Minnesota Legislature
HF 2498
4th Engrossment - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to financing and operation of state and local 1.3 government; modifying provisions relating to income, 1.4 franchise, sales and use, property, MinnesotaCare, 1.5 gross receipts, liquor, insurance, solid waste 1.6 management, estate, minerals, and other taxes, 1.7 property tax refunds, tax liens, and tax 1.8 administration; imposing a wind energy production tax; 1.9 modifying property tax and other state aids and 1.10 credits; changing education aids and levies; modifying 1.11 tax court jurisdiction; authorizing local units of 1.12 government to levy, impose, or abate taxes, issue 1.13 debt, and exercise other powers; extending and 1.14 authorizing certain expenditures from the northeast 1.15 Minnesota economic protection trust fund; modifying 1.16 levy limits; providing powers to and imposing duties 1.17 on the commissioner of revenue and other officials; 1.18 clarifying utility rate reduction provisions mandated 1.19 by property tax reductions; modifying tax increment 1.20 financing and other economic development provisions; 1.21 providing a time limit for offset of federal tax 1.22 refunds; changing lawful purpose for purposes of 1.23 lawful gambling; providing for data privacy and 1.24 exchange of data; modifying certain debt limits; 1.25 repealing an annexation provision; making technical 1.26 corrections; providing for the transfer of funds; 1.27 providing for a budget reserve; appropriating money; 1.28 amending Minnesota Statutes 2000, sections 16A.152, by 1.29 adding a subdivision; 40A.151, subdivision 1; 40A.152, 1.30 subdivisions 1, 3; 69.77, by adding a subdivision; 1.31 126C.44; 168A.05, by adding subdivisions; 270.063, 1.32 subdivision 4; 270.60, subdivision 4; 270B.01, 1.33 subdivision 8; 270B.02, subdivision 4; 270B.14, 1.34 subdivision 8; 272.02, subdivision 15, by adding 1.35 subdivisions; 272.0212, subdivision 4; 273.125, 1.36 subdivisions 3, 4; 273.1398, subdivisions 1a, 2, 3; 1.37 278.01, subdivision 1; 279.01, subdivision 3; 289A.10, 1.38 subdivision 1; 289A.19, subdivision 1; 290.01, 1.39 subdivision 19a; 290.067, subdivisions 1, 2a; 290.081; 1.40 290.17, subdivisions 2, 3; 290.191, subdivision 4; 1.41 290A.03, subdivision 3; 291.03, subdivision 1; 295.53, 1.42 subdivision 1; 295.57, by adding a subdivision; 1.43 296A.18, subdivision 8; 297A.66, by adding a 1.44 subdivision; 297A.67, subdivision 5, by adding a 1.45 subdivision; 297A.68, by adding a subdivision; 1.46 297A.71, by adding subdivisions; 297A.96; 297G.07, 2.1 subdivision 1; 297H.06, subdivision 2; 297I.05, 2.2 subdivision 11; 298.27; 298.28, subdivisions 5, 9b, 2.3 11; 298.291; 469.1813, by adding a subdivision; 2.4 477A.011, subdivision 20; 477A.15; Minnesota Statutes 2.5 2001 Supplement, sections 69.021, subdivision 5; 2.6 124D.86, subdivision 3; 126C.17, subdivision 7a; 2.7 126C.21, subdivision 4; 126C.40, subdivision 1; 2.8 126C.43, subdivision 3; 126C.48, subdivision 8; 2.9 216B.1646; 270.69, subdivision 2; 270.691, subdivision 2.10 8; 270B.02, subdivision 3; 270B.08, subdivision 2; 2.11 271.01, subdivision 5; 271.21, subdivision 2; 272.02, 2.12 subdivision 22; 272.028; 273.121; 273.124, subdivision 2.13 11; 273.13, subdivisions 22, 24, 25; 273.1384, 2.14 subdivisions 1, 2; 273.1392; 273.1398, subdivisions 2.15 4c, 4d; 275.065, subdivision 3; 275.70, subdivision 5; 2.16 275.71, subdivisions 2, 3, 6; 275.74, subdivision 2; 2.17 276.04, subdivision 2; 289A.02, subdivision 7; 2.18 289A.20, subdivisions 2, 4; 289A.60, subdivision 2; 2.19 290.01, subdivisions 19, 19b, 19c, 19d, 31; 290.0675, 2.20 subdivisions 1, 3; 290.091, subdivision 2; 290.0921, 2.21 subdivisions 2, 3, 6; 290.21, subdivision 4; 290A.03, 2.22 subdivision 15; 290A.04, subdivision 2h; 291.005, 2.23 subdivision 1; 295.60, subdivisions 2, 7, by adding 2.24 subdivisions; 297A.61, subdivisions 3, 26, 31; 2.25 297A.66, subdivision 1; 297A.67, subdivisions 25, 29; 2.26 297A.68, subdivision 3; 297A.70, subdivisions 3, 10; 2.27 297A.71, subdivision 23; 297A.75; 297A.995, 2.28 subdivision 4; 298.01, subdivisions 3b, 4c; 298.225, 2.29 subdivision 1; 298.28, subdivisions 4, 6, 9a, 10; 2.30 298.296, subdivision 2; 349.12, subdivision 25; 2.31 469.1734, subdivision 6; 469.1763, subdivision 6; 2.32 469.1792, subdivision 1; 477A.011, subdivision 36; 2.33 477A.0123; 477A.013, subdivision 9; 477A.03, 2.34 subdivision 2; 477A.07, subdivisions 1, 2, 3; Laws 2.35 1990, chapter 604, article 6, section 9, subdivision 2.36 1, as amended; Laws 1993, chapter 375, article 5, 2.37 section 42; Laws 1995, chapter 264, article 5, section 2.38 45, subdivision 1, as amended; Laws 1998, chapter 389, 2.39 article 3, section 42; Laws 1998, chapter 389, article 2.40 8, section 37, subdivision 2; Laws 2001, First Special 2.41 Session chapter 5, article 9, section 3; Laws 2001, 2.42 First Special Session chapter 5, article 12, sections 2.43 11, 82, 95; Laws 2001, First Special Session chapter 2.44 6, article 1, section 53; Laws 2001, First Special 2.45 Session chapter 6, article 4, sections 25, 27, 2.46 subdivision 9; Laws 2001, First Special Session 2.47 chapter 6, article 5, section 12; proposing coding for 2.48 new law in Minnesota Statutes, chapters 126C; 272; 2.49 repealing Minnesota Statutes 2000, sections 272.02, 2.50 subdivision 40; 290.01, subdivisions 19g, 32; 2.51 290.0921, subdivision 5; 291.03, subdivision 2; 2.52 295.44; 297A.68, subdivision 26; Minnesota Statutes 2.53 2001 Supplement, sections 469.176, subdivision 1h; 2.54 Laws 2001, First Special Session chapter 5, article 3, 2.55 section 88; Minnesota Rules, parts 8130.1400; 2.56 8130.2100; 8130.2350; 8130.2600; 8130.3000; 8130.3850; 2.57 8130.5000. 2.58 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.59 ARTICLE 1 2.60 INCOME AND FRANCHISE TAXES 2.61 Section 1. Minnesota Statutes 2001 Supplement, section 2.62 290.01, subdivision 19d, is amended to read: 2.63 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 2.64 TAXABLE INCOME.] For corporations, there shall be subtracted 3.1 from federal taxable income after the increases provided in 3.2 subdivision 19c: 3.3 (1) the amount of foreign dividend gross-up added to gross 3.4 income for federal income tax purposes under section 78 of the 3.5 Internal Revenue Code; 3.6 (2) the amount of salary expense not allowed for federal 3.7 income tax purposes due to claiming the federal jobs credit 3.8 under section 51 of the Internal Revenue Code; 3.9 (3) any dividend (not including any distribution in 3.10 liquidation) paid within the taxable year by a national or state 3.11 bank to the United States, or to any instrumentality of the 3.12 United States exempt from federal income taxes, on the preferred 3.13 stock of the bank owned by the United States or the 3.14 instrumentality; 3.15 (4) amounts disallowed for intangible drilling costs due to 3.16 differences between this chapter and the Internal Revenue Code 3.17 in taxable years beginning before January 1, 1987, as follows: 3.18 (i) to the extent the disallowed costs are represented by 3.19 physical property, an amount equal to the allowance for 3.20 depreciation under Minnesota Statutes 1986, section 290.09, 3.21 subdivision 7, subject to the modifications contained in 3.22 subdivision 19e; and 3.23 (ii) to the extent the disallowed costs are not represented 3.24 by physical property, an amount equal to the allowance for cost 3.25 depletion under Minnesota Statutes 1986, section 290.09, 3.26 subdivision 8; 3.27 (5) the deduction for capital losses pursuant to sections 3.28 1211 and 1212 of the Internal Revenue Code, except that: 3.29 (i) for capital losses incurred in taxable years beginning 3.30 after December 31, 1986, capital loss carrybacks shall not be 3.31 allowed; 3.32 (ii) for capital losses incurred in taxable years beginning 3.33 after December 31, 1986, a capital loss carryover to each of the 3.34 15 taxable years succeeding the loss year shall be allowed; 3.35 (iii) for capital losses incurred in taxable years 3.36 beginning before January 1, 1987, a capital loss carryback to 4.1 each of the three taxable years preceding the loss year, subject 4.2 to the provisions of Minnesota Statutes 1986, section 290.16, 4.3 shall be allowed; and 4.4 (iv) for capital losses incurred in taxable years beginning 4.5 before January 1, 1987, a capital loss carryover to each of the 4.6 five taxable years succeeding the loss year to the extent such 4.7 loss was not used in a prior taxable year and subject to the 4.8 provisions of Minnesota Statutes 1986, section 290.16, shall be 4.9 allowed; 4.10 (6) an amount for interest and expenses relating to income 4.11 not taxable for federal income tax purposes, if (i) the income 4.12 is taxable under this chapter and (ii) the interest and expenses 4.13 were disallowed as deductions under the provisions of section 4.14 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 4.15 federal taxable income; 4.16 (7) in the case of mines, oil and gas wells, other natural 4.17 deposits, and timber for which percentage depletion was 4.18 disallowed pursuant to subdivision 19c, clause (11), a 4.19 reasonable allowance for depletion based on actual cost. In the 4.20 case of leases the deduction must be apportioned between the 4.21 lessor and lessee in accordance with rules prescribed by the 4.22 commissioner. In the case of property held in trust, the 4.23 allowable deduction must be apportioned between the income 4.24 beneficiaries and the trustee in accordance with the pertinent 4.25 provisions of the trust, or if there is no provision in the 4.26 instrument, on the basis of the trust's income allocable to 4.27 each; 4.28 (8) for certified pollution control facilities placed in 4.29 service in a taxable year beginning before December 31, 1986, 4.30 and for which amortization deductions were elected under section 4.31 169 of the Internal Revenue Code of 1954, as amended through 4.32 December 31, 1985, an amount equal to the allowance for 4.33 depreciation under Minnesota Statutes 1986, section 290.09, 4.34 subdivision 7; 4.35 (9) amounts included in federal taxable income that are due 4.36 to refunds of income, excise, or franchise taxes based on net 5.1 income or related minimum taxes paid by the corporation to 5.2 Minnesota, another state, a political subdivision of another 5.3 state, the District of Columbia, or a foreign country or 5.4 possession of the United States to the extent that the taxes 5.5 were added to federal taxable income under section 290.01, 5.6 subdivision 19c, clause (1), in a prior taxable year; 5.7 (10) 80 percent of royalties, fees, or other like income 5.8 accrued or received from a foreign operating corporation or a 5.9 foreign corporation which is part of the same unitary business 5.10 as the receiving corporation; 5.11 (11) income or gains from the business of mining as defined 5.12 in section 290.05, subdivision 1, clause (a), that are not 5.13 subject to Minnesota franchise tax; 5.14 (12) the amount of handicap access expenditures in the 5.15 taxable year which are not allowed to be deducted or capitalized 5.16 under section 44(d)(7) of the Internal Revenue Code; 5.17 (13) the amount of qualified research expenses not allowed 5.18 for federal income tax purposes under section 280C(c) of the 5.19 Internal Revenue Code, but only to the extent that the amount 5.20 exceeds the amount of the credit allowed under section 290.068; 5.21 (14) the amount of salary expenses not allowed for federal 5.22 income tax purposes due to claiming the Indian employment credit 5.23 under section 45A(a) of the Internal Revenue Code; 5.24 (15) the amount of any refund of environmental taxes paid 5.25 under section 59A of the Internal Revenue Code; 5.26 (16) for taxable years beginning before January 1, 2008, 5.27 the amount of the federal small ethanol producer credit allowed 5.28 under section 40(a)(3) of the Internal Revenue Code which is 5.29 included in gross income under section 87 of the Internal 5.30 Revenue Code; and 5.31 (17) for a corporation whose foreign sales corporation, as 5.32 defined in section 922 of the Internal Revenue Code, constituted 5.33 a foreign operating corporation duringtheany taxableyears5.34 year endingduring calendar year 1992before January 1, 1995, 5.35 and a return was filed by August 15, 1996, claiming the 5.36 deduction under this subdivision for income received from the 6.1 foreign operating corporation, an amount equal to 1.23 6.2 multiplied by the amount of income excluded under section 114 of 6.3 the Internal Revenue Code, provided the income is not income of 6.4 a foreign operating company. 6.5 [EFFECTIVE DATE.] This section is effective for taxable 6.6 years beginning after December 31, 2000. 6.7 Sec. 2. Minnesota Statutes 2000, section 290.081, is 6.8 amended to read: 6.9 290.081 [INCOME OF NONRESIDENTS, RECIPROCITY.] 6.10 (a) The compensation received for the performance of 6.11 personal or professional services within this state by an 6.12 individual whose residence, place of abode, and place 6.13 customarily returned to at least once a month is in another 6.14 state, shall be excluded from gross income to the extent such 6.15 compensation is subject to an income tax imposed by the state of 6.16 residence; provided that such state allows a similar exclusion 6.17 of compensation received by residents of Minnesota for services 6.18 performed therein. 6.19 (b) When it is deemed to be in the best interests of the 6.20 people of this state, the commissioner may determine that the 6.21 provisions ofclauseparagraph (a) shall not apply. As long as 6.22 the provisions ofclauseparagraph (a) apply between Minnesota 6.23 and Wisconsin, the provisions ofclauseparagraph (a) shall 6.24 apply to any individual who is domiciled in Wisconsin. 6.25 (c) For the purposes ofclauseparagraph (a), whenever the 6.26 Wisconsin tax on Minnesota residents which would have been paid 6.27 Wisconsin withoutclauseparagraph (a) exceeds the Minnesota tax 6.28 on Wisconsin residents which would have been paid Minnesota 6.29 withoutclauseparagraph (a), or vice versa, then the state with 6.30 the net revenue loss resulting fromclauseparagraph (a) shall 6.31 receive from the other state the amount of such loss. This 6.32 provision shall be effective for all years beginning after 6.33 December 31, 1972. The data used for computing the loss to 6.34 either state shall be determined on or before September 30 of 6.35 the year following the close of the previous calendar year. 6.36 (d) Interestshall beis payable on alldelinquent balances7.1 amounts calculated under paragraph (c) relating to taxable years 7.2 beginning afterDecember 31, 1977December 31, 2000. Interest 7.3 accrues from July 1 of the taxable year. The commissioner of 7.4 revenue is authorized to enter into agreements with the state of 7.5 Wisconsin specifying the reciprocity payment due date, 7.6 conditions constituting delinquency, interest rates, and a 7.7 method for computing interest dueon any delinquent amounts. 7.8 (e) If an agreement cannot be reached as to the amount of 7.9 the loss, the commissioner of revenue and the taxing official of 7.10 the state of Wisconsin shall each appoint a member of a board of 7.11 arbitration and these members shall appoint the third member of 7.12 the board. The board shall select one of its members as chair. 7.13 Such board may administer oaths, take testimony, subpoena 7.14 witnesses, and require their attendance, require the production 7.15 of books, papers and documents, and hold hearings at such places 7.16 as are deemed necessary. The board shall then make a 7.17 determination as to the amount to be paid the other state which 7.18 determination shall be final and conclusive. 7.19 (f) The commissioner may furnish copies of returns, 7.20 reports, or other information to the taxing official of the 7.21 state of Wisconsin, a member of the board of arbitration, or a 7.22 consultant under joint contract with the states of Minnesota and 7.23 Wisconsin for the purpose of making a determination as to the 7.24 amount to be paid the other state under the provisions of this 7.25 section. Prior to the release of any information under the 7.26 provisions of this section, the person to whom the information 7.27 is to be released shall sign an agreement which provides that 7.28 the person will protect the confidentiality of the returns and 7.29 information revealed thereby to the extent that it is protected 7.30 under the laws of the state of Minnesota. 7.31 [EFFECTIVE DATE.] This section is effective the day 7.32 following final enactment. Income tax reciprocity under 7.33 Minnesota Statutes, section 290.081, with the state of Wisconsin 7.34 is terminated effective for taxable years beginning after 7.35 December 31, 2002, unless the state of Wisconsin agrees, in 7.36 writing, by October 1, 2002, that interest will be included in 8.1 payments as required by this section, calculated from the date 8.2 specified under this section at a rate at least equal to the 8.3 rate under Minnesota Statutes, section 270.75, and beginning 8.4 with the payment due in December 2002. If income tax 8.5 reciprocity is terminated, the requirement under Minnesota 8.6 Statutes, section 136A.08, subdivision 3, that an income tax 8.7 reciprocity agreement be in effect as a condition for a higher 8.8 education reciprocity is suspended through the 2003-2004 school 8.9 year. 8.10 Sec. 3. Minnesota Statutes 2001 Supplement, section 8.11 290.0921, subdivision 2, is amended to read: 8.12 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 8.13 the following terms have the meanings given them. 8.14 (b) "Alternative minimum taxable net income" is alternative 8.15 minimum taxable income, 8.16 (1) less the exemption amount, and 8.17 (2) apportioned or allocated to Minnesota under section 8.18 290.17, 290.191, or 290.20. 8.19 (c) The "exemption amount" is $40,000, reduced, but not 8.20 below zero, by 25 percent of the excess of alternative minimum 8.21 taxable income over $150,000. 8.22 (d) "Minnesota alternative minimum taxable income" is 8.23 alternative minimum taxable net income, less the deductions for 8.24 alternative tax net operating loss under subdivision 4; 8.25 charitable contributions under subdivision 5; and dividends 8.26 received under subdivision 6. The sum of the deductions under 8.27 this paragraph may not exceed 90 percent of alternative minimum 8.28 taxable net income. This limitation does not apply to: 8.29 (1) a deduction for dividends paid to or received from a 8.30 corporation which is subject to tax under section 290.36 and 8.31 which is a member of an affiliated group of corporations as 8.32 defined by the Internal Revenue Code; or 8.33 (2) a deduction for dividends received from a property and 8.34 casualty insurer as defined under section 60A.60, subdivision 8, 8.35 which is a member of an affiliated group of corporations as 8.36 defined by the Internal Revenue Code and either: (i) the 9.1 dividend is eliminated in consolidation under Treasury 9.2 Regulation 1.1502-14(a), as amended through December 31, 1989; 9.3 or (ii) the dividend is deducted under an election under section 9.4 243(b) of the Internal Revenue Code. 9.5 [EFFECTIVE DATE.] This section is effective for tax years 9.6 beginning after December 31, 2002. 9.7 Sec. 4. Minnesota Statutes 2001 Supplement, section 9.8 290.0921, subdivision 6, is amended to read: 9.9 Subd. 6. [DIVIDENDS RECEIVED.] (a) A deduction is allowed 9.10 from alternative minimum taxable net income equal to the 9.11 deduction for dividends received under section 290.21, 9.12 subdivision 4, for purposes of calculating taxable income under 9.13 section 290.01, subdivision 29. 9.14 (b) The amount of the deduction must not exceed 90 percent 9.15 of alternative minimum taxable net income. 9.16 This limitation does not apply to: 9.17 (1) dividends paid to or received from a corporation which 9.18 is subject to tax under section 290.36 and which is a member of 9.19 an affiliated group of corporations as defined by the Internal 9.20 Revenue Code; or 9.21 (2) dividends received from a property and casualty insurer 9.22 as defined under section 60A.60, subdivision 8, which is a 9.23 member of an affiliated group of corporations as defined by the 9.24 Internal Revenue Code and either: (i) the dividend is 9.25 eliminated in consolidation under Treasury Regulation 9.26 1.1502-14(a), as amended through December 31, 1989; or (ii) the 9.27 dividend is deducted under an election under section 243(b) of 9.28 the Internal Revenue Code. 9.29 [EFFECTIVE DATE.] This section is effective for tax years 9.30 beginning after December 31, 2002. 9.31 Sec. 5. Minnesota Statutes 2000, section 290.191, 9.32 subdivision 4, is amended to read: 9.33 Subd. 4. [APPORTIONMENT FORMULA FOR CERTAIN MAIL ORDER 9.34 BUSINESSES.] If the business of a corporation, partnership, or 9.35 proprietorship consists exclusively of the selling of tangible 9.36 personal property and services at retail, as defined in section 10.1 297A.61, subdivision 4, paragraph (a), in response to orders 10.2 received by United States mail, telephone, facsimile, or other 10.3 electronic media, and 99 percent of the taxpayer's property and 10.4 payroll is within Minnesota, then the taxpayer may apportion net 10.5 income to Minnesota based solely upon the percentage that the 10.6 sales made within this state in connection with its trade or 10.7 business during the tax period are of the total sales wherever 10.8 made in connection with the trade or business during the tax 10.9 period. Property and payroll factors are disregarded. In 10.10 determining eligibility for this subdivision: 10.11 (1) the sale not in the ordinary course of business of 10.12 tangible or intangible assets used in conducting business 10.13 activities must be disregarded; and 10.14 (2) property and payroll at a distribution center outside 10.15 of Minnesota are disregarded if the sole activity at the 10.16 distribution center is the filling of orders, and no 10.17 solicitation of orders occurs at the distribution center. 10.18 [EFFECTIVE DATE.] This section is effective for tax years 10.19 beginning after December 31, 2001. 10.20 Sec. 6. Minnesota Statutes 2001 Supplement, section 10.21 290.21, subdivision 4, is amended to read: 10.22 Subd. 4. (a)(1) Eighty percent of dividends received by a 10.23 corporation during the taxable year from another corporation, in 10.24 which the recipient owns 20 percent or more of the stock, by 10.25 vote and value, not including stock described in section 10.26 1504(a)(4) of the Internal Revenue Code when the corporate stock 10.27 with respect to which dividends are paid does not constitute the 10.28 stock in trade of the taxpayer or would not be included in the 10.29 inventory of the taxpayer, or does not constitute property held 10.30 by the taxpayer primarily for sale to customers in the ordinary 10.31 course of the taxpayer's trade or business, or when the trade or 10.32 business of the taxpayer does not consist principally of the 10.33 holding of the stocks and the collection of the income and gains 10.34 therefrom; and 10.35 (2)(i) the remaining 20 percent of dividends if the 10.36 dividends received are the stock in an affiliated company 11.1 transferred in an overall plan of reorganization and the 11.2 dividend is eliminated in consolidation under Treasury 11.3 Department Regulation 1.1502-14(a), as amended through December 11.4 31, 1989;or11.5 (ii) the remaining 20 percent of dividends if the dividends 11.6 are received from a corporation which is subject to tax under 11.7 section 290.36 and which is a member of an affiliated group of 11.8 corporations as defined by the Internal Revenue Code and the 11.9 dividend is eliminated in consolidation under Treasury 11.10 Department Regulation 1.1502-14(a), as amended through December 11.11 31, 1989, or is deducted under an election under section 243(b) 11.12 of the Internal Revenue Code; or 11.13 (iii) the remaining 20 percent of the dividends if the 11.14 dividends are received from a property and casualty insurer as 11.15 defined under section 60A.60, subdivision 8, which is a member 11.16 of an affiliated group of corporations as defined by the 11.17 Internal Revenue Code and either: (A) the dividend is 11.18 eliminated in consolidation under Treasury Regulation 11.19 1.1502-14(a), as amended through December 31, 1989; or (B) the 11.20 dividend is deducted under an election under section 243(b) of 11.21 the Internal Revenue Code. 11.22 (b) Seventy percent of dividends received by a corporation 11.23 during the taxable year from another corporation in which the 11.24 recipient owns less than 20 percent of the stock, by vote or 11.25 value, not including stock described in section 1504(a)(4) of 11.26 the Internal Revenue Code when the corporate stock with respect 11.27 to which dividends are paid does not constitute the stock in 11.28 trade of the taxpayer, or does not constitute property held by 11.29 the taxpayer primarily for sale to customers in the ordinary 11.30 course of the taxpayer's trade or business, or when the trade or 11.31 business of the taxpayer does not consist principally of the 11.32 holding of the stocks and the collection of income and gain 11.33 therefrom. 11.34 (c) The dividend deduction provided in this subdivision 11.35 shall be allowed only with respect to dividends that are 11.36 included in a corporation's Minnesota taxable net income for the 12.1 taxable year. 12.2 The dividend deduction provided in this subdivision does 12.3 not apply to a dividend from a corporation which, for the 12.4 taxable year of the corporation in which the distribution is 12.5 made or for the next preceding taxable year of the corporation, 12.6 is a corporation exempt from tax under section 501 of the 12.7 Internal Revenue Code. 12.8 The dividend deduction provided in this subdivision applies 12.9 to the amount of regulated investment company dividends only to 12.10 the extent determined under section 854(b) of the Internal 12.11 Revenue Code. 12.12 The dividend deduction provided in this subdivision shall 12.13 not be allowed with respect to any dividend for which a 12.14 deduction is not allowed under the provisions of section 246(c) 12.15 of the Internal Revenue Code. 12.16 (d) If dividends received by a corporation that does not 12.17 have nexus with Minnesota under the provisions of Public Law 12.18 Number 86-272 are included as income on the return of an 12.19 affiliated corporation permitted or required to file a combined 12.20 report under section 290.34, subdivision 2, then for purposes of 12.21 this subdivision the determination as to whether the trade or 12.22 business of the corporation consists principally of the holding 12.23 of stocks and the collection of income and gains therefrom shall 12.24 be made with reference to the trade or business of the 12.25 affiliated corporation having a nexus with Minnesota. 12.26 (e) The deduction provided by this subdivision does not 12.27 apply if the dividends are paid by a FSC as defined in section 12.28 922 of the Internal Revenue Code. 12.29 (f) If one or more of the members of the unitary group 12.30 whose income is included on the combined report received a 12.31 dividend, the deduction under this subdivision for each member 12.32 of the unitary business required to file a return under this 12.33 chapter is the product of: (1) 100 percent of the dividends 12.34 received by members of the group; (2) the percentage allowed 12.35 pursuant to paragraph (a) or (b); and (3) the percentage of the 12.36 taxpayer's business income apportionable to this state for the 13.1 taxable year under section 290.191 or 290.20. 13.2 [EFFECTIVE DATE.] This section is effective for tax years 13.3 beginning after December 31, 2002. 13.4 ARTICLE 2 13.5 FEDERAL UPDATE 13.6 Section 1. Minnesota Statutes 2001 Supplement, section 13.7 289A.02, subdivision 7, is amended to read: 13.8 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 13.9 defined otherwise, "Internal Revenue Code" means the Internal 13.10 Revenue Code of 1986, as amended throughJune 15, 2001March 15, 13.11 2002. 13.12 [EFFECTIVE DATE.] This section is effective the day 13.13 following final enactment. 13.14 Sec. 2. Minnesota Statutes 2001 Supplement, section 13.15 289A.20, subdivision 2, is amended to read: 13.16 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 13.17 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 13.18 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 13.19 (a) A tax required to be deducted and withheld during the 13.20 quarterly period must be paid on or before the last day of the 13.21 month following the close of the quarterly period, unless an 13.22 earlier time for payment is provided. A tax required to be 13.23 deducted and withheld from compensation of an entertainer and 13.24 from a payment to an out-of-state contractor must be paid on or 13.25 before the date the return for such tax must be filed under 13.26 section 289A.18, subdivision 2. Taxes required to be deducted 13.27 and withheld by partnerships and S corporations must be paid on 13.28 or before the date the return must be filed under section 13.29 289A.18, subdivision 2. 13.30 (b) An employer who, during the previous quarter, withheld 13.31 more than $1,500 of tax under section 290.92, subdivision 2a or 13.32 3, or 290.923, subdivision 2, must deposit tax withheld under 13.33 those sections with the commissioner within the time allowed to 13.34 deposit the employer's federal withheld employment taxes under 13.35Treasury RegulationCode of Federal Regulations, title 26, 13.36 section 31.6302-1, as amended through December 31, 2001, without 14.1 regard to the safe harbor or de minimis rules in subparagraph 14.2 (f) or the one-day rule in subsection (c), clause (3). 14.3 Taxpayers must submit a copy of their federal notice of deposit 14.4 status to the commissioner upon request by the commissioner. 14.5 (c) The commissioner may prescribe by rule other return 14.6 periods or deposit requirements. In prescribing the reporting 14.7 period, the commissioner may classify payors according to the 14.8 amount of their tax liability and may adopt an appropriate 14.9 reporting period for the class that the commissioner judges to 14.10 be consistent with efficient tax collection. In no event will 14.11 the duration of the reporting period be more than one year. 14.12 (d) If less than the correct amount of tax is paid to the 14.13 commissioner, proper adjustments with respect to both the tax 14.14 and the amount to be deducted must be made, without interest, in 14.15 the manner and at the times the commissioner prescribes. If the 14.16 underpayment cannot be adjusted, the amount of the underpayment 14.17 will be assessed and collected in the manner and at the times 14.18 the commissioner prescribes. 14.19 (e) If the aggregate amount of the tax withheld during a 14.20 fiscal year ending June 30 under section 290.92, subdivision 2a 14.21 or 3, is equal to or exceeds the amounts established for 14.22 remitting federal withheld taxes pursuant to the regulations 14.23 promulgated under section 6302(h) of the Internal Revenue Code, 14.24 the employer must remit each required deposit for wages paid in 14.25 the subsequent calendar year by electronic means. 14.26 (f) A third-party bulk filer as defined in section 290.92, 14.27 subdivision 30, paragraph (a), clause (2), who remits 14.28 withholding deposits must remit all deposits by electronic means 14.29 as provided in paragraph (e), regardless of the aggregate amount 14.30 of tax withheld during a fiscal year for all of the employers. 14.31 [EFFECTIVE DATE.] This section is effective the day 14.32 following final enactment. 14.33 Sec. 3. Minnesota Statutes 2001 Supplement, section 14.34 290.01, subdivision 19, is amended to read: 14.35 Subd. 19. [NET INCOME.] The term "net income" means the 14.36 federal taxable income, as defined in section 63 of the Internal 15.1 Revenue Code of 1986, as amended through the date named in this 15.2 subdivision, incorporating any elections made by the taxpayer in 15.3 accordance with the Internal Revenue Code in determining federal 15.4 taxable income for federal income tax purposes, and with the 15.5 modifications provided in subdivisions 19a to 19f. 15.6 In the case of a regulated investment company or a fund 15.7 thereof, as defined in section 851(a) or 851(g) of the Internal 15.8 Revenue Code, federal taxable income means investment company 15.9 taxable income as defined in section 852(b)(2) of the Internal 15.10 Revenue Code, except that: 15.11 (1) the exclusion of net capital gain provided in section 15.12 852(b)(2)(A) of the Internal Revenue Code does not apply; 15.13 (2) the deduction for dividends paid under section 15.14 852(b)(2)(D) of the Internal Revenue Code must be applied by 15.15 allowing a deduction for capital gain dividends and 15.16 exempt-interest dividends as defined in sections 852(b)(3)(C) 15.17 and 852(b)(5) of the Internal Revenue Code; and 15.18 (3) the deduction for dividends paid must also be applied 15.19 in the amount of any undistributed capital gains which the 15.20 regulated investment company elects to have treated as provided 15.21 in section 852(b)(3)(D) of the Internal Revenue Code. 15.22 The net income of a real estate investment trust as defined 15.23 and limited by section 856(a), (b), and (c) of the Internal 15.24 Revenue Code means the real estate investment trust taxable 15.25 income as defined in section 857(b)(2) of the Internal Revenue 15.26 Code. 15.27 The net income of a designated settlement fund as defined 15.28 in section 468B(d) of the Internal Revenue Code means the gross 15.29 income as defined in section 468B(b) of the Internal Revenue 15.30 Code. 15.31 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 15.32 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 15.33 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 15.34 Protection Act, Public Law Number 104-188, the provisions of 15.35 Public Law Number 104-117, the provisions of sections 313(a) and 15.36 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 16.1 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 16.2 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 16.3 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 16.4 Public Law Number 105-34, the provisions of section 6010 of the 16.5 Internal Revenue Service Restructuring and Reform Act of 1998, 16.6 Public Law Number 105-206, the provisions of section 4003 of the 16.7 Omnibus Consolidated and Emergency Supplemental Appropriations 16.8 Act, 1999, Public Law Number 105-277, and the provisions of 16.9 section 318 of the Consolidated Appropriation Act of 2001, 16.10 Public Law Number 106-554, shall become effective at the time 16.11 they become effective for federal purposes. 16.12 The Internal Revenue Code of 1986, as amended through 16.13 December 31, 1996, shall be in effect for taxable years 16.14 beginning after December 31, 1996. 16.15 The provisions of sections 202(a) and (b), 221(a), 225, 16.16 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 16.17 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 16.18 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 16.19 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 16.20 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 16.21 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 16.22 7002, and 7003 of the Internal Revenue Service Restructuring and 16.23 Reform Act of 1998, Public Law Number 105-206, the provisions of 16.24 section 3001 of the Omnibus Consolidated and Emergency 16.25 Supplemental Appropriations Act, 1999, Public Law Number 16.26 105-277, the provisions of section 3001 of the Miscellaneous 16.27 Trade and Technical Corrections Act of 1999, Public Law Number 16.28 106-36, and the provisions of section 316 of the Consolidated 16.29 Appropriation Act of 2001, Public Law Number 106-554, shall 16.30 become effective at the time they become effective for federal 16.31 purposes. 16.32 The Internal Revenue Code of 1986, as amended through 16.33 December 31, 1997, shall be in effect for taxable years 16.34 beginning after December 31, 1997. 16.35 The provisions of sections 5002, 6009, 6011, and 7001 of 16.36 the Internal Revenue Service Restructuring and Reform Act of 17.1 1998, Public Law Number 105-206, the provisions of section 9010 17.2 of the Transportation Equity Act for the 21st Century, Public 17.3 Law Number 105-178, the provisions of sections 1004, 4002, and 17.4 5301 of the Omnibus Consolidation and Emergency Supplemental 17.5 Appropriations Act, 1999, Public Law Number 105-277, the 17.6 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 17.7 Act of 1998, Public Law Number 105-369, the provisions of 17.8 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 17.9 Work Incentives Improvement Act of 1999, Public Law Number 17.10 106-170, the provisions of the Installment Tax Correction Act of 17.11 2000, Public Law Number 106-573, and the provisions of section 17.12 309 of the Consolidated Appropriation Act of 2001, Public Law 17.13 Number 106-554, shall become effective at the time they become 17.14 effective for federal purposes. 17.15 The Internal Revenue Code of 1986, as amended through 17.16 December 31, 1998, shall be in effect for taxable years 17.17 beginning after December 31, 1998. 17.18 The provisions of the FSC Repeal and Extraterritorial 17.19 Income Exclusion Act of 2000, Public Law Number 106-519, and the 17.20 provision of section 412 of the Job Creation and Worker 17.21 Assistance Act of 2002, Public Law Number 107-147, shall become 17.22 effective at the time it became effective for federal purposes. 17.23 The Internal Revenue Code of 1986, as amended through 17.24 December 31, 1999, shall be in effect for taxable years 17.25 beginning after December 31, 1999. The provisions of sections 17.26 306 and 401 of the Consolidated Appropriation Act of 2001, 17.27 Public Law Number 106-554, and the provision of section 17.28 632(b)(2)(A) of the Economic Growth and Tax Relief 17.29 Reconciliation Act of 2001, Public Law Number 107-16, and 17.30 provisions of sections 101 and 402 of the Job Creation and 17.31 Worker Assistance Act of 2002, Public Law Number 107-147, shall 17.32 become effective at the same time it became effective for 17.33 federal purposes. 17.34 The Internal Revenue Code of 1986, as amended through 17.35 December 31, 2000, shall be in effect for taxable years 17.36 beginning after December 31, 2000. The provisions of sections 18.1 659a and 671 of the Economic Growth and Tax Relief 18.2 Reconciliation Act of 2001, Public Law Number 107-16, the 18.3 provisions of sections 104, 105, and 111 of the Victims of 18.4 Terrorism Tax Relief Act of 2001, Public Law Number 107-134, and 18.5 the provisions of sections 201, 403, 413, and 606 of the Job 18.6 Creation and Worker Assistance Act of 2002, Public Law Number 18.7 107-147, shall become effective at the same time it became 18.8 effective for federal purposes. 18.9 The Internal Revenue Code of 1986, as amended throughJune18.1015, 2001March 15, 2002, shall be in effect for taxable years 18.11 beginning after December 31, 2001. 18.12 The provisions of sections 101 and 102 of the Victims of 18.13 Terrorism Tax Relief Act of 2001, Public Law Number 107-134, 18.14 shall become effective at the same time it becomes effective for 18.15 federal purposes. 18.16 Except as otherwise provided, references to the Internal 18.17 Revenue Code in subdivisions 19a to 19g mean the code in effect 18.18 for purposes of determining net income for the applicable year. 18.19 [EFFECTIVE DATE.] This section is effective the day 18.20 following final enactment. 18.21 Sec. 4. Minnesota Statutes 2000, section 290.01, 18.22 subdivision 19a, is amended to read: 18.23 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 18.24 individuals, estates, and trusts, there shall be added to 18.25 federal taxable income: 18.26 (1)(i) interest income on obligations of any state other 18.27 than Minnesota or a political or governmental subdivision, 18.28 municipality, or governmental agency or instrumentality of any 18.29 state other than Minnesota exempt from federal income taxes 18.30 under the Internal Revenue Code or any other federal statute, 18.31 and 18.32 (ii) exempt-interest dividends as defined in section 18.33 852(b)(5) of the Internal Revenue Code, except the portion of 18.34 the exempt-interest dividends derived from interest income on 18.35 obligations of the state of Minnesota or its political or 18.36 governmental subdivisions, municipalities, governmental agencies 19.1 or instrumentalities, but only if the portion of the 19.2 exempt-interest dividends from such Minnesota sources paid to 19.3 all shareholders represents 95 percent or more of the 19.4 exempt-interest dividends that are paid by the regulated 19.5 investment company as defined in section 851(a) of the Internal 19.6 Revenue Code, or the fund of the regulated investment company as 19.7 defined in section 851(g) of the Internal Revenue Code, making 19.8 the payment; and 19.9 (iii) for the purposes of items (i) and (ii), interest on 19.10 obligations of an Indian tribal government described in section 19.11 7871(c) of the Internal Revenue Code shall be treated as 19.12 interest income on obligations of the state in which the tribe 19.13 is located; 19.14 (2) the amount of income taxes paid or accrued within the 19.15 taxable year under this chapter and income taxes paid to any 19.16 other state or to any province or territory of Canada, to the 19.17 extent allowed as a deduction under section 63(d) of the 19.18 Internal Revenue Code, but the addition may not be more than the 19.19 amount by which the itemized deductions as allowed under section 19.20 63(d) of the Internal Revenue Code exceeds the amount of the 19.21 standard deduction as defined in section 63(c) of the Internal 19.22 Revenue Code. For the purpose of this paragraph, the 19.23 disallowance of itemized deductions under section 68 of the 19.24 Internal Revenue Code of 1986, income tax is the last itemized 19.25 deduction disallowed; 19.26 (3) the capital gain amount of a lump sum distribution to 19.27 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 19.28 Reform Act of 1986, Public Law Number 99-514, applies; 19.29 (4) the amount of income taxes paid or accrued within the 19.30 taxable year under this chapter and income taxes paid to any 19.31 other state or any province or territory of Canada, to the 19.32 extent allowed as a deduction in determining federal adjusted 19.33 gross income. For the purpose of this paragraph, income taxes 19.34 do not include the taxes imposed by sections 290.0922, 19.35 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 19.36 (5) the amount of expense, interest, or taxes disallowed 20.1 pursuant to section 290.10;and20.2 (6) the amount of a partner's pro rata share of net income 20.3 which does not flow through to the partner because the 20.4 partnership elected to pay the tax on the income under section 20.5 6242(a)(2) of the Internal Revenue Code; and 20.6 (7) 80 percent of the depreciation deduction allowed under 20.7 section 168(k) of the Internal Revenue Code. 20.8 [EFFECTIVE DATE.] This section is effective for tax years 20.9 ending after September 10, 2001. 20.10 Sec. 5. Minnesota Statutes 2001 Supplement, section 20.11 290.01, subdivision 19b, is amended to read: 20.12 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 20.13 individuals, estates, and trusts, there shall be subtracted from 20.14 federal taxable income: 20.15 (1) interest income on obligations of any authority, 20.16 commission, or instrumentality of the United States to the 20.17 extent includable in taxable income for federal income tax 20.18 purposes but exempt from state income tax under the laws of the 20.19 United States; 20.20 (2) if included in federal taxable income, the amount of 20.21 any overpayment of income tax to Minnesota or to any other 20.22 state, for any previous taxable year, whether the amount is 20.23 received as a refund or as a credit to another taxable year's 20.24 income tax liability; 20.25 (3) the amount paid to others, less the amount used to 20.26 claim the credit allowed under section 290.0674, not to exceed 20.27 $1,625 for each qualifying child in grades kindergarten to 6 and 20.28 $2,500 for each qualifying child in grades 7 to 12, for tuition, 20.29 textbooks, and transportation of each qualifying child in 20.30 attending an elementary or secondary school situated in 20.31 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 20.32 wherein a resident of this state may legally fulfill the state's 20.33 compulsory attendance laws, which is not operated for profit, 20.34 and which adheres to the provisions of the Civil Rights Act of 20.35 1964 and chapter 363. For the purposes of this clause, 20.36 "tuition" includes fees or tuition as defined in section 21.1 290.0674, subdivision 1, clause (1). As used in this clause, 21.2 "textbooks" includes books and other instructional materials and 21.3 equipment purchased or leased for use in elementary and 21.4 secondary schools in teaching only those subjects legally and 21.5 commonly taught in public elementary and secondary schools in 21.6 this state. Equipment expenses qualifying for deduction 21.7 includes expenses as defined and limited in section 290.0674, 21.8 subdivision 1, clause (3). "Textbooks" does not include 21.9 instructional books and materials used in the teaching of 21.10 religious tenets, doctrines, or worship, the purpose of which is 21.11 to instill such tenets, doctrines, or worship, nor does it 21.12 include books or materials for, or transportation to, 21.13 extracurricular activities including sporting events, musical or 21.14 dramatic events, speech activities, driver's education, or 21.15 similar programs. For purposes of the subtraction provided by 21.16 this clause, "qualifying child" has the meaning given in section 21.17 32(c)(3) of the Internal Revenue Code; 21.18 (4)contributions made in taxable years beginning after21.19December 31, 1981, and before January 1, 1985, to a qualified21.20governmental pension plan, an individual retirement account,21.21simplified employee pension, or qualified plan covering a21.22self-employed person that were included in Minnesota gross21.23income in the taxable year for which the contributions were made21.24but were deducted or were not included in the computation of21.25federal adjusted gross income, less any amount allowed to be21.26subtracted as a distribution under this subdivision or a21.27predecessor provision in taxable years that began before January21.281, 2000. This subtraction applies only for taxable years21.29beginning after December 31, 1999, and before January 1, 2001.21.30If an individual's subtraction under this clause exceeds the21.31individual's taxable income, the excess may be carried forward21.32to taxable years beginning after December 31, 2000, and before21.33January 1, 2002;21.34(5)income as provided under section 290.0802; 21.35(6)(5) to the extent included in federal adjusted gross 21.36 income, income realized on disposition of property exempt from 22.1 tax under section 290.491; 22.2(7)(6) to the extent not deducted in determining federal 22.3 taxable income or used to claim the long-term care insurance 22.4 credit under section 290.0672, the amount paid for health 22.5 insurance of self-employed individuals as determined under 22.6 section 162(l) of the Internal Revenue Code, except that the 22.7 percent limit does not apply. If the individual deducted 22.8 insurance payments under section 213 of the Internal Revenue 22.9 Code of 1986, the subtraction under this clause must be reduced 22.10 by the lesser of: 22.11 (i) the total itemized deductions allowed under section 22.12 63(d) of the Internal Revenue Code, less state, local, and 22.13 foreign income taxes deductible under section 164 of the 22.14 Internal Revenue Code and the standard deduction under section 22.15 63(c) of the Internal Revenue Code; or 22.16 (ii) the lesser of (A) the amount of insurance qualifying 22.17 as "medical care" under section 213(d) of the Internal Revenue 22.18 Code to the extent not deducted under section 162(1) of the 22.19 Internal Revenue Code or excluded from income or (B) the total 22.20 amount deductible for medical care under section 213(a); 22.21(8)(7) the exemption amount allowed under Laws 1995, 22.22 chapter 255, article 3, section 2, subdivision 3; 22.23(9)(8) to the extent included in federal taxable income, 22.24 postservice benefits for youth community service under section 22.25 124D.42 for volunteer service under United States Code, title 22.26 42, sections 12601 to 12604; 22.27(10)(9) to the extent not deducted in determining federal 22.28 taxable income by an individual who does not itemize deductions 22.29 for federal income tax purposes for the taxable year, an amount 22.30 equal to 50 percent of the excess of charitable contributions 22.31 allowable as a deduction for the taxable year under section 22.32 170(a) of the Internal Revenue Code over $500; 22.33(11)(10) for taxable years beginning before January 1, 22.34 2008, the amount of the federal small ethanol producer credit 22.35 allowed under section 40(a)(3) of the Internal Revenue Code 22.36 which is included in gross income under section 87 of the 23.1 Internal Revenue Code;and23.2(12)(11) for individuals who are allowed a federal foreign 23.3 tax credit for taxes that do not qualify for a credit under 23.4 section 290.06, subdivision 22, an amount equal to the carryover 23.5 of subnational foreign taxes for the taxable year, but not to 23.6 exceed the total subnational foreign taxes reported in claiming 23.7 the foreign tax credit. For purposes of this clause, "federal 23.8 foreign tax credit" means the credit allowed under section 27 of 23.9 the Internal Revenue Code, and "carryover of subnational foreign 23.10 taxes" equals the carryover allowed under section 904(c) of the 23.11 Internal Revenue Code minus national level foreign taxes to the 23.12 extent they exceed the federal foreign tax credit; and 23.13 (12) in each of the five tax years immediately following 23.14 the tax year in which an addition is required under subdivision 23.15 19a, clause (7), an amount equal to one-fifth of the delayed 23.16 depreciation. For purposes of this clause, "delayed 23.17 depreciation" means the amount of the addition made by the 23.18 taxpayer under subdivision 19a, clause (7), minus the positive 23.19 value of any net operating loss under section 172 of the 23.20 Internal Revenue Code generated for the tax year of the 23.21 addition. The resulting delayed depreciation cannot be less 23.22 than zero. 23.23 [EFFECTIVE DATE.] This section is effective the day 23.24 following final enactment, except that clause (12) is effective 23.25 for tax years ending after September 10, 2001. 23.26 Sec. 6. Minnesota Statutes 2001 Supplement, section 23.27 290.01, subdivision 19c, is amended to read: 23.28 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 23.29 INCOME.] For corporations, there shall be added to federal 23.30 taxable income: 23.31 (1) the amount of any deduction taken for federal income 23.32 tax purposes for income, excise, or franchise taxes based on net 23.33 income or related minimum taxes, including but not limited to 23.34 the tax imposed under section 290.0922, paid by the corporation 23.35 to Minnesota, another state, a political subdivision of another 23.36 state, the District of Columbia, or any foreign country or 24.1 possession of the United States; 24.2 (2) interest not subject to federal tax upon obligations 24.3 of: the United States, its possessions, its agencies, or its 24.4 instrumentalities; the state of Minnesota or any other state, 24.5 any of its political or governmental subdivisions, any of its 24.6 municipalities, or any of its governmental agencies or 24.7 instrumentalities; the District of Columbia; or Indian tribal 24.8 governments; 24.9 (3) exempt-interest dividends received as defined in 24.10 section 852(b)(5) of the Internal Revenue Code; 24.11 (4) the amount of any net operating loss deduction taken 24.12 for federal income tax purposes under section 172 or 832(c)(10) 24.13 of the Internal Revenue Code or operations loss deduction under 24.14 section 810 of the Internal Revenue Code; 24.15 (5) the amount of any special deductions taken for federal 24.16 income tax purposes under sections 241 to 247 of the Internal 24.17 Revenue Code; 24.18 (6) losses from the business of mining, as defined in 24.19 section 290.05, subdivision 1, clause (a), that are not subject 24.20 to Minnesota income tax; 24.21 (7) the amount of any capital losses deducted for federal 24.22 income tax purposes under sections 1211 and 1212 of the Internal 24.23 Revenue Code; 24.24 (8) the exempt foreign trade income of a foreign sales 24.25 corporation under sections 921(a) and 291 of the Internal 24.26 Revenue Code; 24.27 (9) the amount of percentage depletion deducted under 24.28 sections 611 through 614 and 291 of the Internal Revenue Code; 24.29 (10) for certified pollution control facilities placed in 24.30 service in a taxable year beginning before December 31, 1986, 24.31 and for which amortization deductions were elected under section 24.32 169 of the Internal Revenue Code of 1954, as amended through 24.33 December 31, 1985, the amount of the amortization deduction 24.34 allowed in computing federal taxable income for those 24.35 facilities; 24.36 (11) the amount of any deemed dividend from a foreign 25.1 operating corporation determined pursuant to section 290.17, 25.2 subdivision 4, paragraph (g); 25.3 (12) the amount of any environmental tax paid under section 25.4 59(a) of the Internal Revenue Code; 25.5 (13) the amount of a partner's pro rata share of net income 25.6 which does not flow through to the partner because the 25.7 partnership elected to pay the tax on the income under section 25.8 6242(a)(2) of the Internal Revenue Code;and25.9 (14) the amount of net income excluded under section 114 of 25.10 the Internal Revenue Code; 25.11 (15) any increase in subpart F income, as defined in 25.12 section 952(a) of the Internal Revenue Code, for the taxable 25.13 year when subpart F income is calculated without regard to the 25.14 provisions of section 614 of Public Law Number 107-147; and 25.15 (16) 80 percent of the depreciation deduction allowed under 25.16 section 168(k) of the Internal Revenue Code. 25.17 [EFFECTIVE DATE.] This section is effective for tax years 25.18 ending after September 10, 2001. 25.19 Sec. 7. Minnesota Statutes 2001 Supplement, section 25.20 290.01, subdivision 19d, is amended to read: 25.21 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 25.22 TAXABLE INCOME.] For corporations, there shall be subtracted 25.23 from federal taxable income after the increases provided in 25.24 subdivision 19c: 25.25 (1) the amount of foreign dividend gross-up added to gross 25.26 income for federal income tax purposes under section 78 of the 25.27 Internal Revenue Code; 25.28 (2) the amount of salary expense not allowed for federal 25.29 income tax purposes due to claiming the federal jobs credit 25.30 under section 51 of the Internal Revenue Code; 25.31 (3) any dividend (not including any distribution in 25.32 liquidation) paid within the taxable year by a national or state 25.33 bank to the United States, or to any instrumentality of the 25.34 United States exempt from federal income taxes, on the preferred 25.35 stock of the bank owned by the United States or the 25.36 instrumentality; 26.1 (4) amounts disallowed for intangible drilling costs due to 26.2 differences between this chapter and the Internal Revenue Code 26.3 in taxable years beginning before January 1, 1987, as follows: 26.4 (i) to the extent the disallowed costs are represented by 26.5 physical property, an amount equal to the allowance for 26.6 depreciation under Minnesota Statutes 1986, section 290.09, 26.7 subdivision 7, subject to the modifications contained in 26.8 subdivision 19e; and 26.9 (ii) to the extent the disallowed costs are not represented 26.10 by physical property, an amount equal to the allowance for cost 26.11 depletion under Minnesota Statutes 1986, section 290.09, 26.12 subdivision 8; 26.13 (5) the deduction for capital losses pursuant to sections 26.14 1211 and 1212 of the Internal Revenue Code, except that: 26.15 (i) for capital losses incurred in taxable years beginning 26.16 after December 31, 1986, capital loss carrybacks shall not be 26.17 allowed; 26.18 (ii) for capital losses incurred in taxable years beginning 26.19 after December 31, 1986, a capital loss carryover to each of the 26.20 15 taxable years succeeding the loss year shall be allowed; 26.21 (iii) for capital losses incurred in taxable years 26.22 beginning before January 1, 1987, a capital loss carryback to 26.23 each of the three taxable years preceding the loss year, subject 26.24 to the provisions of Minnesota Statutes 1986, section 290.16, 26.25 shall be allowed; and 26.26 (iv) for capital losses incurred in taxable years beginning 26.27 before January 1, 1987, a capital loss carryover to each of the 26.28 five taxable years succeeding the loss year to the extent such 26.29 loss was not used in a prior taxable year and subject to the 26.30 provisions of Minnesota Statutes 1986, section 290.16, shall be 26.31 allowed; 26.32 (6) an amount for interest and expenses relating to income 26.33 not taxable for federal income tax purposes, if (i) the income 26.34 is taxable under this chapter and (ii) the interest and expenses 26.35 were disallowed as deductions under the provisions of section 26.36 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 27.1 federal taxable income; 27.2 (7) in the case of mines, oil and gas wells, other natural 27.3 deposits, and timber for which percentage depletion was 27.4 disallowed pursuant to subdivision 19c, clause (11), a 27.5 reasonable allowance for depletion based on actual cost. In the 27.6 case of leases the deduction must be apportioned between the 27.7 lessor and lessee in accordance with rules prescribed by the 27.8 commissioner. In the case of property held in trust, the 27.9 allowable deduction must be apportioned between the income 27.10 beneficiaries and the trustee in accordance with the pertinent 27.11 provisions of the trust, or if there is no provision in the 27.12 instrument, on the basis of the trust's income allocable to 27.13 each; 27.14 (8) for certified pollution control facilities placed in 27.15 service in a taxable year beginning before December 31, 1986, 27.16 and for which amortization deductions were elected under section 27.17 169 of the Internal Revenue Code of 1954, as amended through 27.18 December 31, 1985, an amount equal to the allowance for 27.19 depreciation under Minnesota Statutes 1986, section 290.09, 27.20 subdivision 7; 27.21 (9) amounts included in federal taxable income that are due 27.22 to refunds of income, excise, or franchise taxes based on net 27.23 income or related minimum taxes paid by the corporation to 27.24 Minnesota, another state, a political subdivision of another 27.25 state, the District of Columbia, or a foreign country or 27.26 possession of the United States to the extent that the taxes 27.27 were added to federal taxable income under section 290.01, 27.28 subdivision 19c, clause (1), in a prior taxable year; 27.29 (10) 80 percent of royalties, fees, or other like income 27.30 accrued or received from a foreign operating corporation or a 27.31 foreign corporation which is part of the same unitary business 27.32 as the receiving corporation; 27.33 (11) income or gains from the business of mining as defined 27.34 in section 290.05, subdivision 1, clause (a), that are not 27.35 subject to Minnesota franchise tax; 27.36 (12) the amount of handicap access expenditures in the 28.1 taxable year which are not allowed to be deducted or capitalized 28.2 under section 44(d)(7) of the Internal Revenue Code; 28.3 (13) the amount of qualified research expenses not allowed 28.4 for federal income tax purposes under section 280C(c) of the 28.5 Internal Revenue Code, but only to the extent that the amount 28.6 exceeds the amount of the credit allowed under section 290.068; 28.7 (14) the amount of salary expenses not allowed for federal 28.8 income tax purposes due to claiming the Indian employment credit 28.9 under section 45A(a) of the Internal Revenue Code; 28.10 (15) the amount of any refund of environmental taxes paid 28.11 under section 59A of the Internal Revenue Code; 28.12 (16) for taxable years beginning before January 1, 2008, 28.13 the amount of the federal small ethanol producer credit allowed 28.14 under section 40(a)(3) of the Internal Revenue Code which is 28.15 included in gross income under section 87 of the Internal 28.16 Revenue Code;and28.17 (17) for a corporation whose foreign sales corporation, as 28.18 defined in section 922 of the Internal Revenue Code, constituted 28.19 a foreign operating corporation during the taxable years ending 28.20 during calendar year 1992 and a return was filed by August 15, 28.21 1996, claiming the deduction under this subdivision for income 28.22 received from the foreign operating corporation, an amount equal 28.23 to 1.23 multiplied by the amount of income excluded under 28.24 section 114 of the Internal Revenue Code, provided the income is 28.25 not income of a foreign operating company; 28.26 (18) any decrease in subpart F income, as defined in 28.27 section 952(a) of the Internal Revenue Code, for the taxable 28.28 year when subpart F income is calculated without regard to the 28.29 provisions of section 614 of Public Law Number 107-147; and 28.30 (19) in each of the five tax years immediately following 28.31 the tax year in which an addition is required under subdivision 28.32 19c, clause (16), an amount equal to one-fifth of the delayed 28.33 depreciation. For purposes of this clause, "delayed 28.34 depreciation" means the amount of the addition made by the 28.35 taxpayer under subdivision 19c, clause (16). The resulting 28.36 delayed depreciation cannot be less than zero. 29.1 [EFFECTIVE DATE.] This section is effective for tax years 29.2 ending after September 10, 2001. 29.3 Sec. 8. Minnesota Statutes 2001 Supplement, section 29.4 290.01, subdivision 31, is amended to read: 29.5 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 29.6 defined otherwise, "Internal Revenue Code" means the Internal 29.7 Revenue Code of 1986, as amended throughJune 15, 2001March 15, 29.8 2002. 29.9 [EFFECTIVE DATE.] This section is effective at the same 29.10 time and in the same manner as the federal changes made by the 29.11 Victims of Terrorism Tax Relief Act of 2001, Public Law Number 29.12 107-134, and by the Job Creation and Worker Assistance Act of 29.13 2002, Public Law Number 107-147, become effective. 29.14 Sec. 9. Minnesota Statutes 2000, section 290.067, 29.15 subdivision 1, is amended to read: 29.16 Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take 29.17 as a credit against the tax due from the taxpayer and a spouse, 29.18 if any, under this chapter an amount equal to the dependent care 29.19 credit for which the taxpayer is eligible pursuant to the 29.20 provisions of section 21 of the Internal Revenue Code subject to 29.21 the limitations provided in subdivision 2 except that in 29.22 determining whether the child qualified as a dependent, income 29.23 received as a Minnesota family investment program grant or 29.24 allowance to or on behalf of the child must not be taken into 29.25 account in determining whether the child received more than half 29.26 of the child's support from the taxpayer, and the provisions of 29.27 section 32(b)(1)(D) of the Internal Revenue Code do not apply. 29.28 (b) If a child who has not attained the age of six years at 29.29 the close of the taxable year is cared for at a licensed family 29.30 day care home operated by the child's parent, the taxpayer is 29.31 deemed to have paid employment-related expenses. If the child 29.32 is 16 months old or younger at the close of the taxable year, 29.33 the amount of expenses deemed to have been paid equals the 29.34 maximum limit for one qualified individual under section 21(c) 29.35 and (d) of the Internal Revenue Code. If the child is older 29.36 than 16 months of age but has not attained the age of six years 30.1 at the close of the taxable year, the amount of expenses deemed 30.2 to have been paid equals the amount the licensee would charge 30.3 for the care of a child of the same age for the same number of 30.4 hours of care. 30.5 (c) If a married couple: 30.6 (1) has a child who has not attained the age of one year at 30.7 the close of the taxable year; 30.8 (2) files a joint tax return for the taxable year; and 30.9 (3) does not participate in a dependent care assistance 30.10 program as defined in section 129 of the Internal Revenue Code, 30.11 in lieu of the actual employment related expenses paid for that 30.12 child under paragraph (a) or the deemed amount under paragraph 30.13 (b), the lesser of (i) the combined earned income of the couple 30.14 or (ii)$2,400the amount of the maximum limit for one qualified 30.15 individual under section 21(c) and (d) of the Internal Revenue 30.16 Code will be deemed to be the employment related expense paid 30.17 for that child. The earned income limitation of section 21(d) 30.18 of the Internal Revenue Code shall not apply to this deemed 30.19 amount. These deemed amounts apply regardless of whether any 30.20 employment-related expenses have been paid. 30.21 (d) If the taxpayer is not required and does not file a 30.22 federal individual income tax return for the tax year, no credit 30.23 is allowed for any amount paid to any person unless: 30.24 (1) the name, address, and taxpayer identification number 30.25 of the person are included on the return claiming the credit; or 30.26 (2) if the person is an organization described in section 30.27 501(c)(3) of the Internal Revenue Code and exempt from tax under 30.28 section 501(a) of the Internal Revenue Code, the name and 30.29 address of the person are included on the return claiming the 30.30 credit. 30.31 In the case of a failure to provide the information required 30.32 under the preceding sentence, the preceding sentence does not 30.33 apply if it is shown that the taxpayer exercised due diligence 30.34 in attempting to provide the information required. 30.35 In the case of a nonresident, part-year resident, or a 30.36 person who has earned income not subject to tax under this 31.1 chapter, the credit determined under section 21 of the Internal 31.2 Revenue Code must be allocated based on the ratio by which the 31.3 earned income of the claimant and the claimant's spouse from 31.4 Minnesota sources bears to the total earned income of the 31.5 claimant and the claimant's spouse. 31.6 [EFFECTIVE DATE.] This section is effective for tax years 31.7 beginning after December 31, 2002. 31.8 Sec. 10. Minnesota Statutes 2001 Supplement, section 31.9 290.091, subdivision 2, is amended to read: 31.10 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 31.11 this section, the following terms have the meanings given: 31.12 (a) "Alternative minimum taxable income" means the sum of 31.13 the following for the taxable year: 31.14 (1) the taxpayer's federal alternative minimum taxable 31.15 income as defined in section 55(b)(2) of the Internal Revenue 31.16 Code; 31.17 (2) the taxpayer's itemized deductions allowed in computing 31.18 federal alternative minimum taxable income, but excluding: 31.19 (i) the Minnesota charitable contribution deduction; 31.20 (ii) the medical expense deduction; 31.21 (iii) the casualty, theft, and disaster loss deduction; and 31.22 (iv) the impairment-related work expenses of a disabled 31.23 person;and31.24(v) holocaust victims' settlement payments to the extent31.25allowed under section 290.01, subdivision 19b;31.26 (3) for depletion allowances computed under section 613A(c) 31.27 of the Internal Revenue Code, with respect to each property (as 31.28 defined in section 614 of the Internal Revenue Code), to the 31.29 extent not included in federal alternative minimum taxable 31.30 income, the excess of the deduction for depletion allowable 31.31 under section 611 of the Internal Revenue Code for the taxable 31.32 year over the adjusted basis of the property at the end of the 31.33 taxable year (determined without regard to the depletion 31.34 deduction for the taxable year); 31.35 (4) to the extent not included in federal alternative 31.36 minimum taxable income, the amount of the tax preference for 32.1 intangible drilling cost under section 57(a)(2) of the Internal 32.2 Revenue Code determined without regard to subparagraph (E);and32.3 (5) to the extent not included in federal alternative 32.4 minimum taxable income, the amount of interest income as 32.5 provided by section 290.01, subdivision 19a, clause (1); and 32.6 (6) the amount of addition required by section 290.01, 32.7 subdivision 19a, clause (7); 32.8 less the sum of the amounts determined under the following: 32.9 (1) interest income as defined in section 290.01, 32.10 subdivision 19b, clause (1); 32.11 (2) an overpayment of state income tax as provided by 32.12 section 290.01, subdivision 19b, clause (2), to the extent 32.13 included in federal alternative minimum taxable income; 32.14 (3) the amount of investment interest paid or accrued 32.15 within the taxable year on indebtedness to the extent that the 32.16 amount does not exceed net investment income, as defined in 32.17 section 163(d)(4) of the Internal Revenue Code. Interest does 32.18 not include amounts deducted in computing federal adjusted gross 32.19 income; and 32.20 (4) amounts subtracted from federal taxable income as 32.21 provided by section 290.01, subdivision 19b, clause(4)(12). 32.22 In the case of an estate or trust, alternative minimum 32.23 taxable income must be computed as provided in section 59(c) of 32.24 the Internal Revenue Code. 32.25 (b) "Investment interest" means investment interest as 32.26 defined in section 163(d)(3) of the Internal Revenue Code. 32.27 (c) "Tentative minimum tax" equals 6.4 percent of 32.28 alternative minimum taxable income after subtracting the 32.29 exemption amount determined under subdivision 3. 32.30 (d) "Regular tax" means the tax that would be imposed under 32.31 this chapter (without regard to this section and section 32.32 290.032), reduced by the sum of the nonrefundable credits 32.33 allowed under this chapter. 32.34 (e) "Net minimum tax" means the minimum tax imposed by this 32.35 section. 32.36 (f) "Minnesota charitable contribution deduction" means a 33.1 charitable contribution deduction under section 170 of the 33.2 Internal Revenue Code to or for the use of an entity described 33.3 in Minnesota Statutes 2000, section 290.21, subdivision 3, 33.4 clauses (a) to (e). When the federal deduction for charitable 33.5 contributions is limited under section 170(b) of the Internal 33.6 Revenue Code, the allowable contributions in the year of 33.7 contribution are deemed to be first contributions to entities 33.8 described in Minnesota Statutes 2000, section 290.21, 33.9 subdivision 3, clauses (a) to (e). 33.10 [EFFECTIVE DATE.] This section is effective the day 33.11 following final enactment, except that clause (6) is effective 33.12 for tax years ending after September 10, 2001. 33.13 Sec. 11. Minnesota Statutes 2001 Supplement, section 33.14 290.0921, subdivision 3, is amended to read: 33.15 Subd. 3. [ALTERNATIVE MINIMUM TAXABLE INCOME.] 33.16 "Alternative minimum taxable income" is Minnesota net income as 33.17 defined in section 290.01, subdivision 19, and includes the 33.18 adjustments and tax preference items in sections 56, 57, 58, and 33.19 59(d), (e), (f), and (h) of the Internal Revenue Code. If a 33.20 corporation files a separate company Minnesota tax return, the 33.21 minimum tax must be computed on a separate company basis. If a 33.22 corporation is part of a tax group filing a unitary return, the 33.23 minimum tax must be computed on a unitary basis. The following 33.24 adjustments must be made. 33.25 (1) For purposes of the depreciation adjustments under 33.26 section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 33.27 the basis for depreciable property placed in service in a 33.28 taxable year beginning before January 1, 1990, is the adjusted 33.29 basis for federal income tax purposes, including any 33.30 modification made in a taxable year under section 290.01, 33.31 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 33.32 subdivision 7, paragraph (c). 33.33 For taxable years beginning after December 31, 2000, the 33.34 amount of any remaining modification made under section 290.01, 33.35 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 33.36 subdivision 7, paragraph (c), not previously deducted is a 34.1 depreciation allowance in the first taxable year after December 34.2 31, 2000. 34.3 (2) The portion of the depreciation deduction allowed for 34.4 federal income tax purposes under section 168(k) of the Internal 34.5 Revenue Code that is required as an addition under section 34.6 290.01, subdivision 19c, clause (16), is disallowed in 34.7 determining alternative minimum taxable income. 34.8 (3) The subtraction for depreciation allowed under section 34.9 290.01, subdivision 19d, clause (19), is allowed as a 34.10 depreciation deduction in determining alternative minimum 34.11 taxable income. 34.12 (4) The alternative tax net operating loss deduction under 34.13 sections 56(a)(4) and 56(d) of the Internal Revenue Code does 34.14 not apply. 34.15(3)(5) The special rule for certain dividends under 34.16 section 56(g)(4)(C)(ii) of the Internal Revenue Code does not 34.17 apply. 34.18(4)(6) The special rule for dividends from section 936 34.19 companies under section 56(g)(4)(C)(iii) does not apply. 34.20(5)(7) The tax preference for depletion under section 34.21 57(a)(1) of the Internal Revenue Code does not apply. 34.22(6)(8) The tax preference for intangible drilling costs 34.23 under section 57(a)(2) of the Internal Revenue Code must be 34.24 calculated without regard to subparagraph (E) and the 34.25 subtraction under section 290.01, subdivision 19d, clause (4). 34.26(7)(9) The tax preference for tax exempt interest under 34.27 section 57(a)(5) of the Internal Revenue Code does not apply. 34.28(8)(10) The tax preference for charitable contributions of 34.29 appreciated property under section 57(a)(6) of the Internal 34.30 Revenue Code does not apply. 34.31(9)(11) For purposes of calculating the tax preference for 34.32 accelerated depreciation or amortization on certain property 34.33 placed in service before January 1, 1987, under section 57(a)(7) 34.34 of the Internal Revenue Code, the deduction allowable for the 34.35 taxable year is the deduction allowed under section 290.01, 34.36 subdivision 19e. 35.1 For taxable years beginning after December 31, 2000, the 35.2 amount of any remaining modification made under section 290.01, 35.3 subdivision 19e, not previously deducted is a depreciation or 35.4 amortization allowance in the first taxable year after December 35.5 31,20002004. 35.6(10)(12) For purposes of calculating the adjustment for 35.7 adjusted current earnings in section 56(g) of the Internal 35.8 Revenue Code, the term "alternative minimum taxable income" as 35.9 it is used in section 56(g) of the Internal Revenue Code, means 35.10 alternative minimum taxable income as defined in this 35.11 subdivision, determined without regard to the adjustment for 35.12 adjusted current earnings in section 56(g) of the Internal 35.13 Revenue Code. 35.14(11)(13) For purposes of determining the amount of 35.15 adjusted current earnings under section 56(g)(3) of the Internal 35.16 Revenue Code, no adjustment shall be made under section 56(g)(4) 35.17 of the Internal Revenue Code with respect to (i) the amount of 35.18 foreign dividend gross-up subtracted as provided in section 35.19 290.01, subdivision 19d, clause (1), (ii) the amount of refunds 35.20 of income, excise, or franchise taxes subtracted as provided in 35.21 section 290.01, subdivision 19d, clause (10), or (iii) the 35.22 amount of royalties, fees or other like income subtracted as 35.23 provided in section 290.01, subdivision 19d, clause (11). 35.24 Items of tax preference must not be reduced below zero as a 35.25 result of the modifications in this subdivision. 35.26 [EFFECTIVE DATE.] This section is effective for tax years 35.27 ending after September 10, 2001. 35.28 Sec. 12. Minnesota Statutes 2001 Supplement, section 35.29 290A.03, subdivision 15, is amended to read: 35.30 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 35.31 means the Internal Revenue Code of 1986, as amended throughJune35.3215, 2001March 15, 2002. 35.33 [EFFECTIVE DATE.] This section is effective at the same 35.34 time and manner as the changes to federal adjusted gross income 35.35 made by the Victims of Terrorism Tax Relief Act of 2001, Public 35.36 Law Number 107-134, and by the Job Creation and Worker 36.1 Assistance Act of 2002, Public Law Number 107-147, become 36.2 effective. 36.3 ARTICLE 3 36.4 SALES AND USE TAXES 36.5 Section 1. Minnesota Statutes 2000, section 270.60, 36.6 subdivision 4, is amended to read: 36.7 Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner 36.8 shall pay to a county in which an Indian gaming casino is 36.9 located ten percent of the state share of all taxes generated 36.10 from activities on reservations and collected under a tax 36.11 agreement under this section with the tribal government for the 36.12 reservation located in the county. If the tribe has casinos 36.13 located in more than one county, the payment must be divided 36.14 equally among the counties in which the casinos are located. 36.15 (b)A county is a qualified county under this subdivision36.16if one of the following conditions is met:36.17(1) the county's per capita income is less than 80 percent36.18of the state per capita personal income, based on the most36.19recent estimates made by the United States Bureau of Economic36.20Analysis; or36.21(2) 30 percent or more of the total market value of real36.22property in the county is exempt from ad valorem taxation.36.23(c)The commissioner shall make the payments required under 36.24 this subdivision by February 28 of the year following the year 36.25 the taxes are collected. 36.26(d)(c) An amount sufficient to make the payments 36.27 authorized by this subdivision, not to exceed $1,100,000 in any36.28fiscal year,is annually appropriated from the general fund to 36.29 the commissioner.If the authorized payments exceed the amount36.30of the appropriation, the commissioner shall first36.31proportionately reduce the payments to counties other than36.32qualified counties so that the total amount equals the36.33appropriation. If the authorized payments to qualified counties36.34also exceed the amount of the appropriation, the commissioner36.35shall then proportionately reduce the rate so that the total36.36amount to be paid to qualified counties equals the appropriation.37.1 [EFFECTIVE DATE.] This section is effective for payments 37.2 made after December 31, 2002. 37.3 Sec. 2. Minnesota Statutes 2001 Supplement, section 37.4 289A.20, subdivision 4, is amended to read: 37.5 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 37.6 chapter 297A are due and payable to the commissioner monthly on 37.7 or before the 20th day of the month following the month in which 37.8 the taxable event occurred, or following another reporting 37.9 period as the commissioner prescribes or as allowed under 37.10 section 289A.18, subdivision 4, paragraph (f), except that use 37.11 taxes due on an annual use tax return as provided under section 37.12 289A.11, subdivision 1, are payable by April 15 following the 37.13 close of the calendar year. 37.14 (b) For a fiscal year ending before July 1, 2002, a vendor 37.15 having a liability of $120,000 or more during a fiscal year 37.16 ending June 30 must remit the June liability for the next year 37.17 in the following manner: 37.18 (1) Two business days before June 30 of the year, the 37.19 vendor must remit6275 percent of the estimated June liability 37.20 to the commissioner. 37.21 (2) On or before August 20 of the year, the vendor must pay 37.22 any additional amount of tax not remitted in June. 37.23 (c) A vendor having a liability of $120,000 or more during 37.24 a fiscal year ending June 30 must remit all liabilities on 37.25 returns due for periods beginning in the subsequent calendar 37.26 year by electronic means on or before the 20th day of the month 37.27 following the month in which the taxable event occurred, or on 37.28 or before the 20th day of the month following the month in which 37.29 the sale is reported under section 289A.18, subdivision 4, 37.30 except for6275 percent of the estimated June liability, which 37.31 is due two business days before June 30. The remaining amount 37.32 of the June liability is due on August 20. 37.33 [EFFECTIVE DATE.] This section is effective for June 2002 37.34 and June 2003 tax liabilities. 37.35 Sec. 3. Minnesota Statutes 2001 Supplement, section 37.36 297A.61, subdivision 3, is amended to read: 38.1 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 38.2 include, but are not limited to, each of the transactions listed 38.3 in this subdivision. 38.4 (b) Sale and purchase include: 38.5 (1) any transfer of title or possession, or both, of 38.6 tangible personal property, whether absolutely or conditionally, 38.7 for a consideration in money or by exchange or barter; and 38.8 (2) the leasing of or the granting of a license to use or 38.9 consume, for a consideration in money or by exchange or barter, 38.10 tangible personal property, other than a manufactured home used 38.11 for residential purposes for a continuous period of 30 days or 38.12 more. 38.13 (c) Sale and purchase include the production, fabrication, 38.14 printing, or processing of tangible personal property for a 38.15 consideration for consumers who furnish either directly or 38.16 indirectly the materials used in the production, fabrication, 38.17 printing, or processing. 38.18 (d) Sale and purchase include the preparing for a 38.19 consideration of food. Notwithstanding section 297A.67, 38.20 subdivision 2, taxable food includes, but is not limited to, the 38.21 following: 38.22 (1) prepared food sold by the retailer; 38.23 (2) soft drinks; 38.24 (3) candy; and 38.25 (4) all food sold through vending machines. 38.26 (e) A sale and a purchase includes the furnishing for a 38.27 consideration of electricity, gas, water, or steam for use or 38.28 consumption within this state. 38.29 (f) A sale and a purchase includes the transfer for a 38.30 consideration of computer software. 38.31 (g) A sale and a purchase includes the furnishing for a 38.32 consideration of the following services: 38.33 (1) the privilege of admission to places of amusement, 38.34 recreational areas, or athletic events, and the making available 38.35 of amusement devices, tanning facilities, reducing salons, steam 38.36 baths, turkish baths, health clubs, and spas or athletic 39.1 facilities; 39.2 (2) lodging and related services by a hotel, rooming house, 39.3 resort, campground, motel, or trailer camp and the granting of 39.4 any similar license to use real property other than the renting 39.5 or leasing of it for a continuous period of 30 days or more; 39.6 (3) parking services, whether on a contractual, hourly, or 39.7 other periodic basis, except for parking at a meter; 39.8 (4) the granting of membership in a club, association, or 39.9 other organization if: 39.10 (i) the club, association, or other organization makes 39.11 available for the use of its members sports and athletic 39.12 facilities, without regard to whether a separate charge is 39.13 assessed for use of the facilities; and 39.14 (ii) use of the sports and athletic facility is not made 39.15 available to the general public on the same basis as it is made 39.16 available to members. 39.17 Granting of membership means both one-time initiation fees and 39.18 periodic membership dues. Sports and athletic facilities 39.19 include golf courses; tennis, racquetball, handball, and squash 39.20 courts; basketball and volleyball facilities; running tracks; 39.21 exercise equipment; swimming pools; and other similar athletic 39.22 or sports facilities;and39.23 (5) delivery of aggregate materials and concrete block; and 39.24 (6) services as provided in this clause: 39.25 (i) laundry and dry cleaning services including cleaning, 39.26 pressing, repairing, altering, and storing clothes, linen 39.27 services and supply, cleaning and blocking hats, and carpet, 39.28 drapery, upholstery, and industrial cleaning. Laundry and dry 39.29 cleaning services do not include services provided by coin 39.30 operated facilities operated by the customer; 39.31 (ii) motor vehicle washing, waxing, and cleaning services, 39.32 including services provided by coin operated facilities operated 39.33 by the customer, and rustproofing, undercoating, and towing of 39.34 motor vehicles; 39.35 (iii) building and residential cleaning, maintenance, and 39.36 disinfecting and exterminating services; 40.1 (iv) detective, security, burglar, fire alarm, and armored 40.2 car services; but not including services performed within the 40.3 jurisdiction they serve by off-duty licensed peace officers as 40.4 defined in section 626.84, subdivision 1, or services provided 40.5 by a nonprofit organization for monitoring and electronic 40.6 surveillance of persons placed on in-home detention pursuant to 40.7 court order or under the direction of the Minnesota department 40.8 of corrections; 40.9 (v) pet grooming services; 40.10 (vi) lawn care, fertilizing, mowing, spraying and sprigging 40.11 services; garden planting and maintenance; tree, bush, and shrub 40.12 pruning, bracing, spraying, and surgery; indoor plant care; 40.13 tree, bush, shrub, and stump removal; and tree trimming for 40.14 public utility lines. Services performed under a construction 40.15 contract for the installation of shrubbery, plants, sod, trees, 40.16 bushes, and similar items are not taxable; 40.17 (vii) massages, except when provided by a licensed health 40.18 care facility or professional or upon written referral from a 40.19 licensed health care facility or professional for treatment of 40.20 illness, injury, or disease; and 40.21 (viii) the furnishing of lodging, board, and care services 40.22 for animals in kennels and other similar arrangements, but 40.23 excluding veterinary and horse boarding services. 40.24 In applying the provisions of this chapter, the terms 40.25 "tangible personal property" and "sales at retail" include 40.26 taxable services and the provision of taxable services, unless 40.27 specifically provided otherwise. Services performed by an 40.28 employee for an employer are not taxable. Services performed by 40.29 a partnership or association for another partnership or 40.30 association are not taxable if one of the entities owns or 40.31 controls more than 80 percent of the voting power of the equity 40.32 interest in the other entity. Services performed between 40.33 members of an affiliated group of corporations are not taxable. 40.34 For purposes of this section, "affiliated group of corporations" 40.35 includes those entities that would be classified as members of 40.36 an affiliated group under United States Code, title 26, section 41.1 1504, and that are eligible to file a consolidated tax return 41.2 for federal income tax purposes. 41.3 (h) A sale and a purchase includes the furnishing for a 41.4 consideration of tangible personal property or taxable services 41.5 by the United States or any of its agencies or 41.6 instrumentalities, or the state of Minnesota, its agencies, 41.7 instrumentalities, or political subdivisions. 41.8 (i) A sale and a purchase includes the furnishing for a 41.9 consideration of telecommunications services, including cable 41.10 television services and direct satellite services. 41.11 Telecommunications services are taxed to the extent allowed 41.12 under federal law if those services: 41.13 (1) either (i) originate and terminate in this state; or 41.14 (ii) originate in this state and terminate outside the state and 41.15 the service is charged to a telephone number customer located in 41.16 this state or to the account of any transmission instrument in 41.17 this state; or (iii) originate outside this state and terminate 41.18 in this state and the service is charged to a telephone number 41.19 customer located in this state or to the account of any 41.20 transmission instrument in this state; or 41.21 (2) are rendered by providing a private communications 41.22 service for which the customer has one or more locations within 41.23 Minnesota connected to the service and the service is charged to 41.24 a telephone number customer located in this state or to the 41.25 account of any transmission instrument in this state. 41.26 All charges for mobile telecommunications services, as 41.27 defined in United States Code, title 4, section 124, are deemed 41.28 to be provided by the customer's home service provider and 41.29 sourced to the customer's place of primary use and are subject 41.30 to tax based upon the customer's place of primary use in 41.31 accordance with the Mobile Telecommunications Sourcing Act, 41.32 United States Code, title 4, sections 116 to 126. All other 41.33 definitions and provisions of the Mobile Telecommunications 41.34 Sourcing Act as provided in United States Code, title 4, are 41.35 hereby adopted. 41.36 (j) A sale and a purchase includes the furnishing for a 42.1 consideration of installation if the installation charges would 42.2 be subject to the sales tax if the installation were provided by 42.3 the seller of the item being installed. 42.4 [EFFECTIVE DATE.] This section is effective for sales made 42.5 after June 30, 2002. 42.6 Sec. 4. Minnesota Statutes 2001 Supplement, section 42.7 297A.61, subdivision 31, is amended to read: 42.8 Subd. 31. [PREPARED FOOD.] "Prepared food" means(i)food 42.9 that meets either of the following conditions: 42.10 (1) the food is sold with eating utensils provided by the 42.11 seller, including plates, knives, forks, spoons, glasses, cups, 42.12 napkins, or straws; or 42.13 (2) the food is sold in a heated state or heated by the 42.14 seller; (ii)or two or more food ingredients are mixed or 42.15 combined by the seller for sale as a single item; or (iii) food42.16sold with eating utensils provided by the seller, including42.17plates, knives, forks, spoons, glasses, cups, napkins, or42.18straws. Prepared food does not include, except for: 42.19 (i) bakery items, including, but not limited to, bread, 42.20 rolls, buns, biscuits, bagels, croissants, pastries, donuts, 42.21 danish, cakes, tortes, pies, tarts, muffins, bars, cookies, 42.22 tortillas; 42.23 (ii) ready-to-eat meat and seafood in an unheated state 42.24 sold by weight; 42.25 (iii) eggs, fish, meat, poultry, and foods containing these 42.26 raw animal foods requiring cooking by the consumer as 42.27 recommended by the Food and Drug Administration in chapter 3, 42.28 part 401.11 of its food code so as to prevent food borne 42.29 illnesses; or 42.30 (iv) food that is only sliced, repackaged, or pasteurized 42.31 by the seller. 42.32 [EFFECTIVE DATE.] With the exception of clause (2), item 42.33 (ii), this section is effective for sales and purchases made 42.34 after June 30, 2002. Clause (2), item (ii), is effective for 42.35 sales and purchases made after June 30, 2002, and before January 42.36 1, 2006. 43.1 Sec. 5. Minnesota Statutes 2001 Supplement, section 43.2 297A.66, subdivision 1, is amended to read: 43.3 Subdivision 1. [DEFINITIONS.] (a) To the extent allowed by 43.4 the United States Constitution and the laws of the United 43.5 States, "retailer maintaining a place of business in this 43.6 state," or a similar term, means a retailer: 43.7 (1) having or maintaining within this state, directly or by 43.8 a subsidiary or an affiliate, an office, place of distribution, 43.9 sales or sample room or place, warehouse, or other place of 43.10 business; or 43.11 (2) having a representative, including, but not limited to, 43.12 an affiliate agent, salesperson, canvasser, or solicitor 43.13 operating in this state under the authority of the retailer or 43.14 its subsidiary, for any purpose, including the repairing, 43.15 selling, delivering, installing, or soliciting of orders for the 43.16 retailer's goods or services, or the leasing of tangible 43.17 personal property located in this state, whether the place of 43.18 business or agent, representative, affiliate, salesperson, 43.19 canvasser, or solicitor is located in the state permanently or 43.20 temporarily, or whether or not the retaileror, subsidiary, or 43.21 affiliate is authorized to do business in this state. 43.22 (b) "Destination of a sale" means the location to which the 43.23 retailer makes delivery of the property sold, or causes the 43.24 property to be delivered, to the purchaser of the property, or 43.25 to the agent or designee of the purchaser. The delivery may be 43.26 made by any means, including the United States Postal Service or 43.27 a for-hire carrier. 43.28 [EFFECTIVE DATE.] (a) This section is effective the day 43.29 following final enactment and is intended to confirm the 43.30 original intent of the legislature in enacting Minnesota 43.31 Statutes, section 297A.66, and its predecessor provisions. 43.32 (b) A retailer may elect that the provisions of this 43.33 section apply only to sales it made after August 31, 2002, by 43.34 notifying the commissioner and by applying for a permit under 43.35 Minnesota Statutes, section 297A.84, by August 15, 2002, to 43.36 collect the tax imposed under Minnesota Statutes, chapter 297A. 44.1 A retailer qualifies under this paragraph only if it: 44.2 (1) did not maintain an office, place of distribution, 44.3 sales or sample room or place, warehouse, or other place of 44.4 business in Minnesota except through an affiliate or did not 44.5 have a representative, agent, salesperson, canvasser, or 44.6 solicitor in Minnesota except through an affiliate; and 44.7 (2) has not registered to collect tax under Minnesota 44.8 Statutes, chapter 297A, as of the date of enactment of this 44.9 section. 44.10 Sec. 6. Minnesota Statutes 2000, section 297A.66, is 44.11 amended by adding a subdivision to read: 44.12 Subd. 4. [AFFILIATED ENTITIES.] (a) An entity is an 44.13 "affiliate" of the retailer for purposes of subdivision 1, 44.14 paragraph (a), if: 44.15 (1) the entity uses its facilities or employees in this 44.16 state to advertise, promote, or facilitate the establishment or 44.17 maintenance of a market for sales of items by the retailer to 44.18 purchasers in this state or for the provision of services to the 44.19 retailer's purchasers in this state, such as accepting returns 44.20 of purchases for the retailer, providing assistance in resolving 44.21 customer complaints of the retailer, or providing other 44.22 services; and 44.23 (2) the retailer and the entity are related parties. 44.24 (b) Two entities are related parties under this section if 44.25 one of the entities meets at least one of the following tests 44.26 with respect to the other entity: 44.27 (1) one or both entities is a corporation, and one entity 44.28 and any party related to that entity in a manner that would 44.29 require an attribution of stock from the corporation to the 44.30 party or from the party to the corporation under the attribution 44.31 rules of section 318 of the Internal Revenue Code owns directly, 44.32 indirectly, beneficially, or constructively at least 50 percent 44.33 of the value of the corporation's outstanding stock; 44.34 (2) one or both entities is a partnership, estate, or trust 44.35 and any partner or beneficiary, and the partnership, estate, or 44.36 trust and its partners or beneficiaries own directly, 45.1 indirectly, beneficially, or constructively, in the aggregate, 45.2 at least 50 percent of the profits, capital, stock, or value of 45.3 the other entity or both entities; or 45.4 (3) an individual stockholder and the members of the 45.5 stockholder's family (as defined in section 318 of the Internal 45.6 Revenue Code) owns directly, indirectly, beneficially, or 45.7 constructively, in the aggregate, at least 50 percent of the 45.8 value of both entities' outstanding stock. 45.9 (c) An entity is an affiliate under the provisions of this 45.10 subdivision if the requirements of paragraphs (a) and (b) are 45.11 met during any part of the 12-month period ending on the first 45.12 day of the month before the month in which the sale was made. 45.13 [EFFECTIVE DATE.] (a) This section is effective the day 45.14 following final enactment and is intended to confirm the 45.15 original intent of the legislature in enacting Minnesota 45.16 Statutes, section 297A.66, and its predecessor provisions. 45.17 (b) A retailer may elect that the provisions of this 45.18 section apply only to sales it made after August 31, 2002, by 45.19 notifying the commissioner and by applying for a permit under 45.20 Minnesota Statutes, section 297A.84, by August 15, 2002, to 45.21 collect the tax imposed under Minnesota Statutes, chapter 297A. 45.22 A retailer qualifies under this paragraph only if it: 45.23 (1) did not maintain an office, place of distribution, 45.24 sales or sample room or place, warehouse, or other place of 45.25 business in Minnesota except through an affiliate or did not 45.26 have a representative, agent, salesperson, canvasser, or 45.27 solicitor in Minnesota except through an affiliate; and 45.28 (2) has not registered to collect tax under Minnesota 45.29 Statutes, chapter 297A, as of the date of enactment of this 45.30 section. 45.31 Sec. 7. Minnesota Statutes 2000, section 297A.67, 45.32 subdivision 5, is amended to read: 45.33 Subd. 5. [EXEMPT MEALS AT SCHOOLS.] Meals and lunches 45.34 served at public and private elementary, middle, or secondary 45.35 schools,universities, or collegesas defined in section 120A.05 45.36 are exempt. Meals and lunches served to students at a college, 46.1 university, or private career school under a board contract are 46.2 exempt. For purposes of this subdivision, "meals and lunches" 46.3 does not include sales from vending machines. 46.4 [EFFECTIVE DATE.] This section is effective for sales and 46.5 purchases made after June 30, 2002. However, for vending 46.6 machine contracts entered into by a school, as defined in 46.7 section 120A.05, prior to May 30, 2002, food sales from vending 46.8 machines continue to be exempt under this subdivision for one 46.9 year after the effective date of the contract. 46.10 Sec. 8. Minnesota Statutes 2000, section 297A.67, is 46.11 amended by adding a subdivision to read: 46.12 Subd. 13a. [INSTRUCTIONAL MATERIALS.] Instructional 46.13 materials, other than textbooks, that are prescribed for use in 46.14 conjunction with a course of study in a post-secondary school, 46.15 college, university, or private career school to students who 46.16 are regularly enrolled at such institutions are exempt. For 46.17 purposes of this subdivision, "instructional materials" means 46.18 materials required to be used directly in the completion of the 46.19 course of study, including, but not limited to, interactive CDs, 46.20 tapes, and computer software. 46.21 Instructional materials do not include general reference 46.22 works or other items incidental to the instructional process 46.23 such as pens, pencils, paper, folders, or computers. For 46.24 purposes of this subdivision, "school" and "private career 46.25 school" have the meanings given in subdivision 13. 46.26 [EFFECTIVE DATE.] This section is effective for sales after 46.27 June 30, 2003. 46.28 Sec. 9. Minnesota Statutes 2001 Supplement, section 46.29 297A.67, subdivision 25, is amended to read: 46.30 Subd. 25. [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 46.31 related services used in the maintenance of cemetery grounds are 46.32 exempt. For purposes of this subdivision, "lawn care and 46.33 related services" means the services listed in section 297A.61, 46.34 subdivision 3, paragraph (g), clause(5)(6), item (vi), and 46.35 "cemetery" means a cemetery for human burial. 46.36 Sec. 10. Minnesota Statutes 2001 Supplement, section 47.1 297A.67, subdivision 29, is amended to read: 47.2 Subd. 29. [ENERGY EFFICIENT PRODUCTS.] (a) A residential 47.3 lighting fixture or a compact fluorescent bulb is exempt if it 47.4 has an energy star label. 47.5 (b) The following products are exempt if they have an 47.6 energyguide label that indicates that the product meets or 47.7 exceeds the standards listed below: 47.8 (1) an electric heat pump hot water heater with an energy 47.9 factor of at least 1.9; 47.10 (2) a natural gas water heater with an energy factor of at 47.11 least 0.62;and47.12 (3) a propane gas or fuel oil water heater with an energy 47.13 factor of at least 0.62; 47.14 (4) a natural gas furnace with an annual fuel utilization 47.15 efficiency greater than 92 percent; and 47.16 (5) a propane gas or fuel oil furnace with an annual fuel 47.17 utilization efficiency greater than 92 percent. 47.18 (c) A photovoltaic device is exempt. For purposes of this 47.19 subdivision, "photovoltaic device" means a solid-state 47.20 electrical device, such as a solar module, that converts light 47.21 directly into direct current electricity of voltage-current 47.22 characteristics that are a function of the characteristics of 47.23 the light source and the materials in and design of the device. 47.24 A "solar module" is a photovoltaic device that produces a 47.25 specified power output under defined test conditions, usually 47.26 composed of groups of solar cells connected in series, in 47.27 parallel, or in series-parallel combinations. 47.28 (d) For purposes of this subdivision, "energy star label" 47.29 means the label granted to certain products that meet United 47.30 States Environmental Protection Agency and United States 47.31 Department of Energy criteria for energy efficiency. For 47.32 purposes of this subdivision, "energyguide label" means the 47.33 label that the United States Federal Trade Commissioner requires 47.34 manufacturers to apply to certain appliances under United States 47.35 Code, title 16, part 305. 47.36 [EFFECTIVE DATE.] This section is effective for sales and 48.1 purchases made on or after the day following final enactment and 48.2 before August 1, 2005. 48.3 Sec. 11. Minnesota Statutes 2001 Supplement, section 48.4 297A.68, subdivision 3, is amended to read: 48.5 Subd. 3. [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 48.6 SERVICES.] (a) Materials stored, used, or consumed in providing 48.7 a taxable service listed in section 297A.61, subdivision 3, 48.8 paragraph (g), clause(5)(6), intended to be sold ultimately at 48.9 retail are exempt. 48.10 (b) This exemption includes, but is not limited to: 48.11 (1) chemicals, lubricants, packaging materials, seeds, 48.12 trees, fertilizers, and herbicides, if these items are used or 48.13 consumed in providing the taxable service; 48.14 (2) chemicals used to treat waste generated as a result of 48.15 providing the taxable service; 48.16 (3) accessory tools, equipment, and other items that are 48.17 separate detachable units used in providing the service and that 48.18 have an ordinary useful life of less than 12 months; and 48.19 (4) fuel, electricity, gas, and steam used or consumed in 48.20 the production process, except that electricity, gas, or steam 48.21 used for space heating, cooling, or lighting is exempt if (i) it 48.22 is in excess of average climate control or lighting, and (ii) it 48.23 is necessary to produce that particular service. 48.24 (c) This exemption does not include machinery, equipment, 48.25 implements, tools, accessories, appliances, contrivances, 48.26 furniture, and fixtures used in providing the taxable service. 48.27 Sec. 12. Minnesota Statutes 2001 Supplement, section 48.28 297A.70, subdivision 10, is amended to read: 48.29 Subd. 10. [NONPROFIT TICKETS OR ADMISSIONS.] (a) Tickets 48.30 or admissions to an event are exempt if all the gross receipts 48.31 are recorded as such, in accordance with generally accepted 48.32 accounting principles, on the books of one or more organizations 48.33 that provide an opportunity for citizens of the state to 48.34 participate in the creation, performance, or appreciation of the 48.35 arts, and provided that each organization iseither: 48.36 (1) an organization described in section 501(c)(3) of the 49.1 Internal Revenue Code in which voluntary contributions make up 49.2 at least the following percent of the organization's annual 49.3 revenue in its most recently completed 12-month fiscal year, or 49.4 in the current year if the organization has not completed a 49.5 12-month fiscal year: 49.6 (i) for sales made after July 31, 2001, and before July 1, 49.7 2002, for the organization's fiscal year completed in calendar 49.8 year 2000, three percent; 49.9 (ii) for sales made on or after July 1, 2002, and on or 49.10 before June 30, 2003, for the organization's fiscal year 49.11 completed in calendar year 2001, three percent; 49.12 (iii) for sales made on or after July 1, 2003, and on or 49.13 before June 30, 2004, for the organization's fiscal year 49.14 completed in calendar year 2002, four percent; and 49.15 (iv) for sales made in each 12-month period, beginning on 49.16 July 1, 2004, and each subsequent year, for the organization's 49.17 fiscal year completed in the preceding calendar year, five 49.18 percent;or49.19 (2) a municipal board that promotes cultural and arts 49.20 activities; or 49.21 (3) the University of Minnesota, provided that the event is 49.22 held at a university-owned facility. 49.23 The exemption only applies if the entire proceeds, after 49.24 reasonable expenses, are used solely to provide opportunities 49.25 for citizens of the state to participate in the creation, 49.26 performance, or appreciation of the arts. 49.27 (b) Tickets or admissions to the premises of the Minnesota 49.28 zoological garden are exempt, provided that the exemption under 49.29 this paragraph does not apply to tickets or admissions to 49.30 performances or events held on the premises unless the 49.31 performance or event is sponsored and conducted exclusively by 49.32 the Minnesota zoological board or employees of the Minnesota 49.33 zoological garden. 49.34 [EFFECTIVE DATE.] This section is effective for tickets and 49.35 admissions to events held after July 31, 2001, but does not 49.36 apply to events for which sales of tickets or admissions were 50.1 made prior to August 1, 2001. 50.2 Sec. 13. Minnesota Statutes 2001 Supplement, section 50.3 297A.71, subdivision 23, is amended to read: 50.4 Subd. 23. [CONSTRUCTION MATERIALS FOR QUALIFIED LOW-INCOME 50.5 HOUSING PROJECTS.] (a) Purchases of materials and supplies used 50.6 or consumed in and equipment incorporated into the construction, 50.7 improvement, or expansion of qualified low-income housing 50.8 projects are exempt from the tax imposed under this chapter if 50.9 the owner of the qualified low-income housing project is: 50.10 (1) the public housing agency or housing and redevelopment 50.11 authority of a political subdivision; 50.12 (2) an entity exercising the powers of a housing and 50.13 redevelopment authority within a political subdivision; 50.14 (3) a limited partnership in which the sole general partner 50.15 is an authority under clause (1) or an entity under clause (2); 50.16or50.17 (4) a nonprofit corporation subject to the provisions of 50.18 chapter 317A, and qualifying under section 501(c)(3) or 50.19 501(c)(4) of the Internal Revenue Code of 1986, as amended; or 50.20 (5) an owner entity, as defined in Code of Federal 50.21 Regulations, title 24, part 941.604, for a qualified low-income 50.22 housing project described in paragraph (b), clause (5). 50.23 This exemption applies regardless of whether the purchases 50.24 are made by the owner of the facility or a contractor. 50.25 (b) For purposes of this exemption, "qualified low-income 50.26 housing project" means: 50.27 (1) a housing or mixed use project in which at least 20 50.28 percent of the residential units are qualifying low-income 50.29 rental housing units as defined in section 273.126; 50.30 (2) a federally assisted low-income housing project 50.31 financed by a mortgage insured or held by the United States 50.32 Department of Housing and Urban Development under United States 50.33 Code, title 12, section 1701s, 1715l(d)(3), 1715l(d)(4), or 50.34 1715z-1; United States Code, title 42, section 1437f; the Native 50.35 American Housing Assistance and Self-Determination Act, United 50.36 States Code, title 25, section 4101 et seq.; or any similar 51.1 successor federal low-income housing program; 51.2 (3) a qualified low-income housing project as defined in 51.3 United States Code, title 26, section 42(g), meeting all of the 51.4 requirements for a low-income housing credit under section 42 of 51.5 the Internal Revenue Code regardless of whether the project 51.6 actually applies for or receives a low-income housing credit;or51.7 (4) a project that will be operated in compliance with 51.8 Internal Revenue Service revenue procedure 96-32; or 51.9 (5) a housing or mixed use project in which all or a 51.10 portion of the residential units are subject to the requirements 51.11 of section 5 of the United States Housing Act of 1937. 51.12 (c) For a project, a portion of which is not used for 51.13 low-income housing units, the amount of purchases that are 51.14 exempt under this subdivision must be determined by multiplying 51.15 the total purchases, as specified in paragraph (a), by the ratio 51.16 of: 51.17 (1) the total gross square footage of units subject to the 51.18 income limits under section 273.126, the financing for the 51.19 project, the federal low-income housing tax credit, revenue 51.20 procedure 96-32, or section 5 of the United States Housing Act 51.21 of 1937, as applicable to the project; and 51.22 (2) the total gross square footage of all units in the 51.23 project. 51.24 (d) The tax must be imposed and collected as if the rate 51.25 under section 297A.62, subdivision 1, applied, and then refunded 51.26 in the manner provided in section 297A.75. 51.27 [EFFECTIVE DATE.] Paragraph (a), clause (5), and paragraph 51.28 (b), clause (5), are effective retroactive for sales and 51.29 purchases made after July 31, 2001. For sales and purchases 51.30 made after July 31, 2001, and before July 1, 2002, an owner 51.31 entity under this section must apply to the commissioner of 51.32 revenue for a refund of the tax paid on the exempt amount as 51.33 determined under this section. The rest of the section is 51.34 effective for sales made after June 30, 2002. 51.35 Sec. 14. Minnesota Statutes 2000, section 297A.71, is 51.36 amended by adding a subdivision to read: 52.1 Subd. 28. [CONSTRUCTION MATERIALS AND EQUIPMENT; 52.2 REPLACEMENT AGRICULTURAL PROCESSING FACILITY.] Materials and 52.3 supplies used or consumed in, and machinery and equipment 52.4 incorporated into, the construction of a meat-packing or 52.5 meat-processing facility are exempt if: 52.6 (1) the cost of the project exceeds $75,000,000; and 52.7 (2) the facility replaces a facility that was destroyed by 52.8 fire. 52.9 [EFFECTIVE DATE.] This section is effective for sales and 52.10 purchases made after March 31, 2002, and before January 1, 2005. 52.11 Sec. 15. Minnesota Statutes 2000, section 297A.71, is 52.12 amended by adding a subdivision to read: 52.13 Subd. 29. [HYDROELECTRIC GENERATING FACILITY.] Materials 52.14 and supplies used or consumed in the construction of a 52.15 hydroelectric generating facility that meets the requirements of 52.16 this subdivision are exempt. To qualify for the exemption under 52.17 this subdivision, a hydroelectric generating facility must: 52.18 (1) utilize two turbine generators at a dam site existing 52.19 on March 31, 1994; 52.20 (2) be located on publicly owned land and within 2,500 feet 52.21 of a 13.8 kilovolt distribution circuit; and 52.22 (3) be eligible to receive a renewable energy production 52.23 incentive payment under section 216C.41. 52.24 [EFFECTIVE DATE.] This section is effective for sales made 52.25 after August 31, 2002, and on or before December 31, 2003. 52.26 Sec. 16. Minnesota Statutes 2000, section 297A.71, is 52.27 amended by adding a subdivision to read: 52.28 Subd. 30. [NONPROFIT ARTS ORGANIZATION.] Materials, 52.29 equipment, and supplies incorporated into the construction or 52.30 renovation of a state bond financed facility funded in 2002 52.31 which is owned or operated by a nonprofit arts organization are 52.32 exempt. 52.33 [EFFECTIVE DATE.] This section is effective for sales and 52.34 purchases made the day after final enactment and before July 1, 52.35 2007. 52.36 Sec. 17. Minnesota Statutes 2001 Supplement, section 53.1 297A.75, is amended to read: 53.2 297A.75 [REFUND; APPROPRIATION.] 53.3 Subdivision 1. [TAX COLLECTED.] The tax on the gross 53.4 receipts from the sale of the following exempt items must be 53.5 imposed and collected as if the sale were taxable and the rate 53.6 under section 297A.62, subdivision 1, applied. The exempt items 53.7 include: 53.8 (1) capital equipment exempt under section 297A.68, 53.9 subdivision 5; 53.10 (2) building materials for an agricultural processing 53.11 facility exempt under section 297A.71, subdivision 13; 53.12 (3) building materials for mineral production facilities 53.13 exempt under section 297A.71, subdivision 14; 53.14 (4) building materials for correctional facilities under 53.15 section 297A.71, subdivision 3; 53.16 (5) building materials used in a residence for disabled 53.17 veterans exempt under section 297A.71, subdivision 11; 53.18 (6) chair lifts, ramps, elevators, and associated building 53.19 materials exempt under section 297A.71, subdivision 12; 53.20 (7) building materials for the Long Lake Conservation 53.21 Center exempt under section 297A.71, subdivision 17;and53.22 (8) materials, supplies, fixtures, furnishings, and 53.23 equipment for a county law enforcement and family service center 53.24 under section 297A.71, subdivision 26; and 53.25 (9) materials and supplies for qualified low-income housing 53.26 under section 297A.71, subdivision 23. 53.27 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 53.28 forms prescribed by the commissioner, a refund equal to the tax 53.29 paid on the gross receipts of the exempt items must be paid to 53.30 the applicant. Only the following persons may apply for the 53.31 refund: 53.32 (1) for subdivision 1, clauses (1) to (3), the applicant 53.33 must be the purchaser; 53.34 (2) for subdivision 1, clauses (4), (7), and (8), the 53.35 applicant must be the governmental subdivision; 53.36 (3) for subdivision 1, clause (5), the applicant must be 54.1 the recipient of the benefits provided in United States Code, 54.2 title 38, chapter 21;and54.3 (4) for subdivision 1, clause (6), the applicant must be 54.4 the owner of the homestead property; and 54.5 (5) for subdivision 1, clause (9), the owner of the 54.6 qualified low-income housing project. 54.7 Subd. 3. [APPLICATION.] (a) The application must include 54.8 sufficient information to permit the commissioner to verify the 54.9 tax paid. If the tax was paid by a contractor, subcontractor, 54.10 or builder, under subdivision 1, clause (4), (5), (6), 54.11 (7),or(8), or (9), the contractor, subcontractor, or builder 54.12 must furnish to the refund applicant a statement including the 54.13 cost of the exempt items and the taxes paid on the items unless 54.14 otherwise specifically provided by this subdivision. The 54.15 provisions of sections 289A.40 and 289A.50 apply to refunds 54.16 under this section. 54.17 (b) An applicant may not file more than two applications 54.18 per calendar year for refunds for taxes paid on capital 54.19 equipment exempt under section 297A.68, subdivision 5. 54.20 Subd. 4. [INTEREST.] Interest must be paid on the refund 54.21 at the rate in section 270.76 from the date the refund claim is 54.22 filed for taxes paid under subdivision 1, clauses (1) to (3), 54.23 and (5), and from 60 days after the date the refund claim is 54.24 filed with the commissioner for claims filed under subdivision 54.25 1, clauses (4), (6), (7),and(8), and (9). 54.26 Subd. 5. [APPROPRIATION.] The amount required to make the 54.27 refunds is annually appropriated to the commissioner. 54.28 [EFFECTIVE DATE.] This section is effective for sales made 54.29 after June 30, 2002. 54.30 Sec. 18. Minnesota Statutes 2000, section 297A.96, is 54.31 amended to read: 54.32 297A.96 [LOCAL ADMISSIONS AND AMUSEMENT TAXES; EXEMPTION 54.33 FOR ARTS ORGANIZATIONS.] 54.34If an event is sponsored by a nonprofit arts organization,54.35thenAmounts charged for admission tothean eventor to the54.36organization's premisesdescribed in section 297A.70, 55.1 subdivision 10, paragraph (a), are not subject to a tax imposed 55.2 by a local unit of government or imposed on sales taking place 55.3 in a single named local unit of government on sales of 55.4 admissions or amusements, under a law other than a general sales 55.5 tax law. 55.6 [EFFECTIVE DATE.] This section is effective for tickets and 55.7 admissions to events held after July 31, 2001, but does not 55.8 apply to events for which sales of tickets or admissions were 55.9 made prior to August 1, 2001. 55.10 Sec. 19. Minnesota Statutes 2001 Supplement, section 55.11 297A.995, subdivision 4, is amended to read: 55.12 Subd. 4. [AUTHORITY TO ENTER AGREEMENT.] The commissioner 55.13 of revenue is authorized and directed to enter into the 55.14 agreement with one or more states to simplify and modernize 55.15 sales and use tax administration in order to substantially 55.16 reduce the burden of tax compliance for all sellers and for all 55.17 types of commerce. In furtherance of the agreement, the 55.18 commissioner is authorized to act jointly with other states that 55.19 are members of the agreement to establish standards for 55.20 certification of a certified service provider and certified 55.21 automated system and establish performance standards for 55.22 multistate sellers. 55.23 The commissioner of revenue is further directed to 55.24 negotiate the agreement with the express intention of ensuring 55.25 uniform sales and use taxation as applied to like-kind 55.26 transactions. 55.27 The commissioner is further authorized to take other 55.28 actions reasonably required to implement the provisions set 55.29 forth in this article. Other actions authorized by this section 55.30 include, but are not limited to, the adoption of rules and 55.31 regulations and the joint procurement, with other member states, 55.32 of goods and services in furtherance of the cooperative 55.33 agreement. 55.34 Thecommissioner or the commissioner's designee is55.35 following officials are authorized to represent this state 55.36 before the other states that are signatories to the agreement: 56.1 (1) the commissioner or the commissioner's designee; 56.2 (2) the chair of the house committee with jurisdiction over 56.3 taxes or the house chair's designee; and 56.4 (3) the chair of the senate committee with jurisdiction 56.5 over taxes or the senate chair's designee. 56.6 [EFFECTIVE DATE.] This section is effective the day 56.7 following final enactment. 56.8 Sec. 20. Laws 1990, chapter 604, article 6, section 9, 56.9 subdivision 1, as amended by Laws 1991, chapter 291, article 8, 56.10 section 25, is amended to read: 56.11 Subdivision 1. [AUTHORIZATION.] Notwithstanding Minnesota 56.12 Statutes, section 469.190, 477A.016, or other law, in addition 56.13 to the tax authorized in Laws 1986, chapter 391, section 4, the 56.14 governing body of the city of Bloomington may impose a tax of up 56.15 toonetwo percent on the gross receipts from the furnishing for 56.16 consideration of lodging at a hotel, motel, rooming house, 56.17 tourist court, or resort, other than the renting or leasing of 56.18 it for a continuous period of 30 days or more, located in the 56.19 city. The city may agree with the commissioner of revenue that 56.20 a tax imposed under this section shall be collected by the 56.21 commissioner together with the tax imposed by Minnesota 56.22 Statutes, chapter 297A, and subject to the same interest, 56.23 penalties, and other rules and that its proceeds, less the cost 56.24 of collection, shall be remitted to the city. The proceeds of 56.25 the tax must be used by the Bloomington convention bureau only 56.26 to market and promote the city as a tourist or convention 56.27 center. If the duties of the convention bureau as they existed 56.28 on January 1, 1991, are assigned to another agency, the tax 56.29 shall cease. 56.30 [EFFECTIVE DATE; LOCAL APPROVAL.] This section takes effect 56.31 the day after the governing body of the city of Bloomington 56.32 complies with Minnesota Statutes, section 645.021, subdivision 3. 56.33 Sec. 21. Laws 1998, chapter 389, article 8, section 37, 56.34 subdivision 2, is amended to read: 56.35 Subd. 2. [APPOINTMENT OF MEMBERS.] The citizen review 56.36 panelmust consist of 17 members, each of whom represents one of57.1the district councilsconsists of three residents from each of 57.2 the seven city council wards, for a total of 21 members. The 57.3 mayor must appoint the members, and the appointments are subject 57.4 to confirmation by a majority vote of the city council. Members 57.5 serve for a term of four years. Elected officials and employees 57.6 of the city are ineligible to serve as members of the panel. 57.7 [EFFECTIVE DATE.] This section is effective upon approval 57.8 by the governing body of the city of St. Paul and compliance 57.9 with Minnesota Statutes, section 645.021. 57.10 Sec. 22. Laws 2001, First Special Session chapter 5, 57.11 article 12, section 11, the effective date, is amended to read: 57.12 [EFFECTIVE DATE.] This section is effective January 1, 57.13 2002, however, for contracts entered into before January 1, 57.14 2002, the sale price for aggregate materials and concrete block 57.15 does not include delivery charges until January 1, 2005. 57.16 Sec. 23. Laws 2001, First Special Session chapter 5, 57.17 article 12, section 82, the effective date, is amended to read: 57.18 [EFFECTIVE DATE.] This section is effectiveJanuary 1, 200357.19 for sales and purchases made after December 31, 2005. 57.20 Sec. 24. Laws 2001, First Special Session chapter 5, 57.21 article 12, section 95, is amended to read: 57.22 Sec. 95. [REPEALER.] 57.23 (a) Minnesota Statutes 2000, sections 297A.61, subdivision 57.24 16; 297A.68, subdivision 21; and 297A.71,subdivisions57.25 subdivision 2and 16, are repealed effective for sales and 57.26 purchases occurring after June 30, 2001, except that the repeal 57.27 of section 297A.61, subdivision 16, paragraph (d), is effective 57.28 for sales and purchases occurring after July 31, 2001. 57.29 (b) Minnesota Statutes 2000, sections 297A.62, subdivision 57.30 2, and 297A.64, subdivision 1, are repealed effective for sales 57.31 and purchases made after December 31, 2005. 57.32 (c) Minnesota Statutes 2000, section 297A.71, subdivision 57.33 15, is repealed effective for sales and purchases made after 57.34 June 30, 2002. 57.35 (d) Minnesota Statutes 2000, section 289A.60, subdivision 57.36 15, is repealed effective for liabilities after January 1, 58.120032004. 58.2 (e) Minnesota Statutes 2000, section 297A.71, subdivision 58.3 16, is repealed effective for sales and purchases occurring 58.4 after December 31, 2002. 58.5 [EFFECTIVE DATE.] Paragraph (d) is effective the day after 58.6 final enactment. Paragraphs (a) and (e) are effective for sales 58.7 and purchases made on or after June 30, 2001, for projects begun 58.8 prior to June 30, 2001. 58.9 Sec. 25. [ROCHESTER LODGING TAX.] 58.10 Subdivision 1. [AUTHORIZATION.] Notwithstanding Minnesota 58.11 Statutes, section 469.190 or 477A.016, or any other law, the 58.12 city of Rochester may impose an additional tax of one percent on 58.13 the gross receipts from the furnishing for consideration of 58.14 lodging at a hotel, motel, rooming house, tourist court, or 58.15 resort, other than the renting or leasing of it for a continuous 58.16 period of 30 days or more. 58.17 Subd. 2. [DISPOSITION OF PROCEEDS.] The gross proceeds 58.18 from any tax imposed under subdivision 1 must be used by the 58.19 city to fund a local convention or tourism bureau for the 58.20 purpose of marketing and promoting the city as a tourist or 58.21 convention center. 58.22 [EFFECTIVE DATE.] This section is effective for lodging 58.23 furnished on or after July 1, 2002. 58.24 Sec. 26. [REPEALER.] 58.25 Minnesota Statutes 2000, section 297A.68, subdivision 26, 58.26 is repealed effective for sales and purchases made after June 58.27 30, 2002. 58.28 ARTICLE 4 58.29 PROPERTY TAXES 58.30 Section 1. Minnesota Statutes 2000, section 168A.05, is 58.31 amended by adding a subdivision to read: 58.32 Subd. 1a. [MANUFACTURED HOMES; PROPERTY TAXES MUST BE 58.33 PAID.] In the case of a manufactured home as defined in section 58.34 327.31, subdivision 6, the department shall not issue a 58.35 certificate of title unless the application under section 58.36 168A.04 is accompanied with a statement from the county auditor 59.1 or county treasurer where the manufactured home is presently 59.2 located, stating that all personal property taxes levied on the 59.3 unit that are due from the current owner at the time of transfer 59.4 for which the application applies, have been paid. 59.5 [EFFECTIVE DATE.] This section is effective for 59.6 certificates of title issued by the department on or after July 59.7 1, 2002. 59.8 Sec. 2. Minnesota Statutes 2000, section 168A.05, is 59.9 amended by adding a subdivision to read: 59.10 Subd. 1b. [EXEMPTION.] The provisions of subdivision 1a 59.11 shall not apply to: (i) a manufactured home which is sold or 59.12 otherwise disposed of pursuant to section 504B.271 by the owner 59.13 of a manufactured home park as defined in section 327.14, 59.14 subdivision 3, or (ii) a manufactured home which is sold 59.15 pursuant to section 504B.265 by the owner of a manufactured home 59.16 park. 59.17 [EFFECTIVE DATE.] This section is effective for 59.18 certificates of title issued by the department on or after July 59.19 1, 2002. 59.20 Sec. 3. Minnesota Statutes 2001 Supplement, section 59.21 216B.1646, is amended to read: 59.22 216B.1646 [RATE REDUCTION; PROPERTY TAX REDUCTION.] 59.23 (a) The commission shall, by any method the commission 59.24 finds appropriate, reduce theamountsrates each electric 59.25 utility subject to rate regulation by the commission charges its 59.26 customers to reflect, on an ongoing basis, the amount by which 59.27 each utility's property tax on the personal property of its 59.28 electricgeneration, transmission, or distributionsystem from 59.29 taxes payable in 2001 to taxes payable in 2002 is reduced. The 59.30 commission must ensure that, to the extent feasible, each dollar 59.31 of personal property tax reduction allocated to Minnesota 59.32 consumers retroactive to January 1, 2002, results in a dollar of 59.33 savings to the utility's customers. A utility may voluntarily 59.34 pass on any additional property tax savings in the same manner 59.35 as approved by the commission under this paragraph. 59.36 (b) By April 10, 2002, each utility shall submit a filing 60.1 to the commission containing: 60.2 (1) certified information regarding the utility's property 60.3 tax savings allocated to Minnesota retail customers; and 60.4 (2) a proposed method of passing these savings on to 60.5 Minnesota retail customers. 60.6 The utility shall provide the information in clause (1) to 60.7 the commissioner of revenue at the same time. The commissioner 60.8 shall notify the commission within 30 days as to the accuracy of 60.9 the property tax data submitted by the utility. 60.10 (c) For purposes of this section, "personal property" 60.11 means tools, implements, and machinery of the generating plant. 60.12 It does not apply to transformers, transmission lines, 60.13 distribution lines, or any other tools, implements, and 60.14 machinery that are part of an electric substation, wherever 60.15 located. 60.16 [EFFECTIVE DATE.] This section is effective retroactive to 60.17 July 1, 2001. 60.18 Sec. 4. Minnesota Statutes 2001 Supplement, section 60.19 271.01, subdivision 5, is amended to read: 60.20 Subd. 5. [JURISDICTION.] The tax court shall have 60.21 statewide jurisdiction. Except for an appeal to the supreme 60.22 court or any other appeal allowed under this subdivision, the 60.23 tax court shall be the sole, exclusive, and final authority for 60.24 the hearing and determination of all questions of law and fact 60.25 arising under the tax laws of the state, as defined in this 60.26 subdivision, in those cases that have been appealed to the tax 60.27 court and in any case that has been transferred by the district 60.28 court to the tax court. The tax court shall have no 60.29 jurisdiction in any case that does not arise under the tax laws 60.30 of the state or in any criminal case or in any case determining 60.31 or granting title to real property or in any case that is under 60.32 the probate jurisdiction of the district court. The small 60.33 claims division of the tax court shall havenojurisdictionin60.34any case dealing with property valuation or assessment for60.35property tax purposes until the taxpayer has appealed the60.36valuation or assessment to the county board of equalization, and61.1in those towns and cities which have not transferred their61.2duties to the county, the town or city board of equalization,61.3except for: (i) those taxpayers whose original assessments are61.4determined by the commissioner of revenue; (ii) those taxpayers61.5appealing a denial of a current year application for the61.6homestead classification for their property and the denial was61.7not reflected on a valuation notice issued in the year; and61.8(iii) any case dealing with property valuation, assessment, or61.9taxation for property tax purposes and meeting the61.10jurisdictional requirements of section 271.21, subdivision 2,61.11paragraph (c)only as provided in section 271.21, subdivision 2. 61.12 The tax court shall have no jurisdiction in any case involving 61.13 an order of the state board of equalization unless a taxpayer 61.14 contests the valuation of property. Laws governing taxes, aids, 61.15 and related matters administered by the commissioner of revenue, 61.16 laws dealing with property valuation, assessment or taxation of 61.17 property for property tax purposes, and any other laws that 61.18 contain provisions authorizing review of taxes, aids, and 61.19 related matters by the tax court shall be considered tax laws of 61.20 this state subject to the jurisdiction of the tax court. This 61.21 subdivision shall not be construed to prevent an appeal, as 61.22 provided by law, to an administrative agency, board of 61.23 equalization, review under section 274.13, subdivision 1c, or to 61.24 the commissioner of revenue. Wherever used in this chapter, the 61.25 term commissioner shall mean the commissioner of revenue, unless 61.26 otherwise specified. 61.27 [EFFECTIVE DATE.] This section is effective for petitions 61.28 filed pertaining to the 2002 assessment, and thereafter. 61.29 Sec. 5. Minnesota Statutes 2001 Supplement, section 61.30 271.21, subdivision 2, is amended to read: 61.31 Subd. 2. [JURISDICTION.] At the election of the taxpayer, 61.32 the small claims division shall have jurisdiction only in the 61.33 following matters: 61.34 (a) cases involving valuation, assessment, or taxation of 61.35 real or personal property, ifthe taxpayer has satisfied the61.36requirements of section 271.01, subdivision 5, and: 62.1 (i) the issue is a denial of a current year application for 62.2 the homestead classification for the taxpayer's propertyand the62.3denial was not reflected on a valuation notice issued in the62.4year;or62.5 (ii)in the case of nonhomestead property,only one parcel 62.6 is included in the petition, the entire parcel is classified as 62.7 homestead class 1a or 1b under section 273.13 and the parcel 62.8 contains no more than one dwelling unit; 62.9 (iii) the entire property is classified as agricultural 62.10 homestead class 2a or 1b under section 273.13; or 62.11 (iv) the assessor's estimated market value of the property 62.12 included in the petition is less than$100,000$300,000; or 62.13 (b) anyothercaseconcerning the tax laws as defined in62.14section 271.01, subdivision 5,not involving valuation, 62.15 assessment, or taxation of real and personal property in which 62.16 the amount in controversy does not exceed $5,000, including 62.17 penalty and interest; or. 62.18(c) cases involving valuation, assessment, or taxation of62.19real or personal property if:62.20(i) the issue is a denial of a current year application for62.21the homestead classification for the taxpayer's property;62.22(ii) only one parcel is included in the petition, the62.23entire parcel is classified as homestead 1a or 1b pursuant to62.24section 273.13, and the parcel contains no more than one62.25dwelling unit; or62.26(iii) the assessor's estimated market value of the property62.27included in the petition is less than $300,000.62.28 [EFFECTIVE DATE.] This section is effective for petitions 62.29 filed pertaining to the 2002 assessment, and thereafter. 62.30 Sec. 6. Minnesota Statutes 2001 Supplement, section 62.31 272.02, subdivision 22, is amended to read: 62.32 Subd. 22. [WIND ENERGY CONVERSION SYSTEMS.](a) Small62.33scale wind energy conversion systems installed after January 1,62.341991, and used as an electric power source are exempt.62.35"Small scale wind energy conversion systems" are wind62.36energy conversion systems, as defined in section 216C.06,63.1subdivision 12, including the foundation or support pad, which63.2(i) are used as an electric power source; (ii) are located63.3within one county and owned by the same owner; and (iii) produce63.4two megawatts or less of electricity as measured by nameplate63.5ratings.63.6(b) Medium scale wind energy conversion systems installed63.7after January 1, 1991, are treated as follows: (i) the63.8foundation and support pad are taxable; (ii) the associated63.9supporting and protective structures are exempt for the first63.10five assessment years after they have been constructed, and63.11thereafter, 30 percent of the market value of the associated63.12supporting and protective structures are taxable; and (iii) the63.13turbines, blades, transformers, and its related equipment, are63.14exempt. "Medium scale wind energy conversion systems" are wind63.15energy conversion systems as defined in section 216C.06,63.16subdivision 12, including the foundation or support pad, which:63.17(i) are used as an electric power source; (ii) are located63.18within one county and owned by the same owner; and (iii) produce63.19more than two but equal to or less than 12 megawatts of energy63.20as measured by nameplate ratings.63.21(c) Large scale wind energy conversion systems installed63.22after January 1, 1991, are treated as follows: 25 percent of63.23the market value of all property is taxable, including (i) the63.24foundation and support pad; (ii) the associated supporting and63.25protective structures; and (iii) the turbines, blades,63.26transformers, and its related equipment. "Large scale wind63.27energy conversion systems" are wind energy conversion systems as63.28defined in section 216C.06, subdivision 12, including the63.29foundation or support pad, which (i) are used as an electric63.30power source; and (ii) produce more than 12 megawatts of energy63.31as measured by nameplate ratings.63.32(d) The total size of a wind energy conversion system under63.33this subdivision shall be determined according to this paragraph.63.34Unless the systems are interconnected with different63.35distribution systems, the nameplate capacity of one wind energy63.36conversion system shall be combined with the nameplate capacity64.1of any other wind energy conversion system that is:64.2(1) located within five miles of the wind energy conversion64.3system;64.4(2) constructed within the same calendar year as the wind64.5energy conversion system; and64.6(3) under common ownership.64.7In the case of a dispute, the commissioner of commerce64.8shall determine the total size of the system, and shall draw all64.9reasonable inferences in favor of combining the systems.64.10(e) In making a determination under paragraph (d), the64.11commissioner of commerce may determine that two wind energy64.12conversion systems are under common ownership when the64.13underlying ownership structure contains similar persons or64.14entities, even if the ownership shares differ between the two64.15systems. Wind energy conversion systems are not under common64.16ownership solely because the same person or entity provided64.17equity financing for the systems.All real and personal 64.18 property of a wind energy conversion system as defined in 64.19 section 272.029, subdivision 2, is exempt from property tax 64.20 except that the land on which the property is located remains 64.21 taxable. 64.22 [EFFECTIVE DATE.] This section is effective for taxes 64.23 payable in 2003 and thereafter. 64.24 Sec. 7. Minnesota Statutes 2000, section 272.02, is 64.25 amended by adding a subdivision to read: 64.26 Subd. 51. [ELECTRIC GENERATION FACILITY; PERSONAL 64.27 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 64.28 machinery and other personal property which is part of a 64.29 combined cycle natural gas turbine electric generation facility 64.30 of between 43 and 46 megawatts of installed capacity and that 64.31 meets the requirements of this subdivision is exempt. At the 64.32 time of construction, the facility must: 64.33 (1) utilize a combined cycle gas turbine generator fueled 64.34 by natural gas; 64.35 (2) be connected to an existing 115-kilovolt high-voltage 64.36 electric transmission line that is within one mile of the 65.1 facility; 65.2 (3) be located on an underground natural gas storage 65.3 aquifer; 65.4 (4) be designed as an intermediate load facility; and 65.5 (5) have received, by resolution, the approval from the 65.6 governing body of the county for the exemption of personal 65.7 property under this subdivision. 65.8 Construction of the facility must be commenced after 65.9 January 1, 2002, and before January 1, 2004. Property eligible 65.10 for this exemption does not include electric transmission lines 65.11 and interconnections or gas pipelines and interconnections 65.12 appurtenant to the property or the facility. 65.13 [EFFECTIVE DATE.] This section is effective for assessment 65.14 year 2002 and thereafter. 65.15 Sec. 8. Minnesota Statutes 2000, section 272.02, is 65.16 amended by adding a subdivision to read: 65.17 Subd. 52. [ELECTRIC GENERATION FACILITY; PERSONAL 65.18 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 65.19 machinery and other personal property which is part of a 65.20 simple-cycle combustion-turbine electric generation facility of 65.21 more than 40 megawatts and less than 50 megawatts of installed 65.22 capacity and that meets the requirements of this subdivision is 65.23 exempt. At the time of construction, the facility must: 65.24 (1) utilize natural gas as a primary fuel; 65.25 (2) be located within two miles of parallel existing 65.26 36-inch natural gas pipelines and an existing 115-kilovolt 65.27 high-voltage electric transmission line; 65.28 (3) be designed to provide peaking, emergency backup, or 65.29 contingency services; and 65.30 (4) satisfy a resource deficiency identified in an approved 65.31 integrated resource plan filed under section 216B.2422. 65.32 Construction of the facility must be commenced after 65.33 January 1, 2001, and before January 1, 2005. Property eligible 65.34 for this exemption does not include electric transmission lines 65.35 and interconnections or gas pipelines and interconnections 65.36 appurtenant to the property or the facility. 66.1 [EFFECTIVE DATE.] This section is effective for assessment 66.2 year 2002 and thereafter. 66.3 Sec. 9. Minnesota Statutes 2000, section 272.02, is 66.4 amended by adding a subdivision to read: 66.5 Subd. 53. [ELECTRIC GENERATION FACILITY; PERSONAL 66.6 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 66.7 machinery and other personal property which is part of a 3.2 66.8 megawatt run-of-the-river hydroelectric generation facility and 66.9 that meets the requirements of this subdivision is exempt. At 66.10 the time of construction, the facility must: 66.11 (1) utilize two turbine generators at a dam site existing 66.12 on March 31, 1994; 66.13 (2) be located on publicly owned land and within 1,500 feet 66.14 of a 13.8 kilovolt distribution substation; and 66.15 (3) be eligible to receive a renewable energy production 66.16 incentive payment under section 216C.41. 66.17 Construction of the facility must be commenced after 66.18 January 1, 2002, and before January 1, 2004. Property eligible 66.19 for this exemption does not include electric transmission lines 66.20 and interconnections or gas pipelines and interconnections 66.21 appurtenant to the property or the facility. 66.22 [EFFECTIVE DATE.] This section is effective for assessment 66.23 year 2002 and thereafter. 66.24 Sec. 10. Minnesota Statutes 2000, section 272.02, is 66.25 amended by adding a subdivision to read: 66.26 Subd. 54. [SMALL BIOMASS ELECTRIC GENERATION FACILITY; 66.27 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 66.28 attached machinery and other personal property which is part of 66.29 an electrical generating facility that meets the requirements of 66.30 this subdivision is exempt. At the time of construction the 66.31 facility must: 66.32 (1) have a generation capacity of less than 25 megawatts; 66.33 (2) provide process heating needs in addition to electrical 66.34 generation; and 66.35 (3) utilize agricultural by-products from the malting 66.36 process and other biomass fuels as its primary fuel source. 67.1 Construction of the facility must be commenced after 67.2 January 1, 2002, and before January 1, 2006. Property eligible 67.3 for this exemption does not include electric transmission lines 67.4 and interconnections or gas pipelines and interconnections 67.5 appurtenant to the property or facility. 67.6 [EFFECTIVE DATE.] This section is effective for assessment 67.7 year 2003 and thereafter. 67.8 Sec. 11. Minnesota Statutes 2000, section 272.02, is 67.9 amended by adding a subdivision to read: 67.10 Subd. 55. [ELECTRIC GENERATION FACILITY; PERSONAL 67.11 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 67.12 machinery and other personal property which is part of an 67.13 electric generating facility that meets the requirements of this 67.14 subdivision is exempt. At the time of construction, the 67.15 facility must be sited on an energy park that (i) is located on 67.16 an active mining site, or on a former mining or industrial site 67.17 where mining or industrial operations have terminated, (ii) is 67.18 within a tax relief area as defined in section 273.134, (iii) 67.19 has on-site access to existing railroad infrastructure, (iv) has 67.20 direct rail access to a Great Lakes port, (v) has sufficient 67.21 private water resources on site, and (vi) is designed to host at 67.22 least 500 megawatts of electrical generation. 67.23 Construction of the first 250 megawatts of the facility 67.24 must be commenced after January 1, 2002, and before January 1, 67.25 2005. Construction of up to an additional 750 megawatts of 67.26 generation must be commenced before January 1, 2010. Property 67.27 eligible for this exemption does not include electric 67.28 transmission lines and interconnections or gas pipelines and 67.29 interconnections appurtenant to the property or the facility. 67.30 [EFFECTIVE DATE.] This section is effective for assessment 67.31 year 2003 and thereafter. 67.32 Sec. 12. Minnesota Statutes 2001 Supplement, section 67.33 272.028, is amended to read: 67.34 272.028 [PAYMENT IN LIEU OFPERSONAL PROPERTYPRODUCTION 67.35 TAX; WIND GENERATION FACILITIES.] 67.36 A developer of a new or existingmedium or large scalewind 68.1 energy conversion system, as defined under section272.02,68.2subdivision 22, paragraphs (b) and (c),272.029, subdivision 2, 68.3 may negotiate with thecity or town and thecounty where the 68.4 wind energy conversion system is located to establish a payment 68.5 in lieu oftax on personal property used to generate electric68.6powerthe wind energy production tax imposed under section 68.7 272.029. The in lieu payment is to provide fees or compensation 68.8 to the host jurisdictions to maintain public infrastructure and 68.9 services. A host jurisdiction includes a city or town and the 68.10 county in which a facility is located. The payment in lieu of 68.11personal propertythe wind energy production tax may be based on 68.12 production capacity, historical production, or other factors 68.13 agreed upon by the parties. The payment in lieu of tax 68.14 agreement must be signed by the parties and filed with the 68.15 commissioner of revenue and the county recorder.Upon execution68.16and filing of the agreement, the personal property to which the68.17in lieu payment applies shall be deemed exempt from tax under68.18section 272.02, subdivision 22, paragraphs (b) and (c). This68.19 Exemption from the tax under section 272.029 shall be 68.20 effectivefor the assessment year in which the in lieu payment68.21is agreed upon and shall remain exemptfor the same duration as 68.22 the in lieu payments under this section are in effect. 68.23 Sec. 13. [272.029] [WIND ENERGY PRODUCTION TAX.] 68.24 Subdivision 1. [PRODUCTION TAX.] A tax is imposed on the 68.25 production of electricity from a wind energy conversion system 68.26 installed after January 1, 1991, and used as an electric power 68.27 source. 68.28 Subd. 2. [DEFINITIONS.] (a) For the purposes of this 68.29 section, the term: 68.30 (1) "wind energy conversion system" has the meaning given 68.31 it in section 216C.06, subdivision 12; 68.32 (2) "large scale wind energy conversion system" means a 68.33 wind energy conversion system of more than 12 megawatts, as 68.34 measured by the nameplate capacity of the system or as combined 68.35 with other systems as provided in paragraph (b); 68.36 (3) "medium scale wind energy conversion system" means a 69.1 wind energy conversion system of over two and not more than 12 69.2 megawatts, as measured by the nameplate capacity of the system 69.3 or as combined with other systems as provided in paragraph (b); 69.4 and 69.5 (4) "small scale wind energy conversion system" means a 69.6 wind energy conversion system of two megawatts and under, as 69.7 measured by the nameplate capacity of the system or as combined 69.8 with other systems as provided in paragraph (b). 69.9 (b) For systems installed and contracted for after January 69.10 1, 2002, the total size of a wind energy conversion system under 69.11 this subdivision shall be determined according to this paragraph. 69.12 Unless the systems are interconnected with different 69.13 distribution systems, the nameplate capacity of one wind energy 69.14 conversion system shall be combined with the nameplate capacity 69.15 of any other wind energy conversion system that is: 69.16 (1) located within five miles of the wind energy conversion 69.17 system; 69.18 (2) constructed within the same calendar year as the wind 69.19 energy conversion system; and 69.20 (3) under common ownership. 69.21 In the case of a dispute, the commissioner of commerce 69.22 shall determine the total size of the system, and shall draw all 69.23 reasonable inferences in favor of combining the systems. 69.24 (c) In making a determination under paragraph (b), the 69.25 commissioner of commerce may determine that two wind energy 69.26 conversion systems are under common ownership when the 69.27 underlying ownership structure contains similar persons or 69.28 entities, even if the ownership shares differ between the two 69.29 systems. Wind energy conversion systems are not under common 69.30 ownership solely because the same person or entity provided 69.31 equity financing for the systems. 69.32 Subd. 3. [RATE OF TAX.] (a) The owner of a wind energy 69.33 conversion system shall pay a tax based on the following 69.34 schedule: 69.35 (1) for a large scale wind energy conversion system, .12 69.36 cents per kilowatt-hour of electricity produced by the system; 70.1 (2) for a medium scale wind energy conversion system, .036 70.2 cents per kilowatt-hour of electricity produced by the system; 70.3 and 70.4 (3) for a small scale wind energy conversion system of two 70.5 megawatts or less, but greater than .25 megawatts capacity, .012 70.6 cents per kilowatt-hour of electricity produced by the system. 70.7 (b) Small scale wind energy conversion systems with the 70.8 capacity of .25 megawatts or less, and small scale wind energy 70.9 conversion systems with a capacity of two megawatts or less that 70.10 are owned by a political subdivision, are exempt from the wind 70.11 energy production tax. 70.12 Subd. 4. [REPORTS.] (a) An owner of a wind energy 70.13 conversion system subject to tax under subdivision 3 shall file 70.14 a report with the commissioner of revenue annually on or before 70.15 March 1 detailing the amount of electricity in kilowatt-hours 70.16 that was produced by the wind energy conversion system for the 70.17 previous calendar year. The commissioner shall prescribe the 70.18 form of the report. The report must contain the information 70.19 required by the commissioner to determine the tax due to each 70.20 county under this section for the current year. If an owner of 70.21 a wind energy conversion system subject to taxation under this 70.22 section fails to file the report by the due date, the 70.23 commissioner of revenue shall determine the tax based upon the 70.24 nameplate capacity of the system multiplied by a capacity factor 70.25 of 40 percent. 70.26 (b) On or before March 31, the commissioner of revenue 70.27 shall notify the owner of the wind energy conversion systems of 70.28 the tax due to each county for the current year and shall 70.29 certify to the county auditor of each county in which the 70.30 systems are located the tax due from each owner for the current 70.31 year. 70.32 Subd. 5. [PAYMENT OF TAX; COLLECTION.] The amount of 70.33 production tax determined under subdivision 4 must be paid to 70.34 the county treasurer at the time and in the manner provided for 70.35 payment of property taxes under section 277.01, subdivision 3, 70.36 and, if unpaid, is subject to the same enforcement, collection, 71.1 and interest and penalties as delinquent personal property 71.2 taxes. Except to the extent inconsistent with this section, the 71.3 provisions of sections 277.01 to 277.24 and 278.01 to 278.13 71.4 apply to the taxes imposed under this section, and for purposes 71.5 of those provisions, the taxes imposed under this section are 71.6 considered personal property taxes. 71.7 Subd. 6. [DISTRIBUTION OF REVENUES.] Revenues from the 71.8 taxes imposed under subdivision 5 must be part of the settlement 71.9 between the county treasurer and the county auditor under 71.10 section 276.09. The revenue must be distributed by the county 71.11 auditor or the county treasurer to all taxing jurisdictions in 71.12 which the wind energy conversion system is located, in the same 71.13 proportion that each of the taxing jurisdiction's current year's 71.14 net tax capacity based tax rate is to the current year's total 71.15 net tax capacity based rate. 71.16 [EFFECTIVE DATE.] This section is effective for all energy 71.17 produced by wind energy conversion systems after December 31, 71.18 2002. 71.19 Sec. 14. Minnesota Statutes 2001 Supplement, section 71.20 273.124, subdivision 11, is amended to read: 71.21 Subd. 11. [LIMITATION ON HOMESTEADREDUCTIONS71.22 TREATMENT.] (a) For taxes payable in 2003 through 2005 only, if 71.23 the assessor has classified a property as both homestead and 71.24 nonhomestead, the greater of: 71.25 (1) the value attributable to the portion of the property 71.26 used as a homestead; or 71.27 (2) the homestead value amount determined under paragraph 71.28 (b), is entitled to assessment as a homestead under section 71.29 273.13, subdivision 22 or 23. 71.30 (b) For taxes payable in 2003 only, the homestead value 71.31 amount is $60,000. For taxes payable in 2004 only, the 71.32 homestead value amount is $45,000. For taxes payable in 2005 71.33 only, the homestead value amount is $30,000. 71.34 (c) If the assessor has classified a property as both 71.35 homestead and nonhomestead, the reductions in tax provided under 71.36 sections 273.135 and 273.1391 apply to the value of both the 72.1 homestead and the nonhomestead portions of the property. 72.2 Sec. 15. Minnesota Statutes 2000, section 273.125, 72.3 subdivision 3, is amended to read: 72.4 Subd. 3. [TAX STATEMENTS; PENALTIES; COLLECTIONS.] Not 72.5 later than July 15 in the year of assessment the county 72.6 treasurer shall mail to the taxpayer a statement of tax due on a 72.7 manufactured home. The taxes are due on the last day of August, 72.8 or 20 days after the postmark date on the envelope containing 72.9 the property tax statement, whichever is later, except that if 72.10 the tax exceeds $50, one-half of the amount due may be paid on 72.11 August 31, or 20 days after the postmark date on the envelope 72.12 containing the property tax statement, whichever is later, and 72.13 the remainder on November 15. Taxes remaining unpaid after the 72.14 due date are delinquent, and a penalty of eight percent must be 72.15 assessed and collected as part of the unpaid taxes. The tax 72.16 statement must contain a sentence notifying the taxpayer that 72.17 the title to the manufactured home cannot be transferred unless 72.18 the property taxes are paid. 72.19 [EFFECTIVE DATE.] This section is effective for tax 72.20 statements issued in 2003 and thereafter. 72.21 Sec. 16. Minnesota Statutes 2001 Supplement, section 72.22 273.13, subdivision 22, is amended to read: 72.23 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 72.24 23 and in paragraphs (b) and (c), real estate which is 72.25 residential and used for homestead purposes is class 1a. In the 72.26 case of a duplex or triplex in which one of the units is used 72.27 for homestead purposes, the entire property is deemed to be used 72.28 for homestead purposes. The market value of class 1a property 72.29 must be determined based upon the value of the house, garage, 72.30 and land. 72.31 The first $500,000 of market value of class 1a property has 72.32 a net class rate of one percent of its market value; and the 72.33 market value of class 1a property that exceeds $500,000 has a 72.34 class rate of 1.25 percent of its market value. 72.35 (b) Class 1b property includes homestead real estate or 72.36 homestead manufactured homes used for the purposes of a 73.1 homestead by 73.2 (1) any blind person, or the blind person and the blind 73.3 person's spouse; or 73.4 (2) any person, hereinafter referred to as "veteran," who: 73.5 (i) served in the active military or naval service of the 73.6 United States; and 73.7 (ii) is entitled to compensation under the laws and 73.8 regulations of the United States for permanent and total 73.9 service-connected disability due to the loss, or loss of use, by 73.10 reason of amputation, ankylosis, progressive muscular 73.11 dystrophies, or paralysis, of both lower extremities, such as to 73.12 preclude motion without the aid of braces, crutches, canes, or a 73.13 wheelchair; and 73.14 (iii) has acquired a special housing unit with special 73.15 fixtures or movable facilities made necessary by the nature of 73.16 the veteran's disability, or the surviving spouse of the 73.17 deceased veteran for as long as the surviving spouse retains the 73.18 special housing unit as a homestead; or 73.19 (3) any person who: 73.20 (i) is permanently and totally disabled and 73.21 (ii) receives 90 percent or more of total household income, 73.22 as defined in section 290A.03, subdivision 5, from 73.23 (A) aid from any state as a result of that disability; or 73.24 (B) supplemental security income for the disabled; or 73.25 (C) workers' compensation based on a finding of total and 73.26 permanent disability; or 73.27 (D) social security disability, including the amount of a 73.28 disability insurance benefit which is converted to an old age 73.29 insurance benefit and any subsequent cost of living increases; 73.30 or 73.31 (E) aid under the federal Railroad Retirement Act of 1937, 73.32 United States Code Annotated, title 45, section 228b(a)5; or 73.33 (F) a pension from any local government retirement fund 73.34 located in the state of Minnesota as a result of that 73.35 disability; or 73.36 (G) pension, annuity, or other income paid as a result of 74.1 that disability from a private pension or disability plan, 74.2 including employer, employee, union, and insurance plans and 74.3 (iii) has household income as defined in section 290A.03, 74.4 subdivision 5, of $50,000 or less; or 74.5 (4) any person who is permanently and totally disabled and 74.6 whose household income as defined in section 290A.03, 74.7 subdivision 5, is 275 percent or less of the federal poverty 74.8 level. 74.9 Property is classified and assessed under clause (4) only 74.10 if the government agency or income-providing source certifies, 74.11 upon the request of the homestead occupant, that the homestead 74.12 occupant satisfies the disability requirements of this paragraph. 74.13 Property is classified and assessed pursuant to clause (1) 74.14 only if the commissioner of economic security certifies to the 74.15 assessor that the homestead occupant satisfies the requirements 74.16 of this paragraph. 74.17 Permanently and totally disabled for the purpose of this 74.18 subdivision means a condition which is permanent in nature and 74.19 totally incapacitates the person from working at an occupation 74.20 which brings the person an income. The first $32,000 market 74.21 value of class 1b property has a net class rate of .45 percent 74.22 of its market value. The remaining market value of class 1b 74.23 property has a class rate using the rates for class 1a or class 74.24 2a property, whichever is appropriate, of similar market value. 74.25 (c) Class 1c property is commercial use real property that 74.26 abuts a lakeshore line and is devoted to temporary and seasonal 74.27 residential occupancy for recreational purposes but not devoted 74.28 to commercial purposes for more than 250 days in the year 74.29 preceding the year of assessment, and that includes a portion 74.30 used as a homestead by the owner, which includes a dwelling 74.31 occupied as a homestead by a shareholder of a corporation that 74.32 owns the resort or a partner in a partnership that owns the 74.33 resort, even if the title to the homestead is held by the 74.34 corporation or partnership. For purposes of this clause, 74.35 property is devoted to a commercial purpose on a specific day if 74.36 any portion of the property, excluding the portion used 75.1 exclusively as a homestead, is used for residential occupancy 75.2 and a fee is charged for residential occupancy. The first 75.3 $500,000 of market value of class 1c property has a class rate 75.4 of one percent, and the remaining market value of class 1c 75.5 property has a class rate of one percent, with the following 75.6 limitation: the area of the property must not exceed 100 feet 75.7 of lakeshore footage for each cabin or campsite located on the 75.8 property up to a total of 800 feet and 500 feet in depth, 75.9 measured away from the lakeshore. If any portion of the class 75.10 1c resort property is classified as class 4c under subdivision 75.11 25, the entire property must meet the requirements of 75.12 subdivision 25, paragraph (d), clause (1), to qualify for class 75.13 1c treatment under this paragraph. 75.14 (d) Class 1d property includes structures that meet all of 75.15 the following criteria: 75.16 (1) the structure is located on property that is classified 75.17 as agricultural property under section 273.13, subdivision 23; 75.18 (2) the structure is occupied exclusively by seasonal farm 75.19 workers during the time when they work on that farm, and the 75.20 occupants are not charged rent for the privilege of occupying 75.21 the property, provided that use of the structure for storage of 75.22 farm equipment and produce does not disqualify the property from 75.23 classification under this paragraph; 75.24 (3) the structure meets all applicable health and safety 75.25 requirements for the appropriate season; and 75.26 (4) the structure is not salable as residential property 75.27 because it does not comply with local ordinances relating to 75.28 location in relation to streets or roads. 75.29 The market value of class 1d property has the same class 75.30 rates as class 1a property under paragraph (a). 75.31 [EFFECTIVE DATE.] This section is effective for taxes 75.32 payable in 2003 and subsequent years. 75.33 Sec. 17. Minnesota Statutes 2001 Supplement, section 75.34 273.13, subdivision 25, is amended to read: 75.35 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 75.36 estate containing four or more units and used or held for use by 76.1 the owner or by the tenants or lessees of the owner as a 76.2 residence for rental periods of 30 days or more. Class 4a also 76.3 includes hospitals licensed under sections 144.50 to 144.56, 76.4 other than hospitals exempt under section 272.02, and contiguous 76.5 property used for hospital purposes, without regard to whether 76.6 the property has been platted or subdivided. The market value 76.7 of class 4a property has a class rate of 1.8 percent for taxes 76.8 payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 76.9 percent for taxes payable in 2004 and thereafter, except that 76.10 class 4a property consisting of a structure for which 76.11 construction commenced after June 30, 2001, has a class rate of 76.12 1.25 percent of market value for taxes payable in 2003 and 76.13 subsequent years. 76.14 (b) Class 4b includes: 76.15 (1) residential real estate containing less than four units 76.16 that does not qualify as class 4bb, other than seasonal 76.17 residential, and recreational; 76.18 (2) manufactured homes not classified under any other 76.19 provision; 76.20 (3) a dwelling, garage, and surrounding one acre of 76.21 property on a nonhomestead farm classified under subdivision 23, 76.22 paragraph (b) containing two or three units; 76.23 (4) unimproved property that is classified residential as 76.24 determined under subdivision 33. 76.25 The market value of class 4b property has a class rate of 76.26 1.5 percent for taxes payable in 2002, and 1.25 percent for 76.27 taxes payable in 2003 and thereafter. 76.28 (c) Class 4bb includes: 76.29 (1) nonhomestead residential real estate containing one 76.30 unit, other than seasonal residential, and recreational; and 76.31 (2) a single family dwelling, garage, and surrounding one 76.32 acre of property on a nonhomestead farm classified under 76.33 subdivision 23, paragraph (b). 76.34 Class 4bb property has the same class rates as class 1a 76.35 property under subdivision 22. 76.36 Property that has been classified as seasonal recreational 77.1 residential property at any time during which it has been owned 77.2 by the current owner or spouse of the current owner does not 77.3 qualify for class 4bb. 77.4 (d) Class 4c property includes: 77.5 (1) except as provided in subdivision 22, paragraph (c), 77.6 real property devoted to temporary and seasonal residential 77.7 occupancy for recreation purposes, including real property 77.8 devoted to temporary and seasonal residential occupancy for 77.9 recreation purposes and not devoted to commercial purposes for 77.10 more than 250 days in the year preceding the year of 77.11 assessment. For purposes of this clause, property is devoted to 77.12 a commercial purpose on a specific day if any portion of the 77.13 property is used for residential occupancy, and a fee is charged 77.14 for residential occupancy. In order for a property to be 77.15 classified as class 4c, seasonal recreational residential for 77.16 commercial purposes, at least 40 percent of the annual gross 77.17 lodging receipts related to the property must be from business 77.18 conducted during 90 consecutive days and either (i) at least 60 77.19 percent of all paid bookings by lodging guests during the year 77.20 must be for periods of at least two consecutive nights; or (ii) 77.21 at least 20 percent of the annual gross receipts must be from 77.22 charges for rental of fish houses, boats and motors, 77.23 snowmobiles, downhill or cross-country ski equipment, or charges 77.24 for marina services, launch services, and guide services, or the 77.25 sale of bait and fishing tackle. For purposes of this 77.26 determination, a paid booking of five or more nights shall be 77.27 counted as two bookings. Class 4c also includes commercial use 77.28 real property used exclusively for recreational purposes in 77.29 conjunction with class 4c property devoted to temporary and 77.30 seasonal residential occupancy for recreational purposes, up to 77.31 a total of two acres, provided the property is not devoted to 77.32 commercial recreational use for more than 250 days in the year 77.33 preceding the year of assessment and is located within two miles 77.34 of the class 4c property with which it is used. Class 4c 77.35 property classified in this clause also includes the remainder 77.36 of class 1c resorts provided that the entire property including 78.1 that portion of the property classified as class 1c also meets 78.2 the requirements for class 4c under this clause; otherwise the 78.3 entire property is classified as class 3. Owners of real 78.4 property devoted to temporary and seasonal residential occupancy 78.5 for recreation purposes and all or a portion of which was 78.6 devoted to commercial purposes for not more than 250 days in the 78.7 year preceding the year of assessment desiring classification as 78.8 class 1c or 4c, must submit a declaration to the assessor 78.9 designating the cabins or units occupied for 250 days or less in 78.10 the year preceding the year of assessment by January 15 of the 78.11 assessment year. Those cabins or units and a proportionate 78.12 share of the land on which they are located will be designated 78.13 class 1c or 4c as otherwise provided. The remainder of the 78.14 cabins or units and a proportionate share of the land on which 78.15 they are located will be designated as class 3a. The owner of 78.16 property desiring designation as class 1c or 4c property must 78.17 provide guest registers or other records demonstrating that the 78.18 units for which class 1c or 4c designation is sought were not 78.19 occupied for more than 250 days in the year preceding the 78.20 assessment if so requested. The portion of a property operated 78.21 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 78.22 nonresidential facility operated on a commercial basis not 78.23 directly related to temporary and seasonal residential occupancy 78.24 for recreation purposes shall not qualify for class 1c or 4c; 78.25 (2) qualified property used as a golf course if: 78.26 (i) it is open to the public on a daily fee basis. It may 78.27 charge membership fees or dues, but a membership fee may not be 78.28 required in order to use the property for golfing, and its green 78.29 fees for golfing must be comparable to green fees typically 78.30 charged by municipal courses; and 78.31 (ii) it meets the requirements of section 273.112, 78.32 subdivision 3, paragraph (d). 78.33 A structure used as a clubhouse, restaurant, or place of 78.34 refreshment in conjunction with the golf course is classified as 78.35 class 3a property; 78.36 (3) real property up to a maximum of one acre of land owned 79.1 by a nonprofit community service oriented organization; provided 79.2 that the property is not used for a revenue-producing activity 79.3 for more than six days in the calendar year preceding the year 79.4 of assessment and the property is not used for residential 79.5 purposes on either a temporary or permanent basis. For purposes 79.6 of this clause, a "nonprofit community service oriented 79.7 organization" means any corporation, society, association, 79.8 foundation, or institution organized and operated exclusively 79.9 for charitable, religious, fraternal, civic, or educational 79.10 purposes, and which is exempt from federal income taxation 79.11 pursuant to section 501(c)(3), (10), or (19) of the Internal 79.12 Revenue Code of 1986, as amended through December 31, 1990. For 79.13 purposes of this clause, "revenue-producing activities" shall 79.14 include but not be limited to property or that portion of the 79.15 property that is used as an on-sale intoxicating liquor or 3.2 79.16 percent malt liquor establishment licensed under chapter 340A, a 79.17 restaurant open to the public, bowling alley, a retail store, 79.18 gambling conducted by organizations licensed under chapter 349, 79.19 an insurance business, or office or other space leased or rented 79.20 to a lessee who conducts a for-profit enterprise on the 79.21 premises. Any portion of the property which is used for 79.22 revenue-producing activities for more than six days in the 79.23 calendar year preceding the year of assessment shall be assessed 79.24 as class 3a. The use of the property for social events open 79.25 exclusively to members and their guests for periods of less than 79.26 24 hours, when an admission is not charged nor any revenues are 79.27 received by the organization shall not be considered a 79.28 revenue-producing activity; 79.29 (4) post-secondary student housing of not more than one 79.30 acre of land that is owned by a nonprofit corporation organized 79.31 under chapter 317A and is used exclusively by a student 79.32 cooperative, sorority, or fraternity for on-campus housing or 79.33 housing located within two miles of the border of a college 79.34 campus; 79.35 (5) manufactured home parks as defined in section 327.14, 79.36 subdivision 3; 80.1 (6) real property that is actively and exclusively devoted 80.2 to indoor fitness, health, social, recreational, and related 80.3 uses, is owned and operated by a not-for-profit corporation, and 80.4 is located within the metropolitan area as defined in section 80.5 473.121, subdivision 2;and80.6 (7) a leased or privately owned noncommercial aircraft 80.7 storage hangar not exempt under section 272.01, subdivision 2, 80.8 and the land on which it is located, provided that: 80.9 (i) the land is on an airport owned or operated by a city, 80.10 town, county, metropolitan airports commission, or group 80.11 thereof; and 80.12 (ii) the land lease, or any ordinance or signed agreement 80.13 restricting the use of the leased premise, prohibits commercial 80.14 activity performed at the hangar. 80.15 If a hangar classified under this clause is sold after June 80.16 30, 2000, a bill of sale must be filed by the new owner with the 80.17 assessor of the county where the property is located within 60 80.18 days of the sale; and 80.19 (8) residential real estate, a portion of which is used by 80.20 the owner for homestead purposes, and that is also a place of 80.21 lodging, if all of the following criteria are met: 80.22 (i) rooms are provided for rent to transient guests that 80.23 generally stay for periods of 14 or fewer days; 80.24 (ii) meals are provided to persons who rent rooms, the cost 80.25 of which is incorporated in the basic room rate; 80.26 (iii) meals are not provided to the general public except 80.27 for special events on fewer than seven days in the calendar year 80.28 preceding the year of the assessment; and 80.29 (iv) the owner is the operator of the property. 80.30 The market value subject to the 4c classification under this 80.31 clause is limited to five rental units. Any rental units on the 80.32 property in excess of five, must be valued and assessed as class 80.33 3a. The portion of the property used for purposes of a 80.34 homestead by the owner must be classified as class 1a property 80.35 under subdivision 22. 80.36 Class 4c property has a class rate of 1.5 percent of market 81.1 value, except that (i) each parcel of seasonal residential 81.2 recreational property not used for commercial purposes has the 81.3 same class rates as class 4bb property, (ii) manufactured home 81.4 parks assessed under clause (5) have the same class rate as 81.5 class 4b property, (iii) commercial-use seasonal residential 81.6 recreational property has a class rate of one percent for the 81.7 first $500,000 of market value, which includes any market value 81.8 receiving the one percent rate under subdivision 22, and 1.25 81.9 percent for the remaining market value, (iv) the market value of 81.10 property described in clause (4) has a class rate of one 81.11 percent, and (v) the market value of property described in 81.12 clauses (2) and (6) has a class rate of 1.25 percent, and (vi) 81.13 that portion of the market value of property in clause (8) 81.14 qualifying for class 4c property has a class rate of 1.25 81.15 percent. 81.16 (e) Class 4d property is qualifying low-income rental 81.17 housing certified to the assessor by the housing finance agency 81.18 under sections 273.126 and 462A.071. Class 4d includes land in 81.19 proportion to the total market value of the building that is 81.20 qualifying low-income rental housing. For all properties 81.21 qualifying as class 4d, the market value determined by the 81.22 assessor must be based on the normal approach to value using 81.23 normal unrestricted rents. 81.24 Class 4d property has a class rate of 0.9 percent for taxes 81.25 payable in 2002, and one percent for taxes payable in 2003 and 81.26 1.25 percent for taxes payable in 2004 and thereafter. 81.27 [EFFECTIVE DATE.] This section is effective for assessment 81.28 year 2002 and thereafter, for taxes payable in 2003 and 81.29 thereafter. 81.30 Sec. 18. Minnesota Statutes 2001 Supplement, section 81.31 273.1384, subdivision 1, is amended to read: 81.32 Subdivision 1. [RESIDENTIAL HOMESTEAD MARKET VALUE 81.33 CREDIT.] Each county auditor shall determine a homestead credit 81.34 for each class 1a, 1b, 1c, and 2a homestead property within the 81.35 county equal to 0.4 percent of the market value of the 81.36 property. The amount of homestead credit for a homestead may 82.1 not exceed $304 and is reduced by .09 percent of the market 82.2 value in excess of $76,000. In the case of an agricultural or 82.3 resort homestead, only the market value of the house, garage, 82.4 and immediately surrounding one acre of land is eligible in 82.5 determining the property's homestead credit. In the case of a 82.6 property which is classified as part homestead and part 82.7 nonhomestead, the credit shall apply only to the homestead 82.8 portion of the property. 82.9 [EFFECTIVE DATE.] This section is effective for taxes 82.10 payable in 2003 and subsequent years. 82.11 Sec. 19. Minnesota Statutes 2001 Supplement, section 82.12 273.1384, subdivision 2, is amended to read: 82.13 Subd. 2. [AGRICULTURAL HOMESTEAD MARKET VALUE CREDIT.] 82.14 Property classified as class 2a agricultural homestead is 82.15 eligible for an agricultural credit. The credit is equal to0.282.16 0.3 percent of the first $115,000 of the property's market 82.17 value. The credit under this subdivision is limited 82.18 to$230$345 for each homestead. The credit is reduced by .05 82.19 percent of the market value in excess of $115,000, subject to a 82.20 maximum reduction of $115. 82.21 [EFFECTIVE DATE.] This section is effective for taxes 82.22 payable in 2003 and thereafter. 82.23 Sec. 20. Minnesota Statutes 2000, section 273.1398, 82.24 subdivision 1a, is amended to read: 82.25 Subd. 1a. [TAX BASE DIFFERENTIAL.] (a) For aids payable in 82.2620002003, the tax base differential is: 82.27 (1)0.45 percent of the assessment year 1998 taxable market82.28value of class 2a agricultural homestead property, excluding the82.29house, garage, and surrounding one acre of land, between82.30$115,000 and $600,000 and over 320 acres, minus the value over82.31$600,000 that is less than 320 acres31 percent of the 82.32 assessment year 2000 net tax capacity of public utility property 82.33 reported by the county on the 2000 abstract of assessment as 82.34 public utility land and buildings valued up to $150,000; plus 82.35 (2)0.5 percent of the assessment year 1998 taxable market82.36value of noncommercial seasonal recreational residential83.1property over $75,000 in value34 percent of the assessment year 83.2 2000 net tax capacity of public utility property reported by the 83.3 county on the 2000 abstract of assessment as public utility land 83.4 and buildings valued over $150,000; plus 83.5 (3)for purposes of computing the fiscal disparity83.6adjustment only, 0.2 percent of the assessment year 1998 taxable83.7market value of class 3 commercial-industrial property over83.8$150,00034 percent of the assessment year 2000 net tax capacity 83.9 of public utility property reported by the county on the 2000 83.10 abstract of assessment as public utility machinery, systems of 83.11 electric utilities-transmission, systems of electric 83.12 utilities-distribution, and systems of gas utilities. 83.13 (b)For the purposes of the distribution of homestead and83.14agricultural credit aid for aids payable in 2000, the83.15commissioner of revenue shall use the best information available83.16as of June 30, 1999, to make an estimate of the value described83.17in paragraph (a), clause (1). The commissioner shall adjust the83.18distribution of homestead and agricultural credit aid for aids83.19payable in 2001 and subsequent years if new information83.20regarding the value described in paragraph (a), clause (1),83.21becomes available after June 30, 1999Notwithstanding the 83.22 computation in paragraph (a), the tax base differential shall be 83.23 zero in all counties in which the sum of the net tax capacities 83.24 of properties described in paragraph (a) does not exceed 40 83.25 percent of the total assessment year 2000 net tax capacity of 83.26 the county. 83.27 Sec. 21. Minnesota Statutes 2000, section 273.1398, 83.28 subdivision 2, is amended to read: 83.29 Subd. 2. [HOMESTEAD AND AGRICULTURAL CREDIT AID.] (a) 83.30 Homestead and agricultural credit aid for each unique taxing 83.31 jurisdiction equals the product of (1) the homestead and 83.32 agricultural credit aid base, and (2) the growth adjustment 83.33 factor, plus the net tax capacity adjustment and the fiscal 83.34 disparity adjustment. 83.35 (b) For the purposes of determining the net tax capacity 83.36 adjustment for aids payable in 2003, the "current local tax 84.1 rate" and the "previous net tax capacity" as defined under 84.2 subdivision 1 shall be determined using tax capacities and tax 84.3 rates in effect for taxes payable in 2001. 84.4 Sec. 22. Minnesota Statutes 2001 Supplement, section 84.5 275.065, subdivision 3, is amended to read: 84.6 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 84.7 county auditor shall prepare and the county treasurer shall 84.8 deliver after November 10 and on or before November 24 each 84.9 year, by first class mail to each taxpayer at the address listed 84.10 on the county's current year's assessment roll, a notice of 84.11 proposed property taxes. 84.12 (b) The commissioner of revenue shall prescribe the form of 84.13 the notice. 84.14 (c) The notice must inform taxpayers that it contains the 84.15 amount of property taxes each taxing authority proposes to 84.16 collect for taxes payable the following year. In the case of a 84.17 town, or in the case of the statedetermined portion of the84.18school district levygeneral tax, the final tax amount will be 84.19 its proposed tax. In the case of taxing authorities required to 84.20 hold a public meeting under subdivision 6, the notice must 84.21 clearly state that each taxing authority, including regional 84.22 library districts established under section 134.201, and 84.23 including the metropolitan taxing districts as defined in 84.24 paragraph (i), but excluding all other special taxing districts 84.25 and towns, will hold a public meeting to receive public 84.26 testimony on the proposed budget and proposed or final property 84.27 tax levy, or, in case of a school district, on the current 84.28 budget and proposed property tax levy. It must clearly state 84.29 the time and place of each taxing authority's meeting, a 84.30 telephone number for the taxing authority that taxpayers may 84.31 call if they have questions related to the notice, and an 84.32 address where comments will be received by mail. 84.33 (d) The notice must state for each parcel: 84.34 (1) the market value of the property as determined under 84.35 section 273.11, and used for computing property taxes payable in 84.36 the following year and for taxes payable in the current year as 85.1 each appears in the records of the county assessor on November 1 85.2 of the current year; and, in the case of residential property, 85.3 whether the property is classified as homestead or 85.4 nonhomestead. The notice must clearly inform taxpayers of the 85.5 years to which the market values apply and that the values are 85.6 final values; 85.7 (2) the items listed below, shown separately by county, 85.8 city or town, and statedetermined schoolgeneral tax, net of 85.9 theeducationresidential and agricultural homestead credit 85.10 under section273.1382273.1384, voter approved school levy, 85.11 other local school levy, and the sum of the special taxing 85.12 districts, and as a total of all taxing authorities: 85.13 (i) the actual tax for taxes payable in the current year; 85.14 (ii) the tax change due to spending factors, defined as the 85.15 proposed tax minus the constant spending tax amount; 85.16 (iii) the tax change due to other factors, defined as the 85.17 constant spending tax amount minus the actual current year tax; 85.18 and 85.19 (iv) the proposed tax amount. 85.20 If the county levy under clause (2) includes an amount for 85.21 a lake improvement district as defined under sections 103B.501 85.22 to 103B.581, the amount attributable for that purpose must be 85.23 separately stated from the remaining county levy amount. 85.24 In the case of a town or the statedetermined school85.25 general tax, the final tax shall also be its proposed tax unless 85.26 the town changes its levy at a special town meeting under 85.27 section 365.52. If a school district has certified under 85.28 section 126C.17, subdivision 9, that a referendum will be held 85.29 in the school district at the November general election, the 85.30 county auditor must note next to the school district's proposed 85.31 amount that a referendum is pending and that, if approved by the 85.32 voters, the tax amount may be higher than shown on the notice. 85.33 In the case of the city of Minneapolis, the levy for the 85.34 Minneapolis library board and the levy for Minneapolis park and 85.35 recreation shall be listed separately from the remaining amount 85.36 of the city's levy. In the case of a parcel where tax increment 86.1 or the fiscal disparities areawide tax under chapter 276A or 86.2 473F applies, the proposed tax levy on the captured value or the 86.3 proposed tax levy on the tax capacity subject to the areawide 86.4 tax must each be stated separately and not included in the sum 86.5 of the special taxing districts; and 86.6 (3) the increase or decrease between the total taxes 86.7 payable in the current year and the total proposed taxes, 86.8 expressed as a percentage. 86.9 For purposes of this section, the amount of the tax on 86.10 homesteads qualifying under the senior citizens' property tax 86.11 deferral program under chapter 290B is the total amount of 86.12 property tax before subtraction of the deferred property tax 86.13 amount. 86.14 (e) The notice must clearly state that the proposed or 86.15 final taxes do not include the following: 86.16 (1) special assessments; 86.17 (2) levies approved by the voters after the date the 86.18 proposed taxes are certified, including bond referenda, school 86.19 district levy referenda, and levy limit increase referenda; 86.20 (3) amounts necessary to pay cleanup or other costs due to 86.21 a natural disaster occurring after the date the proposed taxes 86.22 are certified; 86.23 (4) amounts necessary to pay tort judgments against the 86.24 taxing authority that become final after the date the proposed 86.25 taxes are certified; and 86.26 (5) the contamination tax imposed on properties which 86.27 received market value reductions for contamination. 86.28 (f) Except as provided in subdivision 7, failure of the 86.29 county auditor to prepare or the county treasurer to deliver the 86.30 notice as required in this section does not invalidate the 86.31 proposed or final tax levy or the taxes payable pursuant to the 86.32 tax levy. 86.33 (g) If the notice the taxpayer receives under this section 86.34 lists the property as nonhomestead, and satisfactory 86.35 documentation is provided to the county assessor by the 86.36 applicable deadline, and the property qualifies for the 87.1 homestead classification in that assessment year, the assessor 87.2 shall reclassify the property to homestead for taxes payable in 87.3 the following year. 87.4 (h) In the case of class 4 residential property used as a 87.5 residence for lease or rental periods of 30 days or more, the 87.6 taxpayer must either: 87.7 (1) mail or deliver a copy of the notice of proposed 87.8 property taxes to each tenant, renter, or lessee; or 87.9 (2) post a copy of the notice in a conspicuous place on the 87.10 premises of the property. 87.11 The notice must be mailed or posted by the taxpayer by 87.12 November 27 or within three days of receipt of the notice, 87.13 whichever is later. A taxpayer may notify the county treasurer 87.14 of the address of the taxpayer, agent, caretaker, or manager of 87.15 the premises to which the notice must be mailed in order to 87.16 fulfill the requirements of this paragraph. 87.17 (i) For purposes of this subdivision, subdivisions 5a and 87.18 6, "metropolitan special taxing districts" means the following 87.19 taxing districts in the seven-county metropolitan area that levy 87.20 a property tax for any of the specified purposes listed below: 87.21 (1) metropolitan council under section 473.132, 473.167, 87.22 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 87.23 (2) metropolitan airports commission under section 473.667, 87.24 473.671, or 473.672; and 87.25 (3) metropolitan mosquito control commission under section 87.26 473.711. 87.27 For purposes of this section, any levies made by the 87.28 regional rail authorities in the county of Anoka, Carver, 87.29 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 87.30 398A shall be included with the appropriate county's levy and 87.31 shall be discussed at that county's public hearing. 87.32 (j) If a statutory or home rule charter city or a town has 87.33 exercised the local levy option provided by section 473.388, 87.34 subdivision 7, it may include in the notice of its proposed 87.35 taxes the amount of its proposed taxes attributable to its 87.36 exercise of the option. In the first year of the city or town's 88.1 exercise of this option, the statement shall include an estimate 88.2 of the reduction of the metropolitan council's tax on the parcel 88.3 due to exercise of that option. The metropolitan council's levy 88.4 shall be adjusted accordingly. 88.5 [EFFECTIVE DATE.] This section is effective for notices of 88.6 proposed property taxes prepared in 2002, for taxes payable in 88.7 2003, and thereafter. 88.8 Sec. 23. Minnesota Statutes 2001 Supplement, section 88.9 276.04, subdivision 2, is amended to read: 88.10 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 88.11 shall provide for the printing of the tax statements. The 88.12 commissioner of revenue shall prescribe the form of the property 88.13 tax statement and its contents. The statement must contain a 88.14 tabulated statement of the dollar amount due to each taxing 88.15 authority and the amount of the state tax from the parcel of 88.16 real property for which a particular tax statement is prepared. 88.17 The dollar amounts attributable to the county, the state tax, 88.18 the voter approved school tax, the other local school tax, the 88.19 township or municipality, and the total of the metropolitan 88.20 special taxing districts as defined in section 275.065, 88.21 subdivision 3, paragraph (i), must be separately stated. The 88.22 amounts due all other special taxing districts, if any, may be 88.23 aggregated. If the county levy under this paragraph includes an 88.24 amount for a lake improvement district as defined under sections 88.25 103B.501 to 103B.581, the amount attributable for that purpose 88.26 must be separately stated from the remaining county levy 88.27 amount. The amount of the tax on homesteads qualifying under 88.28 the senior citizens' property tax deferral program under chapter 88.29 290B is the total amount of property tax before subtraction of 88.30 the deferred property tax amount. The amount of the tax on 88.31 contamination value imposed under sections 270.91 to 270.98, if 88.32 any, must also be separately stated. The dollar amounts, 88.33 including the dollar amount of any special assessments, may be 88.34 rounded to the nearest even whole dollar. For purposes of this 88.35 section whole odd-numbered dollars may be adjusted to the next 88.36 higher even-numbered dollar. The amount of market value 89.1 excluded under section 273.11, subdivision 16, if any, must also 89.2 be listed on the tax statement. 89.3 (b) The property tax statements for manufactured homes and 89.4 sectional structures taxed as personal property shall contain 89.5 the same information that is required on the tax statements for 89.6 real property. 89.7 (c) Real and personal property tax statements must contain 89.8 the following information in the order given in this paragraph. 89.9 The information must contain the current year tax information in 89.10 the right column with the corresponding information for the 89.11 previous year in a column on the left: 89.12 (1) the property's estimated market value under section 89.13 273.11, subdivision 1; 89.14 (2) the property's taxable market value after reductions 89.15 under section 273.11, subdivisions 1a and 16; 89.16 (3) the property's gross tax, calculated by adding the 89.17 property's total property tax to the sum of the aids enumerated 89.18 in clause (4); 89.19 (4) a total of the following aids: 89.20 (i) education aids payable under chapters 122A, 123A, 123B, 89.21 124D, 125A, 126C, and 127A; 89.22 (ii) local government aids for cities, towns, and counties 89.23 under chapter 477A; 89.24 (iii) disparity reduction aid under section 273.1398; and 89.25 (iv) homestead and agricultural credit aid under section 89.26 273.1398; 89.27 (5) for homestead residential and agricultural properties, 89.28 the credits under section 273.1384; 89.29 (6) any credits received under sections 273.119; 273.123; 89.30 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 89.31 473H.10, except that the amount of credit received under section 89.32 273.135 must be separately stated and identified as "taconite 89.33 tax relief"; and 89.34 (7) the net tax payable in the manner required in paragraph 89.35 (a). 89.36 (d) If the county uses envelopes for mailing property tax 90.1 statements and if the county agrees, a taxing district may 90.2 include a notice with the property tax statement notifying 90.3 taxpayers when the taxing district will begin its budget 90.4 deliberations for the current year, and encouraging taxpayers to 90.5 attend the hearings. If the county allows notices to be 90.6 included in the envelope containing the property tax statement, 90.7 and if more than one taxing district relative to a given 90.8 property decides to include a notice with the tax statement, the 90.9 county treasurer or auditor must coordinate the process and may 90.10 combine the information on a single announcement. 90.11 The commissioner of revenue shall certify to the county 90.12 auditor the actual or estimated aids enumerated in clause (4) 90.13 that local governments will receive in the following year. The 90.14 commissioner must certify this amount by January 1 of each year. 90.15 [EFFECTIVE DATE.] This section is effective for property 90.16 tax statements prepared in 2003 and thereafter. 90.17 Sec. 24. Laws 1998, chapter 389, article 3, section 42, is 90.18 amended to read: 90.19 Sec. 42. [TRANSFER OF PROPERTY; PAYMENT OF DEFERRED 90.20 TAXES.] 90.21 Subdivision 1. [ADDITIONAL TAX.] The assessor shall make a 90.22 separate determination of the market value and net tax capacity 90.23 of a property qualifying under section 38 as if sections 39 and 90.24 40 did not apply. The tax based upon the appropriate local tax 90.25 rate applicable to such property in the taxing district shall be 90.26 recorded on the property assessment records. 90.27 Subd. 2. [RECAPTURE.] (a) Property or any portion thereof 90.28 qualifying under section 38 is subject to additional taxes if: 90.29 (1) ownership of the property is transferred to anyone 90.30 other than the spouse or child of the current owner, or; 90.31 (2) the current owner or the spouse or child of the current 90.32 owner has not conveyed or entered into a contract before July 1, 90.3320022007, to convey the property to a nonprofit foundation or 90.34 corporationcreated to own and operateoperating the property as 90.35 an art park providing the services included in section 38, 90.36 clauses (2) to (5); or 91.1 (3) the nonprofit foundation or corporation to which the 91.2 property was transferred ceases to provide the services included 91.3 in section 38, clauses (2) to (5), earlier than ten years 91.4 following the effective date of the conveyance or of the 91.5 execution of the contract to convey. 91.6 (b) The additional taxes are imposed at the earlier of (1) 91.7 the year following transfer of ownership to anyone other than 91.8 the spouse or child of the current owner or a nonprofit 91.9 foundation or corporationcreated to own and operateoperating 91.10 the property as an art park, or (2) for taxes payable in200391.11 2008, or in the event the nonprofit foundation or corporation to 91.12 which the property was conveyed ceases to provide the required 91.13 services within ten years after the conveyance, for taxes 91.14 payable in the year following the year when it ceased to do so. 91.15 The additional taxes are equal to the difference between the 91.16 taxes determined under sections 39 and 40 and the amount 91.17 determined under subdivision 1 for all years that the property 91.18 qualified under section 38. The additional taxes must be 91.19 extended against the property on the tax list for the current 91.20 year; provided, however, that no interest or penalties may be 91.21 levied on the additional taxes if timely paid. 91.22 Subd. 3. [CURRENT OWNER.] For purposes of this section, 91.23 "current owner" means the owner of property qualifying under 91.24 section 38 on the date of final enactment of this act or that 91.25 owner's spouse or child. 91.26 Subd. 4. [NONPROFIT FOUNDATION OR CORPORATION.] For 91.27 purposes of this act, "nonprofit foundation or corporation" 91.28 means a nonprofit entitycreated to own and operateas defined 91.29 under section 501(c)(3) of the Internal Revenue Code that is 91.30 operating the property as an art park providing the services 91.31 included in section 38, clauses (2) to (5). 91.32 [EFFECTIVE DATE.] This section is effective the day 91.33 following final enactment. 91.34 Sec. 25. [COOK COUNTY; EXPENDITURE OF ROAD AND BRIDGE 91.35 LEVY.] 91.36 Notwithstanding Minnesota Statutes, section 163.06, 92.1 subdivisions 4 and 5, the county board of Cook county, by 92.2 resolution, may expend the proceeds of the levy under Minnesota 92.3 Statutes, section 163.06, in any organized or unorganized 92.4 township or portion thereof in the county. 92.5 [EFFECTIVE DATE.] This section is effective the day after 92.6 the governing body of Cook county and its chief clerical officer 92.7 timely complete their compliance with Minnesota Statutes, 92.8 section 645.021, subdivisions 2 and 3. 92.9 Sec. 26. [REPEALER.] 92.10 Laws 2001, First Special Session chapter 5, article 3, 92.11 section 88, is repealed effective July 1, 2002. 92.12 ARTICLE 5 92.13 EDUCATION LEVIES AND REVENUES 92.14 Section 1. Minnesota Statutes 2001 Supplement, section 92.15 124D.86, subdivision 3, is amended to read: 92.16 Subd. 3. [INTEGRATION REVENUE.] Integration revenue equals 92.17 the following amounts: 92.18 (1) for independent school district No. 709, Duluth, $207 92.19 times the adjusted pupil units for the school year; 92.20 (2) for independent school district No. 625, St. Paul,and92.21for special school district No. 1, Minneapolis,$446 times the 92.22 adjusted pupil units for the school year; 92.23 (3) for special school district No. 1, Minneapolis, the sum 92.24 of $446 times the adjusted pupil units for the school year and 92.25 an additional $35 times the adjusted pupil units for the school 92.26 year that is provided entirely through a local levy; 92.27 (4) for a district not listed in clause (1)or, (2), or 92.28 (3), that must implement a plan under Minnesota Rules, parts 92.29 3535.0100 to 3535.0180, where the district's enrollment of 92.30 protected students, as defined under Minnesota Rules, part 92.31 3535.0110, exceeds 15 percent, the lesser of (i) the actual cost 92.32 of implementing the plan during the fiscal year minus the aid 92.33 received under subdivision 6, or (ii) $130 times the adjusted 92.34 pupil units for the school year; 92.35(4)(5) for a district not listed in clause (1), (2), 92.36or(3), or (4), that is required to implement a plan according 93.1 to the requirements of Minnesota Rules, parts 3535.0100 to 93.2 3535.0180, the lesser of 93.3 (i) the actual cost of implementing the plan during the 93.4 fiscal year minus the aid received under subdivision 6, or 93.5 (ii) $93 times the adjusted pupil units for the school year. 93.6 Any money received by districts in clauses (1) to(3)(4) 93.7 which exceeds the amount received in fiscal year 2000 shall be 93.8 subject to the budget requirements in subdivision 1a; and 93.9(5)(6) for a member district of a multidistrict 93.10 integration collaborative that files a plan with the 93.11 commissioner, but is not contiguous to a racially isolated 93.12 district, integration revenue equals the amount defined in 93.13 clause(4)(5). 93.14 [EFFECTIVE DATE.] This section is effective the day 93.15 following final enactment for revenue for fiscal year 2003. 93.16 Sec. 2. Minnesota Statutes 2001 Supplement, section 93.17 126C.40, subdivision 1, is amended to read: 93.18 Subdivision 1. [TO LEASE BUILDING OR LAND.] (a) Whenaan 93.19 independent or a special school district or a group of 93.20 independent or special school districts finds it economically 93.21 advantageous to rent or lease a building or land for any 93.22 instructional purposes or for school storage or furniture 93.23 repair, and it determines that the operating capital revenue 93.24 authorized under section 126C.10, subdivision 13, is 93.25 insufficient for this purpose, it may apply to the commissioner 93.26 for permission to make an additional capital expenditure levy 93.27 for this purpose. An application for permission to levy under 93.28 this subdivision must contain financial justification for the 93.29 proposed levy, the terms and conditions of the proposed lease, 93.30 and a description of the space to be leased and its proposed use. 93.31 (b) The criteria for approval of applications to levy under 93.32 this subdivision must include: the reasonableness of the price, 93.33 the appropriateness of the space to the proposed activity, the 93.34 feasibility of transporting pupils to the leased building or 93.35 land, conformity of the lease to the laws and rules of the state 93.36 of Minnesota, and the appropriateness of the proposed lease to 94.1 the space needs and the financial condition of the district. 94.2 The commissioner must not authorize a levy under this 94.3 subdivision in an amount greater than the cost to the district 94.4 of renting or leasing a building or land for approved purposes. 94.5 The proceeds of this levy must not be used for custodial or 94.6 other maintenance services. A district may not levy under this 94.7 subdivision for the purpose of leasing or renting a 94.8 district-owned building or site to itself. 94.9 (c) For agreements finalized after July 1, 1997, a district 94.10 may not levy under this subdivision for the purpose of leasing: 94.11 (1) a newly constructed building used primarily for regular 94.12 kindergarten, elementary, or secondary instruction; or (2) a 94.13 newly constructed building addition or additions used primarily 94.14 for regular kindergarten, elementary, or secondary instruction 94.15 that contains more than 20 percent of the square footage of the 94.16 previously existing building. 94.17 (d) Notwithstanding paragraph (b), a district may levy 94.18 under this subdivision for the purpose of leasing or renting a 94.19 district-owned building or site to itself only if the amount is 94.20 needed by the district to make payments required by a lease 94.21 purchase agreement, installment purchase agreement, or other 94.22 deferred payments agreement authorized by law, and the levy 94.23 meets the requirements of paragraph (c). A levy authorized for 94.24 a district by the commissioner under this paragraph may be in 94.25 the amount needed by the district to make payments required by a 94.26 lease purchase agreement, installment purchase agreement, or 94.27 other deferred payments agreement authorized by law, provided 94.28 that any agreement include a provision giving the school 94.29 districts the right to terminate the agreement annually without 94.30 penalty. 94.31 (e) The total levy under this subdivision for a district 94.32 for any year must not exceed $100 times the resident pupil units 94.33 for the fiscal year to which the levy is attributable. 94.34 (f) For agreements for which a review and comment have been 94.35 submitted to the department of children, families, and learning 94.36 after April 1, 1998, the term "instructional purpose" as used in 95.1 this subdivision excludes expenditures on stadiums. 95.2 (g) The commissioner of children, families, and learning 95.3 may authorize a school district to exceed the limit in paragraph 95.4 (e) if the school district petitions the commissioner for 95.5 approval. The commissioner shall grant approval to a school 95.6 district to exceed the limit in paragraph (e) for not more than 95.7 five years if the district meets the following criteria: 95.8 (1) the school district has been experiencing pupil 95.9 enrollment growth in the preceding five years; 95.10 (2) the purpose of the increased levy is in the long-term 95.11 public interest; 95.12 (3) the purpose of the increased levy promotes colocation 95.13 of government services; and 95.14 (4) the purpose of the increased levy is in the long-term 95.15 interest of the district by avoiding over construction of school 95.16 facilities. 95.17 (h) A school district that is a member of an intermediate 95.18 school district may include in its authority under this section 95.19 the costs associated with leases of administrative and classroom 95.20 space for intermediate school district programs. This authority 95.21 must not exceed $25 times the adjusted marginal cost pupil units 95.22 of the member districts. This authority is in addition to any 95.23 other authority authorized under this section. 95.24 (i) In addition to the allowable capital levies in 95.25 paragraph (a), a district that is a member of the "Technology 95.26 and Information Education Systems" data processing joint board, 95.27 that finds it economically advantageous to enter into a lease 95.28 purchase agreement for a building for a group of school 95.29 districts or special school districts for staff development 95.30 purposes, may levy for its portion of lease costs attributed to 95.31 the district within the total levy limit in paragraph (e). 95.32 [EFFECTIVE DATE.] This section is effective for taxes 95.33 payable in 2003. 95.34 Sec. 3. Minnesota Statutes 2001 Supplement, section 95.35 126C.43, subdivision 3, is amended to read: 95.36 Subd. 3. [TAX LEVY FOR JUDGMENT.] A district may levy the 96.1 amounts necessary to pay judgments against the district under 96.2 section 123B.25 that became final after the date the district 96.3 certified its proposed levy in the previous year. With the 96.4 approval of the commissioner, a district may spread this levy 96.5 over a period not to exceed three years. Upon approval through 96.6 the adoption of a resolution by each of an intermediate 96.7 district's member school district boards, a member school 96.8 district may include its proportionate share of the costs of a 96.9 judgment against an intermediate school district that became 96.10 final under section 123B.25 after the date that the earliest 96.11 member school district certified its proposed levy in the 96.12 previous year. With the approval of the commissioner, an 96.13 intermediate school district member school district may spread 96.14 this levy over a period not to exceed three years. 96.15 [EFFECTIVE DATE.] This section is effective for taxes 96.16 payable in 2003. 96.17 Sec. 4. Minnesota Statutes 2000, section 126C.44, is 96.18 amended to read: 96.19 126C.44 [CRIME-RELATED COSTSSAFE SCHOOLS LEVY.] 96.20 Each district may make a levy on all taxable property 96.21 located within the district for the purposes specified in this 96.22 section. The maximum amount which may be levied for all costs 96.23 under this section shall be equal to$11$30 multiplied by the 96.24 district's adjusted marginal cost pupil units for the school 96.25 year. The proceeds of the levy must be used for directly 96.26 funding the following purposes or for reimbursing the cities and 96.27 counties who contract with the district for the following 96.28 purposes: (1) to pay the costs incurred for the salaries, 96.29 benefits, and transportation costs of peace officers and 96.30 sheriffs for liaison in services in the district's schools; (2) 96.31 to pay the costs for a drug abuse prevention program as defined 96.32 in section 609.101, subdivision 3, paragraph (e), in the 96.33 elementary schools; (3) to pay the costs for a gang resistance 96.34 education training curriculum in the district's schools; (4) to 96.35 pay the costs for security in the district's schools and on 96.36 school property; or (5) to pay the costs for other crime 97.1 prevention, drug abuse, student and staff safety, and violence 97.2 prevention measures taken by the school district. The district 97.3 must initially attempt to contract for services to be provided 97.4 by peace officers or sheriffs with the police department of each 97.5 city or the sheriff's department of the county within the 97.6 district containing the school receiving the services. If a 97.7 local police department or a county sheriff's department does 97.8 not wish to provide the necessary services, the district may 97.9 contract for these services with any other police or sheriff's 97.10 department located entirely or partially within the school 97.11 district's boundaries. The levy authorized under this section 97.12 is not included in determining the school district's levy 97.13 limitations. 97.14 [EFFECTIVE DATE.] This section is effective for taxes 97.15 payable in 2003. 97.16 Sec. 5. Laws 2001, First Special Session chapter 6, 97.17 article 1, section 53, is amended to read: 97.18 Sec. 53. [REFERENDUM CONVERSION ADJUSTMENT FOR INTEREST 97.19 EARNED.] 97.20 (a) The commissioner of children, families, and learning 97.21 shall calculate the change in estimated net interest earnings 97.22 for each district attributable to the repeal of the general 97.23 education levy as provided in this section. 97.24 (b)The interest calculations must assume an annual97.25interest rate of five percent, and must be based on the amount97.26by which the district's cumulative net general education levy97.27receipts for taxes payable in 2000, based on the assumptions97.28specified in Minnesota Statutes, section 127A.45, subdivision 8,97.29exceeds the cumulative amount that would have been guaranteed97.30for each payment in fiscal year 2001, as defined in Minnesota97.31Statutes, section 127A.45, subdivisions 2 and 3, calculated97.32using data as of the June 20, 2001, payment, and assuming that97.33the repeal of the general education levy was effective for97.34fiscal year 2001. The commissioner shall divide the interest97.35revenue in fiscal year 2001 by the number of resident marginal97.36cost pupil units in fiscal year 2001.The interest calculations 98.1 must assume an annual interest rate of five percent, and must be 98.2 based on the difference between (1) the district's estimated aid 98.3 payments and levy receipts for fiscal year 2003, based upon the 98.4 payment schedule specified in Minnesota Statutes, section 98.5 127A.45, and (2) the amount that the district's estimated aid 98.6 payments and levy receipts for fiscal year 2003 would have been 98.7 had the general education levy for fiscal year 2003 been set at 98.8 the amount of the district's general education levy for taxes 98.9 payable in 2001. For the purposes of this section, the general 98.10 education levy must not include the education homestead credit 98.11 or the education agricultural credit. 98.12 (c)The amount calculated in paragraph (a) may be converted98.13to an additional referendum allowance according to Minnesota98.14Statutes, section 126C.17, subdivision 11.The amount 98.15 calculated in paragraph (b), less any interest conversion 98.16 revenue calculated for the district under Laws 2001, First 98.17 Special Session chapter 6, article 1, section 53, is added to 98.18 the district's levy limitation for taxes payable in 2003 through 98.19 2006. 98.20 (d)Any additional referendum allowance as a result of a98.21conversion under paragraph (b) shall be included in the98.22referendum conversion allowance used to determine the referendum98.23allowance limit under Minnesota Statutes, section 126C.17,98.24subdivision 2.If the state total levy under paragraph (c) 98.25 exceeds $3,000,000, the commissioner shall reduce the levy 98.26 authority proportionately for each eligible district such that 98.27 the state total levy equals $3,000,000. 98.28 (e) The commissioner must calculate an adjustment for taxes 98.29 payable in 2002 for each school district as though this section 98.30 were in effect for that tax year. 98.31 [EFFECTIVE DATE.] This section is effective for revenue for 98.32 taxes payable in 2003 and later. 98.33 Sec. 6. Laws 2001, First Special Session chapter 6, 98.34 article 4, section 25, is amended to read: 98.35 Sec. 25. [INTERACTIVE WEB-BASED AND INDEPENDENT STUDY 98.36 PROGRAMS.] 99.1 Subdivision 1. [PUPIL REVENUE.] (a) General education 99.2 revenue for an eligible pupil in an approved interactive 99.3 Web-based program offered by a school district or a charter 99.4 school, or an approved alternative program that has an 99.5 independent study component offered by a charter school, under 99.6 the supervision of a teacher with a Minnesota license, must be 99.7 paid for each hour of completed coursework needed for grade 99.8 progression, credit, or alignment with state graduation 99.9 standards. For purposes of this section, an eligible pupil is a 99.10 public school pupil concurrently enrolled in the district or 99.11 charter school or concurrently enrolled in another district or 99.12 charter school and participating in the program by agreement 99.13 with the district or charter school of enrollment. The course 99.14 of study must be approved by the commissioner of children, 99.15 families, and learning for alignment with the state graduation 99.16 standards and compliance with Minnesota Statutes, chapter 125A. 99.17 An alternative program that has an independent study component 99.18 must also meet the requirements of Minnesota Statutes, section 99.19 126C.05, subdivision 15, paragraph (b), clauses (i) and (iv). 99.20 Average daily membership for a pupil shall equal the number of 99.21 hours of coursework completed divided by the number of hours 99.22 required for a full-time student in the district or charter 99.23 school. Pupils enrolled in the program must not be counted as 99.24 more than 1.0 pupil in average daily membership. A school 99.25 district or charter school is not required to provide a pupil 99.26 enrolled in the program with access to a computer or to the 99.27 Internet. 99.28 (b) Notwithstanding paragraph (a), pupils enrolled in a 99.29 Web-based public alternative program approved by the 99.30 commissioner before June 1, 2001, are not required to be 99.31 concurrently enrolled in the district and may be counted as more 99.32 than 1.0 pupil in average daily membership under Minnesota 99.33 Statutes, section 126C.05, subdivision 15. 99.34 (c) Notwithstanding paragraph (a), pupils enrolled in a 99.35 charter school with a Web-based program, approved by the 99.36 commissioner before June 1, 2001, are not required to be 100.1 concurrently enrolled in the charter school. 100.2 (d) Notwithstanding paragraph (a), pupils enrolled in a 100.3 charter school with an alternative program that has an 100.4 independent study component, approved by the commissioner for 100.5 fiscal year 2001, may be counted as more than 1.0 pupil in 100.6 average daily membership under Minnesota Statutes, section 100.7 126C.05, subdivision 15, paragraph (b), clause (iii). 100.8 Subd. 2. [REIMBURSEMENT.] Notwithstanding Minnesota 100.9 Statutes, section 126C.19, subdivision 4, for fiscalyearyears 100.10 2002 and 2003 only, the commissioner shall establish a process 100.11 for providing additional revenue to school districts or charter 100.12 schools for: 100.13 (1) an eligible pupil in an approved interactive Web-based 100.14 program under subdivision 1, paragraph (a), that may be counted 100.15 as more than 1.0 pupil in average daily membership; or 100.16 (2) a nonpublic pupil in an approved interactive Web-based 100.17 program in a public school under subdivision 1, paragraph (a). 100.18 The commissioner may award additional general education revenue 100.19 to school districts and charter schools up to the amount 100.20 appropriated for this section. The amount of additional revenue 100.21 awarded to a school district under this section shall be based 100.22 on additional pupils in average daily membership that are 100.23 generated according to this subdivision with the prior approval 100.24 from the commissioner. The commissioner shall establish a 100.25 process to prioritize the awards under this subdivision based on 100.26 the estimated number of students the school district or charter 100.27 school expects to serve under this section. 100.28 [EFFECTIVE DATE.] This section is effective for revenue for 100.29 fiscal year 2003 only. 100.30 Sec. 7. Laws 2001, First Special Session chapter 6, 100.31 article 4, section 27, subdivision 9, is amended to read: 100.32 Subd. 9. [REIMBURSEMENT FOR WEB-BASED AND INDEPENDENT 100.33 STUDY COURSES.] For grants to school districts and charter 100.34 schools for additional pupils taking on-line courses according 100.35 to section 25: 100.36 $100,000 ..... 2002 101.1 This appropriation is available until June 30, 2003. 101.2 Sec. 8. [DISABLED ACCESS LEVY AUTHORITY; WESTBROOK-WALNUT 101.3 GROVE.] 101.4 Notwithstanding the time limit in Minnesota Statutes, 101.5 section 123B.58, subdivision 3, independent school district No. 101.6 2898, Westbrook-Walnut Grove, may levy its remaining disabled 101.7 access levy authority over five or fewer years. 101.8 [EFFECTIVE DATE.] This section is effective the day 101.9 following final enactment. 101.10 Sec. 9. [DISABLED ACCESS LEVY AUTHORITY; PINE CITY.] 101.11 Notwithstanding the time limits in Minnesota Statutes, 101.12 section 123B.58, subdivision 3, independent school district No. 101.13 578, Pine City, may levy its remaining disabled access levy 101.14 authority over five or fewer years. 101.15 [EFFECTIVE DATE.] This section is effective the day 101.16 following final enactment. 101.17 ARTICLE 6 101.18 AIDS AND LEVIES 101.19 Section 1. Minnesota Statutes 2000, section 69.77, is 101.20 amended by adding a subdivision to read: 101.21 Subd. 12. [APPLICATION OF OTHER LAWS TO CONTRIBUTION 101.22 RATE.] In the absence of any specific provision to the contrary, 101.23 no general or special law previously enacted may be construed as 101.24 reducing the levy amount or rate of contribution to a police or 101.25 firefighters relief association to which subdivision 1a applies, 101.26 by a municipality or member of the association, which is 101.27 required as a condition for the use of public funds or the levy 101.28 of taxes for the support of the association. Each association, 101.29 the municipality in which it is organized, and the officers of 101.30 each, are authorized to do all things required by this section 101.31 as a condition for the use of public funds or the levy of taxes 101.32 for the support of the association. 101.33 Sec. 2. [126C.445] [TREE GROWTH REPLACEMENT REVENUE.] 101.34 For taxes payable in 2003 and later, a school district may 101.35 levy an amount not to exceed its miscellaneous revenue for tree 101.36 growth revenue for taxes payable in 2001. 102.1 [EFFECTIVE DATE.] This section is effective beginning with 102.2 taxes levied in 2002, payable in 2003. 102.3 Sec. 3. Minnesota Statutes 2000, section 273.1398, 102.4 subdivision 3, is amended to read: 102.5 Subd. 3. [DISPARITY REDUCTION AID.] (a) For taxes payable 102.6 in1995,2003 and subsequent years, the amount of disparity aid 102.7 certified for each taxing district within each unique taxing 102.8 jurisdiction for taxes payable in the prior year shall be 102.9 multiplied by the ratio of (1) the jurisdiction's tax capacity 102.10 using the class rates for taxes payable in the year for which 102.11 aid is being computed, to (2) its tax capacity using the class 102.12 rates for taxes payable in the year prior to that for which aid 102.13 is being computed, both based upon market values for taxes 102.14 payable in the year prior to that for which aid is being 102.15 computed. For the purposes of this aid determination, disparity 102.16 reduction aid certified for taxes payable in the prior year for 102.17 a taxing entity other than a town or school district is deemed 102.18 to be county government disparity reduction aid.For taxes102.19payable in 1992 and subsequent years,The amount of disparity 102.20 aid certified to each taxing jurisdiction shall be reduced by 102.21 any reductions required in the current year or permanent 102.22 reductions required in previous years under section 477A.0132. 102.23 (b) For aid payable in 2003, in each unique taxing 102.24 jurisdiction where the total tax rate for taxes payable in 2002 102.25 exceeds 135 percent of taxable net tax capacity, an amount shall 102.26 be permanently added to the unique taxing jurisdiction's aid 102.27 amount under paragraph (a) equal to the lesser of: (i) the 102.28 amount, if any, by which 87 percent of the aid certified for 102.29 2001 exceeds the amount certified for 2002, or (ii) the amount 102.30 that would be necessary to reduce the total payable 2002 tax 102.31 rate for the unique taxing jurisdiction to 135 percent of 102.32 taxable net tax capacity. The amount determined under this 102.33 paragraph must be added before the class rate adjustment 102.34 described in paragraph (a). 102.35 [EFFECTIVE DATE.] This section is effective for aids 102.36 payable in 2003 and subsequent years. 103.1 Sec. 4. Minnesota Statutes 2001 Supplement, section 103.2 273.1398, subdivision 4d, is amended to read: 103.3 Subd. 4d. [AID OFFSET FOR OUT-OF-HOME PLACEMENT COSTS.] 103.4 For aid payable in20032004, each county's aid under 103.5 subdivision 2 shall be permanently reduced by an amount equal to 103.6 the county's20032004 reimbursement for nonfederal expenditures 103.7 for out-of-home placements, as provided in section 245.775, 103.8 provided that payments will be made under section 477A.0123 in 103.9 calendar year20032004. The counties shall provide all 103.10 information requested by the commissioner of human services 103.11 necessary to allow the commissioner to certify the previous 103.12 three years' average nonfederal costs to the commissioner of 103.13 revenue by July 15,20032004. The aid reduction under this 103.14 subdivision mustbe made prior tonot exceed the difference 103.15 between (1) the amount of aid calculated for the county for 103.16 calendar year 2004 under subdivision 2, including any addition 103.17 under section 477A.07, and (2) the amount of any aid reductions 103.18 for the state takeover of courts contained in Laws 2001, First 103.19 Special Session chapter 5, article 5. 103.20 [EFFECTIVE DATE.] This section is effective for aids 103.21 payable in 2004. 103.22 Sec. 5. Minnesota Statutes 2001 Supplement, section 103.23 275.70, subdivision 5, is amended to read: 103.24 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 103.25 portions of ad valorem taxes levied by a local governmental unit 103.26 for the following purposes or in the following manner: 103.27 (1) to pay the costs of the principal and interest on 103.28 bonded indebtedness or to reimburse for the amount of liquor 103.29 store revenues used to pay the principal and interest due on 103.30 municipal liquor store bonds in the year preceding the year for 103.31 which the levy limit is calculated; 103.32 (2) to pay the costs of principal and interest on 103.33 certificates of indebtedness issued for any corporate purpose 103.34 except for the following: 103.35 (i) tax anticipation or aid anticipation certificates of 103.36 indebtedness; 104.1 (ii) certificates of indebtedness issued under sections 104.2 298.28 and 298.282; 104.3 (iii) certificates of indebtedness used to fund current 104.4 expenses or to pay the costs of extraordinary expenditures that 104.5 result from a public emergency; or 104.6 (iv) certificates of indebtedness used to fund an 104.7 insufficiency in tax receipts or an insufficiency in other 104.8 revenue sources; 104.9 (3) to provide for the bonded indebtedness portion of 104.10 payments made to another political subdivision of the state of 104.11 Minnesota; 104.12 (4) to fund payments made to the Minnesota state armory 104.13 building commission under section 193.145, subdivision 2, to 104.14 retire the principal and interest on armory construction bonds; 104.15 (5) property taxes approved by voters which are levied 104.16 against the referendum market value as provided under section 104.17 275.61; 104.18 (6) to fund matching requirements needed to qualify for 104.19 federal or state grants or programs to the extent that either 104.20 (i) the matching requirement exceeds the matching requirement in 104.21 calendar year 2001, or (ii) it is a new matching requirement 104.22 that didn't exist prior to 2002; 104.23 (7) to pay the expenses reasonably and necessarily incurred 104.24 in preparing for or repairing the effects of natural disaster 104.25 including the occurrence or threat of widespread or severe 104.26 damage, injury, or loss of life or property resulting from 104.27 natural causes, in accordance with standards formulated by the 104.28 emergency services division of the state department of public 104.29 safety, as allowed by the commissioner of revenue under section 104.30 275.74, paragraph (b); 104.31 (8) pay amounts required to correct an error in the levy 104.32 certified to the county auditor by a city or county in a levy 104.33 year, but only to the extent that when added to the preceding 104.34 year's levy it is not in excess of an applicable statutory, 104.35 special law or charter limitation, or the limitation imposed on 104.36 the governmental subdivision by sections 275.70 to 275.74 in the 105.1 preceding levy year; 105.2 (9) to pay an abatement under section 469.1815; 105.3 (10) to pay any costs attributable to increases in the 105.4 employer contribution rates under chapter 353 that are effective 105.5 after June 30, 2001; 105.6 (11) to pay the operating or maintenance costs of a county 105.7 jail as authorized in section 641.01 or 641.262, or of a 105.8 correctional facility as defined in section 241.021, subdivision 105.9 1, paragraph (5), to the extent that the county can demonstrate 105.10 to the commissioner of revenue that the amount has been included 105.11 in the county budget as a direct result of a rule, minimum 105.12 requirement, minimum standard, or directive of the department of 105.13 corrections, or to pay the operating or maintenance costs of a 105.14 regional jail as authorized in section 641.262. For purposes of 105.15 this clause, a district court order is not a rule, minimum 105.16 requirement, minimum standard, or directive of the department of 105.17 corrections. If the county utilizes this special levy, any 105.18 amount levied by the county in the previous levy year for the 105.19 purposes specified under this clause and included in the 105.20 county's previous year's levy limitation computed under section 105.21 275.71, shall be deducted from the levy limit base under section 105.22 275.71, subdivision 2, when determining the county's current 105.23 year levy limitation. The county shall provide the necessary 105.24 information to the commissioner of revenue for making this 105.25 determination; 105.26 (12) to pay for operation of a lake improvement district, 105.27 as authorized under section 103B.555. If the county utilizes 105.28 this special levy, any amount levied by the county in the 105.29 previous levy year for the purposes specified under this clause 105.30 and included in the county's previous year's levy limitation 105.31 computed under section 275.71 shall be deducted from the levy 105.32 limit base under section 275.71, subdivision 2, when determining 105.33 the county's current year levy limitation. The county shall 105.34 provide the necessary information to the commissioner of revenue 105.35 for making this determination; 105.36 (13) to repay a state or federal loan used to fund the 106.1 direct or indirect required spending by the local government due 106.2 to a state or federal transportation project or other state or 106.3 federal capital project. This authority may only be used if the 106.4 project is not a local government initiative; 106.5 (14) for counties only, to pay the costs reasonably 106.6 expected to be incurred in 2002 related to the redistricting of 106.7 election districts and establishment of election precincts under 106.8 sections 204B.135 and 204B.14, the notice required by section 106.9 204B.14, subdivision 4, and the reassignment of voters in the 106.10 statewide registration system, not to exceed $1 per capita, 106.11 provided that the county shall distribute a portion of the 106.12 amount levied under this clause equal to 25 cents times the 106.13 population of the city to all cities in the county with a 106.14 population of 30,000 or more;and106.15 (15) to pay for court administration costs as required 106.16 under section 273.1398, subdivision 4b, less the county's share 106.17 of transferred fines and fees collected by the district courts 106.18 in the county for calendar year 2001; however, for taxes levied 106.19 to pay for these costs in the year in which the court financing 106.20 is transferred to the state, the amount under this section is 106.21 limited to one-third of the aid reduction under section 106.22 273.1398, subdivision 4a; and 106.23 (16) to fund a police or firefighters relief association as 106.24 required under section 69.77 to the extent that the required 106.25 amount exceeds the amount levied for this purpose in 2001. 106.26 [EFFECTIVE DATE.] This section is effective for taxes 106.27 levied beginning in 2002. 106.28 Sec. 6. Minnesota Statutes 2001 Supplement, section 106.29 275.71, subdivision 2, is amended to read: 106.30 Subd. 2. [LEVY LIMIT BASE.] (a) The levy limit base for a 106.31 local governmental unit for taxes levied in 2001 is equal to the 106.32 greater of: 106.33 (1) the sum of its adjusted levy limit base for taxes 106.34 levied in 1999 plus the amount it levied in 1999 under Minnesota 106.35 Statutes 1999 Supplement, section 275.70, subdivision 5, clauses 106.36 (8) and (13), multiplied by: 107.1 (i) one plus the percentage growth in the implicit price 107.2 deflator for the 12-month period ending March 30, 2000; 107.3 (ii) one plus a percentage equal to the annual percentage 107.4 increase in the estimated number of households, if any, for the 107.5 most recent 12-month period that was available on July 1, 2000; 107.6 and 107.7 (iii) one plus a percentage equal to 50 percent of the 107.8 percentage increase in the taxable market value of the 107.9 jurisdiction due to new construction of class 3 property, as 107.10 defined in section 273.13, subdivision 24, except for 107.11 state-assessed utility and railroad operating property, for the 107.12 most recent year for which data was available as of July 1, 107.13 2000; or 107.14 (2) an amount equal to: 107.15 (i) the sum of the amount it levied in 2000 plus the amount 107.16 of aids it was certified to receive in calendar year 2001 under 107.17 sections 273.1398, 298.282, 477A.011 to 477A.03, prior to any 107.18 aid reductions under section 273.1399, subdivision 5, 477A.06, 107.19 and 477A.065; less 107.20 (ii) the amount it levied in 2000 that would qualify as 107.21 special levies under section 275.70, subdivision 6, for taxes 107.22 levied in 2001. The local governmental unit shall provide the 107.23 commissioner of revenue with sufficient information to make this 107.24 calculation. 107.25 (b) If the governmental unit was not subject to levy limits 107.26 for taxes levied in 1999, its levy limit base for taxes levied 107.27 in 2001 is equal to the amount calculated under paragraph (a), 107.28 clause (2). 107.29 (c) The levy limit base for a local governmental unit for 107.30 taxes levied in 2002 is equal to its adjusted levy limit base in 107.31 the previous year, plus the amount of tree growth tax it 107.32 received in calendar year 2001 under sections 270.31 to 270.39, 107.33 and plus, in the case of a city, the amount it was certified to 107.34 receive in calendar year 2001 under section 273.166, subject to 107.35 any adjustments under section 275.72. 107.36 [EFFECTIVE DATE.] This section is effective for taxes 108.1 levied in 2002, payable in 2003. 108.2 Sec. 7. Minnesota Statutes 2001 Supplement, section 108.3 275.71, subdivision 3, is amended to read: 108.4 Subd. 3. [ADJUSTMENTS FOR STATE TAKEOVERS.] (a) The levy 108.5 limit base for each local unit of government shall be adjusted 108.6 to reflect the assumption by the state of financing for certain 108.7 government functions as indicated in this subdivision. 108.8 (b) For a county in a judicial district for which financing 108.9 has not been transferred to the state by January 1, 2001, the 108.10 levy limit base for 2001 is permanently reduced by the amount of 108.11 the county's 2001 budget for court administration costs, as 108.12 certified under section 273.1398, subdivision 4b, paragraph (b), 108.13 net of the county's share of transferred fines and fees 108.14 collected by the district courts in the county for the same 108.15 budget period. 108.16 (c) For a governmental unit which levied a tax in 2000 108.17 under section 473.388, subdivision 7, the levy limit base for 108.18 2001 is permanently reduced by an amount equal to the sum of the 108.19 governmental unit's taxes payable 2001 nondebt transit services 108.20 levy plus the portion of its 2001 homestead and agricultural 108.21 credit aid under section 273.1398, subdivision 2, attributable 108.22 to nondebt transit services. 108.23 (d) For counties in a judicial district in which the state 108.24 assumed financing of mandated services costs as defined in 108.25 section 480.181, subdivision 4, on July 1, 2001, the levy limit 108.26 base for taxes levied in 2001 is permanently reduced by an 108.27 amount equal to one-half of the aid reduction under section 108.28 273.1398, subdivision 4a, paragraph (g). 108.29 [EFFECTIVE DATE.] This section is effective retroactively 108.30 for taxes payable in 2002 and 2003. 108.31 Sec. 8. Minnesota Statutes 2001 Supplement, section 108.32 275.71, subdivision 6, is amended to read: 108.33 Subd. 6. [LEVIES IN EXCESS OF LEVY LIMITS.] (a) If the 108.34 levy made by a city or county exceeds the levy limit provided in 108.35 sections 275.70 to 275.74, except when the excess levy is due to 108.36 the rounding of the rate in accordance with section 275.28, the 109.1 county auditor shall only extend the amount of taxes permitted 109.2 under sections 275.70 to 275.74, as provided for in section 109.3 275.16. 109.4 (b) For taxes levied in 2002, payable in 2003 only, if an 109.5 error was made in calculating the levy limit adjustment related 109.6 to a special levy for jails authorized under section 275.70, 109.7 subdivision 5, clause (11), in the previous year, the following 109.8 adjustments must be made: 109.9 (1) the county's levy limit base for taxes levied in 2002 109.10 must be based on the corrected adjusted levy limit base for 109.11 taxes levied in 2001; and 109.12 (2) the county's final levy limit for taxes levied in 2002, 109.13 payable in 2003, must also be temporarily reduced by an amount 109.14 equal to the amount of county levy spread in the previous year 109.15 in excess of the total recalculated levy limit plus authorized 109.16 special levies for taxes levied in 2001, payable in 2002. 109.17 (c) The commissioner of revenue shall inform counties 109.18 affected by paragraph (b) of the levy error and levy adjustments 109.19 required under this provision by June 15, 2002. The county may 109.20 provide additional information to the commissioner indicating 109.21 why these adjustments may be in error by July 15, 2002. The 109.22 commissioner shall certify the final levy adjustment to the 109.23 affected counties by August 1, 2002. The levy reduction imposed 109.24 under paragraph (b), clause (2), may be spread over a period not 109.25 to exceed three years, upon agreement between the county and the 109.26 commissioner. 109.27 [EFFECTIVE DATE.] This section is effective for taxes 109.28 levied in 2002, payable in 2003 only. 109.29 Sec. 9. Minnesota Statutes 2001 Supplement, section 109.30 477A.011, subdivision 36, is amended to read: 109.31 Subd. 36. [CITY AID BASE.] (a) Except as otherwise 109.32 provided inparagraphs (b) to (o)this subdivision, "city aid 109.33 base" means, for each city, the sum of the local government aid 109.34 and equalization aid it was originally certified to receive in 109.35 calendar year 1993 under Minnesota Statutes 1992, section 109.36 477A.013, subdivisions 3 and 5, and the amount of disparity 110.1 reduction aid it received in calendar year 1993 under Minnesota 110.2 Statutes 1992, section 273.1398, subdivision 3. 110.3 (b) For aids payable in 1996 and thereafter, a city that in 110.4 1992 or 1993 transferred an amount from governmental funds to 110.5 its sewer and water fund, which amount exceeded its net levy for 110.6 taxes payable in the year in which the transfer occurred, has a 110.7 "city aid base" equal to the sum of (i) its city aid base, as 110.8 calculated under paragraph (a), and (ii) one-half of the 110.9 difference between its city aid distribution under section 110.10 477A.013, subdivision 9, for aids payable in 1995 and its city 110.11 aid base for aids payable in 1995. 110.12 (c) The city aid base for any city with a population less 110.13 than 500 is increased by $40,000 for aids payable in calendar 110.14 year 1995 and thereafter, and the maximum amount of total aid it 110.15 may receive under section 477A.013, subdivision 9, paragraph 110.16 (c), is also increased by $40,000 for aids payable in calendar 110.17 year 1995 only, provided that: 110.18 (i) the average total tax capacity rate for taxes payable 110.19 in 1995 exceeds 200 percent; 110.20 (ii) the city portion of the tax capacity rate exceeds 100 110.21 percent; and 110.22 (iii) its city aid base is less than $60 per capita. 110.23 (d) The city aid base for a city is increased by $20,000 in 110.24 1998 and thereafter and the maximum amount of total aid it may 110.25 receive under section 477A.013, subdivision 9, paragraph (c), is 110.26 also increased by $20,000 in calendar year 1998 only, provided 110.27 that: 110.28 (i) the city has a population in 1994 of 2,500 or more; 110.29 (ii) the city is located in a county, outside of the 110.30 metropolitan area, which contains a city of the first class; 110.31 (iii) the city's net tax capacity used in calculating its 110.32 1996 aid under section 477A.013 is less than $400 per capita; 110.33 and 110.34 (iv) at least four percent of the total net tax capacity, 110.35 for taxes payable in 1996, of property located in the city is 110.36 classified as railroad property. 111.1 (e) The city aid base for a city is increased by $200,000 111.2 in 1999 and thereafter and the maximum amount of total aid it 111.3 may receive under section 477A.013, subdivision 9, paragraph 111.4 (c), is also increased by $200,000 in calendar year 1999 only, 111.5 provided that: 111.6 (i) the city was incorporated as a statutory city after 111.7 December 1, 1993; 111.8 (ii) its city aid base does not exceed $5,600; and 111.9 (iii) the city had a population in 1996 of 5,000 or more. 111.10 (f) The city aid base for a city is increased by $450,000 111.11 in 1999 to 2008 and the maximum amount of total aid it may 111.12 receive under section 477A.013, subdivision 9, paragraph (c), is 111.13 also increased by $450,000 in calendar year 1999 only, provided 111.14 that: 111.15 (i) the city had a population in 1996 of at least 50,000; 111.16 (ii) its population had increased by at least 40 percent in 111.17 the ten-year period ending in 1996; and 111.18 (iii) its city's net tax capacity for aids payable in 1998 111.19 is less than $700 per capita. 111.20 (g) Beginning in20022004, the city aid base for a city is 111.21 equal to the sum of its city aid base in20012003 and the 111.22 amount of additional aid it was certified to receive under 111.23 section 477A.06 in20012003. For20022004 only, the maximum 111.24 amount of total aid a city may receive under section 477A.013, 111.25 subdivision 9, paragraph (c), is also increased by the amount it 111.26 was certified to receive under section 477A.06 in20012003. 111.27 (h) The city aid base for a city is increased by $150,000 111.28 for aids payable in 2000 and thereafter, and the maximum amount 111.29 of total aid it may receive under section 477A.013, subdivision 111.30 9, paragraph (c), is also increased by $150,000 in calendar year 111.31 2000 only, provided that: 111.32 (1) the city has a population that is greater than 1,000 111.33 and less than 2,500; 111.34 (2) its commercial and industrial percentage for aids 111.35 payable in 1999 is greater than 45 percent; and 111.36 (3) the total market value of all commercial and industrial 112.1 property in the city for assessment year 1999 is at least 15 112.2 percent less than the total market value of all commercial and 112.3 industrial property in the city for assessment year 1998. 112.4 (i) The city aid base for a city is increased by $200,000 112.5 in 2000 and thereafter, and the maximum amount of total aid it 112.6 may receive under section 477A.013, subdivision 9, paragraph 112.7 (c), is also increased by $200,000 in calendar year 2000 only, 112.8 provided that: 112.9 (1) the city had a population in 1997 of 2,500 or more; 112.10 (2) the net tax capacity of the city used in calculating 112.11 its 1999 aid under section 477A.013 is less than $650 per 112.12 capita; 112.13 (3) the pre-1940 housing percentage of the city used in 112.14 calculating 1999 aid under section 477A.013 is greater than 12 112.15 percent; 112.16 (4) the 1999 local government aid of the city under section 112.17 477A.013 is less than 20 percent of the amount that the formula 112.18 aid of the city would have been if the need increase percentage 112.19 was 100 percent; and 112.20 (5) the city aid base of the city used in calculating aid 112.21 under section 477A.013 is less than $7 per capita. 112.22 (j) The city aid base for a city is increased by $225,000 112.23 in calendar years 2000 to 2002 and the maximum amount of total 112.24 aid it may receive under section 477A.013, subdivision 9, 112.25 paragraph (c), is also increased by $225,000 in calendar year 112.26 2000 only, provided that: 112.27 (1) the city had a population of at least 5,000; 112.28 (2) its population had increased by at least 50 percent in 112.29 the ten-year period ending in 1997; 112.30 (3) the city is located outside of the Minneapolis-St. Paul 112.31 metropolitan statistical area as defined by the United States 112.32 Bureau of the Census; and 112.33 (4) the city received less than $30 per capita in aid under 112.34 section 477A.013, subdivision 9, for aids payable in 1999. 112.35 (k) The city aid base for a city is increased by $102,000 112.36 in 2000 and thereafter, and the maximum amount of total aid it 113.1 may receive under section 477A.013, subdivision 9, paragraph 113.2 (c), is also increased by $102,000 in calendar year 2000 only, 113.3 provided that: 113.4 (1) the city has a population in 1997 of 2,000 or more; 113.5 (2) the net tax capacity of the city used in calculating 113.6 its 1999 aid under section 477A.013 is less than $455 per 113.7 capita; 113.8 (3) the net levy of the city used in calculating 1999 aid 113.9 under section 477A.013 is greater than $195 per capita; and 113.10 (4) the 1999 local government aid of the city under section 113.11 477A.013 is less than 38 percent of the amount that the formula 113.12 aid of the city would have been if the need increase percentage 113.13 was 100 percent. 113.14 (l) The city aid base for a city is increased by $32,000 in 113.15 2001 and thereafter, and the maximum amount of total aid it may 113.16 receive under section 477A.013, subdivision 9, paragraph (c), is 113.17 also increased by $32,000 in calendar year 2001 only, provided 113.18 that: 113.19 (1) the city has a population in 1998 that is greater than 113.20 200 but less than 500; 113.21 (2) the city's revenue need used in calculating aids 113.22 payable in 2000 was greater than $200 per capita; 113.23 (3) the city net tax capacity for the city used in 113.24 calculating aids available in 2000 was equal to or less than 113.25 $200 per capita; 113.26 (4) the city aid base of the city used in calculating aid 113.27 under section 477A.013 is less than $65 per capita; and 113.28 (5) the city's formula aid for aids payable in 2000 was 113.29 greater than zero. 113.30 (m) The city aid base for a city is increased by $7,200 in 113.31 2001 and thereafter, and the maximum amount of total aid it may 113.32 receive under section 477A.013, subdivision 9, paragraph (c), is 113.33 also increased by $7,200 in calendar year 2001 only, provided 113.34 that: 113.35 (1) the city had a population in 1998 that is greater than 113.36 200 but less than 500; 114.1 (2) the city's commercial industrial percentage used in 114.2 calculating aids payable in 2000 was less than ten percent; 114.3 (3) more than 25 percent of the city's population was 60 114.4 years old or older according to the 1990 census; 114.5 (4) the city aid base of the city used in calculating aid 114.6 under section 477A.013 is less than $15 per capita; and 114.7 (5) the city's formula aid for aids payable in 2000 was 114.8 greater than zero. 114.9 (n) The city aid base for a city is increased by $45,000 in 114.10 2001 and thereafter and by an additional $50,000 in calendar 114.11 years 2002 to 2011, and the maximum amount of total aid it may 114.12 receive under section 477A.013, subdivision 9, paragraph (c), is 114.13 also increased by $45,000 in calendar year 2001 only, and by 114.14 $50,000 in calendar year 2002 only, provided that: 114.15 (1) the net tax capacity of the city used in calculating 114.16 its 2000 aid under section 477A.013 is less than $810 per 114.17 capita; 114.18 (2) the population of the city declined more than two 114.19 percent between 1988 and 1998; 114.20 (3) the net levy of the city used in calculating 2000 aid 114.21 under section 477A.013 is greater than $240 per capita; and 114.22 (4) the city received less than $36 per capita in aid under 114.23 section 477A.013, subdivision 9, for aids payable in 2000. 114.24 (o) The city aid base for a city with a population of 114.25 10,000 or more which is located outside of the seven-county 114.26 metropolitan area is increased in 2002 and thereafter, and the 114.27 maximum amount of total aid it may receive under section 114.28 477A.013, subdivision 9, paragraph (b) or (c), is also increased 114.29 in calendar year 2002 only, by an amount equal to the lesser of: 114.30 (1)(i) the total population of the city, as determined by 114.31 the United States Bureau of the Census, in the 2000 census, (ii) 114.32 minus 5,000, (iii) times 60; or 114.33 (2) $2,500,000. 114.34 (p) The city aid base is increased by $50,000 in 2002 and 114.35 thereafter, and the maximum amount of total aid it may receive 114.36 under section 477A.013, subdivision 9, paragraph (c), is also 115.1 increased by $50,000 in calendar year 2002 only, provided that: 115.2 (1) the city is located in the seven-county metropolitan 115.3 area; 115.4 (2) its population in 2000 is between 10,000 and 20,000; 115.5 and 115.6 (3) its commercial industrial percentage, as calculated for 115.7 city aid payable in 2001, was greater than 25 percent. 115.8 (q) The city aid base for a city is increased by $150,000 115.9 in calendar years 2002 to 2011 and the maximum amount of total 115.10 aid it may receive under section 477A.013, subdivision 9, 115.11 paragraph (c), is also increased by $150,000 in calendar year 115.12 2002 only, provided that: 115.13 (1) the city had a population of at least 3,000 but no more 115.14 than 4,000 in 1999; 115.15 (2) its home county is located within the seven-county 115.16 metropolitan area; 115.17 (3) its pre-1940 housing percentage is less than 15 115.18 percent; and 115.19 (4) its city net tax capacity per capita for taxes payable 115.20 in 2000 is less than $900 per capita. 115.21 (r) The city aid base for a city is increased by $200,000 115.22 beginning in calendar year 2003 and the maximum amount of total 115.23 aid it may receive under section 477A.013, subdivision 9, 115.24 paragraph (c), is also increased by $200,000 in calendar year 115.25 2003 only, provided that the city qualified for an increase in 115.26 homestead and agricultural credit aid under Laws 1995, chapter 115.27 264, article 8, section 18. 115.28 [EFFECTIVE DATE.] This section is effective for aid payable 115.29 in 2002 and thereafter, except that paragraph (r) is effective 115.30 beginning with aid payable in 2003. 115.31 Sec. 10. Minnesota Statutes 2001 Supplement, section 115.32 477A.0123, is amended to read: 115.33 477A.0123 [REIMBURSEMENT OF COUNTY FOR CERTAIN OUT-OF-HOME 115.34 PLACEMENT.] 115.35 Subdivision 1. [AID PAYMENTS.] (a) In calendar year2003115.36 2004 and thereafter, the commissioner of revenue shall reimburse 116.1 each county for a portion of the nonfederal share of the cost of 116.2 out-of-home placement provided the commissioner of human 116.3 services, in consultation with the commissioner of corrections, 116.4 certifies to the commissioner of revenue that accurate data is 116.5 available to make the aid determination under this section. The 116.6 amount of reimbursement is a percent of the county's average 116.7 nonfederal share of the cost for out-of-home placement for the 116.8 most recent three calendar years for which data is available. 116.9 The commissioner shall pay the aid under the schedule used for 116.10 local government aid payments under section 477A.015. 116.11 (b) For aids payable in calendar year20032004, the 116.12 percent of reimbursement in paragraph (a) shall be equal to the 116.13 maximum percentage possible, up to 30 percent, that does not 116.14 cause the payment to any county in the seven county metropolitan 116.15 area to exceed the difference between (1) the amount of aidit116.16is scheduled to receivecalculated for the county in calendar 116.17 year20032004 under section 273.1398,prior to the offset under116.18section 273.1398, subdivision 4d, and any aid offset under116.19section 273.1398, subdivision 4a, that is scheduled to occur116.20after July 1, 2003subdivision 2, including any addition 116.21 determined under section 477A.07, and (2) the amount of any aid 116.22 reductions for the state takeover of courts contained in Laws 116.23 2001, First Special Session chapter 5, article 5. For aids 116.24 payable in20042005 and thereafter, the percent of 116.25 reimbursement under paragraph (a) shall be equal to the percent 116.26 of reimbursement determined for calendar year20032004, 116.27 adjusted so that the total payments under this section do not 116.28 exceed the appropriation under section 477A.03, subdivision 2, 116.29 paragraph (e). 116.30 (c) For purposes of this section, "out-of-home placement" 116.31 means the placement of a child in a child caring institution or 116.32 shelter licensed under Minnesota Rules, parts 9545.0905 to 116.33 9545.1125, in a group home licensed under Minnesota Rules, parts 116.34 9545.1400 to 9545.1480, in family foster care or group family 116.35 foster care licensed under Minnesota Rules, parts 9545.0010 to 116.36 9545.0260, or a correctional facility pursuant to a court order 117.1 under which a county social services agency or a county 117.2 correctional agency has been assigned responsibility for the 117.3 placement. 117.4 Subd. 2. [DETERMINATION OF NONFEDERAL SHARE OF COSTS.] (a) 117.5 By January 1, 2002, each county shall report the following 117.6 information to the commissioners of human services and 117.7 corrections, the separate amounts paid out of its social service 117.8 agency budget and its corrections budget for out-of-home 117.9 placement in calendar years 1998, 1999, and 2000, along with the 117.10 number of case days associated with the expenditures from each 117.11 budget. By March 15, 2002, the commissioner of human services, 117.12 in consultation with the commissioner of corrections, shall 117.13 certify to the commissioner of revenue and to the legislative 117.14 committees responsible for local government aids and out-of-home 117.15 placement funding, whether the data reported under this 117.16 subdivision accurately reflects total expenditures by counties 117.17 for out-of-home placement costs. 117.18 (b) By January 1 of calendar year20042003 and thereafter, 117.19 each county shall report to the commissioners of human services 117.20 and corrections the separate amounts paid out of its social 117.21 service agency budget and its corrections budget for out-of-home 117.22 placement in the calendaryearsyear two years before the 117.23 current calendar year along with the number of case days 117.24 associated with the expenditures from each budget. 117.25 (c) Until either the commissioner of human services or 117.26 corrections develops another mechanism for collecting and 117.27 verifying data on out-of-home placements, and the legislature 117.28 authorizes the use of that data, the data collected under this 117.29 subdivision shall be used to calculate payments under 117.30 subdivision 1. The commissioner of human services shall certify 117.31 the information to the commissioner of revenue by July 1 of the 117.32 year prior to the aid payment. 117.33 Sec. 11. Minnesota Statutes 2001 Supplement, section 117.34 477A.03, subdivision 2, is amended to read: 117.35 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 117.36 discharge the duties imposed by sections 477A.011 to 477A.014 is 118.1 annually appropriated from the general fund to the commissioner 118.2 of revenue. 118.3 (b) Aid payments to counties under section 477A.0121 are 118.4 limited to $20,265,000 in 1996. Aid payments to counties under 118.5 section 477A.0121 are limited to $27,571,625 in 1997. For aid 118.6 payable in 1998 and thereafter, the total aids paid under 118.7 section 477A.0121 are the amounts certified to be paid in the 118.8 previous year, adjusted for inflation as provided under 118.9 subdivision 3. 118.10 (c)(i) For aids payable in 1998 and thereafter, the total 118.11 aids paid to counties under section 477A.0122 are the amounts 118.12 certified to be paid in the previous year, adjusted for 118.13 inflation as provided under subdivision 3. 118.14 (ii) Aid payments to counties under section 477A.0122 in 118.15 2000 are further increased by an additional $20,000,000 in 2000. 118.16 (d) Aid payments to cities in 2002 under section 477A.013, 118.17 subdivision 9, are limited to the amounts certified to be paid 118.18 in the previous year, adjusted for inflation as provided in 118.19 subdivision 3, and increased by $140,000,000. For aids payable 118.20 in 2003, the total aids paid under section 477A.013, subdivision 118.21 9, are the amounts certified to be paid in the previous year, 118.22 adjusted for inflation as provided under subdivision 3. For 118.23 aids payable in 2004, the total aids paid under section 118.24 477A.013, subdivision 9, are the amounts certified to be paid in 118.25 the previous year, adjusted for inflation as provided under 118.26 subdivision 3, and increased by the amount certified to be paid 118.27 in 2003 under section 477A.06. For aids payable in 2005 and 118.28 thereafter, the total aids paid under section 477A.013, 118.29 subdivision 9, are the amounts certified to be paid in the 118.30 previous year, adjusted for inflation as provided under 118.31 subdivision 3. The additional amount authorized under 118.32 subdivision 4 is not included when calculating the appropriation 118.33 limits under this paragraph. 118.34 (e) Reimbursements made to counties under section 477A.0123 118.35 in calendar year20042005 and thereafter are limited to an 118.36 amount equal to the maximum allowed appropriation under this 119.1 section in the previous year, multiplied by a percent to be 119.2 established by law. If no percent is established by law, the 119.3 appropriation is limited to the total amount appropriated for 119.4 this purpose in the previous year. 119.5 [EFFECTIVE DATE.] This section is effective beginning with 119.6 aids payable in 2004. 119.7 Sec. 12. Minnesota Statutes 2001 Supplement, section 119.8 477A.07, subdivision 2, is amended to read: 119.9 Subd. 2. [COUNTY AID.] Each county's aid amount for 2003 119.10 determined under subdivision 1 must bepermanentlyadded to the 119.11 county's 2003 homestead and agricultural credit aidbase119.12 determined under section 273.1398for aid payable, subdivision 119.13 2, and paid in 2003 as part of the county's homestead and 119.14 agricultural credit aid. It then becomes a permanent part of 119.15 the county's homestead and agricultural credit aid base for aid 119.16 payable in 2004. Each county's aid amount for 2004 determined 119.17 under subdivision 1 must bepermanentlyadded to the county's 119.18 2004 homestead and agricultural credit aidbase for aid payable119.19 determined under section 273.1398, subdivision 2, and paid in 119.20 2004 as part of the county's homestead and agricultural credit 119.21 aid. It then becomes a permanent part of the county's homestead 119.22 and agricultural credit aid base for aid payable in 2005. 119.23 [EFFECTIVE DATE.] This section is effective beginning with 119.24 aids payable in 2003. 119.25 ARTICLE 7 119.26 ECONOMIC DEVELOPMENT 119.27 Section 1. Minnesota Statutes 2000, section 272.0212, 119.28 subdivision 4, is amended to read: 119.29 Subd. 4. [DEFINITIONS.] (a) For purposes of this section, 119.30 the following terms have the meanings given. 119.31 (b) "Qualified property" meansclass 3 andclass 1, 3, 4, 119.32 and 5 property as defined in section 273.13 that is located in a 119.33 zone and is newly constructed after the zone was designated, 119.34 including the land that contains the improvements. 119.35 (c) "Zone" means a border city development zone designated 119.36 under the provisions of section 469.1731. 120.1 [EFFECTIVE DATE.] This section is effective beginning for 120.2 assessment year 2003. 120.3 Sec. 2. Minnesota Statutes 2001 Supplement, section 120.4 469.1734, subdivision 6, is amended to read: 120.5 Subd. 6. [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 120.6 MATERIALS.] (a) The gross receipts from the sale of machinery 120.7 and equipment and repair parts are exempt from taxation under 120.8 chapter 297A, if the machinery and equipment: 120.9 (1) are used in connection with a trade or business; 120.10 (2) are placed in service in a city that is authorized to 120.11 designate a zone under section 469.1731, regardless of whether 120.12 the machinery and equipment are used in a zone; and 120.13 (3) have a useful life of 12 months or more. 120.14 (b) The gross receipts from the sale of construction 120.15 materials are exempt, if they are used to construct: 120.16 (1) a facility for use in a trade or business located in a 120.17 city that is authorized to designate a zone under section 120.18 469.1731, regardless of whether the facility is located in a 120.19 zone; or 120.20 (2) housing that is located in a zone. 120.21 The exemptions under this paragraph apply regardless of whether 120.22 the purchase is made by the owner, the user, or a contractor. 120.23 (c) A purchaser may claim an exemption under this 120.24 subdivision for tax on the purchases up to, but not exceeding: 120.25 (1) the amount of the tax credit certificates received from 120.26 the city, less 120.27 (2) any tax credit certificates used under the provisions 120.28 of subdivisions 4 and 5, and section 469.1732, subdivision 2. 120.29 (d) The tax on sales of items exempted under this 120.30 subdivision shall be imposed and collected as if the applicable 120.31 rate under section 297A.62 applied. Upon application by the 120.32 purchaser, on forms prescribed by the commissioner, a refund 120.33 equal to the tax paid shall be paid to the purchaser. The 120.34 application must include sufficient information to permit the 120.35 commissioner to verify the sales tax paid and the eligibility of 120.36 the claimant to receive the credit. No more than two 121.1 applications for refunds may be filed under this subdivision in 121.2 a calendar year. The provisions of section 289A.40 apply to the 121.3 refunds payable under this subdivision. There is annually 121.4 appropriated to the commissioner of revenue the amount required 121.5 to make the refunds, which must be deducted from the amount of 121.6 the city's allocation under section 469.169, subdivision 12, 121.7 that remains available and its limitation under section 469.1735. 121.8 The amount to be refunded shall bear interest at the rate in 121.9 section 270.76 from the date the refund claim is filed with the 121.10 commissioner. 121.11 [EFFECTIVE DATE.] This section is effective for sales made 121.12 after June 30, 2002. 121.13 Sec. 3. Minnesota Statutes 2001 Supplement, section 121.14 469.1763, subdivision 6, is amended to read: 121.15 Subd. 6. [POOLING PERMITTED FOR DEFICITS.] (a) This 121.16 subdivision applies only to districts for which the request for 121.17 certification was made before August 1, 2001, and without regard 121.18 to whether the request for certification was made prior to 121.19 August 1, 1979. 121.20 (b) The municipality for the district may transfer 121.21 available increments from another tax increment financing 121.22 district located in the municipality, if the transfer is 121.23 necessary to eliminate a deficit in the district to which the 121.24 increments are transferred. A deficit in the district for 121.25 purposes of this subdivision means the lesser of the following 121.26 two amounts: 121.27 (1)(i) the amount due during the calendar year to pay 121.28 preexisting obligations of the district; minus 121.29 (ii) the total increments to be collected from properties 121.30 located within the district that are available for the calendar 121.31 year; plus 121.32 (iii) total increments from properties located in other 121.33 districts in the municipality that are available to be used to 121.34 meet the district's obligations under this section, excluding 121.35 this subdivision, or other provisions of law (but excluding a 121.36 special tax under section 469.1791 and the grant program under 122.1 Laws 1997, chapter 231, article 1, section 19, or Laws 2001, 122.2 First Special Session chapter 5); or 122.3 (2) the reduction in increments collected from properties 122.4 located in the district for the calendar year as a result of the 122.5 changes in class rates in Laws 1997, chapter 231, article 1; 122.6 Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, 122.7 and Laws 2001, First Special Session chapter 5, or the 122.8 elimination of the general education tax levy under Laws 2001, 122.9 First Special Session chapter 5. 122.10 (c) A preexisting obligation means: 122.11 (1) bonds issued and sold before August 1, 2001, or bonds 122.12 issued pursuant to a binding contract requiring the issuance of 122.13 bonds entered into before July 1, 2001, and bonds issued to 122.14 refund such bonds or to reimburse expenditures made in 122.15 conjunction with a signed contractual agreement entered into 122.16 before August 1, 2001, to the extent that the bonds are secured 122.17 by a pledge of increments from the tax increment financing 122.18 district; and 122.19 (2) binding contracts entered into before August 1, 2001, 122.20 to the extent that the contracts require payments secured by a 122.21 pledge of increments from the tax increment financing district. 122.22 (d) The municipality may require a development authority, 122.23 other than a seaway port authority, to transfer available 122.24 increments for any of its tax increment financing districts in 122.25 the municipality to make up an insufficiency in another district 122.26 in the municipality, regardless of whether the district was 122.27 established by the development authority or another development 122.28 authority. This authority applies notwithstanding any law to 122.29 the contrary, but applies only to a development authority that: 122.30 (1) was established by the municipality; or 122.31 (2) the governing body of which is appointed, in whole or 122.32 part, by the municipality or an officer of the municipality or 122.33 which consists, in whole or part, of members of the governing 122.34 body of the municipality. The municipality may use this 122.35 authority only after it has first used all available increments 122.36 of the receiving development authority to eliminate the 123.1 insufficiency and exercised any permitted action under section 123.2 469.1792, subdivision 3, for preexisting districts of the 123.3 receiving development authority to eliminate the insufficiency. 123.4 (e) The authority under this subdivision to spend tax 123.5 increments outside of the area of the district from which the 123.6 tax increments were collected: 123.7 (1) may only be exercised after obtaining approval of the 123.8 use of the increments, in writing, by the commissioner of 123.9 revenue; 123.10 (2) is an exception to the restrictions under section 123.11 469.176, subdivision 4i, and the other provisions of this 123.12 section, and the percentage restrictions under subdivision 2 123.13 must be calculated after deducting increments spent under this 123.14 subdivision from the total increments for the district; and 123.15 (3) applies notwithstanding the provisions of the Tax 123.16 Increment Financing Act in effect for districts for which the 123.17 request for certification was made before June 30, 1982, or any 123.18 other law to the contrary. 123.19 (f) If a preexisting obligation requires the development 123.20 authority to pay an amount that is limited to the increment from 123.21 the district or a specific development within the district and 123.22 if the obligation requires paying a higher amount to the extent 123.23 that increments are available, the municipality may determine 123.24 that the amount due under the preexisting obligation equals the 123.25 higher amount and may authorize the transfer of increments under 123.26 this subdivision to pay up to the higher amount. The existence 123.27 of a guarantee of obligations by the individual or entity that 123.28 would receive the payment under this paragraph is disregarded in 123.29 the determination of eligibility to pool under this 123.30 subdivision. The authority to transfer increments under this 123.31 paragraph may only be used to the extent that the payment of all 123.32 other preexisting obligations in the municipality due during the 123.33 calendar year have been satisfied. 123.34 [EFFECTIVE DATE.] This section is effective for increments 123.35 payable in 2002 and thereafter. 123.36 Sec. 4. Minnesota Statutes 2001 Supplement, section 124.1 469.1792, subdivision 1, is amended to read: 124.2 Subdivision 1. [SCOPE.] This section applies only to an 124.3 authority with a preexisting district for which: 124.4 (1)(i)the increments from the district were insufficient 124.5 to pay preexisting obligations as a result of the class rate 124.6 changes or the elimination of the state-determined general 124.7 education property tax levy under this act, or both; or 124.8(ii)(2)(i) the development authority has a binding 124.9 contract with a person requiring the authority to pay to the 124.10 person an amount that may not exceed the increment from the 124.11 district or a specific development within the districtand as a124.12result of the reduction in increment because of the class rate124.13changes or the elimination of the state-determined general124.14education property tax levy under this act, or both,; and 124.15 (ii) the authority is unable to pay the full amount under 124.16 the contract from the pledged increments or other increments 124.17 from the district that would have been due if the class rate 124.18 changes or elimination of the state-determined general education 124.19 property tax levy or both had not been made under Laws 2001, 124.20 First Special Session chapter 5; and124.21(2) the municipality exercised its full authority to pool124.22under section 469.1763, subdivision 6, and the transfer of124.23increments did not eliminate the insufficiency under clause (1),124.24item (i), or the inability to pay the full amount under clause124.25(1), item (ii). 124.26 [EFFECTIVE DATE.] This section is effective for actions 124.27 taken and resolutions approved after June 30, 2002. 124.28 Sec. 5. Minnesota Statutes 2000, section 469.1813, is 124.29 amended by adding a subdivision to read: 124.30 Subd. 6b. [EXTENDED DURATION LIMIT.] (a) Notwithstanding 124.31 the provisions of subdivision 6, a political subdivision may 124.32 grant an abatement for a period of up to 20 years, if the 124.33 abatement is for a qualified business. 124.34 (b) To be a qualified business for purposes of this 124.35 subdivision, at least 50 percent of the payroll of the 124.36 operations of the business that qualify for the abatement must 125.1 be for employees engaged in one of the following lines of 125.2 business or any combination of them: 125.3 (1) manufacturing; 125.4 (2) agricultural processing; 125.5 (3) mining; 125.6 (4) research and development; 125.7 (5) warehousing; or 125.8 (6) qualified high technology. 125.9 (c)(1) "Manufacturing" means the material staging and 125.10 production of tangible personal property by procedures commonly 125.11 regarded as manufacturing, processing, fabrication, or 125.12 assembling which changes some existing material into new shapes, 125.13 new qualities, or new combinations. 125.14 (2) "Mining" has the meaning given in section 613(c) of the 125.15 Internal Revenue Code of 1986. 125.16 (3) "Agricultural processing" means transforming, 125.17 packaging, sorting, or grading livestock or livestock products, 125.18 agricultural commodities, or plants or plant products into goods 125.19 that are used for intermediate or final consumption including 125.20 goods for nonfood use. 125.21 (4) "Research and development" means qualified research as 125.22 defined in section 41(d) of the Internal Revenue Code of 1986. 125.23 (5) "Qualified high technology" means one or more of the 125.24 following activities: 125.25 (i) advanced computing, which is any technology used in the 125.26 design and development of any of the following: 125.27 (A) computer hardware and software; 125.28 (B) data communications; and 125.29 (C) information technologies; 125.30 (ii) advanced materials, which are materials with 125.31 engineered properties created through the development of 125.32 specialized process and synthesis technology; 125.33 (iii) biotechnology, which is any technology that uses 125.34 living organisms, cells, macromolecules, microorganisms, or 125.35 substances from living organisms to make or modify a product, 125.36 improve plants or animals, or develop microorganisms for useful 126.1 purposes; 126.2 (iv) electronic device technology, which is any technology 126.3 that involves microelectronics, semiconductors, electronic 126.4 equipment, and instrumentation, radio frequency, microwave, and 126.5 millimeter electronics, and optical and optic-electrical 126.6 devices, or data and digital communications and imaging devices; 126.7 (v) engineering or laboratory testing related to the 126.8 development of a product; 126.9 (vi) technology that assists in the assessment or 126.10 prevention of threats or damage to human health or the 126.11 environment, including, but not limited to, environmental 126.12 cleanup technology, pollution prevention technology, or 126.13 development of alternative energy sources; 126.14 (vii) medical device technology, which is any technology 126.15 that involves medical equipment or products other than a 126.16 pharmaceutical product that has therapeutic or diagnostic value 126.17 and is regulated; or 126.18 (viii) advanced vehicles technology which is any technology 126.19 that involves electric vehicles, hybrid vehicles, or alternative 126.20 fuel vehicles, or components used in the construction of 126.21 electric vehicles, hybrid vehicles, or alternative fuel 126.22 vehicles. An electric vehicle is a road vehicle that draws 126.23 propulsion energy only from an on-board source of electrical 126.24 energy. A hybrid vehicle is a road vehicle that can draw 126.25 propulsion energy from both a consumable fuel and a rechargeable 126.26 energy storage system. 126.27 (d) The authority to grant new abatements under this 126.28 subdivision expires on July 1, 2004. 126.29 Sec. 6. Laws 1995, chapter 264, article 5, section 45, 126.30 subdivision 1, as amended by Laws 1996, chapter 471, article 7, 126.31 section 22, and Laws 1997, chapter 231, article 10, section 13, 126.32 is amended to read: 126.33 Subdivision 1. [CREATION OF PROJECTS.] (a) An authority 126.34 may create a housing replacement project under sections 44 to 126.35 47, as provided in this section. 126.36 (b) For the cities of Crystal, Fridley, Richfield, and 127.1 Columbia Heights, the authority may designate up to 50 parcels 127.2 in the city to be included in a housing replacement district. 127.3 No more than ten parcels may be included in year one of the 127.4 district, with up to ten additional parcels added to the 127.5 district in each of the following nine years. For the cities of 127.6 Minneapolis, St. Paul, and Duluth, each authority may designate 127.7up to 100not more than 200 parcels in the city to be included 127.8 in a housing replacement district over the life of the 127.9 district. The only parcels that may be included in a district 127.10 are (1) vacant sites, (2) parcels containing vacant houses, or 127.11 (3) parcels containing houses that are structurally substandard, 127.12 as defined in Minnesota Statutes, section 469.174, subdivision 127.13 10. 127.14 (c) The city in which the authority is located must pay at 127.15 least 25 percent of the housing replacement project costs from 127.16 its general fund, a property tax levy, or other unrestricted 127.17 money, not including tax increments. 127.18 (d) The housing replacement district plan must have as its 127.19 sole object the acquisition of parcels for the purpose of 127.20 preparing the site to be sold for market rate housing. As used 127.21 in this section, "market rate housing" means housing that has a 127.22 market value that does not exceed 150 percent of the average 127.23 market value of single-family housing in that municipality. 127.24 Sec. 7. [CITY OF ALBERT LEA; TAX INCREMENT FINANCING 127.25 DISTRICT.] 127.26 Subdivision 1. [AUTHORIZATION.] The governing body of the 127.27 city of Albert Lea may create a redevelopment tax increment 127.28 financing district as provided in this section. The city or its 127.29 port authority may be the "authority" for the purposes of 127.30 Minnesota Statutes, sections 469.174 to 469.179. 127.31 Subd. 2. [DEFINITIONS.] (a) For the purposes of this 127.32 section, the terms defined in this subdivision have the meanings 127.33 given them. 127.34 (b) "Redevelopment parcel" means the property in the city 127.35 of Albert Lea bounded by Main Street, Garfield Avenue, Front 127.36 Street, the Union Pacific railway line, and Albert Lea lake. 128.1 (c) "Reconstruction parcel" means the property in the city 128.2 of Albert Lea described as lot 1, block 5, Habben First Addition. 128.3 Subd. 3. [SPECIAL RULES.] (a) The district established 128.4 under this section is subject to the provisions of Minnesota 128.5 Statutes, sections 469.174 to 469.179, except as provided in 128.6 this subdivision. 128.7 (b) The district may consist of the redevelopment parcel 128.8 and the reconstruction parcel. 128.9 (c) Minnesota Statutes, section 469.174, subdivision 10, 128.10 paragraph (f), does not apply to the district, and if the city 128.11 finds that the redevelopment parcel meets the criteria described 128.12 in Minnesota Statutes, section 469.174, subdivision 10, 128.13 paragraph (a), clause (1), then both the redevelopment parcel 128.14 and the reconstruction parcel and the district as a whole are 128.15 considered to meet those criteria. 128.16 (d) Expenditures for activities, as defined in Minnesota 128.17 Statutes, section 469.1763, subdivision 1, paragraph (b), 128.18 anywhere within the district are considered costs of correcting 128.19 conditions that allow designation of redevelopment districts 128.20 within the meaning of Minnesota Statutes, section 469.176, 128.21 subdivision 4j. 128.22 (e) For the purposes of Minnesota Statutes, section 128.23 469.1763, subdivision 3, expenditures on the redevelopment 128.24 parcel are considered to have been expended on an activity 128.25 within the district if a qualifying action occurs within ten 128.26 years after certification of the district. 128.27 [EFFECTIVE DATE.] This section is effective upon local 128.28 approval in compliance with the requirements of Minnesota 128.29 Statutes, section 645.021. 128.30 Sec. 8. [RUSHFORD TAX INCREMENT FINANCING EXTENSION.] 128.31 The governing body of the city of Rushford may elect to 128.32 extend the duration of its downtown redevelopment tax increment 128.33 financing district by up to two additional years. 128.34 [EFFECTIVE DATE.] This section is effective upon compliance 128.35 with the requirements of Minnesota Statutes, sections 469.1782, 128.36 subdivision 2; and 645.021. 129.1 Sec. 9. [CITY OF MINNEAPOLIS TAX INCREMENT DISTRICT; 129.2 DURATION EXTENSION.] 129.3 (a) Upon approval of the city council of the city of 129.4 Minneapolis, the Minneapolis community development agency may, 129.5 notwithstanding Minnesota Statutes, section 469.176, subdivision 129.6 1b, extend the duration of the east Hennepin and University tax 129.7 increment district for a period of up to seven years, or until 129.8 all amounts payable to the developers and to the agency to 129.9 reimburse the agency's provision of $1,100,000 of city of 129.10 Minneapolis HOME funds to assist low-income housing are repaid, 129.11 whichever is shorter. 129.12 (b) The amount of additional increment which may be paid to 129.13 the district as a result of this section may not exceed: 129.14 (1) the increment that would have been collected if the 129.15 class rate changes and elimination of the state-determined 129.16 general education property tax levy had not been made under Laws 129.17 2001, First Special Session chapter 5, for the term of the 129.18 district under general law and if the provisions of section 4 129.19 did not apply, less 129.20 (2) the actual increments collected for the term of the 129.21 district under general law. 129.22 (c) Notwithstanding any law to the contrary, effective upon 129.23 approval of this section, no increments may be spent on 129.24 activities located outside of the area of the district, other 129.25 than to pay administrative expenses. 129.26 (d) This section is effective upon compliance with the 129.27 requirements of Minnesota Statutes, sections 469.1782, 129.28 subdivision 2, and 645.021. 129.29 Sec. 10. [CITY OF MINNEAPOLIS TAX INCREMENT DISTRICT; 129.30 DURATION EXTENSION.] 129.31 (a) Upon approval of the city council of the city of 129.32 Minneapolis, the Minneapolis community development agency may, 129.33 with respect to the southeast Minneapolis industrial area 129.34 redevelopment area phase 4 tax increment financing district, 129.35 notwithstanding Minnesota Statutes, section 469.176, subdivision 129.36 1b, extend the duration of the district for a period of up to 130.1 six years. 130.2 (b) The amount of additional increment which may be paid to 130.3 the district as a result of this section may not exceed: 130.4 (1) the increment that would have been collected if the 130.5 class rate changes and elimination of the state-determined 130.6 general education property tax levy had not been made under Laws 130.7 2001, First Special Session chapter 5, for the term of the 130.8 district under general law and if the provisions of section 4 130.9 did not apply, less 130.10 (2) the actual increments collected for the term of the 130.11 district under general law. 130.12 (c) Notwithstanding any law to the contrary, effective upon 130.13 approval of this section, no increments may be spent on 130.14 activities located outside of the area of the district, other 130.15 than to pay administrative expenses. 130.16 (d) Upon payment in full of the Minneapolis community 130.17 development agency amended and restated tax increment revenue 130.18 note, in the original face amount of $1,000,000, issued December 130.19 4, 1997, the district terminates and the authority granted under 130.20 this section terminates. 130.21 (e) This section is effective upon compliance with the 130.22 requirements of Minnesota Statutes, sections 469.1782, 130.23 subdivision 2, and 645.021. 130.24 Sec. 11. [GRANT TO WASHBURN-CROSBY PROJECT.] 130.25 Notwithstanding the requirements of Minnesota Statutes, 130.26 section 469.1794, the commissioner of revenue shall pay a 130.27 one-time grant of $2,600,000 to the Minneapolis community 130.28 development agency for the Washburn-Crosby Mill City Museum 130.29 project of the historical society as described in Laws 2001, 130.30 First Special Session chapter 5, article 15, section 39. The 130.31 grant must be disbursed on July 1, 2002. $2,600,000 is 130.32 appropriated from the general fund to the commissioner of 130.33 revenue to make the grant under this section. 130.34 Sec. 12. [DAKOTA COUNTY TAX INCREMENT DISTRICT EXTENSION.] 130.35 (a) The governing body of Dakota county may elect to extend 130.36 the duration of its C.D.A. South Robert Street redevelopment tax 131.1 increment financing district number 4 by up to five additional 131.2 years. 131.3 (b) The amount of additional increment which may be paid to 131.4 the district as a result of this section may not exceed: 131.5 (1) the increment that would have been collected if the 131.6 class rate changes and elimination of the state-determined 131.7 general education property tax levy had not been made under Laws 131.8 2001, First Special Session chapter 5, for the term of the 131.9 district under general law and if the provisions of section 4 131.10 did not apply, less 131.11 (2) the actual increments collected for the term of the 131.12 district under general law. 131.13 [EFFECTIVE DATE.] This section is effective upon compliance 131.14 with Minnesota Statutes, sections 469.1782, subdivision 2, and 131.15 645.021. 131.16 Sec. 13. [REPEALER.] 131.17 Minnesota Statutes 2001 Supplement, section 469.176, 131.18 subdivision 1h, is repealed. 131.19 [EFFECTIVE DATE.] This section is effective retroactive to 131.20 July 1, 2001, and any early decertification of a tax increment 131.21 financing district made after July 1, 2001, is ratified. 131.22 ARTICLE 8 131.23 MINERALS TAXES 131.24 Section 1. Minnesota Statutes 2001 Supplement, section 131.25 126C.21, subdivision 4, is amended to read: 131.26 Subd. 4. [TACONITE DEDUCTIONS.] (1) Notwithstanding any 131.27 provisions of any other law to the contrary, the adjusted net 131.28 tax capacity used in calculating general education aid may 131.29 include only that property that is currently taxable in the 131.30 district. 131.31 (2) For districts that received payments under sections 131.32 298.018; 298.225; 298.28; 298.34 to 298.39; 298.391 to 298.396; 131.33 and 298.405,orany law imposing a tax upon severed mineral 131.34 values; or recognized revenue under section 477A.15; the general 131.35 education aid must be reduced in the final adjustment payment by 131.36 the difference between the dollar amount of the payments 132.1 received pursuant to those sections, or revenue recognized under 132.2 section 477A.15 in the fiscal year to which the final adjustment 132.3 is attributable and the amount that was calculated, pursuant to 132.4 section 126C.48, subdivision 8, as a reduction of the levy 132.5 attributable to the fiscal year to which the final adjustment is 132.6 attributable. If the final adjustment of a district's general 132.7 education aid for a fiscal year is a negative amount because of 132.8 this clause, the next fiscal year's general education aid to 132.9 that district must be reduced by this negative amount in the 132.10 following manner: there must be withheld from each scheduled 132.11 general education aid payment due the district in such fiscal 132.12 year, 15 percent of the total negative amount, until the total 132.13 negative amount has been withheld. The amount reduced from 132.14 general education aid pursuant to this clause must be recognized 132.15 as revenue in the fiscal year to which the final adjustment 132.16 payment is attributable. 132.17 Sec. 2. Minnesota Statutes 2001 Supplement, section 132.18 126C.48, subdivision 8, is amended to read: 132.19 Subd. 8. [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) 132.20 Reductions in levies pursuant to sections 126C.48, subdivision 132.21 1, and 273.138, must be made prior to the reductions in clause 132.22 (2). 132.23 (2) Notwithstanding any other law to the contrary, 132.24 districts which received payments pursuant to sections 298.018; 132.25 298.225; 298.28, except an amount distributed under section 132.26 298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to 132.27 298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 132.28 upon severed mineral values; or recognized revenue under section 132.29 477A.15 must not include a portion of these aids in their 132.30 permissible levies pursuant to those sections, but instead must 132.31 reduce the permissible levies authorized by this chapter and 132.32 chapters 120B, 122A, 123A, 123B, 124A, 124D, 125A, and 127A by 132.33 the greater of the following: 132.34 (a) an amount equal to 50 percent of the total dollar 132.35 amount of the payments received pursuant to those sections or 132.36 revenue recognized under section 477A.15 in the previous fiscal 133.1 year; or 133.2 (b) an amount equal to the total dollar amount of the 133.3 payments received pursuant to those sections or revenue 133.4 recognized under section 477A.15 in the previous fiscal year 133.5 less the product of the same dollar amount of payments or 133.6 revenue times five percent. 133.7 For levy year 2002 only, 77 percent of the amounts 133.8 distributed under section 298.225 and 298.28, and 100 percent of 133.9 the amounts distributed under sections 298.018; 298.34 to 133.10 298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 133.11 upon severed mineral values, or recognized revenue under section 133.12 477A.15, shall be used for purposes of the calculations under 133.13 this paragraph. For levy year 2003 only, the levy reductions 133.14 under this subdivision must be calculated as if section 298.28, 133.15 subdivision 4, paragraph (f), did not apply for the 2003 133.16 distribution. 133.17 (3) The amount of anyincreased levy authorized by133.18referendum pursuant to section 126C.17, subdivision 9,voter 133.19 approved referendum, facilities down payment, and debt levies 133.20 shall not be reducedpursuant toby more than 50 percent under 133.21 this subdivision.The amount of any levy authorized by section133.22126C.43, to make payments for bonds issued and for interest133.23thereon, shall not be reduced pursuant to this subdivision.In 133.24 administering this paragraph, the commissioner shall first 133.25 reduce the nonvoter approved levies of a district; then, if any 133.26 payments, severed mineral value tax revenue or recognized 133.27 revenue under paragraph (2) remains, the commissioner shall 133.28 reduce any voter approved referendum levies authorized under 133.29 section 126C.17; then, if any payments, severed mineral value 133.30 tax revenue or recognized revenue under paragraph (2) remains, 133.31 the commissioner shall reduce any voter approved facilities down 133.32 payment levies authorized under section 123B.63 and then, if any 133.33 payments, severed mineral value tax revenue or recognized 133.34 revenue under paragraph (2) remains, the commissioner shall 133.35 reduce any voter approved debt levies. 133.36 (4) Before computing the reduction pursuant to this 134.1 subdivision of the health and safety levy authorized by sections 134.2 123B.57 and 126C.40, subdivision 5, the commissioner shall 134.3 ascertain from each affected school district the amount it 134.4 proposes to levy under each section or subdivision. The 134.5 reduction shall be computed on the basis of the amount so 134.6 ascertained. 134.7 (5)Notwithstanding any law to the contrary, any amounts134.8received by districts in any fiscal year pursuant to sections134.9298.018; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any134.10law imposing a tax on severed mineral values; and not deducted134.11from general education aid pursuant to section 126C.21,134.12subdivision 4, clause (2), and not applied to reduce levies134.13pursuant to this subdivision shall be paid by the district to134.14the St. Louis county auditor in the following amount by March 15134.15of each year, the amount required to be subtracted from the134.16previous fiscal year's general education aid pursuant to section134.17126C.21, subdivision 4, which is in excess of the general134.18education aid earned for that fiscal year. The county auditor134.19shall deposit any amounts received pursuant to this clause in134.20the St. Louis county treasury for purposes of paying the134.21taconite homestead credit as provided in section 273.135.To the 134.22 extent the levy reduction calculated under paragraph (2) exceeds 134.23 the limitation in paragraph (3), an amount equal to the excess 134.24 must be distributed from the school district's distribution 134.25 under sections 298.225, 298.28, and 477A.15 in the following 134.26 year to the cities and townships within the school district in 134.27 the proportion that their taxable net tax capacity within the 134.28 school district bears to the taxable net tax capacity of the 134.29 school district for property taxes payable in the year prior to 134.30 distribution. No city or township shall receive a distribution 134.31 greater than its levy for taxes payable in the year prior to 134.32 distribution. The commissioner of revenue shall certify the 134.33 distributions of cities and towns under this paragraph to the 134.34 county auditor by September 30 of the year preceding 134.35 distribution. The county auditor shall reduce the proposed and 134.36 final levies of cities and towns receiving distributions by the 135.1 amount of their distribution. Distributions to the cities and 135.2 towns shall be made at the times provided under section 298.27. 135.3 Sec. 3. Minnesota Statutes 2001 Supplement, section 135.4 298.01, subdivision 3b, is amended to read: 135.5 Subd. 3b. [DEDUCTIONS.] (a) For purposes of determining 135.6 taxable income under subdivision 3, the deductions from gross 135.7 income include only those expenses necessary to convert raw ores 135.8 to marketable quality. Such expenses include costs associated 135.9 with refinement but do not include expenses such as 135.10 transportation, stockpiling, marketing, or marine insurance that 135.11 are incurred after marketable ores are produced, unless the 135.12 expenses are included in gross income. 135.13 (b) The provisions of section 290.01, subdivisions 19c, 135.14 clauses (6) and(10)(9), and 19d, clauses (7) and (11), are not 135.15 used to determine taxable income. 135.16 [EFFECTIVE DATE.] This section is effective the day 135.17 following final enactment. 135.18 Sec. 4. Minnesota Statutes 2001 Supplement, section 135.19 298.01, subdivision 4c, is amended to read: 135.20 Subd. 4c. [SPECIAL DEDUCTIONS; NET OPERATING LOSS.] (a) 135.21 For purposes of determining taxable income under subdivision 135.22 4,the following modifications are allowed:135.23(1)the provisions of section 290.01, subdivisions 19c, 135.24 clauses (6) and(10)(9), and 19d, clauses (7) and (11), are not 135.25 used to determine taxable income; and. 135.26(2) for assets placed in service before January 1, 1990,135.27the deduction for depreciation will be the same amount allowed135.28under chapter 290, except that after an asset has been fully135.29depreciated for federal income tax purposes any remaining135.30depreciable basis is allowed as a deduction using the135.31straight-line method over the following number of years:135.32(i) three-year property, one year;135.33(ii) five- and seven-year property, two years;135.34(iii) ten-year property, five years; and135.35(iv) all other property, seven years.135.36No deduction is allowed if an asset is fully depreciated136.1for occupation tax purposes before January 1990.136.2(b) For purposes of determining the deduction allowed under136.3paragraph (a), clause (2), the remaining depreciable basis of136.4property placed in service before January 1, 1990, is calculated136.5as follows:136.6(1) the adjusted basis of the property on December 31,136.71989, which was used to calculate the hypothetical corporate136.8franchise tax under Minnesota Statutes 1988, section 298.40,136.9including salvage value; less136.10(2) deductions for depreciation allowed under section136.11290.01, subdivision 19e.136.12(c) The basis for determining gain or loss on sale or136.13disposition of assets placed in service before January 1, 1990,136.14is the basis determined under paragraph (b), less the deductions136.15allowed under paragraph (a), clause (2).136.16(d)(b) The amount of net operating loss incurred in a 136.17 taxable year beginning before January 1, 1990, that may be 136.18 carried over to a taxable year beginning after December 31, 136.19 1989, is the amount of net operating loss carryover determined 136.20 in the calculation of the hypothetical corporate franchise tax 136.21 under Minnesota Statutes 1988, sections 298.40 and 298.402. 136.22 [EFFECTIVE DATE.] This section is effective for taxes 136.23 payable May 1, 2002, and thereafter. 136.24 Sec. 5. Minnesota Statutes 2001 Supplement, section 136.25 298.225, subdivision 1, is amended to read: 136.26 Subdivision 1. (a) The distribution of the taconite 136.27 production tax as provided in section 298.28, subdivisions 3 to 136.28 5, 6, paragraph (b), 7, and 8, shall equal the lesser of the 136.29 following amounts: 136.30 (1) the amount distributed pursuant to this section and 136.31 section 298.28, with respect to 1983 production if the 136.32 production for the year prior to the distribution year is no 136.33 less than 42,000,000 taxable tons. If the production is less 136.34 than 42,000,000 taxable tons, the amount of the distributions 136.35 shall be reduced proportionately at the rate of two percent for 136.36 each 1,000,000 tons, or part of 1,000,000 tons by which the 137.1 production is less than 42,000,000 tons; or 137.2 (2)(i) for the distributions made pursuant to section 137.3 298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 137.4 (c),40.531.2 percent of the amount distributed pursuant to 137.5 this section and section 298.28, with respect to 1983 137.6 production; 137.7 (ii) for the distributions made pursuant to section 298.28, 137.8 subdivision 5, paragraphs (b) and (d), 75 percent of the amount 137.9 distributed pursuant to this section and section 298.28, with 137.10 respect to 1983 production. 137.11 (b) The distribution of the taconite production tax as 137.12 provided in section 298.28, subdivision 2, shall equal the 137.13 following amount: 137.14 (1) if the production for the year prior to the 137.15 distribution year is at least 42,000,000 taxable tons, the 137.16 amount distributed pursuant to this section and section 298.28 137.17 with respect to 1999 production; or 137.18 (2) if the production for the year prior to the 137.19 distribution year is less than 42,000,000 taxable tons, the 137.20 amount distributed pursuant to this section and section 298.28 137.21 with respect to 1999 production, reduced proportionately at the 137.22 rate of two percent for each 1,000,000 tons or part of 1,000,000 137.23 tons by which the production is less than 42,000,000 tons. 137.24 Sec. 6. Minnesota Statutes 2000, section 298.27, is 137.25 amended to read: 137.26 298.27 [COLLECTION AND PAYMENT OF TAX.] 137.27 The taxes provided by section 298.24 shall be paid directly 137.28 to each eligible county and the iron range resources and 137.29 rehabilitation board. The commissioner of revenue shall notify 137.30 each producer of the amount to be paid each recipient prior to 137.31 February 15. Every person subject to taxes imposed by section 137.32 298.24 shall file a correct report covering the preceding year. 137.33 The report must contain the information required by the 137.34 commissioner. The report shall be filed by each producer on or 137.35 before February 1. A remittance equal to 50 percent of the 137.36 total tax required to be paid hereunder in 2003 and 100 percent 138.1 of the total tax required to be paid hereunder in 2004 and 138.2 thereafter shall be paid on or before February 24. A remittance 138.3 equal to the remaining total tax required to be paid hereunder 138.4 in 2003 shall be paid on or before August 24. On or before 138.5 February 25, and in 2003, August 25, the county auditor shall 138.6 make distribution of thepaymentpayments previously received by 138.7 the county in the manner provided by section 298.28. Reports 138.8 shall be made and hearings held upon the determination of the 138.9 tax in accordance with procedures established by the 138.10 commissioner of revenue. The commissioner of revenue shall have 138.11 authority to make reasonable rules as to the form and manner of 138.12 filing reports necessary for the determination of the tax 138.13 hereunder, and by such rules may require the production of such 138.14 information as may be reasonably necessary or convenient for the 138.15 determination and apportionment of the tax. All the provisions 138.16 of the occupation tax law with reference to the assessment and 138.17 determination of the occupation tax, including all provisions 138.18 for appeals from or review of the orders of the commissioner of 138.19 revenue relative thereto, but not including provisions for 138.20 refunds, are applicable to the taxes imposed by section 298.24 138.21 except in so far as inconsistent herewith. If any person 138.22 subject to section 298.24 shall fail to make the report provided 138.23 for in this section at the time and in the manner herein 138.24 provided, the commissioner of revenue shall in such case, upon 138.25 information possessed or obtained, ascertain the kind and amount 138.26 of ore mined or produced and thereon find and determine the 138.27 amount of the tax due from such person. There shall be added to 138.28 the amount of tax due a penalty for failure to report on or 138.29 before February 1, which penalty shall equal ten percent of the 138.30 tax imposed and be treated as a part thereof. 138.31 If any person responsible for making a tax payment at the 138.32 time and in the manner herein provided fails to do so, there 138.33 shall be imposed a penalty equal to ten percent of the amount so 138.34 due, which penalty shall be treated as part of the tax due. 138.35 In the case of any underpayment of the tax payment required 138.36 herein, there may be added and be treated as part of the tax due 139.1 a penalty equal to ten percent of the amount so underpaid. 139.2 A person having a liability of $120,000 or more during a 139.3 calendar year must remit all liabilities by means of a funds 139.4 transfer as defined in section 336.4A-104, paragraph (a). The 139.5 funds transfer payment date, as defined in section 336.4A-401, 139.6 must be on or before the date the tax is due. If the date the 139.7 tax is due is not a funds transfer business day, as defined in 139.8 section 336.4A-105, paragraph (a), clause (4), the payment date 139.9 must be on or before the funds transfer business day next 139.10 following the date the tax is due. 139.11 [EFFECTIVE DATE.] Except as otherwise provided, this 139.12 section is effective for years beginning after December 31, 2001. 139.13 Sec. 7. Minnesota Statutes 2001 Supplement, section 139.14 298.28, subdivision 4, is amended to read: 139.15 Subd. 4. [SCHOOL DISTRICTS.] (a)22.2817.15 cents per 139.16 taxable ton plus the increase provided in paragraph (d) must be 139.17 allocated to qualifying school districts to be distributed, 139.18 based upon the certification of the commissioner of revenue, 139.19 under paragraphs (b) and (c), except as otherwise provided in 139.20 paragraph (f). 139.21 (b)4.463.43 cents per taxable ton must be distributed to 139.22 the school districts in which the lands from which taconite was 139.23 mined or quarried were located or within which the concentrate 139.24 was produced. The distribution must be based on the 139.25 apportionment formula prescribed in subdivision 2. 139.26 (c)(i)17.8213.72 cents per taxable ton, less any amount 139.27 distributed under paragraph (e), shall be distributed to a group 139.28 of school districts comprised of those school districts in which 139.29 the taconite was mined or quarried or the concentrate produced 139.30 or in which there is a qualifying municipality as defined by 139.31 section 273.134, paragraph (b), in direct proportion to school 139.32 district indexes as follows: for each school district, its 139.33 pupil units determined under section 126C.05 for the prior 139.34 school year shall be multiplied by the ratio of the average 139.35 adjusted net tax capacity per pupil unit for school districts 139.36 receiving aid under this clause as calculated pursuant to 140.1 chapters 122A, 126C, and 127A for the school year ending prior 140.2 to distribution to the adjusted net tax capacity per pupil unit 140.3 of the district. Each district shall receive that portion of 140.4 the distribution which its index bears to the sum of the indices 140.5 for all school districts that receive the distributions. 140.6 (ii) Notwithstanding clause (i), each school district that 140.7 receives a distribution under sections 298.018; 298.23 to 140.8 298.28, exclusive of any amount received under this clause; 140.9 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 140.10 imposing a tax on severed mineral values after reduction for any 140.11 portion distributed to cities and towns under section 126C.48, 140.12 subdivision 8, paragraph (5), that is less than the amount of 140.13 its levy reduction under section 126C.48, subdivision 8, for the 140.14 second year prior to the year of the distribution shall receive 140.15 a distribution equal to the difference; the amount necessary to 140.16 make this payment shall be derived from proportionate reductions 140.17 in the initial distribution to other school districts under 140.18 clause (i). 140.19 (d) Any school district described in paragraph (c) where a 140.20 levy increase pursuant to section 126C.17, subdivision 9, was 140.21 authorized by referendum for taxes payable in 2001, shall 140.22 receive a distribution from a fund that receives a distribution 140.23 in 1998 of 21.3 cents per ton. On July 15 of 1999, and each 140.24 year thereafter, the increase over the amount established for 140.25 the prior year shall be determined according to the increase in 140.26 the implicit price deflator as provided in section 298.24, 140.27 subdivision 1. Each district shall receive $175 times the pupil 140.28 units identified in section 126C.05, subdivision 1, enrolled in 140.29 the second previous year or the 1983-1984 school year, whichever 140.30 is greater, less the product of 1.8 percent times the district's 140.31 taxable net tax capacity in the second previous year. 140.32 If the total amount provided by paragraph (d) is 140.33 insufficient to make the payments herein required then the 140.34 entitlement of $175 per pupil unit shall be reduced uniformly so 140.35 as not to exceed the funds available. Any amounts received by a 140.36 qualifying school district in any fiscal year pursuant to 141.1 paragraph (d) shall not be applied to reduce general education 141.2 aid which the district receives pursuant to section 126C.13 or 141.3 the permissible levies of the district. Any amount remaining 141.4 after the payments provided in this paragraph shall be paid to 141.5 the commissioner of iron range resources and rehabilitation who 141.6 shall deposit the same in the taconite environmental protection 141.7 fund and the northeast Minnesota economic protection trust fund 141.8 as provided in subdivision 11. 141.9 Each district receiving money according to this paragraph 141.10 shall reserve $25 times the number of pupil units in the 141.11 district. It may use the money for early childhood programs or 141.12 for outcome-based learning programs that enhance the academic 141.13 quality of the district's curriculum. The outcome-based 141.14 learning programs must be approved by the commissioner of 141.15 children, families, and learning. 141.16 (e) There shall be distributed to any school district the 141.17 amount which the school district was entitled to receive under 141.18 section 298.32 in 1975. 141.19 (f) Effectivewithfor the distribution in 2003and141.20thereafteronly, five percent of the distributions to school 141.21 districts under paragraphs (b), (c), and (e); subdivision 6, 141.22 paragraph (c); subdivision 11; and section477A.15298.225, 141.23 shall be distributed to the general fund. The remainder less 141.24 any portion distributed to cities and towns under section 141.25 126C.48, subdivision 8, paragraph (5), shall be distributed to 141.26 thecities and townships within each school district in the141.27proportion that their taxable net tax capacity within the school141.28district bears to the taxable net tax capacity of the school141.29district for property taxes payable in the year prior to141.30distribution. No city or township shall receive a distribution141.31greater than its levy for taxes payable in the year prior to141.32distributionnortheast Minnesota economic protection trust fund 141.33 created in section 298.292. Fifty percent of the amount 141.34 distributed to the northeast Minnesota economic protection trust 141.35 fund shall be made available for expenditure under section 141.36 298.293 as governed by section 298.296. Effective in 2003 only, 142.1 100 percent of the distributions to school districts under 142.2 section 477A.15 less any portion distributed to cities and towns 142.3 under section 126C.48, subdivision 8, paragraph (5), shall be 142.4 distributed to the general fund. 142.5 Sec. 8. Minnesota Statutes 2000, section 298.28, 142.6 subdivision 5, is amended to read: 142.7 Subd. 5. [COUNTIES.] (a)16.526.05 cents per taxable ton 142.8 is allocated to counties to be distributed, based upon 142.9 certification by the commissioner of revenue, under paragraphs 142.10 (b) to (d). 142.11 (b)1320.525 cents per taxable ton shall be distributed to 142.12 the county in which the taconite is mined or quarried or in 142.13 which the concentrate is produced, less any amount which is to 142.14 be distributed pursuant to paragraph (c). The apportionment 142.15 formula prescribed in subdivision 2 is the basis for the 142.16 distribution. 142.17 (c) If an electric power plant owned by and providing the 142.18 primary source of power for a taxpayer mining and concentrating 142.19 taconite is located in a county other than the county in which 142.20 the mining and the concentrating processes are conducted, one 142.21 cent per taxable ton of the tax distributed to the counties 142.22 pursuant to paragraph (b) and imposed on and collected from such 142.23 taxpayer shall be paid to the county in which the power plant is 142.24 located. 142.25 (d)3.55.525 cents per taxable ton shall be paid to the 142.26 county from which the taconite was mined, quarried or 142.27 concentrated to be deposited in the county road and bridge 142.28 fund. If the mining, quarrying and concentrating, or separate 142.29 steps in any of those processes are carried on in more than one 142.30 county, the commissioner shall follow the apportionment formula 142.31 prescribed in subdivision 2. 142.32 [EFFECTIVE DATE.] This section is effective the day 142.33 following final enactment. 142.34 Sec. 9. Minnesota Statutes 2001 Supplement, section 142.35 298.28, subdivision 6, is amended to read: 142.36 Subd. 6. [PROPERTY TAX RELIEF.] (a) In 2002 and 143.1 thereafter,35.933.9 cents per taxable ton, less any amount 143.2 required to be distributed under paragraphs (b) and (c),and143.3less any amount required to be deducted under paragraph (d),143.4 must be allocated to St. Louis county acting as the counties' 143.5 fiscal agent, to be distributed as provided in sections 273.134 143.6 to 273.136. 143.7 (b) If an electric power plant owned by and providing the 143.8 primary source of power for a taxpayer mining and concentrating 143.9 taconite is located in a county other than the county in which 143.10 the mining and the concentrating processes are conducted, .1875 143.11 cent per taxable ton of the tax imposed and collected from such 143.12 taxpayer shall be paid to the county. 143.13 (c) If an electric power plant owned by and providing the 143.14 primary source of power for a taxpayer mining and concentrating 143.15 taconite is located in a school district other than a school 143.16 district in which the mining and concentrating processes are 143.17 conducted,.7282.4541 cent per taxable ton of the tax imposed 143.18 and collected from the taxpayer shall be paid to the school 143.19 district. 143.20(d) Two cents per taxable ton must be deducted from the143.21amount allocated to the St. Louis county auditor under paragraph143.22(a).143.23 [EFFECTIVE DATE.] This section is effective the day 143.24 following final enactment. 143.25 Sec. 10. Minnesota Statutes 2001 Supplement, section 143.26 298.28, subdivision 9a, is amended to read: 143.27 Subd. 9a. [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 30.1 143.28 cents per ton for distributions in 2002 and thereafter must be 143.29 paid to the taconite economic development fund. No distribution 143.30 shall be made under this paragraph in 2004 or any subsequent 143.31 year in which total industry production falls below 30 million 143.32 tons. Distribution shall only be made to a taconite producer's 143.33 fund under section 298.227 if the producer timely pays its tax 143.34 under section 298.24 by the dates provided under section 298.27, 143.35 or pursuant to the due dates provided by an administrative 143.36 agreement with the commissioner. 144.1 (b) An amount equal to 50 percent of the tax under section 144.2 298.24 for concentrate sold in the form of pellet chips and 144.3 fines not exceeding 5/16 inch in size and not including crushed 144.4 pellets shall be paid to the taconite economic development 144.5 fund. The amount paid shall not exceed $700,000 annually for 144.6 all companies. If the initial amount to be paid to the fund 144.7 exceeds this amount, each company's payment shall be prorated so 144.8 the total does not exceed $700,000. 144.9 Sec. 11. Minnesota Statutes 2000, section 298.28, 144.10 subdivision 9b, is amended to read: 144.11 Subd. 9b. [TACONITE ENVIRONMENTAL FUND.] Five cents per 144.12 ton for distributions in 1999, 2000, 2001,and2002, and 2003 144.13 must be paid to the taconite environmental fund for use under 144.14 section 298.2961.No distribution may be made under this144.15paragraph in any year in which total industry production falls144.16below 30,000,000 tons.144.17 Sec. 12. Minnesota Statutes 2001 Supplement, section 144.18 298.28, subdivision 10, is amended to read: 144.19 Subd. 10. [INCREASE.] Beginning with distributions in 144.20 2000, the amount determined under subdivision 9 shall be 144.21 increased in the same proportion as the increase in the implicit 144.22 price deflator as provided in section 298.24, subdivision 1. 144.23 Beginning with distributions in 2003, the amount determined 144.24 under subdivision 6, paragraph (a), shall be increased in the 144.25 same proportion as the increase in the implicit price deflator 144.26 as provided in section 298.24, subdivision 1. 144.27The distributions per ton determined under subdivisions 5,144.28paragraphs (b) and (d), and 6, paragraph (b), for distribution144.29in 1988 and subsequent years shall be the distribution per ton144.30determined for distribution in 1987. The distribution per ton144.31under subdivision 6, paragraph (c), for distribution in 2000 and144.32subsequent years shall be 81 percent of the distribution per ton144.33determined for distribution in 1987.144.34 [EFFECTIVE DATE.] This section is effective the day 144.35 following final enactment. 144.36 Sec. 13. Minnesota Statutes 2000, section 298.28, 145.1 subdivision 11, is amended to read: 145.2 Subd. 11. [REMAINDER.] (a) The proceeds of the tax imposed 145.3 by section 298.24 which remain after the distributions and 145.4 payments in subdivisions 2 to 10a, as certified by the 145.5 commissioner of revenue, and paragraphs (b), (c),and(d), and 145.6 (e) have been made, together with interest earned on all money 145.7 distributed under this section prior to distribution, shall be 145.8 divided between the taconite environmental protection fund 145.9 created in section 298.223 and the northeast Minnesota economic 145.10 protection trust fund created in section 298.292 as follows: 145.11 Two-thirds to the taconite environmental protection fund and 145.12 one-third to the northeast Minnesota economic protection trust 145.13 fund. The proceeds shall be placed in the respective special 145.14 accounts. 145.15 (b) There shall be distributed to each city, town, and 145.16 county the amount that it received under section 294.26 in 145.17 calendar year 1977; provided, however, that the amount 145.18 distributed in 1981 to the unorganized territory number 2 of 145.19 Lake county and the town of Beaver Bay based on the 145.20 between-terminal trackage of Erie Mining Company will be 145.21 distributed in 1982 and subsequent years to the unorganized 145.22 territory number 2 of Lake county and the towns of Beaver Bay 145.23 and Stony River based on the miles of track of Erie Mining 145.24 Company in each taxing district. 145.25 (c) There shall be distributed to the iron range resources 145.26 and rehabilitation board the amounts it received in 1977 under 145.27 section 298.22. The amount distributed under this paragraph 145.28 shall be expended within or for the benefit of the tax relief 145.29 area defined in section 273.134. 145.30 (d) There shall be distributed to each school district81145.31 62 percent of the amount that it received under section 294.26 145.32 in calendar year 1977. 145.33 (e) In 2003 only, $100,000 must be distributed to a 145.34 township located in a taconite tax relief area as defined in 145.35 section 273.134, paragraph (a), that received $119,259 of 145.36 homestead and agricultural credit aid and $182,014 in local 146.1 government aid in 2001. 146.2 Sec. 14. Minnesota Statutes 2000, section 298.291, is 146.3 amended to read: 146.4 298.291 [CITATION.] 146.5 Sections 298.291 to 298.294 shall be known as the 146.6 "Northeast MinnesotaDouglas J. Johnson Economic Protection 146.7 Trust Fund Act. 146.8 Sec. 15. Minnesota Statutes 2001 Supplement, section 146.9 298.296, subdivision 2, is amended to read: 146.10 Subd. 2. [EXPENDITURE OF FUNDS.] (a) Before January 1, 146.1120032028, funds may be expended on projects and for 146.12 administration of the trust fund only from the net interest, 146.13 earnings, and dividends arising from the investment of the trust 146.14 at any time, including net interest, earnings, and dividends 146.15 that have arisen prior to July 13, 1982, plus $10,000,000 made 146.16 available for use in fiscal year 1983, except that any amount 146.17 required to be paid out of the trust fund to provide the 146.18 property tax relief specified in Laws 1977, chapter 423, article 146.19 X, section 4, and to make school bond payments and payments to 146.20 recipients of taconite production tax proceeds pursuant to 146.21 section 298.225, may be taken from the corpus of the trust. 146.22 (b) Additionally, upon recommendation by the board, up to 146.23 $13,000,000 from the corpus of the trust may be made available 146.24 for use as provided in subdivision 4, and up to $10,000,000 from 146.25 the corpus of the trust may be made available for use as 146.26 provided in section 298.2961. 146.27 (c)On and after January 1, 2003, Funds may be expended on146.28projects and for administration from any assets of the146.29trust.Additionally, an amount equal to 20 percent of the value 146.30 of the corpus of the trust on the date of enactment of this act, 146.31 not including the funds authorized in paragraph (b), plus the 146.32 amounts made available under sections 7 and 17, may be expended 146.33 on projects. Funds may be expended for projects under this 146.34 paragraph only if the project: 146.35 (1) is for the purposes established under section 298.292, 146.36 subdivision 1, clause (1) or (2); and 147.1 (2) is approved by the board upon an affirmative vote of at 147.2 least ten of its members. 147.3 No money made available under this paragraph or paragraph (d) 147.4 can be used for administrative or operating expenses of the iron 147.5 range resources and rehabilitation board or expenses relating to 147.6 any facilities owned or operated by the board on the effective 147.7 date of this act. 147.8 (d) Upon recommendation by a unanimous vote of all members 147.9 of the board, amounts in addition to those authorized under 147.10 paragraphs (a), (b), and (c) may be expended on projects 147.11 described in section 298.292, subdivision 1. 147.12 (e) Annual administrative costs, not including detailed 147.13 engineering expenses for the projects, shall not exceed five 147.14 percent of the net interest, dividends, and earnings arising 147.15 from the trust in the preceding fiscal year. 147.16 (f) Principal and interest received in repayment of loans 147.17 made pursuant to this section, and earnings on other investments 147.18 made under section 298.292, subdivision 2, clause (4), shall be 147.19 deposited in the state treasury and credited to the trust. 147.20 These receipts are appropriated to the board for the purposes of 147.21 sections 298.291 to 298.298. 147.22 [EFFECTIVE DATE.] This section is effective January 1, 2003. 147.23 Sec. 16. Minnesota Statutes 2000, section 477A.15, is 147.24 amended to read: 147.25 477A.15 [TACONITE AID REIMBURSEMENT.] 147.26 Any school district in which is located property which had 147.27 been entitled to a reduction of tax pursuant to Minnesota 147.28 Statutes 1978, section 273.135, subdivision 2, clause (c), shall 147.29 receive in 1981 and subsequent years an amount equal to the 147.30 amount it received in 1980 pursuant to Minnesota Statutes 1978, 147.31 section 298.28, subdivision 1, clause (3)(b). Payments shall be 147.32 made pursuant to this section and section 126C.48, subdivision 147.33 8, paragraph (5), by the commissioner of revenue to the taxing 147.34 jurisdictions on the date in each calendar year when the first 147.35 installment is paid under section 477A.015. 147.36 [EFFECTIVE DATE.] This section is effective for payments in 148.1 2003 and subsequent years. 148.2 Sec. 17. [ADDITIONAL DISTRIBUTION.] 148.3 The difference between the distribution to school districts 148.4 under Minnesota Statutes, sections 298.225 and 298.28, as 148.5 amended by this act, and the amount the districts would have 148.6 received under Minnesota Statutes 2000, sections 298.225 and 148.7 298.28 for distributions in 2004 only, shall be added to the 148.8 sums available for expenditure under Minnesota Statutes, section 148.9 298.293, as governed by Minnesota Statutes, section 298.296. 148.10 Sec. 18. [INSTRUCTION TO THE REVISOR.] 148.11 In the next edition of Minnesota Statutes, the revisor of 148.12 statutes shall change the phrase "Northeast Minnesota Economic 148.13 Protection Trust Fund Act" to "Douglas J. Johnson Economic 148.14 Protection Trust Fund Act" wherever it appears in Minnesota 148.15 Statutes. 148.16 ARTICLE 9 148.17 DEPARTMENT OF REVENUE POLICY PROVISIONS 148.18 Section 1. Minnesota Statutes 2000, section 270.063, 148.19 subdivision 4, is amended to read: 148.20 Subd. 4. [FEDERAL TAX REFUND OFFSET FEES; TIME LIMIT FOR 148.21 SUBMITTING CLAIMS FOR OFFSET.] For fees charged by the 148.22 department of the treasury of the United States for the offset 148.23 of federal tax refunds that are deducted from the refund amounts 148.24 remitted to the commissioner, the unpaid debts of the taxpayers 148.25 whose refunds are being offset to satisfy the debts are reduced 148.26 only by the actual amount of the refund payments received by the 148.27 commissioner. Notwithstanding any other provision of law to the 148.28 contrary, a claim for the offset of a federal tax refund must be 148.29 submitted to the department of the treasury of the United States 148.30 within ten years after the date of the assessment of the tax 148.31 owed by the taxpayer whose refund is to be offset to satisfy the 148.32 debt. 148.33 [EFFECTIVE DATE.] This section is effective for claims for 148.34 offset that were submitted before and are pending on the date of 148.35 final enactment, and for claims submitted on or after the day 148.36 following final enactment. 149.1 Sec. 2. Minnesota Statutes 2001 Supplement, section 149.2 270.691, subdivision 8, is amended to read: 149.3 Subd. 8. [EXPIRATION DATE.] The program authorized under 149.4 this section terminates on June 30,20022003. 149.5 [EFFECTIVE DATE.] This section is effective the day 149.6 following final enactment. 149.7 Sec. 3. Minnesota Statutes 2000, section 273.125, 149.8 subdivision 4, is amended to read: 149.9 Subd. 4. [PETITIONS OF GRIEVANCE.] A person who claims 149.10 that the person's manufactured home has been unfairly or 149.11 unequally assessed, or that the property has been assessed at a 149.12 valuation greater than its real or actual value, or that the tax 149.13 levied against it is illegal, in whole or in part, or has been 149.14 paid, or that the property is exempt from the tax so levied, may 149.15 have the validity of the claim, defense, or objection determined 149.16 in court. The determination must be made by the district court 149.17 of the county in which the tax is levied or by the tax court. A 149.18 person can request the determination by filing a petition for it 149.19 in the office of the court administrator of the district court 149.20 on or beforeSeptemberOctober 1 of the year in which the tax 149.21 becomes payable. A petition for determination under this 149.22 section may be transferred by the district court to the tax 149.23 court. 149.24 [EFFECTIVE DATE.] This section is effective for taxes 149.25 payable in 2003 and thereafter. 149.26 Sec. 4. Minnesota Statutes 2000, section 278.01, 149.27 subdivision 1, is amended to read: 149.28 Subdivision 1. [DETERMINATION OF VALIDITY.] (a) Any person 149.29 having personal property, or any estate, right, title, or 149.30 interest in or lien upon any parcel of land, who claims that 149.31 such property has been partially, unfairly, or unequally 149.32 assessed in comparison with other property in the (1) city, or 149.33 (2) county, or (3) in the case of a county containing a city of 149.34 the first class, the portion of the county excluding the first 149.35 class city, or that the parcel has been assessed at a valuation 149.36 greater than its real or actual value, or that the tax levied 150.1 against the same is illegal, in whole or in part, or has been 150.2 paid, or that the property is exempt from the tax so levied, may 150.3 have the validity of the claim, defense, or objection determined 150.4 by the district court of the county in which the tax is levied 150.5 or by the tax court by serving one copy of a petition for such 150.6 determination upon the county auditor, one copy on the county 150.7 attorney, one copy on the county treasurer, and three copies on 150.8 the county assessor. The county assessor shall immediately 150.9 forward one copy of the petition to the appropriate governmental 150.10 authority in a home rule charter or statutory city or town in 150.11 which the property is located if that city or town employs its 150.12 own certified assessor. A copy of the petition shall also be 150.13 forwarded by the assessor to the school board of the school 150.14 district in which the property is located. 150.15 (b) In counties where the office of county treasurer has 150.16 been combined with the office of county auditor, the county may 150.17 elect to require the petitioner to serve the number of copies as 150.18 determined by the county. The county assessor shall immediately 150.19 forward one copy of the petition to the appropriate governmental 150.20 authority in a home rule charter or statutory city or town in 150.21 which the property is located if that city or town employs its 150.22 own certified assessor. A list of petitioned properties, 150.23 including the name of the petitioner, the identification number 150.24 of the property, and the estimated market value, shall be sent 150.25 on or before the first day of July by the county 150.26 auditor/treasurer to the school board of the school district in 150.27 which the property is located. 150.28 (c) For all counties, the petitioner must file the copies 150.29 with proof of service, in the office of the court administrator 150.30 of the district court on or beforeMarch 31April 30 of the year 150.31 in which the tax becomes payable. A petition for determination 150.32 under this section may be transferred by the district court to 150.33 the tax court. An appeal may also be taken to the tax court 150.34 under chapter 271 at any time following receipt of the valuation 150.35 notice required by section 273.121 but prior toAprilMay 1 of 150.36 the year in which the taxes are payable. 151.1 [EFFECTIVE DATE.] This section is effective for taxes 151.2 payable in 2003 and thereafter. 151.3 Sec. 5. Minnesota Statutes 2000, section 279.01, 151.4 subdivision 3, is amended to read: 151.5 Subd. 3. [AGRICULTURAL PROPERTY.] In the case of class 1b 151.6 agricultural homestead, class 2a agricultural homestead 151.7 property, and class 2b(3) agricultural nonhomestead property, no 151.8 penalties shall attach to the second one-half property tax 151.9 payment as provided in this section if paid by November 15. 151.10 Thereafter for class 1b agricultural homestead and class 2a 151.11 homestead property, on November 16 following, a penalty of six 151.12 percent shall accrue and be charged on all such unpaid taxes and 151.13 on December 1 following, an additional two percent shall be 151.14 charged on all such unpaid taxes. Thereafter for class 2b(3) 151.15 agricultural nonhomestead property, on November 16 following, a 151.16 penalty of eight percent shall accrue and be charged on all such 151.17 unpaid taxes and on December 1 following, an additional four 151.18 percent shall be charged on all such unpaid taxes. 151.19 If the owner of class 1b agricultural homestead, class 2a, 151.20 or class 2b(3) agricultural property receives a consolidated 151.21 property tax statement that shows only an aggregate of the taxes 151.22 and special assessments due on that property and on other 151.23 property not classified as class 1b agricultural homestead, 151.24 class 2a, or class 2b(3) agricultural property, the aggregate 151.25 tax and special assessments shown due on the property by the 151.26 consolidated statement will be due on November 15provided that151.27at least 50 percent of the property's market value is classified151.28class 1b agricultural, class 2a, or class 2b(3) agricultural. 151.29 [EFFECTIVE DATE.] This section is effective for taxes 151.30 payable in 2003 and thereafter. 151.31 Sec. 6. Minnesota Statutes 2000, section 289A.19, 151.32 subdivision 1, is amended to read: 151.33 Subdivision 1. [FIDUCIARY INCOME, ENTERTAINMENT TAX, AND 151.34 INFORMATION RETURNS.] When, in the commissioner's judgment, good 151.35 cause exists, the commissioner may extend the time for filing 151.36 entertainment tax returns for not more than six months.If an152.1extension to file the federal fiduciary income tax return or152.2information return has been granted under section 6081 of the152.3Internal Revenue Code, the time for filing the state return is152.4extended for that period. The commissioner may require the152.5taxpayer to file a tentative return when the regularly required152.6return is due, and to pay a tax on the basis of the tentative152.7return at the times required for the payment of taxes on the152.8basis of the regularly required return from the taxpayer.The 152.9 commissioner shall grant an automatic extension of six months to 152.10 file a partnership, "S" corporation, or fiduciary income tax 152.11 return if all of the taxes imposed on the entity for the year by 152.12 chapter 290 and section 289A.08, subdivision 7, have been paid 152.13 by the date prescribed by section 289A.18, subdivision 1. 152.14 [EFFECTIVE DATE.] This section is effective for returns due 152.15 after December 31, 2002. 152.16 Sec. 7. Minnesota Statutes 2000, section 295.53, 152.17 subdivision 1, is amended to read: 152.18 Subdivision 1. [EXEMPTIONS.] (a) The following payments 152.19 are excluded from the gross revenues subject to the hospital, 152.20 surgical center, or health care provider taxes under sections 152.21 295.50 to 295.57: 152.22 (1) payments received for services provided under the 152.23 Medicare program, including payments received from the 152.24 government, and organizations governed by sections 1833 and 1876 152.25 of title XVIII of the federal Social Security Act, United States 152.26 Code, title 42, section 1395, and enrollee deductibles, 152.27 coinsurance, and copayments, whether paid by the Medicare 152.28 enrollee or by a Medicare supplemental coverage as defined in 152.29 section 62A.011, subdivision 3, clause (10). Payments for 152.30 services not covered by Medicare are taxable; 152.31 (2) medical assistance payments including payments received 152.32 directly from the government or from a prepaid plan; 152.33 (3) payments received for home health care services; 152.34 (4) payments received from hospitals or surgical centers 152.35 for goods and services on which liability for tax is imposed 152.36 under section 295.52 or the source of funds for the payment is 153.1 exempt under clause (1), (2), (7), (8), (10), (13), or (20); 153.2 (5) payments received from health care providers for goods 153.3 and services on which liability for tax is imposed under this 153.4 chapter or the source of funds for the payment is exempt under 153.5 clause (1), (2), (7), (8), (10), (13), or (20); 153.6 (6) amounts paid for legend drugs, other than nutritional 153.7 products, to a wholesale drug distributor who is subject to tax 153.8 under section 295.52, subdivision 3, reduced by reimbursements 153.9 received for legend drugsunder clauses (1), (2), (7), and153.10(8)otherwise exempt under chapter 295; 153.11 (7) payments received under the general assistance medical 153.12 care program including payments received directly from the 153.13 government or from a prepaid plan; 153.14 (8) payments received for providing services under the 153.15 MinnesotaCare program including payments received directly from 153.16 the government or from a prepaid plan and enrollee deductibles, 153.17 coinsurance, and copayments. For purposes of this clause, 153.18 coinsurance means the portion of payment that the enrollee is 153.19 required to pay for the covered service; 153.20 (9) payments received by a health care provider or the 153.21 wholly owned subsidiary of a health care provider for care 153.22 provided outside Minnesota; 153.23 (10) payments received from the chemical dependency fund 153.24 under chapter 254B; 153.25 (11) payments received in the nature of charitable 153.26 donations that are not designated for providing patient services 153.27 to a specific individual or group; 153.28 (12) payments received for providing patient services 153.29 incurred through a formal program of health care research 153.30 conducted in conformity with federal regulations governing 153.31 research on human subjects. Payments received from patients or 153.32 from other persons paying on behalf of the patients are subject 153.33 to tax; 153.34 (13) payments received from any governmental agency for 153.35 services benefiting the public, not including payments made by 153.36 the government in its capacity as an employer or insurer; 154.1 (14) payments received for services provided by community 154.2 residential mental health facilities licensed under Minnesota 154.3 Rules, parts 9520.0500 to 9520.0690, community support programs 154.4 and family community support programs approved under Minnesota 154.5 Rules, parts 9535.1700 to 9535.1760, and community mental health 154.6 centers as defined in section 245.62, subdivision 2; 154.7 (15) government payments received by a regional treatment 154.8 center; 154.9 (16) payments received for hospice care services; 154.10 (17) payments received by a health care provider for 154.11 hearing aids and related equipment or prescription eyewear 154.12 delivered outside of Minnesota; 154.13 (18) payments received by an educational institution from 154.14 student tuition, student activity fees, health care service 154.15 fees, government appropriations, donations, or grants. Fee for 154.16 service payments and payments for extended coverage are taxable; 154.17 (19) payments received for services provided by: assisted 154.18 living programs and congregate housing programs; and 154.19 (20) payments received under the federal Employees Health 154.20 Benefits Act, United States Code, title 5, section 8909(f), as 154.21 amended by the Omnibus Reconciliation Act of 1990. 154.22 (b) Payments received by wholesale drug distributors for 154.23 legend drugs sold directly to veterinarians or veterinary bulk 154.24 purchasing organizations are excluded from the gross revenues 154.25 subject to the wholesale drug distributor tax under sections 154.26 295.50 to 295.59. 154.27 [EFFECTIVE DATE.] This section is effective for payments 154.28 received after December 31, 2001. 154.29 Sec. 8. Minnesota Statutes 2000, section 295.57, is 154.30 amended by adding a subdivision to read: 154.31 Subd. 5. [EXEMPTION FOR AMOUNTS PAID FOR LEGEND DRUGS.] If 154.32 a hospital or health care provider cannot determine the actual 154.33 cost or reimbursement of legend drugs under the exemption 154.34 provided in section 295.53, subdivision 1, paragraph (a), clause 154.35 (6), the following method must be used: 154.36 A hospital or health care provider must determine the 155.1 amount paid for legend drugs used during the month or quarter 155.2 and multiply that amount by a ratio, the numerator of which is 155.3 the total amount received for taxable patient services, and the 155.4 denominator of which is the total amount received for all 155.5 patient services, including amounts exempt under section 295.53, 155.6 subdivision 1. The result represents the allowable exemption 155.7 for the monthly or quarterly cost of drugs. 155.8 [EFFECTIVE DATE.] This section is effective for payments 155.9 received on or after July 1, 2002. 155.10 Sec. 9. Minnesota Statutes 2001 Supplement, section 155.11 295.60, subdivision 2, is amended to read: 155.12 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 155.13 the following terms have the meanings given. 155.14 (b) "Commissioner" means the commissioner of revenue. 155.15 (c) "Furrier" means a retailer that sells clothing made of 155.16 fur. 155.17 (d) "Clothing made of fur" means articles of clothing made 155.18 of fur on the hide or pelt, and articles of clothing of which 155.19 such fur is the component material of chief value, but only if 155.20 such value is more than three times the value of the next most 155.21 valuable material. 155.22 (e) "Retail sale" has the meaning given in section 297A.61, 155.23 subdivision 4. 155.24 (f) "Delivered outside of Minnesota" means fur clothing 155.25 which the furrier delivers to a common carrier for delivery 155.26 outside Minnesota, places in the United States mail or parcel 155.27 post directed to the purchaser outside Minnesota, or delivers to 155.28 the purchaser outside Minnesota by means of the seller's own 155.29 delivery vehicles, and which is not returned to a point within 155.30 Minnesota, except in the course of interstate commerce. 155.31 [EFFECTIVE DATE.] This section is effective January 1, 2002. 155.32 Sec. 10. Minnesota Statutes 2001 Supplement, section 155.33 295.60, is amended by adding a subdivision to read: 155.34 Subd. 2a. [EXEMPTIONS.] Payments received by a furrier for 155.35 clothing made of fur delivered outside of Minnesota are exempt 155.36 from gross revenues subject to the fur clothing tax. 156.1 [EFFECTIVE DATE.] This section is effective for payments 156.2 received on or after January 1, 2002. 156.3 Sec. 11. Minnesota Statutes 2001 Supplement, section 156.4 297A.61, subdivision 26, is amended to read: 156.5 Subd. 26. [PRIVATE COMMUNICATION SERVICE.] "Private 156.6 communication service" means acommunicationtelecommunication 156.7 servicefurnished to a subscriber whichthat entitles the 156.8subscribercustomer to:156.9(1)exclusive or priority use ofanya communication 156.10 channel or group of channels;156.11(2) the use of an intercommunication system for the156.12subscriber's stations, or regardless of whether the channel,156.13group of channels, or intercommunication system may be connected156.14through switching;156.15(3) thebetween or among termination points, regardless of 156.16 the manner in which the channel or channels are connected, and 156.17 includes switching capacity, extension linesand, stations, 156.18orand any other associated services that are provided in 156.19 connection with, and are necessary or unique to the use of,the 156.20 use of the channel or channelsor systems described in clause156.21(1); or156.22(4) any combination of tunneling, encryption,156.23authentication, and access control technologies and services156.24used to carry traffic over the Internet, a managed Internet156.25provider network or provider's backbone. 156.26 [EFFECTIVE DATE.] This section is effective retroactively 156.27 for sales and purchases occurring after July 31, 2001. 156.28 Sec. 12. Minnesota Statutes 2000, section 297A.68, is 156.29 amended by adding a subdivision to read: 156.30 Subd. 37. [DELIVERY OR DISTRIBUTION CHARGES; PRINTED 156.31 MATERIALS.] Charges for the delivery or distribution of printed 156.32 materials, including individual account information, are exempt 156.33 if (1) the charges are separately stated, (2) the delivery or 156.34 distribution is to a mass audience or to a mailing list provided 156.35 at the direction of the customer, and (3) the cost of the 156.36 materials is not billed directly to the recipients. 157.1 [EFFECTIVE DATE.] This section is effective retroactive to 157.2 delivery charges on sales and purchases made after December 31, 157.3 2001, and before January 1, 2006. 157.4 Sec. 13. Minnesota Statutes 2000, section 297G.07, 157.5 subdivision 1, is amended to read: 157.6 Subdivision 1. [EXEMPTIONS.] The following are not subject 157.7 to the excise tax: 157.8 (1) Sales by a manufacturer, brewer, or wholesaler for 157.9 shipment outside the state in interstate commerce. 157.10 (2) Alcoholic beverages sold or transferred between 157.11 Minnesota wholesalers. 157.12 (3) Sales to common carriers engaged in interstate 157.13 transportation of passengers, except as provided in this chapter. 157.14 (4) Malt beverages served by a brewery for on-premise 157.15 consumption at no charge, or distributed to brewery employees 157.16 for on-premise consumption under a labor contract. 157.17 (5) Shipments of wine to Minnesota residents under section 157.18 340A.417. 157.19 (6) Fruit juices naturally fermented or beer naturally 157.20 brewed in the home for family use. 157.21 (7) Sales of wine for sacramental purposes under section 157.22 340A.316. 157.23 (8) Alcoholic beverages sold to authorized manufacturers of 157.24 food products or pharmaceutical firms. The alcoholic beverage 157.25 must be used exclusively in the manufacture of food products or 157.26 medicines. For purposes of this clause, "manufacturer" means a 157.27 person who manufactures food products intended for sale to 157.28 wholesalers or retailers for ultimate sale to the consumer. 157.29 (9) Liqueur-filled candy. 157.30 (10) Sales to a federal agency, that the state of Minnesota 157.31 is prohibited from taxing under the constitution or laws of the 157.32 United States or under the constitution of Minnesota. 157.33 (11) Sales to Indian tribes as defined in section 297G.08. 157.34 (12) Shipments of intoxicating liquor from foreign 157.35 countries to diplomatic personnel of foreign countries assigned 157.36 to service in this state. 158.1 [EFFECTIVE DATE.] This section is effective the day 158.2 following final enactment. 158.3 Sec. 14. Minnesota Statutes 2001 Supplement, section 158.4 469.1763, subdivision 6, is amended to read: 158.5 Subd. 6. [POOLING PERMITTED FOR DEFICITS.] (a) This 158.6 subdivision applies only to districts for which the request for 158.7 certification was made before August 1, 2001, and without regard 158.8 to whether the request for certification was made prior to 158.9 August 1, 1979. 158.10 (b) The municipality for the district may transfer 158.11 available increments from another tax increment financing 158.12 district located in the municipality, if the transfer is 158.13 necessary to eliminate a deficit in the district to which the 158.14 increments are transferred. A deficit in the district for 158.15 purposes of this subdivision means the lesser of the following 158.16 two amounts: 158.17 (1)(i) the amount due during the calendar year to pay 158.18 preexisting obligations of the district; minus 158.19 (ii) the total increments collected or to be collected from 158.20 properties located within the district that are available for 158.21 the calendar year including amounts collected in prior years 158.22 that are currently available; plus 158.23 (iii) total increments from properties located in other 158.24 districts in the municipality including amounts collected in 158.25 prior years that are available to be used to meet the district's 158.26 obligations under this section, excluding this subdivision, or 158.27 other provisions of law (but excluding a special tax under 158.28 section 469.1791 and the grant program under Laws 1997, chapter 158.29 231, article 1, section 19, or Laws 2001, First Special Session 158.30 chapter 5); or 158.31 (2) the reduction in increments collected from properties 158.32 located in the district for the calendar year as a result of the 158.33 changes in class rates in Laws 1997, chapter 231, article 1; 158.34 Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, 158.35 and Laws 2001, First Special Session chapter 5, or the 158.36 elimination of the general education tax levy under Laws 2001, 159.1 First Special Session chapter 5. 159.2 (c) A preexisting obligation means: 159.3 (1) bonds issued and sold before August 1, 2001, or bonds 159.4 issued pursuant to a binding contract requiring the issuance of 159.5 bonds entered into before July 1, 2001, and bonds issued to 159.6 refund such bonds or to reimburse expenditures made in 159.7 conjunction with a signed contractual agreement entered into 159.8 before August 1, 2001, to the extent that the bonds are secured 159.9 by a pledge of increments from the tax increment financing 159.10 district; and 159.11 (2) binding contracts entered into before August 1, 2001, 159.12 to the extent that the contracts require payments secured by a 159.13 pledge of increments from the tax increment financing district. 159.14 (d) The municipality may require a development authority, 159.15 other than a seaway port authority, to transfer available 159.16 increments including amounts collected in prior years that are 159.17 currently available for any of its tax increment financing 159.18 districts in the municipality to make up an insufficiency in 159.19 another district in the municipality, regardless of whether the 159.20 district was established by the development authority or another 159.21 development authority. This authority applies notwithstanding 159.22 any law to the contrary, but applies only to a development 159.23 authority that: 159.24 (1) was established by the municipality; or 159.25 (2) the governing body of which is appointed, in whole or 159.26 part, by the municipality or an officer of the municipality or 159.27 which consists, in whole or part, of members of the governing 159.28 body of the municipality. The municipality may use this 159.29 authority only after it has first used all available increments 159.30 of the receiving development authority to eliminate the 159.31 insufficiency and exercised any permitted action under section 159.32 469.1792, subdivision 3, for preexisting districts of the 159.33 receiving development authority to eliminate the insufficiency. 159.34 (e) The authority under this subdivision to spend tax 159.35 increments outside of the area of the district from which the 159.36 tax increments were collected: 160.1 (1) may only be exercised after obtaining approval of the 160.2 use of the increments, in writing, by the commissioner of 160.3 revenue; 160.4 (2) is an exception to the restrictions under section 160.5 469.176, subdivision 4i, and the other provisions of this 160.6 section, and the percentage restrictions under subdivision 2 160.7 must be calculated after deducting increments spent under this 160.8 subdivision from the total increments for the district; and 160.9 (3) applies notwithstanding the provisions of the Tax 160.10 Increment Financing Act in effect for districts for which the 160.11 request for certification was made before June 30, 1982, or any 160.12 other law to the contrary. 160.13 (f) If a preexisting obligation requires the development 160.14 authority to pay an amount that is limited to the increment from 160.15 the district or a specific development within the district and 160.16 if the obligation requires paying a higher amount to the extent 160.17 that increments are available, the municipality may determine 160.18 that the amount due under the preexisting obligation equals the 160.19 higher amount and may authorize the transfer of increments under 160.20 this subdivision to pay up to the higher amount. The authority 160.21 to transfer increments under this paragraph may only be used to 160.22 the extent that the payment of all other preexisting obligations 160.23 in the municipality due during the calendar year have been 160.24 satisfied. 160.25 [EFFECTIVE DATE.] This section is effective retroactively 160.26 to January 2, 2002, and thereafter. 160.27 ARTICLE 10 160.28 DEPARTMENT OF REVENUE TECHNICAL PROVISIONS 160.29 Section 1. Minnesota Statutes 2001 Supplement, section 160.30 69.021, subdivision 5, is amended to read: 160.31 Subd. 5. [CALCULATION OF STATE AID.] (a) The amount of 160.32 fire state aid available for apportionment, before the addition 160.33 of the minimum fire state aid allocation amount under 160.34 subdivision 7, is equal to 107 percent of the amount of premium 160.35 taxes paid to the state upon the fire, lightning, sprinkler 160.36 leakage, and extended coverage premiums reported to the 161.1 commissioner by insurers on the Minnesota Firetown Premium 161.2 Report. This amount shall be reduced by the amount required to 161.3 pay the state auditor's costs and expenses of the audits or 161.4 exams of the firefighters relief associations. 161.5 The total amount for apportionment in respect to fire state 161.6 aid must not be less than two percent of the premiums reported 161.7 to the commissioner by insurers on the Minnesota Firetown 161.8 Premium Report after subtracting the following amounts: 161.9 (1) the amount required to pay the state auditor's costs 161.10 and expenses of the audits or exams of the firefighters relief 161.11 associations; and 161.12 (2) one percent of the premiums reported by town and 161.13 farmers' mutual insurance companies and mutual property and 161.14 casualty companies with total assets of $5,000,000 or less. 161.15 (b) The total amount for apportionment as police state aid 161.16 is equal to 104 percent of the amount of premium taxes paid to 161.17 the state on the premiums reported to the commissioner by 161.18 insurers on the Minnesota Aid to Police Premium Report, plus the 161.19 payment amounts received under section 297I.05, subdivision 8, 161.20 since the last aid apportionment, and reduced by the amount 161.21 required to pay the costs and expenses of the state auditor for 161.22 audits or exams of police relief associations. The total amount 161.23 for apportionment in respect to the police state aid program 161.24 must not be less than two percent of the amount of premiums 161.25 reported to the commissioner by insurers on the Minnesota Aid to 161.26 Police Premium Report after subtracting the amount required to 161.27 pay the state auditor's cost and expenses of the audits or exams 161.28 of the police relief associations. 161.29 (c) The commissioner shall calculate the percentage of 161.30 increase or decrease reflected in the apportionment over or 161.31 under the previous year's available state aid using the same 161.32 premiums as a basis for comparison. 161.33 (d) The amount for apportionment in respect to peace 161.34 officer state aid under paragraph (b) must be further reduced by 161.35 $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 161.36 and $2,404,000 in fiscal year 2001. These reductions in this 162.1 paragraph cancel to the general fund. 162.2 (e) In addition to the amount for apportionment of police 162.3 state aid under paragraph (b)is annually increased by an amount162.4equal to the revenues under the tax on automobile risk162.5self-insurance under Minnesota Statutes 2000, section 297I.05,162.6subdivision 8, that were collected in fiscal year 2001, each 162.7 year $100,000 shall be apportioned for police state aid. An 162.8 amount sufficient to pay this increase is annually appropriated 162.9 from the general fund. 162.10 [EFFECTIVE DATE.] This section is effective beginning with 162.11 fiscal year 2003. 162.12 Sec. 2. Minnesota Statutes 2001 Supplement, section 162.13 126C.17, subdivision 7a, is amended to read: 162.14 Subd. 7a. [REFERENDUM TAX BASE REPLACEMENT AID.] For each 162.15 school district that had a referendum allowance for fiscal year 162.16 2002 exceeding $415, for each separately authorized referendum 162.17 levy, the commissioner of revenue, in consultation with the 162.18 commissioner of children, families, and learning, shall certify 162.19 the amount of the referendum levy in taxes payable year 2001 162.20 attributable to the portion of the referendum allowance 162.21 exceeding $415 levied against property classified as class 2, 162.22 noncommercial 4c(1), or 4c(4), under section 273.13, excluding 162.23 the portion of the tax paid by the portion of class 2a property 162.24 consisting of the house, garage, and surrounding one acre of 162.25 land. The resulting amount must be used to reduce the 162.26 district's referendum levy amount otherwise determined, and must 162.27 be paid to the district each year that the referendum authority 162.28 remains in effect. The aid payable under this subdivision must 162.29 be subtracted from the district's referendum equalization aid 162.30 under subdivision 7. The referendum equalization aid after the 162.31 subtraction must not be less than zero. 162.32 For the purposes of this subdivision, the referendum levy 162.33 with the latest year of expiration is assumed to be at the 162.34 highest level of equalization, and the referendum levy with the 162.35 earliest year of expiration is assumed to be at the lowest level 162.36 of equalization. 163.1 [EFFECTIVE DATE.] This section is effective for taxes 163.2 payable in 2002 and thereafter. 163.3 Sec. 3. Minnesota Statutes 2001 Supplement, section 163.4 270.69, subdivision 2, is amended to read: 163.5 Subd. 2. [FILING OF LIENS NECESSARY FOR ENFORCEABILITY 163.6 AGAINST CERTAIN PERSONS; METHODS OF FILING; FEES.] (a) The lien 163.7 imposed by subdivision 1 is not enforceable against any 163.8 purchaser, mortgagee, pledgee, holder of a Uniform Commercial 163.9 Code security interest, mechanic's lienor, or judgment lien 163.10 creditor whose interest has been duly perfected or is a 163.11 conveyance or interest entitled to protection against judgments 163.12 and attachments under section 507.34 or under any other 163.13 applicable provisions of state law, until a notice of lien has 163.14 been filed by the commissioner of revenue in the office of the 163.15 county recorder of the county in which real property is 163.16 situated, or in the case of personal propertybelonging to an163.17individual who is not a resident of this state or to a163.18corporation, partnership, or other organization,in the office 163.19 of the secretary of state, or in the case of personal property163.20belonging to a resident individual, in the office of the county163.21recorder of the county of residence of the individual. 163.22 (b)(1) Notices of liens, and lien releases, transcriptions, 163.23 and renewals, in a form prescribed by the commissioner of 163.24 revenue, may be filed with the county recorder or the secretary 163.25 of state by mail, personal delivery, or by electronic 163.26 transmission by the commissioner or a delegate into the 163.27 computerized filing system of the secretary of state. The 163.28 secretary of state shall transmit the notice electronically to 163.29 the office of the county recorder, if that is the place of 163.30 filing, in the county or counties shown on the computer entry. 163.31 The filing officer, whether the county recorder or the secretary 163.32 of state, shall endorse and index a printout of the notice in 163.33 the same manner as if the notice had been mailed or delivered. 163.34 (2) County recorders and the secretary of state shall enter 163.35 information relative to lien notices, transcriptions, renewals, 163.36 and releases filed in their offices into the central database of 164.1 the secretary of state. For notices filed electronically with 164.2 the county recorders, the date and time of receipt of the notice 164.3 and county recorder's file number, and for notices filed 164.4 electronically with the secretary of state, the secretary of 164.5 state's recording information, must be entered by the filing 164.6 officer into the central database before the close of the 164.7 working day following the day of the original data entry by the 164.8 department of revenue. 164.9 The filing and indexing of all notices must be in 164.10 accordance with the filing and indexing of notices of federal 164.11 liens, certificates of release, and refiled notices under 164.12 section 272.483. 164.13 (c) Notwithstanding any other law to the contrary, the 164.14 department of revenue is exempt from payment of fees when a 164.15 lien, lien renewal, or lien transcription is offered for 164.16 recording. The recording fees must be paid along with the 164.17 release fee at the end of the month in which the release of lien 164.18 is recorded, after receipt of a monthly statement from a county 164.19 recorder or the secretary of state. The department of revenue 164.20 shall add the recording fees to the delinquent tax liability of 164.21 the taxpayer. Notwithstanding any other law to the contrary, 164.22 the fee for filing or recording a notice of lien, or lien 164.23 release, transcription, or renewal is $15. 164.24 (d) There is appropriated to the commissioner of revenue an 164.25 amount representing the cost of payment of recording fees to the 164.26 county recorders and the secretary of state. The commissioner 164.27 shall keep a separate accounting of the costs and of payments 164.28 for recording fees remitted by taxpayers, and make the records 164.29 available to the legislature upon request. 164.30 [EFFECTIVE DATE.] As to the protection of interests in 164.31 property of third parties, this section is effective for liens 164.32 of record and enforceable as of the day following final 164.33 enactment, and for liens filed thereafter. As to the place of 164.34 filing of liens against personal property, this section is 164.35 effective for liens filed on or after the day following final 164.36 enactment. 165.1 Sec. 4. Minnesota Statutes 2000, section 272.02, 165.2 subdivision 15, is amended to read: 165.3 Subd. 15. [PROPERTY USED TO GENERATE HYDROELECTRIC OR 165.4 HYDROMECHANICAL POWER.]To the extent provided by section 295.44165.5 Notwithstanding the provisions of subdivision 39, and sections 165.6 272.01, subdivision 2, and 273.19, subdivision 1, real and 165.7 personal property used or to be used primarily for the 165.8 production of hydroelectric or hydromechanical power on a site 165.9 owned by the federal government, the state, or a local 165.10 governmental unitwhich isand developed and operated pursuant 165.11 tothe provisions ofsection 103G.535 is exempt from property 165.12 tax for all years during which the site is developed and 165.13 operated under the terms of a lease or agreement authorized by 165.14 section 103G.535. 165.15 [EFFECTIVE DATE.] This section is effective the day 165.16 following final enactment. 165.17 Sec. 5. Minnesota Statutes 2001 Supplement, section 165.18 273.121, is amended to read: 165.19 273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 165.20 Any county assessor or city assessor having the powers of a 165.21 county assessor, valuing or classifying taxable real property 165.22 shall in each year notify those persons whose property is to be 165.23 included on the assessment roll that year if the person's 165.24 address is known to the assessor, otherwise the occupant of the 165.25 property. The notice shall be in writing and shall be sent by 165.26 ordinary mail at least ten days before the meeting of the local 165.27 board of appeal and equalization under section 274.01 or the 165.28 review process established under section 274.13, subdivision 165.29 1c. It shall contain: (1) the market value for the current and 165.30 prior assessment, (2) the limited market value under section 165.31 273.11, subdivision 1a, for the current and prior assessment, (3) 165.32 the qualifying amount of any improvements under section 273.11, 165.33 subdivision 16, for the current assessment, (4) the market value 165.34 subject to taxation after subtracting the amount of any 165.35 qualifying improvements for the current assessment, (5) the 165.36 classification of the property for the current and prior 166.1 assessment, (6) a note that if the property is homestead and at 166.2 least3545 years old, improvements made to the property may be 166.3 eligible for a valuation exclusion under section 273.11, 166.4 subdivision 16, (7) the assessor's office address, and (8) the 166.5 dates, places, and times set for the meetings of the local board 166.6 of appeal and equalization, the review process established under 166.7 section 274.13, subdivision 1c, and the county board of appeal 166.8 and equalization. The commissioner of revenue shall specify the 166.9 form of the notice. The assessor shall attach to the assessment 166.10 roll a statement that the notices required by this section have 166.11 been mailed. Any assessor who is not provided sufficient funds 166.12 from the assessor's governing body to provide such notices, may 166.13 make application to the commissioner of revenue to finance such 166.14 notices. The commissioner of revenue shall conduct an 166.15 investigation and, if satisfied that the assessor does not have 166.16 the necessary funds, issue a certification to the commissioner 166.17 of finance of the amount necessary to provide such notices. The 166.18 commissioner of finance shall issue a warrant for such amount 166.19 and shall deduct such amount from any state payment to such 166.20 county or municipality. The necessary funds to make such 166.21 payments are hereby appropriated. Failure to receive the notice 166.22 shall in no way affect the validity of the assessment, the 166.23 resulting tax, the procedures of any board of review or 166.24 equalization, or the enforcement of delinquent taxes by 166.25 statutory means. 166.26 [EFFECTIVE DATE.] This section is effective for notices 166.27 required to be mailed in 2002 and thereafter. 166.28 Sec. 6. Minnesota Statutes 2001 Supplement, section 166.29 273.13, subdivision 24, is amended to read: 166.30 Subd. 24. [CLASS 3.] (a) Commercial and industrial 166.31 property and utility real and personal property is class 3a. 166.32 (1) Except as otherwise provided, each parcel of 166.33 commercial, industrial, or utility real property has a class 166.34 rate of 1.5 percent of the first tier of market value, and 2.0 166.35 percent of the remaining market value. In the case of 166.36 contiguous parcels of property owned by the same person or 167.1 entity, only the value equal to the first-tier value of the 167.2 contiguous parcels qualifies for the reduced class rate, except 167.3 that contiguous parcels owned by the same person or entity shall 167.4 be eligible for the first-tier value class rate on each separate 167.5 business operated by the owner of the property, provided the 167.6 business is housed in a separate structure. For the purposes of 167.7 this subdivision, the first tier means the first $150,000 of 167.8 market value. Real property owned in fee by a utility for 167.9 transmission line right-of-way shall be classified at the class 167.10 rate for the higher tier. 167.11 For purposes of this subdivision, parcels are considered to 167.12 be contiguous even if they are separated from each other by a 167.13 road, street, waterway, or other similar intervening type of 167.14 property. Connections between parcels that consist of power 167.15 lines or pipelines do not cause the parcels to be contiguous. 167.16 Property owners who have contiguous parcels of property that 167.17 constitute separate businesses that may qualify for the 167.18 first-tier class rate shall notify the assessor by July 1, for 167.19 treatment beginning in the following taxes payable year. 167.20 (2)All railroad operating property andAll personal 167.21 property that is: (i) part of an electric generation, 167.22 transmission, or distribution system; or (ii) part of a pipeline 167.23 system transporting or distributing water, gas, crude oil, or 167.24 petroleum products; and (iii) not described in clause (3), and 167.25 all railroad operating property has a class rate as provided 167.26 under clause (1) for the first tier of market value and the 167.27 remaining market value. In the case of multiple parcels in one 167.28 county that are owned by one person or entity, only one first 167.29 tier amount is eligible for the reduced rate. 167.30 (3) The entire market value of personal property that is: 167.31 (i) tools, implements, and machinery of an electric generation, 167.32 transmission, or distribution system; (ii) tools, implements, 167.33 and machinery of a pipeline system transporting or distributing 167.34 water, gas, crude oil, or petroleum products; or (iii) the mains 167.35 and pipes used in the distribution of steam or hot or chilled 167.36 water for heating or cooling buildings, has a class rate as 168.1 provided under clause (1) for the remaining market value in 168.2 excess of the first tier. 168.3 (b) Employment property defined in section 469.166, during 168.4 the period provided in section 469.170, shall constitute class 168.5 3b. The class rates for class 3b property are determined under 168.6 paragraph (a). 168.7 [EFFECTIVE DATE.] This section is effective for taxes 168.8 payable in 2002 and thereafter. 168.9 Sec. 7. Minnesota Statutes 2001 Supplement, section 168.10 273.1392, is amended to read: 168.11 273.1392 [PAYMENT; SCHOOL DISTRICTS.] 168.12 The amounts of conservation tax credits under section 168.13 273.119; disaster or emergency reimbursement under section 168.14 273.123; attached machinery aid under section 273.138; homestead 168.15 and agricultural credits under section 273.1384; aids and 168.16 credits under section 273.1398; wetlands reimbursement under 168.17 section 275.295; enterprise zone property credit payments under 168.18 section 469.171; and metropolitan agricultural preserve 168.19 reduction under section 473H.10 for school districts, shall be 168.20 certified to the department of children, families, and learning 168.21 by the department of revenue. The amounts so certified shall be 168.22 paid according to section 127A.45, subdivisions 9 and 13. 168.23 [EFFECTIVE DATE.] This section is effective for aids and 168.24 credits payable in 2002 and thereafter. 168.25 Sec. 8. Minnesota Statutes 2001 Supplement, section 168.26 273.1398, subdivision 4c, is amended to read: 168.27 Subd. 4c. [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 168.28 calendar years 2004 and 2005, each county in a judicial district 168.29 that has not been transferred to the state by January 1 of that 168.30 year shall receive additional homestead and agricultural credit 168.31 aid. This amount is in addition to the amount calculated under 168.32 subdivision 2 and must not be included in the definition of 168.33 homestead and agricultural credit base under subdivision 1, 168.34 paragraph (j). The amount of additional aid is equal to the 168.35 difference between (1) the amount budgeted for court 168.36 administration costs in 2001 as determined under subdivision 4b, 169.1 paragraph(c)(b), multiplied by the maintenance of effort 169.2 percent for the calendar year as determined under subdivision 169.3 4b, paragraph(d)(a), and (2) the amount calculated under 169.4 subdivision 4b, paragraph (a), for calendar year 2003. This 169.5 additional aid must be used only to fund court administration 169.6 expenditures as defined in section 480.183, subdivision 3. This 169.7 amount must be added to the state court's base budget in the 169.8 year when the court in that judicial district in which the 169.9 county is located is transferred to the state. 169.10 [EFFECTIVE DATE.] This section is effective retroactively 169.11 to July 1, 2001, and thereafter. 169.12 Sec. 9. Minnesota Statutes 2001 Supplement, section 169.13 275.74, subdivision 2, is amended to read: 169.14 Subd. 2. [AUTHORIZATION FOR SPECIAL LEVIES.] A local 169.15 governmental unit may request authorization to levy for 169.16 unreimbursed costs forothernatural disasters under section 169.17 275.70, subdivision 5, clause(6)(7). The local governmental 169.18 unit shall submit a request to levy under section 275.70, 169.19 subdivision 5, clause(6)(7), to the commissioner of revenue by 169.20 September 30 of the levy year and the request must include 169.21 information documenting the estimated unreimbursed costs. The 169.22 commissioner of revenue may grant levy authority, up to the 169.23 amount requested based on the documentation submitted. All 169.24 decisions of the commissioner are final. 169.25 [EFFECTIVE DATE.] This section is effective for taxes 169.26 payable in 2002 and 2003. 169.27 Sec. 10. Minnesota Statutes 2001 Supplement, section 169.28 289A.60, subdivision 2, is amended to read: 169.29 Subd. 2. [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 169.30 a taxpayer fails to make and file a tax return within the time 169.31 prescribed, including an extension, or fails to file an 169.32 individual income tax return within six months after the due 169.33 date, a penalty of five percent of the amount of tax not paid by 169.34 the end of that period is added to the tax. 169.35 [EFFECTIVE DATE.] This section is effective the day 169.36 following final enactment. 170.1 Sec. 11. Minnesota Statutes 2000, section 290.067, 170.2 subdivision 2a, is amended to read: 170.3 Subd. 2a. [INCOME.] (a) For purposes of this section, 170.4 "income" means the sum of the following: 170.5 (1) federal adjusted gross income as defined in section 62 170.6 of the Internal Revenue Code; and 170.7 (2) the sum of the following amounts to the extent not 170.8 included in clause (1): 170.9 (i) all nontaxable income; 170.10 (ii) the amount of a passive activity loss that is not 170.11 disallowed as a result of section 469, paragraph (i) or (m) of 170.12 the Internal Revenue Code and the amount of passive activity 170.13 loss carryover allowed under section 469(b) of the Internal 170.14 Revenue Code; 170.15 (iii) an amount equal to the total of any discharge of 170.16 qualified farm indebtedness of a solvent individual excluded 170.17 from gross income under section 108(g) of the Internal Revenue 170.18 Code; 170.19 (iv) cash public assistance and relief; 170.20 (v) any pension or annuity (including railroad retirement 170.21 benefits, all payments received under the federal Social 170.22 Security Act, supplemental security income, and veterans 170.23 benefits), which was not exclusively funded by the claimant or 170.24 spouse, or which was funded exclusively by the claimant or 170.25 spouse and which funding payments were excluded from federal 170.26 adjusted gross income in the years when the payments were made; 170.27 (vi) interest received from the federal or a state 170.28 government or any instrumentality or political subdivision 170.29 thereof; 170.30 (vii) workers' compensation; 170.31 (viii) nontaxable strike benefits; 170.32 (ix) the gross amounts of payments received in the nature 170.33 of disability income or sick pay as a result of accident, 170.34 sickness, or other disability, whether funded through insurance 170.35 or otherwise; 170.36 (x) a lump sum distribution under section 402(e)(3) of the 171.1 Internal Revenue Code; 171.2 (xi) contributions made by the claimant to an individual 171.3 retirement account, including a qualified voluntary employee 171.4 contribution; simplified employee pension plan; self-employed 171.5 retirement plan; cash or deferred arrangement plan under section 171.6 401(k) of the Internal Revenue Code; or deferred compensation 171.7 plan under section 457 of the Internal Revenue Code; and 171.8 (xii) nontaxable scholarship or fellowship grants. 171.9 In the case of an individual who files an income tax return 171.10 on a fiscal year basis, the term "federal adjusted gross income" 171.11 means federal adjusted gross income reflected in the fiscal year 171.12 ending in the next calendar year. Federal adjusted gross income 171.13 may not be reduced by the amount of a net operating loss 171.14 carryback or carryforward or a capital loss carryback or 171.15 carryforward allowed for the year. 171.16 (b) "Income" does not include: 171.17 (1) amounts excluded pursuant to the Internal Revenue Code, 171.18 sections 101(a) and 102; 171.19 (2) amounts of any pension or annuity that were exclusively 171.20 funded by the claimant or spouse if the funding payments were 171.21 not excluded from federal adjusted gross income in the years 171.22 when the payments were made; 171.23 (3) surplus food or other relief in kind supplied by a 171.24 governmental agency; 171.25 (4) relief granted under chapter 290A;and171.26 (5) child support payments received under a temporary or 171.27 final decree of dissolution or legal separation; and 171.28 (6) restitution payments received by eligible individuals 171.29 and excludable interest as defined in section 803 of the 171.30 Economic Growth and Tax Relief Reconciliation Act of 2001, 171.31 Public Law Number 107-16. 171.32 [EFFECTIVE DATE.] This section is effective for tax years 171.33 beginning after December 31, 2000. 171.34 Sec. 12. Minnesota Statutes 2001 Supplement, section 171.35 290.0675, subdivision 1, is amended to read: 171.36 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 172.1 section the following terms have the meanings given. 172.2 (b) "Earned income" means the sum of the following, to the 172.3 extent included in Minnesota taxable income: 172.4 (1) earned income as defined in section 32(c)(2) of the 172.5 Internal Revenue Code; 172.6 (2) income received from a retirement pension, 172.7 profit-sharing, stock bonus, or annuity plan; and 172.8 (3) social security benefits as defined in section 86(d)(1) 172.9 of the Internal Revenue Code. 172.10 (c) "Taxable income" means net income as defined in section 172.11 290.01, subdivision 19. 172.12 (d) "Earned income of lesser-earning spouse" means the 172.13 earned income of the spouse with the lesser amount of earned 172.14 income as defined in paragraph (b) for the taxable year minus 172.15 the sum of (i) the amount for one exemption under section 151(d) 172.16 of the Internal Revenue Code and (ii) one-half the amount of the 172.17 standard deduction under section 63(c)(2)(A) and (4) of the 172.18 Internal Revenue Code. 172.19 [EFFECTIVE DATE.] This section is effective for tax years 172.20 beginning after December 31, 2000. 172.21 Sec. 13. Minnesota Statutes 2001 Supplement, section 172.22 290.0675, subdivision 3, is amended to read: 172.23 Subd. 3. [CREDIT AMOUNT.] The credit amount is the 172.24 difference between the tax on the couple's joint Minnesota 172.25 taxable income under the rates in section 290.06, subdivision 172.26 2c, paragraph (a), and the sum of the tax under the rates of 172.27 section 290.06, subdivision 2c, paragraph (b), on the earned 172.28 income of the lesser-earning spouse, and the tax under the rates 172.29 of section 290.06, subdivision 2c, paragraph (b), on the 172.30 couple's joint Minnesota taxable income, minus the earned income 172.31 of the lesser-earning spouse. 172.32For taxable years beginning after December 31, 2001,The 172.33 commissioner of revenue shall prepare and make available to 172.34 taxpayers a comprehensive table showing the credit under this 172.35 section at brackets of earnings of the lesser-earning spouse and 172.36 joint taxable income. The brackets of earnings shall not be 173.1 more than $2,000. 173.2For taxable years beginning after December 31, 2002, the173.3commissioner shall update the table as necessary to provide a173.4credit that reflects the relationship between the marginal tax173.5rates imposed under section 290.06, subdivision 2c.173.6 [EFFECTIVE DATE.] This section is effective for tax years 173.7 beginning after December 31, 2000. 173.8 Sec. 14. Minnesota Statutes 2001 Supplement, section 173.9 290.0921, subdivision 2, is amended to read: 173.10 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 173.11 the following terms have the meanings given them. 173.12 (b) "Alternative minimum taxable net income" is alternative 173.13 minimum taxable income, 173.14 (1) less the exemption amount, and 173.15 (2) apportioned or allocated to Minnesota under section 173.16 290.17, 290.191, or 290.20. 173.17 (c) The "exemption amount" is $40,000, reduced, but not 173.18 below zero, by 25 percent of the excess of alternative minimum 173.19 taxable income over $150,000. 173.20 (d) "Minnesota alternative minimum taxable income" is 173.21 alternative minimum taxable net income, less the deductions for 173.22 alternative tax net operating loss under subdivision 4; 173.23charitable contributions under subdivision 5;and dividends 173.24 received under subdivision 6. The sum of the deductions under 173.25 this paragraph may not exceed 90 percent of alternative minimum 173.26 taxable net income. This limitation does not apply to a 173.27 deduction for dividends paid to or received from a corporation 173.28 which is subject to tax under section 290.36 and which is a 173.29 member of an affiliated group of corporations as defined by the 173.30 Internal Revenue Code. 173.31 [EFFECTIVE DATE.] This section is effective for taxable 173.32 years beginning after December 31, 2001. 173.33 Sec. 15. Minnesota Statutes 2000, section 290.17, 173.34 subdivision 2, is amended to read: 173.35 Subd. 2. [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 173.36 BUSINESS.] The income of a taxpayer subject to the allocation 174.1 rules that is not derived from the conduct of a trade or 174.2 business must be assigned in accordance with paragraphs (a) to 174.3 (f): 174.4 (a)(1) Subject to paragraphs (a)(2), (a)(3), and (a)(4), 174.5 income from wages as defined in section 3401(a) and (f) of the 174.6 Internal Revenue Code is assigned to this state if, and to the 174.7 extent that, the work of the employee is performed within it; 174.8 all other income from such sources is treated as income from 174.9 sources without this state. 174.10 Severance pay shall be considered income from labor or 174.11 personal or professional services. 174.12 (2) In the case of an individual who is a nonresident of 174.13 Minnesota and who is an athlete or entertainer, income from 174.14 compensation for labor or personal services performed within 174.15 this state shall be determined in the following manner: 174.16 (i) The amount of income to be assigned to Minnesota for an 174.17 individual who is a nonresident salaried athletic team employee 174.18 shall be determined by using a fraction in which the denominator 174.19 contains the total number of days in which the individual is 174.20 under a duty to perform for the employer, and the numerator is 174.21 the total number of those days spent in Minnesota. For purposes 174.22 of this paragraph, off-season training activities, unless 174.23 conducted at the team's facilities as part of a team imposed 174.24 program, are not included in the total number of duty days. 174.25 Bonuses earned as a result of play during the regular season or 174.26 for participation in championship, play-off, or all-star games 174.27 must be allocated under the formula. Signing bonuses are not 174.28 subject to allocation under the formula if they are not 174.29 conditional on playing any games for the team, are payable 174.30 separately from any other compensation, and are nonrefundable; 174.31 and 174.32 (ii) The amount of income to be assigned to Minnesota for 174.33 an individual who is a nonresident, and who is an athlete or 174.34 entertainer not listed in clause (i), for that person's athletic 174.35 or entertainment performance in Minnesota shall be determined by 174.36 assigning to this state all income from performances or athletic 175.1 contests in this state. 175.2 (3) For purposes of this section, amounts received by a 175.3 nonresident as "retirement income" as defined in section (b)(1) 175.4 of the State Income Taxation of Pension Income Act, Public Law 175.5 Number 104-95, are not considered income derived from carrying 175.6 on a trade or business or from wages or other compensation for 175.7 work an employee performed in Minnesota, and are not taxable 175.8 under this chapter. 175.9 (4) Wages, otherwise assigned to this state under clause 175.10 (1) and not qualifying under clause (3), are not taxable under 175.11 this chapter if the following conditions are met: 175.12 (i) the recipient was not a resident of this state for any 175.13 part of the taxable year in which the wages were received; and 175.14 (ii) the wages are for work performed while the recipient 175.15 was a resident of this state. 175.16 (b) Income or gains from tangible property located in this 175.17 state that is not employed in the business of the recipient of 175.18 the income or gains must be assigned to this state. 175.19 (c) Income or gains from intangible personal property not 175.20 employed in the business of the recipient of the income or gains 175.21 must be assigned to this state if the recipient of the income or 175.22 gains is a resident of this state or is a resident trust or 175.23 estate. 175.24 Gain on the sale of a partnership interest is allocable to 175.25 this state in the ratio of the original cost of partnership 175.26 tangible property in this state to the original cost of 175.27 partnership tangible property everywhere, determined at the time 175.28 of the sale. If more than 50 percent of the value of the 175.29 partnership's assets consists of intangibles, gain or loss from 175.30 the sale of the partnership interest is allocated to this state 175.31 in accordance with the sales factor of the partnership for its 175.32 first full tax period immediately preceding the tax period of 175.33 the partnership during which the partnership interest was sold. 175.34 Gain on the sale of goodwill or income from a covenant not 175.35 to compete that is connected with a business operating all or 175.36 partially in Minnesota is allocated to this state to the extent 176.1 that the income from the business in the year preceding the year 176.2 of sale was assignable to Minnesota under subdivision 3. 176.3 When an employer pays an employee for a covenant not to 176.4 compete, the income allocated to this state is in the ratio of 176.5 the employee's service in Minnesota in the calendar year 176.6 preceding leaving the employment of the employer over the total 176.7 services performed by the employee for the employer in that year. 176.8 (d) Income from winnings onMinnesota pari-mutuel betting176.9tickets, the Minnesota state lottery, and lawful gambling as176.10defined in section 349.12, subdivision 24, conducted within the176.11boundaries of the state of Minnesota shall be assigned to this176.12statea bet made by an individual while in Minnesota is assigned 176.13 to this state. In this paragraph, "bet" has the meaning given 176.14 in section 609.75, subdivision 2, as limited by section 609.75, 176.15 subdivision 3, clauses (1), (2), and (3). 176.16 (e) All items of gross income not covered in paragraphs (a) 176.17 to (d) and not part of the taxpayer's income from a trade or 176.18 business shall be assigned to the taxpayer's domicile. 176.19 (f) For the purposes of this section, working as an 176.20 employee shall not be considered to be conducting a trade or 176.21 business. 176.22 [EFFECTIVE DATE.] This section is effective for tax years 176.23 beginning after December 31, 2001. 176.24 Sec. 16. Minnesota Statutes 2000, section 290.17, 176.25 subdivision 3, is amended to read: 176.26 Subd. 3. [TRADE OR BUSINESS INCOME; GENERAL RULE.] All 176.27 income of a trade or business is subject to apportionment except 176.28 nonbusiness income. Income derived from carrying on a trade or 176.29 business must be assigned to this state if the trade or business 176.30 is conducted wholly within this state, assigned outside this 176.31 state if conducted wholly without this state and apportioned 176.32 between this state and other states and countries under this 176.33 subdivision if conducted partly within and partly without this 176.34 state. For purposes of determining whether a trade or business 176.35 is carried on exclusively within or without this state: 176.36 (a) A trade or business physically located exclusively 177.1 within this state is nevertheless carried on partly within and 177.2 partly without this state if any of the principles set forth in 177.3 section 290.191 for the allocation of sales or receipts within 177.4 or without this state when applied to the taxpayer's situation 177.5 result in the allocation of any sales or receipts without this 177.6 state. 177.7 (b) A trade or business physically located exclusively 177.8 without this state is nevertheless carried on partly within and 177.9 partly without this state if any of the principles set forth in 177.10 section 290.191 for the allocation of sales or receipts within 177.11 or without this state when applied to the taxpayer's situation 177.12 result in the allocation of any sales or receiptswithoutwithin 177.13 this state. The jurisdiction to tax such a business under this 177.14 chapter must be determined in accordance with sections 290.014 177.15 and 290.015. 177.16 [EFFECTIVE DATE.] This section is effective for tax years 177.17 beginning after December 31, 2001. 177.18 Sec. 17. Minnesota Statutes 2000, section 290A.03, 177.19 subdivision 3, is amended to read: 177.20 Subd. 3. [INCOME.] (1) "Income" means the sum of the 177.21 following: 177.22 (a) federal adjusted gross income as defined in the 177.23 Internal Revenue Code; and 177.24 (b) the sum of the following amounts to the extent not 177.25 included in clause (a): 177.26 (i) all nontaxable income; 177.27 (ii) the amount of a passive activity loss that is not 177.28 disallowed as a result of section 469, paragraph (i) or (m) of 177.29 the Internal Revenue Code and the amount of passive activity 177.30 loss carryover allowed under section 469(b) of the Internal 177.31 Revenue Code; 177.32 (iii) an amount equal to the total of any discharge of 177.33 qualified farm indebtedness of a solvent individual excluded 177.34 from gross income under section 108(g) of the Internal Revenue 177.35 Code; 177.36 (iv) cash public assistance and relief; 178.1 (v) any pension or annuity (including railroad retirement 178.2 benefits, all payments received under the federal Social 178.3 Security Act, supplemental security income, and veterans 178.4 benefits), which was not exclusively funded by the claimant or 178.5 spouse, or which was funded exclusively by the claimant or 178.6 spouse and which funding payments were excluded from federal 178.7 adjusted gross income in the years when the payments were made; 178.8 (vi) interest received from the federal or a state 178.9 government or any instrumentality or political subdivision 178.10 thereof; 178.11 (vii) workers' compensation; 178.12 (viii) nontaxable strike benefits; 178.13 (ix) the gross amounts of payments received in the nature 178.14 of disability income or sick pay as a result of accident, 178.15 sickness, or other disability, whether funded through insurance 178.16 or otherwise; 178.17 (x) a lump sum distribution under section 402(e)(3) of the 178.18 Internal Revenue Code; 178.19 (xi) contributions made by the claimant to an individual 178.20 retirement account, including a qualified voluntary employee 178.21 contribution; simplified employee pension plan; self-employed 178.22 retirement plan; cash or deferred arrangement plan under section 178.23 401(k) of the Internal Revenue Code; or deferred compensation 178.24 plan under section 457 of the Internal Revenue Code; and 178.25 (xii) nontaxable scholarship or fellowship grants. 178.26 In the case of an individual who files an income tax return 178.27 on a fiscal year basis, the term "federal adjusted gross income" 178.28 shall mean federal adjusted gross income reflected in the fiscal 178.29 year ending in the calendar year. Federal adjusted gross income 178.30 shall not be reduced by the amount of a net operating loss 178.31 carryback or carryforward or a capital loss carryback or 178.32 carryforward allowed for the year. 178.33 (2) "Income" does not include: 178.34 (a) amounts excluded pursuant to the Internal Revenue Code, 178.35 sections 101(a) and 102; 178.36 (b) amounts of any pension or annuity which was exclusively 179.1 funded by the claimant or spouse and which funding payments were 179.2 not excluded from federal adjusted gross income in the years 179.3 when the payments were made; 179.4 (c) surplus food or other relief in kind supplied by a 179.5 governmental agency; 179.6 (d) relief granted under this chapter; 179.7 (e) child support payments received under a temporary or 179.8 final decree of dissolution or legal separation; or 179.9 (f)holocaust settlement payments as defined in section179.10290.01, subdivision 32restitution payments received by eligible 179.11 individuals and excludable interest as defined in section 803 of 179.12 the Economic Growth and Tax Relief Reconciliation Act of 2001, 179.13 Public Law Number 107-16. 179.14 (3) The sum of the following amounts may be subtracted from 179.15 income: 179.16 (a) for the claimant's first dependent, the exemption 179.17 amount multiplied by 1.4; 179.18 (b) for the claimant's second dependent, the exemption 179.19 amount multiplied by 1.3; 179.20 (c) for the claimant's third dependent, the exemption 179.21 amount multiplied by 1.2; 179.22 (d) for the claimant's fourth dependent, the exemption 179.23 amount multiplied by 1.1; 179.24 (e) for the claimant's fifth dependent, the exemption 179.25 amount; and 179.26 (f) if the claimant or claimant's spouse was disabled or 179.27 attained the age of 65 on or before December 31 of the year for 179.28 which the taxes were levied or rent paid, the exemption amount. 179.29 For purposes of this subdivision, the "exemption amount" 179.30 means the exemption amount under section 151(d) of the Internal 179.31 Revenue Code for the taxable year for which the income is 179.32 reported. 179.33 [EFFECTIVE DATE.] This section is effective the day 179.34 following final enactment. 179.35 Sec. 18. Minnesota Statutes 2001 Supplement, section 179.36 290A.04, subdivision 2h, is amended to read: 180.1 Subd. 2h. [ADDITIONAL REFUND.] (a)Beginning with gross180.2property taxes payable in 2003,If the gross property taxes 180.3 payable on a homestead increase more than 12 percent over the 180.4 property taxes payable in the prior year on the same property 180.5 that is owned and occupied by the same owner on January 2 of 180.6 both years, and the amount of that increase is $100 or more, a 180.7 claimant who is a homeowner shall be allowed an additional 180.8 refund equal to 60 percent of the amount of the increase over 180.9 the greater of 12 percent of the prior year's property taxes 180.10 payable or $100. This subdivision shall not apply to any 180.11 increase in the gross property taxes payable attributable to 180.12 improvements made to the homestead after the assessment date for 180.13 the prior year's taxes. This subdivision shall not apply to any 180.14 increase in the gross property taxes payable attributable to the 180.15 termination of valuation exclusions under section 273.11, 180.16 subdivision 16. 180.17 The maximum refund allowed under this subdivision is $1,000. 180.18 (b) For purposes of this subdivision "gross property taxes 180.19 payable" means property taxes payable determined without regard 180.20 to the refund allowed under this subdivision. 180.21 (c) In addition to the other proofs required by this 180.22 chapter, each claimant under this subdivision shall file with 180.23 the property tax refund return a copy of the property tax 180.24 statement for taxes payable in the preceding year or other 180.25 documents required by the commissioner. 180.26 (d) Upon request, the appropriate county official shall 180.27 make available the names and addresses of the property taxpayers 180.28 who may be eligible for the additional property tax refund under 180.29 this section. The information shall be provided on a magnetic 180.30 computer disk. The county may recover its costs by charging the 180.31 person requesting the information the reasonable cost for 180.32 preparing the data. The information may not be used for any 180.33 purpose other than for notifying the homeowner of potential 180.34 eligibility and assisting the homeowner, without charge, in 180.35 preparing a refund claim. 180.36 [EFFECTIVE DATE.] This section is effective beginning with 181.1 refunds based on gross property taxes payable in 2002. 181.2 Sec. 19. Minnesota Statutes 2001 Supplement, section 181.3 295.60, is amended by adding a subdivision to read: 181.4 Subd. 1a. [USE TAX; CREDIT FOR TAXES PAID.] (a) A person 181.5 that receives fur clothing for use or storage in Minnesota, 181.6 other than from a furrier that paid the tax under subdivision 1, 181.7 is subject to tax at the rate imposed under subdivision 1. 181.8 Liability for the tax is incurred when the person has possession 181.9 of the fur clothing in Minnesota. The tax must be remitted to 181.10 the commissioner in the manner prescribed by subdivision 3. 181.11 (b) A person that has paid taxes to another jurisdiction on 181.12 the same transaction and is subject to tax under this section is 181.13 entitled to a credit for the tax legally due and paid to another 181.14 jurisdiction to the extent of the lesser of (1) the tax actually 181.15 paid to the other jurisdiction, or (2) the amount of tax imposed 181.16 by Minnesota on the transaction subject to tax in the other 181.17 jurisdiction. 181.18 [EFFECTIVE DATE.] This section is effective for fur 181.19 clothing purchased and brought into Minnesota on or after 181.20 January 1, 2002. 181.21 Sec. 20. Minnesota Statutes 2001 Supplement, section 181.22 295.60, is amended by adding a subdivision to read: 181.23 Subd. 1b. [TAX COLLECTION REQUIRED.] A furrier with nexus 181.24 in Minnesota, who is not subject to tax under subdivision 1, is 181.25 required to collect the tax imposed under subdivision 1a from 181.26 the purchaser of the clothing made from fur and give the 181.27 purchaser a receipt for the tax paid. The tax collected must be 181.28 remitted to the commissioner in the manner prescribed by 181.29 subdivision 3. 181.30 [EFFECTIVE DATE.] This section is effective for fur 181.31 clothing purchased and brought into Minnesota on or after 181.32 January 1, 2002. 181.33 Sec. 21. Minnesota Statutes 2001 Supplement, section 181.34 295.60, is amended by adding a subdivision to read: 181.35 Subd. 1c. [TAXES PAID TO ANOTHER JURISDICTION; CREDIT.] A 181.36 furrier that has paid taxes to another jurisdiction measured by 182.1 gross revenue and is subject to tax under this section on the 182.2 same gross revenues is entitled to a credit for the tax legally 182.3 due and paid to another jurisdiction to the extent of the lesser 182.4 of (1) the tax actually paid to the other jurisdiction, or (2) 182.5 the amount of tax imposed by Minnesota on the gross revenues 182.6 subject to tax in the other taxing jurisdictions. 182.7 [EFFECTIVE DATE.] This section is effective for gross 182.8 revenues received on or after January 1, 2002. 182.9 Sec. 22. Minnesota Statutes 2001 Supplement, section 182.10 295.60, subdivision 7, is amended to read: 182.11 Subd. 7. [APPLICATION OF OTHER CHAPTERS.] Unless 182.12 specifically provided otherwise by this section, the 182.13 enforcement, interest,and penalty provisions under chapter 294,182.14 appealprovisions in sections 289A.43 and 289A.65, criminal 182.15 penaltiesin section 289A.63, and refunds provisions insection182.16289A.50chapter 289A, civil penalty provisions applicable to 182.17 withholding and sales taxes under section 289A.60, and 182.18 collection and rulemaking provisions under chapter 270, apply to 182.19a liability for thetaxes imposed under this section. 182.20 [EFFECTIVE DATE.] This section is effective January 1, 2002. 182.21 Sec. 23. Minnesota Statutes 2000, section 296A.18, 182.22 subdivision 8, is amended to read: 182.23 Subd. 8. [AVIATION FUEL TAXSTATE AIRPORTS FUND.] The 182.24 revenues derived from the excise taxes on aviation gasoline and 182.25 on special fuel received, sold, stored, or withdrawn from 182.26 storage as substitutes for aviation gasoline, shall be paid into 182.27 the state treasury and credited to theaviation fuel taxstate 182.28 airports fund. There is hereby appropriated such sums as are 182.29 needed to carry out the provisions of this subdivision. 182.30 [EFFECTIVE DATE.] This section is effective the day 182.31 following final enactment. 182.32 Sec. 24. Minnesota Statutes 2001 Supplement, section 182.33 297A.70, subdivision 3, is amended to read: 182.34 Subd. 3. [SALES OF CERTAIN GOODS AND SERVICES TO 182.35 GOVERNMENT.] (a) The following sales to or use by the specified 182.36 governments and political subdivisions of the state are exempt: 183.1 (1) repair and replacement parts for emergency rescue 183.2 vehicles, fire trucks, and fire apparatus to a political 183.3 subdivision; 183.4 (2) machinery and equipment, except for motor vehicles, 183.5 used directly for mixed municipal solid waste management 183.6 services at a solid waste disposal facility as defined in 183.7 section 115A.03, subdivision 10; 183.8 (3) chore and homemaking services to a political 183.9 subdivision of the state to be provided to elderly or disabled 183.10 individuals; 183.11 (4) telephone services to the department of administration 183.12 that are used to provide telecommunications services through the 183.13 intertechnologies revolving fund; 183.14 (5) firefighter personal protective equipment as defined in 183.15 paragraph (b), if purchased or authorized by and for the use of 183.16 an organized fire department, fire protection district, or fire 183.17 company regularly charged with the responsibility of providing 183.18 fire protection to the state or a political subdivision; 183.19 (6) bullet-resistant body armor that provides the wearer 183.20 with ballistic and trauma protection, if purchased by a law 183.21 enforcement agency of the state or a political subdivision of 183.22 the state, or a licensed peace officer, as defined in section 183.23 626.84, subdivision 1; 183.24 (7) motor vehicles purchased or leased by political 183.25 subdivisions of the state if the vehicles are exempt from 183.26 registration under section 168.012, subdivision 1, paragraph 183.27 (b), exempt from taxation under section 473.448, or exempt from 183.28 the motor vehicle sales tax under section 297B.03, clause (12); 183.29 (8) equipment designed to process, dewater, and recycle 183.30 biosolids for wastewater treatment facilities of political 183.31 subdivisions, and materials incidental to installation of that 183.32 equipment;and materials used to construct buildings to house183.33the equipment, if the materials are purchased after June 30,183.341998, and before July 1, 2001;and 183.35 (9) sales to a town of gravel and of machinery, equipment, 183.36 and accessories, except motor vehicles, used exclusively for 184.1 road and bridge maintenance, and leases by a town of motor 184.2 vehicles exempt from tax under section 297B.03, clause (10). 184.3 (b) For purposes of this subdivision, "firefighters 184.4 personal protective equipment" means helmets, including face 184.5 shields, chin straps, and neck liners; bunker coats and pants, 184.6 including pant suspenders; boots; gloves; head covers or hoods; 184.7 wildfire jackets; protective coveralls; goggles; self-contained 184.8 breathing apparatus; canister filter masks; personal alert 184.9 safety systems; spanner belts; optical or thermal imaging search 184.10 devices; and all safety equipment required by the Occupational 184.11 Safety and Health Administration. 184.12 [EFFECTIVE DATE.] This section is effective the day 184.13 following final enactment. 184.14 Sec. 25. Minnesota Statutes 2000, section 297I.05, 184.15 subdivision 11, is amended to read: 184.16 Subd. 11. [RETALIATORY PROVISIONS.] (a) If any other state 184.17 or country imposes any taxes, fines, deposits, penalties, 184.18 licenses, or fees upon any insurance companies of this state and 184.19 their agents doing business in another state or country that are 184.20 in addition to or in excess of those imposed by the laws of this 184.21 state upon foreign insurance companies and their agents doing 184.22 business in this state, the same taxes, fines, deposits, 184.23 penalties, licenses, and fees are imposed upon every similar 184.24 insurance company of that state or country and their agents 184.25 doing or applying to do business in this state. 184.26 (b) If any conditions precedent to the right to do business 184.27 in any other state or country are imposed by the laws of that 184.28 state or country, beyond those imposed upon foreign companies by 184.29 the laws of this state, the same conditions precedent are 184.30 imposed upon every similar insurance company of that state or 184.31 country and their agents doing or applying to do business in 184.32 that state. 184.33 (c) For purposes of this subdivision, "taxes, fines, 184.34 deposits, penalties, licenses, or fees" means an amount of money 184.35 that is deposited in the general revenue fund of the state or 184.36 other similar fund in another state or country and is not 185.1 dedicated to a special purpose or use or money deposited in the 185.2 general revenue fund of the state or other similar fund in 185.3 another state or country and appropriated to the commissioner of 185.4 commerce or insurance for the operation of the department of 185.5 commerce or other similar agency with jurisdiction over 185.6 insurance. Taxes, fines, deposits, penalties, licenses, or fees 185.7 do not include: 185.8 (1) special purpose obligations or assessments imposed in 185.9 connection with particular kinds of insurance, including but not 185.10 limited to assessments imposed in connection with residual 185.11 market mechanisms; or 185.12 (2) assessments made by the insurance guaranty association, 185.13 life and health guarantee association, or similar association. 185.14 (d) This subdivision applies to taxes imposed under 185.15 subdivisions 1, 3, 4, 6, and 12, paragraph (a), clauses (1) and 185.16(3)(2). 185.17 (e) This subdivision does not apply to insurance companies 185.18 organized or domiciled in a state or country, the laws of which 185.19 do not impose retaliatory taxes, fines, deposits, penalties, 185.20 licenses, or fees or which grant, on a reciprocal basis, 185.21 exemptions from retaliatory taxes, fines, deposits, penalties, 185.22 licenses, or fees to insurance companies domiciled in this state. 185.23 [EFFECTIVE DATE.] This section is effective retroactively 185.24 to tax years beginning on or after January 1, 2001. 185.25 Sec. 26. Minnesota Statutes 2000, section 477A.011, 185.26 subdivision 20, is amended to read: 185.27 Subd. 20. [CITY NET TAX CAPACITY.] "City net tax capacity" 185.28 means (1) the net tax capacity computed using the net tax 185.29 capacity rates in section 273.13 for taxes payable in the year 185.30 of the aid distribution, and the market values for taxes payable 185.31 in the year prior to the aid distribution plus (2) a city's 185.32 fiscal disparities distribution tax capacity under section 185.33 276A.06, subdivision 2, paragraph (b), or 473F.08, subdivision 185.34 2, paragraph (b), for taxes payable in the year prior to that 185.35 for which aids are being calculated. The market value utilized 185.36 in computing city net tax capacity shall be reduced by the sum 186.1 of (1) a city's market value of commercial industrial property 186.2 as defined in section 276A.01, subdivision 3, or 473F.02, 186.3 subdivision 3, multiplied by the ratio determined pursuant to 186.4 section 276A.06, subdivision 2, paragraph (a), or 473F.08, 186.5 subdivision 2, paragraph (a), (2) the market value of the 186.6 captured value of tax increment financing districts as defined 186.7 in section 469.177, subdivision 2, and (3) the market value of 186.8 transmission lines deducted from a city's total net tax capacity 186.9 under section 273.425. The city net tax capacity will be 186.10 computed using equalized market values. 186.11 [EFFECTIVE DATE.] This section is effective for aid payable 186.12 in 2002 and thereafter. 186.13 Sec. 27. Minnesota Statutes 2001 Supplement, section 186.14 477A.013, subdivision 9, is amended to read: 186.15 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 186.16 2002 and thereafter, each city shall receive an aid distribution 186.17 equal to the sum of (1) the city formula aid under subdivision 186.18 8, and (2) its city aid base. 186.19 (b) The percentage increase for a first class city in 186.20 calendar year 1995 and thereafter, except for 2002, shall not 186.21 exceed the percentage increase in the sum of the aid to all 186.22 cities under this section in the current calendar year compared 186.23 to the sum of the aid to all cities in the previous year. For 186.24 aids payable in 2002 only, the amount of the aid paid to a first 186.25 class city shall not exceed the sum of its aid amount for 186.26 calendar year 2001 under this section and its aid payment in 186.27 calendar year 2001 under section 273.1398, subdivision 2, by 186.28 more than 2.5 percent. 186.29 (c) For aids payable in all years except 2002, the total 186.30 aid for any city, except a first class city, shall not exceed 186.31 the sum of (1) ten percent of the city's net levy for the year 186.32 prior to the aid distribution plus (2) its total aid in the 186.33 previous yearbefore any increases or decreases under sections186.3416A.711, subdivision 5, and 477A.0132. For aids payable in 2002 186.35 only, the total aid for any city, except a first class city, 186.36 shall not exceed40 percent ofthe sum of (1) 40 percent of the 187.1 city's net levy for taxes payable in the year prior to the aid 187.2 distribution plus (2) 40 percent of its total aid in the 187.3 previous year under section 273.1398, subdivision 2,before any187.4increases or decreases under sections 16A.711, subdivision 5,187.5and 477A.0132plus (3) its total aid in the previous year under 187.6 this section. 187.7 [EFFECTIVE DATE.] This section is effective for aid payable 187.8 in 2002 and thereafter. 187.9 Sec. 28. Minnesota Statutes 2001 Supplement, section 187.10 477A.07, subdivision 1, is amended to read: 187.11 Subdivision 1. [AID AMOUNT.] (a) For aid payable in 2003, 187.12 each county and city is eligible for aid equal to the amount by 187.13 which (i) 0.3 percent of the assessment year 2001 taxable market 187.14 value of class 4a property, plus 0.25 percent of the assessment 187.15 year 2001 market value of class 4b property, as defined in 187.16 section 273.13, subdivision 25, multiplied by the jurisdiction's 187.17 average tax rate for taxes payable in 2002, exceeds (ii) 0.4 187.18 percent of the jurisdiction's total taxable net tax capacity for 187.19 taxes payable in 2002, multiplied by the jurisdiction's average187.20tax rate for taxes payable in 2002. 187.21 (b) For aid payable in 2004, each county and city is 187.22 eligible for aid equal to the amount by which (i) 0.25 percent 187.23 of the assessment year 2002 taxable market value of class 4a 187.24 property, as defined in section 273.13, subdivision 187.25 25, multiplied by the jurisdiction's average tax rate for taxes 187.26 payable in 2003, exceeds (ii) 0.4 percent of the jurisdiction's 187.27 total taxable net tax capacity for taxes payable in 2003,187.28multiplied by the jurisdiction's average tax rate for taxes187.29payable in 2003. 187.30 [EFFECTIVE DATE.] This section is effective for aid payable 187.31 in 2003 and thereafter. 187.32 Sec. 29. Minnesota Statutes 2001 Supplement, section 187.33 477A.07, subdivision 3, is amended to read: 187.34 Subd. 3. [CITY AID.] Each city's 2003 aid amount 187.35 determined under subdivision 1 must be permanently added to its 187.36 city aid base under section 477A.011, subdivision 36, and the 188.1 maximum amount of total aid it may receive under section 188.2 477A.013, subdivision 9, paragraph (b) or (c), is increased by 188.3 the same amount for aid payable in 2003. Each city's 2004 aid 188.4 amount determined under subdivision 1 must be permanently added 188.5 to its city aid base under section 477A.011, subdivision 36, and 188.6 the maximum amount of total aid it may receive under section 188.7 477A.013, subdivision 9, paragraph (b) or _(c), is increased by 188.8 the same amount for aid payable in 2004. 188.9 [EFFECTIVE DATE.] This section is effective for aids 188.10 payable in calendar years 2003 and 2004. 188.11 Sec. 30. Laws 1993, chapter 375, article 5, section 42, is 188.12 amended to read: 188.13 Sec. 42. [REPORT TO LEGISLATURE.] 188.14 ByFebruaryMarch 1 of each year, the commissioner of 188.15 revenue shall make a report to the legislature on the use of 188.16 limited market value under section 273.13, subdivision 1a, and 188.17 the valuation exclusion under section 273.13, subdivision 16. 188.18 For the limited market value provision, the report shall include 188.19 the total value excluded from taxation by type of property for 188.20 each city and town. For the valuation exclusion provision, the 188.21 report shall include the total market value excluded from 188.22 taxation for each city and town, as well as a breakdown of the 188.23 excluded improvement amounts by age and value of the property 188.24 being improved and the amount of the qualifying improvement. 188.25 The county assessors shall provide the information necessary for 188.26 the commissioner to compile the report in a manner prescribed by 188.27 the commissioner. 188.28 Sec. 31. Laws 2001, First Special Session chapter 5, 188.29 article 9, section 3, the effective date, is amended to read: 188.30 [EFFECTIVE DATE.] This section is effective for tax years 188.31 beginning after December 31, 2001, except that the amendment 188.32 toclauseclauses (3)isand (12) are effective for tax years 188.33 beginning after December 31, 2000. 188.34 Sec. 32. [REPEALER.] 188.35 (a) Minnesota Statutes 2000, sections 272.02, subdivision 188.36 40; 290.01, subdivisions 19g and 32; and 295.44, are repealed 189.1 effective the day following final enactment. 189.2 (b) Minnesota Statutes 2000, section 290.0921, subdivision 189.3 5, is repealed effective for taxable years beginning after 189.4 December 31, 2001. 189.5 (c) Minnesota Rules, parts 8130.1400; 8130.2100; 8130.2350; 189.6 8130.2600; 8130.3000; 8130.3850; and 8130.5000, are repealed 189.7 effective the day following final enactment. 189.8 ARTICLE 11 189.9 LOCAL LAWS 189.10 Section 1. [CITY OF MOORHEAD; TAX LEVY AUTHORIZED.] 189.11 (a) Each year the city of Moorhead may impose a tax on all 189.12 class 3a and class 3b property located in the city in an amount 189.13 which the city determines is equal to the reduction in revenues 189.14 from increment from all tax increment financing districts in the 189.15 city resulting from the class rate changes and the elimination 189.16 of the state-determined general education property levy under 189.17 Laws 2001, First Special Session chapter 5. The proceeds of 189.18 this tax may only be used to pay preexisting obligations as 189.19 defined in Minnesota Statutes, section 469.1763, subdivision 6, 189.20 whether general obligations or payable wholly from tax 189.21 increments. The tax must be levied and collected in the same 189.22 manner and as part of the property tax levied by the city and is 189.23 subject to the same administrative, penalty, and enforcement 189.24 provisions. A tax imposed under this section is a special levy 189.25 and is not subject to levy limitations under Minnesota Statutes, 189.26 section 275.71. 189.27 (b) This section expires December 31, 2005. 189.28 [EFFECTIVE DATE.] This section is effective upon approval 189.29 by and compliance with Minnesota Statutes, section 645.021, 189.30 subdivision 3, by the governing body of the city of Moorhead. 189.31 Sec. 2. [ST. CLOUD AREA CITIES; TAXES AUTHORIZED.] 189.32 Subdivision 1. [SALES AND USE TAX.] (a) Notwithstanding 189.33 Minnesota Statutes, section 477A.016, or any other provision of 189.34 law, ordinance, or city charter, the following cities may, by 189.35 ordinance, impose a sales and use tax of one-half of one percent 189.36 for the purposes specified in subdivision 2: 190.1 (1) the city of St. Cloud, pursuant to the approval of the 190.2 city voters at the general election held on November 7, 2000; 190.3 (2) the city of Sartell, pursuant to the approval of the 190.4 city voters at an election held in November 1999; and 190.5 (3) each of the cities of Sauk Rapids, Waite Park, St. 190.6 Joseph, and St. Augusta, pursuant to the approval of the voters 190.7 of that city at the next general election following the date of 190.8 final enactment of this act, as provided for in subdivision 3. 190.9 (b) The provisions of Minnesota Statutes, section 297A.99, 190.10 govern the imposition, administration, collection, and 190.11 enforcement of the taxes authorized under this subdivision. 190.12 (c) The tax in Sartell must be used for the purposes listed 190.13 in subdivision 2, notwithstanding other purposes listed in the 190.14 referendum, and are not subject to the requirements of Minnesota 190.15 Statutes, section 297A.99, subdivision 3. 190.16 Subd. 2. [USE OF REVENUES.] (a) Revenues received from the 190.17 taxes authorized under subdivision 1 must be used for the cost 190.18 of collecting and administering the taxes and to pay all or part 190.19 of the capital or administrative costs of the acquisition, 190.20 construction, and improvement of the main runway improvements to 190.21 the St. Cloud Regional Airport, as provided for in the city of 190.22 St. Cloud capital improvement program 2000 to 2005, adopted by 190.23 the St. Cloud planning commission on July 14, 1999. Authorized 190.24 expenses include, but are not limited to, acquiring property, 190.25 paying construction expenses related to the development of these 190.26 facilities, and securing and paying debt service on bonds or 190.27 other obligations issued to finance construction or improvement 190.28 of the authorized facility. 190.29 (b) If revenues collected from the taxes imposed under 190.30 subdivision 1 are greater than the amount needed to meet 190.31 obligations under paragraph (a) in any year, the surplus may be 190.32 returned to the cities in a manner agreed upon by the 190.33 participating cities under this section, to be used by the 190.34 cities for projects of regional significance, limited to: the 190.35 acquisition and improvement of park land and open space; the 190.36 purchase, renovation, and construction of public buildings and 191.1 land primarily used for the arts, libraries, and community 191.2 centers; major roadway improvements; and for debt service on 191.3 bonds issued for these purposes. Authorized expenses include, 191.4 but are not limited to, acquiring property, paying construction 191.5 expenses related to the development of these facilities, and 191.6 securing and paying debt service on bonds or other obligations 191.7 issued to finance construction or improvement of the authorized 191.8 facility. The distribution of surplus revenues raised by the 191.9 tax must be determined by an applicable joint powers agreement. 191.10 The revenues returned to each city may only be used to fund 191.11 projects that have been approved by voters at the referendum 191.12 authorizing the tax. 191.13 (c) Pursuant to the approval of the St. Cloud voters at the 191.14 general election held on November 7, 2000, the surplus returned 191.15 to St. Cloud under paragraph (b) must be used for the following 191.16 projects: 191.17 (1) intersection improvements to the 25th Avenue and trunk 191.18 highway No. 23, I-94 interchange at county road 75, 10th Street 191.19 South improvements, the West Metro corridor improvements, and 191.20 other regionally significant road projects; and 191.21 (2) park and nature land purchase, trail development, and 191.22 improvements and expansions of existing regional park 191.23 facilities, as provided for in the city of St. Cloud capital 191.24 improvement program 2000 to 2005, adopted by the St. Cloud 191.25 planning commission on July 14, 1999. 191.26 (d) Pursuant to approval of the Sartell voters at the 191.27 election held in November 1999, the surplus returned to the city 191.28 of Sartell under paragraph (b) must be used to fund 191.29 construction, expansion, and improvements to a community center 191.30 and for park land acquisition and improvement. 191.31 Subd. 3. [SEPARATE REFERENDA REQUIRED.] Notwithstanding 191.32 Minnesota Statutes, section 297A.99, subdivision 3, each city 191.33 listed in subdivision 1, clause (3), shall have a separate vote 191.34 on each project that it proposes to fund with the surplus tax 191.35 revenues it receives under subdivision 2, paragraph (b). For 191.36 these cities, the cost of each project to be funded by the taxes 192.1 authorized in subdivision 1 must be listed. Revenue may be used 192.2 to repay debt for a project that the city has already funded if 192.3 the project meets one of the authorized uses listed in 192.4 subdivision 2, paragraph (b), and the referenda states the 192.5 maximum amount of debt that will be repaid from the revenue. 192.6 The referendum must state that approval of using the tax 192.7 authorized in subdivision 1 for any project shall also indicate 192.8 approval to share the revenues collected from the tax with the 192.9 other cities in the area which have also passed a sales tax. 192.10 The sharing must be done in a manner agreed upon by all affected 192.11 cities under a joint powers agreement. 192.12 Subd. 4. [IMPOSITION AND TERMINATION OF TAX.] The tax 192.13 authorized by each city under subdivision 1 shall be imposed 192.14 beginning January 1, 2003, and shall expire December 31, 2005. 192.15 [EFFECTIVE DATE.] This section is effective July 1, 2002, 192.16 with respect to any city listed in subdivision 1, upon 192.17 compliance of the governing body of that city with Minnesota 192.18 Statutes, section 645.021, subdivision 3. 192.19 ARTICLE 12 192.20 MISCELLANEOUS 192.21 Section 1. Minnesota Statutes 2000, section 16A.152, is 192.22 amended by adding a subdivision to read: 192.23 Subd. 1b. [BUDGET RESERVE INCREASE.] On June 30, 2003, the 192.24 commissioner of finance shall transfer $3,900,000 to the budget 192.25 reserve account in the general fund. On June 30, 2004, the 192.26 commissioner of finance shall transfer $12,300,000 to the budget 192.27 reserve account in the general fund. On June 30, 2005, the 192.28 commissioner of finance shall transfer $12,000,000 to the budget 192.29 reserve account in the general fund. The amounts necessary for 192.30 this purpose are appropriated from the general fund. 192.31 Sec. 2. Minnesota Statutes 2000, section 40A.151, 192.32 subdivision 1, is amended to read: 192.33 Subdivision 1. [ESTABLISHMENT.] The Minnesota conservation 192.34 fund is established as an account in the state treasury. Money 192.35 from counties under section 40A.152 must be deposited in the 192.36 state treasury and credited one-half to the Minnesota 193.1 conservation fund account and one-half to the general fund. 193.2 [EFFECTIVE DATE.] This section is effective for money from 193.3 counties deposited in the state treasury after June 30, 2002. 193.4 Sec. 3. Minnesota Statutes 2000, section 40A.152, 193.5 subdivision 1, is amended to read: 193.6 Subdivision 1. [FEE.] A county that is a metropolitan 193.7 county under section 473.121, subdivision 4, has allowed 193.8 exclusive agricultural zones to be created under this chapter, 193.9 or has elected to become an agricultural land preservation pilot 193.10 county, shall impose an additional fee of $5 per transaction on 193.11 the recording or registration of a mortgage subject to the tax 193.12 under section 287.05 and an additional $5 on the recording or 193.13 registration of a deed subject to the tax under section 287.21. 193.14 One-half of the fee must be deposited in a special conservation 193.15 account to be created in the county general revenue fund and 193.16 one-half must be transferred to the commissioner of revenue for 193.17 deposit in the state treasuryand credited to the Minnesota193.18conservation fundpursuant to section 40A.151, subdivision 1. 193.19 [EFFECTIVE DATE.] This section is effective July 1, 2002, 193.20 and thereafter. 193.21 Sec. 4. Minnesota Statutes 2000, section 40A.152, 193.22 subdivision 3, is amended to read: 193.23 Subd. 3. [TRANSFER TO STATE FUND.] Money in the county 193.24 conservation account that is not encumbered by the county within 193.25 one year of deposit in the account must be transferred to the 193.26 commissioner of revenue for deposit in theMinnesota193.27conservation fundstate treasury pursuant to section 40A.151, 193.28 subdivision 1. 193.29 Sec. 5. Minnesota Statutes 2000, section 270B.01, 193.30 subdivision 8, is amended to read: 193.31 Subd. 8. [MINNESOTA TAX LAWS.] For purposes of this 193.32 chapter only, unless expressly stated otherwise, "Minnesota tax 193.33 laws" means the taxes, refunds, and fees administered by or paid 193.34 to the commissioner under chapters 115B (except taxes imposed 193.35 under sections 115B.21 to 115B.24), 289A (except taxes imposed 193.36 under sections 298.01, 298.015, and 298.24), 290, 290A, 194.1 291, 295, 297A, and 297Hand sections 295.50 to 295.59, or any 194.2 similar Indian tribal tax administered by the commissioner 194.3 pursuant to any tax agreement between the state and the Indian 194.4 tribal government, and includes any laws for the assessment, 194.5 collection, and enforcement of those taxes, refunds, and fees. 194.6 [EFFECTIVE DATE.] This section is effective the day 194.7 following final enactment. 194.8 Sec. 6. Minnesota Statutes 2001 Supplement, section 194.9 270B.02, subdivision 3, is amended to read: 194.10 Subd. 3. [CONFIDENTIAL DATA ON INDIVIDUALS; PROTECTED 194.11 NONPUBLIC DATA.] (a) Except as provided in paragraph (b), the 194.12 name or existence of an informer, informer letters, and other 194.13 data, in whatever form, given to the department of revenue by a 194.14 person, other than the data subject, who informs that a specific 194.15taxpayerperson is not or may not be in compliance with tax 194.16 laws, or nontax laws administered by the department of revenue, 194.17 including laws other than those relating to property taxes not 194.18 listed in section 270B.01, subdivision 8, are confidential data 194.19 on individuals or protected nonpublic data as defined in section 194.20 13.02, subdivisions 3 and 13. 194.21 (b) Data under paragraph (a) may be disclosed with the 194.22 consent of the informer or upon a written finding by a court 194.23 that the information provided by the informer was false and that 194.24 there is evidence that the information was provided in bad 194.25 faith. This subdivision does not alter disclosure 194.26 responsibilities or obligations under the rules of criminal 194.27 procedure. 194.28 [EFFECTIVE DATE.] This section is effective the day 194.29 following final enactment. 194.30 Sec. 7. Minnesota Statutes 2000, section 270B.02, 194.31 subdivision 4, is amended to read: 194.32 Subd. 4. [PUBLIC DATA.] Information required to be filed 194.33 by exempt individuals, corporations, organizations, estates, and 194.34 trusts under section 290.05, subdivisions 1 and 4, or that 194.35 relates to exempt status under section 290.05, subdivision 2, is 194.36 public data on individuals or public data not on individuals, as 195.1 defined in section 13.02, subdivisions 14 and 15. The 195.2 commissioner may publish a list of organizations exempt from 195.3 taxation under section 290.05, except that the name or address 195.4 of any contributor to any organization that is or was exempt, or 195.5 that has applied for tax exempt status, or any other information 195.6 that could not be disclosed under section 6104 of the Internal 195.7 Revenue Code of 1986, as amended through December 31, 1988, is 195.8 classified as private data on individuals or nonpublic data as 195.9 defined in section 13.02, subdivisions 9 and 12. 195.10 [EFFECTIVE DATE.] This section is effective the day 195.11 following final enactment. 195.12 Sec. 8. Minnesota Statutes 2001 Supplement, section 195.13 270B.08, subdivision 2, is amended to read: 195.14 Subd. 2. [REVOCATION.] When a taxpayer's sales tax permit 195.15 has been revoked under section 297A.86, the commissioner may 195.16 disclose data identifying the holder of the revoked permitand, 195.17 stating the basis for the revocation, and stating whether the 195.18 permit has been reinstated. 195.19 [EFFECTIVE DATE.] This section is effective the day 195.20 following final enactment. 195.21 Sec. 9. Minnesota Statutes 2000, section 270B.14, 195.22 subdivision 8, is amended to read: 195.23 Subd. 8. [EXCHANGE BETWEEN DEPARTMENTS OF LABOR AND 195.24 INDUSTRY AND REVENUE.] The departments of labor and industry and 195.25 revenue may exchange information as follows: 195.26 (1) data used in determining whether a business is an 195.27 employer or a contracting agent; 195.28 (2) taxpayer identity information relating to employers and 195.29 employees for purposes of supporting tax administration and 195.30chapterchapters 176, 177, and 181; and 195.31 (3) data to the extent provided in and for the purpose set 195.32 out in section 176.181, subdivision 8. 195.33 [EFFECTIVE DATE.] This section is effective the day 195.34 following final enactment. 195.35 Sec. 10. Minnesota Statutes 2000, section 289A.10, 195.36 subdivision 1, is amended to read: 196.1 Subdivision 1. [RETURN REQUIRED.] In the case of a 196.2 decedent who has an interest in property with a situs in 196.3 Minnesota, the personal representative must submit a Minnesota 196.4 estate tax return to the commissioner, on a form prescribed by 196.5 the commissioner,in instances in which a federal estate tax196.6return is required to be filedif the federal gross estate 196.7 exceeds $700,000 for estates of decedents dying after December 196.8 31, 2001, and before January 1, 2004; $850,000 for estates of 196.9 decedents dying after December 31, 2003, and before January 1, 196.10 2005; $950,000 for estates of decedents dying after December 31, 196.11 2004, and before January 1, 2006; and $1,000,000 for estates of 196.12 decedents dying after December 31, 2005. 196.13 The return must contain a computation of the Minnesota 196.14 estate tax due. The return must be signed by the personal 196.15 representative. 196.16 [EFFECTIVE DATE.] This section is effective for estates of 196.17 decedents dying after December 31, 2001. 196.18 Sec. 11. Minnesota Statutes 2001 Supplement, section 196.19 291.005, subdivision 1, is amended to read: 196.20 Subdivision 1. Unless the context otherwise clearly 196.21 requires, the following terms used in this chapter shall have 196.22 the following meanings: 196.23 (1) "Federal gross estate" means the gross estate of a 196.24 decedent as valued and otherwise determined for federal estate 196.25 tax purposes by federal taxing authorities pursuant to the 196.26 provisions of the Internal Revenue Code. 196.27 (2) "Minnesota gross estate" means the federal gross estate 196.28 of a decedent after (a) excluding therefrom any property 196.29 included therein which has its situs outside Minnesota and 196.30 pensions exempt from tax under this chapter pursuant to section 196.31 352.15, subdivision 1; 353.15, subdivision 1; 354.10, 196.32 subdivision 1; 354B.30; or 354C.165, and (b) including therein 196.33 any property omitted from the federal gross estate which is 196.34 includable therein, has its situs in Minnesota, and was not 196.35 disclosed to federal taxing authorities. 196.36 (3) "Personal representative" means the executor, 197.1 administrator or other person appointed by the court to 197.2 administer and dispose of the property of the decedent. If 197.3 there is no executor, administrator or other person appointed, 197.4 qualified, and acting within this state, then any person in 197.5 actual or constructive possession of any property having a situs 197.6 in this state which is included in the federal gross estate of 197.7 the decedent shall be deemed to be a personal representative to 197.8 the extent of the property and the Minnesota estate tax due with 197.9 respect to the property. 197.10 (4) "Resident decedent" means an individual whose domicile 197.11 at the time of death was in Minnesota. 197.12 (5) "Nonresident decedent" means an individual whose 197.13 domicile at the time of death was not in Minnesota. 197.14 (6) "Situs of property" means, with respect to real 197.15 property, the state or country in which it is located; with 197.16 respect to tangible personal property, the state or country in 197.17 which it was normally kept or located at the time of the 197.18 decedent's death; and with respect to intangible personal 197.19 property, the state or country in which the decedent was 197.20 domiciled at death. 197.21 (7) "Commissioner" means the commissioner of revenue or any 197.22 person to whom the commissioner has delegated functions under 197.23 this chapter. 197.24 (8) "Internal Revenue Code" means the United States 197.25 Internal Revenue Code of 1986, as amended through December 31, 197.26 2000. 197.27 [EFFECTIVE DATE.] This section is effective for estates of 197.28 decedents dying after December 31, 2001. 197.29 Sec. 12. Minnesota Statutes 2000, section 291.03, 197.30 subdivision 1, is amended to read: 197.31 Subdivision 1. [TAX AMOUNT.] The tax imposed shall be an 197.32 amount equal to the proportion of the maximum credit 197.33allowablecomputed under section 2011 of the Internal Revenue 197.34 Code for state death taxes as the Minnesota gross estate bears 197.35 to the value of the federal gross estate. For a resident 197.36 decedent, the tax shall be the maximum creditallowablecomputed 198.1 under section 2011 of the Internal Revenue Code reduced by the 198.2 amount of the death tax paid the other state and credited 198.3 against the federal estate tax if this results in a larger 198.4 amount of tax than the proportionate amount of the credit. The 198.5 tax determined under this paragraph shall not be greater than 198.6 themaximum credit allowable under section 2011 of the Internal198.7Revenue Codefederal estate tax computed under section 2001 of 198.8 the Internal Revenue Code after the allowance of the federal 198.9 credits allowed under sections 2010, 2012, 2013, and 2015 of the 198.10 Internal Revenue Code of 1986, as amended through December 31, 198.11 2000. 198.12 [EFFECTIVE DATE.] This section is effective for estates of 198.13 decedents dying after December 31, 2001. 198.14 Sec. 13. Minnesota Statutes 2000, section 297H.06, 198.15 subdivision 2, is amended to read: 198.16 Subd. 2. [MATERIALS.] The tax is not imposed upon charges 198.17 to generators of mixed municipal solid waste or upon the volume 198.18 of non-mixed-municipal solid waste for waste management services 198.19 to manage the following materials: 198.20 (1) mixed municipal solid waste and non-mixed-municipal 198.21 solid waste generated outside of Minnesota; 198.22 (2) recyclable materials that are separated for recycling 198.23 by the generator, collected separately from other waste, and 198.24 recycled, to the extent the price of the service for handling 198.25 recyclable material is separately itemized; 198.26 (3) recyclable non-mixed-municipal solid waste that is 198.27 separated for recycling by the generator, collected separately 198.28 from other waste, delivered to a waste facility for the purpose 198.29 of recycling, and recycled; 198.30 (4) industrial waste, when it is transported to a facility 198.31 owned and operated by the same person that generated it; 198.32 (5) mixed municipal solid waste from a recycling facility 198.33 that separates or processes recyclable materials and reduces the 198.34 volume of the waste by at least 85 percent, provided that the 198.35 exempted waste is managed separately from other waste; 198.36 (6) recyclable materials that are separated from mixed 199.1 municipal solid waste by the generator, collected and delivered 199.2 to a waste facility that recycles at least 85 percent of its 199.3 waste, and are collected with mixed municipal solid waste that 199.4 is segregated in leakproof bags, provided that the mixed 199.5 municipal solid waste does not exceed five percent of the total 199.6 weight of the materials delivered to the facility and is 199.7 ultimately delivered to a waste facility identified as a 199.8 preferred waste management facility in county solid waste plans 199.9 under section 115A.46; 199.10 (7)through December 31, 2002,source-separated compostable 199.11 waste, if the waste is delivered to a facility exempted as 199.12 described in this clause. To initially qualify for an 199.13 exemption, a facility must apply for an exemption in its 199.14 application for a new or amended solid waste permit to the 199.15 pollution control agency. The first time a facility applies to 199.16 the agency it must certify in its application that it will 199.17 comply with the criteria in items (i) to (v) and the 199.18 commissioner of the agency shall so certify to the commissioner 199.19 of revenue who must grant the exemption. For each subsequent 199.20 calendar year, by October 1 of the preceding year, the facility 199.21 must apply to the agency for certification to renew its 199.22 exemption for the following year. The application must be filed 199.23 according to the procedures of, and contain the information 199.24 required by, the agency. The commissioner of revenue shall 199.25 grant the exemption if the commissioner of the pollution control 199.26 agency finds and certifies to the commissioner of revenue that 199.27 based on an evaluation of the composition of incoming waste and 199.28 residuals and the quality and use of the product: 199.29 (i) generators separate materials at the source; 199.30 (ii) the separation is performed in a manner appropriate to 199.31 the technology specific to the facility that: 199.32 (A) maximizes the quality of the product; 199.33 (B) minimizes the toxicity and quantity of residuals; and 199.34 (C) provides an opportunity for significant improvement in 199.35 the environmental efficiency of the operation; 199.36 (iii) the operator of the facility educates generators, in 200.1 coordination with each county using the facility, about 200.2 separating the waste to maximize the quality of the waste stream 200.3 for technology specific to the facility; 200.4 (iv) process residuals do not exceed 15 percent of the 200.5 weight of the total material delivered to the facility; and 200.6 (v) the final product is accepted for use; 200.7 (8) waste and waste by-products for which the tax has been 200.8 paid; and 200.9 (9) daily cover for landfills that has been approved in 200.10 writing by the Minnesota pollution control agency. 200.11 Sec. 14. Minnesota Statutes 2001 Supplement, section 200.12 349.12, subdivision 25, is amended to read: 200.13 Subd. 25. [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 200.14 or more of the following: 200.15 (1) any expenditure by or contribution to a 501(c)(3) or 200.16 festival organization, as defined in subdivision 15a, provided 200.17 that the organization and expenditure or contribution are in 200.18 conformity with standards prescribed by the board under section 200.19 349.154, which standards must apply to both types of 200.20 organizations in the same manner and to the same extent; 200.21 (2) a contribution to an individual or family suffering 200.22 from poverty, homelessness, or physical or mental disability, 200.23 which is used to relieve the effects of that poverty, 200.24 homelessness, or disability; 200.25 (3) a contribution to an individual for treatment for 200.26 delayed posttraumatic stress syndrome or a contribution to a 200.27 program recognized by the Minnesota department of human services 200.28 for the education, prevention, or treatment of compulsive 200.29 gambling; 200.30 (4) a contribution to or expenditure on a public or private 200.31 nonprofit educational institution registered with or accredited 200.32 by this state or any other state; 200.33 (5) a contribution to a scholarship fund for defraying the 200.34 cost of education to individuals where the funds are awarded 200.35 through an open and fair selection process; 200.36 (6) activities by an organization or a government entity 201.1 which recognize humanitarian or military service to the United 201.2 States, the state of Minnesota, or a community, subject to rules 201.3 of the board, provided that the rules must not include mileage 201.4 reimbursements in the computation of the per occasion 201.5 reimbursement limit and must impose no aggregate annual limit on 201.6 the amount of reasonable and necessary expenditures made to 201.7 support: 201.8 (i) members of a military marching or color guard unit for 201.9 activities conducted within the state; 201.10 (ii) members of an organization solely for services 201.11 performed by the members at funeral services; or 201.12 (iii) members of military marching, color guard, or honor 201.13 guard units may be reimbursed for participating in color guard, 201.14 honor guard, or marching unit events within the state or states 201.15 contiguous to Minnesota at a per participant rate of up to $35 201.16 per occasion; 201.17 (7) recreational, community, and athletic facilities and 201.18 activities intended primarily for persons under age 21, provided 201.19 that such facilities and activities do not discriminate on the 201.20 basis of gender and the organization complies with section 201.21 349.154; 201.22 (8) payment of local taxes authorized under this chapter, 201.23 taxes imposed by the United States on receipts from lawful 201.24 gambling, the taxes imposed by section 297E.02, subdivisions 1, 201.25 4, 5, and 6, and the tax imposed on unrelated business income by 201.26 section 290.05, subdivision 3; 201.27 (9) payment of real estate taxes and assessments on 201.28 permitted gambling premises wholly owned by the licensed 201.29 organization paying the taxes, or wholly leased by a licensed 201.30 veterans organization under a national charter organized under 201.31 section 501(c)(19) of the Internal Revenue Code, not to exceed: 201.32 (i) for premises used for bingo, the amount that an 201.33 organization may expend under board rules on rent for bingo; and 201.34 (ii) $35,000 per year for premises used for other forms of 201.35 lawful gambling; 201.36 (10) a contribution to the United States, this state or any 202.1 of its political subdivisions, or any agency or instrumentality 202.2 thereof other than a direct contribution to a law enforcement or 202.3 prosecutorial agency; 202.4 (11) a contribution to or expenditure by a nonprofit 202.5 organization which is a church or body of communicants gathered 202.6 in common membership for mutual support and edification in 202.7 piety, worship, or religious observances; 202.8 (12) payment of the reasonable costs of an audit required 202.9 in section 297E.06, subdivision 4, provided the annual audit is 202.10 filed in a timely manner with the department of revenue; 202.11 (13) a contribution to or expenditure on a wildlife 202.12 management project that benefits the public at-large, provided 202.13 that the state agency with authority over that wildlife 202.14 management project approves the project before the contribution 202.15 or expenditure is made; 202.16 (14) expenditures, approved by the commissioner of natural 202.17 resources, by an organization for grooming and maintaining 202.18 snowmobile trails and all-terrain vehicle trails that are (1) 202.19 grant-in-aid trails established under section 85.019, or (2) 202.20 other trails open to public use, including purchase or lease of 202.21 equipment for this purpose; or 202.22 (15) conducting nutritional programs, food shelves, and 202.23 congregate dining programs primarily for persons who are age 62 202.24 or older or disabled; or 202.25 (16) a contribution to a community arts organization, or an 202.26 expenditure to sponsor arts programs in the community, including 202.27 but not limited to visual, literary, performing, or musical arts. 202.28 (b) Notwithstanding paragraph (a), "lawful purpose" does 202.29 not include: 202.30 (1) any expenditure made or incurred for the purpose of 202.31 influencing the nomination or election of a candidate for public 202.32 office or for the purpose of promoting or defeating a ballot 202.33 question; 202.34 (2) any activity intended to influence an election or a 202.35 governmental decision-making process; 202.36 (3) the erection, acquisition, improvement, expansion, 203.1 repair, or maintenance of real property or capital assets owned 203.2 or leased by an organization, unless the board has first 203.3 specifically authorized the expenditures after finding that (i) 203.4 the real property or capital assets will be used exclusively for 203.5 one or more of the purposes in paragraph (a); (ii) with respect 203.6 to expenditures for repair or maintenance only, that the 203.7 property is or will be used extensively as a meeting place or 203.8 event location by other nonprofit organizations or community or 203.9 service groups and that no rental fee is charged for the use; 203.10 (iii) with respect to expenditures, including a mortgage payment 203.11 or other debt service payment, for erection or acquisition only, 203.12 that the erection or acquisition is necessary to replace with a 203.13 comparable building, a building owned by the organization and 203.14 destroyed or made uninhabitable by fire or natural disaster, 203.15 provided that the expenditure may be only for that part of the 203.16 replacement cost not reimbursed by insurance; (iv) with respect 203.17 to expenditures, including a mortgage payment or other debt 203.18 service payment, for erection or acquisition only, that the 203.19 erection or acquisition is necessary to replace with a 203.20 comparable building a building owned by the organization that 203.21 was acquired from the organization by eminent domain or sold by 203.22 the organization to a purchaser that the organization reasonably 203.23 believed would otherwise have acquired the building by eminent 203.24 domain, provided that the expenditure may be only for that part 203.25 of the replacement cost that exceeds the compensation received 203.26 by the organization for the building being replaced; or (v) with 203.27 respect to an expenditure to bring an existing building into 203.28 compliance with the Americans with Disabilities Act under item 203.29 (ii), an organization has the option to apply the amount of the 203.30 board-approved expenditure to the erection or acquisition of a 203.31 replacement building that is in compliance with the Americans 203.32 with Disabilities Act; 203.33 (4) an expenditure by an organization which is a 203.34 contribution to a parent organization, foundation, or affiliate 203.35 of the contributing organization, if the parent organization, 203.36 foundation, or affiliate has provided to the contributing 204.1 organization within one year of the contribution any money, 204.2 grants, property, or other thing of value; 204.3 (5) a contribution by a licensed organization to another 204.4 licensed organization unless the board has specifically 204.5 authorized the contribution. The board must authorize such a 204.6 contribution when requested to do so by the contributing 204.7 organization unless it makes an affirmative finding that the 204.8 contribution will not be used by the recipient organization for 204.9 one or more of the purposes in paragraph (a); or 204.10 (6) a contribution to a statutory or home rule charter 204.11 city, county, or town by a licensed organization with the 204.12 knowledge that the governmental unit intends to use the 204.13 contribution for a pension or retirement fund. 204.14 [EFFECTIVE DATE.] This section is effective the day 204.15 following final enactment. 204.16 Sec. 15. Laws 2001, First Special Session chapter 6, 204.17 article 5, section 12, is amended to read: 204.18 Sec. 12. [SCHOOL DISTRICT FORMULA ADJUSTMENTS.] 204.19 Subdivision 1. [TAX RATE ADJUSTMENT.] The commissioner of 204.20 children, families, and learning must adjust each tax rate 204.21 established under Minnesota Statutes, chapters 120A to 127A, by 204.22 multiplying the rate by the ratio of the statewide net tax 204.23 capacity as calculated using the class rates in effect for 204.24 assessment year 2000 to the statewide total net tax capacity as 204.25 calculated using the class rates in effect for assessment year 204.26 2001, in both cases using taxable market values for assessment 204.27 year 2000. 204.28 Subd. 2. [EQUALIZING FACTORS.] The commissioner of 204.29 children, families, and learning must adjust each equalizing 204.30 factor based upon adjusted net tax capacity per actual pupil 204.31 unit established under Minnesota Statutes, chapters 120A to 204.32 127A, by multiplying the equalizing factor by the ratio of the 204.33 statewide net tax capacity as calculated using the class rates 204.34 in effect for assessment year 2001 to the statewide total net 204.35 tax capacity as calculated using the class rates in effect for 204.36 assessment year 2000, in both cases using taxable market values 205.1 for assessment year 2000. 205.2 Subd. 3. [DEBT SERVICE TAX RATES AND EQUALIZING FACTORS.] 205.3 The provisions in subdivisions 1 and 2 do not apply to the 205.4 equalizing factors and tax rates of the debt service 205.5 equalization aid program under Minnesota Statutes, section 205.6 123B.53. 205.7 Subd. 4. [SCHOOL DISTRICT BONDS.] The commissioner of 205.8 children, families, and learning must adjust the net debt limit 205.9 percentage for special school district No. 1, Minneapolis, based 205.10 upon net tax capacity established under Minnesota Statutes, 205.11 section 128D.11, subdivision 8, by multiplying the net debt 205.12 limit percentage by the ratio of the district's net tax capacity 205.13 as calculated using the class rates in effect for assessment 205.14 year 2000 to the district's total net tax capacity as calculated 205.15 using the class rates in effect for assessment year 2001, in 205.16 both cases using taxable market values for assessment year 2000. 205.17 [EFFECTIVE DATE.] This section is effective retroactively 205.18 for bonds issued after July 1, 2001. 205.19 Sec. 16. [CITY OF THIEF RIVER FALLS; NONPROFIT 205.20 CORPORATION.] 205.21 Subdivision 1. [NONPROFIT CORPORATION MAY BE ESTABLISHED.] 205.22 The city of Thief River Falls may incorporate or authorize the 205.23 incorporation of a nonprofit corporation to operate a community 205.24 or regional center in the city. 205.25 Subd. 2. [BOARD OF DIRECTORS.] The corporation must be 205.26 governed by a board of five directors. The directors must be 205.27 named by the Thief River Falls city council. No more than three 205.28 of the directors may be persons currently serving on the Thief 205.29 River Falls city council. Board members must not be compensated 205.30 for their services but may be reimbursed for reasonable expenses 205.31 incurred in connection with their duties as board members. 205.32 Subd. 3. [ARTICLES AND BYLAWS.] The entity must be 205.33 incorporated under Minnesota Statutes, chapter 317A, and 205.34 otherwise must comply with Minnesota Statutes, chapter 317A, 205.35 except to the extent Minnesota Statutes, chapter 317A, is 205.36 inconsistent with this section. 206.1 Subd. 4. [EMPLOYEES.] Persons employed by the nonprofit 206.2 corporation are not public employees and must not participate in 206.3 retirement, deferred compensation, insurance, or other plans 206.4 that apply to public employees generally. 206.5 Subd. 5. [STATUTORY COMPLIANCE.] The nonprofit corporation 206.6 must comply with Minnesota Statutes, section 465.719, 206.7 subdivisions 9, 10, 11, 12, 13, and 14. 206.8 Sec. 17. [APPROPRIATION.] 206.9 (a) $585,000 in fiscal year 2002 and $7,015,000 in fiscal 206.10 year 2003 are appropriated to the commissioner of revenue from 206.11 the general fund for tax compliance activities, including 206.12 identification and collection of tax liabilities from 206.13 individuals and businesses that currently do not pay all taxes 206.14 owed, and audit and collection activity in the income tax, sales 206.15 tax, lawful gambling, insurance, and corporate areas. The base 206.16 funding for these activities in fiscal years 2004 and 2005 is 206.17 increased by $4,750,000 each year. 206.18 (b) The commissioner must include these tax compliance 206.19 activities in the report required by Laws 2001, First Special 206.20 Session chapter 10, article 1, section 16, subdivision 2, 206.21 paragraph (c). 206.22 (c) Laws 2002, chapter 220, article 10, section 38, does 206.23 not apply to the positions necessary to carry out the compliance 206.24 activities identified in this section. 206.25 (d) If the legislative auditor determines that: 206.26 (1) actual revenue collections generated from tax 206.27 compliance activities funded by Laws 2001, First Special Session 206.28 chapter 10, article 1, section 16, subdivision 2, paragraphs (a) 206.29 and (b), will not generate at least $52,000,000 in additional 206.30 general fund revenue for the biennium ending June 30, 2003; or 206.31 (2) actual revenue collections generated from new tax 206.32 compliance activities funded by the appropriation in this 206.33 section will not generate at least $7,600,000 in additional 206.34 general fund revenue for the biennium ending June 30, 2003; 206.35 then the commissioner of finance must cancel from the budget 206.36 reserve account to the general fund the difference between the 207.1 $52,000,000 or the $7,600,000 and the actual additional general 207.2 fund revenue. The legislative auditor's determination under 207.3 this paragraph must be made in the February 1, 2003, report to 207.4 the legislature required by Laws 2001, First Special Session 207.5 chapter 10, article 1, section 16. 207.6 [EFFECTIVE DATE.] This section is effective the day 207.7 following final enactment. 207.8 Sec. 18. [REPEALER.] 207.9 Minnesota Statutes 2000, section 291.03, subdivision 2, is 207.10 repealed effective for estates of decedents dying after December 207.11 31, 2001.