as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am
Engrossments | ||
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Introduction | Posted on 08/14/1998 |
1.1 A bill for an act 1.2 relating to refinancing of government in this state; 1.3 reforming state and local government finance; 1.4 eliminating, consolidating, and replacing school 1.5 district levies; limiting referendum revenue; 1.6 proposing an amendment to the Minnesota Constitution 1.7 by adding sections to article X; dedicating a portion 1.8 of the sales tax to property tax relief for property 1.9 taxpayers in cities and towns; limiting property taxes 1.10 levied for public schools; reforming property tax 1.11 classifications; providing for local government aid; 1.12 changing property tax refunds and providing a separate 1.13 property tax refund schedule for farm homesteads; 1.14 changing the sales tax and providing a refundable 1.15 credit for sales taxes; reducing the franchise tax 1.16 rate and imposing a business activity tax; 1.17 appropriating money; amending Minnesota Statutes 1994, 1.18 sections 124.2711, subdivisions 1 and 5; 124.2713, 1.19 subdivision 1; 124.2714; 124.2715, subdivision 1; 1.20 124.2716, subdivision 2; 124.2725, subdivision 2; 1.21 124.2726, subdivision 3; 124.2727, subdivision 6a; 1.22 124.4945; 124.912, subdivisions 3 and 6; 124.914, 1.23 subdivisions 1, 2, 3, and 4; 124.916, subdivisions 3 1.24 and 4; 124.918, subdivision 8; 124A.03, by adding 1.25 subdivisions; 124A.292, subdivision 2; 273.1398, 1.26 subdivision 3; 290.06, subdivision 1; 290A.03, by 1.27 adding a subdivision; 290A.04, subdivisions 1, 2, 2a, 1.28 and by adding a subdivision; 297A.01, subdivision 16; 1.29 297A.15, subdivision 5; 297A.25, subdivision 29; 1.30 473F.02, subdivision 5; 473F.08, subdivision 3; 1.31 477A.011, subdivision 34, and by adding subdivisions; 1.32 477A.013, subdivisions 8 and 9; and Minnesota Statutes 1.33 1995 Supplement, sections 122.247, subdivision 3; 1.34 122.533; 124.2601, as amended; 124.2725, subdivisions 1.35 13, 14, and 15; 124.2726, subdivision 1; 124.312, 1.36 subdivision 5; 124.313; 124.3201, subdivision 1; 1.37 124.912, subdivisions 1 and 7; 124.916, subdivisions 1 1.38 and 2; 124A.22, subdivision 1; 273.13, subdivisions 24 1.39 and 25; 275.065, subdivision 3; 275.08, subdivision 1.40 1b; 276.04, subdivision 2; 290A.03, subdivisions 6 and 1.41 13; 290A.04, subdivision 6; 297A.01, subdivision 3; 1.42 and 477A.03, subdivision 2; proposing coding for new 1.43 law in Minnesota Statutes, chapters 124A; 290; and 1.44 297A; repealing Minnesota Statutes 1994, sections 1.45 122.531, subdivision 4a; 124.2711, subdivision 3; 1.46 124.2713, subdivisions 6a, 6b, and 7; 124.2715, 2.1 subdivision 2; 124.2716, subdivisions 3 and 4; 2.2 124.2725, subdivision 7; 124.2727, subdivisions 6b and 2.3 6c; 124.321, subdivisions 3, 4, and 5; 124.912, 2.4 subdivision 2; 124A.029; 124A.03, subdivisions 1b, 1d, 2.5 1e, 1f, 2b, and 3b; 124A.23, subdivisions 2, 3, and 5; 2.6 124A.292, subdivisions 3 and 4; 273.1398, subdivision 2.7 2; 290.0921; 290.0922; 297A.01, subdivisions 17 and 2.8 20; 297A.02, subdivisions 2 and 5; 297A.25, 2.9 subdivisions 8, 17, and 53; 477A.011, subdivisions 35 2.10 and 37; 477A.013, subdivision 6; and 477A.014, 2.11 subdivision 1a; Minnesota Statutes 1995 Supplement, 2.12 sections 124.2711, subdivision 2a; 124.2713, 2.13 subdivision 6; 124.2715, subdivision 3; 124.2725, 2.14 subdivisions 3, 4, and 15; 124.2727, subdivision 9; 2.15 124.312, subdivision 4; 124.314, subdivision 2; 2.16 124.321, subdivisions 1 and 2; 124A.03, subdivisions 2.17 1c and 2; 124A.22, subdivisions 13d and 13e; 124A.23, 2.18 subdivisions 1 and 4; 124A.24; and 477A.011, 2.19 subdivision 36. 2.20 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.21 ARTICLE 1 2.22 CONSTITUTIONAL AMENDMENT 2.23 Section 1. [CONSTITUTIONAL AMENDMENT PROPOSED.] 2.24 An amendment to the Minnesota Constitution, adding sections 2.25 to article X, is proposed to the people. 2.26 If the amendment is adopted, the sections will read as 2.27 follows: 2.28 article X, section 9, will read: 2.29 Sec. 9. A permanent property taxpayers' trust fund is 2.30 established in the state treasury. The fund consists of the 2.31 revenues derived from a sales and use tax at a rate of ... 2.32 percent on all taxable sales, excluding motor vehicles, 2.33 including penalties and interest paid with respect to the sales 2.34 and use taxes. If the legislature enacts changes in the sales 2.35 tax base in 1997 or any later year that are determined by the 2.36 legislature to increase the total sales tax base by more than 2.37 ... percent, the tax proceeds attributable to the change are not 2.38 included in the taxpayers' trust fund. 2.39 Funds in the property taxpayers' trust fund shall be 2.40 appropriated in the manner prescribed by law solely for property 2.41 tax relief for property taxpayers. Fifty percent of the fund 2.42 shall be distributed to cities through a program designed to 2.43 compensate for differences in revenue need and differences in 2.44 property wealth among cities, and 50 percent of the fund shall 2.45 be distributed through a program designed to provide property 3.1 tax relief directly to homeowners and renters. 3.2 article X, section 10, will read: 3.3 Sec. 10. The legislature may levy a tax on all taxable 3.4 property to help meet its duty under article XIII, section 1, to 3.5 establish a general and uniform system of public schools. The 3.6 annual state property tax levy for public schools shall not 3.7 exceed .75 percent of the market value of the total taxable 3.8 property in the state. All other property tax levies for public 3.9 schools are prohibited, except for: (1) levies imposed by local 3.10 school districts with voter approval at a general election to 3.11 pay for capital construction and capital improvements of school 3.12 facilities and equipment, or to pay debt to finance capital 3.13 facilities; (2) referendum levies approved prior to November 8, 3.14 1996, but only until the termination date set for those levies 3.15 as of that date; (3) levies to pay general obligation debt 3.16 issued before January 1, 1997; and (4) levies imposed by local 3.17 school districts for school operations with voter approval after 3.18 November 7, 1996, in an amount that does not exceed 20 percent 3.19 of the amount of aid per student provided by the state to that 3.20 school district. The legislature by law shall provide for an 3.21 equal amount for the public education of each student in similar 3.22 circumstances, except the legislature may allow more funds for 3.23 school districts spending more at the adoption of this amendment 3.24 until each school district in Minnesota spends the same amount 3.25 for each student in similar circumstances. 3.26 Sec. 2. [SUBMISSION TO VOTERS.] 3.27 The proposed amendment must be submitted to the people at 3.28 the 1996 general election. The question submitted shall be: 3.29 "Shall the Minnesota Constitution be amended to limit state 3.30 and local property taxes for public education and dedicate .... 3.31 cents of the sales and use tax to a property taxpayers' trust 3.32 fund to be used for property tax relief for property taxpayers 3.33 of cities and towns? 3.34 Yes ....... 3.35 No ........" 3.36 ARTICLE 2 4.1 EDUCATION FINANCE REFORM 4.2 Section 1. Minnesota Statutes 1995 Supplement, section 4.3 122.247, subdivision 3, is amended to read: 4.4 Subd. 3. [TRANSITIONALLEVYREVENUE.] The board of the 4.5 combined district, or the boards of combining districts that 4.6 have received voter approval for the combination under section 4.7 122.243, subdivision 2,may levyare eligible for state aid to 4.8 pay for the expenses of negotiation, administrative expenses 4.9 directly related to the transition from cooperation to 4.10 combination, and the cost of necessary new athletic and music 4.11 uniforms.The board or boards may levy this amount over three4.12or fewer years.All expenses must be approved by the 4.13 commissioner of children, families, and learning. The 4.14 commissioner may pay this state aid over three or fewer years. 4.15 Sec. 2. Minnesota Statutes 1995 Supplement, section 4.16 122.533, is amended to read: 4.17 122.533 [EXPENSES OF TRANSITION.] 4.18 The board of a district to which a dissolved district is 4.19 attached pursuant to section 122.22,may,is eligible for state 4.20 aid for the purpose of paying the expenses of negotiations and 4.21 other administrative expenses relating to the transition,. The 4.22 board of the district may enter into agreements with banks or 4.23 any person to take its orders at any rate of interest not to 4.24 exceed seven percent per annum. These orders shall be paid by 4.25 the treasurer of the district from district funds after the 4.26 effective date of the dissolution and attachment. 4.27 Notwithstanding the provisions of sections 124.226, 124.2716, 4.28 124.91, 124.912, 124.914, 124.916, and 124.918, the districtmay4.29 is, in the year the dissolution and attachment becomes 4.30 effective,levyeligible for state aid in an amount equal to the 4.31 amount of the orders issued pursuant to this subdivision and the 4.32 interest on these orders. No district shall issue orders for 4.33 fundsor make a levy pursuantaccording to this subdivision 4.34 without the commissioner's approval of the expenses to be paid 4.35 with the funds from the orders andlevystate aid. 4.36 Sec. 3. Minnesota Statutes 1995 Supplement, section 5.1 124.2601, as amended by Laws 1995, First Special Session chapter 5.2 3, article 16, section 13, is amended to read: 5.3 124.2601 [ADULT BASIC EDUCATION AID.] 5.4 Subdivision 1. [FULL-TIME EQUIVALENT.] In this section 5.5 "full-time equivalent" means 408 contact hours for a student at 5.6 the adult secondary instructional level and 240 contact hours 5.7 for a student at a lower instructional level. "Full-time 5.8 equivalent" for an English as a second language student means 5.9 240 contact hours. 5.10 Subd. 2. [PROGRAMS FUNDED.] Adult basic education programs 5.11 established under section 124.26 and approved by the 5.12 commissioner are eligible forrevenueaid under this section. 5.13 Subd. 3. [AID.] Adult basic education aid for each 5.14 approved program equals the sum of 65 percent of the general 5.15 education formula allowance times the number of full-time 5.16 equivalent students in its adult basic education program and an 5.17 amount equal to .12 percent times the district's adjusted net 5.18 tax capacity for assessment year 1994. 5.19 Subd. 4.[LEVY.] A district with an eligible program may5.20levy an amount not to exceed the amount raised by .12 percent5.21times the adjusted tax capacity of the district for the5.22preceding year.5.23Subd. 5. [REVENUE.] Adult basic education revenue is equal5.24to the sum of an approved program's adult basic education aid5.25and its adult basic education levy.5.26Subd. 6. [AID GUARANTEE.] (a) For fiscal year 1994, any5.27adult basic education program that receives less state aid under5.28subdivisions 3 and 7 than from the aid formula for fiscal year5.291992 shall receive the amount of aid it received in fiscal year5.301992.5.31(b) For 1995 and later fiscal years, an adult basic5.32education program that receives aid shall receive at least the5.33amount of aid it received in fiscal year 1992 under subdivisions5.343 and 7, plus aid equal to the amount of revenue that would have5.35been raised for taxes payable in 1994 under Minnesota Statutes5.361992, section 124.2601, subdivision 4, minus the amount raised6.1under subdivision 4.6.2Subd. 7.[PRORATION.] If the total appropriation for adult 6.3 basic education aid is insufficient to pay all approved programs 6.4 the full amount of aid earned, the department of children, 6.5 families, and learning shall proportionately reduce each 6.6 approved program's aid. 6.7 Sec. 4. Minnesota Statutes 1994, section 124.2711, 6.8 subdivision 1, is amended to read: 6.9 Subdivision 1. [REVENUEAID.]The revenueState aid for 6.10 early childhood family education programs for a school district 6.11 equals $101.25for 1993 and later fiscal yearstimes the greater 6.12 of: 6.13 (1) 150; or 6.14 (2) the number of people under five years of age residing 6.15 in the school district on October 1 of the previous school year. 6.16 Sec. 5. Minnesota Statutes 1994, section 124.2711, 6.17 subdivision 5, is amended to read: 6.18 Subd. 5. [HOME VISITINGLEVYAID.] A school district that 6.19 enters into a collaborative agreement to provide education 6.20 services and social services to families with young childrenmay6.21levy an amountis eligible for state aid equal to $1.60 times 6.22 the number of people under five years of age residing in the 6.23 district on September 1 of the last school year.Levy revenue6.24under this subdivision shall not be included as revenue under6.25subdivision 1.The revenue shall be used for home visiting 6.26 programs under section 121.882, subdivision 2b. 6.27 Sec. 6. Minnesota Statutes 1994, section 124.2713, 6.28 subdivision 1, is amended to read: 6.29 Subdivision 1. [TOTAL COMMUNITY EDUCATION REVENUE.] 6.30 Community education revenue equals the sum of a district's 6.31 general community education revenue and youth service program 6.32 revenue. Community education revenue is provided entirely 6.33 through state aid. 6.34 Sec. 7. Minnesota Statutes 1994, section 124.2714, is 6.35 amended to read: 6.36 124.2714 [ADDITIONAL COMMUNITY EDUCATION REVENUE.] 7.1 (a) A district that is eligible under section 124.2713, 7.2 subdivision 2,may levy an amount upis eligible for aid equal 7.3 to the amount of revenue authorized by Minnesota Statutes 1986, 7.4 section 275.125, subdivision 8, clause (2). 7.5 (b) Beginning withleviesrevenue for fiscal year 1995, 7.6 thislevyrevenue must be reduced each year by the amount of any 7.7 increase in thelevyingdistrict's general community education 7.8 revenue under section 124.2713, subdivision 3, for that fiscal 7.9 year over the amount received by the district under section 7.10 124.2713, subdivision 3, for fiscal year 1994. 7.11 (c) Theproceeds of the levyrevenue may be used for the 7.12 purposes set forth in section 124.2713, subdivision 8. 7.13 Sec. 8. Minnesota Statutes 1994, section 124.2715, 7.14 subdivision 1, is amended to read: 7.15 Subdivision 1. [REVENUE AMOUNT.] A district that is 7.16 eligible according to section 124.2713, subdivision 2, may 7.17 receive revenue for a program for adults with disabilities. 7.18 Revenue for the program for adults with disabilities for a 7.19 district or a group of districts equals the lesser of: 7.20 (1) the actual expenditures for approved programs and 7.21 budgets; or 7.22 (2) $60,000. 7.23 Revenue is provided through state aid. 7.24 Sec. 9. Minnesota Statutes 1994, section 124.2716, 7.25 subdivision 2, is amended to read: 7.26 Subd. 2. [EXTENDED DAY REVENUE.] The extended day revenue 7.27 for an eligible school district equals the approved additional 7.28 cost of providing services to children with disabilities or 7.29 children experiencing family or related problems of a temporary 7.30 nature who participate in the extended day program. Extended 7.31 day revenue is provided through state aid. 7.32 Sec. 10. Minnesota Statutes 1994, section 124.2725, 7.33 subdivision 2, is amended to read: 7.34 Subd. 2. [COOPERATION AND COMBINATION REVENUE.] 7.35 Cooperation and combination revenue equals $100 times the pupil 7.36 units served in the district. For purposes of this section, 8.1 pupil units served means the number of resident and nonresident 8.2 pupil units in average daily membership receiving instruction in 8.3 the cooperating or combined district. A district may not 8.4 receive revenue under this section if itleviesreceives revenue 8.5 under section 124.912, subdivision 4. Cooperation and 8.6 combination revenue is provided through state aid. 8.7 Sec. 11. Minnesota Statutes 1995 Supplement, section 8.8 124.2725, subdivision 13, is amended to read: 8.9 Subd. 13. [FAILURE TO COMBINE.] A district has failed to 8.10 combine if the commissioner disapproves of the plan according to 8.11 section 122.243, subdivision 1, or if a third referendum fails 8.12 under section 122.243, subdivision 2, or if the commissioner of 8.13 children, families, and learning determines that the districts 8.14 involved are not making sufficient progress toward combination. 8.15 (a) If a district has failed to combine, cooperation and 8.16 combination aid under subdivisions 5 and 6 shall not be paidand8.17the authority to levy under subdivision 4 ceases. The 8.18 commissioner shall reduce other aids due the district to recover 8.19 an amount equal to the aid paid under subdivision 6 plus the 8.20 difference between the aid paid under subdivision 5 and the aid 8.21 that would have been paid if the revenue had been $50 times the 8.22 pupil units served. 8.23 (b) If a district has failed to combine, theauthority to8.24levyeligibility for revenue for reorganization operating debt 8.25 under section 122.531, subdivision 4a, and for severance pay or 8.26 early retirement incentives under subdivision 15 ceases. 8.27 Sec. 12. Minnesota Statutes 1995 Supplement, section 8.28 124.2725, subdivision 14, is amended to read: 8.29 Subd. 14. [CESSATION OF REVENUE.] At any time the 8.30 districts cease cooperating, aid shall not be paidand the8.31authority to levy ceases. If a district ceases to cooperate for8.32all or a portion of a fiscal year for which a levy has been8.33certified under subdivision 3, the department of children,8.34families, and learning shall adjust the next levy certified by8.35the district by an amount in proportion to the part of the8.36fiscal year that the district did not cooperate. 9.1 Sec. 13. Minnesota Statutes 1995 Supplement, section 9.2 124.2725, subdivision 15, is amended to read: 9.3 Subd. 15. [RETIREMENT AND SEVERANCELEVYAID.] A 9.4 cooperating or combined district that levied under subdivision 3 9.5 for taxes payable in 1995may levyis eligible for state aid for 9.6 severance pay or early retirement incentives for licensed and 9.7 nonlicensed employees who retire early as a result of the 9.8 cooperation or combination. All severance pay agreements or 9.9 early retirement incentives for licensed and nonlicensed 9.10 employees who retire early as a result of the cooperation and 9.11 combination must be approved by the commissioner. 9.12 Sec. 14. Minnesota Statutes 1995 Supplement, section 9.13 124.2726, subdivision 1, is amended to read: 9.14 Subdivision 1. [ELIGIBILITY AND USE.] A school district 9.15 that has been reorganized after June 30, 1994, under section 9.16 122.23 is eligible for consolidation transition revenue. Revenue 9.17 is equal to the sum of aid undersubdivisionsubdivisions 2 9.18 andlevy under subdivision3. Consolidation transition revenue 9.19 may only be used according to this section. Revenue must be 9.20 used for the following purposes and may be distributed among 9.21 these purposes at the discretion of the district: 9.22 (1) to offer early retirement incentives as provided by 9.23 section 122.23, subdivision 20; 9.24 (2) to reduce operating debt as defined in section 121.915; 9.25 (3) to enhance learning opportunities for students in the 9.26 reorganized district; and 9.27 (4) for other costs incurred in the reorganization. 9.28 Revenue received and utilized under clause (3) or (4) may 9.29 be expended for operating, facilities, and/or equipment. 9.30 Revenue received under this section shall not be included in the 9.31 determination of the reduction under section 124A.26, 9.32 subdivision 1. 9.33 Sec. 15. Minnesota Statutes 1994, section 124.2726, 9.34 subdivision 3, is amended to read: 9.35 Subd. 3. [LEVYADDITIONAL AID.] If the aid available in 9.36 subdivision 2 is insufficient to cover the costs of the district 10.1 under section 122.23, subdivision 20, the district maylevy10.2 apply to the commissioner for state aid to cover the difference 10.3 over a period of time not to exceed three years. 10.4 Sec. 16. Minnesota Statutes 1994, section 124.2727, 10.5 subdivision 6a, is amended to read: 10.6 Subd. 6a. [DISTRICT COOPERATION REVENUE.] A district's 10.7 cooperation revenue is equal to the greater of $67 times the 10.8 actual pupil units or $25,000. District cooperation revenue is 10.9 provided through state aid. 10.10 Sec. 17. Minnesota Statutes 1995 Supplement, section 10.11 124.312, subdivision 5, is amended to read: 10.12 Subd. 5. [INTEGRATION AID.]For fiscal year 1996 and later10.13fiscal yearsIntegration revenue is provided through state aid 10.14 and equals the following amounts: 10.15 (1) for independent school district No. 709, Duluth, 10.16 $1,385,000 plus the sum of $660,000 and an amount equal to two 10.17 percent times the district's adjusted net tax capacity for 10.18 assessment year 1994; 10.19 (2) for independent school district No. 625, St. Paul, 10.20 $8,090,700 plus the product of $197 and the district's actual 10.21 pupil units for that year; and 10.22 (3) for special school district No. 1, Minneapolis, 10.23 $9,368,300 plus the product of $197 and the district's actual 10.24 pupil units for that year. 10.25 Sec. 18. Minnesota Statutes 1995 Supplement, section 10.26 124.313, is amended to read: 10.27 124.313 [TARGETED NEEDS REVENUE.] 10.28 For fiscal year 1996 and thereafter, a school district's 10.29 targeted needs revenue equals the sum of: 10.30 (1) assurance of mastery revenue according to section 10.31 124.311; plus 10.32 (2) the district's limited English proficiency revenue 10.33 computed according to section 124.273, subdivision 1d; plus 10.34 (3) integration revenue computed according to section 10.35 124.312, subdivision 4. 10.36 Sec. 19. Minnesota Statutes 1995 Supplement, section 11.1 124.3201, subdivision 1, is amended to read: 11.2 Subdivision 1. [DEFINITIONS.] For the purposes of this 11.3 section and sections 124.3202 and 124.321, the definitions in 11.4 this subdivision apply. 11.5 (a) "Base year" for fiscal year 1996 means fiscal year 1995. 11.6 Base year for later fiscal years means the second fiscal year 11.7 preceding the fiscal year for which aid will be paid. 11.8 (b) "Basic revenue" has the meaning given it in section 11.9 124A.22, subdivision 2. For the purposes of computing basic 11.10 revenue pursuant to this section, each child with a disability 11.11 shall be counted as prescribed in section 124.17, subdivision 1. 11.12 (c) "Essential personnel" means teachers, related services, 11.13 and support services staff providing direct services to students. 11.14 (d) "Average daily membership" has the meaning given it in 11.15 section 124.17. 11.16 (e) "Program growth factor" means 1.00 for fiscal year 1998 11.17 and later. 11.18 (f) "Aid percentage factor" means 60 percent for fiscal 11.19 year 1996, 70 percent for fiscal year 1997, 80 percent for 11.20 fiscal year 1998,90 percent for fiscal year 1999,and 100 11.21 percent for fiscal years20001999 and later. 11.22 (g) "Levy percentage factor" means 100 minus the aid 11.23 percentage factor for that year. 11.24 Sec. 20. Minnesota Statutes 1994, section 124.4945, is 11.25 amended to read: 11.26 124.4945 [LEVYSTATE AID FOR SEVERANCE PAY.] 11.27 A joint powers board established under section 124.494may11.28make a levyis eligible to receive state aid to provide 11.29 severance pay and early retirement incentives under section 11.30 125.611, for any teacher as defined under section 125.12, 11.31 subdivision 1, who is placed on unrequested leave as a result of 11.32 the cooperative secondary facility agreement.A joint powers11.33board making a levy shall certify to each participating district11.34tax levies sufficient to raise the amount necessary to provide11.35the district's portion of severance pay and early retirement11.36incentives. The tax levy certified to each district must be12.1expressed as a local tax rate, that, when applied to the12.2adjusted net tax capacity of all of the participating districts12.3raises the amount necessary to provide severance pay and early12.4retirement incentives. Each participating school district shall12.5include the levy in the next tax roll which it shall certify to12.6the county auditor, and shall remit the collections of the levy12.7to the joint powers board.12.8 Sec. 21. Minnesota Statutes 1995 Supplement, section 12.9 124.912, subdivision 1, is amended to read: 12.10 Subdivision 1. [STATUTORY OBLIGATIONS.](a)A school 12.11 districtmay levyis eligible for state aid for the amount 12.12 authorized for liabilities of dissolved districts pursuant to 12.13 section 122.45; the amounts necessary to pay the district's 12.14 obligations under section 268.06, subdivision 25; the amounts 12.15 necessary to pay for job placement services offered to employees 12.16 who may become eligible for benefits pursuant to section 268.08; 12.17 the amounts necessary to pay the district's obligations under 12.18 section 127.05; the amounts authorized by section 122.531; the 12.19 amounts necessary to pay the district's obligations under 12.20 section 122.533; and for severance pay required by sections 12.21 120.08, subdivision 3, and 122.535, subdivision 6. 12.22(b) An education district that negotiates a collective12.23bargaining agreement for teachers under section 122.937 may12.24certify to the department of children, families, and learning12.25the amount necessary to pay all of the member districts'12.26obligations and the education district's obligations under12.27section 268.06, subdivision 25.12.28The department of children, families, and learning must12.29allocate the levy amount proportionately among the member12.30districts based on adjusted net tax capacity. The member12.31districts must levy the amount allocated.12.32(c) Each year, a member district of an education district12.33that levies under this subdivision must transfer the amount of12.34revenue certified under paragraph (b) to the education district12.35board according to this subdivision. By June 20 and November 3012.36of each year, an amount must be transferred equal to:13.1(1) 50 percent times13.2(2) the amount certified in paragraph (b) minus homestead13.3and agricultural credit aid allocated for that levy according to13.4section 273.1398, subdivision 6.13.5 Sec. 22. Minnesota Statutes 1994, section 124.912, 13.6 subdivision 3, is amended to read: 13.7 Subd. 3. [RULE COMPLIANCE.] Each year a district that is 13.8 required to implement a plan according to the requirements of 13.9 Minnesota Rules, parts 3535.0200 to 3535.2200,may levyis 13.10 eligible for state aid in an amountnot to exceed a net tax rate13.11ofequal to 2.0 percent times the adjusted net tax capacity of 13.12 the district fortaxes payable in 1991 and thereafterthe 13.13 preceding year. A district thatleviesreceives integration 13.14 revenue according tosubdivision 2 may not levy according to13.15 section 124.312 is not eligible for state aid under this 13.16 subdivision.Notwithstanding section 121.904, the entire amount13.17of this levy shall be recognized as revenue for the fiscal year13.18in which the levy is certified. This levy shall not be13.19considered in computing the aid reduction under section 124.155.13.20 Sec. 23. Minnesota Statutes 1994, section 124.912, 13.21 subdivision 6, is amended to read: 13.22 Subd. 6. [CRIME RELATED COSTS.]For taxes levied in 199113.23and subsequent years, payable in 1992 and subsequent years, each13.24school district may make a levy on all taxable property located13.25within the school district for the purposes specified in this13.26subdivision. The maximum amount which may be levied for all13.27costs under this subdivision shall be equal toState aid for 13.28 crime related costs equals $1 multiplied by the population of 13.29 the school district. For purposes of this subdivision, 13.30 "population" of the school district means the same as contained 13.31 in section 275.14. Theproceeds of the levystate aid must be 13.32 used for reimbursing the cities and counties who contract with 13.33 the school district for the following purposes: (1) to pay the 13.34 costs incurred for the salaries, benefits, and transportation 13.35 costs of peace officers and sheriffs for liaison services in the 13.36 district's middle and secondary schools and (2) to pay the costs 14.1 for a drug abuse prevention program as defined in Minnesota 14.2 Statutes 1991 Supplement, section 609.101, subdivision 3, 14.3 paragraph (f) in the elementary schools. The school district 14.4 must initially attempt to contract for these services with the 14.5 police department of each city or the sheriff's department of 14.6 the county within the school district containing the school 14.7 receiving the services. If a local police department or a 14.8 county sheriff's department does not wish to provide the 14.9 necessary services, the district may contract for these services 14.10 with any other police or sheriff's department located entirely 14.11 or partially within the school district's boundaries.The levy14.12authorized under this subdivision is not included in determining14.13the school district's levy limitations.14.14 Sec. 24. Minnesota Statutes 1995 Supplement, section 14.15 124.912, subdivision 7, is amended to read: 14.16 Subd. 7. [ICE ARENA LEVY.] (a) Each year, an independent 14.17 school district operating and maintaining an ice arena,may levy14.18 is eligible for state aid for the net operational costs of the 14.19 ice arena. Thelevyamount of state aid may not exceed the net 14.20 actual costs of operation of the arena for the previous year. 14.21 Net actual costs are defined as operating costs less any 14.22 operating revenues. 14.23 (b) Any school district operating and maintaining an ice 14.24 arena must demonstrate to the satisfaction of the office of 14.25 monitoring in the department of children, families, and learning 14.26 that the district will offer equal sports opportunities for male 14.27 and female students to use its ice arena, particularly in areas 14.28 of access to prime practice time, team support, and providing 14.29 junior varsity and younger level teams for girls' ice sports and 14.30 ice sports offerings. 14.31 Sec. 25. Minnesota Statutes 1994, section 124.914, 14.32 subdivision 1, is amended to read: 14.33 Subdivision 1. [1977 STATUTORY OPERATING DEBT.] (1) In 14.34 each year in which so required by this subdivision, a district 14.35shall make an additional levyis eligible for state aid to 14.36 eliminate its statutory operating debt, determined as of June 15.1 30, 1977, and certified and adjusted by the commissioner. 15.2ThisState aid payments for fiscal years 1999 and later and the 15.3 previous local levy shall not be made in more than 30 successive 15.4 years and each year before it is made, it must be approved by 15.5 the commissioner and the approval shall specify its amount. 15.6This levy shall be an amount which is equal to the amount raised15.7by a levy of a net tax rate of 1.66 percent times the adjusted15.8net tax capacity of the district for the preceding year for15.9taxes payable in 1991 and thereafter; provided that in the last15.10year in which the district is required to make this levy, it15.11shall levy an amount not to exceed the amount raised by a levy15.12of a net tax rate of 1.66 percent times the adjusted net tax15.13capacity of the district for the preceding year for taxes15.14payable in 1991 and thereafter.The state aid for each district 15.15 equals the amount raised by the levy for this purpose for taxes 15.16 payable in 1997. When the sum of the cumulativelevies made15.17pursuantrevenue received according to this subdivision and 15.18 transfers made according to section 121.912, subdivision 4, 15.19 equals an amount equal to the statutory operating debt of the 15.20 district, thelevystate aid shall be discontinued. 15.21 (2) The district shall establish a special account in the 15.22 general fund which shall be designated "appropriated fund 15.23 balance reserve account for purposes of reducing statutory 15.24 operating debt" on its books and records. This account shall 15.25 reflect thelevyrevenue authorized pursuant to this subdivision. 15.26 The proceeds of thislevyrevenue shall be used only for cash 15.27 flow requirements and shall not be used to supplement district 15.28 revenues or income for the purposes of increasing the district's 15.29 expenditures or budgets. 15.30 (3)Any district which is required to levy pursuant to this15.31subdivision shall certify the maximum levy allowable under15.32section 124A.23, subdivision 2, in that same year.15.33(4)Each district shall make permanent fund balance 15.34 transfers so that the total statutory operating debt of the 15.35 district is reflected in the general fund as of June 30, 1977. 15.36 Sec. 26. Minnesota Statutes 1994, section 124.914, 16.1 subdivision 2, is amended to read: 16.2 Subd. 2. [1983 OPERATING DEBT.] (1) Each year, a 16.3 districtmay make an additional levyis eligible for state aid 16.4 to eliminate a deficit in the net unappropriated operating funds 16.5 of the district, determined as of June 30, 1983, and certified 16.6 and adjusted by the commissioner. Thislevy may in each year be16.7an amount not to exceed the amount raised by a levy of a net tax16.8rate of 1.85 percent times the adjusted net tax capacity for16.9taxes payable in 1991 and thereafter of the district for the16.10preceding year as determined by the commissionerstate aid for 16.11 each district equals the amount raised by the district's levy 16.12 for this purpose for taxes payable in 1997. However, the total 16.13 amount of thislevyrevenue for all years it ismadereceived 16.14 shall not exceed the lesser of (a) the amount of the deficit in 16.15 the net unappropriated operating funds of the district as of 16.16 June 30, 1983, or (b) the amount of the aid reduction, according 16.17 to Laws 1981, Third Special Session chapter 2, article 2, 16.18 section 2, but excluding clauses (l), (m), (n), (o), and (p), 16.19 and Laws 1982, Third Special Session chapter 1, article 3, 16.20 section 6, to the district in fiscal year 1983. When the 16.21 cumulativelevies made pursuantrevenue received according to 16.22 this subdivisionequalequals the total amount permitted by this 16.23 subdivision, thelevystate aid shall be discontinued. 16.24 (2) The proceeds of thislevystate aid shall be used only 16.25 for cash flow requirements and shall not be used to supplement 16.26 district revenues or income for the purposes of increasing the 16.27 district's expenditures or budgets. 16.28(3) Any district that levies pursuant to this subdivision16.29shall certify the maximum levy allowable under section 124A.23,16.30subdivisions 2 and 2a, in that same year.16.31 Sec. 27. Minnesota Statutes 1994, section 124.914, 16.32 subdivision 3, is amended to read: 16.33 Subd. 3. [1985 OPERATING DEBT.] (1) Each year, a 16.34 districtmay levyis eligible for state aid to eliminate a 16.35 deficit in the net unappropriated balance in the general fund of 16.36 the district, determined as of June 30, 1985, and certified and 17.1 adjusted by the commissioner. Each yearthis levy may be an17.2amount not to exceed the amount raised by a levy of a net tax17.3rate of 1.85 percent times the adjusted net tax capacity for17.4taxes payable in 1991 and thereafter of the district for the17.5preceding yearthe state aid for each district equals the amount 17.6 raised by the district's levy for this purpose for taxes payable 17.7 in 1997. However, the total amount of thislevyrevenue for all 17.8 years it ismadereceived shall not exceed the amount of the 17.9 deficit in the net unappropriated balance in the general fund of 17.10 the district as of June 30, 1985. When the cumulativelevies17.11made pursuant torevenue received under this subdivisionequal17.12 equals the total amount permitted by this subdivision, thelevy17.13 state aid shall be discontinued. 17.14 (2) A district, if eligible, maylevyreceive revenue under 17.15 this subdivision or subdivision 2, but not both. 17.16 (3) The proceeds of thislevyrevenue shall be used only 17.17 for cash flow requirements and shall not be used to supplement 17.18 district revenues or income for the purposes of increasing the 17.19 district's expenditures or budgets. 17.20(4) Any district that levies pursuant to this subdivision17.21shall certify the maximum levy allowable under section 124A.23,17.22subdivision 2, in that same year.17.23 Sec. 28. Minnesota Statutes 1994, section 124.914, 17.24 subdivision 4, is amended to read: 17.25 Subd. 4. [1992 OPERATING DEBT.] (a) Fortaxes payable for17.26calendar year 2003fiscal year 2004 and earlier, a district that 17.27 has filed a plan pursuant to section 121.917, subdivision 4,may17.28levyis eligible for state aid, with the approval of the 17.29 commissioner, to eliminate a deficit in the net unappropriated 17.30 balance in the operating funds of the district, determined as of 17.31 June 30, 1992, and certified and adjusted by the commissioner. 17.32 Each yearthis levy may be an amount not tothe state aid shall 17.33 not exceed the lesser of: 17.34 (1) an amount raised bya levy of a net tax rate of one17.35percent times the adjusted net tax capacitythe district's levy 17.36 for this purpose for taxes payable in 1997; or 18.1 (2) $100,000. 18.2 This amount shall be reduced by referendum revenue authorized 18.3 under section 124A.03 pursuant to the plan filed under section 18.4 121.917. However, the total amount of thislevyrevenue for all 18.5 years it ismadereceived shall not exceed the amount of the 18.6 deficit in the net unappropriated balance in the operating funds 18.7 of the district as of June 30, 1992. When the cumulativelevies18.8made pursuant torevenue received under this subdivisionequal18.9 equals the total amount permitted by this subdivision, thelevy18.10 state aid shall be discontinued. 18.11 (b) A district, if eligible, maylevyreceive revenue under 18.12 this subdivision or subdivision 2 or 3, or under section 18.13 122.531, subdivision 4a, or Laws 1992, chapter 499, article 7, 18.14 sections 16 or 17, but not under more than one. 18.15 (c) The proceeds of thislevyrevenue shall be used only 18.16 for cash flow requirements and shall not be used to supplement 18.17 district revenues or income for the purposes of increasing the 18.18 district's expenditures or budgets. 18.19(d) Any district that levies pursuant to this subdivision18.20shall certify the maximum levy allowable under section 124A.23,18.21subdivision 2, in that same year.18.22 Sec. 29. Minnesota Statutes 1995 Supplement, section 18.23 124.916, subdivision 1, is amended to read: 18.24 Subdivision 1. [HEALTH INSURANCE.] (a) A school 18.25 districtmay levyis eligible for state aid in the amount 18.26 necessary to make employer contributions for insurance for 18.27 retired employees under this subdivision.Notwithstanding18.28section 121.904, 50 percent of the amount levied shall be18.29recognized as revenue for the fiscal year in which the levy is18.30certified. This levy shall not be considered in computing the18.31aid reduction under section 124.155.18.32 (b) The school board of a joint vocational technical 18.33 district formed under sections 136C.60 to 136C.69 and the school 18.34 board of a school district may provide employer-paid hospital, 18.35 medical, and dental benefits to a person who: 18.36 (1) is eligible for employer-paid insurance under 19.1 collective bargaining agreements or personnel plans in effect on 19.2 June 30, 1992; 19.3 (2) has at least 25 years of service credit in the public 19.4 pension plan of which the person is a member on the day before 19.5 retirement or, in the case of a teacher, has a total of at least 19.6 25 years of service credit in the teachers retirement 19.7 association, a first-class city teacher retirement fund, or any 19.8 combination of these; 19.9 (3) upon retirement is immediately eligible for a 19.10 retirement annuity; 19.11 (4) is at least 55 and not yet 65 years of age; and 19.12 (5) retires on or after May 15, 1992, and before July 21, 19.13 1992. 19.14 A school board paying insurance under this subdivision may 19.15 not exclude any eligible employees. 19.16 (c) An employee who is eligible both for the health 19.17 insurance benefit under this subdivision and for an early 19.18 retirement incentive under a collective bargaining agreement or 19.19 personnel plan established by the employer must select either 19.20 the early retirement incentive provided under the collective 19.21 bargaining agreement personnel plan or the incentive provided 19.22 under this subdivision, but may not receive both. For purposes 19.23 of this subdivision, a person retires when the person terminates 19.24 active employment and applies for retirement benefits. The 19.25 retired employee is eligible for single and dependent coverages 19.26 and employer payments to which the person was entitled 19.27 immediately before retirement, subject to any changes in 19.28 coverage and employer and employee payments through collective 19.29 bargaining or personnel plans, for employees in positions 19.30 equivalent to the position from which the employee retired. The 19.31 retired employee is not eligible for employer-paid life 19.32 insurance. Eligibility ceases when the retired employee attains 19.33 the age of 65, or when the employee chooses not to receive the 19.34 retirement benefits for which the employee has applied, or when 19.35 the employee is eligible for employer-paid health insurance from 19.36 a new employer. Coverages must be coordinated with relevant 20.1 health insurance benefits provided through the federally 20.2 sponsored Medicare program. 20.3 (d) Unilateral implementation of this section by a public 20.4 employer is not an unfair labor practice for purposes of chapter 20.5 179A. The authority provided in this subdivision for an 20.6 employer to pay health insurance costs for certain retired 20.7 employees is not subject to the limits in section 179A.20, 20.8 subdivision 2a. 20.9 (e) If a school districtleviesreceives revenue according 20.10 to this subdivision, it may not alsolevyreceive revenue 20.11 according to section 122.531, subdivision 9, for eligible 20.12 employees. 20.13 Sec. 30. Minnesota Statutes 1995 Supplement, section 20.14 124.916, subdivision 2, is amended to read: 20.15 Subd. 2. [RETIRED EMPLOYEE HEALTH BENEFITS.] Fortaxes20.16payable in 1996,fiscal years 1997, 1998, and 1999 only, a 20.17 school districtmay levyis eligible for state aid in an amount 20.18 up to the amount the district is required by the collective 20.19 bargaining agreement in effect on March 30, 1992, to pay for 20.20 health insurance or unreimbursed medical expenses for licensed 20.21 and nonlicensed employees who have terminated services in the 20.22 employing district and withdrawn from active teaching service or 20.23 other active service, as applicable, before July 1, 1992. The 20.24 total amount of thelevystate aid each year may not exceed 20.25 $300,000. 20.26Notwithstanding section 121.904, 50 percent of the proceeds20.27of this levy shall be recognized in the fiscal year in which it20.28is certified.20.29 Sec. 31. Minnesota Statutes 1994, section 124.916, 20.30 subdivision 3, is amended to read: 20.31 Subd. 3. [RETIREMENTLEVIESAID.] (1)In addition to the20.32excess levy authorized in 1976 any district within a city of the20.33first class which was authorized in 1975 to make a retirement20.34levy under Minnesota Statutes 1974, section 275.127 and chapter20.35422A may levy an amount per pupil unit which is equal to the20.36amount levied in 1975 payable 1976, under Minnesota Statutes21.11974, section 275.127 and chapter 422A, divided by the number of21.2pupil units in the district in 1976-1977.21.3(2) In 1979 and each year thereafter, any district which21.4qualified in 1976 for an extra levy under clause (1) shall be21.5allowed to levy the same amount as levied for retirement in 197821.6under this clause reduced each year by ten percent of the21.7difference between the amount levied for retirement in 197121.8under Minnesota Statutes 1971, sections 275.127 and 422.01 to21.9422.54 and the amount levied for retirement in 1975 under21.10Minnesota Statutes 1974, section 275.127 and chapter 422A.21.11(3) In 1991 and each year thereafter, a district to which21.12this subdivision applies may levy an additional amount required21.13for contributions to the Minneapolis employees retirement fund21.14as a result of the maximum dollar amount limitation on state21.15contributions to the fund imposed under section 422A.101,21.16subdivision 3. The additional levy shall not exceed the most21.17recent amount certified by the board of the Minneapolis21.18employees retirement fund as the district's share of the21.19contribution requirement in excess of the maximum state21.20contribution under section 422A.101, subdivision 3.21.21(4) For taxes payable in 1994 and thereafter, special21.22school district No. 1, Minneapolis, and independent school21.23district No. 625, St. Paul, may levy for the increase in the21.24employer retirement fund contributions, under Laws 1992, chapter21.25598, article 5, section 1. Notwithstanding section 121.904, the21.26entire amount of this levy may be recognized as revenue for the21.27fiscal year in which the levy is certified. This levy shall not21.28be considered in computing the aid reduction under section21.29124.155.For fiscal years 1998 and later, the commissioner 21.30 shall determine the amount of retirement levies certified under 21.31 this subdivision by each district for taxes payable in 1997. 21.32 (2) A district is eligible for state aid equal to the 21.33 amount calculated under paragraph (1). 21.34(5)(3) If the employer retirement fund contributions under 21.35 section 354A.12, subdivision 2a, are increased for fiscal year 21.36 1994 or later fiscal years, special school district No. 1, 22.1 Minneapolis, and independent school district No. 625, St. Paul, 22.2may levy in payable 1994 or later an amountare eligible for 22.3 state aid equal to the amount derived by applying the net 22.4 increase in the employer retirement fund contribution rate of 22.5 the respective teacher retirement fund association between 22.6 fiscal year 1993 and the fiscal year beginning in the year after 22.7 the levy is certified to the total covered payroll of the 22.8 applicable teacher retirement fund association.Notwithstanding22.9section 121.904, the entire amount of this levy may be22.10recognized as revenue for the fiscal year in which the levy is22.11certified. This levy shall not be considered in computing the22.12aid reduction under section 124.155. If an applicable school22.13district levies under this paragraph, they may not levy under22.14paragraph (4).22.15(6)(4) In addition to thelevystate aid authorized under 22.16 paragraph(5)(3), special school district No. 1, 22.17 Minneapolis,may also levy in payable 1994 or lateris also 22.18 eligible for additional state aid in an amount equal to the 22.19 state aid contribution under section 354A.12, subdivision 3b. 22.20Notwithstanding section 121.904, the entire amount of this levy22.21may be recognized as revenue for the fiscal year in which the22.22levy is certified. This levy shall not be considered in22.23computing the aid reduction under section 124.155.22.24 Sec. 32. Minnesota Statutes 1994, section 124.916, 22.25 subdivision 4, is amended to read: 22.26 Subd. 4. [MINNEAPOLIS HEALTH INSURANCE SUBSIDY.] Each year 22.27 special school district No. 1, Minneapolis,may make an22.28additional levy not to exceedis eligible for state aid equal to 22.29 the amount raised by a net tax rate of .10 percent times the 22.30 adjusted net tax capacityfor taxes payable in 1991 and22.31thereafterof the property in the district for the preceding 22.32 year. The proceeds may be used only to subsidize health 22.33 insurance costs for eligible teachers as provided in this 22.34 section. 22.35 "Eligible teacher" means a retired teacher who was a basic 22.36 member of the Minneapolis teachers retirement fund association, 23.1 who retired before May 1, 1974, and who is not eligible to 23.2 receive the hospital insurance benefits of the federal Medicare 23.3 program of the Social Security Act without payment of a monthly 23.4 premium. The district shall notify eligible teachers that a 23.5 subsidy is available. To obtain a subsidy, an eligible teacher 23.6 must submit to the school district a copy of receipts for health 23.7 insurance premiums paid. The school district shall disburse the 23.8 health insurance premium subsidy to each eligible teacher 23.9 according to a schedule determined by the district, but at least 23.10 annually. An eligible teacher may receive a subsidy up to an 23.11 amount equal to the lesser of 90 percent of the cost of the 23.12 eligible teacher's health insurance or up to 90 percent of the 23.13 cost of the number two qualified plan of health coverage for 23.14 individual policies made available by the Minnesota 23.15 comprehensive health association under chapter 62E. 23.16 If funds remaining from the previous year's health 23.17 insurance subsidylevyrevenue, minus the previous year's 23.18 required subsidy amount, are sufficient to pay the estimated 23.19 current year subsidy, thelevystate aid must be discontinued 23.20 until the remaining funds are estimated by the school board to 23.21 be insufficient to pay the subsidy. 23.22 Sec. 33. Minnesota Statutes 1994, section 124.918, 23.23 subdivision 8, is amended to read: 23.24 Subd. 8. [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) 23.25 Reductions in levies pursuant to section 124.918, subdivision 1, 23.26 and section 273.138, shall be made prior to the reductions in 23.27 clause (2). 23.28 (2) Notwithstanding any other law to the contrary, 23.29 districts which received payments pursuant to sections 298.018; 23.30 298.23 to 298.28, except an amount distributed under section 23.31 298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to 23.32 298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 23.33 upon severed mineral values, or recognized revenue pursuant to 23.34 section 477A.15; shall not include a portion of these aids in 23.35 their permissible levies pursuant to those sections, but instead 23.36 shall reduce the permissible levies authorized by this chapter 24.1 and chapter 124A by the greater of the following: 24.2 (a) an amount equal to 50 percent of the total dollar 24.3 amount of the payments received pursuant to those sections or 24.4 revenue recognized pursuant to section 477A.15 in the previous 24.5 fiscal year; or 24.6 (b) an amount equal to the total dollar amount of the 24.7 payments received pursuant to those sections or revenue 24.8 recognized pursuant to section 477A.15 in the previous fiscal 24.9 year less the product of the same dollar amount of payments or 24.10 revenue times the ratio of the maximum levy allowed the district 24.11 under Minnesota Statutes 1986, sections 124A.03, subdivision 2, 24.12 124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, 24.13 subdivision 3a, 124A.12, subdivision 3a, and 124A.14, 24.14 subdivision 5a, to the total levy allowed the district under 24.15 this section and Minnesota Statutes 1986, sections 124A.03, 24.16 124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, 24.17 subdivision 3a, 124A.12, subdivision 3a, 124A.14, subdivision 24.18 5a, and 124A.20, subdivision 2, for levies certified in 1986. 24.19 (3) No reduction pursuant to this subdivision shall reduce 24.20 the levy made by the district pursuant to section124A.2324.21 124A.25, to an amount less than the amount raised by a levy of a 24.22 net tax rate of 6.82 percent times the adjusted net tax capacity 24.23 for taxes payable in 1990 and thereafter of that district for 24.24 the preceding year as determined by the commissioner. The 24.25 amount of any increased levy authorized by referendum pursuant 24.26 to section 124A.03, subdivision 2, shall not be reduced pursuant 24.27 to this subdivision. The amount of any levy authorized by 24.28 section 124.912, subdivision 1, to make payments for bonds 24.29 issued and for interest thereon, shall not be reduced pursuant 24.30 to this subdivision. 24.31 (4) Before computing the reduction pursuant to this 24.32 subdivision of the capital expenditure facilities levy 24.33 authorized by section 124.243, the capital expenditure equipment 24.34 levy authorized by section 124.244, the health and safety levy 24.35 authorized by sections 124.83 and 124.91, subdivision 6, the 24.36 commissioner shall ascertain from each affected school district 25.1 the amount it proposes to levy under each section or 25.2 subdivision. The reduction shall be computed on the basis of 25.3 the amount so ascertained. 25.4 (5) Notwithstanding any law to the contrary, any amounts 25.5 received by districts in any fiscal year pursuant to sections 25.6 298.018; 298.23 to 298.28; 298.34 to 298.39; 298.391 to 298.396; 25.7 298.405; or any law imposing a tax on severed mineral values; 25.8 and not deducted from general education aid pursuant to section 25.9 124A.035, subdivision 5, clause (2), and not applied to reduce 25.10 levies pursuant to this subdivision shall be paid by the 25.11 district to the St. Louis county auditor in the following amount 25.12 by March 15 of each year, the amount required to be subtracted 25.13 from the previous fiscal year's general education aid pursuant 25.14 to section 124A.035, subdivision 5, which is in excess of the 25.15 general education aid earned for that fiscal year. The county 25.16 auditor shall deposit any amounts received pursuant to this 25.17 clause in the St. Louis county treasury for purposes of paying 25.18 the taconite homestead credit as provided in section 273.135. 25.19 Sec. 34. Minnesota Statutes 1994, section 124A.03, is 25.20 amended by adding a subdivision to read: 25.21 Subd. 7. [REFERENDUM ALLOWANCE.] A district's referendum 25.22 allowance for fiscal years 1999 and later equals its referendum 25.23 revenue for fiscal year 1998 divided by its actual pupil units 25.24 for that year. The district's referendum allowance computed 25.25 under this subdivision expires according to its scheduled 25.26 expiration under Minnesota Statutes 1994, sections 124A.03 and 25.27 124A.0311. 25.28 Sec. 35. Minnesota Statutes 1994, section 124A.03, is 25.29 amended by adding a subdivision to read: 25.30 Subd. 8. [REFERENDUM REVENUE.] A district's referendum 25.31 revenue for fiscal years 1998 and later equals: (1) its 25.32 referendum allowance determined according to subdivision 7, less 25.33 the difference between the basic general education formula 25.34 allowance for that year and $3,505; times (2) its actual pupil 25.35 units for that year. 25.36 Sec. 36. Minnesota Statutes 1995 Supplement, section 26.1 124A.22, subdivision 1, is amended to read: 26.2 Subdivision 1. [GENERAL EDUCATION REVENUE.](a) For fiscal26.3year 1996, the general education revenue for each district26.4equals the sum of the district's basic revenue, compensatory26.5education revenue, training and experience revenue, secondary26.6sparsity revenue, elementary sparsity revenue, and supplemental26.7revenue.26.8(b)For fiscal year 1997 and thereafter, the general 26.9 education revenue for each district equals the sum of the 26.10 district's basic revenue, compensatory education revenue, 26.11 secondary sparsity revenue, elementary sparsity revenue, 26.12 transportation sparsity, total operating capital revenue, 26.13 transition revenue, and supplemental revenue. General education 26.14 revenue is provided through state aid. 26.15 Sec. 37. [124A.25] [STATEWIDE UNIFORM SCHOOL LEVY.] 26.16 Subdivision 1. [STATEWIDE UNIFORM SCHOOL TAX RATE.] The 26.17 commissioner shall establish the statewide uniform school tax 26.18 rate by August 1 of each year for levies payable in the 26.19 following year. The statewide uniform school tax rate shall be 26.20 a rate, that, when applied to the adjusted net tax capacity for 26.21 all districts, raises the amount specified in this subdivision. 26.22 The statewide uniform school tax rate shall be the rate that 26.23 raises $642,200,000 for fiscal year 1998 and later fiscal 26.24 years. The statewide uniform school tax rate may not be changed 26.25 due to changes or corrections made to a district's adjusted net 26.26 tax capacity after the tax rate has been established. 26.27 Subd. 2. [STATEWIDE UNIFORM SCHOOL LEVY.] By August 1 of 26.28 each year, the commissioner shall certify to the home county 26.29 auditor of each school district the statewide uniform school 26.30 levy within the district equal to the tax rate established 26.31 according to subdivision 1 multiplied by the adjusted net tax 26.32 capacity of the district for the preceding year. 26.33 Sec. 38. Minnesota Statutes 1994, section 124A.292, 26.34 subdivision 2, is amended to read: 26.35 Subd. 2. [REVENUE.] Staff development incentive revenue is 26.36 equal to the number of teachers at the site times $25. Staff 27.1 development incentive revenue is provided through state aid. 27.2 Sec. 39. Minnesota Statutes 1994, section 273.1398, 27.3 subdivision 3, is amended to read: 27.4 Subd. 3. [DISPARITY REDUCTION AID.] For taxes payable in 27.5 1995, and subsequent years, the amount of disparity aid 27.6 certified for each taxing district within each unique taxing 27.7 jurisdiction for taxes payable in the prior year shall be 27.8 multiplied by the ratio of (1) the jurisdiction's tax capacity 27.9 using the class rates for taxes payable in the year for which 27.10 aid is being computed, to (2) its tax capacity using the class 27.11 rates for taxes payable in the year prior to that for which aid 27.12 is being computed, both based upon market values for taxes 27.13 payable in the year prior to that for which aid is being 27.14 computed. For the purposes of this aid determination, disparity 27.15 reduction aid certified for taxes payable in the prior year for 27.16 a taxing entity other than a townor school districtis deemed 27.17 to be county government disparity reduction aid. For taxes 27.18 payable in 1992 and subsequent years, the amount of disparity 27.19 aid certified to each taxing jurisdiction shall be reduced by 27.20 any reductions required in the current year or permanent 27.21 reductions required in previous years under section 477A.0132. 27.22 Sec. 40. Minnesota Statutes 1995 Supplement, section 27.23 275.065, subdivision 3, is amended to read: 27.24 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 27.25 county auditor shall prepare and the county treasurer shall 27.26 deliver after November 10 and on or before November 24 each 27.27 year, by first class mail to each taxpayer at the address listed 27.28 on the county's current year's assessment roll, a notice of 27.29 proposed property taxes and, in the case of a town, final 27.30 property taxes. 27.31 (b) The commissioner of revenue shall prescribe the form of 27.32 the notice. 27.33 (c) The notice must inform taxpayers that it contains the 27.34 amount of property taxes each taxing authorityother than a27.35town, including the state of Minnesota, proposes to collect for 27.36 taxes payable the following yearand, for a town, the amount of28.1its final levy. In the case of the state of Minnesota or any 28.2 town, the amount shown shall be based upon the final rather than 28.3 a proposed levy. It must clearly state that each taxing 28.4 authority, including regional library districts established 28.5 under section 134.201, and including the metropolitan taxing 28.6 districts as defined in paragraph (i), but excluding the state 28.7 of Minnesota, all other special taxing districts, and towns, 28.8 will hold a public meeting to receive public testimony on the 28.9 proposed budget and proposed or final property tax levy, or, in 28.10 case of a school district, on the current budget and proposed 28.11 property tax levy. It must clearly state the time and place of 28.12 each taxing authority's meeting and an address where comments 28.13 will be received by mail. 28.14 (d) The notice must state for each parcel: 28.15 (1) the market value of the property as determined under 28.16 section 273.11, and used for computing property taxes payable in 28.17 the following year and for taxes payable in the current year; 28.18 and, in the case of residential property, whether the property 28.19 is classified as homestead or nonhomestead. The notice must 28.20 clearly inform taxpayers of the years to which the market values 28.21 apply and that the values are final values; 28.22 (2)bythe proposed net tax on the property for taxes 28.23 payable the following year and the actual tax for taxes payable 28.24 the current year, itemized for the state of Minnesota, county, 28.25 city or town, school district excess referendalevytax, 28.26 remaining school districtlevytax, regional library district, 28.27 if in existence, the total of the metropolitan special taxing 28.28 districts as defined in paragraph (i) and the sum of the 28.29 remaining special taxing districts, and as a total of the taxing 28.30 authorities, including all special taxing districts, the28.31proposed or, for a town, final net tax on the property for taxes28.32payable the following year and the actual tax for taxes payable28.33the current year. For the purposes of this subdivision, "school 28.34 district excess referendalevytax" means school district taxes 28.35 for operating purposes approved at referendums, including those 28.36 taxes based on net tax capacity as well as those based on market 29.1 value. "School district excess referendalevytax" does not 29.2 include school district taxes for capital expenditures approved 29.3 at referendums or school district taxes to pay for the debt 29.4 service on bonds approved at referenda. In the case of the city 29.5 of Minneapolis, thelevytax for the Minneapolis library board 29.6 and thelevytax for Minneapolis park and recreation shall be 29.7 listed separately from the remaining amount of the city'slevy29.8 tax. In the case of a parcel where tax increment or the fiscal 29.9 disparities areawide tax applies, the proposed taxlevyon the 29.10 captured value or the proposed taxlevyon the tax capacity 29.11 subject to the areawide tax must each be stated separately and 29.12 not included in the sum of the special taxing districts; and 29.13 (3) the increase or decrease in the amounts in clause (2) 29.14 from taxes payable in the current year to proposed or, for a 29.15 town, final taxes payable the following year, expressed as a 29.16 dollar amount and as a percentage. 29.17 (e) The notice must clearly state that the proposed or 29.18 final taxes do not include the following: 29.19 (1) special assessments; 29.20 (2) levies approved by the voters after the date the 29.21 proposed taxes are certified, including bond referenda, school 29.22 district levy referenda, and levy limit increase referenda; 29.23 (3) amounts necessary to pay cleanup or other costs due to 29.24 a natural disaster occurring after the date the proposed taxes 29.25 are certified; 29.26 (4) amounts necessary to pay tort judgments against the 29.27 taxing authority that become final after the date the proposed 29.28 taxes are certified; and 29.29 (5) the contamination tax imposed on properties which 29.30 received market value reductions for contamination. 29.31 (f) Except as provided in subdivision 7, failure of the 29.32 county auditor to prepare or the county treasurer to deliver the 29.33 notice as required in this section does not invalidate the 29.34 proposed or final tax levy or the taxes payable pursuant to the 29.35 tax levy. 29.36 (g) If the notice the taxpayer receives under this section 30.1 lists the property as nonhomestead and the homeowner provides 30.2 satisfactory documentation to the county assessor that the 30.3 property is owned and has been used as the owner's homestead 30.4 prior to June 1 of that year, the assessor shall reclassify the 30.5 property to homestead for taxes payable in the following year. 30.6 (h) In the case of class 4 residential property used as a 30.7 residence for lease or rental periods of 30 days or more, the 30.8 taxpayer must either: 30.9 (1) mail or deliver a copy of the notice of proposed 30.10 property taxes to each tenant, renter, or lessee; or 30.11 (2) post a copy of the notice in a conspicuous place on the 30.12 premises of the property. 30.13 The notice must be mailed or posted by the taxpayer by 30.14 November 27 or within three days of receipt of the notice, 30.15 whichever is later. A taxpayer may notify the county treasurer 30.16 of the address of the taxpayer, agent, caretaker, or manager of 30.17 the premises to which the notice must be mailed in order to 30.18 fulfill the requirements of this paragraph. 30.19 (i) For purposes of this subdivision, subdivisions 5a and 30.20 6, "metropolitan special taxing districts" means the following 30.21 taxing districts in the seven-county metropolitan area that levy 30.22 a property tax for any of the specified purposes listed below: 30.23 (1) metropolitan council under section 473.132, 473.167, 30.24 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 30.25 (2) metropolitan airports commission under section 473.667, 30.26 473.671, or 473.672; and 30.27 (3) metropolitan mosquito control commission under section 30.28 473.711. 30.29 For purposes of this section, any levies made by the 30.30 regional rail authorities in the county of Anoka, Carver, 30.31 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 30.32 398A shall be included with the appropriate county's levy and 30.33 shall be discussed at that county's public hearing. 30.34 Sec. 41. Minnesota Statutes 1995 Supplement, section 30.35 275.08, subdivision 1b, is amended to read: 30.36 Subd. 1b. The amounts certified under section 275.07 by an 31.1 individual local government unit, except for any amounts 31.2 certified under sections 124A.03, subdivision 2a, and 275.61, 31.3 shall be divided by the total net tax capacity of all taxable 31.4 properties within the local government unit's taxing 31.5 jurisdiction. The resulting ratio, the local government's local 31.6 tax rate, multiplied by each property's net tax capacity shall 31.7 be each property's tax for that local government unit before 31.8 reduction by any credits. 31.9 The state school tax levied within each school district 31.10 under section 124A.25, subdivision 2, shall be divided by the 31.11 total net tax capacity of all taxable properties within the 31.12 school district's taxing jurisdiction. The resulting ratio, the 31.13 district's state school tax rate, multiplied by each property's 31.14 net tax capacity shall be each property's statewide uniform 31.15 school tax before reduction by any credits. 31.16 Any amount certified to the county auditor under section 31.17 124A.03, subdivision 2a, or 275.61, after the dates given in 31.18 those sections, shall be divided by the total estimated market 31.19 value of all taxable properties within the taxing district. The 31.20 resulting ratio, the taxing district's new referendum tax rate, 31.21 multiplied by each property's estimated market value shall be 31.22 each property's new referendum tax before reduction by any 31.23 credits. 31.24 Sec. 42. Minnesota Statutes 1995 Supplement, section 31.25 276.04, subdivision 2, is amended to read: 31.26 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 31.27 shall provide for the printing of the tax statements. The 31.28 commissioner of revenue shall prescribe the form of the property 31.29 tax statement and its contents. The statement must contain a 31.30 tabulated statement of the dollar amount due to each taxing 31.31 authority from the parcel of real property for which a 31.32 particular tax statement is prepared. The dollar amounts due 31.33 the state of Minnesota, county, township or municipality, the 31.34 total of the metropolitan special taxing districts as defined in 31.35 section 275.065, subdivision 3, paragraph (i), school district 31.36 excess referendalevytax, remaining school districtlevytax, 32.1 and the total of other voter approved referendaleviestaxes 32.2 based on market value under section 275.61 must be separately 32.3 stated. The amount due to the state of Minnesota through the 32.4 uniform school levy under section 124A.25 shall be designated as 32.5 the "statewide uniform school tax." The amounts due all other 32.6 special taxing districts, if any, may be aggregated. For the 32.7 purposes of this subdivision, "school district excess 32.8 referendalevytax" means school district taxes for operating 32.9 purposes approved at referenda, including those taxes based on 32.10 net tax capacity as well as those based on market value. 32.11 "School district excess referendalevytax" does not include 32.12 school district taxes for capital expenditures approved at 32.13 referendums or school district taxes to pay for the debt service 32.14 on bonds approved at referenda. The amount of the tax on 32.15 contamination value imposed under sections 270.91 to 270.98, if 32.16 any, must also be separately stated. The dollar amounts, 32.17 including the dollar amount of any special assessments, may be 32.18 rounded to the nearest even whole dollar. For purposes of this 32.19 section whole odd-numbered dollars may be adjusted to the next 32.20 higher even-numbered dollar. The amount of market value 32.21 excluded under section 273.11, subdivision 16, if any, must also 32.22 be listed on the tax statement.The statement shall include the32.23following sentence, printed in upper case letters in boldface32.24print: "THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY32.25TAX REVENUES. THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX32.26BY PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF32.27GOVERNMENT."32.28 (b) The property tax statements for manufactured homes and 32.29 sectional structures taxed as personal property shall contain 32.30 the same information that is required on the tax statements for 32.31 real property. 32.32 (c) Real and personal property tax statements must contain 32.33 the following information in the order given in this paragraph. 32.34 The information must contain the current year tax information in 32.35 the right column with the corresponding information for the 32.36 previous year in a column on the left: 33.1 (1) the property's estimated market value under section 33.2 273.11, subdivision 1; 33.3 (2) the property's taxable market value after reductions 33.4 under section 273.11, subdivisions 1a and 16; 33.5 (3) the property's gross tax, calculated by multiplying the 33.6 property's gross tax capacity times the total local tax rate and 33.7 adding to the result the sum of the aids enumerated in clause 33.8 (3); 33.9 (4) a total of the following aids: 33.10 (i) education aids payable under chapters 124 and 124A; 33.11 (ii) local government aids for cities, towns, and counties 33.12 under chapter 477A; and 33.13 (iii) disparity reduction aid under section 273.1398; 33.14 (5) for homestead residential and agricultural properties, 33.15 the homestead and agricultural credit aid apportioned to the 33.16 property. This amount is obtained by multiplying the total 33.17 local tax rate by the difference between the property's gross 33.18 and net tax capacities under section 273.13. This amount must 33.19 be separately stated and identified as "homestead and 33.20 agricultural credit." For purposes of comparison with the 33.21 previous year's amount for the statement for taxes payable in 33.22 1990, the statement must show the homestead credit for taxes 33.23 payable in 1989 under section 273.13, and the agricultural 33.24 credit under section 273.132 for taxes payable in 1989; 33.25 (6) any credits received under sections 273.119; 273.123; 33.26 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 33.27 473H.10, except that the amount of credit received under section 33.28 273.135 must be separately stated and identified as "taconite 33.29 tax relief"; and 33.30 (7) the net tax payable in the manner required in paragraph 33.31 (a). 33.32 The commissioner of revenue shall certify to the county 33.33 auditor the actual or estimated aids enumerated in clauses (3) 33.34 and (4) that local governments will receive in the following 33.35 year. In the case of a county containing a city of the first 33.36 class, for taxes levied in 1991, and for all counties for taxes 34.1 levied in 1992 and thereafter, the commissioner must certify 34.2 this amount by September 1. 34.3 Sec. 43. Minnesota Statutes 1994, section 473F.02, 34.4 subdivision 5, is amended to read: 34.5 Subd. 5. [GOVERNMENTAL UNIT.] "Governmental unit" meansa34.6 the state of Minnesota, or any county, city, town, school 34.7 district, or other taxing unit or body which levies ad valorem 34.8 taxes in whole or in part within the area. 34.9 Sec. 44. Minnesota Statutes 1994, section 473F.08, 34.10 subdivision 3, is amended to read: 34.11 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 34.12 apportion the levy of each governmental unit in the auditor's 34.13 county in the manner prescribed by this subdivision. The 34.14 auditor shall: 34.15 (a) by August 20, determine the areawide portion of the 34.16 levy for each governmental unit by multiplying the local tax 34.17 rate of the governmental unit for the preceding levy year times 34.18 the distribution value set forth in subdivision 2, clause (b); 34.19 and 34.20 (b) by September 5, determine the local portion of the 34.21 current year's levy by subtracting the resulting amount from 34.22 clause (a) from the governmental unit's current year's levy. 34.23 For property taxes payable in 1998 only, a percentage of 34.24 the areawide portion of a school district's levy shall be 34.25 distributed to the state of Minnesota uniform school levy within 34.26 the district equal to the percentage that equalized levies are 34.27 of the school district's payable 1997 levy. The commissioner of 34.28 children, families, and learning shall certify the equalized 34.29 levy percentage of each district's payable 1997 levy to the 34.30 administrative auditor by July 1, 1997, using the definition of 34.31 equalized levies found in section 273.1398, subdivision 1. 34.32 Sec. 45. [REPEALER.] 34.33 Subdivision 1. [JULY 1, 1997.] (a) Minnesota Statutes 34.34 1994, sections 122.531, subdivision 4a; 124.2713, subdivisions 34.35 6a, 6b, and 7; 124.2715, subdivision 2; 124.2716, subdivisions 3 34.36 and 4; 124.2725, subdivision 7; 124.2727, subdivisions 6b and 35.1 6c; 124A.029; 124A.03, subdivisions 1b, 1d, 1e, 1f, 2b, and 3b; 35.2 124A.23, subdivisions 2, 3, and 5; and 124A.292, subdivisions 3 35.3 and 4; and Minnesota Statutes 1995 Supplement, sections 35.4 124.2715, subdivision 3; and 124.2727, subdivision 9, are 35.5 repealed July 1, 1997. 35.6 (b) Minnesota Statutes 1994, section 273.1398, subdivision 35.7 2, is repealed December 31, 1997, for aids payable in 1998 and 35.8 subsequent years. 35.9 (c) Minnesota Statutes 1994, sections 124.2711, subdivision 35.10 3; and 124.321, subdivisions 3, 4, and 5; and Minnesota Statutes 35.11 1995 Supplement, sections 124.2711, subdivision 2a; 124.2713, 35.12 subdivision 6; 124.2725, subdivisions 3, 4, and 15; 124.312, 35.13 subdivision 4; 124.314, subdivision 2; 124.321, subdivisions 1 35.14 and 2; 124A.03, subdivisions 1c and 2; 124A.22, subdivisions 13d 35.15 and 13e; 124A.23, subdivisions 1 and 4; and 124A.24, are 35.16 repealed July 1, 1997. 35.17 Subd. 2. [TAXES PAYABLE IN 1997.] Minnesota Statutes 1994, 35.18 section 124.912, subdivision 2, is repealed July 1, 1997, and 35.19 shall not be levied for taxes payable in 1998 and following 35.20 years. 35.21 Sec. 46. [EFFECTIVE DATE.] 35.22 (a) The provisions of this article take effect as provided 35.23 in paragraph (b) only if the constitutional amendment proposed 35.24 to the people by article 1, section 1, is adopted in the 1996 35.25 general election. 35.26 (b) Sections 1 to 38 are effective July 1, 1997, for 35.27 revenue for 1998-1999 and later school years. Section 39 is 35.28 effective for aids payable in 1998 and subsequent years. 35.29 Sections 40 to 44 are effective for taxes payable in 1998 and 35.30 subsequent years. 35.31 ARTICLE 3 35.32 PROPERTY TAX CLASSIFICATION REFORM 35.33 Section 1. Minnesota Statutes 1995 Supplement, section 35.34 273.13, subdivision 24, is amended to read: 35.35 Subd. 24. [CLASS 3.] (a) Commercial and industrial 35.36 property and utility real and personal property, except class 5 36.1 property as identified in subdivision 31, clause (1), is class 36.2 3a.ItCommercial property and utility real and personal 36.3 property has a class rate of three percent of the first $100,000 36.4 of market valuefor taxes payable in 1993 and thereafter,and 36.5 5.06 percent of the market value over $100,000. Industrial 36.6 property, defined as property used in manufacturing, milling, 36.7 converting, producing, processing, or fabricating materials, has 36.8 a class rate of three percent of the first $100,000 of market 36.9 value and four percent of the market value over $100,000. In 36.10 the case of property which is used partially for commercial and 36.11 partially for industrial purposes, each portion of the 36.12 property's market value will be separately assigned a class rate 36.13 consistent with its use, provided that not more than $100,000 of 36.14 the property's market value may receive the preferential three 36.15 percent rate. 36.16 In the case of state-assessed commercial, industrial, and 36.17 utility property owned by one person or entity, only one parcel 36.18 has a reduced class rate on the first $100,000 of market value. 36.19 In the case of other commercial, industrial, and utility 36.20 property owned by one person or entity, only one parcel in each 36.21 county has a reduced class rate on the first $100,000 of market 36.22 value, except that: 36.23 (1) if the market value of the parcel is less than 36.24 $100,000, and additional parcels are owned by the same person or 36.25 entity in the same city or town within that county, the reduced 36.26 class rate shall be applied up to a combined total market value 36.27 of $100,000 for all parcels owned by the same person or entity 36.28 in the same city or town within the county; 36.29 (2) in the case of grain, fertilizer, and feed elevator 36.30 facilities, as defined in section 18C.305, subdivision 1, or 36.31 232.21, subdivision 8, the limitation to one parcel per owner 36.32 per county for the reduced class rate shall not apply, but there 36.33 shall be a limit of $100,000 of preferential value per site of 36.34 contiguous parcels owned by the same person or entity. Only the 36.35 value of the elevator portion of each parcel shall qualify for 36.36 treatment under this clause. For purposes of this subdivision, 37.1 contiguous parcels include parcels separated only by a railroad 37.2 or public road right-of-way; and 37.3 (3) in the case of property owned by a nonprofit charitable 37.4 organization that qualifies for tax exemption under section 37.5 501(c)(3) of the Internal Revenue Code of 1986, as amended 37.6 through December 31, 1993, if the property is used as a business 37.7 incubator, the limitation to one parcel per owner per county for 37.8 the reduced class rate shall not apply, provided that the 37.9 reduced rate applies only to the first $100,000 of value per 37.10 parcel owned by the organization. As used in this clause, a 37.11 "business incubator" is a facility used for the development of 37.12 nonretail businesses, offering access to equipment, space, 37.13 services, and advice to the tenant businesses, for the purpose 37.14 of encouraging economic development, diversification, and job 37.15 creation in the area served by the organization. 37.16 To receive the reduced class rate on additional parcels 37.17 under clause (1), (2), or (3), the taxpayer must notify the 37.18 county assessor that the taxpayer owns more than one parcel that 37.19 qualifies under clause (1), (2), or (3). 37.20 (b) Employment property defined in section 469.166, during 37.21 the period provided in section 469.170, shall constitute class 37.22 3b and has a class rate of 2.3 percent of the first $50,000 of 37.23 market value and 3.6 percent of the remainder, except that for 37.24 employment property located in a border city enterprise zone 37.25 designated pursuant to section 469.168, subdivision 4, paragraph 37.26 (c), the class rate of the first $100,000 of market value and 37.27 the class rate of the remainder is determined under paragraph 37.28 (a), unless the governing body of the city designated as an 37.29 enterprise zone determines that a specific parcel shall be 37.30 assessed pursuant to the first clause of this sentence. The 37.31 governing body may provide for assessment under the first clause 37.32 of the preceding sentence only for property which is located in 37.33 an area which has been designated by the governing body for the 37.34 receipt of tax reductions authorized by section 469.171, 37.35 subdivision 1. 37.36 (c) Structures which are (i) located on property classified 38.1 as class 3a, (ii) constructed under an initial building permit 38.2 issued after January 2, 1996, (iii) located in a transit zone as 38.3 defined under section 473.3915, subdivision 3, (iv) located 38.4 within the boundaries of a school district, and (v) not 38.5 primarily used for retail or transient lodging purposes, shall 38.6 have a class rate of four percent on that portion of the market 38.7 value in excess of $100,000 and any market value under $100,000 38.8 that does not qualify for the three percent class rate under 38.9 paragraph (a). As used in item (v), a structure is primarily 38.10 used for retail or transient lodging purposes if over 50 percent 38.11 of its square footage is used for those purposes. The four 38.12 percent rate shall also apply to improvements to existing 38.13 structures that meet the requirements of items (i) to (v) if the 38.14 improvements are constructed under an initial building permit 38.15 issued after January 2, 1996, even if the remainder of the 38.16 structure was constructed prior to January 2, 1996. For the 38.17 purposes of this paragraph, a structure shall be considered to 38.18 be located in a transit zone if any portion of the structure 38.19 lies within the zone. If any property once eligible for 38.20 treatment under this paragraph ceases to remain eligible due to 38.21 revisions in transit zone boundaries, the property shall 38.22 continue to receive treatment under this paragraph for a period 38.23 of three years. 38.24 Sec. 2. Minnesota Statutes 1995 Supplement, section 38.25 273.13, subdivision 25, is amended to read: 38.26 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 38.27 estate containing four or more units and used or held for use by 38.28 the owner or by the tenants or lessees of the owner as a 38.29 residence for rental periods of 30 days or more. Class 4a also 38.30 includes hospitals licensed under sections 144.50 to 144.56, 38.31 other than hospitals exempt under section 272.02, and contiguous 38.32 property used for hospital purposes, without regard to whether 38.33 the property has been platted or subdivided. Class 4a property 38.34 in a city with a population of 5,000 or less, that is (1) 38.35 located outside of the metropolitan area, as defined in section 38.36 473.121, subdivision 2, or outside any county contiguous to the 39.1 metropolitan area, and (2) whose city boundary is at least 15 39.2 miles from the boundary of any city with a population greater 39.3 than 5,000 has a class rate of 2.3 percent of market valuefor39.4taxes payable in 1996 and thereafter. All other class 4a 39.5 property has a class rate of3.4three percent of market value 39.6for taxes payable in 1996 and thereafter. For purposes of this 39.7 paragraph, population has the same meaning given in section 39.8 477A.011, subdivision 3. 39.9 (b) Class 4b includes: 39.10 (1) residential real estate containing less than four 39.11 units, other than seasonal residential, and recreational; 39.12 (2) manufactured homes not classified under any other 39.13 provision; 39.14 (3) a dwelling, garage, and surrounding one acre of 39.15 property on a nonhomestead farm classified under subdivision 23, 39.16 paragraph (b). 39.17 Class 4b property has a class rate of2.8two percent of 39.18 market valuefor taxes payable in 1992, 2.5 percent of market39.19value for taxes payable in 1993, and 2.3 percent of market value39.20for taxes payable in 1994 and thereafter. 39.21 (c) Class 4c property includes: 39.22 (1) a structure that is: 39.23 (i) situated on real property that is used for housing for 39.24 the elderly or for low- and moderate-income families as defined 39.25 in Title II, as amended through December 31, 1990, of the 39.26 National Housing Act or the Minnesota housing finance agency law 39.27 of 1971, as amended, or rules promulgated by the agency and 39.28 financed by a direct federal loan or federally insured loan made 39.29 pursuant to Title II of the Act; or 39.30 (ii) situated on real property that is used for housing the 39.31 elderly or for low- and moderate-income families as defined by 39.32 the Minnesota housing finance agency law of 1971, as amended, or 39.33 rules adopted by the agency pursuant thereto and financed by a 39.34 loan made by the Minnesota housing finance agency pursuant to 39.35 the provisions of the act. 39.36 This clause applies only to property of a nonprofit or 40.1 limited dividend entity. Property is classified as class 4c 40.2 under this clause for 15 years from the date of the completion 40.3 of the original construction or substantial rehabilitation, or 40.4 for the original term of the loan. 40.5 (2) a structure that is: 40.6 (i) situated upon real property that is used for housing 40.7 lower income families or elderly or handicapped persons, as 40.8 defined in section 8 of the United States Housing Act of 1937, 40.9 as amended; and 40.10 (ii) owned by an entity which has entered into a housing 40.11 assistance payments contract under section 8 which provides 40.12 assistance for 100 percent of the dwelling units in the 40.13 structure, other than dwelling units intended for management or 40.14 maintenance personnel. Property is classified as class 4c under 40.15 this clause for the term of the housing assistance payments 40.16 contract, including all renewals, or for the term of its 40.17 permanent financing, whichever is shorter; and 40.18 (3) a qualified low-income building as defined in section 40.19 42(c)(2) of the Internal Revenue Code of 1986, as amended 40.20 through December 31, 1990, that (i) receives a low-income 40.21 housing credit under section 42 of the Internal Revenue Code of 40.22 1986, as amended through December 31, 1990; or (ii) meets the 40.23 requirements of that section and receives public financing, 40.24 except financing provided under sections 469.174 to 469.179, 40.25 which contains terms restricting the rents; or (iii) meets the 40.26 requirements of section 273.1317. Classification pursuant to 40.27 this clause is limited to a term of 15 years. The public 40.28 financing received must be from at least one of the following 40.29 sources: government issued bonds exempt from taxes under 40.30 section 103 of the Internal Revenue Code of 1986, as amended 40.31 through December 31, 1993, the proceeds of which are used for 40.32 the acquisition or rehabilitation of the building; programs 40.33 under section 221(d)(3), 202, or 236, of Title II of the 40.34 National Housing Act; rental housing program funds under Section 40.35 8 of the United States Housing Act of 1937 or the market rate 40.36 family graduated payment mortgage program funds administered by 41.1 the Minnesota housing finance agency that are used for the 41.2 acquisition or rehabilitation of the building; public financing 41.3 provided by a local government used for the acquisition or 41.4 rehabilitation of the building, including grants or loans from 41.5 federal community development block grants, HOME block grants, 41.6 or residential rental bonds issued under chapter 474A; or other 41.7 rental housing program funds provided by the Minnesota housing 41.8 finance agency for the acquisition or rehabilitation of the 41.9 building. 41.10 For all properties described in clauses (1), (2), and (3) 41.11 and in paragraph (d), the market value determined by the 41.12 assessor must be based on the normal approach to value using 41.13 normal unrestricted rents unless the owner of the property 41.14 elects to have the property assessed under Laws 1991, chapter 41.15 291, article 1, section 55. If the owner of the property elects 41.16 to have the market value determined on the basis of the actual 41.17 restricted rents, as provided in Laws 1991, chapter 291, article 41.18 1, section 55, the property will be assessed at the rate 41.19 provided for class 4a or class 4b property, as appropriate. 41.20 Properties described in clauses (1)(ii), (3), and (4) may apply 41.21 to the assessor for valuation under Laws 1991, chapter 291, 41.22 article 1, section 55. The land on which these structures are 41.23 situated has the class rate given in paragraph (b) if the 41.24 structure contains fewer than four units, and the class rate 41.25 given in paragraph (a) if the structure contains four or more 41.26 units. This clause applies only to the property of a nonprofit 41.27 or limited dividend entity. 41.28 (4) a parcel of land, not to exceed one acre, and its 41.29 improvements or a parcel of unimproved land, not to exceed one 41.30 acre, if it is owned by a neighborhood real estate trust and at 41.31 least 60 percent of the dwelling units, if any, on all land 41.32 owned by the trust are leased to or occupied by lower income 41.33 families or individuals. This clause does not apply to any 41.34 portion of the land or improvements used for nonresidential 41.35 purposes. For purposes of this clause, a lower income family is 41.36 a family with an income that does not exceed 65 percent of the 42.1 median family income for the area, and a lower income individual 42.2 is an individual whose income does not exceed 65 percent of the 42.3 median individual income for the area, as determined by the 42.4 United States Secretary of Housing and Urban Development. For 42.5 purposes of this clause, "neighborhood real estate trust" means 42.6 an entity which is certified by the governing body of the 42.7 municipality in which it is located to have the following 42.8 characteristics: 42.9 (a) it is a nonprofit corporation organized under chapter 42.10 317A; 42.11 (b) it has as its principal purpose providing housing for 42.12 lower income families in a specific geographic community 42.13 designated in its articles or bylaws; 42.14 (c) it limits membership with voting rights to residents of 42.15 the designated community; and 42.16 (d) it has a board of directors consisting of at least 42.17 seven directors, 60 percent of whom are members with voting 42.18 rights and, to the extent feasible, 25 percent of whom are 42.19 elected by resident members of buildings owned by the trust; and 42.20 (5) except as provided in subdivision 22, paragraph (c), 42.21 real property devoted to temporary and seasonal residential 42.22 occupancy for recreation purposes, including real property 42.23 devoted to temporary and seasonal residential occupancy for 42.24 recreation purposes and not devoted to commercial purposes for 42.25 more than 250 days in the year preceding the year of 42.26 assessment. For purposes of this clause, property is devoted to 42.27 a commercial purpose on a specific day if any portion of the 42.28 property is used for residential occupancy, and a fee is charged 42.29 for residential occupancy. Class 4c also includes commercial 42.30 use real property used exclusively for recreational purposes in 42.31 conjunction with class 4c property devoted to temporary and 42.32 seasonal residential occupancy for recreational purposes, up to 42.33 a total of two acres, provided the property is not devoted to 42.34 commercial recreational use for more than 250 days in the year 42.35 preceding the year of assessment and is located within two miles 42.36 of the class 4c property with which it is used. Class 4c 43.1 property classified in this clause also includes the remainder 43.2 of class 1c resorts. Owners of real property devoted to 43.3 temporary and seasonal residential occupancy for recreation 43.4 purposes and all or a portion of which was devoted to commercial 43.5 purposes for not more than 250 days in the year preceding the 43.6 year of assessment desiring classification as class 1c or 4c, 43.7 must submit a declaration to the assessor designating the cabins 43.8 or units occupied for 250 days or less in the year preceding the 43.9 year of assessment by January 15 of the assessment year. Those 43.10 cabins or units and a proportionate share of the land on which 43.11 they are located will be designated class 1c or 4c as otherwise 43.12 provided. The remainder of the cabins or units and a 43.13 proportionate share of the land on which they are located will 43.14 be designated as class 3a. The first $100,000 of the market 43.15 value of the remainder of the cabins or units and a 43.16 proportionate share of the land on which they are located shall 43.17 have a class rate of three percent. The owner of property 43.18 desiring designation as class 1c or 4c property must provide 43.19 guest registers or other records demonstrating that the units 43.20 for which class 1c or 4c designation is sought were not occupied 43.21 for more than 250 days in the year preceding the assessment if 43.22 so requested. The portion of a property operated as a (1) 43.23 restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 43.24 facility operated on a commercial basis not directly related to 43.25 temporary and seasonal residential occupancy for recreation 43.26 purposes shall not qualify for class 1c or 4c; 43.27 (6) real property up to a maximum of one acre of land owned 43.28 by a nonprofit community service oriented organization; provided 43.29 that the property is not used for a revenue-producing activity 43.30 for more than six days in the calendar year preceding the year 43.31 of assessment and the property is not used for residential 43.32 purposes on either a temporary or permanent basis. For purposes 43.33 of this clause, a "nonprofit community service oriented 43.34 organization" means any corporation, society, association, 43.35 foundation, or institution organized and operated exclusively 43.36 for charitable, religious, fraternal, civic, or educational 44.1 purposes, and which is exempt from federal income taxation 44.2 pursuant to section 501(c)(3), (10), or (19) of the Internal 44.3 Revenue Code of 1986, as amended through December 31, 1990. For 44.4 purposes of this clause, "revenue-producing activities" shall 44.5 include but not be limited to property or that portion of the 44.6 property that is used as an on-sale intoxicating liquor or 3.2 44.7 percent malt liquor establishment licensed under chapter 340A, a 44.8 restaurant open to the public, bowling alley, a retail store, 44.9 gambling conducted by organizations licensed under chapter 349, 44.10 an insurance business, or office or other space leased or rented 44.11 to a lessee who conducts a for-profit enterprise on the 44.12 premises. Any portion of the property which is used for 44.13 revenue-producing activities for more than six days in the 44.14 calendar year preceding the year of assessment shall be assessed 44.15 as class 3a. The use of the property for social events open 44.16 exclusively to members and their guests for periods of less than 44.17 24 hours, when an admission is not charged nor any revenues are 44.18 received by the organization shall not be considered a 44.19 revenue-producing activity; 44.20 (7) post-secondary student housing of not more than one 44.21 acre of land that is owned by a nonprofit corporation organized 44.22 under chapter 317A and is used exclusively by a student 44.23 cooperative, sorority, or fraternity for on-campus housing or 44.24 housing located within two miles of the border of a college 44.25 campus; and 44.26 (8) manufactured home parks as defined in section 327.14, 44.27 subdivision 3. 44.28 Class 4c property has a class rate of 2.3 percent of market 44.29 value, except that (i) for each parcel of seasonal residential 44.30 recreational property not used for commercial purposes under 44.31 clause (5) the first $72,000 of market value on each parcel has 44.32 a class rate of 1.9 percent for taxes payable in 1997 and 1.8 44.33 percent for taxes payable in 1998 and thereafter, and the market 44.34 value of each parcel that exceeds $72,000 has a class rate of 44.35 2.5 percent, and (ii) manufactured home parks assessed under 44.36 clause (8) have a class rate of two percent for taxes payable in 45.1 1996, and thereafter. 45.2 (d) Class 4d property includes: 45.3 (1) a structure that is: 45.4 (i) situated on real property that is used for housing for 45.5 the elderly or for low and moderate income families as defined 45.6 by the Farmers Home Administration; 45.7 (ii) located in a municipality of less than 10,000 45.8 population; and 45.9 (iii) financed by a direct loan or insured loan from the 45.10 Farmers Home Administration. Property is classified under this 45.11 clause for 15 years from the date of the completion of the 45.12 original construction or for the original term of the loan. 45.13 The class rates in paragraph (c), clauses (1), (2), and (3) 45.14 and this clause apply to the properties described in them, only 45.15 in proportion to occupancy of the structure by elderly or 45.16 handicapped persons or low and moderate income families as 45.17 defined in the applicable laws unless construction of the 45.18 structure had been commenced prior to January 1, 1984; or the 45.19 project had been approved by the governing body of the 45.20 municipality in which it is located prior to June 30, 1983; or 45.21 financing of the project had been approved by a federal or state 45.22 agency prior to June 30, 1983. For those properties, 4c or 4d 45.23 classification is available only for those units meeting the 45.24 requirements of section 273.1318. 45.25 Classification under this clause is only available to 45.26 property of a nonprofit or limited dividend entity. 45.27 In the case of a structure financed or refinanced under any 45.28 federal or state mortgage insurance or direct loan program 45.29 exclusively for housing for the elderly or for housing for the 45.30 handicapped, a unit shall be considered occupied so long as it 45.31 is actually occupied by an elderly or handicapped person or, if 45.32 vacant, is held for rental to an elderly or handicapped person. 45.33 (2) For taxes payable in 1992, 1993, and 1994, only, 45.34 buildings and appurtenances, together with the land upon which 45.35 they are located, leased by the occupant under the community 45.36 lending model lease-purchase mortgage loan program administered 46.1 by the Federal National Mortgage Association, provided the 46.2 occupant's income is no greater than 60 percent of the county or 46.3 area median income, adjusted for family size and the building 46.4 consists of existing single family or duplex housing. The lease 46.5 agreement must provide for a portion of the lease payment to be 46.6 escrowed as a nonrefundable down payment on the housing. To 46.7 qualify under this clause, the taxpayer must apply to the county 46.8 assessor by May 30 of each year. The application must be 46.9 accompanied by an affidavit or other proof required by the 46.10 assessor to determine qualification under this clause. 46.11 (3) Qualifying buildings and appurtenances, together with 46.12 the land upon which they are located, leased for a period of up 46.13 to five years by the occupant under a lease-purchase program 46.14 administered by the Minnesota housing finance agency or a 46.15 housing and redevelopment authority authorized under sections 46.16 469.001 to 469.047, provided the occupant's income is no greater 46.17 than 80 percent of the county or area median income, adjusted 46.18 for family size, and the building consists of two or less 46.19 dwelling units. The lease agreement must provide for a portion 46.20 of the lease payment to be escrowed as a nonrefundable down 46.21 payment on the housing. The administering agency shall verify 46.22 the occupants income eligibility and certify to the county 46.23 assessor that the occupant meets the income criteria under this 46.24 paragraph. To qualify under this clause, the taxpayer must 46.25 apply to the county assessor by May 30 of each year. For 46.26 purposes of this section, "qualifying buildings and 46.27 appurtenances" shall be defined as one or two unit residential 46.28 buildings which are unoccupied and have been abandoned and 46.29 boarded for at least six months. 46.30 Class 4d property has a class rate of two percent of market 46.31 value except that property classified under clause (3), shall 46.32 have the same class rate as class 1a property. 46.33 (e) Residential rental property that would otherwise be 46.34 assessed as class 4 property under paragraph (a); paragraph (b), 46.35 clauses (1) and (3); paragraph (c), clause (1), (2), (3), or 46.36 (4), is assessed at the class rate applicable to it under 47.1 Minnesota Statutes 1988, section 273.13, if it is found to be a 47.2 substandard building under section 273.1316. Residential rental 47.3 property that would otherwise be assessed as class 4 property 47.4 under paragraph (d) is assessed at 2.3 percent of market value 47.5 if it is found to be a substandard building under section 47.6 273.1316. 47.7 Sec. 3. [TIF GRANTS; APPROPRIATIONS.] 47.8 (a) The commissioner of revenue shall pay grants to 47.9 municipalities for deficits in tax increment financing districts 47.10 caused by the changes in class rates under this article. 47.11 Municipalities must submit applications for the grants in a form 47.12 prescribed by the commissioner by no later than March 1 for 47.13 taxes payable during the calendar year. The maximum grant 47.14 equals the lesser of: 47.15 (1) the reduction in the tax increment financing district's 47.16 revenues derived from increment resulting from the class rate 47.17 reductions under this article; and 47.18 (2) the municipality's total available tax increments, 47.19 including those from previous years, less the amount due during 47.20 the calendar year to pay bonds issued and sold before and 47.21 binding contracts entered into before the day following final 47.22 enactment of this act. 47.23 If the total applications for grants exceed the amount 47.24 available under the appropriation, the commissioner shall 47.25 proportionately reduce the grant for each municipality. These 47.26 grants are available for calendar years 1998, 1999, and 2000. 47.27 (b) $19,000,000 is appropriated to the commissioner of 47.28 revenue for purposes of this section. This appropriation does 47.29 not cancel until June 30, 2001. 47.30 Sec. 4. [EFFECTIVE DATE.] 47.31 (a) The provisions of this article take effect as provided 47.32 in paragraph (b) only if the constitutional amendment proposed 47.33 to the people by article 1, section 1, is adopted in the 1996 47.34 general election. 47.35 (b) Sections 1 and 2 are effective for taxes payable in 47.36 1998 and subsequent years. 48.1 ARTICLE 4 48.2 LOCAL GOVERNMENT AID 48.3 Section 1. Minnesota Statutes 1994, section 477A.011, is 48.4 amended by adding a subdivision to read: 48.5 Subd. 32a. [POVERTY PERCENTAGE.] "Poverty percentage" for 48.6 a city is 100 times the ratio of the number of households below 48.7 the poverty line to the total number of households in the city 48.8 according to the most recent federal census. 48.9 Sec. 2. Minnesota Statutes 1994, section 477A.011, is 48.10 amended by adding a subdivision to read: 48.11 Subd. 33a. [SPRAWL AREA.] "Sprawl area" is the area of a 48.12 circle centered around a city's geographic center. The radius 48.13 of the circle, in miles, is equal to the sum of (1) 3.5 and (2) 48.14 0.00004 times the city's 1990 population. 48.15 Sec. 3. Minnesota Statutes 1994, section 477A.011, is 48.16 amended by adding a subdivision to read: 48.17 Subd. 33b. [ADJUSTED POPULATION.] For a city with a 48.18 population of 5,000 or more which is located outside of the 48.19 metropolitan area, the "adjusted population" is equal to the 48.20 city's population plus the sum of the 1990 population, outside 48.21 of any city boundary, that is located within the sprawl area for 48.22 that city. If two or more cities have overlapping sprawl areas, 48.23 the population in the overlapping area that is outside of any 48.24 city limits shall be divided between the cities based on each 48.25 city's 1990 population compared to the total population of the 48.26 affected cities. For a city with a population less than 5,000 48.27 or a city located in the metropolitan area, adjusted population 48.28 is equal to the city's population. 48.29 Sec. 4. Minnesota Statutes 1994, section 477A.011, is 48.30 amended by adding a subdivision to read: 48.31 Subd. 33c. [CITY DECLINE FACTOR.] "City decline factor" 48.32 for a city is the product of the city's (1) pre-1940 housing 48.33 percentage, (2) commercial industrial percentage, and (3) 48.34 population decline percentage. 48.35 Sec. 5. Minnesota Statutes 1994, section 477A.011, 48.36 subdivision 34, is amended to read: 49.1 Subd. 34. [CITY REVENUE NEED.] (a) For a city with a 49.2 population equal to or greater than 2,500, "city revenue need" 49.3 is the sum of (1)3.4623126.110762 times the pre-1940 housing 49.4 percentage; plus (2)2.0938265.744915 times the commercial 49.5 industrial percentage; plus (3)6.8625520.024686 times the 49.6populationcity declinepercentagefactor; plus 49.7 (4).000269.784552 times thecity population; plus (5) 152.014149.8 poverty percentage. 49.9 (b) For a city with a population less than 2,500, "city 49.10 revenue need" is the sum of (1) 1.795919 times the pre-1940 49.11 housing percentage; plus (2) 1.562138 times the commercial 49.12 industrial percentage; plus (3) 4.177568 times the population 49.13 decline percentage; plus (4) 1.04013 times the transformed 49.14 population; minus (5) 107.475. 49.15 (c) The city revenue need cannot be less than zero. 49.16 (d) For calendar year 1995 and subsequent years, the city 49.17 revenue need for a city with a population less than 2,500, as 49.18 determined in paragraphs(a) to(b) and (c), is multiplied by 49.19 the ratio of the annual implicit price deflator for state and 49.20 local government purchases, as prepared by the United States 49.21 Department of Commerce, for the most recently available year to 49.22 the 1993 implicit price deflator for state and local government 49.23 purchases. 49.24 (e) For calendar year 1998 and subsequent years, the city 49.25 revenue need for a city with a population of 2,500 or more, as 49.26 determined in paragraphs (a) and (c), is multiplied by the ratio 49.27 of the annual implicit price deflator for state and local 49.28 government purchases, as prepared by the United States 49.29 Department of Commerce, for the most recent available year to 49.30 the 1996 implicit price deflator for state and local government 49.31 purchases. 49.32 (f) For cities with a population of 1,200 or less which are 49.33 located in a tax relief area, as defined in section 273.134, the 49.34 city revenue need determined under paragraphs (a) to (e) shall 49.35 be increased by 50 percent. 49.36 Sec. 6. Minnesota Statutes 1994, section 477A.013, 50.1 subdivision 8, is amended to read: 50.2 Subd. 8. [CITY FORMULA AID.] In calendar year19941997 50.3 and subsequent years, the formula aid for a city is equal to the 50.4 product of (1) the need increase percentagemultiplied by the50.5difference between (1)(2) the city's revenue need multiplied by 50.6 its adjusted population, and(2) the city's net tax capacity50.7multiplied by the tax effort rate(3) the square root of the 50.8 difference between (i) 4.14 and (ii) the ratio of the city's net 50.9 tax capacity to 215.06. No city may have a formula aid amount 50.10 less than zero. The need increase percentage must be the same 50.11 for all cities. 50.12Notwithstanding the prior sentence, in 1995 only, the need50.13increase percentage for a city shall be twice the need increase50.14percentage applicable to other cities if:50.15(1) the city, in 1992 or 1993, transferred an amount from50.16governmental funds to their sewer and water fund, and50.17(2) the amount transferred exceeded their net levy for50.18taxes payable in the year in which the transfer occurred.50.19 The applicable need increase percentageor percentagesmust 50.20 be calculated by the department of revenue so that the total of 50.21 the aid under subdivision 9 equals the total amount available 50.22 for aid under section 477A.03. 50.23 Sec. 7. Minnesota Statutes 1994, section 477A.013, 50.24 subdivision 9, is amended to read: 50.25 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 50.26 1994 and thereafter, each city shall receive an aid distribution 50.27 equal tothe sum of (1) the city formula aid under subdivision50.288, and (2) its city aid baseits city formula aid, subject to 50.29 the limits in paragraphs (b) and (c). 50.30 (b)The percentage increase for a first class city in50.31calendar year 1995 and thereafter shall not exceed the50.32percentage increase in the sum of the aid to all cities under50.33this section in the current calendar year compared to the sum of50.34the aid to all cities in the previous year.50.35(c)The total aid for any city, except a first class city,50.36 shall not exceed the sum of (1)ten17 percent of the city's net 51.1 levy for the year prior to the aid distribution plus (2) its 51.2 total aid in the previous year before anyincreases ordecreases 51.3 undersections 16A.711, subdivision 5, andsection 477A.0132. 51.4(d) Notwithstanding paragraph (c), in 1995 only, for cities51.5which in 1992 or 1993 transferred an amount from governmental51.6funds to their sewer and water fund in an amount greater than51.7their net levy for taxes payable in the year in which the51.8transfer occurred, the total aid shall not exceed the sum of (1)51.920 percent of the city's net levy for the year prior to the aid51.10distribution plus (2) its total aid in the previous year before51.11any increases or decreases under sections 16A.711, subdivision51.125, and 477A.0132.51.13 (c) Notwithstanding paragraphs (a) and (b), if a city with 51.14 a population of 2,500 or more has a reduction in its net tax 51.15 capacity of 20 percent or more in an assessment year compared to 51.16 the previous year, the following limits and minimums shall apply: 51.17 (1) for aid distributed in the year immediately following 51.18 the assessment year of the net tax capacity loss, the aid may 51.19 not increase by more than an amount equal to the product of (i) 51.20 17 percent plus a percent equal to the percent loss in net tax 51.21 capacity and (ii) the city's net levy for the year prior to the 51.22 aid distribution; 51.23 (2) for aid distributed in the five years following the 51.24 assessment year of the net tax capacity loss, the aid may not be 51.25 less than an amount equal to the following: 51.26 (i) for the first year, the amount of the net tax capacity 51.27 loss multiplied by the city tax rate from the previous year; 51.28 (ii) for the second year, 80 percent of the minimum amount 51.29 guaranteed in the first year; 51.30 (iii) for the third year, 60 percent of the minimum amount 51.31 guaranteed in the first year; 51.32 (iv) for the fourth year, 40 percent of the minimum amount 51.33 guaranteed in the first year; 51.34 (v) for the fifth year, 20 percent of the minimum amount 51.35 guaranteed in the first year. 51.36 A city must notify the commissioner of revenue by July 1 of 52.1 the year prior to the first year it would qualify for provisions 52.2 under this paragraph in order to be eligible for aid adjustments 52.3 under this paragraph. The city must also furnish the 52.4 commissioner with any information needed to administer the 52.5 provisions of this paragraph. 52.6 Sec. 8. Minnesota Statutes 1995 Supplement, section 52.7 477A.03, subdivision 2, is amended to read: 52.8 Subd. 2. [ANNUAL APPROPRIATION.] A sum sufficient to 52.9 discharge the duties imposed by sections 477A.011 to 477A.014 is 52.10 annually appropriated from the general fund to the commissioner 52.11 of revenue. For aids payable in19961997 and thereafter, the 52.12 total aids paid under sections477A.013, subdivision 9,52.13 477A.0121 and 477A.0122 are the amounts certified to be paid in 52.14 the previous year, adjusted for inflation as provided under 52.15 subdivision 3. Aid payments tocountiescities under section 52.16477A.0121477A.013, subdivision 9, are limited to$20,265,000 in52.171996$400,000,000 in 1997. For aid payable in19971998 and 52.18 thereafter, the total aids paid under section477A.012152.19 477A.013, subdivision 9, are the amounts certified to be paid in 52.20 the previous year, adjusted for inflation as provided under 52.21 subdivision 3. 52.22 Sec. 9. [REPEALER.] 52.23 Minnesota Statutes 1994, sections 477A.011, subdivisions 35 52.24 and 37; 477A.013, subdivision 6; and 477A.014, subdivision 1a; 52.25 and Minnesota Statutes 1995 Supplement, section 477A.011, 52.26 subdivision 36, are repealed. 52.27 Sec. 10. [EFFECTIVE DATE.] 52.28 (a) The provisions of this article take effect as provided 52.29 in paragraph (b) only if the constitutional amendment proposed 52.30 to the people by article 1, section 1, is adopted in the 1996 52.31 general election. 52.32 (b) Sections 1 to 9 are effective for aids payable in 1997 52.33 and thereafter. 52.34 ARTICLE 5 52.35 PROPERTY TAX REFUND 52.36 Section 1. Minnesota Statutes 1995 Supplement, section 53.1 290A.03, subdivision 6, is amended to read: 53.2 Subd. 6. [HOMESTEAD.] "Homestead" means any one of the 53.3 following: 53.4 (1) The dwelling occupied as the claimant's principal 53.5 residence and so much of the land surrounding it, not exceeding 53.6 ten acres, as is reasonably necessary for use of the dwelling as 53.7 a home and any other property used for purposes of a homestead 53.8 as defined in section 273.13, subdivision 22, except for53.9agricultural land assessed as part of a homestead pursuant to53.10section 273.13, subdivision 23, "homestead" is limited to 32053.11acres or, where the farm homestead is rented, one acre. The 53.12 homestead may be owned or rented and may be a part of a 53.13 multidwelling or multipurpose building and the land on which it 53.14 is built. 53.15 (2) The house, garage, and immediately surrounding one acre 53.16 of land, in the case of an agricultural homestead classified 53.17 under section 273.13, subdivision 23. 53.18 (3) A manufactured home, as defined in section 273.125, 53.19 subdivision 8, or a park trailer taxed as a manufactured home 53.20 under section 168.012, subdivision 9, assessed as personal 53.21 property may be a dwelling for purposes of this subdivision. 53.22 Sec. 2. Minnesota Statutes 1994, section 290A.03, is 53.23 amended by adding a subdivision to read: 53.24 Subd. 6a. [FARM HOMESTEAD.] "Farm homestead" means the 53.25 house occupied as the claimant's principal residence, garage, 53.26 and up to 320 acres of the agricultural land assessed as part of 53.27 the homestead under section 273.13, subdivision 23, paragraph 53.28 (a), including any other improvements located on the land. 53.29 Sec. 3. Minnesota Statutes 1995 Supplement, section 53.30 290A.03, subdivision 13, is amended to read: 53.31 Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes 53.32 payable" means the property tax exclusive of special 53.33 assessments, penalties, and interest payable on a claimant's 53.34 homestead or farm homestead before reductions made under section 53.35 273.13 but after deductions made under sections 273.135, 53.36 273.1391, 273.42, subdivision 2, and any other state paid 54.1 property tax credits in any calendar year. In the case of a 54.2 claimant who makes ground lease payments, "property taxes 54.3 payable" includes the amount of the payments directly 54.4 attributable to the property taxes assessed against the parcel 54.5 on which the house is located. No apportionment or reduction of 54.6 the "property taxes payable" shall be required for the use of a 54.7 portion of the claimant's homestead or farm homestead for a 54.8 business purpose if the claimant does not deduct any business 54.9 depreciation expenses for the use of a portion of the 54.10 homestead or farm homestead in the determination of federal 54.11 adjusted gross income. For homesteads which are manufactured 54.12 homes as defined in section 273.125, subdivision 8, and for 54.13 homesteads which are park trailers taxed as manufactured homes 54.14 under section 168.012, subdivision 9, "property taxes payable" 54.15 shall also include the amount of the gross rent paid in the 54.16 preceding year for the site on which the homestead is located, 54.17 which is attributable to the net tax paid on the site. The 54.18 amount attributable to property taxes shall be determined by 54.19 multiplying the net tax on the parcel by a fraction, the 54.20 numerator of which is the gross rent paid for the calendar year 54.21 for the site and the denominator of which is the gross rent paid 54.22 for the calendar year for the parcel. When a homestead or farm 54.23 homestead is owned by two or more persons as joint tenants or 54.24 tenants in common, such tenants shall determine between them 54.25 which tenant may claim the property taxes payable on the 54.26 homestead or farm homestead. If they are unable to agree, the 54.27 matter shall be referred to the commissioner of revenue whose 54.28 decision shall be final. Property taxes are considered payable 54.29 in the year prescribed by law for payment of the taxes. 54.30 In the case of a claim relating to "property taxes 54.31 payable," the claimant must have owned and occupied the 54.32 homestead or farm homestead on January 2 of the year in which 54.33 the tax is payable and (i) the property must have been 54.34 classified as homestead property pursuant to section 273.13, 54.35 subdivision 22 or 23, on or before December 15 of the assessment 54.36 year to which the "property taxes payable" relate; or (ii) the 55.1 claimant must provide documentation from the local assessor that 55.2 application for homestead classification has been made on or 55.3 before December 15 of the year in which the "property taxes 55.4 payable" were payable and that the assessor has approved the 55.5 application. 55.6 Sec. 4. Minnesota Statutes 1994, section 290A.04, 55.7 subdivision 1, is amended to read: 55.8 Subdivision 1. A refund shall be allowed each claimant in 55.9 the amount that property taxes payable or rent constituting 55.10 property taxes exceed the percentage of the household income of 55.11 the claimant specified in subdivision 2or, 2a, or 2j in the 55.12 year for which the taxes were levied or in the year in which the 55.13 rent was paid as specified in subdivision 2or, 2a, or 2j. If 55.14 the amount of property taxes payable or rent constituting 55.15 property taxes is equal to or less than the percentage of the 55.16 household income of the claimant specified in subdivision 2or, 55.17 2a, or 2j in the year for which the taxes were levied or in the 55.18 year in which the rent was paid, the claimant shall not be 55.19 eligible for a state refund pursuant to this section. A 55.20 claimant whose property taxes payable relate to a farm homestead 55.21 may choose to use either: 55.22 (1) the property taxes payable on the homestead as defined 55.23 in section 290A.03, subdivision 6, to calculate and claim a 55.24 refund using the schedule in subdivision 2; or 55.25 (2) the property taxes payable on the farm homestead as 55.26 defined in section 290A.03, subdivision 6a, to calculate and 55.27 claim a refund using the schedule in subdivision 2j. 55.28 Sec. 5. Minnesota Statutes 1994, section 290A.04, 55.29 subdivision 2, is amended to read: 55.30 Subd. 2. [HOMEOWNERS.] A claimant whose property taxes 55.31 payable are in excess of the percentage of the household income 55.32 stated below shall pay an amount equal to the percent of income 55.33 shown for the appropriate household income level along with the 55.34 percent to be paid by the claimant of the remaining amount of 55.35 property taxes payable. The state refund equals the amount of 55.36 property taxes payable that remain, up to the state refund 56.1 amount shown below. 56.2 Percent Percent Maximum 56.3 Household Income of Income Paid by State 56.4 Claimant Refund 56.5$0 to 1,0291.2 percent18 percent$44056.61,030 to 2,0591.3 percent18 percent$44056.72,060 to 3,0991.4 percent20 percent$44056.83,100 to 4,1291.6 percent20 percent$44056.94,130 to 5,1591.7 percent20 percent$44056.105,160 to 7,2291.9 percent25 percent$44056.117,230 to 8,2592.1 percent25 percent$44056.128,260 to 9,2892.2 percent25 percent$44056.139,290 to 10,3192.3 percent30 percent$44056.1410,320 to 11,3492.4 percent30 percent$44056.1511,350 to 12,3892.5 percent30 percent$44056.1612,390 to 14,4492.6 percent30 percent$44056.1714,450 to 15,4792.8 percent35 percent$44056.1815,480 to 16,5093.0 percent35 percent$44056.1916,510 to 17,5493.2 percent40 percent$44056.2017,550 to 21,6693.3 percent40 percent$44056.2121,670 to 24,7693.4 percent45 percent$44056.2224,770 to 30,9593.5 percent45 percent$44056.2330,960 to 36,1193.5 percent45 percent$44056.2436,120 to 41,2793.7 percent50 percent$44056.2541,280 to 58,8294.0 percent50 percent$44056.2658,830 to 59,8594.0 percent50 percent$31056.2759,860 to 60,8894.0 percent50 percent$21056.2860,890 to 61,9294.0 percent50 percent$10056.29 $0 to 1,059 1.2 percent 18 percent $850 56.30 1,060 to 2,119 1.3 percent 18 percent $850 56.31 2,120 to 3,188 1.4 percent 20 percent $850 56.32 3,189 to 4,247 1.6 percent 20 percent $850 56.33 4,248 to 5,307 1.7 percent 20 percent $850 56.34 5,308 to 7,435 1.9 percent 25 percent $850 56.35 7,436 to 8,495 2.1 percent 25 percent $850 56.36 8,496 to 9,554 2.2 percent 25 percent $850 56.37 9,555 to 10,613 2.3 percent 30 percent $850 56.38 10,614 to 11,673 2.4 percent 30 percent $850 56.39 11,674 to 12,742 2.5 percent 30 percent $850 56.40 12,743 to 14,861 2.6 percent 30 percent $850 56.41 14,862 to 15,920 2.8 percent 35 percent $850 56.42 15,921 to 16,979 3.0 percent 35 percent $850 56.43 16,980 to 18,049 3.2 percent 40 percent $850 56.44 18,050 to 22,286 3.3 percent 40 percent $850 56.45 22,287 to 25,474 3.4 percent 45 percent $850 56.46 25,475 to 31,840 3.5 percent 45 percent $850 56.47 31,841 to 37,147 3.5 percent 45 percent $850 56.48 37,148 to 42,453 3.7 percent 50 percent $850 56.49 42,454 to 60,502 4.0 percent 50 percent $850 56.50 60,503 to 61,561 4.0 percent 50 percent $600 56.51 61,562 to 62,621 4.0 percent 50 percent $300 56.52 62,622 to 63,689 4.0 percent 50 percent $100 56.53 The payment made to a claimant shall be the amount of the 56.54 state refund calculated under this subdivision. No payment is 56.55 allowed if the claimant's household income is$61,930$63,690 or 56.56 more. 56.57 Sec. 6. Minnesota Statutes 1994, section 290A.04, 56.58 subdivision 2a, is amended to read: 56.59 Subd. 2a. [RENTERS.] A claimant whose rent constituting 56.60 property taxes exceeds the percentage of the household income 56.61 stated below must pay an amount equal to the percent of income 57.1 shown for the appropriate household income level along with the 57.2 percent to be paid by the claimant of the remaining amount of 57.3 rent constituting property taxes. The state refund equals the 57.4 amount of rent constituting property taxes that remain, up to 57.5 the maximum state refund amount shown below. 57.6 Percent Percent Maximum 57.7 Household Income of Income Paid by State 57.8 Claimant Refund 57.9$0 to 3,0991.0 percent5 percent$1,03057.103,100 to 4,1291.0 percent10 percent$1,03057.114,130 to 5,1591.1 percent10 percent$1,03057.125,160 to 7,2291.2 percent10 percent$1,03057.137,230 to 9,2891.3 percent15 percent$1,03057.149,290 to 10,3191.4 percent15 percent$1,03057.1510,320 to 11,3491.4 percent20 percent$1,03057.1611,350 to 13,4191.5 percent20 percent$1,03057.1713,420 to 14,4491.6 percent20 percent$1,03057.1814,450 to 15,4791.7 percent25 percent$1,03057.1915,480 to 17,5491.8 percent25 percent$1,03057.2017,550 to 18,5791.9 percent30 percent$1,03057.2118,580 to 19,6092.0 percent30 percent$1,03057.2219,610 to 20,6392.2 percent30 percent$1,03057.2320,640 to 21,6692.4 percent30 percent$1,03057.2421,670 to 22,7092.6 percent35 percent$1,03057.2522,710 to 23,7392.7 percent35 percent$1,03057.2623,740 to 24,7692.8 percent35 percent$1,03057.2724,770 to 25,7992.9 percent40 percent$1,03057.2825,800 to 26,8393.0 percent40 percent$1,03057.2926,840 to 27,8693.1 percent40 percent$1,03057.3027,870 to 28,8993.2 percent40 percent$1,03057.3128,900 to 29,9293.3 percent45 percent$93057.3229,930 to 30,9593.4 percent45 percent$83057.3330,960 to 31,9993.5 percent45 percent$72057.3432,000 to 33,0293.5 percent50 percent$62057.3533,030 to 34,0593.5 percent50 percent$52057.3634,060 to 35,0893.5 percent50 percent$31057.3735,090 to 36,1193.5 percent50 percent$10057.38 $0 to 3,189 1.0 percent 5 percent $2,000 57.39 3,190 to 4,249 1.0 percent 10 percent $2,000 57.40 4,250 to 6,369 1.1 percent 10 percent $2,000 57.41 6,370 to 7,439 1.2 percent 10 percent $2,000 57.42 7,440 to 9,549 1.3 percent 10 percent $2,000 57.43 9,550 to 10,609 1.4 percent 10 percent $2,000 57.44 10,610 to 11,669 1.4 percent 10 percent $2,000 57.45 11,670 to 13,799 1.5 percent 10 percent $2,000 57.46 13,800 to 14,859 1.6 percent 10 percent $2,000 57.47 14,860 to 15,919 1.7 percent 10 percent $2,000 57.48 15,920 to 18,049 1.8 percent 10 percent $2,000 57.49 18,050 to 19,109 1.9 percent 10 percent $2,000 57.50 19,110 to 20,169 2.0 percent 10 percent $2,000 57.51 20,170 to 21,229 2.2 percent 15 percent $2,000 57.52 21,230 to 22,289 2.4 percent 15 percent $2,000 57.53 22,290 to 23,359 2.6 percent 15 percent $2,000 57.54 23,360 to 24,419 2.7 percent 15 percent $2,000 57.55 24,420 to 25,469 2.8 percent 15 percent $2,000 57.56 25,470 to 26,529 2.9 percent 20 percent $2,000 57.57 25,530 to 27,599 3.0 percent 20 percent $2,000 57.58 27,600 to 28,659 3.1 percent 20 percent $2,000 57.59 28,660 to 29,719 3.2 percent 20 percent $2,000 57.60 27,720 to 30,779 3.3 percent 25 percent $1,920 57.61 30,780 to 31,839 3.4 percent 25 percent $1,700 57.62 31,840 to 32,909 3.5 percent 25 percent $1,480 57.63 32,910 to 33,969 3.5 percent 30 percent $1,280 57.64 33,970 to 35,029 3.5 percent 30 percent $1,080 57.65 35,030 to 37,149 3.5 percent 30 percent $ 640 57.66 36,090 to 39,999 3.5 percent 30 percent $ 200 58.1 The payment made to a claimant is the amount of the state 58.2 refund calculated under this subdivision. No payment is allowed 58.3 if the claimant's household income is$36,120$40,000 or more. 58.4 Sec. 7. Minnesota Statutes 1994, section 290A.04, is 58.5 amended by adding a subdivision to read: 58.6 Subd. 2j. [FARM HOMESTEADS.] A claimant whose property 58.7 taxes payable relate to a farm homestead and are in excess of 58.8 the percentage of the household income stated in this 58.9 subdivision shall pay an amount equal to the percent of income 58.10 shown for the appropriate household income level along with the 58.11 percent to be paid by the claimant of the remaining amount of 58.12 property taxes payable. The state refund equals the amount of 58.13 property taxes payable that remain, up to the state refund 58.14 amount shown in this subdivision. 58.15 Household Income Percent Percent Maximum 58.16 of Income Paid by State 58.17 Claimant Refund 58.18 $0 to 1,059 1.2 percent 18 percent $500 58.19 1,060 to 2,119 1.3 percent 18 percent $500 58.20 2,120 to 3,188 1.4 percent 20 percent $500 58.21 3,189 to 4,247 1.6 percent 20 percent $500 58.22 4,248 to 5,307 1.7 percent 20 percent $500 58.23 5,308 to 7,435 1.9 percent 25 percent $500 58.24 7,436 to 8,495 2.1 percent 25 percent $500 58.25 8,496 to 9,554 2.2 percent 25 percent $500 58.26 9,555 to 10,613 2.3 percent 30 percent $500 58.27 10,614 to 11,673 2.4 percent 30 percent $500 58.28 11,674 to 12,742 2.5 percent 30 percent $500 58.29 12,743 to 14,861 2.6 percent 30 percent $500 58.30 14,862 to 15,920 2.8 percent 35 percent $500 58.31 15,921 to 16,979 3.0 percent 35 percent $500 58.32 16,980 to 18,049 3.2 percent 40 percent $500 58.33 18,050 to 22,286 3.3 percent 40 percent $500 58.34 22,287 to 25,474 3.4 percent 45 percent $500 58.35 25,475 to 31,840 3.5 percent 45 percent $500 58.36 31,841 to 37,147 3.5 percent 45 percent $500 58.37 37,148 to 42,453 3.7 percent 50 percent $500 58.38 42,454 to 60,502 4.0 percent 50 percent $500 58.39 60,503 to 61,561 4.0 percent 50 percent $400 58.40 61,562 to 62,621 4.0 percent 50 percent $300 58.41 62,622 to 63,689 4.0 percent 50 percent $100 58.42 The payment made to a claimant shall be the amount of the 58.43 state refund calculated under this subdivision. No payment is 58.44 allowed if the claimant's household income is $63,690 or more. 58.45 Sec. 8. Minnesota Statutes 1995 Supplement, section 58.46 290A.04, subdivision 6, is amended to read: 58.47 Subd. 6. [INFLATION ADJUSTMENT.] Beginning for property 58.48 tax refunds payable in calendar year19961998, the commissioner 59.1 shall annually adjust the dollar amounts of the income 59.2 thresholds and the maximum refunds under subdivisions 2and, 2a, 59.3 and 2j for inflation. The commissioner shall make the inflation 59.4 adjustments in accordance with section 290.06, subdivision 2d, 59.5 except that for purposes of this subdivision the percentage 59.6 increase shall be determined from the year ending on August 31, 59.719941996, to the year ending on August 31 of the year preceding 59.8 that in which the refund is payable. The commissioner shall use 59.9 the appropriate percentage increase to annually adjust the 59.10 income thresholds and maximum refunds under subdivisions 2and, 59.11 2a, and 2j for inflation without regard to whether or not the 59.12 income tax brackets are adjusted for inflation in that year. 59.13 The commissioner shall round the thresholds and the maximum 59.14 amounts, as adjusted to the nearest $10 amount. If the amount 59.15 ends in $5, the commissioner shall round it up to the next $10 59.16 amount. 59.17 The commissioner shall annually announce the adjusted 59.18 refund schedule at the same time provided under section 290.06. 59.19 The determination of the commissioner under this subdivision is 59.20 not a rule under the administrative procedure act. 59.21 Sec. 9. [EFFECTIVE DATE.] 59.22 (a) The provisions of this article take effect as provided 59.23 in paragraph (b) only if the constitutional amendment proposed 59.24 to the people by article 1, section 1, is adopted in the 1996 59.25 general election. 59.26 (b) Sections 1 to 8 are effective for refunds claimed for 59.27 property taxes payable in 1997 and thereafter. 59.28 ARTICLE 6 59.29 SALES TAX 59.30 Section 1. [290.0692] [REFUNDABLE SALES TAX CREDIT.] 59.31 Subdivision 1. [CREDIT ALLOWED.] For each taxable year, an 59.32 individual may claim a credit against the tax imposed by this 59.33 chapter equal to $25 multiplied by each exemption for the 59.34 taxpayer, spouse, and each dependent of the taxpayer. The 59.35 maximum allowable credit is $150. For married individuals 59.36 filing separately, the maximum allowable credit is $75. 60.1 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 60.2 the following terms have the meanings given. 60.3 (b) "Exemption" means an exemption allowed under section 60.4 151 of the Internal Revenue Code. 60.5 (c) "Income" means income as defined in section 290.067, 60.6 subdivision 2a. 60.7 (d) "Taxpayer" excludes one who is claimed as a dependent 60.8 on another's federal income tax return or who would qualify to 60.9 be claimed as a dependent on the tax return of another, 60.10 regardless of whether a return was filed. 60.11 Subd. 3. [INCOME PHASE-OUT.] The amount of the credit is 60.12 reduced by five percentage points for each $500 or part of $500 60.13 of income above $15,000. No credit is allowed if income exceeds 60.14 $25,000. 60.15 Subd. 4. [CREDIT REFUNDABLE.] If the amount of the credit 60.16 exceeds the taxpayer's liability under this chapter, the 60.17 commissioner shall refund the excess to the taxpayer. 60.18 Subd. 5. [INFLATION ADJUSTMENT.] The commissioner shall 60.19 adjust the dollar amounts in subdivisions 1 and 3 for inflation, 60.20 using the percentage determined under section 290.06, 60.21 subdivision 2d, for the taxable year. 60.22 Subd. 6. [APPROPRIATION.] An amount sufficient to pay 60.23 refunds under this section is appropriated to the commissioner. 60.24 Sec. 2. Minnesota Statutes 1995 Supplement, section 60.25 297A.01, subdivision 3, is amended to read: 60.26 Subd. 3. A "sale" and a "purchase" includes, but is not 60.27 limited to, each of the following transactions: 60.28 (a) Any transfer of title or possession, or both, of 60.29 tangible personal property, whether absolutely or conditionally, 60.30 and the leasing of or the granting of a license to use or 60.31 consume tangible personal property other than manufactured homes 60.32 used for residential purposes for a continuous period of 30 days 60.33 or more, for a consideration in money or by exchange or barter; 60.34 (b) The production, fabrication, printing, or processing of 60.35 tangible personal property for a consideration for consumers who 60.36 furnish either directly or indirectly the materials used in the 61.1 production, fabrication, printing, or processing; and 61.2 (c)The furnishing, preparing, or serving for a61.3consideration of food, meals, or drinks. "Sale" does not61.4include:61.5(1) meals or drinks served to patients, inmates, or persons61.6residing at hospitals, sanitariums, nursing homes, senior61.7citizens homes, and correctional, detention, and detoxification61.8facilities;61.9(2) meals or drinks purchased for and served exclusively to61.10individuals who are 60 years of age or over and their spouses or61.11to the handicapped and their spouses by governmental agencies,61.12nonprofit organizations, agencies, or churches or pursuant to61.13any program funded in whole or part through 42 USCA sections61.143001 through 3045, wherever delivered, prepared or served; or61.15(3) meals and lunches served at public and private schools,61.16universities, or colleges.61.17Notwithstanding section 297A.25, subdivision 2, taxable food or61.18meals include, but are not limited to, the following:61.19(i) heated food or drinks;61.20(ii) sandwiches prepared by the retailer;61.21(iii) single sales of prepackaged ice cream or ice milk61.22novelties prepared by the retailer;61.23(iv) hand-prepared or dispensed ice cream or ice milk61.24products including cones, sundaes, and snow cones;61.25(v) soft drinks and other beverages prepared or served by61.26the retailer;61.27(vi) gum;61.28(vii) ice;61.29(viii) all food sold in vending machines;61.30(ix) party trays prepared by the retailers; and61.31(x) all meals and single servings of packaged snack food,61.32single cans or bottles of pop, sold in restaurants and bars;61.33(d) The granting of the privilege of admission to places of61.34amusement, recreational areas, or athletic events, except a61.35world championship football game sponsored by the national61.36football league, and the privilege of having access to and the62.1use of amusement devices, tanning facilities, reducing salons,62.2steam baths, turkish baths, health clubs, and spas or athletic62.3facilities;62.4(e) The furnishing for a consideration of lodging and62.5related services by a hotel, rooming house, tourist court, motel62.6or trailer camp and of the granting of any similar license to62.7use real property other than the renting or leasing thereof for62.8a continuous period of 30 days or more;62.9(f) The furnishing for a consideration of electricity, gas,62.10water, or steam for use or consumption within this state, or62.11local exchange telephone service, intrastate toll service, and62.12interstate toll service, if that service originates from and is62.13charged to a telephone located in this state. Telephone service62.14includes paging services and private communication service, as62.15defined in United States Code, title 26, section 4252(d), except62.16for private communication service purchased by an agent acting62.17on behalf of the state lottery. The furnishing for a62.18consideration of access to telephone services by a hotel to its62.19guests is a sale under this clause. Sales by municipal62.20corporations in a proprietary capacity are included in the62.21provisions of this clause. The furnishing of water and sewer62.22services for residential use shall not be considered a sale.62.23The sale of natural gas to be used as a fuel in vehicles62.24propelled by natural gas shall not be considered a sale for the62.25purposes of this section;62.26(g) The furnishing for a consideration of cable television62.27services, including charges for basic service, charges for62.28premium service, and any other charges for any other62.29pay-per-view, monthly, or similar television services;62.30(h) The furnishing for a consideration of parking services,62.31whether on a contractual, hourly, or other periodic basis,62.32except for parking at a meter;62.33(i) The furnishing for a consideration of services listed62.34in this paragraph:62.35(i) laundry and dry cleaning services including cleaning,62.36pressing, repairing, altering, and storing clothes, linen63.1services and supply, cleaning and blocking hats, and carpet,63.2drapery, upholstery, and industrial cleaning. Laundry and dry63.3cleaning services do not include services provided by coin63.4operated facilities operated by the customer;63.5(ii) motor vehicle washing, waxing, and cleaning services,63.6including services provided by coin-operated facilities operated63.7by the customer, and rustproofing, undercoating, and towing of63.8motor vehicles;63.9(iii) building and residential cleaning, maintenance, and63.10disinfecting and exterminating services;63.11(iv) detective services, security services, burglar, fire63.12alarm, and armored car services not including services performed63.13within the jurisdiction they serve by off-duty licensed peace63.14officers as defined in section 626.84, subdivision 1;63.15(v) pet grooming services;63.16(vi) lawn care, fertilizing, mowing, spraying and sprigging63.17services; garden planting and maintenance; tree, bush, and shrub63.18pruning, bracing, spraying, and surgery; tree, bush, shrub and63.19stump removal; and tree trimming for public utility lines.63.20Services performed under a construction contract for the63.21installation of shrubbery, plants, sod, trees, bushes, and63.22similar items are not taxable;63.23(vii) mixed municipal solid waste management services as63.24described in section 297A.45;63.25(viii) massages, except when provided by a licensed health63.26care facility or professional or upon written referral from a63.27licensed health care facility or professional for treatment of63.28illness, injury, or disease; and63.29(ix) the furnishing for consideration of lodging, board and63.30care services for animals in kennels and other similar63.31arrangements, but excluding veterinary and horse boarding63.32services.63.33The services listed in this paragraph are taxable under section63.34297A.02 if the service is performed wholly within Minnesota or63.35if the service is performed partly within and partly without63.36Minnesota and the greater proportion of the service is performed64.1in Minnesota, based on the cost of performance. In applying the64.2provisions of this chapter, the terms "tangible personal64.3property" and "sales at retail" include taxable services and the64.4provision of taxable services, unless specifically provided64.5otherwise. Services performed by an employee for an employer64.6are not taxable under this paragraph. Services performed by a64.7partnership or association for another partnership or64.8association are not taxable under this paragraph if one of the64.9entities owns or controls more than 80 percent of the voting64.10power of the equity interest in the other entity. Services64.11performed between members of an affiliated group of corporations64.12are not taxable. For purposes of this section, "affiliated64.13group of corporations" includes those entities that would be64.14classified as a member of an affiliated group under United64.15States Code, title 26, section 1504, and who are eligible to64.16file a consolidated tax return for federal income tax purposes;64.17(j)A "sale" and a "purchase" includes the transfer of 64.18 computer software, meaning information and directions that 64.19 dictate the function performed by data processing equipment. A 64.20 "sale" and a "purchase" does not include the design, 64.21 development, writing, translation, fabrication, lease, or 64.22 transfer for a consideration of title or possession of a custom 64.23 computer program; and. 64.24(k) The granting of membership in a club, association, or64.25other organization if:64.26(1) the club, association, or other organization makes64.27available for the use of its members sports and athletic64.28facilities (without regard to whether a separate charge is64.29assessed for use of the facilities); and64.30(2) use of the sports and athletic facilities is not made64.31available to the general public on the same basis as it is made64.32available to members.64.33Granting of membership includes both one-time initiation fees64.34and periodic membership dues. Sports and athletic facilities64.35include golf courses, tennis, racquetball, handball and squash64.36courts, basketball and volleyball facilities, running tracks,65.1exercise equipment, swimming pools, and other similar athletic65.2or sports facilities. The provisions of this paragraph do not65.3apply to camps or other recreation facilities owned and operated65.4by an exempt organization under section 501(c)(3) of the65.5Internal Revenue Code of 1986, as amended through December 31,65.61992, for educational and social activities for young people65.7primarily age 18 and under.65.8 Sec. 3. Minnesota Statutes 1994, section 297A.01, 65.9 subdivision 16, is amended to read: 65.10 Subd. 16. [CAPITAL EQUIPMENT.] (a) Capital equipment means 65.11 machinery and equipment purchased or leased for use in this 65.12 state and used by the purchaser or lessee primarily for 65.13 manufacturing, fabricating, mining, or refining tangible 65.14 personal property to be sold ultimately at retail and for 65.15 electronically transmitting results retrieved by a customer of 65.16 an on-line computerized data retrieval system. 65.17 (b) Capital equipment includes all machinery and equipment 65.18 that is essential to the integrated production process. Capital 65.19 equipment includes, but is not limited to: 65.20 (1) machinery and equipment used or required to operate, 65.21 control, or regulate the production equipment; 65.22 (2) machinery and equipment used for research and 65.23 development, design, quality control, and testing activities; 65.24 (3) environmental control devices that are used to maintain 65.25 conditions such as temperature, humidity, light, or air pressure 65.26 when those conditions are essential to and are part of the 65.27 production process;or65.28 (4) materials and supplies necessary to construct and 65.29 install machinery or equipment; or 65.30 (5) pollution control equipment. 65.31 (c) Capital equipment does not include the following: 65.32 (1)repair or replacement parts, including accessories,65.33whether purchased as spare parts, repair parts, or as upgrades65.34or modifications, and whether purchased before or after the65.35machinery or equipment is placed into service. Parts or65.36accessories are treated as capital equipment only to the extent66.1that they are a part of and are essential to the operation of66.2the machinery or equipment as initially purchased;66.3(2)motor vehicles taxed under chapter 297B; 66.4(3)(2) machinery or equipment used to receive or store raw 66.5 materials; 66.6(4)(3) building materials; 66.7(5)(4) machinery or equipment used for nonproduction 66.8 purposes, including, but not limited to, the following: 66.9 machinery and equipment used for plant security, fire 66.10 prevention, first aid, and hospital stations; machinery and 66.11 equipment used in support operations or for administrative 66.12 purposes; machinery and equipment used solely for pollution 66.13 control, prevention, or abatement; and machinery and equipment 66.14 used in plant cleaning, disposal of scrap and waste, plant 66.15 communications, space heating, lighting, or safety; or 66.16(6) "farm machinery" as defined by subdivision 15,66.17"aquaculture production equipment" as defined by subdivision 19,66.18and "replacement capital equipment" as defined by subdivision66.1920; or66.20(7)(5) any other item that is not essential to the 66.21 integrated process of manufacturing, fabricating, mining, or 66.22 refining. 66.23 (d) For purposes of this subdivision: 66.24 (1) "Equipment" means independent devices or tools separate 66.25 from machinery but essential to an integrated production 66.26 process, including computers and software, used in operating 66.27 machinery and equipment; and any subunit or assembly comprising 66.28 a component of any machinery or accessory or attachment parts of 66.29 machinery, such as tools, dies, jigs, patterns, and molds. 66.30 (2) "Fabricating" means to make, build, create, produce, or 66.31 assemble components or property to work in a new or different 66.32 manner. 66.33 (3) "Machinery" means mechanical, electronic, or electrical 66.34 devices, including computers and software, that are purchased or 66.35 constructed to be used for the activities set forth in paragraph 66.36 (a), beginning with the removal of raw materials from inventory 67.1 through the completion of the product, including packaging of 67.2 the product. 67.3 (4) "Manufacturing" means an operation or series of 67.4 operations where raw materials are changed in form, composition, 67.5 or condition by machinery and equipment and which results in the 67.6 production of a new article of tangible personal property. For 67.7 purposes of this subdivision, "manufacturing" includes the 67.8 generation of electricity or steam to be sold at retail. 67.9 (5) "Mining" means the extraction of minerals, ores, stone, 67.10 and peat. 67.11 (6) "On-line data retrieval system" means a system whose 67.12 cumulation of information is equally available and accessible to 67.13 all its customers. 67.14 (7) "Pollution control equipment" means machinery and 67.15 equipment used to eliminate, prevent, or reduce pollution 67.16 resulting from an activity described in paragraph (a). 67.17 (8) "Primarily" means machinery and equipment used 50 67.18 percent or more of the time in an activity described in 67.19 paragraph (a). 67.20 (9) "Refining" means the process of converting a natural 67.21 resource to a product, including the treatment of water to be 67.22 sold at retail. 67.23(e) For purposes of this subdivision the requirement that67.24the machinery or equipment "must be used by the purchaser or67.25lessee" means that the person who purchases or leases the67.26machinery or equipment must be the one who uses it for the67.27qualifying purpose. When a contractor buys and installs67.28machinery or equipment as part of an improvement to real67.29property, only the contractor is considered the purchaser.67.30(f) Notwithstanding prior provisions of this subdivision,67.31machinery and equipment purchased or leased to replace machinery67.32and equipment used in the mining or production of taconite shall67.33qualify as capital equipment.67.34 Sec. 4. [297A.136] [TAXABLE SERVICES.] 67.35 Subdivision 1. [TAXABLE.] Provisions of services for 67.36 consideration is subject to tax under this chapter as provided 68.1 by this section. 68.2 Subd. 2. [MEALS AND PREPARED FOODS.] (a) The furnishing, 68.3 preparing, or serving of food, meals, or drinks are taxable. 68.4 Notwithstanding section 297A.25, subdivision 2, this 68.5 specifically includes, but is not limited to, the following: 68.6 (1) heated food or drinks; 68.7 (2) sandwiches prepared by the retailer; 68.8 (3) single sales of prepackaged ice cream or ice milk 68.9 novelties prepared by the retailer; 68.10 (4) hand-prepared or dispensed ice cream or ice milk 68.11 products including cones, sundaes, and snow cones; 68.12 (5) soft drinks and other beverages prepared or served by 68.13 the retailer; 68.14 (6) gum; 68.15 (7) ice; 68.16 (8) all food sold in vending machines; 68.17 (9) party trays prepared by the retailers; and 68.18 (10) all meals and single servings of packaged snack food, 68.19 single cans or bottles of pop, sold in restaurants and bars. 68.20 (b) The following prepared meals, foods, and drinks are 68.21 exempt: 68.22 (1) meals or drinks served to patients, inmates, or persons 68.23 residing at hospitals, sanitariums, nursing homes, senior 68.24 citizens homes, and correctional, detention, and detoxification 68.25 facilities; 68.26 (2) meals or drinks purchased for and served exclusively to 68.27 individuals who are 60 years of age or over and their spouses or 68.28 to the handicapped and their spouses by governmental agencies, 68.29 nonprofit organizations, agencies, or churches, or pursuant to 68.30 any program funded in whole or part through United States Code 68.31 Annotated, title 42, sections 3001 through 3045, wherever 68.32 delivered, prepared, or served; or 68.33 (3) meals and lunches served at public and private schools, 68.34 universities, or colleges. 68.35 Subd. 3. [ADMISSIONS.] The granting of the privilege of 68.36 admission to places of amusement, recreational areas, or 69.1 athletic events, except a world championship football game 69.2 sponsored by the national football league, and the privilege of 69.3 having access to and the use of amusement devices, tanning 69.4 facilities, reducing salons, steam baths, turkish baths, health 69.5 clubs, and spas or athletic facilities is taxable. 69.6 Subd. 4. [LODGING.] Lodging and related services furnished 69.7 by a hotel, rooming house, tourist court, motel, or trailer camp 69.8 and the granting of any similar license to use real property 69.9 other than the renting or leasing thereof for a continuous 69.10 period of 30 days or more are taxable. 69.11 Subd. 5. [UTILITY SERVICES.] (a) The furnishing for use or 69.12 consumption in this state of the following utility services is 69.13 taxable: 69.14 (1) electricity; 69.15 (2) gas; 69.16 (3) water; 69.17 (4) steam; 69.18 (5) sewer services; and 69.19 (6) telephone service, including: 69.20 (i) local exchange telephone service; 69.21 (ii) intrastate toll service; 69.22 (iii) interstate toll service if that service originates 69.23 from and is charged to a telephone located in this state; 69.24 (iv) paging services and private communications service, as 69.25 defined in United States Code, title 26, section 4252(d), except 69.26 private communication service purchased by an agent acting on 69.27 behalf of the state lottery; and 69.28 (v) furnishing of access to telephone services by a hotel 69.29 to its guests. 69.30 (b) Sales of the services listed in this subdivision by 69.31 municipal corporations in a proprietary capacity are taxable. 69.32 (c) The sale of natural gas to be used as a fuel in 69.33 vehicles propelled by natural gas is exempt. 69.34 Subd. 6. [CABLE TELEVISION SERVICES.] The furnishing of 69.35 cable television services, including charges for basic service, 69.36 charges for premium service, and any other charges for any other 70.1 pay-per-view, monthly, or similar television services is taxable. 70.2 Subd. 7. [PARKING SERVICES.] The furnishing of parking 70.3 services, whether on a contractual, hourly, or other periodic 70.4 basis, except for parking at a meter, is taxable. 70.5 Subd. 8. [SPORTS AND HEALTH CLUB MEMBERSHIPS.] (a) The 70.6 granting of membership in a club, association, or other 70.7 organization is taxable if: 70.8 (1) the club, association, or other organization makes 70.9 available for the use of its members sports and athletic 70.10 facilities (without regard to whether a separate charge is 70.11 assessed for use of the facilities); and 70.12 (2) use of the sports and athletic facilities is not made 70.13 available to the general public on the same basis as it is made 70.14 available to members. Granting of membership includes both 70.15 one-time initiation fees and periodic membership dues. Sports 70.16 and athletic facilities include golf courses, tennis, 70.17 racquetball, handball and squash courts, basketball and 70.18 volleyball facilities, running tracks, exercise equipment, 70.19 swimming pools, and other similar athletic or sports facilities. 70.20 (b) The provisions of this subdivision do not apply to 70.21 camps or other recreation facilities owned and operated by an 70.22 exempt organization under section 501(c)(3) of the Internal 70.23 Revenue Code of 1986, as amended through December 31, 1995, for 70.24 educational and social activities for young people primarily age 70.25 18 and under. 70.26 Subd. 9. [LAUNDRY AND DRY CLEANING.] (a) The furnishing of 70.27 laundry and dry cleaning services is taxable. These services 70.28 include cleaning, pressing, repairing, altering, and storing 70.29 clothes, linen services and supply, cleaning and blocking hats, 70.30 and carpet, drapery, upholstery, and industrial cleaning. 70.31 (b) Laundry and dry cleaning services do not include 70.32 services provided by coin-operated facilities operated by the 70.33 customer. 70.34 Subd. 10. [MOTOR VEHICLE SERVICES.] The furnishing of 70.35 repair, rustproofing, undercoating, towing, washing, waxing, and 70.36 cleaning services for motor vehicles is taxable. Washing, 71.1 waxing, and cleaning services include those provided by 71.2 coin-operated facilities operated by a customer. 71.3 Subd. 11. [BUILDING CLEANING SERVICES.] The furnishing of 71.4 building and residential cleaning, maintenance, and disinfecting 71.5 and exterminating services is taxable. 71.6 Subd. 12. [DETECTIVE AND SECURITY SERVICES.] (a) The 71.7 furnishing of detective services, security services, burglar, 71.8 fire alarm, and armored car services is taxable. 71.9 (b) Services under paragraph (a) that are provided by an 71.10 off-duty licensed peace officer, as defined in section 626.84, 71.11 subdivision 1, are exempt, if they are provided in the 71.12 jurisdiction in which the officer serves. 71.13 Subd. 13. [PET GROOMING SERVICES.] The furnishing of pet 71.14 grooming services is taxable. 71.15 Subd. 14. [LAWN AND GARDEN SERVICES.] (a) The furnishing 71.16 of the following lawn and garden services is taxable: 71.17 (1) lawn care, fertilizing, mowing, spraying, and sprigging 71.18 services; 71.19 (2) garden planting and maintenance; 71.20 (3) tree, bush, and shrub pruning, bracing, spraying, and 71.21 surgery; 71.22 (4) tree, bush, shrub, and stump removal; and 71.23 (5) tree trimming for public utility lines. 71.24 (b) Services performed under a construction contract for 71.25 the installation of shrubbery, plants, sod, trees, bushes, and 71.26 similar items are exempt. 71.27 Subd. 15. [SOLID WASTE SERVICES.] The furnishing of mixed 71.28 municipal solid waste management services as described in 71.29 section 297A.45 is taxable. 71.30 Subd. 16. [MASSAGE SERVICES.] (a) The furnishing of 71.31 massages is taxable. 71.32 (b) Massages provided by a licensed health care facility or 71.33 professional or upon written referral from a licensed health 71.34 care facility or professional for treatment of illness, injury, 71.35 or disease are exempt. 71.36 Subd. 17. [ANIMAL BOARDING SERVICES.] (a) The furnishing 72.1 of lodging, board, and care services for animals in kennels and 72.2 other similar arrangements is taxable. 72.3 (b) Veterinary and horse boarding services are exempt. 72.4 Subd. 18. [REPAIR SERVICES.] The repair of tangible 72.5 personal property is taxable. 72.6 Subd. 19. [FUNERAL SERVICES.] The furnishing of funeral 72.7 services, including embalming, cremation, or other preparation 72.8 of dead human bodies for disposition, and other services 72.9 provided by funeral directors or licensed practitioners of 72.10 mortuary science is taxable. 72.11 Subd. 20. [GENERAL RULES.] (a) The rules in this 72.12 subdivision apply to services taxable under subdivisions 9 to 18. 72.13 (b) The services listed are taxable under section 297A.02 72.14 if the service is performed wholly within Minnesota or if the 72.15 service is performed partly within and partly without Minnesota 72.16 and the greater proportion of the service is performed in 72.17 Minnesota, based on the cost of performance. 72.18 (c) In applying the provisions of this chapter, the terms 72.19 "tangible personal property" and "sales at retail" include 72.20 taxable services and the provision of taxable services, unless 72.21 specifically provided otherwise. 72.22 (d) Services performed by an employee for an employer are 72.23 not taxable under this section. 72.24 (e) Services performed by a partnership or association for 72.25 another partnership or association are not taxable, if one of 72.26 the entities owns or controls more than 80 percent of the voting 72.27 power of the equity interest in the other entity. Services 72.28 performed between members of an affiliated group of corporations 72.29 are not taxable. For purposes of this section, "affiliated 72.30 group of corporations" includes entities that would be 72.31 classified as a member of an affiliated group under United 72.32 States Code, title 26, section 1504, and that are eligible to 72.33 file a consolidated tax return for federal income tax purposes. 72.34 Sec. 5. Minnesota Statutes 1994, section 297A.15, 72.35 subdivision 5, is amended to read: 72.36 Subd. 5. [REFUND; APPROPRIATION.] Notwithstanding the 73.1 provisions ofsections 297A.02, subdivision 5, andsection 73.2 297A.25,subdivisions 42 andsubdivision 50, the tax on sales of 73.3capital equipment, replacement capital equipment, and73.4 construction materials and supplies under section 297A.25, 73.5 subdivision 50, shall be imposed and collected as if the rates 73.6 under sections 297A.02, subdivision 1, and 297A.021, applied. 73.7 Upon application by the purchaser, on forms prescribed by the 73.8 commissioner, a refund equal to the reduction in the tax due as 73.9 a result of the application of the exemption under section 73.10 297A.25, subdivision42 or50,and the rates under sections73.11297A.02, subdivision 5, and 297A.021shall be paid to the 73.12 purchaser.In the case of building materials qualifying under73.13section 297A.25, subdivision 50,Where the tax was paid by a 73.14 contractor, application must be made by the owner for the sales 73.15 tax paid by all the contractors, subcontractors, and builders 73.16 for the project. The application must include sufficient 73.17 information to permit the commissioner to verify the sales tax 73.18 paid for the project. The application shall include information 73.19 necessary for the commissioner initially to verify that the 73.20 purchases qualified ascapital equipment under section 297A.25,73.21subdivision 42, replacement capital equipment under section73.22297A.01, subdivision 20, or capital equipment orconstruction 73.23 materials and supplies under section 297A.25, subdivision 50. 73.24 No more than two applications for refunds may be filed under 73.25 this subdivision in a calendar year.No owner may apply for a73.26refund based on the exemption under section 297A.25, subdivision73.2750, before July 1, 1993.Unless otherwise specifically provided 73.28 by this subdivision, the provisions of section 289A.40 apply to 73.29 the refunds payable under this subdivision. There is annually 73.30 appropriated to the commissioner of revenue the amount required 73.31 to make the refunds. 73.32 The amount to be refunded shall bear interest at the rate 73.33 in section 270.76 from the date the refund claim is filed with 73.34 the commissioner. 73.35 Sec. 6. Minnesota Statutes 1994, section 297A.25, 73.36 subdivision 29, is amended to read: 74.1 Subd. 29. [FARM MACHINERY REPAIR PARTS.] The gross 74.2 receipts from the sale of farm machinery and repair and 74.3 replacement parts, except tires, used for maintenance or repair 74.4 of farm machinery are exempt, if the part replaces a farm 74.5 machinery part assigned a specific or generic part number by the 74.6 manufacturer of the farm machinery. 74.7 Sec. 7. [REVISOR'S INSTRUCTION.] 74.8 The revisor of statutes shall, in the 1996 edition of 74.9 Minnesota Statutes, substitute cross references to the 74.10 appropriate subdivision of section 4 for each reference to a 74.11 paragraph of section 297A.01, subdivision 3, that is recodified 74.12 in section 4. 74.13 Sec. 8. [REPEALER.] 74.14 Minnesota Statutes 1994, sections 297A.01, subdivisions 17 74.15 and 20; 297A.02, subdivisions 2 and 5; and 297A.25, subdivisions 74.16 8, 17, and 53, are repealed. 74.17 Sec. 9. [EFFECTIVE DATE.] 74.18 Section 1 is effective for taxable years beginning after 74.19 December 31, 1996, but only if the constitutional amendment 74.20 proposed to the people by article 1, section 1, is adopted in 74.21 the 1996 general election. The first inflation adjustment under 74.22 section 1, subdivision 6, must be made for the taxable years 74.23 beginning after December 31, 1997. Sections 2 to 8 are 74.24 effective for sales made after July 1, 1997, but only if the 74.25 constitutional amendment proposed to the people by article 1, 74.26 section 1, is adopted in the 1996 general election. 74.27 ARTICLE 7 74.28 BUSINESS ACTIVITY TAX 74.29 Section 1. Minnesota Statutes 1994, section 290.06, 74.30 subdivision 1, is amended to read: 74.31 Subdivision 1. [COMPUTATION, CORPORATIONS.] The franchise 74.32 tax imposed upon corporations shall be computed by applying to 74.33 their taxable income the rate of9.87.5 percent. 74.34 Sec. 2. [290.9401] [BAT IMPOSED.] 74.35 In addition to the taxes imposed by this chapter, a tax of 74.36 .. percent applies to a firm's tax base. 75.1 Sec. 3. [290.9402] [DEFINITIONS.] 75.2 Subdivision 1. [SCOPE.] For purposes of sections 3 to 8, 75.3 the following terms have the meanings given. 75.4 Subd. 2. [BUSINESS ACTIVITY.] "Business activity" means 75.5 sale or rental of property or the performance of services in 75.6 this state to realize a gain, benefit, or advantage, whether 75.7 direct or indirect. Business activity includes activity in 75.8 intrastate, interstate, and foreign commerce. It does not 75.9 include services provided by an employee to the employee's 75.10 employer, service as the director of a corporation, or a casual 75.11 transaction. Although an activity may be incidental to another 75.12 of the firm's business activities, each activity is a business 75.13 activity for purposes of the tax. 75.14 Subd. 3. [BUSINESS INCOME.] "Business income" means net 75.15 income. For a firm other than a corporation, net income is 75.16 limited to the portion derived from business activity. 75.17 Subd. 4. [CASUAL TRANSACTION.] "Casual transaction" means 75.18 a transaction that (1) is not made in the ordinary course of 75.19 repeated or successive transactions of a like character by the 75.20 firm, and (2) is not incidental to the firm's regular business 75.21 activity. 75.22 Subd. 5. [COMPENSATION.] (a) "Compensation" means all 75.23 payments made to or for the benefit of employees, officers, or 75.24 directors of the firm. 75.25 (b) Compensation specifically includes, but is not limited 75.26 to: 75.27 (1) wages, salaries, bonuses, commissions, and other 75.28 payments to employees, officers, or directors; 75.29 (2) payments to state and federal unemployment compensation 75.30 funds; 75.31 (3) payments, including self-insurance, for workers' 75.32 compensation; 75.33 (4) payments to individuals not currently working; 75.34 (5) payments to dependents and heirs of individuals because 75.35 of current or past labor service provided by those individuals; 75.36 (6) payments to a pension, retirement, profit-sharing, or 76.1 deferred compensation program; 76.2 (7) payments for insurance, including self-insurance, for 76.3 which employees are beneficiaries, including payments for health 76.4 and welfare and noninsured benefit plans and payment of fees for 76.5 administration of plans. 76.6 (c) Compensation does not include: 76.7 (1) discounts on the price of the firm's merchandise or 76.8 services sold to employees, officers, or directors which are not 76.9 available to other customers; or 76.10 (2) payments to independent contractors. 76.11 Subd. 6. [FIRM.] "Firm" means a corporation, individual, 76.12 partnership, limited liability company, trust, nonprofit 76.13 corporation, joint venture, association, receiver, estate, or 76.14 other person engaged in business activity. 76.15 Subd. 7. [PROPERTY.] "Property" includes all property, 76.16 whether tangible or intangible, or whether real, personal, or 76.17 mixed. 76.18 Sec. 4. [290.9403] [BUSINESSES SUBJECT TO TAX.] 76.19 Subdivision 1. [TAXABLE BUSINESSES.] The tax imposed by 76.20 sections 2 to 8 applies to a firm engaged in business activity 76.21 in Minnesota, unless an exemption under subdivisions 2 to 4 76.22 applies. 76.23 Subd. 2. [FOREIGN INSURANCE COMPANIES.] An insurance 76.24 company as defined in section 290.05, subdivision 1, clause (c), 76.25 is exempt. 76.26 Subd. 3. [GOVERNMENT ENTITIES.] A governmental entity, as 76.27 defined in section 290.05, subdivision 1, clause (b), is exempt. 76.28 Subd. 4. [OTHER EXEMPT ENTITIES.] An organization exempt 76.29 from taxation under Subchapter F of the Internal Revenue Code is 76.30 exempt, except to the extent of tax base from activities 76.31 generating: 76.32 (1) unrelated business income, as defined in sections 511 76.33 to 515 of the Internal Revenue Code; 76.34 (2) taxable income of farmers cooperatives under section 76.35 521 of the Internal Revenue Code; 76.36 (3) taxable income of political organizations under section 77.1 527 of the Internal Revenue Code; and 77.2 (4) taxable income of homeowners associations under section 77.3 528 of the Internal Revenue Code. 77.4 Sec. 5. [290.9404] [TAX BASE.] 77.5 Subdivision 1. [GENERAL RULE.] The tax base of a firm for 77.6 the taxable year equals the sum of the firm's business income 77.7 and the amounts in subdivision 2, less 77.8 (1) the amounts in subdivision 3, 77.9 (2) the capital acquisition deduction under subdivision 4, 77.10 and 77.11 (3) the exemption amount under subdivision 5. 77.12 All amounts are the amounts paid or accrued for the taxable 77.13 year under the firm's method of accounting for federal income 77.14 tax purposes. 77.15 Subd. 2. [ADDITIONS.] The following amounts are added to 77.16 business income to determine tax base: 77.17 (1) the amount of the additions to federal taxable income 77.18 under section 290.01, subdivision 19c, clauses (1), (2), (3), 77.19 (4), (5), (8), (10), and (11), 77.20 (2) the amount of the following, to the extent deducted or 77.21 excluded in computing federal taxable income and not added under 77.22 clause (1): 77.23 (i) depreciation, amortization, or immediate or accelerated 77.24 write-off of the cost of tangible assets, 77.25 (ii) royalties, 77.26 (iii) dividends, except dividends representing reduction of 77.27 premiums to policyholders of insurance companies, and 77.28 (iv) interest including amounts paid, credited, or reserved 77.29 by insurance companies as amounts necessary to fulfill the 77.30 policy and other contract liability requirements of sections 805 77.31 and 809 of the Internal Revenue Code; 77.32 (3) the amount of compensation; and 77.33 (4) capital gains of individuals from business activity to 77.34 the extent excluded in computing federal taxable income. 77.35 Subd. 3. [SUBTRACTIONS.] To the extent included in federal 77.36 taxable income, the following amounts are subtracted from income 78.1 to determine tax base: 78.2 (1) dividends received or deemed received, including the 78.3 foreign dividend gross-up; 78.4 (2) interest except amounts paid, credited, or reserved by 78.5 insurance companies as amounts necessary to fulfill the policy 78.6 and other contract liability requirements of sections 805 and 78.7 809 of the Internal Revenue Code; 78.8 (3) royalties; 78.9 (4) any capital loss not deducted in computing federal 78.10 taxable income. 78.11 Subd. 4. [CAPITAL ACQUISITION DEDUCTION.] (a) The capital 78.12 acquisition deduction equals the amount paid or accrued for the 78.13 taxable year of the cost of tangible assets qualifying for 78.14 depreciation, amortization, or immediate or accelerated 78.15 deduction under the Internal Revenue Code. Costs include 78.16 fabrication and installation costs. The deduction is the full 78.17 amount paid or accrued, regardless of the amount allowed by 78.18 federal law for the taxable year. 78.19 (b) If the capital acquisition deduction exceeds the net 78.20 amount under subdivisions 1 to 3 for the taxable year, the rest 78.21 is a carryover capital acquisition deduction to the next three 78.22 taxable years. The entire amount must be taken in the earliest 78.23 of the taxable years to which it may be carried. 78.24 Subd. 5. [EXEMPTION.] The exemption amount is $500,000. 78.25 The exemption must be deducted after computation of tax base 78.26 under subdivisions 1 to 4, but before apportionment under 78.27 section 6 for multistate businesses. 78.28 Subd. 6. [SPECIAL RULES FOR FINANCIAL INSTITUTIONS.] The 78.29 tax base of a financial institution is the amount calculated 78.30 under subdivisions 1 to 4, except that the addition under 78.31 subdivision 2, clause (2), item (iv), and the subtraction under 78.32 subdivision 3, clause (2), do not apply. 78.33 Sec. 6. [290.9405] [MULTISTATE FIRMS.] 78.34 Subdivision 1. [SCOPE.] The tax base of a firm from 78.35 business activity carried on partly within and partly without 78.36 Minnesota must be apportioned to Minnesota as provided in this 79.1 section. 79.2 Subd. 2. [DEFINITIONS.] The definitions under section 79.3 290.191 apply for purposes of this section. 79.4 Subd. 3. [APPORTIONMENT FORMULA.] (a) A firm must 79.5 apportion its tax base to Minnesota as follows. The total tax 79.6 base, after deducting the capital acquisition deduction and 79.7 exemption, must be multiplied by the percentage that the firm's 79.8 sales made within Minnesota during the taxable year are of the 79.9 firm's total sales wherever made. 79.10 (b) A financial institution must apportion its tax base 79.11 under paragraph (a) using the receipts factor for financial 79.12 institutions. 79.13 Subd. 4. [RULES FOR UNITARY BUSINESSES.] (a) If a business 79.14 activity conducted wholly within this state or partly within 79.15 this state is part of a unitary business, the entire tax base of 79.16 the unitary business is subject to apportionment under this 79.17 section. The provisions of section 290.17 apply to determine if 79.18 a business activity is part of a unitary business. 79.19 (b) Each firm that is part of a unitary business must file 79.20 combined reports as the commissioner determines. On the 79.21 reports, all intercompany transactions between domestic firms 79.22 that are part of the unitary business must be eliminated. The 79.23 entire tax base of the unitary business must be apportioned 79.24 among the firms by using each firm's Minnesota sales factor in 79.25 the numerator of the apportionment formula and the total sales 79.26 factor of all firms in the unitary business in the denominator 79.27 of the apportionment formula. 79.28 (c) The tax base and apportionment factors of foreign firms 79.29 which are part of a unitary business are not included in the tax 79.30 base and apportionment factors of the unitary business. A 79.31 foreign firm must file on a separate return basis. 79.32 Sec. 7. [290.9406] [CREDITS.] 79.33 Subdivision 1. [INSURANCE PREMIUMS TAX.] The amount of 79.34 premium tax paid by the firm under sections 60A.15 and 299F.21 79.35 to 299F.26 during the taxable year is a credit against the tax 79.36 under section 2. 80.1 Subd. 2. [MINNESOTACARE TAX.] The amount of gross revenue 80.2 tax paid by the firm under sections 295.50 to 295.58 during the 80.3 taxable year is a credit against the tax under section 2. 80.4 Sec. 8. [290.9407] [ADMINISTRATION.] 80.5 The commissioner of revenue shall prescribe forms and 80.6 instructions for payment of the tax. The tax is due and payable 80.7 at the same times and under the same rules provided for the 80.8 franchise tax on corporations. 80.9 Sec. 9. [REPEALER.] 80.10 Minnesota Statutes 1994, sections 290.0921; and 290.0922, 80.11 are repealed. 80.12 Sec. 10. [EFFECTIVE DATE.] 80.13 Sections 1 to 9 are effective for taxable years beginning 80.14 after December 31, 1996, but only if the constitutional 80.15 amendment proposed to the people by article 1, section 1, is 80.16 adopted in the 1996 general election.