HF 3060

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to the financing of state and local 
  1.3             government; reforming state and local taxes and 
  1.4             intergovernmental aid programs; proposing an amendment 
  1.5             to the Minnesota Constitution, article XIII, section 
  1.6             1; prohibiting financing of certain education costs 
  1.7             with local property taxes; eliminating, consolidating, 
  1.8             and replacing school district levies; creating a local 
  1.9             option income tax for schools; reforming property tax 
  1.10            classifications; imposing a state property tax; 
  1.11            providing for local government aid; providing a 
  1.12            comprehensive low income tax credit; changing the 
  1.13            sales tax base; reducing the sales tax rate; 
  1.14            eliminating the accelerated payment of June general 
  1.15            sales, use, cigarette, and tobacco tax payments; 
  1.16            increasing cigarette and tobacco tax rates; indexing 
  1.17            cigarette tax rates; imposing a floor stocks tax; 
  1.18            repealing the working family credit, dependent care 
  1.19            credit, and property tax refund; appropriating money; 
  1.20            amending Minnesota Statutes 1994, sections 124.239, 
  1.21            subdivision 5; 124.2601; 124.2711, subdivisions 1 and 
  1.22            5; 124.2713, subdivision 1; 124.2714; 124.2715, 
  1.23            subdivision 1; 124.2716, subdivision 2; 124.2725, 
  1.24            subdivision 2; 124.2726, subdivision 3; 124.2727, 
  1.25            subdivision 6a; 124.4945; 124.83, subdivision 3; 
  1.26            124.91, subdivisions 1 and 2; 124.912, subdivisions 3 
  1.27            and 6; 124.914, subdivisions 1, 2, 3, and 4; 124.916, 
  1.28            subdivisions 3 and 4; 124.918, subdivision 8, and by 
  1.29            adding a subdivision; 124A.292, subdivision 2; 273.13, 
  1.30            subdivisions 22, 23, 31, and by adding subdivisions; 
  1.31            275.02; 289A.20, subdivision 4; 290.06, by adding a 
  1.32            subdivision; 290A.02; 290A.03, subdivision 8; 290A.07, 
  1.33            subdivision 3; 290A.09; 297.02, subdivision 1; 297.03, 
  1.34            subdivision 5; 297.07, subdivision 1; 297.32, 
  1.35            subdivision 1; 297A.01, subdivision 16, and by adding 
  1.36            a subdivision; 297A.02, subdivision 1; 297A.09; 
  1.37            297A.15, subdivision 5; 297A.25, subdivision 29; 
  1.38            473F.02, subdivisions 4, 5, and 24; 473F.06; 473F.07, 
  1.39            subdivisions 1 and 5; 473F.08, subdivisions 2 and 3; 
  1.40            477A.011, subdivisions 20, 35, and by adding a 
  1.41            subdivision; 477A.012, subdivision 1; and 477A.013, 
  1.42            subdivision 9; Minnesota Statutes 1995 Supplement, 
  1.43            sections 122.247, subdivision 3; 122.533; 124.2725, 
  1.44            subdivisions 13, 14, and 15; 124.2726, subdivision 1; 
  1.45            124.312, subdivision 5; 124.313; 124.3201, subdivision 
  1.46            1; 124.91, subdivision 4; 124.912, subdivisions 1 and 
  2.1             7; 124.916, subdivisions 1 and 2; 124A.22, subdivision 
  2.2             1; 273.13, subdivisions 24 and 25; 275.065, 
  2.3             subdivision 3; 275.08, subdivision 1b; 276.04, 
  2.4             subdivision 2; 289A.18, subdivision 4; 290A.03, 
  2.5             subdivision 6; 297.35, subdivision 1; 297A.01, 
  2.6             subdivision 3; 473F.08, subdivision 5; and 477A.03, 
  2.7             subdivision 2; proposing coding for new law in 
  2.8             Minnesota Statutes, chapters 124A; 290; 297; and 473; 
  2.9             repealing Minnesota Statutes 1994, sections 122.531, 
  2.10            subdivision 4a; 124.2711, subdivision 3; 124.2713, 
  2.11            subdivisions 6a, 6b, and 7; 124.2715, subdivision 2; 
  2.12            124.2716, subdivisions 3 and 4; 124.2725, subdivision 
  2.13            7; 124.2727, subdivisions 6b, 6c, and 9; 124.321, 
  2.14            subdivisions 3, 4, and 5; 124.912, subdivision 2; 
  2.15            124A.029, subdivisions 1, 2, 3, and 4; 124A.03, 
  2.16            subdivisions 1b, 1d, 1e, 1f, 1i, 2a, 2b, and 3b; 
  2.17            124A.0311, subdivisions 1 and 3; 124A.23, subdivisions 
  2.18            2, 3, and 5; 124A.292, subdivisions 3 and 4; 273.13, 
  2.19            subdivision 32; 273.1398, subdivisions 2, 2, 3, and 
  2.20            3a; 275.08, subdivisions 1c and 1d; 275.61; 289A.60, 
  2.21            subdivision 15; 290.067, subdivisions 2, 2a, 2b, 3, 
  2.22            and 4; 290.0671; 290A.03, subdivisions 3, 4, 5, 7, 9, 
  2.23            10, 11, 12, 12a, and 14; 290A.04, subdivisions 1, 2, 
  2.24            2a, 2b, and 5; 290A.05; 290A.08; 290A.091; 290A.19; 
  2.25            290A.22; 290A.23, subdivision 1; 297.07, subdivision 
  2.26            4; 297.35, subdivision 5; 297A.01, subdivisions 17 and 
  2.27            20; 297A.02, subdivisions 2 and 5; 297A.25, 
  2.28            subdivisions 8, 10, 23, and 53; 473F.08, subdivision 
  2.29            8a; 477A.011, subdivision 37; Minnesota Statutes 1995 
  2.30            Supplement, sections 124.2711, subdivision 2a; 
  2.31            124.2713, subdivision 6; 124.2715, subdivision 3; 
  2.32            124.2725, subdivisions 3, 4, and 15; 124.312, 
  2.33            subdivision 4; 124.314, subdivision 2; 124.321, 
  2.34            subdivisions 1 and 2; 124A.03, subdivisions 1c, 1g, 
  2.35            1h, and 2; 124A.0311, subdivisions 2 and 4; 124A.22, 
  2.36            subdivisions 13d and 13e; 124A.23, subdivisions 1 and 
  2.37            4; 124A.24; 290.067, subdivision 1; 290A.04, 
  2.38            subdivisions 3 and 6; 290A.07, subdivision 2a; and 
  2.39            477A.011, subdivision 36. 
  2.40  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.41                             ARTICLE 1 
  2.42                      CONSTITUTIONAL AMENDMENT 
  2.43     Section 1.  [CONSTITUTIONAL AMENDMENT PROPOSED.] 
  2.44     An amendment to the Minnesota Constitution, article XIII, 
  2.45  section 1, is proposed to the people.  If the amendment is 
  2.46  adopted, the section will read as follows: 
  2.47     Section 1.  The stability of a republican form of 
  2.48  government depending mainly upon the intelligence of the people, 
  2.49  it is the duty of the legislature to establish a general and 
  2.50  uniform system of public schools.  The legislature shall make 
  2.51  such provisions by taxation or otherwise as will secure a 
  2.52  thorough and efficient system of public schools throughout the 
  2.53  state, but without the use of local property tax revenues.  
  2.54  Local property taxes may be used to fund facilities and 
  2.55  equipment and to secure and pay debt to finance public school 
  3.1   capital facilities.  
  3.2      Sec. 2.  [SUBMISSION TO VOTERS.] 
  3.3      The proposed amendment must be submitted to the people at 
  3.4   the 1996 general election.  The question submitted is: 
  3.5      "Shall the Minnesota Constitution be amended to require 
  3.6   that operating funds for public schools come from sources other 
  3.7   than local property taxes? 
  3.8                                      Yes .......
  3.9                                      No ........"
  3.10     Sec. 3.  [EFFECTIVE DATE.] 
  3.11     If the amendment proposed by section 1 is adopted by the 
  3.12  voters, the amendment is effective July 1, 1998. 
  3.13                             ARTICLE 2 
  3.14                      EDUCATION FINANCE REFORM 
  3.15     Section 1.  Minnesota Statutes 1995 Supplement, section 
  3.16  122.247, subdivision 3, is amended to read: 
  3.17     Subd. 3.  [TRANSITIONAL LEVY REVENUE.] The board of the 
  3.18  combined district, or the boards of combining districts that 
  3.19  have received voter approval for the combination under section 
  3.20  122.243, subdivision 2, may levy are eligible for state aid to 
  3.21  pay for the expenses of negotiation, administrative expenses 
  3.22  directly related to the transition from cooperation to 
  3.23  combination, and the cost of necessary new athletic and music 
  3.24  uniforms.  The board or boards may levy this amount over three 
  3.25  or fewer years.  All expenses must be approved by the 
  3.26  commissioner of children, families, and learning.  The 
  3.27  commissioner may pay this state aid over three or fewer years.  
  3.28     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
  3.29  122.533, is amended to read: 
  3.30     122.533 [EXPENSES OF TRANSITION.] 
  3.31     The board of a district to which a dissolved district is 
  3.32  attached pursuant to section 122.22, may, is eligible for state 
  3.33  aid for the purpose of paying the expenses of negotiations and 
  3.34  other administrative expenses relating to the transition,.  The 
  3.35  board of the district may enter into agreements with banks or 
  3.36  any person to take its orders at any rate of interest not to 
  4.1   exceed seven percent per annum.  These orders shall be paid by 
  4.2   the treasurer of the district from district funds after the 
  4.3   effective date of the dissolution and attachment.  
  4.4   Notwithstanding the provisions of sections 124.226, 124.2716, 
  4.5   124.91, 124.912, 124.914, 124.916, and 124.918, the district may 
  4.6   is, in the year the dissolution and attachment becomes 
  4.7   effective, levy eligible for state aid in an amount equal to the 
  4.8   amount of the orders issued pursuant to this subdivision and the 
  4.9   interest on these orders.  No district shall issue orders for 
  4.10  funds or make a levy pursuant according to this subdivision 
  4.11  without the commissioner's approval of the expenses to be paid 
  4.12  with the funds from the orders and levy state aid. 
  4.13     Sec. 3.  Minnesota Statutes 1994, section 124.239, 
  4.14  subdivision 5, is amended to read: 
  4.15     Subd. 5.  [LEVY AUTHORIZED.] A district, after local board 
  4.16  approval, may levy for costs related to an approved facility 
  4.17  plan as follows:  
  4.18     (a) if the district has indicated to the commissioner that 
  4.19  bonds will be issued, the district may levy for the principal 
  4.20  and interest payments on outstanding bonds issued according to 
  4.21  subdivision 3; or 
  4.22     (b) if the district has indicated to the commissioner that 
  4.23  the plan will be funded through levy, the district may levy 
  4.24  according to the schedule approved in the plan. 
  4.25     The authority to levy for costs related to an approved 
  4.26  facility plan under this section is limited to facilities plans 
  4.27  approved prior to July 1, 1997. 
  4.28     Sec. 4.  Minnesota Statutes 1994, section 124.2601, as 
  4.29  amended by Laws 1995, First Special Session chapter 3, article 
  4.30  16, section 13, is amended to read: 
  4.31     124.2601 [ADULT BASIC EDUCATION AID.] 
  4.32     Subdivision 1.  [FULL-TIME EQUIVALENT.] In this section 
  4.33  "full-time equivalent" means 408 contact hours for a student at 
  4.34  the adult secondary instructional level and 240 contact hours 
  4.35  for a student at a lower instructional level.  "Full-time 
  4.36  equivalent" for an English as a second language student means 
  5.1   240 contact hours. 
  5.2      Subd. 2.  [PROGRAMS FUNDED.] Adult basic education programs 
  5.3   established under section 124.26 and approved by the 
  5.4   commissioner are eligible for revenue aid under this section. 
  5.5      Subd. 3.  [AID.] Adult basic education aid for each 
  5.6   approved program equals the sum of 65 percent of the general 
  5.7   education formula allowance times the number of full-time 
  5.8   equivalent students in its adult basic education program and an 
  5.9   amount equal to .12 percent times the district's adjusted net 
  5.10  tax capacity for assessment year 1994. 
  5.11     Subd. 4.  [LEVY.] A district with an eligible program may 
  5.12  levy an amount not to exceed the amount raised by .12 percent 
  5.13  times the adjusted tax capacity of the district for the 
  5.14  preceding year. 
  5.15     Subd. 5.  [REVENUE.] Adult basic education revenue is equal 
  5.16  to the sum of an approved program's adult basic education aid 
  5.17  and its adult basic education levy. 
  5.18     Subd. 6.  [AID GUARANTEE.] (a) For fiscal year 1994, any 
  5.19  adult basic education program that receives less state aid under 
  5.20  subdivisions 3 and 7 than from the aid formula for fiscal year 
  5.21  1992 shall receive the amount of aid it received in fiscal year 
  5.22  1992. 
  5.23     (b) For 1995 and later fiscal years, an adult basic 
  5.24  education program that receives aid shall receive at least the 
  5.25  amount of aid it received in fiscal year 1992 under subdivisions 
  5.26  3 and 7, plus aid equal to the amount of revenue that would have 
  5.27  been raised for taxes payable in 1994 under Minnesota Statutes 
  5.28  1992, section 124.2601, subdivision 4, minus the amount raised 
  5.29  under subdivision 4. 
  5.30     Subd. 7.  [PRORATION.] If the total appropriation for adult 
  5.31  basic education aid is insufficient to pay all approved programs 
  5.32  the full amount of aid earned, the department of children, 
  5.33  families, and learning shall proportionately reduce each 
  5.34  approved program's aid. 
  5.35     Sec. 5.  Minnesota Statutes 1994, section 124.2711, 
  5.36  subdivision 1, is amended to read: 
  6.1      Subdivision 1.  [REVENUE AID.] The revenue State aid for 
  6.2   early childhood family education programs for a school district 
  6.3   equals $101.25 for 1993 and later fiscal years times the greater 
  6.4   of: 
  6.5      (1) 150; or 
  6.6      (2) the number of people under five years of age residing 
  6.7   in the school district on October 1 of the previous school year. 
  6.8      Sec. 6.  Minnesota Statutes 1994, section 124.2711, 
  6.9   subdivision 5, is amended to read: 
  6.10     Subd. 5.  [HOME VISITING LEVY AID.] A school district that 
  6.11  enters into a collaborative agreement to provide education 
  6.12  services and social services to families with young children may 
  6.13  levy an amount is eligible for state aid equal to $1.60 times 
  6.14  the number of people under five years of age residing in the 
  6.15  district on September 1 of the last school year.  Levy revenue 
  6.16  under this subdivision shall not be included as revenue under 
  6.17  subdivision 1.  The revenue shall be used for home visiting 
  6.18  programs under section 121.882, subdivision 2b. 
  6.19     Sec. 7.  Minnesota Statutes 1994, section 124.2713, 
  6.20  subdivision 1, is amended to read: 
  6.21     Subdivision 1.  [TOTAL COMMUNITY EDUCATION REVENUE.] 
  6.22  Community education revenue equals the sum of a district's 
  6.23  general community education revenue and youth service program 
  6.24  revenue.  Community education revenue is provided entirely 
  6.25  through state aid.  
  6.26     Sec. 8.  Minnesota Statutes 1994, section 124.2714, is 
  6.27  amended to read: 
  6.28     124.2714 [ADDITIONAL COMMUNITY EDUCATION REVENUE.] 
  6.29     (a) A district that is eligible under section 124.2713, 
  6.30  subdivision 2, may levy an amount up is eligible for aid equal 
  6.31  to the amount of revenue authorized by Minnesota Statutes 1986, 
  6.32  section 275.125, subdivision 8, clause (2).  
  6.33     (b) Beginning with levies revenue for fiscal year 1995, 
  6.34  this levy revenue must be reduced each year by the amount of any 
  6.35  increase in the levying district's general community education 
  6.36  revenue under section 124.2713, subdivision 3, for that fiscal 
  7.1   year over the amount received by the district under section 
  7.2   124.2713, subdivision 3, for fiscal year 1994. 
  7.3      (c) The proceeds of the levy revenue may be used for the 
  7.4   purposes set forth in section 124.2713, subdivision 8. 
  7.5      Sec. 9.  Minnesota Statutes 1994, section 124.2715, 
  7.6   subdivision 1, is amended to read: 
  7.7      Subdivision 1.  [REVENUE AMOUNT.] A district that is 
  7.8   eligible according to section 124.2713, subdivision 2, may 
  7.9   receive revenue for a program for adults with disabilities.  
  7.10  Revenue for the program for adults with disabilities for a 
  7.11  district or a group of districts equals the lesser of:  
  7.12     (1) the actual expenditures for approved programs and 
  7.13  budgets; or 
  7.14     (2) $60,000.  
  7.15     Revenue is provided through state aid. 
  7.16     Sec. 10.  Minnesota Statutes 1994, section 124.2716, 
  7.17  subdivision 2, is amended to read: 
  7.18     Subd. 2.  [EXTENDED DAY REVENUE.] The extended day revenue 
  7.19  for an eligible school district equals the approved additional 
  7.20  cost of providing services to children with disabilities or 
  7.21  children experiencing family or related problems of a temporary 
  7.22  nature who participate in the extended day program.  Extended 
  7.23  day revenue is provided through state aid.  
  7.24     Sec. 11.  Minnesota Statutes 1994, section 124.2725, 
  7.25  subdivision 2, is amended to read: 
  7.26     Subd. 2.  [COOPERATION AND COMBINATION REVENUE.] 
  7.27  Cooperation and combination revenue equals $100 times the pupil 
  7.28  units served in the district.  For purposes of this section, 
  7.29  pupil units served means the number of resident and nonresident 
  7.30  pupil units in average daily membership receiving instruction in 
  7.31  the cooperating or combined district.  A district may not 
  7.32  receive revenue under this section if it levies receives revenue 
  7.33  under section 124.912, subdivision 4.  Cooperation and 
  7.34  combination revenue is provided through state aid.  
  7.35     Sec. 12.  Minnesota Statutes 1995 Supplement, section 
  7.36  124.2725, subdivision 13, is amended to read: 
  8.1      Subd. 13.  [FAILURE TO COMBINE.] A district has failed to 
  8.2   combine if the commissioner disapproves of the plan according to 
  8.3   section 122.243, subdivision 1, or if a third referendum fails 
  8.4   under section 122.243, subdivision 2, or if the commissioner of 
  8.5   children, families, and learning determines that the districts 
  8.6   involved are not making sufficient progress toward combination. 
  8.7      (a) If a district has failed to combine, cooperation and 
  8.8   combination aid under subdivisions 5 and 6 shall not be paid and 
  8.9   the authority to levy under subdivision 4 ceases.  The 
  8.10  commissioner shall reduce other aids due the district to recover 
  8.11  an amount equal to the aid paid under subdivision 6 plus the 
  8.12  difference between the aid paid under subdivision 5 and the aid 
  8.13  that would have been paid if the revenue had been $50 times the 
  8.14  pupil units served.  
  8.15     (b) If a district has failed to combine, the authority to 
  8.16  levy eligibility for revenue for reorganization operating debt 
  8.17  under section 122.531, subdivision 4a, and for severance pay or 
  8.18  early retirement incentives under subdivision 15 ceases. 
  8.19     Sec. 13.  Minnesota Statutes 1995 Supplement, section 
  8.20  124.2725, subdivision 14, is amended to read: 
  8.21     Subd. 14.  [CESSATION OF REVENUE.] At any time the 
  8.22  districts cease cooperating, aid shall not be paid and the 
  8.23  authority to levy ceases.  If a district ceases to cooperate for 
  8.24  all or a portion of a fiscal year for which a levy has been 
  8.25  certified under subdivision 3, the department of children, 
  8.26  families, and learning shall adjust the next levy certified by 
  8.27  the district by an amount in proportion to the part of the 
  8.28  fiscal year that the district did not cooperate. 
  8.29     Sec. 14.  Minnesota Statutes 1995 Supplement, section 
  8.30  124.2725, subdivision 15, is amended to read: 
  8.31     Subd. 15.  [RETIREMENT AND SEVERANCE LEVY AID.] A 
  8.32  cooperating or combined district that levied under subdivision 3 
  8.33  for taxes payable in 1995 may levy is eligible for state aid for 
  8.34  severance pay or early retirement incentives for licensed and 
  8.35  nonlicensed employees who retire early as a result of the 
  8.36  cooperation or combination.  All severance pay agreements or 
  9.1   early retirement incentives for licensed and nonlicensed 
  9.2   employees who retire early as a result of the cooperation and 
  9.3   combination must be approved by the commissioner. 
  9.4      Sec. 15.  Minnesota Statutes 1995 Supplement, section 
  9.5   124.2726, subdivision 1, is amended to read: 
  9.6      Subdivision 1.  [ELIGIBILITY AND USE.] A school district 
  9.7   that has been reorganized after June 30, 1994, under section 
  9.8   122.23 is eligible for consolidation transition revenue.  
  9.9   Revenue is equal to the sum of aid under subdivision 
  9.10  subdivisions 2 and levy under subdivision 3.  Consolidation 
  9.11  transition revenue may only be used according to this section.  
  9.12  Revenue must be used for the following purposes and may be 
  9.13  distributed among these purposes at the discretion of the 
  9.14  district: 
  9.15     (1) to offer early retirement incentives as provided by 
  9.16  section 122.23, subdivision 20; 
  9.17     (2) to reduce operating debt as defined in section 121.915; 
  9.18     (3) to enhance learning opportunities for students in the 
  9.19  reorganized district; and 
  9.20     (4) for other costs incurred in the reorganization. 
  9.21     Revenue received and utilized under clause (3) or (4) may 
  9.22  be expended for operating, facilities, and/or equipment.  
  9.23  Revenue received under this section shall not be included in the 
  9.24  determination of the reduction under section 124A.26, 
  9.25  subdivision 1.  
  9.26     Sec. 16.  Minnesota Statutes 1994, section 124.2726, 
  9.27  subdivision 3, is amended to read: 
  9.28     Subd. 3.  [LEVY ADDITIONAL AID.] If the aid available in 
  9.29  subdivision 2 is insufficient to cover the costs of the district 
  9.30  under section 122.23, subdivision 20, the district may levy 
  9.31  apply to the commissioner for state aid to cover the difference 
  9.32  over a period of time not to exceed three years.  
  9.33     Sec. 17.  Minnesota Statutes 1994, section 124.2727, 
  9.34  subdivision 6a, is amended to read: 
  9.35     Subd. 6a.  [DISTRICT COOPERATION REVENUE.] A district's 
  9.36  cooperation revenue is equal to the greater of $67 times the 
 10.1   actual pupil units or $25,000.  District cooperation revenue is 
 10.2   provided through state aid. 
 10.3      Sec. 18.  Minnesota Statutes 1995 Supplement, section 
 10.4   124.312, subdivision 5, is amended to read: 
 10.5      Subd. 5.  [INTEGRATION AID.] For fiscal year 1996 and later 
 10.6   fiscal years Integration revenue is provided through state aid 
 10.7   and equals the following amounts: 
 10.8      (1) for independent school district No. 709, Duluth, 
 10.9   $1,385,000 plus the sum of $660,000 and an amount equal to 2.0 
 10.10  percent times the district's adjusted net tax capacity for 
 10.11  assessment year 1994; 
 10.12     (2) for independent school district No. 625, St. Paul, 
 10.13  $8,090,700 plus the product of $197 and the district's actual 
 10.14  pupil units for that year; and 
 10.15     (3) for special school district No. 1, Minneapolis, 
 10.16  $9,368,300 plus the product of $197 and the district's actual 
 10.17  pupil units for that year. 
 10.18     Sec. 19.  Minnesota Statutes 1995 Supplement, section 
 10.19  124.313, is amended to read: 
 10.20     124.313 [TARGETED NEEDS REVENUE.] 
 10.21     For fiscal year 1996 and thereafter, a school district's 
 10.22  targeted needs revenue equals the sum of: 
 10.23     (1) assurance of mastery revenue according to section 
 10.24  124.311; plus 
 10.25     (2) the district's limited English proficiency revenue 
 10.26  computed according to section 124.273, subdivision 1d; plus 
 10.27     (3) integration revenue computed according to section 
 10.28  124.312, subdivision 4. 
 10.29     Sec. 20.  Minnesota Statutes 1995 Supplement, section 
 10.30  124.3201, subdivision 1, is amended to read: 
 10.31     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
 10.32  section and sections 124.3202 and 124.321, the definitions in 
 10.33  this subdivision apply. 
 10.34     (a) "Base year" for fiscal year 1996 means fiscal year 1995.
 10.35  Base year for later fiscal years means the second fiscal year 
 10.36  preceding the fiscal year for which aid will be paid. 
 11.1      (b) "Basic revenue" has the meaning given it in section 
 11.2   124A.22, subdivision 2.  For the purposes of computing basic 
 11.3   revenue pursuant to this section, each child with a disability 
 11.4   shall be counted as prescribed in section 124.17, subdivision 1. 
 11.5      (c) "Essential personnel" means teachers, related services, 
 11.6   and support services staff providing direct services to students.
 11.7      (d) "Average daily membership" has the meaning given it in 
 11.8   section 124.17. 
 11.9      (e) "Program growth factor" means 1.00 for fiscal year 1998 
 11.10  and later. 
 11.11     (f) "Aid percentage factor" means 60 percent for fiscal 
 11.12  year 1996, 70 percent for fiscal year 1997, 80 percent for 
 11.13  fiscal year 1998, 90 percent for fiscal year 1999, and 100 
 11.14  percent for fiscal years 2000 1999 and later. 
 11.15     (g) "Levy percentage factor" means 100 minus the aid 
 11.16  percentage factor for that year. 
 11.17     Sec. 21.  Minnesota Statutes 1994, section 124.4945, is 
 11.18  amended to read: 
 11.19     124.4945 [LEVY STATE AID FOR SEVERANCE PAY.] 
 11.20     A joint powers board established under section 124.494 may 
 11.21  make a levy is eligible to receive state aid to provide 
 11.22  severance pay and early retirement incentives under section 
 11.23  125.611, for any teacher as defined under section 125.12, 
 11.24  subdivision 1, who is placed on unrequested leave as a result of 
 11.25  the cooperative secondary facility agreement.  A joint powers 
 11.26  board making a levy shall certify to each participating district 
 11.27  tax levies sufficient to raise the amount necessary to provide 
 11.28  the district's portion of severance pay and early retirement 
 11.29  incentives.  The tax levy certified to each district must be 
 11.30  expressed as a local tax rate, that, when applied to the 
 11.31  adjusted net tax capacity of all of the participating districts 
 11.32  raises the amount necessary to provide severance pay and early 
 11.33  retirement incentives.  Each participating school district shall 
 11.34  include the levy in the next tax roll which it shall certify to 
 11.35  the county auditor, and shall remit the collections of the levy 
 11.36  to the joint powers board. 
 12.1      Sec. 22.  Minnesota Statutes 1994, section 124.83, 
 12.2   subdivision 3, is amended to read: 
 12.3      Subd. 3.  [HEALTH AND SAFETY REVENUE.] A district's health 
 12.4   and safety revenue for a fiscal year equals: 
 12.5      (1) the sum of (a) the total approved cost of the 
 12.6   district's hazardous substance plan for fiscal years 1985 
 12.7   through 1989, plus (b) the total approved cost of the district's 
 12.8   health and safety program for fiscal year 1990 through the 
 12.9   fiscal year to which the levy is attributable, minus 
 12.10     (2) the sum of (a) the district's total hazardous substance 
 12.11  aid and levy for fiscal years 1985 through 1989 under sections 
 12.12  124.245 and 275.125, subdivision 11c, plus (b) the district's 
 12.13  health and safety revenue under this subdivision, for years 
 12.14  before the fiscal year to which the levy is attributable, plus 
 12.15  (c) the amount of other federal, state, or local receipts for 
 12.16  the district's hazardous substance or health and safety programs 
 12.17  for fiscal year 1985 through the fiscal year to which the levy 
 12.18  is attributable. 
 12.19     The annual statewide total amount of health and safety 
 12.20  revenue may not exceed the statewide total health and safety 
 12.21  revenue for fiscal year 1998. 
 12.22     Sec. 23.  Minnesota Statutes 1994, section 124.91, 
 12.23  subdivision 1, is amended to read: 
 12.24     Subdivision 1.  [TO LEASE BUILDING OR LAND.] When a 
 12.25  district finds it economically advantageous to rent or lease a 
 12.26  building or land for any instructional purposes and it 
 12.27  determines that the capital expenditure facilities revenues 
 12.28  authorized under section 124.243 are insufficient for this 
 12.29  purpose, it may apply to the commissioner for permission to make 
 12.30  an additional capital expenditure levy for this purpose.  An 
 12.31  application for permission to levy under this subdivision must 
 12.32  contain financial justification for the proposed levy, the terms 
 12.33  and conditions of the proposed lease, and a description of the 
 12.34  space to be leased and its proposed use.  The criteria for 
 12.35  approval of applications to levy under this subdivision must 
 12.36  include:  the reasonableness of the price, the appropriateness 
 13.1   of the space to the proposed activity, the feasibility of 
 13.2   transporting pupils to the leased building or land, conformity 
 13.3   of the lease to the laws and rules of the state of Minnesota, 
 13.4   and the appropriateness of the proposed lease to the space needs 
 13.5   and the financial condition of the district.  The commissioner 
 13.6   must not authorize a levy under this subdivision in an amount 
 13.7   greater than the cost to the district of renting or leasing a 
 13.8   building or land for approved purposes.  The proceeds of this 
 13.9   levy must not be used for custodial or other maintenance 
 13.10  services.  A district may not levy under this subdivision for 
 13.11  the purpose of leasing or renting a district-owned building to 
 13.12  itself.  For taxes payable in 1998 and later, a district's levy 
 13.13  under this subdivision must not exceed the amount levied for 
 13.14  this purpose for taxes payable in 1997. 
 13.15     Sec. 24.  Minnesota Statutes 1994, section 124.91, 
 13.16  subdivision 2, is amended to read: 
 13.17     Subd. 2.  [PRE-JULY 1990 LEASE PURCHASE, INSTALLMENT BUYS.] 
 13.18  A district may annually levy the amount needed to make payments 
 13.19  required by a lease purchase agreement, installment purchase 
 13.20  agreement, or other deferred payment agreement authorized by 
 13.21  Minnesota Statutes 1989 Supplement, section 465.71, if:  
 13.22     (1) the agreement was approved by the commissioner before 
 13.23  July 1, 1990, according to Minnesota Statutes 1989 Supplement, 
 13.24  section 275.125, subdivision 11d; or 
 13.25     (2) the district levied in 1989 for the payments. 
 13.26     For taxes payable in 1998 and later, a district's levy 
 13.27  under this subdivision must not exceed the amount levied for 
 13.28  this purpose for taxes payable in 1997. 
 13.29     Sec. 25.  Minnesota Statutes 1995 Supplement, section 
 13.30  124.91, subdivision 4, is amended to read: 
 13.31     Subd. 4.  [COOPERATING DISTRICTS.] A district that has an 
 13.32  agreement according to section 122.535 or 122.541 may levy for 
 13.33  the repair costs, as approved by the department of children, 
 13.34  families, and learning, of a building located in another 
 13.35  district that is a party to the agreement.  For taxes payable in 
 13.36  1998 and later, a district's levy under this subdivision must 
 14.1   not exceed the amount levied for this purpose for taxes payable 
 14.2   in 1997. 
 14.3      Sec. 26.  Minnesota Statutes 1995 Supplement, section 
 14.4   124.912, subdivision 1, is amended to read: 
 14.5      Subdivision 1.  [STATUTORY OBLIGATIONS.] (a) A school 
 14.6   district may levy is eligible for state aid for the amount 
 14.7   authorized for liabilities of dissolved districts pursuant to 
 14.8   section 122.45; the amounts necessary to pay the district's 
 14.9   obligations under section 268.06, subdivision 25; the amounts 
 14.10  necessary to pay for job placement services offered to employees 
 14.11  who may become eligible for benefits pursuant to section 268.08; 
 14.12  the amounts necessary to pay the district's obligations under 
 14.13  section 127.05; the amounts authorized by section 122.531; the 
 14.14  amounts necessary to pay the district's obligations under 
 14.15  section 122.533; and for severance pay required by sections 
 14.16  120.08, subdivision 3, and 122.535, subdivision 6. 
 14.17     (b) An education district that negotiates a collective 
 14.18  bargaining agreement for teachers under section 122.937 may 
 14.19  certify to the department of children, families, and learning 
 14.20  the amount necessary to pay all of the member districts' 
 14.21  obligations and the education district's obligations under 
 14.22  section 268.06, subdivision 25. 
 14.23     The department of children, families, and learning must 
 14.24  allocate the levy amount proportionately among the member 
 14.25  districts based on adjusted net tax capacity.  The member 
 14.26  districts must levy the amount allocated. 
 14.27     (c) Each year, a member district of an education district 
 14.28  that levies under this subdivision must transfer the amount of 
 14.29  revenue certified under paragraph (b) to the education district 
 14.30  board according to this subdivision.  By June 20 and November 30 
 14.31  of each year, an amount must be transferred equal to: 
 14.32     (1) 50 percent times 
 14.33     (2) the amount certified in paragraph (b) minus homestead 
 14.34  and agricultural credit aid allocated for that levy according to 
 14.35  section 273.1398, subdivision 6. 
 14.36     Sec. 27.  Minnesota Statutes 1994, section 124.912, 
 15.1   subdivision 3, is amended to read: 
 15.2      Subd. 3.  [RULE COMPLIANCE.] Each year a district that is 
 15.3   required to implement a plan according to the requirements of 
 15.4   Minnesota Rules, parts 3535.0200 to 3535.2200, may levy is 
 15.5   eligible for state aid in an amount not to exceed a net tax rate 
 15.6   of equal to 2.0 percent times the adjusted net tax capacity of 
 15.7   the district for taxes payable in 1991 and thereafter the 
 15.8   preceding year.  A district that levies receives integration 
 15.9   revenue according to subdivision 2 may not levy according to 
 15.10  section 124.312 is not eligible for state aid under this 
 15.11  subdivision.  Notwithstanding section 121.904, the entire amount 
 15.12  of this levy shall be recognized as revenue for the fiscal year 
 15.13  in which the levy is certified.  This levy shall not be 
 15.14  considered in computing the aid reduction under section 124.155. 
 15.15     Sec. 28.  Minnesota Statutes 1994, section 124.912, 
 15.16  subdivision 6, is amended to read: 
 15.17     Subd. 6.  [CRIME RELATED COSTS.] For taxes levied in 1991 
 15.18  and subsequent years, payable in 1992 and subsequent years, each 
 15.19  school district may make a levy on all taxable property located 
 15.20  within the school district for the purposes specified in this 
 15.21  subdivision.  The maximum amount which may be levied for all 
 15.22  costs under this subdivision shall be equal to State aid for 
 15.23  crime related costs equals $1 multiplied by the population of 
 15.24  the school district.  For purposes of this subdivision, 
 15.25  "population" of the school district means the same as contained 
 15.26  in section 275.14.  The proceeds of the levy state aid must be 
 15.27  used for reimbursing the cities and counties who contract with 
 15.28  the school district for the following purposes:  (1) to pay the 
 15.29  costs incurred for the salaries, benefits, and transportation 
 15.30  costs of peace officers and sheriffs for liaison services in the 
 15.31  district's middle and secondary schools and (2) to pay the costs 
 15.32  for a drug abuse prevention program as defined in Minnesota 
 15.33  Statutes 1991 Supplement, section 609.101, subdivision 3, 
 15.34  paragraph (f) in the elementary schools.  The school district 
 15.35  must initially attempt to contract for these services with the 
 15.36  police department of each city or the sheriff's department of 
 16.1   the county within the school district containing the school 
 16.2   receiving the services.  If a local police department or a 
 16.3   county sheriff's department does not wish to provide the 
 16.4   necessary services, the district may contract for these services 
 16.5   with any other police or sheriff's department located entirely 
 16.6   or partially within the school district's boundaries.  The levy 
 16.7   authorized under this subdivision is not included in determining 
 16.8   the school district's levy limitations. 
 16.9      Sec. 29.  Minnesota Statutes 1995 Supplement, section 
 16.10  124.912, subdivision 7, is amended to read: 
 16.11     Subd. 7.  [ICE ARENA LEVY.] (a) Each year, an independent 
 16.12  school district operating and maintaining an ice arena, may levy 
 16.13  is eligible for state aid for the net operational costs of the 
 16.14  ice arena.  The levy amount of state aid may not exceed the net 
 16.15  actual costs of operation of the arena for the previous year.  
 16.16  Net actual costs are defined as operating costs less any 
 16.17  operating revenues. 
 16.18     (b) Any school district operating and maintaining an ice 
 16.19  arena must demonstrate to the satisfaction of the office of 
 16.20  monitoring in the department of children, families, and learning 
 16.21  that the district will offer equal sports opportunities for male 
 16.22  and female students to use its ice arena, particularly in areas 
 16.23  of access to prime practice time, team support, and providing 
 16.24  junior varsity and younger level teams for girls' ice sports and 
 16.25  ice sports offerings. 
 16.26     Sec. 30.  Minnesota Statutes 1994, section 124.914, 
 16.27  subdivision 1, is amended to read: 
 16.28     Subdivision 1.  [1977 STATUTORY OPERATING DEBT.] (1) In 
 16.29  each year in which so required by this subdivision, a district 
 16.30  shall make an additional levy is eligible for state aid to 
 16.31  eliminate its statutory operating debt, determined as of June 
 16.32  30, 1977, and certified and adjusted by the commissioner.  
 16.33  This State aid payments for fiscal years 1999 and later and the 
 16.34  previous local levy shall not be made in more than 30 successive 
 16.35  years and each year before it is made, it must be approved by 
 16.36  the commissioner and the approval shall specify its amount.  
 17.1   This levy shall be an amount which is equal to the amount raised 
 17.2   by a levy of a net tax rate of 1.66 percent times the adjusted 
 17.3   net tax capacity of the district for the preceding year for 
 17.4   taxes payable in 1991 and thereafter; provided that in the last 
 17.5   year in which the district is required to make this levy, it 
 17.6   shall levy an amount not to exceed the amount raised by a levy 
 17.7   of a net tax rate of 1.66 percent times the adjusted net tax 
 17.8   capacity of the district for the preceding year for taxes 
 17.9   payable in 1991 and thereafter The state aid for each district 
 17.10  equals the amount raised by the levy for this purpose for taxes 
 17.11  payable in 1997.  When the sum of the cumulative levies made 
 17.12  pursuant revenue received according to this subdivision and 
 17.13  transfers made according to section 121.912, subdivision 4, 
 17.14  equals an amount equal to the statutory operating debt of the 
 17.15  district, the levy state aid shall be discontinued. 
 17.16     (2) The district shall establish a special account in the 
 17.17  general fund which shall be designated "appropriated fund 
 17.18  balance reserve account for purposes of reducing statutory 
 17.19  operating debt" on its books and records.  This account shall 
 17.20  reflect the levy revenue authorized pursuant to this subdivision.
 17.21  The proceeds of this levy revenue shall be used only for cash 
 17.22  flow requirements and shall not be used to supplement district 
 17.23  revenues or income for the purposes of increasing the district's 
 17.24  expenditures or budgets. 
 17.25     (3) Any district which is required to levy pursuant to this 
 17.26  subdivision shall certify the maximum levy allowable under 
 17.27  section 124A.23, subdivision 2, in that same year. 
 17.28     (4) Each district shall make permanent fund balance 
 17.29  transfers so that the total statutory operating debt of the 
 17.30  district is reflected in the general fund as of June 30, 1977. 
 17.31     Sec. 31.  Minnesota Statutes 1994, section 124.914, 
 17.32  subdivision 2, is amended to read: 
 17.33     Subd. 2.  [1983 OPERATING DEBT.] (1) Each year, a 
 17.34  district may make an additional levy is eligible for state aid 
 17.35  to eliminate a deficit in the net unappropriated operating funds 
 17.36  of the district, determined as of June 30, 1983, and certified 
 18.1   and adjusted by the commissioner.  This levy may in each year be 
 18.2   an amount not to exceed the amount raised by a levy of a net tax 
 18.3   rate of 1.85 percent times the adjusted net tax capacity for 
 18.4   taxes payable in 1991 and thereafter of the district for the 
 18.5   preceding year as determined by the commissioner state aid for 
 18.6   each district equals the amount raised by the district's levy 
 18.7   for this purpose for taxes payable in 1997.  However, the total 
 18.8   amount of this levy revenue for all years it is made received 
 18.9   shall not exceed the lesser of (a) the amount of the deficit in 
 18.10  the net unappropriated operating funds of the district as of 
 18.11  June 30, 1983, or (b) the amount of the aid reduction, according 
 18.12  to Laws 1981, Third Special Session chapter 2, article 2, 
 18.13  section 2, but excluding clauses (l), (m), (n), (o), and (p), 
 18.14  and Laws 1982, Third Special Session chapter 1, article 3, 
 18.15  section 6, to the district in fiscal year 1983.  When the 
 18.16  cumulative levies made pursuant revenue received according to 
 18.17  this subdivision equal equals the total amount permitted by this 
 18.18  subdivision, the levy state aid shall be discontinued.  
 18.19     (2) The proceeds of this levy state aid shall be used only 
 18.20  for cash flow requirements and shall not be used to supplement 
 18.21  district revenues or income for the purposes of increasing the 
 18.22  district's expenditures or budgets.  
 18.23     (3) Any district that levies pursuant to this subdivision 
 18.24  shall certify the maximum levy allowable under section 124A.23, 
 18.25  subdivisions 2 and 2a, in that same year. 
 18.26     Sec. 32.  Minnesota Statutes 1994, section 124.914, 
 18.27  subdivision 3, is amended to read: 
 18.28     Subd. 3.  [1985 OPERATING DEBT.] (1) Each year, a 
 18.29  district may levy is eligible for state aid to eliminate a 
 18.30  deficit in the net unappropriated balance in the general fund of 
 18.31  the district, determined as of June 30, 1985, and certified and 
 18.32  adjusted by the commissioner.  Each year this levy may be an 
 18.33  amount not to exceed the amount raised by a levy of a net tax 
 18.34  rate of 1.85 percent times the adjusted net tax capacity for 
 18.35  taxes payable in 1991 and thereafter of the district for the 
 18.36  preceding year the state aid for each district equals the amount 
 19.1   raised by the district's levy for this purpose for taxes payable 
 19.2   in 1997.  However, the total amount of this levy revenue for all 
 19.3   years it is made received shall not exceed the amount of the 
 19.4   deficit in the net unappropriated balance in the general fund of 
 19.5   the district as of June 30, 1985.  When the cumulative levies 
 19.6   made pursuant to revenue received under this subdivision equal 
 19.7   equals the total amount permitted by this subdivision, the levy 
 19.8   state aid shall be discontinued.  
 19.9      (2) A district, if eligible, may levy revenue under this 
 19.10  subdivision or subdivision 2 but not both. 
 19.11     (3) The proceeds of this levy revenue shall be used only 
 19.12  for cash flow requirements and shall not be used to supplement 
 19.13  district revenues or income for the purposes of increasing the 
 19.14  district's expenditures or budgets.  
 19.15     (4) Any district that levies pursuant to this subdivision 
 19.16  shall certify the maximum levy allowable under section 124A.23, 
 19.17  subdivision 2, in that same year. 
 19.18     Sec. 33.  Minnesota Statutes 1994, section 124.914, 
 19.19  subdivision 4, is amended to read: 
 19.20     Subd. 4.  [1992 OPERATING DEBT.] (a) For taxes payable for 
 19.21  calendar year 2003 fiscal year 2004 and earlier, a district that 
 19.22  has filed a plan pursuant to section 121.917, subdivision 4, may 
 19.23  levy is eligible for state aid, with the approval of the 
 19.24  commissioner, to eliminate a deficit in the net unappropriated 
 19.25  balance in the operating funds of the district, determined as of 
 19.26  June 30, 1992, and certified and adjusted by the commissioner.  
 19.27  Each year this levy may be an amount not to state aid shall not 
 19.28  exceed the lesser of: 
 19.29     (1) an amount raised by a levy of a net tax rate of one 
 19.30  percent times the adjusted net tax capacity the district's levy 
 19.31  for this purpose for taxes payable in 1997; or 
 19.32     (2) $100,000. 
 19.33  This amount shall be reduced by referendum revenue authorized 
 19.34  under section 124A.03 pursuant to the plan filed under section 
 19.35  121.917.  However, the total amount of this levy revenue for all 
 19.36  years it is made received shall not exceed the amount of the 
 20.1   deficit in the net unappropriated balance in the operating funds 
 20.2   of the district as of June 30, 1992.  When the cumulative levies 
 20.3   made pursuant to revenue received under this subdivision equal 
 20.4   equals the total amount permitted by this subdivision, the levy 
 20.5   state aid shall be discontinued.  
 20.6      (b) A district, if eligible, may levy receive revenue under 
 20.7   this subdivision or subdivision 2 or 3, or under section 
 20.8   122.531, subdivision 4a, or Laws 1992, chapter 499, article 7, 
 20.9   sections 16 or 17, but not under more than one. 
 20.10     (c) The proceeds of this levy revenue shall be used only 
 20.11  for cash flow requirements and shall not be used to supplement 
 20.12  district revenues or income for the purposes of increasing the 
 20.13  district's expenditures or budgets.  
 20.14     (d) Any district that levies pursuant to this subdivision 
 20.15  shall certify the maximum levy allowable under section 124A.23, 
 20.16  subdivision 2, in that same year. 
 20.17     Sec. 34.  Minnesota Statutes 1995 Supplement, section 
 20.18  124.916, subdivision 1, is amended to read: 
 20.19     Subdivision 1.  [HEALTH INSURANCE.] (a) A school 
 20.20  district may levy is eligible for state aid in the amount 
 20.21  necessary to make employer contributions for insurance for 
 20.22  retired employees under this subdivision.  Notwithstanding 
 20.23  section 121.904, 50 percent of the amount levied shall be 
 20.24  recognized as revenue for the fiscal year in which the levy is 
 20.25  certified.  This levy shall not be considered in computing the 
 20.26  aid reduction under section 124.155. 
 20.27     (b) The school board of a joint vocational technical 
 20.28  district formed under sections 136C.60 to 136C.69 and the school 
 20.29  board of a school district may provide employer-paid hospital, 
 20.30  medical, and dental benefits to a person who: 
 20.31     (1) is eligible for employer-paid insurance under 
 20.32  collective bargaining agreements or personnel plans in effect on 
 20.33  June 30, 1992; 
 20.34     (2) has at least 25 years of service credit in the public 
 20.35  pension plan of which the person is a member on the day before 
 20.36  retirement or, in the case of a teacher, has a total of at least 
 21.1   25 years of service credit in the teachers retirement 
 21.2   association, a first-class city teacher retirement fund, or any 
 21.3   combination of these; 
 21.4      (3) upon retirement is immediately eligible for a 
 21.5   retirement annuity; 
 21.6      (4) is at least 55 and not yet 65 years of age; and 
 21.7      (5) retires on or after May 15, 1992, and before July 21, 
 21.8   1992. 
 21.9      A school board paying insurance under this subdivision may 
 21.10  not exclude any eligible employees. 
 21.11     (c) An employee who is eligible both for the health 
 21.12  insurance benefit under this subdivision and for an early 
 21.13  retirement incentive under a collective bargaining agreement or 
 21.14  personnel plan established by the employer must select either 
 21.15  the early retirement incentive provided under the collective 
 21.16  bargaining agreement personnel plan or the incentive provided 
 21.17  under this subdivision, but may not receive both.  For purposes 
 21.18  of this subdivision, a person retires when the person terminates 
 21.19  active employment and applies for retirement benefits.  The 
 21.20  retired employee is eligible for single and dependent coverages 
 21.21  and employer payments to which the person was entitled 
 21.22  immediately before retirement, subject to any changes in 
 21.23  coverage and employer and employee payments through collective 
 21.24  bargaining or personnel plans, for employees in positions 
 21.25  equivalent to the position from which the employee retired.  The 
 21.26  retired employee is not eligible for employer-paid life 
 21.27  insurance.  Eligibility ceases when the retired employee attains 
 21.28  the age of 65, or when the employee chooses not to receive the 
 21.29  retirement benefits for which the employee has applied, or when 
 21.30  the employee is eligible for employer-paid health insurance from 
 21.31  a new employer.  Coverages must be coordinated with relevant 
 21.32  health insurance benefits provided through the federally 
 21.33  sponsored Medicare program.  
 21.34     (d) Unilateral implementation of this section by a public 
 21.35  employer is not an unfair labor practice for purposes of chapter 
 21.36  179A.  The authority provided in this subdivision for an 
 22.1   employer to pay health insurance costs for certain retired 
 22.2   employees is not subject to the limits in section 179A.20, 
 22.3   subdivision 2a. 
 22.4      (e) If a school district levies receives revenue according 
 22.5   to this subdivision, it may not also levy receive revenue 
 22.6   according to section 122.531, subdivision 9, for eligible 
 22.7   employees. 
 22.8      Sec. 35.  Minnesota Statutes 1995 Supplement, section 
 22.9   124.916, subdivision 2, is amended to read: 
 22.10     Subd. 2.  [RETIRED EMPLOYEE HEALTH BENEFITS.] For taxes 
 22.11  payable in 1996, fiscal years 1997, 1998, and 1999 only, a 
 22.12  school district may levy is eligible for state aid in an amount 
 22.13  up to the amount the district is required by the collective 
 22.14  bargaining agreement in effect on March 30, 1992, to pay for 
 22.15  health insurance or unreimbursed medical expenses for licensed 
 22.16  and nonlicensed employees who have terminated services in the 
 22.17  employing district and withdrawn from active teaching service or 
 22.18  other active service, as applicable, before July 1, 1992.  The 
 22.19  total amount of the levy state aid each year may not exceed 
 22.20  $300,000.  
 22.21     Notwithstanding section 121.904, 50 percent of the proceeds 
 22.22  of this levy shall be recognized in the fiscal year in which it 
 22.23  is certified. 
 22.24     Sec. 36.  Minnesota Statutes 1994, section 124.916, 
 22.25  subdivision 3, is amended to read: 
 22.26     Subd. 3.  [RETIREMENT LEVIES AID.] (1) In addition to the 
 22.27  excess levy authorized in 1976 any district within a city of the 
 22.28  first class which was authorized in 1975 to make a retirement 
 22.29  levy under Minnesota Statutes 1974, section 275.127 and chapter 
 22.30  422A may levy an amount per pupil unit which is equal to the 
 22.31  amount levied in 1975 payable 1976, under Minnesota Statutes 
 22.32  1974, section 275.127 and chapter 422A, divided by the number of 
 22.33  pupil units in the district in 1976-1977. 
 22.34     (2) In 1979 and each year thereafter, any district which 
 22.35  qualified in 1976 for an extra levy under clause (1) shall be 
 22.36  allowed to levy the same amount as levied for retirement in 1978 
 23.1   under this clause reduced each year by ten percent of the 
 23.2   difference between the amount levied for retirement in 1971 
 23.3   under Minnesota Statutes 1971, sections 275.127 and 422.01 to 
 23.4   422.54 and the amount levied for retirement in 1975 under 
 23.5   Minnesota Statutes 1974, section 275.127 and chapter 422A. 
 23.6      (3) In 1991 and each year thereafter, a district to which 
 23.7   this subdivision applies may levy an additional amount required 
 23.8   for contributions to the Minneapolis employees retirement fund 
 23.9   as a result of the maximum dollar amount limitation on state 
 23.10  contributions to the fund imposed under section 422A.101, 
 23.11  subdivision 3.  The additional levy shall not exceed the most 
 23.12  recent amount certified by the board of the Minneapolis 
 23.13  employees retirement fund as the district's share of the 
 23.14  contribution requirement in excess of the maximum state 
 23.15  contribution under section 422A.101, subdivision 3.  
 23.16     (4) For taxes payable in 1994 and thereafter, special 
 23.17  school district No. 1, Minneapolis, and independent school 
 23.18  district No. 625, St. Paul, may levy for the increase in the 
 23.19  employer retirement fund contributions, under Laws 1992, chapter 
 23.20  598, article 5, section 1.  Notwithstanding section 121.904, the 
 23.21  entire amount of this levy may be recognized as revenue for the 
 23.22  fiscal year in which the levy is certified.  This levy shall not 
 23.23  be considered in computing the aid reduction under section 
 23.24  124.155.  For fiscal years 1998 and later, the commissioner 
 23.25  shall determine the amount of retirement levies certified under 
 23.26  this subdivision by each district for taxes payable in 1997. 
 23.27     (2) A district is eligible for state aid equal to the 
 23.28  amount calculated under paragraph (1). 
 23.29     (5) (3) If the employer retirement fund contributions under 
 23.30  section 354A.12, subdivision 2a, are increased for fiscal year 
 23.31  1994 or later fiscal years, special school district No. 1, 
 23.32  Minneapolis, and independent school district No. 625, St. Paul, 
 23.33  may levy in payable 1994 or later an amount are eligible for 
 23.34  state aid equal to the amount derived by applying the net 
 23.35  increase in the employer retirement fund contribution rate of 
 23.36  the respective teacher retirement fund association between 
 24.1   fiscal year 1993 and the fiscal year beginning in the year after 
 24.2   the levy is certified to the total covered payroll of the 
 24.3   applicable teacher retirement fund association.  Notwithstanding 
 24.4   section 121.904, the entire amount of this levy may be 
 24.5   recognized as revenue for the fiscal year in which the levy is 
 24.6   certified.  This levy shall not be considered in computing the 
 24.7   aid reduction under section 124.155.  If an applicable school 
 24.8   district levies under this paragraph, they may not levy under 
 24.9   paragraph (4). 
 24.10     (6) (4) In addition to the levy state aid authorized under 
 24.11  paragraph (5) (3), special school district No. 1, 
 24.12  Minneapolis, may also levy in payable 1994 or later is also 
 24.13  eligible for additional state aid in an amount equal to the 
 24.14  state aid contribution under section 354A.12, subdivision 3b.  
 24.15  Notwithstanding section 121.904, the entire amount of this levy 
 24.16  may be recognized as revenue for the fiscal year in which the 
 24.17  levy is certified.  This levy shall not be considered in 
 24.18  computing the aid reduction under section 124.155. 
 24.19     Sec. 37.  Minnesota Statutes 1994, section 124.916, 
 24.20  subdivision 4, is amended to read: 
 24.21     Subd. 4.  [MINNEAPOLIS HEALTH INSURANCE SUBSIDY.] Each year 
 24.22  special school district No. 1, Minneapolis, may make an 
 24.23  additional levy not to exceed is eligible for state aid equal to 
 24.24  the amount raised by a net tax rate of .10 percent times the 
 24.25  adjusted net tax capacity for taxes payable in 1991 and 
 24.26  thereafter of the property in the district for the preceding 
 24.27  year.  The proceeds may be used only to subsidize health 
 24.28  insurance costs for eligible teachers as provided in this 
 24.29  section.  
 24.30     "Eligible teacher" means a retired teacher who was a basic 
 24.31  member of the Minneapolis teachers retirement fund association, 
 24.32  who retired before May 1, 1974, and who is not eligible to 
 24.33  receive the hospital insurance benefits of the federal Medicare 
 24.34  program of the Social Security Act without payment of a monthly 
 24.35  premium.  The district shall notify eligible teachers that a 
 24.36  subsidy is available.  To obtain a subsidy, an eligible teacher 
 25.1   must submit to the school district a copy of receipts for health 
 25.2   insurance premiums paid.  The school district shall disburse the 
 25.3   health insurance premium subsidy to each eligible teacher 
 25.4   according to a schedule determined by the district, but at least 
 25.5   annually.  An eligible teacher may receive a subsidy up to an 
 25.6   amount equal to the lesser of 90 percent of the cost of the 
 25.7   eligible teacher's health insurance or up to 90 percent of the 
 25.8   cost of the number two qualified plan of health coverage for 
 25.9   individual policies made available by the Minnesota 
 25.10  comprehensive health association under chapter 62E.  
 25.11     If funds remaining from the previous year's health 
 25.12  insurance subsidy levy revenue, minus the previous year's 
 25.13  required subsidy amount, are sufficient to pay the estimated 
 25.14  current year subsidy, the levy state aid must be discontinued 
 25.15  until the remaining funds are estimated by the school board to 
 25.16  be insufficient to pay the subsidy. 
 25.17     Sec. 38.  Minnesota Statutes 1994, section 124.918, 
 25.18  subdivision 8, is amended to read: 
 25.19     Subd. 8.  [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) 
 25.20  Reductions in levies pursuant to section 124.918, subdivision 1, 
 25.21  and section 273.138, shall be made prior to the reductions in 
 25.22  clause (2). 
 25.23     (2) Notwithstanding any other law to the contrary, 
 25.24  districts which received payments pursuant to sections 298.018; 
 25.25  298.23 to 298.28, except an amount distributed under section 
 25.26  298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to 
 25.27  298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 
 25.28  upon severed mineral values, or recognized revenue pursuant to 
 25.29  section 477A.15; shall not include a portion of these aids in 
 25.30  their permissible levies pursuant to those sections, but instead 
 25.31  shall reduce the permissible levies authorized by this chapter 
 25.32  and chapter 124A by the greater of the following: 
 25.33     (a) an amount equal to 50 percent of the total dollar 
 25.34  amount of the payments received pursuant to those sections or 
 25.35  revenue recognized pursuant to section 477A.15 in the previous 
 25.36  fiscal year; or 
 26.1      (b) an amount equal to the total dollar amount of the 
 26.2   payments received pursuant to those sections or revenue 
 26.3   recognized pursuant to section 477A.15 in the previous fiscal 
 26.4   year less the product of the same dollar amount of payments or 
 26.5   revenue times the ratio of the maximum levy allowed the district 
 26.6   under Minnesota Statutes 1986, sections 124A.03, subdivision 2, 
 26.7   124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, 
 26.8   subdivision 3a, 124A.12, subdivision 3a, and 124A.14, 
 26.9   subdivision 5a, to the total levy allowed the district under 
 26.10  this section and Minnesota Statutes 1986, sections 124A.03, 
 26.11  124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, 
 26.12  subdivision 3a, 124A.12, subdivision 3a, 124A.14, subdivision 
 26.13  5a, and 124A.20, subdivision 2, for levies certified in 1986. 
 26.14     (3) No reduction pursuant to this subdivision shall reduce 
 26.15  the levy made by the district pursuant to section 124A.23 
 26.16  124A.25, to an amount less than the amount raised by a levy of a 
 26.17  net tax rate of 6.82 percent times the adjusted net tax capacity 
 26.18  for taxes payable in 1990 and thereafter of that district for 
 26.19  the preceding year as determined by the commissioner.  The 
 26.20  amount of any increased levy authorized by referendum pursuant 
 26.21  to section 124A.03, subdivision 2, shall not be reduced pursuant 
 26.22  to this subdivision.  The amount of any levy authorized by 
 26.23  section 124.912, subdivision 1, to make payments for bonds 
 26.24  issued and for interest thereon, shall not be reduced pursuant 
 26.25  to this subdivision.  
 26.26     (4) Before computing the reduction pursuant to this 
 26.27  subdivision of the capital expenditure facilities levy 
 26.28  authorized by section 124.243, the capital expenditure equipment 
 26.29  levy authorized by section 124.244, the health and safety levy 
 26.30  authorized by sections 124.83 and 124.91, subdivision 6, the 
 26.31  commissioner shall ascertain from each affected school district 
 26.32  the amount it proposes to levy under each section or 
 26.33  subdivision.  The reduction shall be computed on the basis of 
 26.34  the amount so ascertained. 
 26.35     (5) Notwithstanding any law to the contrary, any amounts 
 26.36  received by districts in any fiscal year pursuant to sections 
 27.1   298.018; 298.23 to 298.28; 298.34 to 298.39; 298.391 to 298.396; 
 27.2   298.405; or any law imposing a tax on severed mineral values; 
 27.3   and not deducted from general education aid pursuant to section 
 27.4   124A.035, subdivision 5, clause (2), and not applied to reduce 
 27.5   levies pursuant to this subdivision shall be paid by the 
 27.6   district to the St. Louis county auditor in the following amount 
 27.7   by March 15 of each year, the amount required to be subtracted 
 27.8   from the previous fiscal year's general education aid pursuant 
 27.9   to section 124A.035, subdivision 5, which is in excess of the 
 27.10  general education aid earned for that fiscal year.  The county 
 27.11  auditor shall deposit any amounts received pursuant to this 
 27.12  clause in the St. Louis county treasury for purposes of paying 
 27.13  the taconite homestead credit as provided in section 273.135. 
 27.14     Sec. 39.  Minnesota Statutes 1994, section 124.918, is 
 27.15  amended by adding a subdivision to read: 
 27.16     Subd. 9.  [INCOME TAX LIABILITY.] No later than October 1 
 27.17  of each year, the commissioner of children, families, and 
 27.18  learning shall report to each school district the preliminary 
 27.19  aggregate individual income tax liability for that district, as 
 27.20  reported by the commissioner of revenue. 
 27.21     Sec. 40.  [124A.038] [DISCRETIONARY REVENUE.] 
 27.22     Subdivision 1.  [INCOME TAX SURTAX.] A school district may 
 27.23  hold a referendum under subdivision 2 to approve an income tax 
 27.24  surtax.  The revenue raised by the income tax surtax may not 
 27.25  exceed the greater of the district's referendum revenue 
 27.26  authority for fiscal year 1998 or $800 per pupil unit.  Each one 
 27.27  percent rate up to three, approved by the taxpayers under 
 27.28  subdivision 2 is guaranteed to raise $100 per pupil unit for 
 27.29  each year the surtax is in place. 
 27.30     Subd. 2.  [REFERENDUM.] (a) A referendum to impose an 
 27.31  income tax surtax may be called by the school board or shall be 
 27.32  called by the school board upon written petition of qualified 
 27.33  voters of the district.  The referendum shall be conducted on 
 27.34  the first Tuesday after the first Monday in November in the 
 27.35  calendar year before the tax year in which the surtax, if 
 27.36  approved, will first be applied.  The ballot shall state the 
 28.1   proposed surtax rate as a percentage of Minnesota individual 
 28.2   income tax liability under chapter 290.  The ballot may state 
 28.3   that an existing surtax is expiring.  The ballot shall designate 
 28.4   the specific number of years, not to exceed ten, for which the 
 28.5   surtax applies.  The ballot may contain a textual portion with 
 28.6   the information required in this subdivision and a question 
 28.7   stating substantially the following: 
 28.8      "Shall an income tax surtax proposed by (petition to) the 
 28.9   board of .........., independent school district No. ...., be 
 28.10  approved?" 
 28.11     If approved, the surtax rate is authorized for the number 
 28.12  of years authorized, not to exceed ten, beginning in the year 
 28.13  after the referendum, or until revoked or reduced by the voters 
 28.14  of the district at a subsequent referendum. 
 28.15     (b) The school board shall prepare and deliver by 
 28.16  first-class mail a notice of the referendum and the proposed 
 28.17  income tax surtax to each residential address in the school 
 28.18  district at least 15 days but no more than 30 days prior to the 
 28.19  day of the referendum.  The notice must project the anticipated 
 28.20  amount of income tax increase in annual dollars and annual 
 28.21  percentages for typical family incomes within the school 
 28.22  district.  The school board shall make these projections by 
 28.23  applying the proposed surtax rate to the preliminary aggregate 
 28.24  individual income tax liability in the school district in the 
 28.25  previous year, as reported by the commissioner of revenue. 
 28.26     The notice for a referendum may state that an existing 
 28.27  income tax surtax is expiring and project the anticipated amount 
 28.28  of increase over the existing discretionary income tax or 
 28.29  referendum property tax, if any, in annual dollars and annual 
 28.30  percentages for typical family incomes within the school 
 28.31  district. 
 28.32     The notice must include the following statement:  "Passage 
 28.33  of this referendum will result in an increase in your individual 
 28.34  income taxes." 
 28.35     (c) A referendum on the question of revoking or reducing 
 28.36  the surtax rate authorized under paragraph (a) may be called by 
 29.1   the school board and shall be called by the school board upon 
 29.2   the written petition of qualified voters of the district.  A 
 29.3   referendum to revoke or reduce the surtax rate must be based 
 29.4   upon the surtax rate that was stated in the initial 
 29.5   authorization.  Revenue resulting from a surtax approved by the 
 29.6   voters of the district according to paragraph (a), must be 
 29.7   received at least once before it is subject to a referendum on 
 29.8   its revocation or reduction for subsequent years.  Only one 
 29.9   revocation or reduction referendum may be held to revoke or 
 29.10  reduce referendum revenue for any specific year and for years 
 29.11  thereafter. 
 29.12     (d) A petition authorized by paragraph (a) or (c) is 
 29.13  effective if signed by a number of qualified voters in excess of 
 29.14  15 percent of the registered voters of the school district on 
 29.15  the day the petition is filed with the school board.  A 
 29.16  referendum invoked by petition must be held on the date 
 29.17  specified in paragraph (a). 
 29.18     (e) The approval of 50 percent plus one of those voting on 
 29.19  the question is required to pass a referendum authorized by this 
 29.20  subdivision. 
 29.21     (f) At least 15 days prior to the day of the referendum, 
 29.22  the district shall submit a copy of the notice required under 
 29.23  paragraph (b) to the commissioner of children, families, and 
 29.24  learning.  Within 15 days after the results of the referendum 
 29.25  have been certified by the school board, or in the case of a 
 29.26  recount, the certification of the results of the recount by the 
 29.27  canvassing board, the district shall notify the commissioner of 
 29.28  the results of the referendum. 
 29.29     Subd. 3.  [REVENUE USE.] Revenue received from an income 
 29.30  tax surtax must be deposited either in the district's general 
 29.31  fund or capital expenditure fund. 
 29.32     Sec. 41.  Minnesota Statutes 1995 Supplement, section 
 29.33  124A.22, subdivision 1, is amended to read: 
 29.34     Subdivision 1.  [GENERAL EDUCATION REVENUE.] (a) For fiscal 
 29.35  year 1996, the general education revenue for each district 
 29.36  equals the sum of the district's basic revenue, compensatory 
 30.1   education revenue, training and experience revenue, secondary 
 30.2   sparsity revenue, elementary sparsity revenue, and supplemental 
 30.3   revenue. 
 30.4      (b) For fiscal year 1997 and thereafter, the general 
 30.5   education revenue for each district equals the sum of the 
 30.6   district's basic revenue, compensatory education revenue, 
 30.7   secondary sparsity revenue, elementary sparsity revenue, 
 30.8   transportation sparsity, total operating capital revenue, 
 30.9   transition revenue, and supplemental revenue.  General education 
 30.10  revenue is provided through state aid. 
 30.11     Sec. 42. Minnesota Statutes 1994, section 124A.292, 
 30.12  subdivision 2, is amended to read: 
 30.13     Subd. 2.  [REVENUE.] Staff development incentive revenue is 
 30.14  equal to the number of teachers at the site times $25.  Staff 
 30.15  development incentive revenue is provided through state aid. 
 30.16     Sec. 43.  [290.0621] [SCHOOL REFERENDUM TAX.] 
 30.17     Subdivision 1.  [IMPOSITION.] In addition to all other 
 30.18  taxes imposed by this chapter, a tax is imposed on individuals 
 30.19  who reside within the territory of a school district in which 
 30.20  the voters approved an income tax surtax at a referendum 
 30.21  conducted under section 124A.038 for that purpose in 1996 or a 
 30.22  subsequent year.  This tax does not apply to referenda on bond 
 30.23  issues.  Individuals residing in the district on the last day of 
 30.24  the tax year are subject to the surtax. 
 30.25     Subd. 2.  [TAX IMPOSED.] The commissioner of revenue shall 
 30.26  annually assess the surtax as part of the individual income tax. 
 30.27     Sec. 44.  [473.176] [SCHOOL DISTRICTS BUILDING PROJECTS.] 
 30.28     Subdivision 1.  [REQUIRED REVIEW.] In order to qualify for 
 30.29  debt service equalization aid under section 124.95, a school 
 30.30  district with its administrative office located within a 
 30.31  metropolitan county must submit any proposal for new 
 30.32  construction, expansion, or remodeling of an educational 
 30.33  facility in excess of $400,000 to the metropolitan council prior 
 30.34  to submitting any plans to the commissioner of children, 
 30.35  families, and learning for review and comment under section 
 30.36  121.15. 
 31.1      Subd. 2.  [APPROVAL OF PROJECT.] Within 60 days of 
 31.2   receiving the district proposal, the council shall return to the 
 31.3   district either a statement approving the project or a list of 
 31.4   modifications that the district must consider in order to assure 
 31.5   conformance with the metropolitan system plans, including the 
 31.6   regional blueprint.  A district may resubmit a proposed project 
 31.7   to the council after considering the council's comments. 
 31.8      Subd. 3.  [ELIGIBILITY FOR AID.] A district that receives a 
 31.9   statement from the council approving the project may proceed 
 31.10  with the review and comment under section 121.15 and any debt 
 31.11  service amounts attributable to the project qualify as they 
 31.12  otherwise would for debt service equalization aid under section 
 31.13  124.95.  A district that does not receive approval of the 
 31.14  project may proceed with the review and comment under section 
 31.15  121.15, but the debt service amounts attributable to the project 
 31.16  do not qualify for debt service equalization aid under section 
 31.17  124.95. 
 31.18     Sec. 45.  [DEPARTMENT OF REVENUE.] 
 31.19     The commissioner of revenue shall require taxpayers to 
 31.20  report on their individual income tax returns the identifying 
 31.21  number of the school district they lived in on the final day of 
 31.22  the tax year.  The commissioner shall provide taxpayers with a 
 31.23  listing of school district names and numbers to facilitate 
 31.24  compliance with this provision. 
 31.25     No later than September 15 of each year, the commissioner 
 31.26  of revenue shall report to the commissioner of children, 
 31.27  families, and learning the preliminary aggregate individual 
 31.28  income tax liability for each school district in the state. 
 31.29     In years in which surtaxes are authorized, the commissioner 
 31.30  of revenue shall collect the surtax along with the individual 
 31.31  income tax.  The instructions for completing the individual 
 31.32  income tax return shall include a listing of school districts 
 31.33  that have authorized surtaxes and the surtax rates. 
 31.34     Sec. 46.  [REPEALER.] 
 31.35     Subdivision 1.  [JULY 1, 1997.] (a) Minnesota Statutes 
 31.36  1994, sections 122.531, subdivision 4a; 124.2713, subdivisions 
 32.1   6a, 6b, and 7; 124.2715, subdivision 2; 124.2716, subdivisions 3 
 32.2   and 4; 124.2725, subdivision 7; 124.2727, subdivisions 6b, 6c, 
 32.3   and 9; 124A.029, subdivisions 1, 2, 3, and 4; 124A.03, 
 32.4   subdivisions 1b, 1d, 1e, 1f, 1i, 2a, 2b, and 3b; 124A.0311, 
 32.5   subdivisions 1 and 3; 124A.23, subdivisions 2, 3, and 5; and 
 32.6   124A.292, subdivisions 3 and 4; and Minnesota Statutes 1995 
 32.7   Supplement, sections 124.2715, subdivision 3; and 124A.0311, 
 32.8   subdivision 2, are repealed July 1, 1997. 
 32.9      (b) Minnesota Statutes 1994, section 273.1398, subdivision 
 32.10  2, is repealed December 31, 1997, for aids payable in 1998 and 
 32.11  subsequent years. 
 32.12     (c) Minnesota Statutes 1994, sections 124.2711, subdivision 
 32.13  3; and 124.321, subdivisions 3, 4, and 5; and Minnesota Statutes 
 32.14  1995 Supplement, sections 124.2711, subdivision 2a; 124.2713, 
 32.15  subdivision 6; 124.2725, subdivisions 3, 4, and 15; 124.312, 
 32.16  subdivision 4; 124.314, subdivision 2; 124.321, subdivisions 1 
 32.17  and 2; 124A.03, subdivisions 1c, 1g, 1h, and 2; 124A.0311, 
 32.18  subdivision 4; 124A.22, subdivisions 13d and 13e; 124A.23, 
 32.19  subdivisions 1 and 4; and 124A.24, are repealed July 1, 1997. 
 32.20     Subd. 2.  [TAXES PAYABLE IN 1997.] Minnesota Statutes 1994, 
 32.21  section 124.912, subdivision 2, is repealed July 1, 1997, and 
 32.22  shall not be levied for taxes payable in 1998 and following 
 32.23  years. 
 32.24     Sec. 47.  [EFFECTIVE DATE.] 
 32.25     (a) The provisions of this article take effect as provided 
 32.26  in paragraph (b) only if the constitutional amendment proposed 
 32.27  to the people by article 1, section 1, is adopted. 
 32.28     (b) Sections 1 to 43 are effective July 1, 1997 for revenue 
 32.29  for 1998-1999 and later school years.  Section 44 is effective 
 32.30  for aids payable in 1998 and subsequent years.  Sections 45 to 
 32.31  49 are effective for taxes payable in 1998 and subsequent years. 
 32.32                             ARTICLE 3
 32.33               PROPERTY TAX CLASSIFICATION AND RATES
 32.34     Section 1.  Minnesota Statutes 1994, section 273.13, 
 32.35  subdivision 22, is amended to read: 
 32.36     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 33.1   23, Class 1 property consists of real estate which is used for 
 33.2   residential and used for homestead purposes is class 1.  The 
 33.3   market value of class 1a property must be determined based upon 
 33.4   the value of the house, garage, and land., including residential 
 33.5   structures on agricultural property, and property used for 
 33.6   seasonal recreational purposes.  A residential property 
 33.7   qualifies for class 1 only if it contains no more than three 
 33.8   housing units.  Seasonal recreational property qualifies for 
 33.9   class 1 only if it is not used for commercial purposes for more 
 33.10  than 250 days in the year preceding the year of assessment.  The 
 33.11  portion of commercial seasonal recreational property operated as 
 33.12  a (1) restaurant, (2) bar, (3) gift shop, or (4) other 
 33.13  nonresidential facility not directly related to temporary and 
 33.14  seasonal residential occupancy for recreation purposes shall not 
 33.15  qualify for class 1.  Class 1 property is further classified 
 33.16  into the following subclasses: 
 33.17     (a) Class 1a consists of the first $115,000 of market value 
 33.18  of each parcel of class 1 property occupied as a homestead. 
 33.19     (b) Class 1b consists of that portion of each parcel of 
 33.20  noncommercial seasonal recreational property over $72,000 market 
 33.21  value. 
 33.22     (c) Class 1c consists of all other class 1 property. 
 33.23     The first $72,000 of market value of class 1a property has 
 33.24  a net class rate of one percent of its market value and a gross 
 33.25  class rate of 2.17 percent of its market value.  For taxes 
 33.26  payable in 1992, the market value of class 1a property that 
 33.27  exceeds $72,000 but does not exceed $115,000 has a class rate of 
 33.28  two percent of its market value; and the market value of class 
 33.29  1a property that exceeds $115,000 has a class rate of 2.5 
 33.30  percent of its market value.  For taxes payable in 1993 and 
 33.31  thereafter, the market value of class 1a property that exceeds 
 33.32  $72,000 has a class rate of two percent. 
 33.33     (b) Class 1b property includes homestead real estate or 
 33.34  homestead manufactured homes used for the purposes of a 
 33.35  homestead by 
 33.36     (1) any blind person, or the blind person and the blind 
 34.1   person's spouse; or 
 34.2      (2) any person, hereinafter referred to as "veteran," who: 
 34.3      (i) served in the active military or naval service of the 
 34.4   United States; and 
 34.5      (ii) is entitled to compensation under the laws and 
 34.6   regulations of the United States for permanent and total 
 34.7   service-connected disability due to the loss, or loss of use, by 
 34.8   reason of amputation, ankylosis, progressive muscular 
 34.9   dystrophies, or paralysis, of both lower extremities, such as to 
 34.10  preclude motion without the aid of braces, crutches, canes, or a 
 34.11  wheelchair; and 
 34.12     (iii) has acquired a special housing unit with special 
 34.13  fixtures or movable facilities made necessary by the nature of 
 34.14  the veteran's disability, or the surviving spouse of the 
 34.15  deceased veteran for as long as the surviving spouse retains the 
 34.16  special housing unit as a homestead; or 
 34.17     (3) any person who: 
 34.18     (i) is permanently and totally disabled and 
 34.19     (ii) receives 90 percent or more of total income from 
 34.20     (A) aid from any state as a result of that disability; or 
 34.21     (B) supplemental security income for the disabled; or 
 34.22     (C) workers' compensation based on a finding of total and 
 34.23  permanent disability; or 
 34.24     (D) social security disability, including the amount of a 
 34.25  disability insurance benefit which is converted to an old age 
 34.26  insurance benefit and any subsequent cost of living increases; 
 34.27  or 
 34.28     (E) aid under the federal Railroad Retirement Act of 1937, 
 34.29  United States Code Annotated, title 45, section 228b(a)5; or 
 34.30     (F) a pension from any local government retirement fund 
 34.31  located in the state of Minnesota as a result of that 
 34.32  disability; or 
 34.33     (4) any person who is permanently and totally disabled and 
 34.34  whose household income as defined in section 290A.03, 
 34.35  subdivision 5, is 150 percent or less of the federal poverty 
 34.36  level. 
 35.1      Property is classified and assessed under clause (4) only 
 35.2   if the government agency or income-providing source certifies, 
 35.3   upon the request of the homestead occupant, that the homestead 
 35.4   occupant satisfies the disability requirements of this paragraph.
 35.5      Property is classified and assessed pursuant to clause (1) 
 35.6   only if the commissioner of economic security certifies to the 
 35.7   assessor that the homestead occupant satisfies the requirements 
 35.8   of this paragraph.  
 35.9      Permanently and totally disabled for the purpose of this 
 35.10  subdivision means a condition which is permanent in nature and 
 35.11  totally incapacitates the person from working at an occupation 
 35.12  which brings the person an income.  The first $32,000 market 
 35.13  value of class 1b property has a net class rate of .45 percent 
 35.14  of its market value and a gross class rate of .87 percent of its 
 35.15  market value.  The remaining market value of class 1b property 
 35.16  has a gross or net class rate using the rates for class 1 or 
 35.17  class 2a property, whichever is appropriate, of similar market 
 35.18  value.  
 35.19     (c) Class 1c property is commercial use real property that 
 35.20  abuts a lakeshore line and is devoted to temporary and seasonal 
 35.21  residential occupancy for recreational purposes but not devoted 
 35.22  to commercial purposes for more than 250 days in the year 
 35.23  preceding the year of assessment, and that includes a portion 
 35.24  used as a homestead by the owner, which includes a dwelling 
 35.25  occupied as a homestead by a shareholder of a corporation that 
 35.26  owns the resort or a partner in a partnership that owns the 
 35.27  resort, even if the title to the homestead is held by the 
 35.28  corporation or partnership.  For purposes of this clause, 
 35.29  property is devoted to a commercial purpose on a specific day if 
 35.30  any portion of the property, excluding the portion used 
 35.31  exclusively as a homestead, is used for residential occupancy 
 35.32  and a fee is charged for residential occupancy.  Class 1c 
 35.33  property has a class rate of one percent of total market value 
 35.34  for taxes payable in 1993 and thereafter with the following 
 35.35  limitation:  the area of the property must not exceed 100 feet 
 35.36  of lakeshore footage for each cabin or campsite located on the 
 36.1   property up to a total of 800 feet and 500 feet in depth, 
 36.2   measured away from the lakeshore.  
 36.3      Sec. 2.  Minnesota Statutes 1994, section 273.13, 
 36.4   subdivision 23, is amended to read: 
 36.5      Subd. 23.  [CLASS 2.] (a) Class 2a 2 property is consists 
 36.6   of agricultural land including any improvements that is 
 36.7   homesteaded. and structures used for agricultural purposes, 
 36.8   including 
 36.9      The market value of the house and garage and immediately 
 36.10  surrounding one acre of land has the same class rates as class 
 36.11  1a property under subdivision 22.  The value of the remaining 
 36.12  land including improvements up to $115,000 has a net class rate 
 36.13  of .45 percent of market value and a gross class rate of 1.75 
 36.14  percent of market value.  The remaining value of class 2a 
 36.15  property over $115,000 of market value that does not exceed 320 
 36.16  acres has a net class rate of one percent of market value, and a 
 36.17  gross class rate of 2.25 percent of market value.  The remaining 
 36.18  property over the $115,000 market value in excess of 320 acres 
 36.19  has a class rate of 1.5 percent of market value, and a gross 
 36.20  class rate of 2.25 percent of market value.  
 36.21     (b) Class 2b property that is (1) real estate, rural in 
 36.22  character and used exclusively for growing trees for timber, 
 36.23  lumber, and wood and wood products; (2) real estate that is not 
 36.24  improved with a structure and is used exclusively for growing 
 36.25  trees for timber, lumber, and wood and wood products, if the 
 36.26  owner has participated or is participating in a cost-sharing 
 36.27  program for afforestation, reforestation, or timber stand 
 36.28  improvement on that particular property, administered or 
 36.29  coordinated by the commissioner of natural resources; (3) real 
 36.30  estate that is nonhomestead agricultural land; or (4) (3) a 
 36.31  landing area or public access area of a privately owned public 
 36.32  use airport.  Class 2b property has a net class rate of 1.5 
 36.33  percent of market value, and a gross class rate of 2.25 percent 
 36.34  of market value.  
 36.35     (c) Agricultural land as used in this section means 
 36.36  contiguous acreage of ten acres or more, primarily used during 
 37.1   the preceding year for agricultural purposes.  Agricultural use 
 37.2   may include pasture, timber, waste, unusable wild land, and land 
 37.3   included in state or federal farm programs.  "Agricultural 
 37.4   purposes" as used in this section means the raising or 
 37.5   cultivation of agricultural products.  
 37.6      (d) Real estate of less than ten acres used principally for 
 37.7   raising or cultivating agricultural products, shall be 
 37.8   considered as agricultural land, if it is not used primarily for 
 37.9   residential purposes.  
 37.10     (e) The term "agricultural products" as used in this 
 37.11  subdivision includes:  
 37.12     (1) livestock, dairy animals, dairy products, poultry and 
 37.13  poultry products, fur-bearing animals, horticultural and nursery 
 37.14  stock described in sections 18.44 to 18.61, fruit of all kinds, 
 37.15  vegetables, forage, grains, bees, and apiary products by the 
 37.16  owner; 
 37.17     (2) fish bred for sale and consumption if the fish breeding 
 37.18  occurs on land zoned for agricultural use; 
 37.19     (3) the commercial boarding of horses if the boarding is 
 37.20  done in conjunction with raising or cultivating agricultural 
 37.21  products as defined in clause (1); 
 37.22     (4) property which is owned and operated by nonprofit 
 37.23  organizations used for equestrian activities, excluding racing; 
 37.24  and 
 37.25     (5) game birds and waterfowl bred and raised for use on a 
 37.26  shooting preserve licensed under section 97A.115.  
 37.27     (f) If a parcel used for agricultural purposes is also used 
 37.28  for commercial or industrial purposes, including but not limited 
 37.29  to:  
 37.30     (1) wholesale and retail sales; 
 37.31     (2) processing of raw agricultural products or other goods; 
 37.32     (3) warehousing or storage of processed goods; and 
 37.33     (4) office facilities for the support of the activities 
 37.34  enumerated in clauses (1), (2), and (3), 
 37.35  the assessor shall classify the part of the parcel used for 
 37.36  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 38.1   appropriate, 2, and the remainder in the class appropriate to 
 38.2   its use.  The grading, sorting, and packaging of raw 
 38.3   agricultural products for first sale is considered an 
 38.4   agricultural purpose.  A greenhouse or other building where 
 38.5   horticultural or nursery products are grown that is also used 
 38.6   for the conduct of retail sales must be classified as 
 38.7   agricultural if it is primarily used for the growing of 
 38.8   horticultural or nursery products from seed, cuttings, or roots 
 38.9   and occasionally as a showroom for the retail sale of those 
 38.10  products.  Use of a greenhouse or building only for the display 
 38.11  of already grown horticultural or nursery products does not 
 38.12  qualify as an agricultural purpose.  
 38.13     The assessor shall determine and list separately on the 
 38.14  records the market value of the homestead dwelling and the one 
 38.15  acre of land on which that dwelling is located.  If any farm 
 38.16  buildings or structures are located on this homesteaded acre of 
 38.17  land, their market value shall not be included in this separate 
 38.18  determination.  
 38.19     (g) To qualify for classification under paragraph (b), 
 38.20  clause (4) (3), a privately owned public use airport must be 
 38.21  licensed as a public airport under section 360.018.  For 
 38.22  purposes of paragraph (b), clause (4) (3), "landing area" means 
 38.23  that part of a privately owned public use airport properly 
 38.24  cleared, regularly maintained, and made available to the public 
 38.25  for use by aircraft and includes runways, taxiways, aprons, and 
 38.26  sites upon which are situated landing or navigational aids.  A 
 38.27  landing area also includes land underlying both the primary 
 38.28  surface and the approach surfaces that comply with all of the 
 38.29  following:  
 38.30     (i) the land is properly cleared and regularly maintained 
 38.31  for the primary purposes of the landing, taking off, and taxiing 
 38.32  of aircraft; but that portion of the land that contains 
 38.33  facilities for servicing, repair, or maintenance of aircraft is 
 38.34  not included as a landing area; 
 38.35     (ii) the land is part of the airport property; and 
 38.36     (iii) the land is not used for commercial or residential 
 39.1   purposes. 
 39.2   The land contained in a landing area under paragraph (b), clause 
 39.3   (4) (3), must be described and certified by the commissioner of 
 39.4   transportation.  The certification is effective until it is 
 39.5   modified, or until the airport or landing area no longer meets 
 39.6   the requirements of paragraph (b), clause (4) (3).  For purposes 
 39.7   of paragraph (b), clause (4) (3), "public access area" means 
 39.8   property used as an aircraft parking ramp, apron, or storage 
 39.9   hangar, or an arrival and departure building in connection with 
 39.10  the airport. 
 39.11     Class 2 property is further classified into the following 
 39.12  subclasses: 
 39.13     (a) Class 2a consists of the first $115,000 of market value 
 39.14  of each homestead agricultural property. 
 39.15     (b) Class 2b consists of all other class 2 property. 
 39.16     Sec. 3.  Minnesota Statutes 1995 Supplement, section 
 39.17  273.13, subdivision 24, is amended to read: 
 39.18     Subd. 24.  [CLASS 3.] (a) Class 3 consists of commercial 
 39.19  and industrial property and utility real and personal property, 
 39.20  except class 5 property as identified in subdivision 31, clause 
 39.21  (1), is class 3a.  It has a class rate of three percent of Class 
 39.22  3 property is further classified into the following subclasses: 
 39.23     (a) Class 3a consists of the first $100,000 of each class 3 
 39.24  property's market value for taxes payable in 1993 and 
 39.25  thereafter, and 5.06 percent of the market value over $100,000., 
 39.26  provided that in the case of state-assessed commercial, 
 39.27  industrial, and utility property owned by one person or entity, 
 39.28  only one parcel has a reduced class rate on the first $100,000 
 39.29  of market value. is eligible for inclusion in class 3a, and 
 39.30  provided that in the case of other commercial, industrial, and 
 39.31  utility property owned by one person or entity, only one parcel 
 39.32  in each county has a reduced class rate on the first $100,000 of 
 39.33  market value is eligible for inclusion in class 3a, except that: 
 39.34     (1) if the market value of the parcel is less than 
 39.35  $100,000, and additional parcels are owned by the same person or 
 39.36  entity in the same city or town within that county, the reduced 
 40.1   class rate shall be applied up to a combined total market value 
 40.2   of $100,000 for all parcels owned by the same person or entity 
 40.3   in the same city or town within the county is eligible for class 
 40.4   3a; 
 40.5      (2) in the case of grain, fertilizer, and feed elevator 
 40.6   facilities, as defined in section 18C.305, subdivision 1, or 
 40.7   232.21, subdivision 8, the limitation to one parcel per owner 
 40.8   per county for the reduced class rate inclusion in class 3a 
 40.9   shall not apply, but there shall be a limit of $100,000 
 40.10  of preferential class 3a value per site of contiguous parcels 
 40.11  owned by the same person or entity.  Only the value of the 
 40.12  elevator portion of each parcel shall qualify for treatment 
 40.13  under this clause.  For purposes of this subdivision, contiguous 
 40.14  parcels include parcels separated only by a railroad or public 
 40.15  road right-of-way; and 
 40.16     (3) in the case of property owned by a nonprofit charitable 
 40.17  organization that qualifies for tax exemption under section 
 40.18  501(c)(3) of the Internal Revenue Code of 1986, as amended 
 40.19  through December 31, 1993, if the property is used as a business 
 40.20  incubator, the limitation to one parcel per owner per county for 
 40.21  the reduced class rate inclusion in class 3a shall not apply, 
 40.22  provided that the reduced rate applies only to the first 
 40.23  $100,000 of value per parcel owned by the organization qualifies 
 40.24  as class 3a.  As used in this clause, a "business incubator" is 
 40.25  a facility used for the development of nonretail businesses, 
 40.26  offering access to equipment, space, services, and advice to the 
 40.27  tenant businesses, for the purpose of encouraging economic 
 40.28  development, diversification, and job creation in the area 
 40.29  served by the organization. 
 40.30     To receive the reduced class rate class 3a classification 
 40.31  on additional parcels under clause (1), (2), or (3), the 
 40.32  taxpayer must notify the county assessor that the taxpayer owns 
 40.33  more than one parcel that qualifies under clause (1), (2), or 
 40.34  (3). 
 40.35     (b) Employment property defined in section 469.166, during 
 40.36  the period provided in section 469.170, shall constitute class 
 41.1   3b and has a class rate of 2.3 percent of the first $50,000 of 
 41.2   market value and 3.6 percent of the remainder, except that for 
 41.3   employment property located in a border city enterprise zone 
 41.4   designated pursuant to section 469.168, subdivision 4, paragraph 
 41.5   (c), the class rate of the first $100,000 of market value and 
 41.6   the class rate of the remainder is determined under paragraph 
 41.7   (a), unless the governing body of the city designated as an 
 41.8   enterprise zone determines that a specific parcel shall be 
 41.9   assessed pursuant to the first clause of this sentence.  The 
 41.10  governing body may provide for assessment under the first clause 
 41.11  of the preceding sentence only for property which is located in 
 41.12  an area which has been designated by the governing body for the 
 41.13  receipt of tax reductions authorized by section 469.171, 
 41.14  subdivision 1. 
 41.15     (c) Structures which are (i) located on property classified 
 41.16  as class 3a, (ii) constructed under an initial building permit 
 41.17  issued after January 2, 1996, (iii) located in a transit zone as 
 41.18  defined under section 473.3915, subdivision 3, (iv) located 
 41.19  within the boundaries of a school district, and (v) not 
 41.20  primarily used for retail or transient lodging purposes, shall 
 41.21  have a class rate of four percent on that portion of the market 
 41.22  value in excess of $100,000 and any market value under $100,000 
 41.23  that does not qualify for the three percent class rate under 
 41.24  paragraph (a).  As used in item (v), a structure is primarily 
 41.25  used for retail or transient lodging purposes if over 50 percent 
 41.26  of its square footage is used for those purposes.  The four 
 41.27  percent rate shall also apply to improvements to existing 
 41.28  structures that meet the requirements of items (i) to (v) if the 
 41.29  improvements are constructed under an initial building permit 
 41.30  issued after January 2, 1996, even if the remainder of the 
 41.31  structure was constructed prior to January 2, 1996.  For the 
 41.32  purposes of this paragraph, a structure shall be considered to 
 41.33  be located in a transit zone if any portion of the structure 
 41.34  lies within the zone.  If any property once eligible for 
 41.35  treatment under this paragraph ceases to remain eligible due to 
 41.36  revisions in transit zone boundaries, the property shall 
 42.1   continue to receive treatment under this paragraph for a period 
 42.2   of three years. 
 42.3      (b) Class 3b consists of all other class 3 property. 
 42.4      Sec. 4.  Minnesota Statutes 1995 Supplement, section 
 42.5   273.13, subdivision 25, is amended to read: 
 42.6      Subd. 25.  [CLASS 4.] (a) Class 4a is 4 consists of 
 42.7   residential real estate containing four or more units and used 
 42.8   or held for use by the owner or by the tenants or lessees of the 
 42.9   owner as a residence for rental periods of 30 days or more.  
 42.10  Class 4a 4 also includes all property described in clause (a) 
 42.11  below, and hospitals licensed under sections 144.50 to 144.56, 
 42.12  other than hospitals exempt under section 272.02, and contiguous 
 42.13  property used for hospital purposes, without regard to whether 
 42.14  the property has been platted or subdivided.  Class 4a property 
 42.15  in a city with a population of 5,000 or less, that is (1) 
 42.16  located outside of the metropolitan area, as defined in section 
 42.17  473.121, subdivision 2, or outside any county contiguous to the 
 42.18  metropolitan area, and (2) whose city boundary is at least 15 
 42.19  miles from the boundary of any city with a population greater 
 42.20  than 5,000 has a class rate of 2.3 percent of market value for 
 42.21  taxes payable in 1996 and thereafter.  All other class 4a 
 42.22  property has a class rate of 3.4 percent of market value for 
 42.23  taxes payable in 1996 and thereafter.  For purposes of this 
 42.24  paragraph, population has the same meaning given in section 
 42.25  477A.011, subdivision 3.  Class 4 property is further classified 
 42.26  into the following subclasses: 
 42.27     (b) Class 4b includes: 
 42.28     (1) residential real estate containing less than four 
 42.29  units, other than seasonal residential, and recreational; 
 42.30     (2) manufactured homes not classified under any other 
 42.31  provision; 
 42.32     (3) a dwelling, garage, and surrounding one acre of 
 42.33  property on a nonhomestead farm classified under subdivision 23, 
 42.34  paragraph (b).  
 42.35     Class 4b property has a class rate of 2.8 percent of market 
 42.36  value for taxes payable in 1992, 2.5 percent of market value for 
 43.1   taxes payable in 1993, and 2.3 percent of market value for taxes 
 43.2   payable in 1994 and thereafter. 
 43.3      (c) (a) Class 4c 4a property includes: 
 43.4      (1) a structure that is:  
 43.5      (i) situated on real property that is used for housing for 
 43.6   the elderly or for low- and moderate-income families as defined 
 43.7   in Title II, as amended through December 31, 1990, of the 
 43.8   National Housing Act or the Minnesota housing finance agency law 
 43.9   of 1971, as amended, or rules promulgated by the agency and 
 43.10  financed by a direct federal loan or federally insured loan made 
 43.11  pursuant to Title II of the Act; or 
 43.12     (ii) situated on real property that is used for housing the 
 43.13  elderly or for low- and moderate-income families as defined by 
 43.14  the Minnesota housing finance agency law of 1971, as amended, or 
 43.15  rules adopted by the agency pursuant thereto and financed by a 
 43.16  loan made by the Minnesota housing finance agency pursuant to 
 43.17  the provisions of the act.  
 43.18     This clause applies only to property of a nonprofit or 
 43.19  limited dividend entity.  Property is classified as class 4c 
 43.20  under this clause for 15 years from the date of the completion 
 43.21  of the original construction or substantial rehabilitation, or 
 43.22  for the original term of the loan.  
 43.23     (2) a structure that is: 
 43.24     (i) situated upon real property that is used for housing 
 43.25  lower income families or elderly or handicapped persons, as 
 43.26  defined in section 8 of the United States Housing Act of 1937, 
 43.27  as amended; and 
 43.28     (ii) owned by an entity which has entered into a housing 
 43.29  assistance payments contract under section 8 which provides 
 43.30  assistance for 100 percent of the dwelling units in the 
 43.31  structure, other than dwelling units intended for management or 
 43.32  maintenance personnel.  Property is classified as class 4c under 
 43.33  this clause for the term of the housing assistance payments 
 43.34  contract, including all renewals, or for the term of its 
 43.35  permanent financing, whichever is shorter; and 
 43.36     (3) a qualified low-income building as defined in section 
 44.1   42(c)(2) of the Internal Revenue Code of 1986, as amended 
 44.2   through December 31, 1990, that (i) receives a low-income 
 44.3   housing credit under section 42 of the Internal Revenue Code of 
 44.4   1986, as amended through December 31, 1990; or (ii) meets the 
 44.5   requirements of that section and receives public financing, 
 44.6   except financing provided under sections 469.174 to 469.179, 
 44.7   which contains terms restricting the rents; or (iii) meets the 
 44.8   requirements of section 273.1317.  Classification pursuant to 
 44.9   this clause is limited to a term of 15 years.  The public 
 44.10  financing received must be from at least one of the following 
 44.11  sources:  government issued bonds exempt from taxes under 
 44.12  section 103 of the Internal Revenue Code of 1986, as amended 
 44.13  through December 31, 1993, the proceeds of which are used for 
 44.14  the acquisition or rehabilitation of the building; programs 
 44.15  under section 221(d)(3), 202, or 236, of Title II of the 
 44.16  National Housing Act; rental housing program funds under Section 
 44.17  8 of the United States Housing Act of 1937 or the market rate 
 44.18  family graduated payment mortgage program funds administered by 
 44.19  the Minnesota housing finance agency that are used for the 
 44.20  acquisition or rehabilitation of the building; public financing 
 44.21  provided by a local government used for the acquisition or 
 44.22  rehabilitation of the building, including grants or loans from 
 44.23  federal community development block grants, HOME block grants, 
 44.24  or residential rental bonds issued under chapter 474A; or other 
 44.25  rental housing program funds provided by the Minnesota housing 
 44.26  finance agency for the acquisition or rehabilitation of the 
 44.27  building. 
 44.28     For all properties described in clauses (1), (2), and (3) 
 44.29  and in paragraph (d), the market value determined by the 
 44.30  assessor must be based on the normal approach to value using 
 44.31  normal unrestricted rents unless the owner of the property 
 44.32  elects to have the property assessed under Laws 1991, chapter 
 44.33  291, article 1, section 55.  If the owner of the property elects 
 44.34  to have the market value determined on the basis of the actual 
 44.35  restricted rents, as provided in Laws 1991, chapter 291, article 
 44.36  1, section 55, the property will be assessed at the rate 
 45.1   provided for class 4a or classified as class 4b property, as 
 45.2   appropriate.  Properties described in clauses (1)(ii), (3), and 
 45.3   (4) may apply to the assessor for valuation under Laws 1991, 
 45.4   chapter 291, article 1, section 55.  The land on which these 
 45.5   structures are situated has the class rate given in paragraph 
 45.6   (b) if the structure contains fewer than four units, and the 
 45.7   class rate given in paragraph (a) if the structure contains four 
 45.8   or more units is class 4b.  This clause applies only to the 
 45.9   property of a nonprofit or limited dividend entity.  
 45.10     (4) a parcel of land, not to exceed one acre, and its 
 45.11  improvements or a parcel of unimproved land, not to exceed one 
 45.12  acre, if it is owned by a neighborhood real estate trust and at 
 45.13  least 60 percent of the dwelling units, if any, on all land 
 45.14  owned by the trust are leased to or occupied by lower income 
 45.15  families or individuals.  This clause does not apply to any 
 45.16  portion of the land or improvements used for nonresidential 
 45.17  purposes.  For purposes of this clause, a lower income family is 
 45.18  a family with an income that does not exceed 65 percent of the 
 45.19  median family income for the area, and a lower income individual 
 45.20  is an individual whose income does not exceed 65 percent of the 
 45.21  median individual income for the area, as determined by the 
 45.22  United States Secretary of Housing and Urban Development.  For 
 45.23  purposes of this clause, "neighborhood real estate trust" means 
 45.24  an entity which is certified by the governing body of the 
 45.25  municipality in which it is located to have the following 
 45.26  characteristics: 
 45.27     (a) it is a nonprofit corporation organized under chapter 
 45.28  317A; 
 45.29     (b) it has as its principal purpose providing housing for 
 45.30  lower income families in a specific geographic community 
 45.31  designated in its articles or bylaws; 
 45.32     (c) it limits membership with voting rights to residents of 
 45.33  the designated community; and 
 45.34     (d) it has a board of directors consisting of at least 
 45.35  seven directors, 60 percent of whom are members with voting 
 45.36  rights and, to the extent feasible, 25 percent of whom are 
 46.1   elected by resident members of buildings owned by the trust; and 
 46.2      (5) except as provided in subdivision 22, paragraph (c), 
 46.3   real property devoted to temporary and seasonal residential 
 46.4   occupancy for recreation purposes, including real property 
 46.5   devoted to temporary and seasonal residential occupancy for 
 46.6   recreation purposes and not devoted to commercial purposes for 
 46.7   more than 250 days in the year preceding the year of 
 46.8   assessment.  For purposes of this clause, property is devoted to 
 46.9   a commercial purpose on a specific day if any portion of the 
 46.10  property is used for residential occupancy, and a fee is charged 
 46.11  for residential occupancy.  Class 4c also includes commercial 
 46.12  use real property used exclusively for recreational purposes in 
 46.13  conjunction with class 4c property devoted to temporary and 
 46.14  seasonal residential occupancy for recreational purposes, up to 
 46.15  a total of two acres, provided the property is not devoted to 
 46.16  commercial recreational use for more than 250 days in the year 
 46.17  preceding the year of assessment and is located within two miles 
 46.18  of the class 4c property with which it is used.  Class 4c 
 46.19  property classified in this clause also includes the remainder 
 46.20  of class 1c resorts.  Owners of real property devoted to 
 46.21  temporary and seasonal residential occupancy for recreation 
 46.22  purposes and all or a portion of which was devoted to commercial 
 46.23  purposes for not more than 250 days in the year preceding the 
 46.24  year of assessment desiring classification as class 1c or 4c, 
 46.25  must submit a declaration to the assessor designating the cabins 
 46.26  or units occupied for 250 days or less in the year preceding the 
 46.27  year of assessment by January 15 of the assessment year.  Those 
 46.28  cabins or units and a proportionate share of the land on which 
 46.29  they are located will be designated class 1c or 4c as otherwise 
 46.30  provided.  The remainder of the cabins or units and a 
 46.31  proportionate share of the land on which they are located will 
 46.32  be designated as class 3a.  The first $100,000 of the market 
 46.33  value of the remainder of the cabins or units and a 
 46.34  proportionate share of the land on which they are located shall 
 46.35  have a class rate of three percent.  The owner of property 
 46.36  desiring designation as class 1c or 4c property must provide 
 47.1   guest registers or other records demonstrating that the units 
 47.2   for which class 1c or 4c designation is sought were not occupied 
 47.3   for more than 250 days in the year preceding the assessment if 
 47.4   so requested.  The portion of a property operated as a (1) 
 47.5   restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
 47.6   facility operated on a commercial basis not directly related to 
 47.7   temporary and seasonal residential occupancy for recreation 
 47.8   purposes shall not qualify for class 1c or 4c; 
 47.9      (6) (5) real property up to a maximum of one acre of land 
 47.10  owned by a nonprofit community service oriented organization; 
 47.11  provided that the property is not used for a revenue-producing 
 47.12  activity for more than six days in the calendar year preceding 
 47.13  the year of assessment and the property is not used for 
 47.14  residential purposes on either a temporary or permanent basis.  
 47.15  For purposes of this clause, a "nonprofit community service 
 47.16  oriented organization" means any corporation, society, 
 47.17  association, foundation, or institution organized and operated 
 47.18  exclusively for charitable, religious, fraternal, civic, or 
 47.19  educational purposes, and which is exempt from federal income 
 47.20  taxation pursuant to section 501(c)(3), (10), or (19) of the 
 47.21  Internal Revenue Code of 1986, as amended through December 31, 
 47.22  1990.  For purposes of this clause, "revenue-producing 
 47.23  activities" shall include but not be limited to property or that 
 47.24  portion of the property that is used as an on-sale intoxicating 
 47.25  liquor or 3.2 percent malt liquor establishment licensed under 
 47.26  chapter 340A, a restaurant open to the public, bowling alley, a 
 47.27  retail store, gambling conducted by organizations licensed under 
 47.28  chapter 349, an insurance business, or office or other space 
 47.29  leased or rented to a lessee who conducts a for-profit 
 47.30  enterprise on the premises.  Any portion of the property which 
 47.31  is used for revenue-producing activities for more than six days 
 47.32  in the calendar year preceding the year of assessment shall be 
 47.33  assessed as class 3a 3.  The use of the property for social 
 47.34  events open exclusively to members and their guests for periods 
 47.35  of less than 24 hours, when an admission is not charged nor any 
 47.36  revenues are received by the organization shall not be 
 48.1   considered a revenue-producing activity; 
 48.2      (7) (6) post-secondary student housing of not more than one 
 48.3   acre of land that is owned by a nonprofit corporation organized 
 48.4   under chapter 317A and is used exclusively by a student 
 48.5   cooperative, sorority, or fraternity for on-campus housing or 
 48.6   housing located within two miles of the border of a college 
 48.7   campus; and 
 48.8      (8) (7) manufactured home parks as defined in section 
 48.9   327.14, subdivision 3.; 
 48.10     Class 4c property has a class rate of 2.3 percent of market 
 48.11  value, except that (i) for each parcel of seasonal residential 
 48.12  recreational property not used for commercial purposes under 
 48.13  clause (5) the first $72,000 of market value on each parcel has 
 48.14  a class rate of 1.9 percent for taxes payable in 1997 and 1.8 
 48.15  percent for taxes payable in 1998 and thereafter, and the market 
 48.16  value of each parcel that exceeds $72,000 has a class rate of 
 48.17  2.5 percent, and (ii) manufactured home parks assessed under 
 48.18  clause (8) have a class rate of two percent for taxes payable in 
 48.19  1996, and thereafter.  
 48.20     (d) Class 4d property includes: 
 48.21     (1) (8) a structure that is: 
 48.22     (i) situated on real property that is used for housing for 
 48.23  the elderly or for low and moderate income families as defined 
 48.24  by the Farmers Home Administration; 
 48.25     (ii) located in a municipality of less than 10,000 
 48.26  population; and 
 48.27     (iii) financed by a direct loan or insured loan from the 
 48.28  Farmers Home Administration.  Property is classified under this 
 48.29  clause for 15 years from the date of the completion of the 
 48.30  original construction or for the original term of the loan.  
 48.31     The class rates In the case of property described in 
 48.32  paragraph (c), clauses (1), (2), and (3) and this clause apply 
 48.33  to the properties described in them, (8), classification under 
 48.34  class 4a applies only in proportion to occupancy of the 
 48.35  structure by elderly or handicapped persons or low and moderate 
 48.36  income families as defined in the applicable laws unless 
 49.1   construction of the structure had been commenced prior to 
 49.2   January 1, 1984; or the project had been approved by the 
 49.3   governing body of the municipality in which it is located prior 
 49.4   to June 30, 1983; or financing of the project had been approved 
 49.5   by a federal or state agency prior to June 30, 1983.  For those 
 49.6   properties, 4c or 4d 4a classification is available only for 
 49.7   those units meeting the requirements of section 273.1318. 
 49.8      Classification under this clause is only available to 
 49.9   property of a nonprofit or limited dividend entity. 
 49.10     In the case of a structure financed or refinanced under any 
 49.11  federal or state mortgage insurance or direct loan program 
 49.12  exclusively for housing for the elderly or for housing for the 
 49.13  handicapped, a unit shall be considered occupied so long as it 
 49.14  is actually occupied by an elderly or handicapped person or, if 
 49.15  vacant, is held for rental to an elderly or handicapped person. 
 49.16     (2) For taxes payable in 1992, 1993, and 1994, only, 
 49.17  buildings and appurtenances, together with the land upon which 
 49.18  they are located, leased by the occupant under the community 
 49.19  lending model lease-purchase mortgage loan program administered 
 49.20  by the Federal National Mortgage Association, provided the 
 49.21  occupant's income is no greater than 60 percent of the county or 
 49.22  area median income, adjusted for family size and the building 
 49.23  consists of existing single family or duplex housing.  The lease 
 49.24  agreement must provide for a portion of the lease payment to be 
 49.25  escrowed as a nonrefundable down payment on the housing.  To 
 49.26  qualify under this clause, the taxpayer must apply to the county 
 49.27  assessor by May 30 of each year.  The application must be 
 49.28  accompanied by an affidavit or other proof required by the 
 49.29  assessor to determine qualification under this clause. 
 49.30     (3) (9) Qualifying buildings and appurtenances, together 
 49.31  with the land upon which they are located, leased for a period 
 49.32  of up to five years by the occupant under a lease-purchase 
 49.33  program administered by the Minnesota housing finance agency or 
 49.34  a housing and redevelopment authority authorized under sections 
 49.35  469.001 to 469.047, provided the occupant's income is no greater 
 49.36  than 80 percent of the county or area median income, adjusted 
 50.1   for family size, and the building consists of two or less 
 50.2   dwelling units.  The lease agreement must provide for a portion 
 50.3   of the lease payment to be escrowed as a nonrefundable down 
 50.4   payment on the housing.  The administering agency shall verify 
 50.5   the occupants income eligibility and certify to the county 
 50.6   assessor that the occupant meets the income criteria under this 
 50.7   paragraph.  To qualify under this clause, the taxpayer must 
 50.8   apply to the county assessor by May 30 of each year.  For 
 50.9   purposes of this section, "qualifying buildings and 
 50.10  appurtenances" shall be defined as one or two unit residential 
 50.11  buildings which are unoccupied and have been abandoned and 
 50.12  boarded for at least six months. 
 50.13     Class 4d property has a class rate of two percent of market 
 50.14  value except that property classified under clause (3), shall 
 50.15  have the same class rate as class 1a property. 
 50.16     (e) Residential rental property that would otherwise be 
 50.17  assessed as class 4 property under paragraph (a); paragraph (b), 
 50.18  clauses (1) and (3); paragraph (c), clause (1), (2), (3), or 
 50.19  (4), is assessed at the class rate applicable to it under 
 50.20  Minnesota Statutes 1988, section 273.13, if it is found to be a 
 50.21  substandard building under section 273.1316.  Residential rental 
 50.22  property that would otherwise be assessed as class 4 property 
 50.23  under paragraph (d) is assessed at 2.3 percent of market value 
 50.24  if it is found to be a substandard building under section 
 50.25  273.1316. 
 50.26     (b) Class 4b consists of all other class 4 property. 
 50.27     Sec. 5.  Minnesota Statutes 1994, section 273.13, 
 50.28  subdivision 31, is amended to read: 
 50.29     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 50.30     (1) tools, implements, and machinery of an electric 
 50.31  generating, transmission, or distribution system or a pipeline 
 50.32  system transporting or distributing water, gas, crude oil, or 
 50.33  petroleum products or mains and pipes used in the distribution 
 50.34  of steam or hot or chilled water for heating or cooling 
 50.35  buildings, which are fixtures; 
 50.36     (2) unmined iron ore and low-grade iron-bearing formations 
 51.1   as defined in section 273.14; and 
 51.2      (3) all other property not otherwise classified. 
 51.3      Class 5 property has a class rate of 5.06 percent of market 
 51.4   value. 
 51.5      Sec. 6.  Minnesota Statutes 1994, section 273.13, is 
 51.6   amended by adding a subdivision to read: 
 51.7      Subd. 34.  [CLASS RATES FOR LOCAL PROPERTY TAXES.] The 
 51.8   following class rates apply to each class of property described 
 51.9   in this section in the levying of local property taxes: 
 51.10           Class                            Class rate
 51.11      1 (residential)                       1.0 percent
 51.12      2 (agricultural)                      0.5 percent
 51.13      3 (commercial-industrial)             2.0 percent
 51.14      4 (apartment)                         2.0 percent
 51.15      5 (public utility systems)            2.0 percent
 51.16     Sec. 7.  Minnesota Statutes 1994, section 273.13, is 
 51.17  amended by adding a subdivision to read: 
 51.18     Subd. 35.  [STATE PROPERTY TAX RATES.] The following 
 51.19  percentages of the state tax rate apply to each class and 
 51.20  subclass of property described in this section: 
 51.21                                              Applicable percentage
 51.22            Class, subclass                     of state tax rate
 51.23    1a (residential homestead, 1st tier)           Exempt
 51.24    1b (seasonal recreational, 2nd tier)           100 percent
 51.25    1c (all other class 1)                         33.3 percent
 51.26    2a (agricultural homestead land, 1st tier)     Exempt
 51.27    2b (all other class 2)                         33.3 percent
 51.28    3a (commercial-industrial, 1st tier)           33.3 percent
 51.29    3b (all other class 3)                         100 percent
 51.30    4a (low-income apartments)                     Exempt
 51.31    4b (all other class 4)                         33.3 percent
 51.32    5 (public utility systems)                     100 percent
 51.33     Sec. 8.  Minnesota Statutes 1994, section 275.02, is 
 51.34  amended to read: 
 51.35     275.02 [STATE LEVY, EXCEPTIONS; CERTIFICATION OF TAX RATE.] 
 51.36     The state tax shall be levied on the market value of all 
 52.1   taxable property in the state which is not exempt from the state 
 52.2   tax rate under section 273.13.  The rate of the tax shall be 
 52.3   certified by the state auditor commissioner of revenue to each 
 52.4   county auditor on or before November 15 October 1 annually.  The 
 52.5   tax rate is an amount sufficient to raise $1,235,000,000 for 
 52.6   taxes payable in 1997 and subsequent years. 
 52.7      Sec. 9.  Minnesota Statutes 1995 Supplement, section 
 52.8   275.065, subdivision 3, is amended to read: 
 52.9      Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
 52.10  county auditor shall prepare and the county treasurer shall 
 52.11  deliver after November 10 and on or before November 24 each 
 52.12  year, by first class mail to each taxpayer at the address listed 
 52.13  on the county's current year's assessment roll, a notice of 
 52.14  proposed property taxes and, in the case of a town, final 
 52.15  property taxes.  
 52.16     (b) The commissioner of revenue shall prescribe the form of 
 52.17  the notice. 
 52.18     (c) The notice must inform taxpayers that it contains the 
 52.19  amount of property taxes each taxing authority other than a town 
 52.20  proposes to collect for taxes payable the following year and, 
 52.21  for a town, the amount of its final levy.  It must clearly state 
 52.22  that each taxing authority, including regional library districts 
 52.23  established under section 134.201, and including the 
 52.24  metropolitan taxing districts as defined in paragraph (i), but 
 52.25  excluding all other special taxing districts and towns, will 
 52.26  hold a public meeting to receive public testimony on the 
 52.27  proposed budget and proposed or final property tax levy, or, in 
 52.28  case of a school district, on the current budget and proposed 
 52.29  property tax levy.  It must clearly state the time and place of 
 52.30  each taxing authority's meeting and an address where comments 
 52.31  will be received by mail.  
 52.32     (d) The notice must state for each parcel: 
 52.33     (1) the market value of the property as determined under 
 52.34  section 273.11, and used for computing property taxes payable in 
 52.35  the following year and for taxes payable in the current year; 
 52.36  and, in the case of residential property, whether the property 
 53.1   is classified as homestead or nonhomestead.  The notice must 
 53.2   clearly inform taxpayers of the years to which the market values 
 53.3   apply and that the values are final values; 
 53.4      (2) by the state of Minnesota, county, city or town, school 
 53.5   district excess referenda levy, remaining school district levy, 
 53.6   regional library district, if in existence, the total of the 
 53.7   metropolitan special taxing districts as defined in paragraph 
 53.8   (i) and the sum of the remaining special taxing districts, and 
 53.9   as a total of the taxing authorities, including all special 
 53.10  taxing districts, the proposed or, for a town or the state of 
 53.11  Minnesota, final net tax on the property for taxes payable the 
 53.12  following year and the actual tax for taxes payable the current 
 53.13  year.  For the purposes of this subdivision, "school district 
 53.14  excess referenda levy" means school district taxes for operating 
 53.15  purposes approved at referendums, including those taxes based on 
 53.16  net tax capacity as well as those based on market value.  
 53.17  "School district excess referenda levy" does not include school 
 53.18  district taxes for capital expenditures approved at referendums 
 53.19  or school district taxes to pay for the debt service on bonds 
 53.20  approved at referenda.  In the case of the city of Minneapolis, 
 53.21  the levy for the Minneapolis library board and the levy for 
 53.22  Minneapolis park and recreation shall be listed separately from 
 53.23  the remaining amount of the city's levy.  In the case of a 
 53.24  parcel where tax increment or the fiscal disparities areawide 
 53.25  tax applies, the proposed tax levy on the captured value or the 
 53.26  proposed tax levy on the tax capacity subject to the areawide 
 53.27  tax must each be stated separately and not included in the sum 
 53.28  of the special taxing districts; and 
 53.29     (3) the increase or decrease in the amounts in clause (2) 
 53.30  from taxes payable in the current year to proposed or, for a 
 53.31  town, final taxes payable the following year, expressed as a 
 53.32  dollar amount and as a percentage. 
 53.33     (e) The notice must clearly state that the proposed or 
 53.34  final taxes do not include the following: 
 53.35     (1) special assessments; 
 53.36     (2) levies approved by the voters after the date the 
 54.1   proposed taxes are certified, including bond referenda, school 
 54.2   district levy referenda, and levy limit increase referenda; 
 54.3      (3) amounts necessary to pay cleanup or other costs due to 
 54.4   a natural disaster occurring after the date the proposed taxes 
 54.5   are certified; 
 54.6      (4) amounts necessary to pay tort judgments against the 
 54.7   taxing authority that become final after the date the proposed 
 54.8   taxes are certified; and 
 54.9      (5) the contamination tax imposed on properties which 
 54.10  received market value reductions for contamination. 
 54.11     (f) Except as provided in subdivision 7, failure of the 
 54.12  county auditor to prepare or the county treasurer to deliver the 
 54.13  notice as required in this section does not invalidate the 
 54.14  proposed or final tax levy or the taxes payable pursuant to the 
 54.15  tax levy. 
 54.16     (g) If the notice the taxpayer receives under this section 
 54.17  lists the property as nonhomestead and the homeowner provides 
 54.18  satisfactory documentation to the county assessor that the 
 54.19  property is owned and has been used as the owner's homestead 
 54.20  prior to June 1 of that year, the assessor shall reclassify the 
 54.21  property to homestead for taxes payable in the following year. 
 54.22     (h) In the case of class 4 residential property used as a 
 54.23  residence for lease or rental periods of 30 days or more, the 
 54.24  taxpayer must either: 
 54.25     (1) mail or deliver a copy of the notice of proposed 
 54.26  property taxes to each tenant, renter, or lessee; or 
 54.27     (2) post a copy of the notice in a conspicuous place on the 
 54.28  premises of the property.  
 54.29     The notice must be mailed or posted by the taxpayer by 
 54.30  November 27 or within three days of receipt of the notice, 
 54.31  whichever is later.  A taxpayer may notify the county treasurer 
 54.32  of the address of the taxpayer, agent, caretaker, or manager of 
 54.33  the premises to which the notice must be mailed in order to 
 54.34  fulfill the requirements of this paragraph. 
 54.35     (i) For purposes of this subdivision, subdivisions 5a and 
 54.36  6, "metropolitan special taxing districts" means the following 
 55.1   taxing districts in the seven-county metropolitan area that levy 
 55.2   a property tax for any of the specified purposes listed below: 
 55.3      (1) metropolitan council under section 473.132, 473.167, 
 55.4   473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
 55.5      (2) metropolitan airports commission under section 473.667, 
 55.6   473.671, or 473.672; and 
 55.7      (3) metropolitan mosquito control commission under section 
 55.8   473.711. 
 55.9      For purposes of this section, any levies made by the 
 55.10  regional rail authorities in the county of Anoka, Carver, 
 55.11  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
 55.12  398A shall be included with the appropriate county's levy and 
 55.13  shall be discussed at that county's public hearing. 
 55.14     Sec. 10.  Minnesota Statutes 1995 Supplement, section 
 55.15  275.08, subdivision 1b, is amended to read: 
 55.16     Subd. 1b.  The amounts certified under section 275.07 by an 
 55.17  individual local government unit, except for any amounts 
 55.18  certified under sections 124A.03, subdivision 2a, and 275.61, 
 55.19  shall be divided by the total net tax capacity of all taxable 
 55.20  properties within the local government unit's taxing 
 55.21  jurisdiction.  The resulting ratio, the local government's local 
 55.22  tax rate, multiplied by each property's net tax capacity shall 
 55.23  be each property's tax for that local government unit before 
 55.24  reduction by any credits.  The sum of the state tax, if any, 
 55.25  plus each local government's tax is the property's total 
 55.26  property tax, before reduction by any credits. 
 55.27     Any amount certified to the county auditor under section 
 55.28  124A.03, subdivision 2a, or 275.61, after the dates given in 
 55.29  those sections, shall be divided by the total estimated market 
 55.30  value of all taxable properties within the taxing district.  The 
 55.31  resulting ratio, the taxing district's new referendum tax rate, 
 55.32  multiplied by each property's estimated market value shall be 
 55.33  each property's new referendum tax before reduction by any 
 55.34  credits. 
 55.35     Sec. 11.  Minnesota Statutes 1995 Supplement, section 
 55.36  276.04, subdivision 2, is amended to read: 
 56.1      Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
 56.2   shall provide for the printing of the tax statements.  The 
 56.3   commissioner of revenue shall prescribe the form of the property 
 56.4   tax statement and its contents.  The statement must contain a 
 56.5   tabulated statement of the dollar amount due to each taxing 
 56.6   authority from the parcel of real property for which a 
 56.7   particular tax statement is prepared.  The dollar amounts due 
 56.8   the state of Minnesota, county, township or municipality, the 
 56.9   total of the metropolitan special taxing districts as defined in 
 56.10  section 275.065, subdivision 3, paragraph (i), school district 
 56.11  excess referenda levy, remaining school district levy, and the 
 56.12  total of other voter approved referenda levies based on market 
 56.13  value under section 275.61 must be separately stated.  The 
 56.14  amounts due all other special taxing districts, if any, may be 
 56.15  aggregated.  For the purposes of this subdivision, "school 
 56.16  district excess referenda levy" means school district taxes for 
 56.17  operating purposes approved at referenda, including those taxes 
 56.18  based on net tax capacity as well as those based on market value.
 56.19  "School district excess referenda levy" does not include school 
 56.20  district taxes for capital expenditures approved at referendums 
 56.21  or school district taxes to pay for the debt service on bonds 
 56.22  approved at referenda.  The amount of the tax on contamination 
 56.23  value imposed under sections 270.91 to 270.98, if any, must also 
 56.24  be separately stated.  The dollar amounts, including the dollar 
 56.25  amount of any special assessments, may be rounded to the nearest 
 56.26  even whole dollar.  For purposes of this section whole 
 56.27  odd-numbered dollars may be adjusted to the next higher 
 56.28  even-numbered dollar.  The amount of market value excluded under 
 56.29  section 273.11, subdivision 16, if any, must also be listed on 
 56.30  the tax statement.  The statement shall include the following 
 56.31  sentence, printed in upper case letters in boldface print:  "THE 
 56.32  STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES.  
 56.33  THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING 
 56.34  CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."  
 56.35     (b) The property tax statements for manufactured homes and 
 56.36  sectional structures taxed as personal property shall contain 
 57.1   the same information that is required on the tax statements for 
 57.2   real property.  
 57.3      (c) Real and personal property tax statements must contain 
 57.4   the following information in the order given in this paragraph.  
 57.5   The information must contain the current year tax information in 
 57.6   the right column with the corresponding information for the 
 57.7   previous year in a column on the left: 
 57.8      (1) the property's estimated market value under section 
 57.9   273.11, subdivision 1; 
 57.10     (2) the property's taxable market value after reductions 
 57.11  under section 273.11, subdivisions 1a and 16; 
 57.12     (3) the property's gross tax, calculated by multiplying the 
 57.13  property's gross tax capacity times the total local tax rate and 
 57.14  adding the property's total property tax to the result the sum 
 57.15  of the aids enumerated in clause (3) (4); 
 57.16     (4) a total of the following aids: 
 57.17     (i) education aids payable under chapters 124 and 124A; and 
 57.18     (ii) local government aids for cities, towns, and counties 
 57.19  under chapter 477A; and 
 57.20     (iii) disparity reduction aid under section 273.1398; 
 57.21     (5) for homestead residential and agricultural properties, 
 57.22  the homestead and agricultural credit aid apportioned to the 
 57.23  property.  This amount is obtained by multiplying the total 
 57.24  local tax rate by the difference between the property's gross 
 57.25  and net tax capacities under section 273.13.  This amount must 
 57.26  be separately stated and identified as "homestead and 
 57.27  agricultural credit."  For purposes of comparison with the 
 57.28  previous year's amount for the statement for taxes payable in 
 57.29  1990, the statement must show the homestead credit for taxes 
 57.30  payable in 1989 under section 273.13, and the agricultural 
 57.31  credit under section 273.132 for taxes payable in 1989; 
 57.32     (6) (5) any credits received under sections 273.119; 
 57.33  273.123; 273.135; 273.1391; 273.1398, subdivision 4; 469.171; 
 57.34  and 473H.10, except that the amount of credit received under 
 57.35  section 273.135 must be separately stated and identified as 
 57.36  "taconite tax relief"; and 
 58.1      (7) (6) the net tax payable in the manner required in 
 58.2   paragraph (a).  
 58.3      The commissioner of revenue shall certify to the county 
 58.4   auditor the actual or estimated aids enumerated in clauses (3) 
 58.5   and clause (4) that local governments will receive in the 
 58.6   following year.  In the case of a county containing a city of 
 58.7   the first class, for taxes levied in 1991, and for all counties 
 58.8   for taxes levied in 1992 and thereafter, The commissioner must 
 58.9   certify this amount by September 1 of each year.  
 58.10     Sec. 12.  Minnesota Statutes 1994, section 290.06, is 
 58.11  amended by adding a subdivision to read: 
 58.12     Subd. 25.  [PROPERTY TAX CREDIT FOR DISABLED.] (a) A 
 58.13  disabled individual may claim a credit against the tax imposed 
 58.14  by this chapter equal to 50 percent of the ad valorem homestead 
 58.15  property tax paid during the taxable year.  The maximum credit 
 58.16  allowed to an individual or a married couple for the year is 
 58.17  $300.  Homestead tax means the tax paid on the individual's or 
 58.18  married couple's principal residence, classified as class 1 
 58.19  under section 273.13, subdivision 22. 
 58.20     (b) If the amount of the credit under this subdivision 
 58.21  exceeds the claimant's liability for tax, the commissioner shall 
 58.22  refund the excess to the individual.  An amount sufficient to 
 58.23  pay the refunds is appropriated to the commissioner from the 
 58.24  general fund. 
 58.25     (c) For purposes of this subdivision, a disabled person 
 58.26  means: 
 58.27     (1) a blind person; 
 58.28     (2) a person who: 
 58.29     (i) served in the active military or naval service of the 
 58.30  United States, 
 58.31     (ii) is entitled to compensation under the laws and 
 58.32  regulations of the United States for permanent and total 
 58.33  service-connected disability due to the loss, or loss of use, by 
 58.34  reason of amputation, ankylosis, progressive muscular 
 58.35  dystrophies, or paralysis of both lower extremities, such as to 
 58.36  preclude motion without the aid of braces, crutches, canes, or a 
 59.1   wheelchair, and 
 59.2      (iii) has acquired a special housing unit with special 
 59.3   fixtures or movable facilities made necessary by the nature of 
 59.4   the veteran's disability; 
 59.5      (3) the surviving spouse of a deceased individual who 
 59.6   qualified under clause (2), for as long as the surviving spouse 
 59.7   uses the special housing unit as the spouse's principal 
 59.8   residence; 
 59.9      (4) any person who: 
 59.10     (i) is permanently and totally disabled, and 
 59.11     (ii) receives 90 percent of more of the person's total 
 59.12  income from one or more of the following: 
 59.13     (A) aid from any state as a result of that disability; 
 59.14     (B) supplemental security income for the disabled; 
 59.15     (C) workers' compensation based on a finding of total and 
 59.16  permanent disability; 
 59.17     (D) social security disability, including the amount of a 
 59.18  disability insurance benefit which is converted to an old age 
 59.19  insurance benefit and any subsequent cost of living increases; 
 59.20     (E) aid under the federal Railroad Retirement Act of 1937, 
 59.21  United States Code Annotated, title 45, section 228b(a)5; and 
 59.22     (F) a pension from any local government retirement fund 
 59.23  located in the state of Minnesota as a result of that 
 59.24  disability; or 
 59.25     (5) any person who is permanently and totally disabled and 
 59.26  whose household income as defined in section 290A.03, 
 59.27  subdivision 5, is 150 percent or less of the federal poverty 
 59.28  level. 
 59.29     Permanently and total disabled for purposes of this 
 59.30  subdivision means a condition that is permanent and totally 
 59.31  incapacitates the person from working at an occupation which 
 59.32  brings the person an income. 
 59.33     Sec. 13.  Minnesota Statutes 1994, section 473F.02, 
 59.34  subdivision 4, is amended to read: 
 59.35     Subd. 4.  [RESIDENTIAL PROPERTY.] "Residential property" 
 59.36  means the following categories of property any property 
 60.1   classified as class 1 or class 4, as defined in section 273.13, 
 60.2   excluding that portion of such property exempt from taxation 
 60.3   pursuant to section 272.02: 
 60.4      (a) Class 1, 1b, 2a, 4a, 4b, 4c, and 4d property except 
 60.5   resorts and property classified under section 273.13, 
 60.6   subdivision 25, paragraph (c), clause (6); 
 60.7      (b) and that portion of class 3a, 3b, and 5 if the property 
 60.8   is used exclusively for residential occupancy. 
 60.9      Sec. 14.  Minnesota Statutes 1994, section 473F.02, 
 60.10  subdivision 5, is amended to read: 
 60.11     Subd. 5.  [GOVERNMENTAL UNIT.] "Governmental unit" means a 
 60.12  county, city, town, school district, or other taxing unit or 
 60.13  body, excluding the state of Minnesota, which levies ad valorem 
 60.14  taxes in whole or in part within the area. 
 60.15     Sec. 15.  Minnesota Statutes 1994, section 473F.02, 
 60.16  subdivision 24, is amended to read: 
 60.17     Subd. 24.  [LOCAL TAX RATE.] "Local tax rate" means a 
 60.18  governmental unit's levy, including any portion levied against 
 60.19  market value under section 124A.03, subdivision 2a, divided by 
 60.20  its net tax capacity. 
 60.21     Sec. 16.  Minnesota Statutes 1994, section 473F.06, is 
 60.22  amended to read: 
 60.23     473F.06 [INCREASE IN NET TAX CAPACITY.] 
 60.24     On or before July August 15 of each year, the auditor of 
 60.25  each county in the area shall determine the amount, if any, by 
 60.26  which the net tax capacity determined in the preceding year 
 60.27  under section 473F.05, of commercial-industrial property subject 
 60.28  to taxation within each municipality in the auditor's county 
 60.29  exceeds the net tax capacity in 1971 of commercial-industrial 
 60.30  property subject to taxation within that municipality.  If a 
 60.31  municipality is located in two or more counties within the area, 
 60.32  the auditors of those counties shall certify the data required 
 60.33  by section 473F.05 to the county auditor who is responsible 
 60.34  under other provisions of law for allocating the levies of that 
 60.35  municipality between or among the affected counties.  That 
 60.36  county auditor shall determine the amount of the net excess, if 
 61.1   any, for the municipality under this section, and certify that 
 61.2   amount under section 473F.07.  Notwithstanding any other 
 61.3   provision of sections 473F.01 to 473F.13 to the contrary, in the 
 61.4   case of a municipality which is designated on July 24, 1971, as 
 61.5   a redevelopment area under section 401(a)(4) of the Public Works 
 61.6   and Economic Development Act of 1965, Public Law Number 89-136, 
 61.7   the increase in its net tax capacity of commercial-industrial 
 61.8   property for purposes of this section shall be determined in 
 61.9   each year by using as a base the net tax capacity of 
 61.10  commercial-industrial property in that municipality in the 1989 
 61.11  assessment year, rather than the net tax capacity of such 
 61.12  property in 1971.  The increase in total net tax capacity 
 61.13  determined by this section shall be reduced by the amount of any 
 61.14  decreases in net tax capacity of commercial-industrial property 
 61.15  resulting from any court decisions, court related stipulation 
 61.16  agreements, or abatements for a prior year, and only in the 
 61.17  amount of such decreases made during the 12-month period ending 
 61.18  on May 1 of the current assessment year, where such decreases, 
 61.19  if originally reflected in the determination of a prior year's 
 61.20  net tax capacity under section 473F.05, would have resulted in a 
 61.21  smaller contribution from the municipality in that year.  An 
 61.22  adjustment for such decreases shall be made only if the 
 61.23  municipality made a contribution in a prior year based on the 
 61.24  higher net tax capacity of the commercial-industrial property. 
 61.25     Sec. 17.  Minnesota Statutes 1994, section 473F.07, 
 61.26  subdivision 1, is amended to read: 
 61.27     Subdivision 1.  [AREAWIDE NET TAX CAPACITY.] Each county 
 61.28  auditor shall certify the determinations under sections 473F.05 
 61.29  and 473F.06 to the administrative auditor on or before August 1 
 61.30  15 of each year.  
 61.31     The administrative auditor shall determine an amount equal 
 61.32  to 40 20 percent of the sum of the amounts certified under 
 61.33  section 473F.06.  The resulting amount shall be known as the 
 61.34  "areawide net tax capacity for ........(year)." 
 61.35     Sec. 18.  Minnesota Statutes 1994, section 473F.07, 
 61.36  subdivision 5, is amended to read: 
 62.1      Subd. 5.  [CERTIFICATION TO COUNTY AUDITOR.] The result of 
 62.2   the procedure prescribed by subdivision 4 shall be known as the 
 62.3   "areawide net tax capacity for ........(year) attributable to 
 62.4   ..................(municipality)."  The administrative auditor 
 62.5   shall certify such product to the auditor of the county in which 
 62.6   the municipality is located on or before August September 15. 
 62.7      Sec. 19.  Minnesota Statutes 1994, section 473F.08, 
 62.8   subdivision 2, is amended to read: 
 62.9      Subd. 2.  [COMPUTATION OF NET TAX CAPACITY.] The net tax 
 62.10  capacity of a governmental unit is its net tax capacity, as 
 62.11  determined in accordance with other provisions of law including 
 62.12  section 469.177, subdivision 3, subject to the following 
 62.13  adjustments:  
 62.14     (a) There shall be subtracted from its net tax capacity, in 
 62.15  each municipality in which the governmental unit exercises ad 
 62.16  valorem taxing jurisdiction, an amount which bears the same 
 62.17  proportion to 40 20 percent of the amount certified in that year 
 62.18  under sections 473F.06 and 473F.07 for the municipality as the 
 62.19  total preceding year's net tax capacity of commercial-industrial 
 62.20  property which is subject to the taxing jurisdiction of the 
 62.21  governmental unit within the municipality, determined without 
 62.22  regard to section 469.177, subdivision 3, bears to the total 
 62.23  preceding year's net tax capacity of commercial-industrial 
 62.24  property within the municipality, determined without regard to 
 62.25  section 469.177, subdivision 3; 
 62.26     (b) There shall be added to its net tax capacity, in each 
 62.27  municipality in which the governmental unit exercises ad valorem 
 62.28  taxing jurisdiction, an amount which bears the same proportion 
 62.29  to the areawide net tax capacity for the year attributable to 
 62.30  that municipality as the total preceding year's net tax capacity 
 62.31  of residential property which is subject to the taxing 
 62.32  jurisdiction of the governmental unit within the municipality 
 62.33  bears to the total preceding year's net tax capacity of 
 62.34  residential property of the municipality.  
 62.35     Sec. 20.  Minnesota Statutes 1994, section 473F.08, 
 62.36  subdivision 3, is amended to read: 
 63.1      Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
 63.2   apportion the levy of each governmental unit in the auditor's 
 63.3   county in the manner prescribed by this subdivision.  The 
 63.4   auditor shall: 
 63.5      (a) by August 20 January 31, determine the areawide portion 
 63.6   of the levy for each governmental unit by multiplying the local 
 63.7   tax rate of the governmental unit for the preceding current levy 
 63.8   year times the distribution value set forth in subdivision 2, 
 63.9   clause (b); and 
 63.10     (b) by September 5, determine the local portion of the 
 63.11  current year's levy by subtracting the resulting amount from 
 63.12  clause (a) from the governmental unit's current year's levy. 
 63.13     For any governmental unit for which the county auditor has 
 63.14  not yet determined the local tax rate by January 31, the county 
 63.15  auditor shall determine the areawide portion of the levy based 
 63.16  on an estimated tax rate.  In the following year, the 
 63.17  distribution levy of the unit must be adjusted to correct for 
 63.18  the difference between the distribution levy actually received 
 63.19  and the distribution levy that would have been received if the 
 63.20  actual tax rate had been used. 
 63.21     Sec. 21.  Minnesota Statutes 1995 Supplement, section 
 63.22  473F.08, subdivision 5, is amended to read: 
 63.23     Subd. 5.  [AREAWIDE TAX RATE.] On or before August 25 
 63.24  February 5 of each year, the county auditor shall certify to the 
 63.25  administrative auditor that portion of the levy of each 
 63.26  governmental unit determined under subdivisions 3, clause (a), 
 63.27  3a, and 3b.  The administrative auditor shall then determine the 
 63.28  areawide tax rate sufficient to yield an amount equal to the sum 
 63.29  of such levies from the areawide net tax capacity.  On or before 
 63.30  September 1 February 10 of each year, the administrative auditor 
 63.31  shall certify the areawide tax rate to each of the county 
 63.32  auditors.  For the purposes of the notice required under section 
 63.33  275.065, the areawide rate for the proposed taxes payable year 
 63.34  shall be assumed to the same as for the current taxes payable 
 63.35  year. 
 63.36     Sec. 22.  [TIF GRANTS; APPROPRIATIONS.] 
 64.1      (a) The commissioner of revenue shall pay grants to 
 64.2   municipalities for deficits in tax increment financing districts 
 64.3   caused by the changes in class rates under this article.  
 64.4   Municipalities must submit applications for the grants in a form 
 64.5   prescribed by the commissioner by no later than March 1 for 
 64.6   taxes payable during the calendar year.  The maximum grant 
 64.7   equals the lesser of: 
 64.8      (1) the reduction in the tax increment financing district's 
 64.9   revenues derived from increment resulting from the class rate 
 64.10  reductions under this article; and 
 64.11     (2) the municipality's total available tax increments, 
 64.12  including those from previous years, less the amount due during 
 64.13  the calendar year to pay bonds issued and sold before and 
 64.14  binding contracts entered into before the day following final 
 64.15  enactment of this act. 
 64.16     If the total applications for grants exceed the amount 
 64.17  available under the appropriation, the commissioner shall 
 64.18  proportionately reduce the grant for each municipality.  These 
 64.19  grants are available for calendar years 1997, 1998, and 1999. 
 64.20     (b) $80,000,000 is appropriated to the commissioner of 
 64.21  revenue for purposes of this section.  This appropriation does 
 64.22  not cancel until June 30, 2000. 
 64.23     Sec. 23.  [REPEALER.] 
 64.24     Minnesota Statutes 1994, sections 273.13, subdivision 32; 
 64.25  275.08, subdivisions 1c and 1d; 275.61; and 473F.08, subdivision 
 64.26  8a, are repealed. 
 64.27     Sec. 24.  [EFFECTIVE DATE.] 
 64.28     (a) The provisions of this article take effect as provided 
 64.29  in paragraph (b) only if the constitutional amendment proposed 
 64.30  to the people by article 1, section 1, is adopted in the 1996 
 64.31  general election. 
 64.32     (b) Sections 1 to 11 and 13 to 23 are effective for taxes 
 64.33  payable in 1997 and subsequent years.  Section 12 is effective 
 64.34  for tax years beginning after December 31, 1996. 
 64.35                             ARTICLE 4
 64.36                       LOCAL GOVERNMENT AIDS
 65.1      Section 1.  Minnesota Statutes 1994, section 477A.011, 
 65.2   subdivision 20, is amended to read: 
 65.3      Subd. 20.  [CITY NET TAX CAPACITY.] "City Net tax capacity" 
 65.4   for a governmental jurisdiction means (1) the net tax capacity 
 65.5   computed using the net tax capacity rates in section 273.13, and 
 65.6   the market values for taxes payable in the year prior to the aid 
 65.7   distribution plus (2) a city's jurisdiction's fiscal disparities 
 65.8   distribution tax capacity under section 473F.08, subdivision 2, 
 65.9   paragraph (b), for taxes payable in the year prior to that for 
 65.10  which aids are being calculated.  The market value utilized in 
 65.11  computing city Net tax capacity shall be reduced by the sum of 
 65.12  (1) a city's market value of commercial industrial property as 
 65.13  defined in section 473F.02, subdivision 3, multiplied by the 
 65.14  ratio determined pursuant to jurisdiction's fiscal disparities 
 65.15  contribution tax capacity under section 473F.08, subdivision 2, 
 65.16  paragraph (a), (2) the market value of the captured value net 
 65.17  tax capacity of tax increment financing districts as defined in 
 65.18  section 469.177, subdivision 2, and (3) the market value net tax 
 65.19  capacity of transmission lines deducted from a city's 
 65.20  jurisdiction's total net tax capacity under section 
 65.21  273.425.  The city Net tax capacity will be computed using 
 65.22  equalized market values.  
 65.23     Sec. 2.  Minnesota Statutes 1994, section 477A.011, 
 65.24  subdivision 35, is amended to read: 
 65.25     Subd. 35.  [TAX EFFORT RATE.] "Tax effort rate" for a type 
 65.26  of jurisdiction means the sum of the net levy for all cities 
 65.27  jurisdictions of that type divided by the sum of the city net 
 65.28  tax capacity capacities for all cities jurisdictions of that 
 65.29  type.  For purposes of this section, "net levy" means the city 
 65.30  levy, after all adjustments, used for calculating the local tax 
 65.31  rate under section 275.08 for taxes payable in the year prior to 
 65.32  the aid distribution.  The fiscal disparity disparities 
 65.33  distribution levy is included in net levy. 
 65.34     Sec. 3.  Minnesota Statutes 1994, section 477A.011, is 
 65.35  amended by adding a subdivision to read: 
 65.36     Subd. 38.  [COUNTY REVENUE NEED.] "County revenue need" 
 66.1   means the sum of a county's population and its public assistance 
 66.2   caseload as defined in section 256E.06, subdivision 1, paragraph 
 66.3   (a). 
 66.4      Sec. 4.  Minnesota Statutes 1994, section 477A.012, 
 66.5   subdivision 1, is amended to read: 
 66.6      Subdivision 1.  [AID AMOUNT.] In calendar year 1991 and 
 66.7   subsequent years, each county government shall receive a 
 66.8   distribution equal to the aid amount it received under this 
 66.9   subdivision in the previous year less any permanent reductions 
 66.10  made under section 477A.0132.  For each year, each county's aid 
 66.11  distribution equals the amount, if any, by which (1) the 
 66.12  county's revenue need multiplied by the state payment factor 
 66.13  exceeds (2) the county's net tax capacity multiplied by one-half 
 66.14  of the county tax effort rate.  For the purposes of this 
 66.15  subdivision "state payment factor" means an amount determined by 
 66.16  the commissioner so that the sum of the aid amounts to all 
 66.17  counties equals the amount specified in section 477A.03, 
 66.18  subdivision 2. 
 66.19     Sec. 5.  Minnesota Statutes 1994, section 477A.013, 
 66.20  subdivision 9, is amended to read: 
 66.21     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
 66.22  1994 1997 and thereafter, each city shall receive an aid 
 66.23  distribution equal to the sum of (1) the city formula aid under 
 66.24  subdivision 8, and (2) its city aid base. 
 66.25     (b) The percentage increase for a first class city in 
 66.26  calendar year 1995 and thereafter shall not exceed the 
 66.27  percentage increase in the sum of the aid to all cities under 
 66.28  this section in the current calendar year compared to the sum of 
 66.29  the aid to all cities in the previous year. 
 66.30     (c) The total aid for any city, except a first class city, 
 66.31  shall not exceed the sum of (1) ten percent of the city's net 
 66.32  levy for the year prior to the aid distribution plus (2) its 
 66.33  total aid in the previous year before any increases or decreases 
 66.34  under sections 16A.711, subdivision 5, and 477A.0132. 
 66.35     (d) Notwithstanding paragraph (c), in 1995 only, for cities 
 66.36  which in 1992 or 1993 transferred an amount from governmental 
 67.1   funds to their sewer and water fund in an amount greater than 
 67.2   their net levy for taxes payable in the year in which the 
 67.3   transfer occurred, the total aid shall not exceed the sum of (1) 
 67.4   20 percent of the city's net levy for the year prior to the aid 
 67.5   distribution plus (2) its total aid in the previous year before 
 67.6   any increases or decreases under sections 16A.711, subdivision 
 67.7   5, and 477A.0132. 
 67.8      Sec. 6.  Minnesota Statutes 1995 Supplement, section 
 67.9   477A.03, subdivision 2, is amended to read: 
 67.10     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 67.11  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 67.12  annually appropriated from the general fund to the commissioner 
 67.13  of revenue. 
 67.14     (b) Aid payments to counties under section 477A.012, 
 67.15  subdivision 1, are limited to $200,000,000 in 1997.  For aid 
 67.16  payable in 1998 and thereafter, the total aids paid under 
 67.17  section 477A.012, subdivision 1, are the amounts certified to be 
 67.18  paid in the previous year, adjusted for inflation as provided 
 67.19  under subdivision 3. 
 67.20     (c) For aids payable in 1996 and thereafter, the total aids 
 67.21  paid under sections 477A.013, subdivision 9, and section 
 67.22  477A.0122 are the amounts certified to be paid in the previous 
 67.23  year, adjusted for inflation as provided under subdivision 3. 
 67.24     (d) Aid payments to counties under section 477A.0121 are 
 67.25  limited to $20,265,000 in 1996.  For aid payable in 1997 and 
 67.26  thereafter, the total aids paid under section 477A.0121 are the 
 67.27  amounts certified to be paid in the previous year, adjusted for 
 67.28  inflation as provided under subdivision 3.  
 67.29     (e) Aid payments to cities under section 477A.013, 
 67.30  subdivision 9, are limited to $375,000,000 in 1997.  For aid 
 67.31  payable in 1997 and thereafter, the total aids paid under 
 67.32  section 477A.013, subdivision 9, are the amounts certified to be 
 67.33  paid in the previous year, adjusted for inflation as provided 
 67.34  under subdivision 3. 
 67.35     Sec. 7.  [REPEALER.] 
 67.36     Minnesota Statutes 1994, sections 273.1398, subdivisions 2, 
 68.1   3, and 3a; and 477A.011, subdivision 37; and Minnesota Statutes 
 68.2   1995 Supplement, section 477A.011, subdivision 36, are repealed. 
 68.3      Sec. 8.  [EFFECTIVE DATE.] 
 68.4      (a) The provisions of this article take effect as provided 
 68.5   in paragraph (b) only if the constitutional amendment proposed 
 68.6   to the people by article 1, section 1, is adopted in the 1996 
 68.7   general election. 
 68.8      (b) This article is effective for aids payable in 1997 and 
 68.9   thereafter. 
 68.10                             ARTICLE 5
 68.11                       LOW INCOME TAX CREDITS
 68.12     Section 1. [290.0672] [COMPREHENSIVE LOW INCOME TAX 
 68.13  CREDIT.] 
 68.14     Subdivision 1. [CREDIT ALLOWED.] (a) An individual may 
 68.15  claim a credit against the tax imposed by this chapter based on 
 68.16  the individual's income and family size under the following 
 68.17  rules. 
 68.18     (b)(1) The initial credit amount equals 50 percent of the 
 68.19  total Minnesota state and local tax burden, as estimated by the 
 68.20  commissioner under subdivision 4, on the average family with an 
 68.21  income at the federal poverty guideline and with the same family 
 68.22  size as the taxpayer's family. 
 68.23     (2) Taxpayers with family sizes greater than six members 
 68.24  are assumed to bear a tax burden equal to a family of six for 
 68.25  purposes of clause (1). 
 68.26     (3) Single taxpayers with no dependents are assumed to bear 
 68.27  a tax burden equal to one-half of the tax burden of a family 
 68.28  with two members. 
 68.29     (c) If the taxpayer's income is less than or equal to the 
 68.30  federal poverty guideline, the initial amount equals the 
 68.31  credit.  If the taxpayer's income exceeds the federal poverty 
 68.32  guideline, the initial credit amount must be reduced 
 68.33  proportionately so that no credit is available when the 
 68.34  taxpayer's income equals or exceeds 250 percent of the federal 
 68.35  poverty guideline.  The commissioner shall establish a table 
 68.36  setting the reduction in the initial credit amount for taxpayers 
 69.1   with incomes over the federal poverty guideline. 
 69.2      (d) An individual who is claimed as a dependent on the 
 69.3   federal tax return of another or who meets the requirements to 
 69.4   be claimed as a dependent on the tax return of another (using 
 69.5   the definition of a dependent in this section) does not qualify 
 69.6   for a credit under this section. 
 69.7      Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 
 69.8   the following terms have the meanings given. 
 69.9      (a) "Dependent" means any person who is considered a 
 69.10  dependent under sections 151 and 152 of the Internal Revenue 
 69.11  Code.  For a son, stepson, daughter, or stepdaughter of the 
 69.12  claimant, amounts received as an aid to families with dependent 
 69.13  children grant, allowance to or on behalf of the child, surplus 
 69.14  food, or other relief in kind supplied by a governmental agency 
 69.15  may not be used to determine whether the child received more 
 69.16  than half of the child's support from the claimant. 
 69.17     (b) "Family size" means the number of individuals in the 
 69.18  taxpayer's family, including only the taxpayer, spouse, and 
 69.19  dependents. 
 69.20     (c) "Federal poverty guidelines" mean the federal poverty 
 69.21  guidelines as determined by the United States secretary of 
 69.22  health and human services or the secretary's designee. 
 69.23     (d) "Income" means the sum of the following: 
 69.24     (1) federal adjusted gross income as defined in section 62 
 69.25  of the Internal Revenue Code: and 
 69.26     (2) the sum of the following amounts to the extent not 
 69.27  included in clause (1): 
 69.28     (i) all nontaxable income; 
 69.29     (ii) the amount of a passive activity loss that is not 
 69.30  disallowed as a result of section 469, paragraph (i) or (m) of 
 69.31  the Internal Revenue Code and the amount of passive activity 
 69.32  loss carryover allowed under section 469(b) of the Internal 
 69.33  Revenue Code; 
 69.34     (iii) an amount equal to the total of any discharge of 
 69.35  qualified farm indebtedness of a solvent individual excluded 
 69.36  from gross income under section 108(g) of the Internal Revenue 
 70.1   Code; 
 70.2      (iv) cash public assistance and relief; 
 70.3      (v) any pension or annuity (including railroad retirement 
 70.4   benefits, all payments received under the federal Social 
 70.5   Security Act, supplemental security income, and veterans 
 70.6   benefits), which was not exclusively funded by the claimant or 
 70.7   spouse, or which was funded exclusively by the claimant or 
 70.8   spouse and which funding payments were excluded from federal 
 70.9   adjusted gross income in the years when the payments were made; 
 70.10     (vi) interest received from the federal or a state 
 70.11  government or any instrumentality or political subdivision 
 70.12  thereof; 
 70.13     (vii) workers' compensation; 
 70.14     (viii) nontaxable strike benefits; 
 70.15     (ix) the gross amounts of payments received in the nature 
 70.16  of disability income or sick pay as a result of accident, 
 70.17  sickness, or other disability, whether funded through insurance 
 70.18  or otherwise; 
 70.19     (x) a lump sum distribution under section 402(e)(3) of the 
 70.20  Internal Revenue Code; 
 70.21     (xi) contributions made by the claimant to an individual 
 70.22  retirement account, including a qualified voluntary employee 
 70.23  contribution; simplified employee pension plan; self-employed 
 70.24  retirement plan; cash or deferred arrangement plan under section 
 70.25  457 of the Internal Revenue Code; and 
 70.26     (xii) nontaxable scholarship or fellowship grants. 
 70.27     If an individual files an income tax return on a fiscal 
 70.28  year basis, the term "federal adjusted gross income" means 
 70.29  federal adjusted gross income for the fiscal year ending in the 
 70.30  next calendar year.  Federal adjusted gross income may not be 
 70.31  reduced by the amount of a net operating loss carryback or 
 70.32  carryforward or a capital loss carryback or carryforward allowed 
 70.33  for the year. 
 70.34     (b) "Income" does not include: 
 70.35     (1) amounts excluded under the Internal Revenue Code, 
 70.36  sections 101(a), 102, and 121; 
 71.1      (2) amounts of any pension or annuity that were exclusively 
 71.2   funded by the claimant or spouse if the funding payments were 
 71.3   not excluded from federal adjusted gross income in the years 
 71.4   when the payments were made; 
 71.5      (3) surplus food or other relief in kind supplied by a 
 71.6   governmental agency; and 
 71.7      (4) child support payments received under a temporary or 
 71.8   final decree of dissolution or legal separation. 
 71.9      Subd. 4. [ESTIMATES OF TAX BURDEN.] (a) The commissioner 
 71.10  shall biennially estimate the total state and local tax burden 
 71.11  on Minnesota residents for families with incomes at the federal 
 71.12  poverty guideline.  The commissioner must prepare separate 
 71.13  estimates for families with two, three, four, five, and six 
 71.14  members.  The commissioner shall prepare the estimates following 
 71.15  the methodology used in preparing the tax incidence study.  The 
 71.16  estimates must reflect the Minnesota tax law as enacted and in 
 71.17  effect or to be in effect for each of the next two years.  The 
 71.18  commissioner shall use the best available data on local tax 
 71.19  burdens in preparing the estimates.  
 71.20     (b) The estimates must be prepared by October 31 of each 
 71.21  odd numbered year.  The estimates apply to credits to be paid 
 71.22  during the next two calendar years.  Separate estimates must be 
 71.23  prepared for each year, if the commissioner concludes that 
 71.24  material changes have been enacted to take effect in state tax 
 71.25  law during the biennial period. 
 71.26     (c) For purposes of the estimates, total state and local 
 71.27  tax burden means the final economic burden of tax after 
 71.28  accounting for shifting of the following state and local taxes 
 71.29  on Minnesota residents: 
 71.30     (1) individual income taxes, 
 71.31     (2) corporate franchise taxes, 
 71.32     (3) general sales taxes, including the taxes on motor 
 71.33  vehicles, but not including local sales taxes, 
 71.34     (4) real and personal property taxes, 
 71.35     (5) motor fuels excise taxes, 
 71.36     (6) motor vehicle registration taxes, 
 72.1      (7) excise taxes on alcoholic beverages, cigarettes, and 
 72.2   tobacco products, 
 72.3      (8) insurance premium taxes, 
 72.4      (9) gross revenues taxes on hospitals, health care 
 72.5   providers, prescription drugs, and pharmacies. 
 72.6      Subd. 5. [CREDIT REFUNDABLE.] If the amount of credit for 
 72.7   which the claimant is eligible under this section exceeds the 
 72.8   claimant's tax liability under this chapter, the commissioner 
 72.9   shall refund the excess to the claimant. 
 72.10     Subd. 6. [APPROPRIATION.] An amount sufficient to pay the 
 72.11  refunds required by this section is appropriated to the 
 72.12  commissioner from the general fund. 
 72.13     Sec. 2.  Minnesota Statutes 1994, section 290A.02, is 
 72.14  amended to read: 
 72.15     290A.02 [PURPOSE.] 
 72.16     The purpose of this chapter is to provide property tax 
 72.17  relief to certain persons who own or rent their homesteads with 
 72.18  large increases in property taxes. 
 72.19     Sec. 3.  Minnesota Statutes 1995 Supplement, section 
 72.20  290A.03, subdivision 6, is amended to read: 
 72.21     Subd. 6.  [HOMESTEAD.] "Homestead" means the dwelling 
 72.22  occupied as the claimant's principal residence and so much of 
 72.23  the land surrounding it, not exceeding ten acres, as is 
 72.24  reasonably necessary for use of the dwelling as a home and any 
 72.25  other property used for purposes of a homestead as defined in 
 72.26  section 273.13, subdivision 22, except for agricultural land 
 72.27  assessed as part of a homestead pursuant to section 273.13, 
 72.28  subdivision 23, "homestead" is limited to 320 acres or, where 
 72.29  the farm homestead is rented, one acre at the class rates for 
 72.30  class 1a property under section 273.13, subdivision 22.  The 
 72.31  homestead may must be owned or rented and may be a part of a 
 72.32  multidwelling or multipurpose building and the land on which it 
 72.33  is built.  A manufactured home, as defined in section 273.125, 
 72.34  subdivision 8, or a park trailer taxed as a manufactured home 
 72.35  under section 168.012, subdivision 9, assessed as personal 
 72.36  property may be a dwelling for purposes of this subdivision. 
 73.1      Sec. 4.  Minnesota Statutes 1994, section 290A.03, 
 73.2   subdivision 8, is amended to read: 
 73.3      Subd. 8.  [CLAIMANT.] (a) "Claimant" means a person, other 
 73.4   than a dependent, as defined under sections 151 and 152 of the 
 73.5   Internal Revenue Code disregarding section 152(b)(3) of the 
 73.6   Internal Revenue Code, who filed a claim authorized by this 
 73.7   chapter and who was a resident of this state as provided in 
 73.8   chapter 290 during the calendar year for which the claim for 
 73.9   relief was filed. 
 73.10     (b) In the case of a claim relating to rent constituting 
 73.11  property taxes, the claimant shall have resided in a rented or 
 73.12  leased unit on which ad valorem taxes or payments made in lieu 
 73.13  of ad valorem taxes, including payments of special assessments 
 73.14  imposed in lieu of ad valorem taxes, are payable at some time 
 73.15  during the calendar year covered by the claim.  
 73.16     (c) "Claimant" shall not include a resident of a nursing 
 73.17  home, intermediate care facility, or long-term residential 
 73.18  facility whose rent constituting property taxes is paid pursuant 
 73.19  to the supplemental security income program under title XVI of 
 73.20  the Social Security Act, the Minnesota supplemental aid program 
 73.21  under sections 256D.35 to 256D.54, the medical assistance 
 73.22  program pursuant to title XIX of the Social Security Act, or the 
 73.23  general assistance medical care program pursuant to section 
 73.24  256D.03, subdivision 3.  If only a portion of the rent 
 73.25  constituting property taxes is paid by these programs, the 
 73.26  resident shall be a claimant for purposes of this chapter, but 
 73.27  the refund calculated pursuant to section 290A.04 shall be 
 73.28  multiplied by a fraction, the numerator of which is income as 
 73.29  defined in subdivision 3, paragraphs (1) and (2), reduced by the 
 73.30  total amount of income from the above sources other than vendor 
 73.31  payments under the medical assistance program or the general 
 73.32  assistance medical care program and the denominator of which is 
 73.33  income as defined in subdivision 3, paragraphs (1) and (2), plus 
 73.34  vendor payments under the medical assistance program or the 
 73.35  general assistance medical care program, to determine the 
 73.36  allowable refund pursuant to this chapter.  
 74.1      (d) Notwithstanding paragraph (c), if the claimant was a 
 74.2   resident of the nursing home, intermediate care facility or 
 74.3   long-term residential facility for only a portion of the 
 74.4   calendar year covered by the claim, the claimant may compute 
 74.5   rent constituting property taxes by disregarding the rent 
 74.6   constituting property taxes from the nursing home, intermediate 
 74.7   care facility, or long-term residential facility and use only 
 74.8   that amount of rent constituting property taxes or property 
 74.9   taxes payable relating to that portion of the year when the 
 74.10  claimant was not in the facility.  The claimant's household 
 74.11  income is the income for the entire calendar year covered by the 
 74.12  claim.  
 74.13     (e) In the case of a claim for rent constituting property 
 74.14  taxes of a part-year Minnesota resident, the income and rental 
 74.15  reflected in this computation shall be for the period of 
 74.16  Minnesota residency only.  Any rental expenses paid which may be 
 74.17  reflected in arriving at federal adjusted gross income cannot be 
 74.18  utilized for this computation.  When two individuals of a 
 74.19  household are able to meet the qualifications for a claimant, 
 74.20  they may determine among them as to who the claimant shall be. 
 74.21  If they are unable to agree, the matter shall be referred to the 
 74.22  commissioner of revenue whose decision shall be final.  If a 
 74.23  homestead property owner was a part-year Minnesota resident, the 
 74.24  income reflected in the computation made pursuant to section 
 74.25  290A.04 shall be for the entire calendar year, including income 
 74.26  not assignable to Minnesota. 
 74.27     (f) If a homestead is occupied by two or more renters, who 
 74.28  are not husband and wife, the rent shall be deemed to be paid 
 74.29  equally by each, and separate claims shall be filed by each.  
 74.30  The income of each shall be each renter's household income for 
 74.31  purposes of computing the amount of credit to be allowed. 
 74.32     Sec. 5. Minnesota Statutes 1994, section 290A.07, 
 74.33  subdivision 3, as amended by 1995 Laws, chapter 264, article 4, 
 74.34  section 13, is amended to read: 
 74.35     Subd. 3.  [PAYMENT AS DEDUCTION ON PROPERTY TAX STATEMENT.] 
 74.36  In the case of property not included in subdivision 2a, payment 
 75.1   of a refund under section 290A.04, subdivision 2, is made as a 
 75.2   deduction on the property tax statement for the homestead for 
 75.3   taxes payable the following year, and Payment of a refund under 
 75.4   section 290A.04, subdivision 2h, is made as a deduction on the 
 75.5   property tax statement for the homestead for taxes payable in 
 75.6   the current year.  
 75.7      Sec. 6.  Minnesota Statutes 1994, section 290A.09, is 
 75.8   amended to read: 
 75.9      290A.09 [PROOF OF CLAIM.] 
 75.10     Every claimant shall supply to the department of revenue, 
 75.11  in support of the claim, proof of eligibility under this 
 75.12  chapter, including but not limited to amount of rent paid or 
 75.13  property taxes accrued, name and address of owner or managing 
 75.14  agent of property rented, changes in homestead, household 
 75.15  membership, household income, size and nature of property 
 75.16  claimed as a homestead. 
 75.17     Disabled persons filing claims shall submit proof of 
 75.18  disability in the form and manner as the department may 
 75.19  prescribe.  The department may require examination and 
 75.20  certification by the claimant's physician or by a physician 
 75.21  designated by the department.  The cost of any examination shall 
 75.22  be borne by the claimant, unless the examination proves the 
 75.23  disability, in which case the cost of the examination shall be 
 75.24  borne by the department. 
 75.25     A determination of disability of a claimant by the social 
 75.26  security administration under Title II or Title XVI of the 
 75.27  Social Security Act shall constitute presumptive proof of 
 75.28  disability.  
 75.29     Sec. 7.  [REPEALER.] 
 75.30     Minnesota Statutes 1994, sections 290.067, subdivisions 2, 
 75.31  2a, 2b, 3, and 4; 290.0671; 290A.03, subdivisions 3, 4, 5, 7, 9, 
 75.32  10, 11, 12, 12a, 14; 290A.04, subdivisions 1, 2, 2a, 2b, and 5; 
 75.33  290A.05; 290A.08; 290A.091; 290A.19, 290A.22; and 290A.23, 
 75.34  subdivision 1; and Minnesota Statutes 1995 Supplement, sections 
 75.35  290.067, subdivision 1; 290A.04, subdivisions 3 and 6; and 
 75.36  290A.07, subdivision 2a, are repealed. 
 76.1      Sec. 8.  [EFFECTIVE DATE.] 
 76.2      Sections 1 to 8 are effective for taxable years beginning 
 76.3   after December 31, 1996 and for property tax refunds payable 
 76.4   beginning in 1998, but only if the constitutional amendment 
 76.5   proposed to the people by article 1, section 1 is adopted at the 
 76.6   1996 general election. 
 76.7                              ARTICLE 6 
 76.8                              SALES TAX 
 76.9      Section 1.  Minnesota Statutes 1995 Supplement, section 
 76.10  289A.18, subdivision 4, is amended to read: 
 76.11     Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
 76.12  tax returns must be filed on or before the 20th day of the month 
 76.13  following the close of the preceding reporting period, except 
 76.14  that annual use tax returns provided for under section 289A.11, 
 76.15  subdivision 1, must be filed by April 15 following the close of 
 76.16  the calendar year, in the case of individuals.  Annual use tax 
 76.17  returns of businesses, including sole proprietorships, and 
 76.18  annual sales tax returns must be filed by February 5 following 
 76.19  the close of the calendar year.  
 76.20     (b) Except for the return for the June reporting period, 
 76.21  which is due on the following August 25, Returns filed by 
 76.22  retailers required to remit liabilities by means of funds 
 76.23  transfer under section 289A.20, subdivision 4, paragraph (d), 
 76.24  are due on or before the 25th day of the month following the 
 76.25  close of the preceding reporting period.  
 76.26     (c) If a retailer has an average sales and use tax 
 76.27  liability, including local sales and use taxes administered by 
 76.28  the commissioner, equal to or less than $500 per month in any 
 76.29  quarter of a calendar year, and has substantially complied with 
 76.30  the tax laws during the preceding four calendar quarters, the 
 76.31  retailer may request authorization to file and pay the taxes 
 76.32  quarterly in subsequent calendar quarters.  The authorization 
 76.33  remains in effect during the period in which the retailer's 
 76.34  quarterly returns reflect sales and use tax liabilities of less 
 76.35  than $1,500 and there is continued compliance with state tax 
 76.36  laws. 
 77.1      (d) If a retailer has an average sales and use tax 
 77.2   liability, including local sales and use taxes administered by 
 77.3   the commissioner, equal to or less than $100 per month during a 
 77.4   calendar year, and has substantially complied with the tax laws 
 77.5   during that period, the retailer may request authorization to 
 77.6   file and pay the taxes annually in subsequent years.  The 
 77.7   authorization remains in effect during the period in which the 
 77.8   retailer's annual returns reflect sales and use tax liabilities 
 77.9   of less than $1,200 and there is continued compliance with state 
 77.10  tax laws. 
 77.11     (e) The commissioner may also grant quarterly or annual 
 77.12  filing and payment authorizations to retailers if the 
 77.13  commissioner concludes that the retailers' future tax 
 77.14  liabilities will be less than the monthly totals identified in 
 77.15  paragraphs (c) and (d).  An authorization granted under this 
 77.16  paragraph is subject to the same conditions as an authorization 
 77.17  granted under paragraphs (c) and (d). 
 77.18     Sec. 2.  Minnesota Statutes 1994, section 289A.20, 
 77.19  subdivision 4, is amended to read: 
 77.20     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
 77.21  chapter 297A are due and payable to the commissioner monthly on 
 77.22  or before the 20th day of the month following the month in which 
 77.23  the taxable event occurred or following another reporting period 
 77.24  as the commissioner prescribes, except that use taxes due on an 
 77.25  annual use tax return as provided under section 289A.11, 
 77.26  subdivision 1, are payable by April 15 following the close of 
 77.27  the calendar year. 
 77.28     (b) A vendor having a liability of $120,000 or more during 
 77.29  a fiscal year ending June 30 must remit the June liability for 
 77.30  the next year in the following manner: 
 77.31     (1) Two business days before June 30 of the year, the 
 77.32  vendor must remit 75 percent of the estimated June liability to 
 77.33  the commissioner.  
 77.34     (2) On or before August 14 of the year, the vendor must pay 
 77.35  any additional amount of tax not remitted in June. 
 77.36     (c) A vendor having a liability of $120,000 or more during 
 78.1   a fiscal year ending June 30 must remit all liabilities in the 
 78.2   subsequent calendar year by means of a funds transfer as defined 
 78.3   in section 336.4A-104, paragraph (a).  The funds transfer 
 78.4   payment date, as defined in section 336.4A-401, must be on or 
 78.5   before the 14th day of the month following the month in which 
 78.6   the taxable event occurred, except for 75 percent of the 
 78.7   estimated June liability, which is due two business days before 
 78.8   June 30.  The remaining amount of the June liability is due on 
 78.9   August 14.  If the date the tax is due is not a funds transfer 
 78.10  business day, as defined in section 336.4A-105, paragraph (a), 
 78.11  clause (4), the payment date must be on or before the funds 
 78.12  transfer business day next following the date the tax is due. 
 78.13     (d) (c) If the vendor required to remit by electronic funds 
 78.14  transfer as provided in paragraph (c) (b) is unable due to 
 78.15  reasonable cause to determine the actual sales and use tax due 
 78.16  on or before the due date for payment, the vendor may remit an 
 78.17  estimate of the tax owed using one of the following options: 
 78.18     (1) 100 percent of the tax reported on the previous month's 
 78.19  sales and use tax return; 
 78.20     (2) 100 percent of the tax reported on the sales and use 
 78.21  tax return for the same month in the previous calendar year; or 
 78.22     (3) 95 percent of the actual tax due. 
 78.23     Any additional amount of tax that is not remitted on or 
 78.24  before the due date for payment, must be remitted with the 
 78.25  return.  If a vendor fails to remit the actual liability or does 
 78.26  not remit using one of the estimate options by the due date for 
 78.27  payment, the vendor must remit actual liability as provided in 
 78.28  paragraph (c) in all subsequent periods.  This paragraph does 
 78.29  not apply to the June sales and use tax liability. 
 78.30     Sec. 3.  Minnesota Statutes 1995 Supplement, section 
 78.31  297A.01, subdivision 3, is amended to read: 
 78.32     Subd. 3.  A "sale" and a "purchase" includes, but is not 
 78.33  limited to, each of the following transactions: 
 78.34     (a) Any transfer of title or possession, or both, of 
 78.35  tangible personal property, whether absolutely or conditionally, 
 78.36  and the leasing of or the granting of a license to use or 
 79.1   consume tangible personal property other than manufactured homes 
 79.2   used for residential purposes for a continuous period of 30 days 
 79.3   or more, for a consideration in money or by exchange or barter; 
 79.4      (b) The production, fabrication, printing, or processing, 
 79.5   or repair of tangible personal property for a consideration for 
 79.6   consumers who furnish either directly or indirectly the 
 79.7   materials used in the production, fabrication, printing, or 
 79.8   processing, or repair; 
 79.9      (c) The furnishing, preparing, or serving for a 
 79.10  consideration of food, meals, or drinks.  "Sale" does not 
 79.11  include: 
 79.12     (1) meals or drinks served to patients, inmates, or persons 
 79.13  residing at hospitals, sanitariums, nursing homes, senior 
 79.14  citizens homes, and correctional, detention, and detoxification 
 79.15  facilities; 
 79.16     (2) meals or drinks purchased for and served exclusively to 
 79.17  individuals who are 60 years of age or over and their spouses or 
 79.18  to the handicapped and their spouses by governmental agencies, 
 79.19  nonprofit organizations, agencies, or churches or pursuant to 
 79.20  any program funded in whole or part through 42 USCA sections 
 79.21  3001 through 3045, wherever delivered, prepared or served; or 
 79.22     (3) meals and lunches served at public and private schools, 
 79.23  universities, or colleges. 
 79.24  Notwithstanding section 297A.25, subdivision 2, taxable food or 
 79.25  meals include, but are not limited to, the following:  
 79.26     (i) heated food or drinks; 
 79.27     (ii) sandwiches prepared by the retailer; 
 79.28     (iii) single sales of prepackaged ice cream or ice milk 
 79.29  novelties prepared by the retailer; 
 79.30     (iv) hand-prepared or dispensed ice cream or ice milk 
 79.31  products including cones, sundaes, and snow cones; 
 79.32     (v) soft drinks and other beverages prepared or served by 
 79.33  the retailer; 
 79.34     (vi) gum; 
 79.35     (vii) ice; 
 79.36     (viii) all food sold in vending machines; 
 80.1      (ix) party trays prepared by the retailers; and 
 80.2      (x) all meals and single servings of packaged snack food, 
 80.3   single cans or bottles of pop, sold in restaurants and bars; 
 80.4      (d) The granting of the privilege of admission to places of 
 80.5   amusement, recreational areas, or athletic events, except a 
 80.6   world championship football game sponsored by the national 
 80.7   football league, and the privilege of having access to and the 
 80.8   use of amusement devices, tanning facilities, reducing salons, 
 80.9   steam baths, turkish baths, health clubs, and spas or athletic 
 80.10  facilities; 
 80.11     (e) The furnishing for a consideration of lodging and 
 80.12  related services by a hotel, rooming house, tourist court, motel 
 80.13  or trailer camp and of the granting of any similar license to 
 80.14  use real property other than the renting or leasing thereof for 
 80.15  a continuous period of 30 days or more; 
 80.16     (f) The furnishing for a consideration of electricity, gas, 
 80.17  water, or steam for use or consumption within this state, or 
 80.18  local exchange telephone service, intrastate toll service, and 
 80.19  interstate toll service, if that service originates from and is 
 80.20  charged to a telephone located in this state.  Telephone service 
 80.21  includes paging services and private communication service, as 
 80.22  defined in United States Code, title 26, section 4252(d), except 
 80.23  for private communication service purchased by an agent acting 
 80.24  on behalf of the state lottery.  The furnishing for a 
 80.25  consideration of access to telephone services by a hotel to its 
 80.26  guests is a sale under this clause.  Sales by municipal 
 80.27  corporations in a proprietary capacity are included in the 
 80.28  provisions of this clause.  The furnishing of water and sewer 
 80.29  services for residential use shall not be considered a sale.  
 80.30  The sale of natural gas to be used as a fuel in vehicles 
 80.31  propelled by natural gas shall not be considered a sale for the 
 80.32  purposes of this section; 
 80.33     (g) The furnishing for a consideration of cable television 
 80.34  services, including charges for basic service, charges for 
 80.35  premium service, and any other charges for any other 
 80.36  pay-per-view, monthly, or similar television services; 
 81.1      (h) The furnishing for a consideration of parking services, 
 81.2   whether on a contractual, hourly, or other periodic basis, 
 81.3   except for parking at a meter; 
 81.4      (i) The furnishing for a consideration of services listed 
 81.5   in this paragraph: 
 81.6      (i) laundry and dry cleaning services including cleaning, 
 81.7   pressing, repairing, altering, and storing clothes, linen 
 81.8   services and supply, cleaning and blocking hats, and carpet, 
 81.9   drapery, upholstery, and industrial cleaning.  Laundry and dry 
 81.10  cleaning services do not include services provided by coin 
 81.11  operated facilities operated by the customer; 
 81.12     (ii) motor vehicle repair, maintenance, diagnostic, 
 81.13  washing, waxing, and cleaning services, including services 
 81.14  provided by coin-operated facilities operated by the customer, 
 81.15  and rustproofing, undercoating, and towing of motor vehicles; 
 81.16     (iii) building and residential cleaning, maintenance, and 
 81.17  disinfecting and exterminating services; 
 81.18     (iv) detective services, security services, burglar, fire 
 81.19  alarm, and armored car services not including services performed 
 81.20  within the jurisdiction they serve by off-duty licensed peace 
 81.21  officers as defined in section 626.84, subdivision 1; 
 81.22     (v) pet grooming services; 
 81.23     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
 81.24  services; garden planting and maintenance; tree, bush, and shrub 
 81.25  pruning, bracing, spraying, and surgery; tree, bush, shrub and 
 81.26  stump removal; and tree trimming for public utility lines.  
 81.27  Services performed under a construction contract for the 
 81.28  installation of shrubbery, plants, sod, trees, bushes, and 
 81.29  similar items are not taxable; 
 81.30     (vii) mixed municipal solid waste management services as 
 81.31  described in section 297A.45; 
 81.32     (viii) massages, except when provided by a licensed health 
 81.33  care facility or professional or upon written referral from a 
 81.34  licensed health care facility or professional for treatment of 
 81.35  illness, injury, or disease; and 
 81.36     (ix) the furnishing for consideration of lodging, board and 
 82.1   care services for animals in kennels and other similar 
 82.2   arrangements, but excluding veterinary and horse boarding 
 82.3   services; and 
 82.4      (x) the furnishing for consideration of professional 
 82.5   services. 
 82.6   The services listed in this paragraph are taxable under section 
 82.7   297A.02 if the service is performed wholly within Minnesota or 
 82.8   if the service is performed partly within and partly without 
 82.9   Minnesota and the greater proportion of the service is performed 
 82.10  in Minnesota, based on the cost of performance.  In applying the 
 82.11  provisions of this chapter, the terms "tangible personal 
 82.12  property" and "sales at retail" include taxable services and the 
 82.13  provision of taxable services, unless specifically provided 
 82.14  otherwise.  Services performed by an employee for an employer 
 82.15  are not taxable under this paragraph.  Services performed by a 
 82.16  partnership or association for another partnership or 
 82.17  association are not taxable under this paragraph if one of the 
 82.18  entities owns or controls more than 80 percent of the voting 
 82.19  power of the equity interest in the other entity.  Services 
 82.20  performed between members of an affiliated group of corporations 
 82.21  are not taxable.  For purposes of this section, "affiliated 
 82.22  group of corporations" includes those entities that would be 
 82.23  classified as a member of an affiliated group under United 
 82.24  States Code, title 26, section 1504, and who are eligible to 
 82.25  file a consolidated tax return for federal income tax purposes; 
 82.26     (j) A "sale" and a "purchase" includes the transfer of 
 82.27  computer software, meaning information and directions that 
 82.28  dictate the function performed by data processing equipment.  A 
 82.29  "sale" and a "purchase" does not include the design, 
 82.30  development, writing, translation, fabrication, lease, or 
 82.31  transfer for a consideration of title or possession of a custom 
 82.32  computer program; and 
 82.33     (k) The granting of membership in a club, association, or 
 82.34  other organization if: 
 82.35     (1) the club, association, or other organization makes 
 82.36  available for the use of its members sports and athletic 
 83.1   facilities (without regard to whether a separate charge is 
 83.2   assessed for use of the facilities); and 
 83.3      (2) use of the sports and athletic facilities is not made 
 83.4   available to the general public on the same basis as it is made 
 83.5   available to members.  
 83.6   Granting of membership includes both one-time initiation fees 
 83.7   and periodic membership dues.  Sports and athletic facilities 
 83.8   include golf courses, tennis, racquetball, handball and squash 
 83.9   courts, basketball and volleyball facilities, running tracks, 
 83.10  exercise equipment, swimming pools, and other similar athletic 
 83.11  or sports facilities.  The provisions of this paragraph do not 
 83.12  apply to camps or other recreation facilities owned and operated 
 83.13  by an exempt organization under section 501(c)(3) of the 
 83.14  Internal Revenue Code of 1986, as amended through December 31, 
 83.15  1992, for educational and social activities for young people 
 83.16  primarily age 18 and under.  
 83.17     Sec. 4.  Minnesota Statutes 1994, section 297A.01, 
 83.18  subdivision 16, is amended to read: 
 83.19     Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
 83.20  machinery and equipment purchased or leased for use in this 
 83.21  state and used by the purchaser or lessee primarily for 
 83.22  manufacturing, fabricating, mining, or refining tangible 
 83.23  personal property to be sold ultimately at retail and for 
 83.24  electronically transmitting results retrieved by a customer of 
 83.25  an on-line computerized data retrieval system.  
 83.26     (b) Capital equipment includes all machinery and equipment 
 83.27  that is essential to the integrated production process.  Capital 
 83.28  equipment includes, but is not limited to: 
 83.29     (1) machinery and equipment used or required to operate, 
 83.30  control, or regulate the production equipment; 
 83.31     (2) machinery and equipment used for research and 
 83.32  development, design, quality control, and testing activities; 
 83.33     (3) environmental control devices that are used to maintain 
 83.34  conditions such as temperature, humidity, light, or air pressure 
 83.35  when those conditions are essential to and are part of the 
 83.36  production process; or 
 84.1      (4) materials and supplies necessary to construct and 
 84.2   install machinery or equipment; or 
 84.3      (5) pollution control equipment. 
 84.4      (c) Capital equipment does not include the following: 
 84.5      (1) repair or replacement parts, including accessories, 
 84.6   whether purchased as spare parts, repair parts, or as upgrades 
 84.7   or modifications, and whether purchased before or after the 
 84.8   machinery or equipment is placed into service.  Parts or 
 84.9   accessories are treated as capital equipment only to the extent 
 84.10  that they are a part of and are essential to the operation of 
 84.11  the machinery or equipment as initially purchased; 
 84.12     (2) motor vehicles taxed under chapter 297B; 
 84.13     (3) (2) machinery or equipment used to receive or store raw 
 84.14  materials; 
 84.15     (4) (3) building materials; 
 84.16     (5) (4) machinery or equipment used for nonproduction 
 84.17  purposes, including, but not limited to, the following:  
 84.18  machinery and equipment used for plant security, fire 
 84.19  prevention, first aid, and hospital stations; machinery and 
 84.20  equipment used in support operations or for administrative 
 84.21  purposes; machinery and equipment used solely for pollution 
 84.22  control, prevention, or abatement; and machinery and equipment 
 84.23  used in plant cleaning, disposal of scrap and waste, plant 
 84.24  communications, space heating, lighting, or safety; 
 84.25     (6) "farm machinery" as defined by subdivision 15, 
 84.26  "aquaculture production equipment" as defined by subdivision 19, 
 84.27  and "replacement capital equipment" as defined by subdivision 
 84.28  20; or 
 84.29     (7) (5) any other item that is not essential to the 
 84.30  integrated process of manufacturing, fabricating, mining, or 
 84.31  refining. 
 84.32     (d) For purposes of this subdivision: 
 84.33     (1) "Equipment" means independent devices or tools separate 
 84.34  from machinery but essential to an integrated production 
 84.35  process, including computers and software, used in operating 
 84.36  machinery and equipment; and any subunit or assembly comprising 
 85.1   a component of any machinery or accessory or attachment parts of 
 85.2   machinery, such as tools, dies, jigs, patterns, and molds. 
 85.3      (2) "Fabricating" means to make, build, create, produce, or 
 85.4   assemble components or property to work in a new or different 
 85.5   manner. 
 85.6      (3) "Machinery" means mechanical, electronic, or electrical 
 85.7   devices, including computers and software, that are purchased or 
 85.8   constructed to be used for the activities set forth in paragraph 
 85.9   (a), beginning with the removal of raw materials from inventory 
 85.10  through the completion of the product, including packaging of 
 85.11  the product. 
 85.12     (4) "Manufacturing" means an operation or series of 
 85.13  operations where raw materials are changed in form, composition, 
 85.14  or condition by machinery and equipment and which results in the 
 85.15  production of a new article of tangible personal property.  For 
 85.16  purposes of this subdivision, "manufacturing" includes the 
 85.17  generation of electricity or steam to be sold at retail. 
 85.18     (5) "Mining" means the extraction of minerals, ores, stone, 
 85.19  and peat. 
 85.20     (6) "On-line data retrieval system" means a system whose 
 85.21  cumulation of information is equally available and accessible to 
 85.22  all its customers. 
 85.23     (7) "Pollution control equipment" means machinery and 
 85.24  equipment used to eliminate, prevent, or reduce pollution 
 85.25  resulting from an activity described in paragraph (a). 
 85.26     (8) "Primarily" means machinery and equipment used 50 
 85.27  percent or more of the time in an activity described in 
 85.28  paragraph (a). 
 85.29     (9) "Refining" means the process of converting a natural 
 85.30  resource to a product, including the treatment of water to be 
 85.31  sold at retail. 
 85.32     (e) For purposes of this subdivision the requirement that 
 85.33  the machinery or equipment "must be used by the purchaser or 
 85.34  lessee" means that the person who purchases or leases the 
 85.35  machinery or equipment must be the one who uses it for the 
 85.36  qualifying purpose.  When a contractor buys and installs 
 86.1   machinery or equipment as part of an improvement to real 
 86.2   property, only the contractor is considered the purchaser. 
 86.3      (f) Notwithstanding prior provisions of this subdivision, 
 86.4   machinery and equipment purchased or leased to replace machinery 
 86.5   and equipment used in the mining or production of taconite shall 
 86.6   qualify as capital equipment. 
 86.7      Sec. 5.  Minnesota Statutes 1994, section 297A.01, is 
 86.8   amended by adding a subdivision to read: 
 86.9      Subd. 22.  [PROFESSIONAL SERVICES.] "Professional services" 
 86.10  means accounting, architectural, engineering, financial 
 86.11  planning, legal, and tax preparation services, if the services 
 86.12  are provided to a natural individual who is a resident of 
 86.13  Minnesota.  Professional services do not include services 
 86.14  provided to a person engaged in the conduct of a trade or 
 86.15  business within the meaning of section 162(a) of the Internal 
 86.16  Revenue Code, if the services are for use exclusively in the 
 86.17  trade or business.  If professional services are provided in 
 86.18  combination with other services, except services incidental to 
 86.19  the professional services, the sale price of the taxable 
 86.20  services must be determined based on the cost of performance.  
 86.21  If other services are provided that are incidental to 
 86.22  professional services, all of the services are fully taxable. 
 86.23     Sec. 6.  Minnesota Statutes 1994, section 297A.02, 
 86.24  subdivision 1, is amended to read: 
 86.25     Subdivision 1.  [GENERALLY.] Except as otherwise provided 
 86.26  in this chapter, there is imposed an excise tax of 6.5 6 percent 
 86.27  of the gross receipts from sales at retail made by any person in 
 86.28  this state. 
 86.29     Sec. 7.  Minnesota Statutes 1994, section 297A.09, is 
 86.30  amended to read: 
 86.31     297A.09 [PRESUMPTION OF TAX; BURDEN OF PROOF.] 
 86.32     For the purpose of the proper administration of sections 
 86.33  297A.01 to 297A.44 and to prevent evasion of the tax, it shall 
 86.34  be presumed that all gross receipts are subject to the tax until 
 86.35  the contrary is established.  The burden of proving that a sale 
 86.36  is not a sale at retail is upon the person who makes the sale, 
 87.1   but that person may take from the purchaser an exemption 
 87.2   certificate to the effect that the property purchased is for 
 87.3   resale or that the sale is otherwise exempt from the application 
 87.4   of the tax imposed by sections 297A.01 to 297A.44.  
 87.5      The sale of accounting, architectural, engineering, 
 87.6   financial planning, legal, and tax preparation services are 
 87.7   presumed to be taxable professional services, unless the 
 87.8   purchaser provides an exemption certificate to the vendor.  The 
 87.9   commissioner shall prescribe the form of and provide, upon 
 87.10  application, exemption certifications for purchases of 
 87.11  non-taxable professional services to persons engaged in the 
 87.12  conduct of a trade or business, government agencies, or 
 87.13  organizations exempt under section 297A.25, subdivision 16. 
 87.14     Sec. 8.  Minnesota Statutes 1994, section 297A.15, 
 87.15  subdivision 5, is amended to read: 
 87.16     Subd. 5.  [REFUND; APPROPRIATION.] Notwithstanding the 
 87.17  provisions of sections 297A.02, subdivision 5, and section 
 87.18  297A.25, subdivisions 42 and subdivision 50, the tax on sales of 
 87.19  capital equipment, replacement capital equipment, and 
 87.20  construction materials and supplies under section 297A.25, 
 87.21  subdivision 50, shall be imposed and collected as if the rates 
 87.22  rate under sections 297A.02, subdivision 1, and 297A.021, 
 87.23  applied.  Upon application by the purchaser, on forms prescribed 
 87.24  by the commissioner, a refund equal to the reduction in the tax 
 87.25  due as a result of the application of the exemption under 
 87.26  section 297A.25, subdivision 42 or 50, and the rates under 
 87.27  sections 297A.02, subdivision 5 , and 297A.021 shall be paid to 
 87.28  the purchaser.  In the case of building materials qualifying 
 87.29  under section 297A.25, subdivision 50, Where the tax was paid by 
 87.30  a contractor, application must be made by the owner for the 
 87.31  sales tax paid by all the contractors, subcontractors, and 
 87.32  builders for the project.  The application must include 
 87.33  sufficient information to permit the commissioner to verify the 
 87.34  sales tax paid for the project.  The application shall include 
 87.35  information necessary for the commissioner initially to verify 
 87.36  that the purchases qualified as capital equipment under section 
 88.1   297A.25, subdivision 42, replacement capital equipment under 
 88.2   section 297A.01, subdivision 20, or capital equipment or 
 88.3   construction materials and supplies under section 297A.25, 
 88.4   subdivision 50.  No more than two applications for refunds may 
 88.5   be filed under this subdivision in a calendar year.  No owner 
 88.6   may apply for a refund based on the exemption under section 
 88.7   297A.25, subdivision 50, before July 1, 1993.  Unless otherwise 
 88.8   specifically provided by this subdivision, the provisions of 
 88.9   section 289A.40 apply to the refunds payable under this 
 88.10  subdivision.  There is annually appropriated to the commissioner 
 88.11  of revenue the amount required to make the refunds. 
 88.12     The amount to be refunded shall bear interest at the rate 
 88.13  in section 270.76 from the date the refund claim is filed with 
 88.14  the commissioner. 
 88.15     Sec. 9.  Minnesota Statutes 1994, section 297A.25, 
 88.16  subdivision 29, is amended to read: 
 88.17     Subd. 29.  [FARM MACHINERY REPAIR PARTS.] The gross 
 88.18  receipts from the sale of farm machinery and repair and 
 88.19  replacement parts, except tires, used for maintenance or repair 
 88.20  of farm machinery are exempt, if the part replaces a farm 
 88.21  machinery part assigned a specific or generic part number by the 
 88.22  manufacturer of the farm machinery.  
 88.23     Sec. 10.  [REPEALER.] 
 88.24     (a) Minnesota Statutes 1994, section 289A.60, subdivision 
 88.25  15, is repealed. 
 88.26     (b) Minnesota Statutes 1994, section 297A.25, subdivisions 
 88.27  8, 10, and 23, are repealed. 
 88.28     (c) Minnesota Statutes 1994, sections 297A.01, subdivisions 
 88.29  17 and 20; 297A.02, subdivisions 2 and 5; and 297A.25, 
 88.30  subdivision 53, are repealed. 
 88.31     Sec. 11.  [EFFECTIVE DATE.] 
 88.32     Sections 1, 2, and 10, paragraph (a) are effective for 
 88.33  sales after June 30, 1998, but only if the constitutional 
 88.34  amendment proposed to the people by article 1, section 1 is 
 88.35  adopted at the 1996 general election. 
 88.36     Sections 3, 5, 6, 7, and 10, paragraph (b) are effective 
 89.1   for sales after June 30, 1997, but only if the constitutional 
 89.2   amendment proposed to the people by article 1, section 1 is 
 89.3   adopted at the 1996 general election. 
 89.4      Sections 4, 8, 9, and 10, paragraph (c) are effective for 
 89.5   sales after June 30, 1999, but only if the constitutional 
 89.6   amendment proposed to the people by article 1, section 1 is 
 89.7   adopted at the 1996 general election. 
 89.8                              ARTICLE 7
 89.9                            TOBACCO TAXES
 89.10     Section 1.  Minnesota Statutes 1994, section 297.02, 
 89.11  subdivision 1, is amended to read: 
 89.12     Subdivision 1.  [RATES.] A tax is hereby imposed upon the 
 89.13  sale of cigarettes in this state or having cigarettes in 
 89.14  possession in this state with intent to sell and upon any person 
 89.15  engaged in business as a distributor thereof, at the following 
 89.16  rates, subject to the discount provided in section 297.03: 
 89.17     (1) Before July 1, 1997, the following rates apply 
 89.18     (A) On cigarettes weighing not more than three pounds per 
 89.19  thousand, 24 mills on each such cigarette; 
 89.20     (2) (B)  On cigarettes weighing more than three pounds per 
 89.21  thousand, 48 mills on each such cigarette.  
 89.22     (2) After June 30, 1997 and before July 1, 1998, the 
 89.23  following rates apply 
 89.24     (A) On cigarettes weighing not more than three pounds per 
 89.25  thousand, 29 mills on each cigarette; 
 89.26     (B)  On cigarettes weighing more than three pounds per 
 89.27  thousand, 58 mills on each cigarette.  
 89.28     (3)  After June 30, 1998, the following rates apply 
 89.29     (A)  On cigarettes weighing not more than three pounds per 
 89.30  thousand, 35 mills on each cigarette; 
 89.31     (B) On cigarettes weighing more than three pounds per 
 89.32  thousand, 70 mills on each cigarette. 
 89.33     Sec. 2.  [297.025] [INDEXING.] 
 89.34     Beginning July 1, 1999, on July 1 of each year the 
 89.35  commissioner shall increase each tax rate in section 297.02 by a 
 89.36  percentage equal to the annual percentage change in the most 
 90.1   recent consumer price index for urban consumers of tobacco and 
 90.2   smoking products, as prepared by the United States bureau of 
 90.3   labor statistics. 
 90.4      Sec. 3.  [297.026] [FLOOR STOCKS TAX.] 
 90.5      Subdivision 1.  [IMPOSITION OF TAX.] (a) A floor stocks tax 
 90.6   is imposed on every person engaged in business in this state as 
 90.7   a distributor, retailer, subjobber, vendor, manufacturer, or 
 90.8   manufacturer's representative of cigarettes, on the stamped 
 90.9   cigarettes in the person's possession or under the person's 
 90.10  control at 12:01 a.m. on the effective date of a qualifying tax 
 90.11  increase.  The tax equals the amount determined by multiplying 
 90.12  the increased tax rate under the qualifying tax increase by the 
 90.13  number of cigarettes in the person's possession.  The tax is 
 90.14  subject to the discounts in section 297.03. 
 90.15     (b) Each distributor shall, within five business days after 
 90.16  the effective date of the tax increase, file a report with the 
 90.17  commissioner, showing the cigarettes on hand on 12:01 a.m. of 
 90.18  the effective date of the qualifying tax increase and the amount 
 90.19  of floor stocks tax due on the cigarettes.  The report must be 
 90.20  in the form prescribed by the commissioner.  The tax imposed by 
 90.21  this section is due within 30 days after the effective date of 
 90.22  the qualifying tax increase, and bears interest at a rate of one 
 90.23  percent a month. 
 90.24     (c) Each retailer, subjobber, vendor, manufacturer, or 
 90.25  manufacturer's representative shall file a return with the 
 90.26  commissioner, showing the number of cigarettes on hand on 12:01 
 90.27  a.m. of the effective date of the qualifying tax increase and 
 90.28  the amount of floor stocks tax due on the cigarettes.  The 
 90.29  return must be in the form prescribed by the commissioner.  The 
 90.30  return must be filed and the tax paid within 30 days after the 
 90.31  effective date of the tax increase.  Tax not paid by the due 
 90.32  date bears interest at the rate of one percent per month. 
 90.33     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 90.34  the following terms have the meanings given. 
 90.35     (b) "Effective date" means the day on which a qualifying 
 90.36  tax increase takes effect. 
 91.1      (c) "Qualifying tax increase" means an increase in the tax 
 91.2   rate, whether specifically enacted or under the indexing 
 91.3   provisions under section 2, if the increase equals or exceeds 
 91.4   one mill on cigarettes weighing not more than three pounds per 
 91.5   thousand and two mills on cigarettes weighing more than three 
 91.6   pounds per thousand. 
 91.7      Sec. 4.  Minnesota Statutes 1994, section 297.03, 
 91.8   subdivision 5, is amended to read: 
 91.9      Subd. 5.  [SALE OF STAMPS.] The commissioner shall sell 
 91.10  stamps to any person licensed as a distributor at a discount of 
 91.11  1.0 0.55 percent from the face amount of the stamps for the 
 91.12  first $1,500,000 of such stamps purchased in any fiscal year; 
 91.13  and at a discount of .60 0.35 percent on the remainder of such 
 91.14  stamps purchased in any fiscal year.  The commissioner shall not 
 91.15  sell stamps to any other person.  The commissioner may prescribe 
 91.16  the method of shipment of the stamps to the distributor as well 
 91.17  as the quantities of stamps purchased.  
 91.18     Sec. 5.  Minnesota Statutes 1994, section 297.07, 
 91.19  subdivision 1, is amended to read: 
 91.20     Subdivision 1.  [MONTHLY RETURN FILED WITH COMMISSIONER.] 
 91.21  On or before the 18th day of each calendar month every 
 91.22  distributor with a place of business in this state shall file a 
 91.23  return with the commissioner showing the quantity of cigarettes 
 91.24  manufactured or brought in from without the state or purchased 
 91.25  during the preceding calendar month and the quantity of 
 91.26  cigarettes sold or otherwise disposed of in this state and 
 91.27  outside this state during that month.  Every licensed 
 91.28  distributor outside this state shall in like manner file a 
 91.29  return showing the quantity of cigarettes shipped or transported 
 91.30  into this state during the preceding calendar month.  Returns 
 91.31  shall be made upon forms furnished and prescribed by the 
 91.32  commissioner and shall contain such other information as the 
 91.33  commissioner may require.  The return shall be accompanied by a 
 91.34  remittance for the full unpaid tax liability shown by it.  The 
 91.35  return for the May liability and 75 percent of the estimated 
 91.36  June liability is due on the date payment of the tax is due. 
 92.1      Sec. 6.  Minnesota Statutes 1994, section 297.32, 
 92.2   subdivision 1, is amended to read: 
 92.3      Subdivision 1.  A tax is hereby imposed upon all tobacco 
 92.4   products in this state and upon any person engaged in business 
 92.5   as a distributor thereof, at the rate of 35 50 percent of the 
 92.6   wholesale sales price of such tobacco products.  Such tax shall 
 92.7   be imposed at the time the distributor (1) brings, or causes to 
 92.8   be brought, into this state from without the state tobacco 
 92.9   products for sale; (2) makes, manufactures, or fabricates 
 92.10  tobacco products in this state for sale in this state; or (3) 
 92.11  ships or transports tobacco products to retailers in this state, 
 92.12  to be sold by those retailers.  
 92.13     Sec. 7.  Minnesota Statutes 1995 Supplement, section 
 92.14  297.35, subdivision 1, is amended to read: 
 92.15     Subdivision 1.  On or before the 18th day of each calendar 
 92.16  month every distributor with a place of business in this state 
 92.17  shall file a return with the commissioner showing the quantity 
 92.18  and wholesale sales price of each tobacco product (1) brought, 
 92.19  or caused to be brought, into this state for sale; and (2) made, 
 92.20  manufactured, or fabricated in this state for sale in this 
 92.21  state, during the preceding calendar month.  Every licensed 
 92.22  distributor outside this state shall in like manner file a 
 92.23  return showing the quantity and wholesale sales price of each 
 92.24  tobacco product shipped or transported to retailers in this 
 92.25  state to be sold by those retailers, during the preceding 
 92.26  calendar month.  Returns shall be made upon forms furnished and 
 92.27  prescribed by the commissioner and shall contain such other 
 92.28  information as the commissioner may require.  Each return shall 
 92.29  be accompanied by a remittance for the full tax liability shown 
 92.30  therein, less 1.5 percent of such liability as compensation to 
 92.31  reimburse the distributor for expenses incurred in the 
 92.32  administration of sections 297.31 to 297.39.  The return for the 
 92.33  May liability and 75 percent of the estimated June liability is 
 92.34  due on the date payment of the tax is due. 
 92.35     A distributor having a liability of $120,000 or more during 
 92.36  a fiscal year ending June 30 must remit all liabilities in the 
 93.1   subsequent calendar year by means of a funds transfer as defined 
 93.2   in section 336.4A-104, paragraph (a).  The funds transfer 
 93.3   payment date, as defined in section 336.4A-401, must be on or 
 93.4   before the date the tax is due.  If the date the tax is due is 
 93.5   not a funds transfer business day, as defined in section 
 93.6   336.4A-105, paragraph (a), clause (4), the payment date must be 
 93.7   on or before the funds transfer business day next following the 
 93.8   date the tax is due.  
 93.9      Sec. 8.  [REPEALER.] 
 93.10     Minnesota Statutes 1994, sections 297.07, subdivision 4; 
 93.11  and 297.35, subdivision 5, are repealed. 
 93.12     Sec. 9. [EFFECTIVE DATE.] 
 93.13     Sections 1 to 8 are effective July 1, 1997, but only if the 
 93.14  constitutional amendment proposed to the people by article 1, 
 93.15  section 1 is adopted at the 1996 general election.