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Minnesota Legislature

Office of the Revisor of Statutes

HF 7

1st Engrossment - 83rd Legislature, 2003 1st Special Session (2003 - 2003) Posted on 12/15/2009 12:00am

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

Current Version - 1st Engrossment

  1.1                          A bill for an act 
  1.2             relating to the financing and operation of state and 
  1.3             local government; providing for job opportunity 
  1.4             building zones; providing for a biotechnology and 
  1.5             health sciences industry zone; changing income, sales 
  1.6             and use, motor vehicle sales, motor vehicle 
  1.7             registration, property, cigarette and tobacco, liquor, 
  1.8             mortgage registry and deed, and other taxes; updating 
  1.9             references to the Internal Revenue Code; changing 
  1.10            accelerated sales tax liability provisions and 
  1.11            extending the requirements to other taxes; changing or 
  1.12            providing property tax and sales tax exemptions; 
  1.13            requiring payment of certain lawful gambling taxes; 
  1.14            altering the computation and payments of 
  1.15            intergovernmental aids; imposing levy limits; 
  1.16            modifying truth in taxation requirements; providing 
  1.17            economic development incentives; changing tax 
  1.18            increment financing requirements; providing powers to 
  1.19            certain cities and counties; authorizing a special 
  1.20            taxing district; providing for collection of certain 
  1.21            debts and charges; providing for payments into and 
  1.22            transfers among certain funds and accounts; providing 
  1.23            for distribution of certain revenues and funds; 
  1.24            regulating limited used vehicle licenses; making 
  1.25            certain changes relating to the taconite assistance 
  1.26            area; authorizing municipalities to collect certain 
  1.27            charges as a special assessment; changing certain 
  1.28            requirements relating to the metropolitan mosquito 
  1.29            control district; regulating tax preparers; providing 
  1.30            for studies; providing penalties; appropriating money; 
  1.31            amending Minnesota Statutes 2002, sections 3.986, 
  1.32            subdivision 4; 4A.02; 16A.152, subdivisions 1, 1b, 2; 
  1.33            18B.07, subdivision 2, as amended; 62J.692, 
  1.34            subdivision 4, by adding a subdivision; 168.27, 
  1.35            subdivision 4a; 270.60, subdivision 4; 270A.03, 
  1.36            subdivision 2; 270A.07, subdivisions 1, 2; 272.02, 
  1.37            subdivision 25, by adding subdivisions; 272.029, by 
  1.38            adding a subdivision; 273.11, subdivision 13; 273.13, 
  1.39            subdivision 25; 273.1341, as added; 273.1398, 
  1.40            subdivisions 4a, 4c, 6, 8; 275.025, subdivision 1; 
  1.41            275.065, subdivision 3; 275.066; 275.70, subdivision 
  1.42            5; 275.71, subdivisions 2, 4, 5, 6; 275.72, 
  1.43            subdivision 3; 275.73, subdivision 2; 275.74, 
  1.44            subdivision 3; 276A.01, subdivision 2; 287.12; 287.29, 
  1.45            subdivision 1; 287.31, by adding a subdivision; 
  1.46            289A.02, subdivision 7, as amended; 289A.08, 
  2.1             subdivision 16, as amended; 289A.20, subdivision 4; 
  2.2             289A.31, subdivision 7; 289A.60, subdivision 15; 
  2.3             290.01, subdivisions 19, as amended, 19b, 29, 31, as 
  2.4             amended; 290.06, subdivision 2c, by adding 
  2.5             subdivisions; 290.067, subdivision 1; 290.0671, 
  2.6             subdivision 1; 290.091, subdivision 2; 290.0921, 
  2.7             subdivision 3; 290.0922, subdivisions 2, 3; 290A.03, 
  2.8             subdivision 15, as amended; 297A.68, by adding 
  2.9             subdivisions; 297A.70, subdivisions 8, 10, 14, 16; 
  2.10            297A.71, by adding a subdivision; 297B.01, subdivision 
  2.11            7; 297B.03; 297F.09, subdivisions 1, 2, by adding a 
  2.12            subdivision; 297F.10, subdivision 1, as amended; 
  2.13            297G.01, by adding a subdivision; 297G.03, subdivision 
  2.14            1; 297G.09, by adding a subdivision; 298.018, 
  2.15            subdivisions 1, 2; 298.22, subdivisions 2, 8; 
  2.16            298.2211, subdivisions 1, 2; 298.2213, subdivision 3; 
  2.17            298.2214, subdivisions 1, 3; 298.223, subdivision 1; 
  2.18            298.28, subdivisions 7, 11; 298.292, subdivision 2; 
  2.19            298.293; 298.298; 349.16, by adding a subdivision; 
  2.20            429.101, subdivision 1; 469.169, by adding a 
  2.21            subdivision; 469.174, subdivisions 6, as amended, 10, 
  2.22            by adding a subdivision; 469.1763, subdivisions 2, 4; 
  2.23            469.177, subdivision 1; 473.167, subdivision 3; 
  2.24            473.249, subdivision 1; 473.253, subdivision 1; 
  2.25            473.704, subdivision 17, as amended; 474A.061, 
  2.26            subdivision 1, as amended; 477A.011, subdivisions 34, 
  2.27            36, by adding subdivisions; 477A.013, subdivisions 8, 
  2.28            9; 477A.03, subdivision 2, by adding subdivisions; 
  2.29            611.27, subdivisions 13, 15; Laws 1980, chapter 511, 
  2.30            section 1, subdivision 2, as amended; Laws 1980, 
  2.31            chapter 511, section 2, as amended; Laws 1993, chapter 
  2.32            375, article 9, section 46, subdivision 2, as amended; 
  2.33            Laws 1998, chapter 389, article 16, section 35, 
  2.34            subdivision 1, as amended; Laws 1999, chapter 243, 
  2.35            article 4, section 19, as amended; Laws 2001, First 
  2.36            Special Session chapter 5, article 12, section 95, as 
  2.37            amended; Laws 2001, First Special Session chapter 5, 
  2.38            article 20, section 22; Laws 2002, chapter 377, 
  2.39            article 3, section 15; 2003 First Special Session H. 
  2.40            F. No. 1, article 2, section 118, subdivision 6; 
  2.41            proposing coding for new law in Minnesota Statutes, 
  2.42            chapters 270; 469; 477A; repealing Minnesota Statutes 
  2.43            2002, sections 37.13, subdivision 2; 272.02, 
  2.44            subdivision 26; 273.138, subdivisions 2, 3, 6; 
  2.45            273.1398, subdivisions 2, 2c, 4d; 273.166; 275.065, 
  2.46            subdivision 3a; 325E.112, subdivision 2a; 477A.011, 
  2.47            subdivision 37; 477A.0121; 477A.0122; 477A.0123; 
  2.48            477A.0132; 477A.03, subdivisions 3, 4; 477A.06; 
  2.49            477A.07. 
  2.50  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.51                             ARTICLE 1 
  2.52                   JOB OPPORTUNITY BUILDING ZONES 
  2.53     Section 1.  Minnesota Statutes 2002, section 272.02, is 
  2.54  amended by adding a subdivision to read: 
  2.55     Subd. 56.  [JOB OPPORTUNITY BUILDING ZONE PROPERTY.] (a) 
  2.56  Improvements to real property, and personal property, classified 
  2.57  under section 273.13, subdivision 24, and located within a job 
  2.58  opportunity building zone, designated under section 469.314, are 
  2.59  exempt from ad valorem taxes levied under chapter 275. 
  2.60     (b) Improvements to real property, and tangible personal 
  3.1   property, of an agricultural production facility located within 
  3.2   an agricultural processing facility zone, designated under 
  3.3   section 469.314, is exempt from ad valorem taxes levied under 
  3.4   chapter 275. 
  3.5      (c) For property to qualify for exemption under paragraph 
  3.6   (a), the occupant must be a qualified business, as defined in 
  3.7   section 469.310. 
  3.8      (d) The exemption applies beginning for the first 
  3.9   assessment year after designation of the job opportunity 
  3.10  building zone by the commissioner of trade and economic 
  3.11  development.  The exemption applies to each assessment year that 
  3.12  begins during the duration of the job opportunity building zone 
  3.13  and to property occupied by July 1 of the assessment year by a 
  3.14  qualified business.  This exemption does not apply to: 
  3.15     (1) the levy under section 475.61 or similar levy 
  3.16  provisions under any other law to pay general obligation bonds; 
  3.17  or 
  3.18     (2) a levy under section 126C.17, if the levy was approved 
  3.19  by the voters before the designation of the job opportunity 
  3.20  building zone. 
  3.21     [EFFECTIVE DATE.] This section is effective beginning for 
  3.22  property taxes assessed in 2004, payable in 2005. 
  3.23     Sec. 2.  Minnesota Statutes 2002, section 272.029, is 
  3.24  amended by adding a subdivision to read: 
  3.25     Subd. 7.  [EXEMPTION.] The tax imposed under this section 
  3.26  does not apply to electricity produced by wind energy conversion 
  3.27  systems located in a job opportunity building zone, designated 
  3.28  under section 469.314, for the duration of the zone.  The 
  3.29  exemption applies beginning for the first calendar year after 
  3.30  designation of the zone and applies to each calendar year that 
  3.31  begins during the designation of the zone. 
  3.32     [EFFECTIVE DATE.] This section is effective the day 
  3.33  following final enactment. 
  3.34     Sec. 3.  Minnesota Statutes 2002, section 290.01, 
  3.35  subdivision 19b, is amended to read: 
  3.36     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  4.1   individuals, estates, and trusts, there shall be subtracted from 
  4.2   federal taxable income: 
  4.3      (1) interest income on obligations of any authority, 
  4.4   commission, or instrumentality of the United States to the 
  4.5   extent includable in taxable income for federal income tax 
  4.6   purposes but exempt from state income tax under the laws of the 
  4.7   United States; 
  4.8      (2) if included in federal taxable income, the amount of 
  4.9   any overpayment of income tax to Minnesota or to any other 
  4.10  state, for any previous taxable year, whether the amount is 
  4.11  received as a refund or as a credit to another taxable year's 
  4.12  income tax liability; 
  4.13     (3) the amount paid to others, less the amount used to 
  4.14  claim the credit allowed under section 290.0674, not to exceed 
  4.15  $1,625 for each qualifying child in grades kindergarten to 6 and 
  4.16  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
  4.17  textbooks, and transportation of each qualifying child in 
  4.18  attending an elementary or secondary school situated in 
  4.19  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
  4.20  wherein a resident of this state may legally fulfill the state's 
  4.21  compulsory attendance laws, which is not operated for profit, 
  4.22  and which adheres to the provisions of the Civil Rights Act of 
  4.23  1964 and chapter 363.  For the purposes of this clause, 
  4.24  "tuition" includes fees or tuition as defined in section 
  4.25  290.0674, subdivision 1, clause (1).  As used in this clause, 
  4.26  "textbooks" includes books and other instructional materials and 
  4.27  equipment purchased or leased for use in elementary and 
  4.28  secondary schools in teaching only those subjects legally and 
  4.29  commonly taught in public elementary and secondary schools in 
  4.30  this state.  Equipment expenses qualifying for deduction 
  4.31  includes expenses as defined and limited in section 290.0674, 
  4.32  subdivision 1, clause (3).  "Textbooks" does not include 
  4.33  instructional books and materials used in the teaching of 
  4.34  religious tenets, doctrines, or worship, the purpose of which is 
  4.35  to instill such tenets, doctrines, or worship, nor does it 
  4.36  include books or materials for, or transportation to, 
  5.1   extracurricular activities including sporting events, musical or 
  5.2   dramatic events, speech activities, driver's education, or 
  5.3   similar programs.  For purposes of the subtraction provided by 
  5.4   this clause, "qualifying child" has the meaning given in section 
  5.5   32(c)(3) of the Internal Revenue Code; 
  5.6      (4) income as provided under section 290.0802; 
  5.7      (5) to the extent included in federal adjusted gross 
  5.8   income, income realized on disposition of property exempt from 
  5.9   tax under section 290.491; 
  5.10     (6) to the extent not deducted in determining federal 
  5.11  taxable income or used to claim the long-term care insurance 
  5.12  credit under section 290.0672, the amount paid for health 
  5.13  insurance of self-employed individuals as determined under 
  5.14  section 162(l) of the Internal Revenue Code, except that the 
  5.15  percent limit does not apply.  If the individual deducted 
  5.16  insurance payments under section 213 of the Internal Revenue 
  5.17  Code of 1986, the subtraction under this clause must be reduced 
  5.18  by the lesser of: 
  5.19     (i) the total itemized deductions allowed under section 
  5.20  63(d) of the Internal Revenue Code, less state, local, and 
  5.21  foreign income taxes deductible under section 164 of the 
  5.22  Internal Revenue Code and the standard deduction under section 
  5.23  63(c) of the Internal Revenue Code; or 
  5.24     (ii) the lesser of (A) the amount of insurance qualifying 
  5.25  as "medical care" under section 213(d) of the Internal Revenue 
  5.26  Code to the extent not deducted under section 162(1) of the 
  5.27  Internal Revenue Code or excluded from income or (B) the total 
  5.28  amount deductible for medical care under section 213(a); 
  5.29     (7) the exemption amount allowed under Laws 1995, chapter 
  5.30  255, article 3, section 2, subdivision 3; 
  5.31     (8) to the extent included in federal taxable income, 
  5.32  postservice benefits for youth community service under section 
  5.33  124D.42 for volunteer service under United States Code, title 
  5.34  42, sections 12601 to 12604; 
  5.35     (9) to the extent not deducted in determining federal 
  5.36  taxable income by an individual who does not itemize deductions 
  6.1   for federal income tax purposes for the taxable year, an amount 
  6.2   equal to 50 percent of the excess of charitable contributions 
  6.3   allowable as a deduction for the taxable year under section 
  6.4   170(a) of the Internal Revenue Code over $500; 
  6.5      (10) for taxable years beginning before January 1, 2008, 
  6.6   the amount of the federal small ethanol producer credit allowed 
  6.7   under section 40(a)(3) of the Internal Revenue Code which is 
  6.8   included in gross income under section 87 of the Internal 
  6.9   Revenue Code; 
  6.10     (11) for individuals who are allowed a federal foreign tax 
  6.11  credit for taxes that do not qualify for a credit under section 
  6.12  290.06, subdivision 22, an amount equal to the carryover of 
  6.13  subnational foreign taxes for the taxable year, but not to 
  6.14  exceed the total subnational foreign taxes reported in claiming 
  6.15  the foreign tax credit.  For purposes of this clause, "federal 
  6.16  foreign tax credit" means the credit allowed under section 27 of 
  6.17  the Internal Revenue Code, and "carryover of subnational foreign 
  6.18  taxes" equals the carryover allowed under section 904(c) of the 
  6.19  Internal Revenue Code minus national level foreign taxes to the 
  6.20  extent they exceed the federal foreign tax credit; and 
  6.21     (12) in each of the five tax years immediately following 
  6.22  the tax year in which an addition is required under subdivision 
  6.23  19a, clause (7), an amount equal to one-fifth of the delayed 
  6.24  depreciation.  For purposes of this clause, "delayed 
  6.25  depreciation" means the amount of the addition made by the 
  6.26  taxpayer under subdivision 19a, clause (7), minus the positive 
  6.27  value of any net operating loss under section 172 of the 
  6.28  Internal Revenue Code generated for the tax year of the 
  6.29  addition.  The resulting delayed depreciation cannot be less 
  6.30  than zero; and 
  6.31     (13) job opportunity building zone income as provided under 
  6.32  section 469.316. 
  6.33     [EFFECTIVE DATE.] This section is effective for taxable 
  6.34  years beginning after December 31, 2003. 
  6.35     Sec. 4.  Minnesota Statutes 2002, section 290.01, 
  6.36  subdivision 29, is amended to read: 
  7.1      Subd. 29.  [TAXABLE INCOME.] The term "taxable income" 
  7.2   means:  
  7.3      (1) for individuals, estates, and trusts, the same as 
  7.4   taxable net income; 
  7.5      (2) for corporations, the taxable net income less 
  7.6      (i) the net operating loss deduction under section 290.095; 
  7.7   and 
  7.8      (ii) the dividends received deduction under section 290.21, 
  7.9   subdivision 4; and 
  7.10     (iii) the exemption for operating in a job opportunity 
  7.11  building zone under section 469.317. 
  7.12     [EFFECTIVE DATE.] This section is effective for taxable 
  7.13  years beginning after December 31, 2003. 
  7.14     Sec. 5.  Minnesota Statutes 2002, section 290.06, 
  7.15  subdivision 2c, is amended to read: 
  7.16     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  7.17  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  7.18  married individuals filing joint returns and surviving spouses 
  7.19  as defined in section 2(a) of the Internal Revenue Code must be 
  7.20  computed by applying to their taxable net income the following 
  7.21  schedule of rates: 
  7.22     (1) On the first $25,680, 5.35 percent; 
  7.23     (2) On all over $25,680, but not over $102,030, 7.05 
  7.24  percent; 
  7.25     (3) On all over $102,030, 7.85 percent. 
  7.26     Married individuals filing separate returns, estates, and 
  7.27  trusts must compute their income tax by applying the above rates 
  7.28  to their taxable income, except that the income brackets will be 
  7.29  one-half of the above amounts.  
  7.30     (b) The income taxes imposed by this chapter upon unmarried 
  7.31  individuals must be computed by applying to taxable net income 
  7.32  the following schedule of rates: 
  7.33     (1) On the first $17,570, 5.35 percent; 
  7.34     (2) On all over $17,570, but not over $57,710, 7.05 
  7.35  percent; 
  7.36     (3) On all over $57,710, 7.85 percent. 
  8.1      (c) The income taxes imposed by this chapter upon unmarried 
  8.2   individuals qualifying as a head of household as defined in 
  8.3   section 2(b) of the Internal Revenue Code must be computed by 
  8.4   applying to taxable net income the following schedule of rates: 
  8.5      (1) On the first $21,630, 5.35 percent; 
  8.6      (2) On all over $21,630, but not over $86,910, 7.05 
  8.7   percent; 
  8.8      (3) On all over $86,910, 7.85 percent. 
  8.9      (d) In lieu of a tax computed according to the rates set 
  8.10  forth in this subdivision, the tax of any individual taxpayer 
  8.11  whose taxable net income for the taxable year is less than an 
  8.12  amount determined by the commissioner must be computed in 
  8.13  accordance with tables prepared and issued by the commissioner 
  8.14  of revenue based on income brackets of not more than $100.  The 
  8.15  amount of tax for each bracket shall be computed at the rates 
  8.16  set forth in this subdivision, provided that the commissioner 
  8.17  may disregard a fractional part of a dollar unless it amounts to 
  8.18  50 cents or more, in which case it may be increased to $1. 
  8.19     (e) An individual who is not a Minnesota resident for the 
  8.20  entire year must compute the individual's Minnesota income tax 
  8.21  as provided in this subdivision.  After the application of the 
  8.22  nonrefundable credits provided in this chapter, the tax 
  8.23  liability must then be multiplied by a fraction in which:  
  8.24     (1) the numerator is the individual's Minnesota source 
  8.25  federal adjusted gross income as defined in section 62 of the 
  8.26  Internal Revenue Code and increased by the additions required 
  8.27  under section 290.01, subdivision 19a, clauses (1) and (6), and 
  8.28  reduced by the subtraction under section 290.01, subdivision 
  8.29  19b, clause (13), and the Minnesota assignable portion of the 
  8.30  subtraction for United States government interest under section 
  8.31  290.01, subdivision 19b, clause (1), after applying the 
  8.32  allocation and assignability provisions of section 290.081, 
  8.33  clause (a), or 290.17; and 
  8.34     (2) the denominator is the individual's federal adjusted 
  8.35  gross income as defined in section 62 of the Internal Revenue 
  8.36  Code of 1986, increased by the amounts specified in section 
  9.1   290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
  9.2   amounts specified in section 290.01, subdivision 19b, clause 
  9.3   clauses (1) and (13). 
  9.4      [EFFECTIVE DATE.] This section is effective for taxable 
  9.5   years beginning after December 31, 2003. 
  9.6      Sec. 6.  Minnesota Statutes 2002, section 290.06, is 
  9.7   amended by adding a subdivision to read: 
  9.8      Subd. 29.  [JOB OPPORTUNITY BUILDING ZONE JOB CREDIT.] A 
  9.9   taxpayer that is a qualified business, as defined in section 
  9.10  469.310, subdivision 11, is allowed a credit as determined under 
  9.11  section 469.318 against the tax imposed by this chapter. 
  9.12     [EFFECTIVE DATE.] This section is effective the day 
  9.13  following final enactment. 
  9.14     Sec. 7.  Minnesota Statutes 2002, section 290.067, 
  9.15  subdivision 1, is amended to read: 
  9.16     Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
  9.17  as a credit against the tax due from the taxpayer and a spouse, 
  9.18  if any, under this chapter an amount equal to the dependent care 
  9.19  credit for which the taxpayer is eligible pursuant to the 
  9.20  provisions of section 21 of the Internal Revenue Code subject to 
  9.21  the limitations provided in subdivision 2 except that in 
  9.22  determining whether the child qualified as a dependent, income 
  9.23  received as a Minnesota family investment program grant or 
  9.24  allowance to or on behalf of the child must not be taken into 
  9.25  account in determining whether the child received more than half 
  9.26  of the child's support from the taxpayer, and the provisions of 
  9.27  section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
  9.28     (b) If a child who has not attained the age of six years at 
  9.29  the close of the taxable year is cared for at a licensed family 
  9.30  day care home operated by the child's parent, the taxpayer is 
  9.31  deemed to have paid employment-related expenses.  If the child 
  9.32  is 16 months old or younger at the close of the taxable year, 
  9.33  the amount of expenses deemed to have been paid equals the 
  9.34  maximum limit for one qualified individual under section 21(c) 
  9.35  and (d) of the Internal Revenue Code.  If the child is older 
  9.36  than 16 months of age but has not attained the age of six years 
 10.1   at the close of the taxable year, the amount of expenses deemed 
 10.2   to have been paid equals the amount the licensee would charge 
 10.3   for the care of a child of the same age for the same number of 
 10.4   hours of care.  
 10.5      (c) If a married couple: 
 10.6      (1) has a child who has not attained the age of one year at 
 10.7   the close of the taxable year; 
 10.8      (2) files a joint tax return for the taxable year; and 
 10.9      (3) does not participate in a dependent care assistance 
 10.10  program as defined in section 129 of the Internal Revenue Code, 
 10.11  in lieu of the actual employment related expenses paid for that 
 10.12  child under paragraph (a) or the deemed amount under paragraph 
 10.13  (b), the lesser of (i) the combined earned income of the couple 
 10.14  or (ii) the amount of the maximum limit for one qualified 
 10.15  individual under section 21(c) and (d) of the Internal Revenue 
 10.16  Code will be deemed to be the employment related expense paid 
 10.17  for that child.  The earned income limitation of section 21(d) 
 10.18  of the Internal Revenue Code shall not apply to this deemed 
 10.19  amount.  These deemed amounts apply regardless of whether any 
 10.20  employment-related expenses have been paid.  
 10.21     (d) If the taxpayer is not required and does not file a 
 10.22  federal individual income tax return for the tax year, no credit 
 10.23  is allowed for any amount paid to any person unless: 
 10.24     (1) the name, address, and taxpayer identification number 
 10.25  of the person are included on the return claiming the credit; or 
 10.26     (2) if the person is an organization described in section 
 10.27  501(c)(3) of the Internal Revenue Code and exempt from tax under 
 10.28  section 501(a) of the Internal Revenue Code, the name and 
 10.29  address of the person are included on the return claiming the 
 10.30  credit.  
 10.31  In the case of a failure to provide the information required 
 10.32  under the preceding sentence, the preceding sentence does not 
 10.33  apply if it is shown that the taxpayer exercised due diligence 
 10.34  in attempting to provide the information required. 
 10.35     In the case of a nonresident, part-year resident, or a 
 10.36  person who has earned income not subject to tax under this 
 11.1   chapter including earned income excluded pursuant to section 
 11.2   290.01, subdivision 19b, clause (13), the credit determined 
 11.3   under section 21 of the Internal Revenue Code must be allocated 
 11.4   based on the ratio by which the earned income of the claimant 
 11.5   and the claimant's spouse from Minnesota sources bears to the 
 11.6   total earned income of the claimant and the claimant's spouse. 
 11.7      [EFFECTIVE DATE.] This section is effective for taxable 
 11.8   years beginning after December 31, 2003. 
 11.9      Sec. 8.  Minnesota Statutes 2002, section 290.0671, 
 11.10  subdivision 1, is amended to read: 
 11.11     Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
 11.12  allowed a credit against the tax imposed by this chapter equal 
 11.13  to a percentage of earned income.  To receive a credit, a 
 11.14  taxpayer must be eligible for a credit under section 32 of the 
 11.15  Internal Revenue Code.  
 11.16     (b) For individuals with no qualifying children, the credit 
 11.17  equals 1.9125 percent of the first $4,620 of earned income.  The 
 11.18  credit is reduced by 1.9125 percent of earned income or modified 
 11.19  adjusted gross income, whichever is greater, in excess of 
 11.20  $5,770, but in no case is the credit less than zero. 
 11.21     (c) For individuals with one qualifying child, the credit 
 11.22  equals 8.5 percent of the first $6,920 of earned income and 8.5 
 11.23  percent of earned income over $12,080 but less than $13,450.  
 11.24  The credit is reduced by 5.73 percent of earned income or 
 11.25  modified adjusted gross income, whichever is greater, in excess 
 11.26  of $15,080, but in no case is the credit less than zero. 
 11.27     (d) For individuals with two or more qualifying children, 
 11.28  the credit equals ten percent of the first $9,720 of earned 
 11.29  income and 20 percent of earned income over $14,860 but less 
 11.30  than $16,800.  The credit is reduced by 10.3 percent of earned 
 11.31  income or modified adjusted gross income, whichever is greater, 
 11.32  in excess of $17,890, but in no case is the credit less than 
 11.33  zero. 
 11.34     (e) For a nonresident or part-year resident, the credit 
 11.35  must be allocated based on the percentage calculated under 
 11.36  section 290.06, subdivision 2c, paragraph (e). 
 12.1      (f) For a person who was a resident for the entire tax year 
 12.2   and has earned income not subject to tax under this 
 12.3   chapter including income excluded under section 290.01, 
 12.4   subdivision 19b, clause (13), the credit must be allocated based 
 12.5   on the ratio of federal adjusted gross income reduced by the 
 12.6   earned income not subject to tax under this chapter over federal 
 12.7   adjusted gross income. 
 12.8      (g) For tax years beginning after December 31, 2001, and 
 12.9   before December 31, 2004, the $5,770 in paragraph (b) is 
 12.10  increased to $6,770, the $15,080 in paragraph (c) is increased 
 12.11  to $16,080, and the $17,890 in paragraph (d) is increased to 
 12.12  $18,890 for married taxpayers filing joint returns. 
 12.13     (h) For tax years beginning after December 31, 2004, and 
 12.14  before December 31, 2007, the $5,770 in paragraph (b) is 
 12.15  increased to $7,770, the $15,080 in paragraph (c) is increased 
 12.16  to $17,080, and the $17,890 in paragraph (d) is increased to 
 12.17  $19,890 for married taxpayers filing joint returns. 
 12.18     (i) For tax years beginning after December 31, 2007, and 
 12.19  before December 31, 2010, the $5,770 in paragraph (b) is 
 12.20  increased to $8,770, the $15,080 in paragraph (c) is increased 
 12.21  to $18,080 and the $17,890 in paragraph (d) is increased to 
 12.22  $20,890 for married taxpayers filing joint returns. 
 12.23     (j) The commissioner shall construct tables showing the 
 12.24  amount of the credit at various income levels and make them 
 12.25  available to taxpayers.  The tables shall follow the schedule 
 12.26  contained in this subdivision, except that the commissioner may 
 12.27  graduate the transition between income brackets. 
 12.28     [EFFECTIVE DATE.] This section is effective for taxable 
 12.29  years beginning after December 31, 2003. 
 12.30     Sec. 9.  Minnesota Statutes 2002, section 290.091, 
 12.31  subdivision 2, is amended to read: 
 12.32     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 12.33  this section, the following terms have the meanings given: 
 12.34     (a) "Alternative minimum taxable income" means the sum of 
 12.35  the following for the taxable year: 
 12.36     (1) the taxpayer's federal alternative minimum taxable 
 13.1   income as defined in section 55(b)(2) of the Internal Revenue 
 13.2   Code; 
 13.3      (2) the taxpayer's itemized deductions allowed in computing 
 13.4   federal alternative minimum taxable income, but excluding: 
 13.5      (i) the charitable contribution deduction under section 170 
 13.6   of the Internal Revenue Code to the extent that the deduction 
 13.7   exceeds 1.3 percent of adjusted gross income, as defined in 
 13.8   section 62 of the Internal Revenue Code; 
 13.9      (ii) the medical expense deduction; 
 13.10     (iii) the casualty, theft, and disaster loss deduction; and 
 13.11     (iv) the impairment-related work expenses of a disabled 
 13.12  person; 
 13.13     (3) for depletion allowances computed under section 613A(c) 
 13.14  of the Internal Revenue Code, with respect to each property (as 
 13.15  defined in section 614 of the Internal Revenue Code), to the 
 13.16  extent not included in federal alternative minimum taxable 
 13.17  income, the excess of the deduction for depletion allowable 
 13.18  under section 611 of the Internal Revenue Code for the taxable 
 13.19  year over the adjusted basis of the property at the end of the 
 13.20  taxable year (determined without regard to the depletion 
 13.21  deduction for the taxable year); 
 13.22     (4) to the extent not included in federal alternative 
 13.23  minimum taxable income, the amount of the tax preference for 
 13.24  intangible drilling cost under section 57(a)(2) of the Internal 
 13.25  Revenue Code determined without regard to subparagraph (E); 
 13.26     (5) to the extent not included in federal alternative 
 13.27  minimum taxable income, the amount of interest income as 
 13.28  provided by section 290.01, subdivision 19a, clause (1); and 
 13.29     (6) the amount of addition required by section 290.01, 
 13.30  subdivision 19a, clause (7); 
 13.31     less the sum of the amounts determined under the following: 
 13.32     (1) interest income as defined in section 290.01, 
 13.33  subdivision 19b, clause (1); 
 13.34     (2) an overpayment of state income tax as provided by 
 13.35  section 290.01, subdivision 19b, clause (2), to the extent 
 13.36  included in federal alternative minimum taxable income; 
 14.1      (3) the amount of investment interest paid or accrued 
 14.2   within the taxable year on indebtedness to the extent that the 
 14.3   amount does not exceed net investment income, as defined in 
 14.4   section 163(d)(4) of the Internal Revenue Code.  Interest does 
 14.5   not include amounts deducted in computing federal adjusted gross 
 14.6   income; and 
 14.7      (4) amounts subtracted from federal taxable income as 
 14.8   provided by section 290.01, subdivision 19b, clause clauses (12) 
 14.9   and (13). 
 14.10     In the case of an estate or trust, alternative minimum 
 14.11  taxable income must be computed as provided in section 59(c) of 
 14.12  the Internal Revenue Code. 
 14.13     (b) "Investment interest" means investment interest as 
 14.14  defined in section 163(d)(3) of the Internal Revenue Code. 
 14.15     (c) "Tentative minimum tax" equals 6.4 percent of 
 14.16  alternative minimum taxable income after subtracting the 
 14.17  exemption amount determined under subdivision 3. 
 14.18     (d) "Regular tax" means the tax that would be imposed under 
 14.19  this chapter (without regard to this section and section 
 14.20  290.032), reduced by the sum of the nonrefundable credits 
 14.21  allowed under this chapter.  
 14.22     (e) "Net minimum tax" means the minimum tax imposed by this 
 14.23  section. 
 14.24     [EFFECTIVE DATE.] This section is effective for taxable 
 14.25  years beginning after December 31, 2003. 
 14.26     Sec. 10.  Minnesota Statutes 2002, section 290.0921, 
 14.27  subdivision 3, is amended to read: 
 14.28     Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
 14.29  "Alternative minimum taxable income" is Minnesota net income as 
 14.30  defined in section 290.01, subdivision 19, and includes the 
 14.31  adjustments and tax preference items in sections 56, 57, 58, and 
 14.32  59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
 14.33  corporation files a separate company Minnesota tax return, the 
 14.34  minimum tax must be computed on a separate company basis.  If a 
 14.35  corporation is part of a tax group filing a unitary return, the 
 14.36  minimum tax must be computed on a unitary basis.  The following 
 15.1   adjustments must be made. 
 15.2      (1) For purposes of the depreciation adjustments under 
 15.3   section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
 15.4   the basis for depreciable property placed in service in a 
 15.5   taxable year beginning before January 1, 1990, is the adjusted 
 15.6   basis for federal income tax purposes, including any 
 15.7   modification made in a taxable year under section 290.01, 
 15.8   subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 15.9   subdivision 7, paragraph (c). 
 15.10     For taxable years beginning after December 31, 2000, the 
 15.11  amount of any remaining modification made under section 290.01, 
 15.12  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 15.13  subdivision 7, paragraph (c), not previously deducted is a 
 15.14  depreciation allowance in the first taxable year after December 
 15.15  31, 2000. 
 15.16     (2) The portion of the depreciation deduction allowed for 
 15.17  federal income tax purposes under section 168(k) of the Internal 
 15.18  Revenue Code that is required as an addition under section 
 15.19  290.01, subdivision 19c, clause (16), is disallowed in 
 15.20  determining alternative minimum taxable income. 
 15.21     (3) The subtraction for depreciation allowed under section 
 15.22  290.01, subdivision 19d, clause (19), is allowed as a 
 15.23  depreciation deduction in determining alternative minimum 
 15.24  taxable income. 
 15.25     (4) The alternative tax net operating loss deduction under 
 15.26  sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
 15.27  not apply. 
 15.28     (5) The special rule for certain dividends under section 
 15.29  56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 
 15.30     (6) The special rule for dividends from section 936 
 15.31  companies under section 56(g)(4)(C)(iii) does not apply. 
 15.32     (7) The tax preference for depletion under section 57(a)(1) 
 15.33  of the Internal Revenue Code does not apply. 
 15.34     (8) The tax preference for intangible drilling costs under 
 15.35  section 57(a)(2) of the Internal Revenue Code must be calculated 
 15.36  without regard to subparagraph (E) and the subtraction under 
 16.1   section 290.01, subdivision 19d, clause (4). 
 16.2      (9) The tax preference for tax exempt interest under 
 16.3   section 57(a)(5) of the Internal Revenue Code does not apply.  
 16.4      (10) The tax preference for charitable contributions of 
 16.5   appreciated property under section 57(a)(6) of the Internal 
 16.6   Revenue Code does not apply. 
 16.7      (11) For purposes of calculating the tax preference for 
 16.8   accelerated depreciation or amortization on certain property 
 16.9   placed in service before January 1, 1987, under section 57(a)(7) 
 16.10  of the Internal Revenue Code, the deduction allowable for the 
 16.11  taxable year is the deduction allowed under section 290.01, 
 16.12  subdivision 19e. 
 16.13     For taxable years beginning after December 31, 2000, the 
 16.14  amount of any remaining modification made under section 290.01, 
 16.15  subdivision 19e, not previously deducted is a depreciation or 
 16.16  amortization allowance in the first taxable year after December 
 16.17  31, 2004. 
 16.18     (12) For purposes of calculating the adjustment for 
 16.19  adjusted current earnings in section 56(g) of the Internal 
 16.20  Revenue Code, the term "alternative minimum taxable income" as 
 16.21  it is used in section 56(g) of the Internal Revenue Code, means 
 16.22  alternative minimum taxable income as defined in this 
 16.23  subdivision, determined without regard to the adjustment for 
 16.24  adjusted current earnings in section 56(g) of the Internal 
 16.25  Revenue Code. 
 16.26     (13) For purposes of determining the amount of adjusted 
 16.27  current earnings under section 56(g)(3) of the Internal Revenue 
 16.28  Code, no adjustment shall be made under section 56(g)(4) of the 
 16.29  Internal Revenue Code with respect to (i) the amount of foreign 
 16.30  dividend gross-up subtracted as provided in section 290.01, 
 16.31  subdivision 19d, clause (1), (ii) the amount of refunds of 
 16.32  income, excise, or franchise taxes subtracted as provided in 
 16.33  section 290.01, subdivision 19d, clause (10), or (iii) the 
 16.34  amount of royalties, fees or other like income subtracted as 
 16.35  provided in section 290.01, subdivision 19d, clause (11). 
 16.36     (14) Alternative minimum taxable income excludes the income 
 17.1   from operating in a job opportunity building zone as provided 
 17.2   under section 469.317. 
 17.3      Items of tax preference must not be reduced below zero as a 
 17.4   result of the modifications in this subdivision. 
 17.5      [EFFECTIVE DATE.] This section is effective for taxable 
 17.6   years beginning after December 31, 2003. 
 17.7      Sec. 11.  Minnesota Statutes 2002, section 290.0922, 
 17.8   subdivision 2, is amended to read: 
 17.9      Subd. 2.  [EXEMPTIONS.] The following entities are exempt 
 17.10  from the tax imposed by this section: 
 17.11     (1) corporations exempt from tax under section 290.05; 
 17.12     (2) real estate investment trusts; 
 17.13     (3) regulated investment companies or a fund thereof; and 
 17.14     (4) entities having a valid election in effect under 
 17.15  section 860D(b) of the Internal Revenue Code; 
 17.16     (5) town and farmers' mutual insurance companies; and 
 17.17     (6) cooperatives organized under chapter 308A that provide 
 17.18  housing exclusively to persons age 55 and over and are 
 17.19  classified as homesteads under section 273.124, subdivision 3; 
 17.20  and 
 17.21     (7) an entity, if for the taxable year all of its property 
 17.22  is located in a job opportunity building zone designated under 
 17.23  section 469.314 and all of its payroll is a job opportunity 
 17.24  building zone payroll under section 469.310. 
 17.25     Entities not specifically exempted by this subdivision are 
 17.26  subject to tax under this section, notwithstanding section 
 17.27  290.05.  
 17.28     [EFFECTIVE DATE.] This section is effective for taxable 
 17.29  years beginning after December 31, 2003. 
 17.30     Sec. 12.  Minnesota Statutes 2002, section 290.0922, 
 17.31  subdivision 3, is amended to read: 
 17.32     Subd. 3.  [DEFINITIONS.] (a) "Minnesota sales or receipts" 
 17.33  means the total sales apportioned to Minnesota pursuant to 
 17.34  section 290.191, subdivision 5, the total receipts attributed to 
 17.35  Minnesota pursuant to section 290.191, subdivisions 6 to 8, 
 17.36  and/or the total sales or receipts apportioned or attributed to 
 18.1   Minnesota pursuant to any other apportionment formula applicable 
 18.2   to the taxpayer. 
 18.3      (b) "Minnesota property" means total Minnesota tangible 
 18.4   property as provided in section 290.191, subdivisions 9 to 11, 
 18.5   and any other tangible property located in Minnesota, but does 
 18.6   not include property located in a job opportunity building zone 
 18.7   designated under section 469.314.  Intangible property shall not 
 18.8   be included in Minnesota property for purposes of this section.  
 18.9   Taxpayers who do not utilize tangible property to apportion 
 18.10  income shall nevertheless include Minnesota property for 
 18.11  purposes of this section.  On a return for a short taxable year, 
 18.12  the amount of Minnesota property owned, as determined under 
 18.13  section 290.191, shall be included in Minnesota property based 
 18.14  on a fraction in which the numerator is the number of days in 
 18.15  the short taxable year and the denominator is 365.  
 18.16     (c) "Minnesota payrolls" means total Minnesota payrolls as 
 18.17  provided in section 290.191, subdivision 12, but does not 
 18.18  include job opportunity building zone payrolls under section 
 18.19  469.310, subdivision 8.  Taxpayers who do not utilize payrolls 
 18.20  to apportion income shall nevertheless include Minnesota 
 18.21  payrolls for purposes of this section. 
 18.22     [EFFECTIVE DATE.] This section is effective for taxable 
 18.23  years beginning after December 31, 2003. 
 18.24     Sec. 13.  Minnesota Statutes 2002, section 297A.68, is 
 18.25  amended by adding a subdivision to read: 
 18.26     Subd. 37.  [JOB OPPORTUNITY BUILDING ZONES.] (a) Purchases 
 18.27  of tangible personal property or taxable services by a qualified 
 18.28  business, as defined in section 469.310, are exempt if the 
 18.29  property or services are primarily used or consumed in a job 
 18.30  opportunity building zone designated under section 469.314. 
 18.31     (b) Purchase and use of construction materials and supplies 
 18.32  for construction of improvements to real property in a job 
 18.33  opportunity building zone are exempt if the improvements after 
 18.34  completion of construction are to be used in the conduct of a 
 18.35  qualified business, as defined in section 469.310.  This 
 18.36  exemption applies regardless of whether the purchases are made 
 19.1   by the business or a contractor. 
 19.2      (c) The exemptions under this subdivision apply to a local 
 19.3   sales and use tax regardless of whether the local sales tax is 
 19.4   imposed on the sales taxable as defined under this chapter. 
 19.5      (d) This subdivision applies to sales, if the purchase was 
 19.6   made and delivery received during the duration of the zone. 
 19.7      [EFFECTIVE DATE.] This section is effective for sales made 
 19.8   on or after the day following final enactment. 
 19.9      Sec. 14.  Minnesota Statutes 2002, section 297B.03, is 
 19.10  amended to read: 
 19.11     297B.03 [EXEMPTIONS.] 
 19.12     There is specifically exempted from the provisions of this 
 19.13  chapter and from computation of the amount of tax imposed by it 
 19.14  the following:  
 19.15     (1) purchase or use, including use under a lease purchase 
 19.16  agreement or installment sales contract made pursuant to section 
 19.17  465.71, of any motor vehicle by the United States and its 
 19.18  agencies and instrumentalities and by any person described in 
 19.19  and subject to the conditions provided in section 297A.67, 
 19.20  subdivision 11; 
 19.21     (2) purchase or use of any motor vehicle by any person who 
 19.22  was a resident of another state or country at the time of the 
 19.23  purchase and who subsequently becomes a resident of Minnesota, 
 19.24  provided the purchase occurred more than 60 days prior to the 
 19.25  date such person began residing in the state of Minnesota and 
 19.26  the motor vehicle was registered in the person's name in the 
 19.27  other state or country; 
 19.28     (3) purchase or use of any motor vehicle by any person 
 19.29  making a valid election to be taxed under the provisions of 
 19.30  section 297A.90; 
 19.31     (4) purchase or use of any motor vehicle previously 
 19.32  registered in the state of Minnesota when such transfer 
 19.33  constitutes a transfer within the meaning of section 118, 331, 
 19.34  332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
 19.35  1563(a) of the Internal Revenue Code of 1986, as amended through 
 19.36  December 31, 1999; 
 20.1      (5) purchase or use of any vehicle owned by a resident of 
 20.2   another state and leased to a Minnesota based private or for 
 20.3   hire carrier for regular use in the transportation of persons or 
 20.4   property in interstate commerce provided the vehicle is titled 
 20.5   in the state of the owner or secured party, and that state does 
 20.6   not impose a sales tax or sales tax on motor vehicles used in 
 20.7   interstate commerce; 
 20.8      (6) purchase or use of a motor vehicle by a private 
 20.9   nonprofit or public educational institution for use as an 
 20.10  instructional aid in automotive training programs operated by 
 20.11  the institution.  "Automotive training programs" includes motor 
 20.12  vehicle body and mechanical repair courses but does not include 
 20.13  driver education programs; 
 20.14     (7) purchase of a motor vehicle for use as an ambulance by 
 20.15  an ambulance service licensed under section 144E.10; 
 20.16     (8) purchase of a motor vehicle by or for a public library, 
 20.17  as defined in section 134.001, subdivision 2, as a bookmobile or 
 20.18  library delivery vehicle; 
 20.19     (9) purchase of a ready-mixed concrete truck; 
 20.20     (10) purchase or use of a motor vehicle by a town for use 
 20.21  exclusively for road maintenance, including snowplows and dump 
 20.22  trucks, but not including automobiles, vans, or pickup trucks; 
 20.23     (11) purchase or use of a motor vehicle by a corporation, 
 20.24  society, association, foundation, or institution organized and 
 20.25  operated exclusively for charitable, religious, or educational 
 20.26  purposes, except a public school, university, or library, but 
 20.27  only if the vehicle is: 
 20.28     (i) a truck, as defined in section 168.011, a bus, as 
 20.29  defined in section 168.011, or a passenger automobile, as 
 20.30  defined in section 168.011, if the automobile is designed and 
 20.31  used for carrying more than nine persons including the driver; 
 20.32  and 
 20.33     (ii) intended to be used primarily to transport tangible 
 20.34  personal property or individuals, other than employees, to whom 
 20.35  the organization provides service in performing its charitable, 
 20.36  religious, or educational purpose; 
 21.1      (12) purchase of a motor vehicle for use by a transit 
 21.2   provider exclusively to provide transit service is exempt if the 
 21.3   transit provider is either (i) receiving financial assistance or 
 21.4   reimbursement under section 174.24 or 473.384, or (ii) operating 
 21.5   under section 174.29, 473.388, or 473.405; 
 21.6      (13) purchase or use of a motor vehicle by a qualified 
 21.7   business, as defined in section 469.310, located in a job 
 21.8   opportunity building zone, if the motor vehicle is principally 
 21.9   garaged in the job opportunity building zone and is primarily 
 21.10  used as part of or in direct support of the person's operations 
 21.11  carried on in the job opportunity building zone.  The exemption 
 21.12  under this clause applies to sales, if the purchase was made and 
 21.13  delivery received during the duration of the job opportunity 
 21.14  building zone.  The exemption under this clause also applies to 
 21.15  any local sales and use tax. 
 21.16     [EFFECTIVE DATE.] This section is effective for sales made 
 21.17  after December 31, 2003. 
 21.18     Sec. 15.  [469.310] [DEFINITIONS.] 
 21.19     Subdivision 1.  [SCOPE.] For purposes of sections 469.310 
 21.20  to 469.320, the following terms have the meanings given. 
 21.21     Subd. 2.  [AGRICULTURAL PROCESSING FACILITY.] "Agricultural 
 21.22  processing facility" means one or more facilities or operations 
 21.23  that transform, package, sort, or grade livestock or livestock 
 21.24  products, agricultural commodities, or plants or plant products 
 21.25  into goods that are used for intermediate or final consumption 
 21.26  including goods for nonfood use, and surrounding property. 
 21.27     Subd. 3.  [APPLICANT.] "Applicant" means a local government 
 21.28  unit or units applying for designation of an area as a job 
 21.29  opportunity building zone or a joint powers board, established 
 21.30  under section 471.59, acting on behalf of two or more local 
 21.31  government units. 
 21.32     Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
 21.33  commissioner of trade and economic development. 
 21.34     Subd. 5.  [DEVELOPMENT PLAN.] "Development plan" means a 
 21.35  plan meeting the requirements of section 469.311. 
 21.36     Subd. 6.  [JOB OPPORTUNITY BUILDING ZONE OR ZONE.] "Job 
 22.1   opportunity building zone" or "zone" means a zone designated by 
 22.2   the commissioner under section 469.314, and includes an 
 22.3   agricultural processing facility zone. 
 22.4      Subd. 7.  [JOB OPPORTUNITY BUILDING ZONE PERCENTAGE OR ZONE 
 22.5   PERCENTAGE.] "Job opportunity building zone percentage" or "zone 
 22.6   percentage" means the following fraction reduced to a percentage:
 22.7      (1) the numerator of the fraction is: 
 22.8      (i) the ratio of the taxpayer's property factor under 
 22.9   section 290.191 located in the zone for the taxable year over 
 22.10  the property factor numerator determined under section 290.191, 
 22.11  plus 
 22.12     (ii) the ratio of the taxpayer's job opportunity building 
 22.13  zone payroll factor under subdivision 8 over the payroll factor 
 22.14  numerator determined under section 290.191; and 
 22.15     (2) the denominator of the fraction is two. 
 22.16     When calculating the zone percentage for a business that is 
 22.17  part of a unitary business as defined under section 290.17, 
 22.18  subdivision 4, the denominator of the payroll and property 
 22.19  factors is the Minnesota payroll and property of the unitary 
 22.20  business as reported on the combined report under section 
 22.21  290.17, subdivision 4, paragraph (j). 
 22.22     Subd. 8.  [JOB OPPORTUNITY BUILDING ZONE PAYROLL 
 22.23  FACTOR.] "Job opportunity building zone payroll factor" or "job 
 22.24  opportunity building zone payroll" is that portion of the 
 22.25  payroll factor under section 290.191 that represents: 
 22.26     (1) wages or salaries paid to an individual for services 
 22.27  performed in a job opportunity building zone; or 
 22.28     (2) wages or salaries paid to individuals working from 
 22.29  offices within a job opportunity building zone if their 
 22.30  employment requires them to work outside the zone and the work 
 22.31  is incidental to the work performed by the individual within the 
 22.32  zone. 
 22.33     Subd. 9.  [LOCAL GOVERNMENT UNIT.] "Local government unit" 
 22.34  means a statutory or home rule charter city, county, town, iron 
 22.35  range resources and rehabilitation agency, regional development 
 22.36  commission, or a federally designated economic development 
 23.1   district. 
 23.2      Subd. 10.  [PERSON.] "Person" includes an individual, 
 23.3   corporation, partnership, limited liability company, 
 23.4   association, or any other entity. 
 23.5      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
 23.6   means a person carrying on a trade or business at a place of 
 23.7   business located within a job opportunity building zone. 
 23.8      (b) A person that relocates a trade or business from 
 23.9   outside a job opportunity building zone into a zone is not a 
 23.10  qualified business, unless the business: 
 23.11     (1)(i) increases full-time employment in the first full 
 23.12  year of operation within the job opportunity building zone by at 
 23.13  least 20 percent measured relative to the operations that were 
 23.14  relocated and maintains the required level of employment for 
 23.15  each year the zone designation applies; or 
 23.16     (ii) makes a capital investment in the property located 
 23.17  within a zone equivalent to ten percent of the gross revenues of 
 23.18  operation that were relocated in the immediately preceding 
 23.19  taxable year; and 
 23.20     (2) enters a binding written agreement with the 
 23.21  commissioner that: 
 23.22     (i) pledges the business will meet the requirements of 
 23.23  clause (1); 
 23.24     (ii) provides for repayment of all tax benefits enumerated 
 23.25  under section 469.315 to the business under the procedures in 
 23.26  section 469.319, if the requirements of clause (1) are not met 
 23.27  for the taxable year or for taxes payable during the year in 
 23.28  which the requirements were not met; and 
 23.29     (iii) contains any other terms the commissioner determines 
 23.30  appropriate. 
 23.31     Subd. 12.  [RELOCATES.] (a) "Relocates" means that the 
 23.32  trade or business: 
 23.33     (1) ceases one or more operations or functions at another 
 23.34  location in Minnesota and begins performing substantially the 
 23.35  same operations or functions at a location in a job opportunity 
 23.36  building zone; or 
 24.1      (2) reduces employment at another location in Minnesota 
 24.2   during a period starting one year before and ending one year 
 24.3   after it begins operations in a job opportunity building zone 
 24.4   and its employees in the job opportunity building zone are 
 24.5   engaged in the same line of business as the employees at the 
 24.6   location where it reduced employment. 
 24.7      (b) "Relocate" does not include an expansion by a business 
 24.8   that establishes a new facility that does not replace or 
 24.9   supplant an existing operation or employment, in whole or in 
 24.10  part. 
 24.11     (c) "Trade or business" includes any business entity that 
 24.12  is substantially similar in operation or ownership to the 
 24.13  business entity seeking to be a qualified business under this 
 24.14  section. 
 24.15     [EFFECTIVE DATE.] This section is effective the day 
 24.16  following final enactment. 
 24.17     Sec. 16.  [469.311] [DEVELOPMENT PLAN.] 
 24.18     (a) An applicant for designation of a job opportunity 
 24.19  building zone must adopt a written development plan for the zone 
 24.20  before submitting the application to the commissioner. 
 24.21     (b) The development plan must contain, at least, the 
 24.22  following: 
 24.23     (1) a map of the proposed zone that indicates the 
 24.24  geographic boundaries of the zone, the total area, and present 
 24.25  use and conditions generally of the land and structures within 
 24.26  those boundaries; 
 24.27     (2) evidence of community support and commitment from local 
 24.28  government, local workforce investment boards, school districts, 
 24.29  and other education institutions, business groups, and the 
 24.30  public; 
 24.31     (3) a description of the methods proposed to increase 
 24.32  economic opportunity and expansion, facilitate infrastructure 
 24.33  improvement, reduce the local regulatory burden, and identify 
 24.34  job-training opportunities; 
 24.35     (4) current social, economic, and demographic 
 24.36  characteristics of the proposed zone and anticipated 
 25.1   improvements in education, health, human services, and 
 25.2   employment if the zone is created; 
 25.3      (5) a description of anticipated activity in the zone and 
 25.4   each subzone, including, but not limited to, industrial use, 
 25.5   industrial site reuse, commercial or retail use, and residential 
 25.6   use; and 
 25.7      (6) any other information required by the commissioner. 
 25.8      [EFFECTIVE DATE.] This section is effective the day 
 25.9   following final enactment. 
 25.10     Sec. 17.  [469.312] [JOB OPPORTUNITY BUILDING ZONES; 
 25.11  LIMITATIONS.] 
 25.12     Subdivision 1.  [MAXIMUM SIZE.] A job opportunity building 
 25.13  zone may not exceed 5,000 acres.  For a zone designated as an 
 25.14  agricultural processing facility zone, the zone also may not 
 25.15  exceed the size of a site necessary for the agricultural 
 25.16  processing facility, including ancillary operations and space 
 25.17  for expansion in the reasonably foreseeable future. 
 25.18     Subd. 2.  [SUBZONES.] The area of a job opportunity 
 25.19  building zone may consist of one or more noncontiguous areas or 
 25.20  subzones. 
 25.21     Subd. 3.  [OUTSIDE METROPOLITAN AREA.] The area of a job 
 25.22  opportunity building zone must be located outside of the 
 25.23  metropolitan area, as defined in section 473.121, subdivision 2. 
 25.24     Subd. 4.  [BORDER CITY DEVELOPMENT ZONES.] (a) The area of 
 25.25  a job opportunity building zone may not include the area of a 
 25.26  border city development zone designated under section 469.1731.  
 25.27  The city may remove property from a border city development zone 
 25.28  contingent upon the area being designated as a job opportunity 
 25.29  building zone.  Before removing a parcel of property from a 
 25.30  border city development zone, the city must obtain the written 
 25.31  consent to the removal from each recipient that is located on 
 25.32  the parcel and receives incentives under the border city 
 25.33  development zone.  Consent of any other property owner or 
 25.34  taxpayer in the border city development zone is not required. 
 25.35     (b) A city may not provide tax incentives under section 
 25.36  469.1734 to individuals or businesses for operations or activity 
 26.1   in a job opportunity building zone. 
 26.2      Subd. 5.  [DURATION LIMIT.] The maximum duration of a zone 
 26.3   is 12 years.  The applicant may request a shorter duration.  The 
 26.4   commissioner may specify a shorter duration, regardless of the 
 26.5   requested duration. 
 26.6      [EFFECTIVE DATE.] This section is effective the day 
 26.7   following final enactment. 
 26.8      Sec. 18.  [469.313] [APPLICATION FOR DESIGNATION.] 
 26.9      Subdivision 1.  [WHO MAY APPLY.] One or more local 
 26.10  government units, or a joint powers board under section 471.59, 
 26.11  acting on behalf of two or more units, may apply for designation 
 26.12  of an area as a job opportunity building zone.  All or part of 
 26.13  the area proposed for designation as a zone must be located 
 26.14  within the boundaries of each of the governmental units.  A 
 26.15  local government unit may not submit or have submitted on its 
 26.16  behalf more than one application for designation of a job 
 26.17  opportunity building zone. 
 26.18     Subd. 2.  [APPLICATION CONTENT.] The application must 
 26.19  include: 
 26.20     (1) a development plan meeting the requirements of section 
 26.21  469.311; 
 26.22     (2) the proposed duration of the zone, not to exceed 12 
 26.23  years; 
 26.24     (3) a resolution or ordinance adopted by each of the cities 
 26.25  or towns and the counties in which the zone is located, agreeing 
 26.26  to provide all of the local tax exemptions provided under 
 26.27  section 469.315; 
 26.28     (4) if the proposed zone includes area in a border city 
 26.29  development zone, written consent to removal of the property 
 26.30  from the border city development zone to the extent required by 
 26.31  section 469.312, subdivision 4; 
 26.32     (5) an agreement by the applicant to treat incentives 
 26.33  provided under the zone designation as business subsidies under 
 26.34  sections 116J.993 to 116J.995 and to comply with the 
 26.35  requirements of that law; and 
 26.36     (6) supporting evidence to allow the commissioner to 
 27.1   evaluate the application under the criteria in section 469.314. 
 27.2      [EFFECTIVE DATE.] This section is effective the day 
 27.3   following final enactment. 
 27.4      Sec. 19.  [469.314] [DESIGNATION OF JOB OPPORTUNITY 
 27.5   BUILDING ZONES.] 
 27.6      Subdivision 1.  [COMMISSIONER TO DESIGNATE.] (a) The 
 27.7   commissioner, in consultation with the commissioner of revenue, 
 27.8   shall designate not more than ten job opportunity building 
 27.9   zones.  In making the designations, the commissioner shall 
 27.10  consider need and likelihood of success to yield the most 
 27.11  economic development and revitalization of economically 
 27.12  distressed rural areas of Minnesota. 
 27.13     (b) In addition to the designations under paragraph (a), 
 27.14  the commissioner may, in consultation with the commissioners of 
 27.15  agriculture and revenue, designate up to five agricultural 
 27.16  processing facility zones. 
 27.17     (c) The commissioner may, upon designation of a zone, 
 27.18  modify the development plan, including the boundaries of the 
 27.19  zone or subzones, if in the commissioner's opinion a modified 
 27.20  plan would better meet the objectives of the job opportunity 
 27.21  building zone program.  The commissioner shall notify the 
 27.22  applicant of the modification and provide a statement of the 
 27.23  reasons for the modifications. 
 27.24     Subd. 2.  [NEED INDICATORS.] (a) In evaluating applications 
 27.25  to determine the need for designation of a job opportunity 
 27.26  building zone, the commissioner shall consider the following 
 27.27  factors as indicators of need: 
 27.28     (1) the percentage of the population that is below 200 
 27.29  percent of the poverty rate, compared with the state as a whole; 
 27.30     (2) the extent to which the area's average weekly wage is 
 27.31  significantly lower than the state average weekly wage; 
 27.32     (3) the amount of property in or near the proposed zone 
 27.33  that is deteriorated or underutilized; 
 27.34     (4) the extent to which the median sale price of housing 
 27.35  units in the area is below the state median; 
 27.36     (5) the extent to which the median household income of the 
 28.1   area is lower than the state median household income; 
 28.2      (6) the extent to which the area experienced a population 
 28.3   loss during the 20-year period ending the year before the 
 28.4   application is made; 
 28.5      (7) the extent to which an area has experienced sudden or 
 28.6   severe job loss as a result of closing of businesses or other 
 28.7   employers; 
 28.8      (8) the extent to which property in the area would remain 
 28.9   underdeveloped or nonperforming due to physical characteristics; 
 28.10     (9) the extent to which the area has substantial real 
 28.11  property with adequate infrastructure and energy to support new 
 28.12  or expanded development; and 
 28.13     (10) the extent to which the business startup or expansion 
 28.14  rates are significantly lower than the respective rate for the 
 28.15  state.  
 28.16     (b) In applying the need indicators, the best available 
 28.17  data should be used.  If reported data are not available for the 
 28.18  proposed zone, data for the smallest area that is available and 
 28.19  includes the area of the proposed zone may be used.  The 
 28.20  commissioner may require applicants to provide data to 
 28.21  demonstrate how the area meets one or more of the indicators of 
 28.22  need. 
 28.23     Subd. 3.  [SUCCESS INDICATORS.] In determining the 
 28.24  likelihood of success of a proposed zone, the commissioner shall 
 28.25  consider: 
 28.26     (1) the strength and viability of the proposed development 
 28.27  goals, objectives, and strategies in the development plan; 
 28.28     (2) whether the development plan is creative and innovative 
 28.29  in comparison to other applications; 
 28.30     (3) local public and private commitment to development of 
 28.31  the proposed zone and the potential cooperation of surrounding 
 28.32  communities; 
 28.33     (4) existing resources available to the proposed zone; 
 28.34     (5) how the designation of the zone would relate to other 
 28.35  economic and community development projects and to regional 
 28.36  initiatives or programs; 
 29.1      (6) how the regulatory burden will be eased for businesses 
 29.2   operating in the proposed zone; 
 29.3      (7) proposals to establish and link job creation and job 
 29.4   training; and 
 29.5      (8) the extent to which the development is directed at 
 29.6   encouraging and that designation of the zone is likely to result 
 29.7   in the creation of high-paying jobs. 
 29.8      Subd. 4.  [DESIGNATION SCHEDULE.] (a) The schedule in 
 29.9   paragraphs (b) to (f) applies to the designation of job 
 29.10  opportunity building zones. 
 29.11     (b) The commissioner shall publish the form for 
 29.12  applications and any procedural, form, or content requirements 
 29.13  for applications by no later than August 1, 2003.  The 
 29.14  commissioner may publish these requirements on the Internet, in 
 29.15  the State Register, or by any other means the commissioner 
 29.16  determines appropriate to disseminate the information to 
 29.17  potential applicants for designation. 
 29.18     (c) Applications must be submitted by October 15, 2003. 
 29.19     (d) The commissioner shall designate the zones by no later 
 29.20  than December 31, 2003. 
 29.21     (e) The designation of the zones takes effect January 1, 
 29.22  2004. 
 29.23     (f) The commissioner may reserve one or more of the ten 
 29.24  authorized zones for a second round of designations in calendar 
 29.25  year 2004.  If the commissioner chooses to reserve designations 
 29.26  for this purpose, the commissioner shall establish the schedule 
 29.27  for the second round of designations, notwithstanding the dates 
 29.28  in paragraphs (c), (d), and (e).  The commissioner shall allow a 
 29.29  period of at least 90 days for submission of applications after 
 29.30  notification of the second round.  A zone designated in the 
 29.31  second round takes effect on January 1, 2005. 
 29.32     Subd. 5.  [GEOGRAPHIC DISTRIBUTION.] The commissioner shall 
 29.33  have as a goal the geographic distribution of zones around the 
 29.34  state. 
 29.35     Subd. 6.  [RULEMAKING EXEMPTION.] The commissioner's 
 29.36  actions in establishing procedures, requirements, and making 
 30.1   determinations to administer sections 469.310 to 469.320 are not 
 30.2   a rule for purposes of chapter 14 and are not subject to the 
 30.3   Administrative Procedure Act contained in chapter 14 and are not 
 30.4   subject to section 14.386. 
 30.5      [EFFECTIVE DATE.] This section is effective the day 
 30.6   following final enactment. 
 30.7      Sec. 20.  [469.315] [TAX INCENTIVES AVAILABLE IN ZONES.] 
 30.8      Qualified businesses that operate in a job opportunity 
 30.9   building zone, individuals who invest in a qualified business 
 30.10  that operates in a job opportunity building zone, and property 
 30.11  located in a job opportunity building zone qualify for: 
 30.12     (1) exemption from individual income taxes as provided 
 30.13  under section 469.316; 
 30.14     (2) exemption from corporate franchise taxes as provided 
 30.15  under section 469.317; 
 30.16     (3) exemption from the state sales and use tax and any 
 30.17  local sales and use taxes on qualifying purchases as provided in 
 30.18  section 297A.68, subdivision 37; 
 30.19     (4) exemption from the state sales tax on motor vehicles 
 30.20  and any local sales tax on motor vehicles as provided under 
 30.21  section 297B.03; 
 30.22     (5) exemption from the property tax as provided in section 
 30.23  272.02, subdivision 56; 
 30.24     (6) exemption from the wind energy production tax under 
 30.25  section 272.029, subdivision 7; and 
 30.26     (7) the jobs credit allowed under section 469.318. 
 30.27     [EFFECTIVE DATE.] This section is effective the day 
 30.28  following final enactment. 
 30.29     Sec. 21.  [469.316] [INDIVIDUAL INCOME TAX EXEMPTION.] 
 30.30     Subdivision 1.  [APPLICATION.] An individual operating a 
 30.31  trade or business in a job opportunity building zone, and an 
 30.32  individual making a qualifying investment in a qualified 
 30.33  business operating in a job opportunity building zone qualifies 
 30.34  for the exemptions from taxes imposed under chapter 290, as 
 30.35  provided in this section.  The exemptions provided under this 
 30.36  section apply only to the extent that the income otherwise would 
 31.1   be taxable under chapter 290.  Subtractions under this section 
 31.2   from federal taxable income, alternative minimum taxable income, 
 31.3   or any other base subject to tax are limited to the amount that 
 31.4   otherwise would be included in the tax base absent the exemption 
 31.5   under this section.  This section applies only to taxable years 
 31.6   beginning during the duration of the job opportunity building 
 31.7   zone. 
 31.8      Subd. 2.  [RENTS.] An individual is exempt from the taxes 
 31.9   imposed under chapter 290 on net rents derived from real or 
 31.10  tangible personal property located in a zone for a taxable year 
 31.11  in which the zone was designated a job opportunity building 
 31.12  zone.  If tangible personal property was used both within and 
 31.13  outside of the zone, the exemption amount for the net rental 
 31.14  income must be multiplied by a fraction, the numerator of which 
 31.15  is the number of days the property was used in the zone and the 
 31.16  denominator of which is the total days. 
 31.17     Subd. 3.  [BUSINESS INCOME.] An individual is exempt from 
 31.18  the taxes imposed under chapter 290 on net income from the 
 31.19  operation of a qualified business in a job opportunity building 
 31.20  zone.  If the trade or business is carried on within and without 
 31.21  the zone and the individual is not a resident of Minnesota, the 
 31.22  exemption must be apportioned based on the zone percentage for 
 31.23  the taxable year.  If the trade or business is carried on within 
 31.24  and without the zone and the individual is a resident of 
 31.25  Minnesota, the exemption must be apportioned based on the zone 
 31.26  percentage for the taxable year, except the ratios under section 
 31.27  469.310, subdivision 7, clause (1), items (i) and (ii), must use 
 31.28  the denominators of the property and payroll factors determined 
 31.29  under section 290.191.  No subtraction is allowed under this 
 31.30  section in excess of 20 percent of the sum of the job 
 31.31  opportunity building zone payroll and the adjusted basis of the 
 31.32  property at the time that the property is first used in the job 
 31.33  opportunity building zone by the business. 
 31.34     Subd. 4.  [CAPITAL GAINS.] (a) An individual is exempt from 
 31.35  the taxes imposed under chapter 290 on: 
 31.36     (1) net gain derived on a sale or exchange of real property 
 32.1   located in the zone and used by a qualified business.  If the 
 32.2   property was held by the individual during a period when the 
 32.3   zone was not designated, the gain must be prorated based on the 
 32.4   percentage of time, measured in calendar days, that the real 
 32.5   property was held by the individual during the period the zone 
 32.6   designation was in effect to the total period of time the real 
 32.7   property was held by the individual; 
 32.8      (2) net gain derived on a sale or exchange of tangible 
 32.9   personal property used by a qualified business in the zone.  If 
 32.10  the property was held by the individual during a period when the 
 32.11  zone was not designated, the gain must be prorated based on the 
 32.12  percentage of time, measured in calendar days, that the property 
 32.13  was held by the individual during the period the zone 
 32.14  designation was in effect to the total period of time the 
 32.15  property was held by the individual.  If the tangible personal 
 32.16  property was used outside of the zone during the period of the 
 32.17  zone's designation, the exemption must be multiplied by a 
 32.18  fraction, the numerator of which is the number of days the 
 32.19  property was used in the zone during the time of the designation 
 32.20  and the denominator of which is the total days the property was 
 32.21  held during the time of the designation; and 
 32.22     (3) net gain derived on a sale of an ownership interest in 
 32.23  a qualified business operating in the job opportunity building 
 32.24  zone, meeting the requirements of paragraph (b).  The exemption 
 32.25  on the gain must be multiplied by the zone percentage of the 
 32.26  business for the taxable year prior to the sale. 
 32.27     (b) A qualified business meets the requirements of 
 32.28  paragraph (a), clause (3), if it is a corporation, an S 
 32.29  corporation, or a partnership, and for the taxable year its job 
 32.30  opportunity building zone percentage exceeds 25 percent.  For 
 32.31  purposes of paragraph (a), clause (3), the zone percentage must 
 32.32  be calculated by modifying the ratios under section 469.310, 
 32.33  subdivision 7, clause (1), items (i) and (ii), to use the 
 32.34  denominators of the property and payroll factors determined 
 32.35  under section 290.191.  Upon the request of an individual 
 32.36  holding an ownership interest in the entity, the entity must 
 33.1   certify to the owner, in writing, the job opportunity building 
 33.2   zone percentage needed to determine the exemption. 
 33.3      [EFFECTIVE DATE.] This section is effective for taxable 
 33.4   years beginning after December 31, 2003. 
 33.5      Sec. 22.  [469.317] [CORPORATE FRANCHISE TAX EXEMPTION.] 
 33.6      (a) A qualified business is exempt from taxation under 
 33.7   section 290.02, the alternative minimum tax under section 
 33.8   290.0921, and the minimum fee under section 290.0922, on the 
 33.9   portion of its income attributable to operations within the 
 33.10  zone.  This exemption is determined as follows: 
 33.11     (1) for purposes of the tax imposed under section 290.02, 
 33.12  by multiplying its taxable net income by its zone percentage and 
 33.13  subtracting the result in determining taxable income; 
 33.14     (2) for purposes of the alternative minimum tax under 
 33.15  section 290.0921, by multiplying its alternative minimum taxable 
 33.16  income by its zone percentage and reducing alternative minimum 
 33.17  taxable income by this amount; and 
 33.18     (3) for purposes of the minimum fee under section 290.0922, 
 33.19  by excluding property and payroll in the zone from the 
 33.20  computations of the fee or by exempting the entity under section 
 33.21  290.0922, subdivision 2, clause (7). 
 33.22     (b) No subtraction is allowed under this section in excess 
 33.23  of 20 percent of the sum of the corporation's job opportunity 
 33.24  building zone payroll and the adjusted basis of the property at 
 33.25  the time that the property is first used in the job opportunity 
 33.26  building zone by the corporation. 
 33.27     (c) This section applies only to taxable years beginning 
 33.28  during the duration of the job opportunity building zone. 
 33.29     [EFFECTIVE DATE.] This section is effective for taxable 
 33.30  years beginning after December 31, 2003. 
 33.31     Sec. 23.  [469.318] [JOBS CREDIT.] 
 33.32     Subdivision 1.  [CREDIT ALLOWED.] A qualified business is 
 33.33  allowed a credit against the taxes imposed under chapter 290.  
 33.34  The credit equals seven percent of the: 
 33.35     (1) lesser of: 
 33.36     (i) zone payroll for the taxable year, less the zone 
 34.1   payroll for the base year; or 
 34.2      (ii) total Minnesota payroll for the taxable year, less 
 34.3   total Minnesota payroll for the base year; minus 
 34.4      (2) $30,000 multiplied by (the number of full-time 
 34.5   equivalent employees that the qualified business employs in the 
 34.6   job opportunity building zone for the taxable year, minus the 
 34.7   number of full-time equivalent employees the business employed 
 34.8   in the zone in the base year, but not less than zero). 
 34.9      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 34.10  the following terms have the meanings given. 
 34.11     (b) "Base year" means the taxable year beginning during the 
 34.12  calendar year prior to the calendar year in which the zone 
 34.13  designation took effect. 
 34.14     (c) "Full-time equivalent employees" means the equivalent 
 34.15  of annualized expected hours of work equal to 2,080 hours. 
 34.16     (d) "Minnesota payroll" means the wages or salaries 
 34.17  attributed to Minnesota under section 290.191, subdivision 12, 
 34.18  for the qualified business or the unitary business of which the 
 34.19  qualified business is a part, whichever is greater. 
 34.20     (e) "Zone payroll" means wages or salaries used to 
 34.21  determine the zone payroll factor for the qualified business, 
 34.22  less the amount of compensation attributable to any employee 
 34.23  that exceeds $100,000. 
 34.24     Subd. 3.  [INFLATION ADJUSTMENT.] For taxable years 
 34.25  beginning after December 31, 2004, the dollar amounts in 
 34.26  subdivision 1, clause (2), and subdivision 2, paragraph (e), are 
 34.27  annually adjusted for inflation.  The commissioner of revenue 
 34.28  shall adjust the amounts by the percentage determined under 
 34.29  section 290.06, subdivision 2d, for the taxable year. 
 34.30     Subd. 4.  [REFUNDABLE.] If the amount of the credit exceeds 
 34.31  the liability for tax under chapter 290, the commissioner of 
 34.32  revenue shall refund the excess to the qualified business. 
 34.33     Subd. 5.  [APPROPRIATION.] An amount sufficient to pay the 
 34.34  refunds authorized by this section is appropriated to the 
 34.35  commissioner of revenue from the general fund. 
 34.36     [EFFECTIVE DATE.] This section is effective for taxable 
 35.1   years beginning after December 31, 2003. 
 35.2      Sec. 24.  [469.319] [REPAYMENT OF TAX BENEFITS.] 
 35.3      Subdivision 1.  [REPAYMENT OBLIGATION.] A business must 
 35.4   repay the amount of the total tax reduction listed in section 
 35.5   469.315 and any refund under section 469.318 in excess of tax 
 35.6   liability, received during the two years immediately before it 
 35.7   ceased to operate in the zone, if the business: 
 35.8      (1) received tax reductions authorized by section 469.315; 
 35.9   and 
 35.10     (2)(i) did not meet the goals specified in an agreement 
 35.11  entered into with the applicant that states any obligation the 
 35.12  qualified business must fulfill in order to be eligible for tax 
 35.13  benefits.  The commissioner may extend for up to one year the 
 35.14  period for meeting any goals provided in an agreement.  The 
 35.15  applicant may extend the period for meeting other goals by 
 35.16  documenting in writing the reason for the extension and 
 35.17  attaching a copy of the document to its next annual report to 
 35.18  the commissioner; or 
 35.19     (ii) ceased to operate its facility located within the job 
 35.20  opportunity building zone or otherwise ceases to be or is not a 
 35.21  qualified business. 
 35.22     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 35.23  the following terms have the meanings given. 
 35.24     (b) "Business" means any person who received tax benefits 
 35.25  enumerated in section 469.315. 
 35.26     (c) "Commissioner" means the commissioner of revenue. 
 35.27     Subd. 3.  [DISPOSITION OR REPAYMENT.] The repayment must be 
 35.28  paid to the state to the extent it represents a state tax 
 35.29  reduction and to the county to the extent it represents a 
 35.30  property tax reduction.  Any amount repaid to the state must be 
 35.31  deposited in the general fund.  Any amount repaid to the county 
 35.32  for the property tax exemption must be distributed to the local 
 35.33  governments with authority to levy taxes in the zone in the same 
 35.34  manner provided for distribution of payment of delinquent 
 35.35  property taxes.  Any repayment of local sales taxes must be 
 35.36  repaid to the city or county imposing the local sales tax. 
 36.1      Subd. 4.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
 36.2   taxes imposed under chapter 290 or 297A or local taxes collected 
 36.3   pursuant to section 297A.99, a business must file an amended 
 36.4   return with the commissioner of revenue and pay any taxes 
 36.5   required to be repaid within 30 days after ceasing to do 
 36.6   business in the zone.  The amount required to be repaid is 
 36.7   determined by calculating the tax for the period or periods for 
 36.8   which repayment is required without regard to the exemptions and 
 36.9   credits allowed under section 469.315. 
 36.10     (b) For the repayment of taxes imposed under chapter 297B, 
 36.11  a business must pay any taxes required to be repaid to the motor 
 36.12  vehicle registrar, as agent for the commissioner of revenue, 
 36.13  within 30 days after ceasing to do business in the zone. 
 36.14     (c) For the repayment of property taxes, the county auditor 
 36.15  shall prepare a tax statement for the business, applying the 
 36.16  applicable tax extension rates for each payable year and provide 
 36.17  a copy to the business.  The business must pay the taxes to the 
 36.18  county treasurer within 30 days after receipt of the tax 
 36.19  statement.  The taxpayer may appeal the valuation and 
 36.20  determination of the property tax to the tax court within 30 
 36.21  days after receipt of the tax statement. 
 36.22     (d) The provisions of chapters 270 and 289A relating to the 
 36.23  commissioner's authority to audit, assess, and collect the tax 
 36.24  and to hear appeals are applicable to the repayment required 
 36.25  under paragraphs (a) and (b).  The commissioner may impose civil 
 36.26  penalties as provided in chapter 289A, and the additional tax 
 36.27  and penalties are subject to interest at the rate provided in 
 36.28  section 270.75, from 30 days after ceasing to do business in the 
 36.29  job opportunity building zone until the date the tax is paid. 
 36.30     (e) If a property tax is not repaid under paragraph (c), 
 36.31  the county treasurer shall add the amount required to be repaid 
 36.32  to the property taxes assessed against the property for payment 
 36.33  in the year following the year in which the treasurer discovers 
 36.34  that the business ceased to operate in the job opportunity 
 36.35  building zone. 
 36.36     (f) For determining the tax required to be repaid, a tax 
 37.1   reduction is deemed to have been received on the date that the 
 37.2   tax would have been due if the taxpayer had not been entitled to 
 37.3   the exemption or on the date a refund was issued for a 
 37.4   refundable tax credit. 
 37.5      (g) The commissioner may assess the repayment of taxes 
 37.6   under paragraph (d) any time within two years after the business 
 37.7   ceases to operate in the job opportunity building zone, or 
 37.8   within any period of limitations for the assessment of tax under 
 37.9   section 289A.38, whichever period is later. 
 37.10     Subd. 5.  [WAIVER AUTHORITY.] The commissioner may waive 
 37.11  all or part of a repayment, if the commissioner, in consultation 
 37.12  with the commissioner of trade and economic development and 
 37.13  appropriate officials from the local government units in which 
 37.14  the qualified business is located, determines that requiring 
 37.15  repayment of the tax is not in the best interest of the state or 
 37.16  the local government units and the business ceased operating as 
 37.17  a result of circumstances beyond its control including, but not 
 37.18  limited to: 
 37.19     (1) a natural disaster; 
 37.20     (2) unforeseen industry trends; or 
 37.21     (3) loss of a major supplier or customer. 
 37.22     [EFFECTIVE DATE.] This section is effective the day 
 37.23  following final enactment. 
 37.24     Sec. 25.  [469.320] [ZONE PERFORMANCE; REMEDIES.] 
 37.25     Subdivision 1.  [REPORTING REQUIREMENT.] An applicant 
 37.26  receiving designation of a job opportunity building zone under 
 37.27  section 469.314 must annually report to the commissioner on its 
 37.28  progress in meeting the zone performance goals under the 
 37.29  development plan for the zone and the applicant's compliance 
 37.30  with the business subsidy law under sections 116J.993 to 
 37.31  116J.995. 
 37.32     Subd. 2.  [PROCEDURES.] For reports required by subdivision 
 37.33  1, the commissioner may prescribe: 
 37.34     (1) the required time or times by which the reports must be 
 37.35  filed; 
 37.36     (2) the form of the report; and 
 38.1      (3) the information required to be included in the report. 
 38.2      Subd. 3.  [REMEDIES.] If the commissioner determines, based 
 38.3   on a report filed under subdivision 1 or other available 
 38.4   information, that a zone or subzone is failing to meet its 
 38.5   performance goals, the commissioner may take any actions the 
 38.6   commissioner determines appropriate, including modification of 
 38.7   the boundaries of the zone or a subzone or termination of the 
 38.8   zone or a subzone.  Before taking any action, the commissioner 
 38.9   shall consult with the applicant and the affected local 
 38.10  government units, including notifying them of the proposed 
 38.11  actions to be taken.  The commissioner shall publish any order 
 38.12  modifying a zone in the State Register and on the Internet.  The 
 38.13  applicant may appeal the commissioner's order under the 
 38.14  contested case procedures of chapter 14. 
 38.15     Subd. 4.  [EXISTING BUSINESSES.] (a) An action to remove 
 38.16  area from a zone or to terminate a zone under this section does 
 38.17  not apply to: 
 38.18     (1) the property tax on improvements constructed before the 
 38.19  first January 2 following publication of the commissioner's 
 38.20  order; 
 38.21     (2) sales tax on purchases made before the first day of the 
 38.22  next calendar month beginning at least 30 days after publication 
 38.23  of the commissioner's order; and 
 38.24     (3) individual income tax or corporate franchise tax 
 38.25  attributable to a facility that was in operation before the 
 38.26  publication of the commissioner's order. 
 38.27     (b) The tax exemptions specified in paragraph (a) terminate 
 38.28  on the date on which the zone expires under the original 
 38.29  designation. 
 38.30     [EFFECTIVE DATE.] This section is effective the day 
 38.31  following final enactment. 
 38.32     Sec. 26.  [477A.08] [JOB OPPORTUNITY BUILDING ZONE AID.] 
 38.33     Subdivision 1.  [ELIGIBILITY.] (a) For each assessment year 
 38.34  that the exemption for job opportunity building zone property is 
 38.35  in effect under section 272.02, subdivision 56, the assessor 
 38.36  shall determine the difference between the actual net tax 
 39.1   capacity and the net tax capacity that would be determined for 
 39.2   the job opportunity building zone, including any property 
 39.3   removed from the zone that continues to qualify under section 
 39.4   469.320, subdivision 4, if the exemption were not in effect. 
 39.5      (b) Each city and county is eligible for aid equal to 
 39.6   one-half of: 
 39.7      (1) the amount by which the sum of the differences 
 39.8   determined in paragraph (a) for the corresponding assessment 
 39.9   year exceeds three percent of the city's or county's total 
 39.10  taxable net tax capacity for taxes payable in 2003, multiplied 
 39.11  by 
 39.12     (2) the city's or the county's, as applicable, average 
 39.13  local tax rate for taxes payable in 2003. 
 39.14     Subd. 2.  [CERTIFICATION.] The county assessor shall notify 
 39.15  the commissioner of revenue of the amount determined under 
 39.16  subdivision 1, paragraph (b), clause (1), for any city or county 
 39.17  that qualifies for aid under this section by June 30 of the 
 39.18  assessment year, in a form prescribed by the commissioner.  The 
 39.19  commissioner shall notify each city and county of its qualifying 
 39.20  aid amount by August 15 of the assessment year. 
 39.21     Subd. 3.  [APPROPRIATION; PAYMENT.] The commissioner shall 
 39.22  pay each city and county its qualifying aid amount by July 20 of 
 39.23  the following year.  An amount sufficient to pay the aid under 
 39.24  this section is appropriated to the commissioner of revenue from 
 39.25  the general fund. 
 39.26     [EFFECTIVE DATE.] This section is effective beginning for 
 39.27  aid based on property taxes assessed in 2004, payable in 2005. 
 39.28     Sec. 27.  [APPROPRIATION; COST OF ADMINISTRATION.] 
 39.29     $100,000 in fiscal year 2004 and $30,000 in fiscal year 
 39.30  2005 are appropriated to the commissioner of trade and economic 
 39.31  development for the cost of designating job opportunity building 
 39.32  zones. 
 39.33     $53,000 in fiscal year 2004 and $29,000 in fiscal year 2005 
 39.34  are appropriated to the commissioner of revenue for the cost of 
 39.35  administering the tax provisions of this act. 
 39.36     [EFFECTIVE DATE.] This section is effective the day 
 40.1   following final enactment. 
 40.2                              ARTICLE 2 
 40.3                BIOTECHNOLOGY AND HEALTH SCIENCE ZONES 
 40.4      Section 1.  [LEGISLATIVE FINDINGS.] 
 40.5      The legislature finds, as a matter of public policy, that 
 40.6   biotechnology and the health sciences hold immense promise in 
 40.7   improving the quality of our lives, including curing diseases, 
 40.8   making our foods safer and more abundant, reducing our 
 40.9   dependence on fossil fuels and foreign oil, making better use of 
 40.10  Minnesota agriculture products, and growing tens of thousands of 
 40.11  new, high-paying jobs. 
 40.12     The legislature further finds that there are hundreds of 
 40.13  discoveries made each year at the University of Minnesota, the 
 40.14  Mayo Clinic, and other research institutions that, if properly 
 40.15  commercialized, could help provide these benefits.  
 40.16     The legislature further finds that biotechnology and health 
 40.17  sciences companies benefit from location in proximity to these 
 40.18  research institutions and the many faculty, students, and other 
 40.19  intellectual and physical infrastructure these institutions 
 40.20  provide.  
 40.21     The legislature further finds that Minnesota's high-quality 
 40.22  workforce is attractive to biotechnology and health sciences 
 40.23  companies that would want to relocate, start up, or expand in 
 40.24  Minnesota. 
 40.25     The legislature further finds and declares that it is 
 40.26  appropriate and necessary, to improve our quality of life and as 
 40.27  a matter of economic development, that Minnesota take rapid and 
 40.28  affirmative steps to encourage the development of biotechnology 
 40.29  and the health sciences and the commercialization of important 
 40.30  discoveries, especially through expansion of business 
 40.31  opportunities in proximity to the research institutions where 
 40.32  those discoveries occur.  This must include attention to the 
 40.33  ethical, legal, and societal impacts of the industry, including 
 40.34  risk assessment and environmental protection. 
 40.35     Sec. 2.  Minnesota Statutes 2002, section 272.02, is 
 40.36  amended by adding a subdivision to read: 
 41.1      Subd. 56.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
 41.2   PROPERTY.] (a) Improvements to real property, and personal 
 41.3   property, classified under section 273.13, subdivision 24, and 
 41.4   located within a biotechnology and health sciences industry zone 
 41.5   are exempt from ad valorem taxes levied under chapter 275, as 
 41.6   provided in this subdivision. 
 41.7      (b) For property to qualify for exemption under paragraph 
 41.8   (a), the occupant must be a qualified business, as defined in 
 41.9   section 469.330. 
 41.10     (c) The exemption applies beginning for the first 
 41.11  assessment year after designation of the biotechnology and 
 41.12  health sciences industry zone by the commissioner of trade and 
 41.13  economic development.  The exemption applies to each assessment 
 41.14  year that begins during the duration of the biotechnology and 
 41.15  health sciences industry zone.  This exemption does not apply to:
 41.16     (1) a levy under section 475.61 or similar levy provisions 
 41.17  under any other law to pay general obligation bonds; or 
 41.18     (2) a levy under section 126C.17, if the levy was approved 
 41.19  by the voters before the designation of the biotechnology and 
 41.20  health sciences industry zone. 
 41.21     (d) The exemption does not apply to taxes imposed by a 
 41.22  city, town, or county, unless the governing body adopts a 
 41.23  resolution granting the exemption.  A city, town, or county may 
 41.24  provide a complete property tax exemption, partial property tax 
 41.25  exemption, or no property tax exemption to qualified businesses 
 41.26  in the biotechnology and health sciences industry zone.  "City" 
 41.27  includes a statutory or home rule charter city. 
 41.28     (e) For property located in a tax increment financing 
 41.29  district, the county shall not adjust the original net tax 
 41.30  capacity of the district under section 469.177, subdivision 1, 
 41.31  paragraph (a), upon the expiration of an exemption under this 
 41.32  subdivision. 
 41.33     [EFFECTIVE DATE.] This section is effective beginning for 
 41.34  property taxes assessed in 2004, payable in 2005. 
 41.35     Sec. 3.  Minnesota Statutes 2002, section 290.01, 
 41.36  subdivision 29, is amended to read: 
 42.1      Subd. 29.  [TAXABLE INCOME.] The term "taxable income" 
 42.2   means:  
 42.3      (1) for individuals, estates, and trusts, the same as 
 42.4   taxable net income; 
 42.5      (2) for corporations, the taxable net income less 
 42.6      (i) the net operating loss deduction under section 290.095; 
 42.7   and 
 42.8      (ii) the dividends received deduction under section 290.21, 
 42.9   subdivision 4; and 
 42.10     (iii) the exemption for operating in a biotechnology and 
 42.11  health sciences industry zone under section 469.337. 
 42.12     [EFFECTIVE DATE.] This section is effective for taxable 
 42.13  years beginning after December 31, 2003. 
 42.14     Sec. 4.  Minnesota Statutes 2002, section 290.06, is 
 42.15  amended by adding a subdivision to read: 
 42.16     Subd. 29.  [BIOTECHNOLOGY AND HEALTH SCIENCE INDUSTRY ZONE 
 42.17  JOB CREDIT.] A taxpayer that is a qualified business, as defined 
 42.18  in section 469.330, subdivision 11, is allowed a credit as 
 42.19  determined under section 469.338 against the franchise tax 
 42.20  imposed under section 290.06, subdivision 1, or the alternative 
 42.21  minimum tax imposed under section 290.0921. 
 42.22     [EFFECTIVE DATE.] This section is effective for taxable 
 42.23  years beginning after December 31, 2003.  
 42.24     Sec. 5.  Minnesota Statutes 2002, section 290.06, is 
 42.25  amended by adding a subdivision to read: 
 42.26     Subd. 30.  [BIOTECHNOLOGY AND HEALTH SCIENCE INDUSTRY ZONE 
 42.27  RESEARCH AND DEVELOPMENT CREDIT.] A taxpayer that is a qualified 
 42.28  business, as defined in section 469.330, subdivision 11, is 
 42.29  allowed a credit as determined under section 469.339 against the 
 42.30  franchise tax imposed under section 290.06, subdivision 1, or 
 42.31  the alternative minimum tax imposed under section 290.0921. 
 42.32     [EFFECTIVE DATE.] This section is effective for taxable 
 42.33  years beginning after December 31, 2003. 
 42.34     Sec. 6.  Minnesota Statutes 2002, section 290.0921, 
 42.35  subdivision 3, is amended to read: 
 42.36     Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
 43.1   "Alternative minimum taxable income" is Minnesota net income as 
 43.2   defined in section 290.01, subdivision 19, and includes the 
 43.3   adjustments and tax preference items in sections 56, 57, 58, and 
 43.4   59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
 43.5   corporation files a separate company Minnesota tax return, the 
 43.6   minimum tax must be computed on a separate company basis.  If a 
 43.7   corporation is part of a tax group filing a unitary return, the 
 43.8   minimum tax must be computed on a unitary basis.  The following 
 43.9   adjustments must be made. 
 43.10     (1) For purposes of the depreciation adjustments under 
 43.11  section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
 43.12  the basis for depreciable property placed in service in a 
 43.13  taxable year beginning before January 1, 1990, is the adjusted 
 43.14  basis for federal income tax purposes, including any 
 43.15  modification made in a taxable year under section 290.01, 
 43.16  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 43.17  subdivision 7, paragraph (c). 
 43.18     For taxable years beginning after December 31, 2000, the 
 43.19  amount of any remaining modification made under section 290.01, 
 43.20  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 43.21  subdivision 7, paragraph (c), not previously deducted is a 
 43.22  depreciation allowance in the first taxable year after December 
 43.23  31, 2000. 
 43.24     (2) The portion of the depreciation deduction allowed for 
 43.25  federal income tax purposes under section 168(k) of the Internal 
 43.26  Revenue Code that is required as an addition under section 
 43.27  290.01, subdivision 19c, clause (16), is disallowed in 
 43.28  determining alternative minimum taxable income. 
 43.29     (3) The subtraction for depreciation allowed under section 
 43.30  290.01, subdivision 19d, clause (19), is allowed as a 
 43.31  depreciation deduction in determining alternative minimum 
 43.32  taxable income. 
 43.33     (4) The alternative tax net operating loss deduction under 
 43.34  sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
 43.35  not apply. 
 43.36     (5) The special rule for certain dividends under section 
 44.1   56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 
 44.2      (6) The special rule for dividends from section 936 
 44.3   companies under section 56(g)(4)(C)(iii) does not apply. 
 44.4      (7) The tax preference for depletion under section 57(a)(1) 
 44.5   of the Internal Revenue Code does not apply. 
 44.6      (8) The tax preference for intangible drilling costs under 
 44.7   section 57(a)(2) of the Internal Revenue Code must be calculated 
 44.8   without regard to subparagraph (E) and the subtraction under 
 44.9   section 290.01, subdivision 19d, clause (4). 
 44.10     (9) The tax preference for tax exempt interest under 
 44.11  section 57(a)(5) of the Internal Revenue Code does not apply.  
 44.12     (10) The tax preference for charitable contributions of 
 44.13  appreciated property under section 57(a)(6) of the Internal 
 44.14  Revenue Code does not apply. 
 44.15     (11) For purposes of calculating the tax preference for 
 44.16  accelerated depreciation or amortization on certain property 
 44.17  placed in service before January 1, 1987, under section 57(a)(7) 
 44.18  of the Internal Revenue Code, the deduction allowable for the 
 44.19  taxable year is the deduction allowed under section 290.01, 
 44.20  subdivision 19e. 
 44.21     For taxable years beginning after December 31, 2000, the 
 44.22  amount of any remaining modification made under section 290.01, 
 44.23  subdivision 19e, not previously deducted is a depreciation or 
 44.24  amortization allowance in the first taxable year after December 
 44.25  31, 2004. 
 44.26     (12) For purposes of calculating the adjustment for 
 44.27  adjusted current earnings in section 56(g) of the Internal 
 44.28  Revenue Code, the term "alternative minimum taxable income" as 
 44.29  it is used in section 56(g) of the Internal Revenue Code, means 
 44.30  alternative minimum taxable income as defined in this 
 44.31  subdivision, determined without regard to the adjustment for 
 44.32  adjusted current earnings in section 56(g) of the Internal 
 44.33  Revenue Code. 
 44.34     (13) For purposes of determining the amount of adjusted 
 44.35  current earnings under section 56(g)(3) of the Internal Revenue 
 44.36  Code, no adjustment shall be made under section 56(g)(4) of the 
 45.1   Internal Revenue Code with respect to (i) the amount of foreign 
 45.2   dividend gross-up subtracted as provided in section 290.01, 
 45.3   subdivision 19d, clause (1), (ii) the amount of refunds of 
 45.4   income, excise, or franchise taxes subtracted as provided in 
 45.5   section 290.01, subdivision 19d, clause (10), or (iii) the 
 45.6   amount of royalties, fees or other like income subtracted as 
 45.7   provided in section 290.01, subdivision 19d, clause (11). 
 45.8      (14) Alternative minimum taxable income excludes the income 
 45.9   from operating in a biotechnology and health sciences industry 
 45.10  zone as provided under section 469.337. 
 45.11     Items of tax preference must not be reduced below zero as a 
 45.12  result of the modifications in this subdivision. 
 45.13     [EFFECTIVE DATE.] This section is effective for taxable 
 45.14  years beginning after December 31, 2003. 
 45.15     Sec. 7.  Minnesota Statutes 2002, section 290.0922, 
 45.16  subdivision 3, is amended to read: 
 45.17     Subd. 3.  [DEFINITIONS.] (a) "Minnesota sales or receipts" 
 45.18  means the total sales apportioned to Minnesota pursuant to 
 45.19  section 290.191, subdivision 5, the total receipts attributed to 
 45.20  Minnesota pursuant to section 290.191, subdivisions 6 to 8, 
 45.21  and/or the total sales or receipts apportioned or attributed to 
 45.22  Minnesota pursuant to any other apportionment formula applicable 
 45.23  to the taxpayer. 
 45.24     (b) "Minnesota property" means total Minnesota tangible 
 45.25  property as provided in section 290.191, subdivisions 9 to 11, 
 45.26  and any other tangible property located in Minnesota, but does 
 45.27  not include property of a qualified business located in a 
 45.28  biotechnology and health sciences zone designated under section 
 45.29  469.334.  Intangible property shall not be included in Minnesota 
 45.30  property for purposes of this section.  Taxpayers who do not 
 45.31  utilize tangible property to apportion income shall nevertheless 
 45.32  include Minnesota property for purposes of this section.  On a 
 45.33  return for a short taxable year, the amount of Minnesota 
 45.34  property owned, as determined under section 290.191, shall be 
 45.35  included in Minnesota property based on a fraction in which the 
 45.36  numerator is the number of days in the short taxable year and 
 46.1   the denominator is 365.  
 46.2      (c) "Minnesota payrolls"  means total Minnesota payrolls as 
 46.3   provided in section 290.191, subdivision 12, but does not 
 46.4   include biotechnology and health sciences zone payroll under 
 46.5   section 469.330, subdivision 8.  Taxpayers who do not utilize 
 46.6   payrolls to apportion income shall nevertheless include 
 46.7   Minnesota payrolls for purposes of this section. 
 46.8      [EFFECTIVE DATE.] This section is effective for taxable 
 46.9   years beginning after December 31, 2003. 
 46.10     Sec. 8.  Minnesota Statutes 2002, section 297A.68, is 
 46.11  amended by adding a subdivision to read: 
 46.12     Subd. 37.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 
 46.13  ZONE.] (a) Purchases of tangible personal property or taxable 
 46.14  services by a qualified business, as defined in section 469.330, 
 46.15  are exempt if the property or services are primarily used or 
 46.16  consumed in a biotechnology and health sciences industry zone 
 46.17  designated under section 469.334. 
 46.18     (b) Purchase and use of construction materials and supplies 
 46.19  for construction of improvements to real property in a 
 46.20  biotechnology and health sciences industry zone are exempt if 
 46.21  the improvements after completion of construction are to be used 
 46.22  in the conduct of a qualified business, as defined in section 
 46.23  469.330.  This exemption applies regardless of whether the 
 46.24  purchases are made by the business or a contractor. 
 46.25     (c) The exemptions under this subdivision apply to a local 
 46.26  sales and use tax regardless of whether the local sales tax is 
 46.27  imposed on the sales taxable as defined under this chapter. 
 46.28     (d)(1) The tax on sales of goods or services exempted under 
 46.29  this subdivision are imposed and collected as if the applicable 
 46.30  rate under section 297A.62 applied.  Upon application by the 
 46.31  purchaser, on forms prescribed by the commissioner, a refund 
 46.32  equal to the tax paid must be paid to the purchaser.  The 
 46.33  application must include sufficient information to permit the 
 46.34  commissioner to verify the sales tax paid and the eligibility of 
 46.35  the claimant to receive the credit.  No more than two 
 46.36  applications for refunds may be filed under this subdivision in 
 47.1   a calendar year.  The provisions of section 289A.40 apply to the 
 47.2   refunds payable under this subdivision. 
 47.3      (2) The amount required to make the refunds is annually 
 47.4   appropriated to the commissioner of revenue. 
 47.5      (3) The aggregate amount refunded to a qualified business 
 47.6   must not exceed the amount allocated to the qualified business 
 47.7   under section 469.335. 
 47.8      (e) This subdivision applies only to sales made during the 
 47.9   duration of the designation of the zone. 
 47.10     [EFFECTIVE DATE.] This section is effective for sales made 
 47.11  on or after the day following final enactment. 
 47.12     Sec. 9.  [469.330] [DEFINITIONS.] 
 47.13     Subdivision 1.  [SCOPE.] For purposes of sections 469.330 
 47.14  to 469.341, the following terms have the meanings given. 
 47.15     Subd. 2.  [APPLICANT.] "Applicant" means a local government 
 47.16  unit or units applying for designation of an area as a 
 47.17  biotechnology and health sciences industry zone or a joint 
 47.18  powers board, established under section 471.59, acting on behalf 
 47.19  of two or more local government units. 
 47.20     Subd. 3.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 
 47.21  FACILITY.] "Biotechnology and health sciences industry facility" 
 47.22  means one or more facilities or operations involved in: 
 47.23     (1) researching, developing, and/or manufacturing a 
 47.24  biotechnology product or service or a biotechnology-related 
 47.25  health sciences product or service; 
 47.26     (2) researching, developing, and/or manufacturing a 
 47.27  biotechnology medical device product or service or a 
 47.28  biotechnology-related medical device product or service; or 
 47.29     (3) promoting, supplying, or servicing a facility or 
 47.30  operation involved in clause (1) or (2), if the business derives 
 47.31  more than 50 percent of its gross receipts from those activities.
 47.32     Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
 47.33  commissioner of trade and economic development. 
 47.34     Subd. 5.  [DEVELOPMENT PLAN.] "Development plan" means a 
 47.35  plan meeting the requirements of section 469.331. 
 47.36     Subd. 6.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
 48.1   OR ZONE.] "Biotechnology and health sciences industry zone" or 
 48.2   "zone" means a zone designated by the commissioner under section 
 48.3   469.334. 
 48.4      Subd. 7.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
 48.5   PERCENTAGE OR ZONE PERCENTAGE.] "Biotechnology and health 
 48.6   sciences industry zone percentage" or "zone percentage" means 
 48.7   the following fraction reduced to a percentage: 
 48.8      (1) the numerator of the fraction is: 
 48.9      (i) the ratio of the taxpayer's property factor under 
 48.10  section 290.191 located in the zone for the taxable year over 
 48.11  the property factor numerator determined under section 290.191, 
 48.12  plus 
 48.13     (ii) the ratio of the taxpayer's biotechnology and health 
 48.14  sciences industry zone payroll factor under subdivision 8 over 
 48.15  the payroll factor numerator determined under section 290.191; 
 48.16  and 
 48.17     (2) the denominator of the fraction is two. 
 48.18     When calculating the zone percentage for a business that is 
 48.19  part of a unitary business as defined under section 290.17, 
 48.20  subdivision 4, the denominator of the payroll and property 
 48.21  factors is the Minnesota payroll and property of the unitary 
 48.22  business as reported on the combined report under section 
 48.23  290.17, subdivision 4, paragraph (j). 
 48.24     Subd. 8.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
 48.25  PAYROLL FACTOR.] "Biotechnology and health sciences industry 
 48.26  zone payroll factor" or "biotechnology and health sciences 
 48.27  industry zone payroll" is that portion of the payroll factor 
 48.28  under section 290.191 that represents: 
 48.29     (1) wages or salaries paid to an individual for services 
 48.30  performed for a qualified business in a biotechnology and health 
 48.31  sciences industry zone; or 
 48.32     (2) wages or salaries paid to individuals working from 
 48.33  offices of a qualified business within a biotechnology and 
 48.34  health sciences industry zone if their employment requires them 
 48.35  to work outside the zone and the work is incidental to the work 
 48.36  performed by the individual within the zone. 
 49.1      Subd. 9.  [LOCAL GOVERNMENT UNIT.] "Local government unit" 
 49.2   means a statutory or home rule charter city, county, town, or 
 49.3   school district. 
 49.4      Subd. 10.  [PERSON.] "Person" includes an individual, 
 49.5   corporation, partnership, limited liability company, 
 49.6   association, or any other entity. 
 49.7      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
 49.8   means a person carrying on a trade or business at a 
 49.9   biotechnology and health sciences industry facility located 
 49.10  within a biotechnology and health sciences industry zone. 
 49.11     (b) A person that relocates a biotechnology and health 
 49.12  sciences industry facility from outside a biotechnology and 
 49.13  health sciences industry zone into a zone is not a qualified 
 49.14  business, unless the business: 
 49.15     (1)(i) increases full-time employment in the first full 
 49.16  year of operation within the biotechnology and health sciences 
 49.17  industry zone by at least 20 percent measured relative to the 
 49.18  operations that were relocated and maintains the required level 
 49.19  of employment for each year the zone designation applies; or 
 49.20     (ii) makes a capital investment in the property located 
 49.21  within a zone equivalent to ten percent of the gross revenues of 
 49.22  operation that were relocated in the immediately preceding 
 49.23  taxable year; and 
 49.24     (2) enters a binding written agreement with the 
 49.25  commissioner that: 
 49.26     (i) pledges the business will meet the requirements of 
 49.27  clause (1); 
 49.28     (ii) provides for repayment of all tax benefits enumerated 
 49.29  under section 469.336 to the business under the procedures in 
 49.30  section 469.340, if the requirements of clause (1) are not met; 
 49.31  and 
 49.32     (iii) contains any other terms the commissioner determines 
 49.33  appropriate. 
 49.34     Subd. 12.  [RELOCATES.] (a) "Relocates" means that the 
 49.35  trade or business: 
 49.36     (1) ceases one or more operations or functions at another 
 50.1   location in Minnesota and begins performing substantially the 
 50.2   same operations or functions at a location in a biotechnology 
 50.3   and health sciences industry zone; or 
 50.4      (2) reduces employment at another location in Minnesota 
 50.5   during a period starting one year before and ending one year 
 50.6   after it begins operations in a biotechnology and health 
 50.7   sciences industry zone and its employees in the biotechnology 
 50.8   and health sciences industry zone are engaged in the same line 
 50.9   of business as the employees at the location where it reduced 
 50.10  employment. 
 50.11     (b) "Relocate" does not include an expansion by a business 
 50.12  that establishes a new facility that does not replace or 
 50.13  supplant an existing operation or employment, in whole or in 
 50.14  part. 
 50.15     [EFFECTIVE DATE.] This section is effective the day 
 50.16  following final enactment. 
 50.17     Sec. 10.  [469.331] [DEVELOPMENT PLAN.] 
 50.18     (a) An applicant for designation of a biotechnology and 
 50.19  health sciences industry zone must adopt a written development 
 50.20  plan for the zone before submitting the application to the 
 50.21  commissioner. 
 50.22     (b) The development plan must contain, at least, the 
 50.23  following: 
 50.24     (1) a map of the proposed zone that indicates the 
 50.25  geographic boundaries of the zone, the total area, and present 
 50.26  use and conditions generally of the land and structures within 
 50.27  those boundaries; 
 50.28     (2) evidence of community support and commitment from local 
 50.29  government, local workforce investment boards, school districts, 
 50.30  and other education institutions, business groups, and the 
 50.31  public; 
 50.32     (3) a description of the methods proposed to increase 
 50.33  economic opportunity and expansion, facilitate infrastructure 
 50.34  improvement, reduce the local regulatory burden, and identify 
 50.35  job-training opportunities; 
 50.36     (4) current social, economic, and demographic 
 51.1   characteristics of the proposed zone and anticipated 
 51.2   improvements in education, health, human services, and 
 51.3   employment if the zone is created; 
 51.4      (5) a description of anticipated activity in the zone and 
 51.5   each subzone, including, but not limited to, industrial use and 
 51.6   industrial site reuse; 
 51.7      (6) a description of the tax exemptions under section 
 51.8   469.336 to be provided to each qualifying business based on a 
 51.9   development agreement between the applicant and each qualified 
 51.10  business.  The development agreement must also state any 
 51.11  obligations the qualified business must fulfill in order to be 
 51.12  eligible for tax benefits; and 
 51.13     (7) any other information required by the commissioner. 
 51.14     [EFFECTIVE DATE.] This section is effective the day 
 51.15  following final enactment. 
 51.16     Sec. 11.  [469.332] [BIOTECHNOLOGY AND HEALTH SCIENCES 
 51.17  INDUSTRY ZONE; LIMITATIONS.] 
 51.18     Subdivision 1.  [MAXIMUM SIZE.] A biotechnology and health 
 51.19  sciences industry zone may not exceed 5,000 acres.  
 51.20     Subd. 2.  [SUBZONES.] The area of a biotechnology and 
 51.21  health sciences industry zone may consist of one or more 
 51.22  noncontiguous areas or subzones. 
 51.23     Subd. 3.  [DURATION LIMIT.] The maximum duration of a zone 
 51.24  is 12 years.  The applicant may request a shorter duration.  The 
 51.25  commissioner may specify a shorter duration, regardless of the 
 51.26  requested duration. 
 51.27     [EFFECTIVE DATE.] This section is effective the day 
 51.28  following final enactment. 
 51.29     Sec. 12.  [469.333] [APPLICATION FOR DESIGNATION.] 
 51.30     Subdivision 1.  [WHO MAY APPLY.] One or more local 
 51.31  government units, or a joint powers board under section 471.59, 
 51.32  acting on behalf of two or more units, may apply for designation 
 51.33  of an area as a biotechnology and health sciences industry 
 51.34  zone.  All or part of the area proposed for designation as a 
 51.35  zone must be located within the boundaries of each of the 
 51.36  governmental units.  A local government unit may not submit or 
 52.1   have submitted on its behalf more than one application for 
 52.2   designation of a biotechnology and health sciences industry zone.
 52.3      Subd. 2.  [APPLICATION CONTENT.] The application must 
 52.4   include: 
 52.5      (1) a development plan meeting the requirements of section 
 52.6   469.331; 
 52.7      (2) the proposed duration of the zone, not to exceed 12 
 52.8   years; 
 52.9      (3)(i) a resolution or ordinance adopted by each of the 
 52.10  cities or towns and the counties in which the zone is located, 
 52.11  agreeing to provide all of the local sales and use tax 
 52.12  exemptions provided under section 469.336; or (ii) a resolution 
 52.13  or ordinance adopted by each of the cities or towns and the 
 52.14  counties in which the zone is located that declares whether it 
 52.15  will provide property tax exemptions under section 469.336; 
 52.16     (4) an agreement by the applicant to treat incentives 
 52.17  provided under the zone designation as business subsidies under 
 52.18  sections 116J.993 to 116J.995 and to comply with the 
 52.19  requirements of that law; and 
 52.20     (5) supporting evidence to allow the commissioner to 
 52.21  evaluate the application under the criteria in section 469.334. 
 52.22     [EFFECTIVE DATE.] This section is effective the day 
 52.23  following final enactment. 
 52.24     Sec. 13.  [469.334] [DESIGNATION OF BIOTECHNOLOGY AND 
 52.25  HEALTH SCIENCES INDUSTRY ZONE.] 
 52.26     Subdivision 1.  [COMMISSIONER TO DESIGNATE.] (a) The 
 52.27  commissioner, in consultation with the commissioner of revenue 
 52.28  and the director of the office of strategic and long-range 
 52.29  planning, shall designate not more than one biotechnology and 
 52.30  health sciences industry zone.  Priority must be given to 
 52.31  applicants with a development plan that links a higher 
 52.32  education/research institution with a biotechnology and health 
 52.33  sciences industry facility. 
 52.34     (b) The commissioner may consult with the applicant prior 
 52.35  to the designation of the zone.  The commissioner may modify the 
 52.36  development plan, including the boundaries of the zone or 
 53.1   subzones, if in the commissioner's opinion a modified plan would 
 53.2   better meet the objectives of the biotechnology and health 
 53.3   sciences industry zone program.  The commissioner shall notify 
 53.4   the applicant of the modifications and provide a statement of 
 53.5   the reasons for the modifications. 
 53.6      Subd. 2.  [NEED INDICATORS.] (a) In evaluating applications 
 53.7   to determine the need for designation of a biotechnology and 
 53.8   health sciences industry zone, the commissioner shall consider 
 53.9   the following factors as indicators of need: 
 53.10     (1) the extent to which land in proximity to a significant 
 53.11  scientific research institution could be developed as a higher 
 53.12  and better use for biotechnology and health sciences industry 
 53.13  facilities; 
 53.14     (2) the amount of property in or near the zone that is 
 53.15  deteriorated or underutilized; and 
 53.16     (3) the extent to which property in the area would remain 
 53.17  underdeveloped or nonperforming due to physical characteristics. 
 53.18     (b) The commissioner may require applicants to provide data 
 53.19  to demonstrate how the area meets one or more of the indicators 
 53.20  of need. 
 53.21     Subd. 3.  [SUCCESS INDICATORS.] In determining the 
 53.22  likelihood of success of a proposed zone, the commissioner shall 
 53.23  consider: 
 53.24     (1) applicants that show a viable link between a higher 
 53.25  education/research institution, the biotechnology and/or medical 
 53.26  devices business sectors, and one or more units of local 
 53.27  government with a development plan; 
 53.28     (2) the extent to which the area has substantial real 
 53.29  property with adequate infrastructure and energy to support new 
 53.30  or expanded development; 
 53.31     (3) the strength and viability of the proposed development 
 53.32  goals, objectives, and strategies in the development plan; 
 53.33     (4) whether the development plan is creative and innovative 
 53.34  in comparison to other applications; 
 53.35     (5) local public and private commitment to development of a 
 53.36  biotechnology and health sciences industry facility or 
 54.1   facilities in the proposed zone and the potential cooperation of 
 54.2   surrounding communities; 
 54.3      (6) existing resources available to the proposed zone; 
 54.4      (7) how the designation of the zone would relate to other 
 54.5   economic and community development projects and to regional 
 54.6   initiatives or programs; 
 54.7      (8) how the regulatory burden will be eased for 
 54.8   biotechnology and health sciences industry facilities located in 
 54.9   the proposed zone; 
 54.10     (9) proposals to establish and link job creation and job 
 54.11  training in the biotechnology and health sciences industry with 
 54.12  research/educational institutions; and 
 54.13     (10) the extent to which the development is directed at 
 54.14  encouraging, and that designation of the zone is likely to 
 54.15  result in, the creation of high-paying jobs. 
 54.16     Subd. 4.  [DESIGNATION SCHEDULE.] (a) The schedule in 
 54.17  paragraphs (b) to (e) applies to the designation of the 
 54.18  biotechnology and health sciences industry zone. 
 54.19     (b) The commissioner shall publish the form for 
 54.20  applications and any procedural, form, or content requirements 
 54.21  for applications by no later than August 1, 2003.  The 
 54.22  commissioner may publish these requirements on the Internet, in 
 54.23  the State Register, or by any other means the commissioner 
 54.24  determines appropriate to disseminate the information to 
 54.25  potential applicants for designation. 
 54.26     (c) Applications must be submitted by October 15, 2003. 
 54.27     (d) The commissioner shall designate the zones by no later 
 54.28  than December 31, 2003. 
 54.29     (e) The designation of the zones takes effect January 1, 
 54.30  2004. 
 54.31     [EFFECTIVE DATE.] This section is effective the day 
 54.32  following final enactment. 
 54.33     Sec. 14.  [469.335] [APPLICATION FOR TAX BENEFITS.] 
 54.34     (a) To claim a tax credit or exemption against a state tax 
 54.35  under section 469.336, clauses (2) through (5), a business must 
 54.36  apply to the commissioner for a tax credit certificate.  As a 
 55.1   condition of its application, the business must agree to furnish 
 55.2   information to the commissioner that is sufficient to verify the 
 55.3   eligibility for any credits or exemptions claimed.  The total 
 55.4   amount of the state tax credits and exemptions allowed for the 
 55.5   specified period may not exceed the amount of the tax credit 
 55.6   certificates provided by the commissioner to the business.  The 
 55.7   commissioner must verify to the commissioner of revenue the 
 55.8   amount of tax exemptions or credits for which each business is 
 55.9   eligible. 
 55.10     (b) A tax credit certificate issued under this section may 
 55.11  specify the particular tax exemptions or credits against a state 
 55.12  tax that the qualified business is eligible to claim under 
 55.13  section 469.336, clauses (2) through (5), and the amount of each 
 55.14  exemption or credit allowed. 
 55.15     (c) The commissioner may issue $1,000,000 of tax credits or 
 55.16  exemptions in fiscal year 2004.  Any tax credits or exemptions 
 55.17  not awarded in fiscal year 2004 may be awarded in fiscal year 
 55.18  2005. 
 55.19     (d) A qualified business must use the tax credits or tax 
 55.20  exemptions granted under this section by the later of the end of 
 55.21  the state fiscal year or the taxpayer's tax year in which the 
 55.22  credits or exemptions are granted. 
 55.23     [EFFECTIVE DATE.] This section is effective the day 
 55.24  following final enactment. 
 55.25     Sec. 15.  [469.336] [TAX INCENTIVES AVAILABLE IN ZONES.] 
 55.26     Qualified businesses that operate in a biotechnology and 
 55.27  health sciences industry zone, individuals who invest in a 
 55.28  qualified business that operates in a biotechnology and health 
 55.29  sciences industry zone, and property of a qualified business 
 55.30  located in a biotechnology and health sciences industry zone 
 55.31  qualify for: 
 55.32     (1) exemption from the property tax as provided in section 
 55.33  272.02, subdivision 56; 
 55.34     (2) exemption from corporate franchise taxes as provided 
 55.35  under section 469.337; 
 55.36     (3) exemption from the state sales and use tax and any 
 56.1   local sales and use taxes on qualifying purchases as provided in 
 56.2   section 297A.68, subdivision 37; 
 56.3      (4) research and development credits as provided under 
 56.4   section 469.339; 
 56.5      (5) jobs credits as provided under section 469.338. 
 56.6      [EFFECTIVE DATE.] This section is effective the day 
 56.7   following final enactment. 
 56.8      Sec. 16.  [469.337] [CORPORATE FRANCHISE TAX EXEMPTION.] 
 56.9      (a) A qualified business is exempt from taxation under 
 56.10  section 290.02, the alternative minimum tax under section 
 56.11  290.0921, and the minimum fee under section 290.0922, on the 
 56.12  portion of its income attributable to operations of a qualified 
 56.13  business within the biotechnology and health sciences industry 
 56.14  zone.  This exemption is determined as follows: 
 56.15     (1) for purposes of the tax imposed under section 290.02, 
 56.16  by multiplying its taxable net income by its zone percentage and 
 56.17  subtracting the result in determining taxable income; 
 56.18     (2) for purposes of the alternative minimum tax under 
 56.19  section 290.0921, by multiplying its alternative minimum taxable 
 56.20  income by its zone percentage and reducing alternative minimum 
 56.21  taxable income by this amount; and 
 56.22     (3) for purposes of the minimum fee under section 290.0922, 
 56.23  by excluding property and payroll in the zone from the 
 56.24  computations of the fee. 
 56.25     (b) No subtraction is allowed under this section in excess 
 56.26  of 20 percent of the sum of the corporation's biotechnology and 
 56.27  health sciences industry zone payroll and the adjusted basis of 
 56.28  the property at the time that the property is first used in the 
 56.29  biotechnology and health sciences industry zone by the 
 56.30  corporation. 
 56.31     (c) No reduction in tax is allowed in excess of the amount 
 56.32  allocated under section 469.335. 
 56.33     [EFFECTIVE DATE.] This section is effective for taxable 
 56.34  years beginning after December 31, 2003. 
 56.35     Sec. 17.  [469.338] [JOBS CREDIT.] 
 56.36     Subdivision 1.  [CREDIT ALLOWED.] A qualified business is 
 57.1   allowed a credit against the taxes imposed under chapter 290. 
 57.2      The credit equals seven percent of the: 
 57.3      (1) lesser of: 
 57.4      (i) zone payroll for the taxable year, less the zone 
 57.5   payroll for the base year; or 
 57.6      (ii) total Minnesota payroll for the taxable year, less 
 57.7   total Minnesota payroll for the base year; minus 
 57.8      (2) $30,000 multiplied by the number of full-time 
 57.9   equivalent employee positions that the qualified business 
 57.10  employs in the biotechnology and health sciences industry zone 
 57.11  for the taxable year, minus the number of full-time equivalent 
 57.12  employees the business employed in the zone in the base year, 
 57.13  but not less than zero. 
 57.14     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 57.15  the following terms have the meaning given. 
 57.16     (b) "Base year" means the taxable year beginning during the 
 57.17  calendar year in which the commissioner designated the zone. 
 57.18     (c) "Full-time equivalent employee position" means the 
 57.19  equivalent of annualized expected hours of work equal to 2,080 
 57.20  hours. 
 57.21     (d) "Minnesota payroll" means the wages or salaries 
 57.22  attributed to Minnesota under section 290.191, subdivision 12, 
 57.23  for the qualified business or the unitary business of which the 
 57.24  qualified business is a part, whichever is greater. 
 57.25     (e) "Zone payroll" means wages or salaries used to 
 57.26  determine the zone payroll factor for the qualified business. 
 57.27     Subd. 3.  [INFLATION ADJUSTMENT.] For taxable years 
 57.28  beginning after December 31, 2004, the dollar amount in 
 57.29  subdivision 1, clause (2), is annually adjusted for inflation.  
 57.30  The commissioner of revenue shall adjust the amount by the 
 57.31  percentage determined under section 290.06, subdivision 2d, for 
 57.32  the taxable year. 
 57.33     Subd. 4.  [REFUNDABLE.] If the amount of the credit 
 57.34  calculated under this section and allocated to the qualified 
 57.35  business under section 14 exceeds the liability for tax under 
 57.36  chapter 290, the commissioner of revenue shall refund the excess 
 58.1   to the qualified business. 
 58.2      [EFFECTIVE DATE.] This section is effective the day 
 58.3   following final enactment. 
 58.4      Sec. 18.  [469.339] [CREDIT FOR INCREASING RESEARCH 
 58.5   ACTIVITIES IN A BIOTECHNOLOGY AND HEALTH SCIENCES ZONE.] 
 58.6      Subdivision 1.  [CREDIT ALLOWED.] A corporation, other than 
 58.7   a corporation treated as an "S" corporation under section 
 58.8   290.9725, is allowed a credit against the portion of the 
 58.9   franchise tax computed under section 290.06, subdivision 1, for 
 58.10  the taxable year equal to: 
 58.11     (1) five percent of the first $2,000,000 of the excess (if 
 58.12  any) of (i) the qualified research expenses for the taxable 
 58.13  year, over (ii) the base amount; and 
 58.14     (2) 2.5 percent of all such excess expenses over $2,000,000.
 58.15     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 58.16  the following terms have the meanings given. 
 58.17     (b) "Qualified research expenses" means qualified research 
 58.18  expenses and basic research payments as defined in section 41(b) 
 58.19  and (e) of the Internal Revenue Code. 
 58.20     (c) "Qualified research" means activities in the fields of 
 58.21  biotechnology or health sciences that are "qualified research" 
 58.22  as defined in section 41(d) of the Internal Revenue Code, except 
 58.23  that the term does not include qualified research conducted 
 58.24  outside the biotechnology and health sciences industry zone. 
 58.25     (d) "Base amount" means base amount as defined in section 
 58.26  4(c) of the Internal Revenue Code, except that the average 
 58.27  annual gross receipts must be calculated using Minnesota sales 
 58.28  or receipts under section 290.191 and the definitions contained 
 58.29  in paragraphs (b) and (c) apply. 
 58.30     (e) "Liability for tax" for purposes of this section means 
 58.31  the tax imposed under this chapter for the taxable year reduced 
 58.32  by the sum of the nonrefundable credits allowed under this 
 58.33  chapter. 
 58.34     Subd. 3.  [REFUNDABLE CREDIT.] If the credit determined 
 58.35  under this section and allocated to the taxpayer under section 
 58.36  469.335 for the taxable year exceeds the taxpayer's liability 
 59.1   for tax for the year, the commissioner shall refund the 
 59.2   difference to the taxpayer. 
 59.3      Subd. 4.  [PARTNERSHIPS.] For partnerships, the credit is 
 59.4   allocated in the same manner provided by section 41(f)(2) of the 
 59.5   Internal Revenue Code. 
 59.6      Subd. 5.  [ADJUSTMENTS; ACQUISITIONS AND DISPOSITIONS.] If 
 59.7   a taxpayer acquires or disposes of the major portion of a trade 
 59.8   or business or the major portion of a separate unit of a trade 
 59.9   or business in a transaction with another taxpayer, the 
 59.10  taxpayer's qualified research expenses and base amount are 
 59.11  adjusted in the same manner provided by section 41(f)(3) of the 
 59.12  Internal Revenue Code. 
 59.13     Subd. 6.  [INTERACTION; REGULAR RESEARCH CREDIT.] Any 
 59.14  amount used to calculate a credit under this section may not be 
 59.15  used to generate a credit under section 290.068. 
 59.16     [EFFECTIVE DATE.] This section is effective the day 
 59.17  following final enactment.  
 59.18     Sec. 19.  [469.340] [REPAYMENT OF TAX BENEFITS.] 
 59.19     Subdivision 1.  [REPAYMENT OBLIGATION.] A business must 
 59.20  repay the amount of the tax reduction listed in section 469.336 
 59.21  and any refunds under sections 469.338 and 469.339 in excess of 
 59.22  tax liability, received during the two years immediately before 
 59.23  it ceased to operate in the zone, if the business: 
 59.24     (1) received tax reductions authorized by section 469.336; 
 59.25  and 
 59.26     (2)(i) did not meet the goals specified in an agreement 
 59.27  entered into with the applicant that states any obligation the 
 59.28  qualified business must fulfill in order to be eligible for tax 
 59.29  benefits.  The commissioner may extend for up to one year the 
 59.30  period for meeting any goals provided in an agreement.  The 
 59.31  applicant may extend the period for meeting other goals by 
 59.32  documenting in writing the reason for the extension and 
 59.33  attaching a copy of the document to its next annual report to 
 59.34  the commissioner; or 
 59.35     (ii) ceased to operate its facility located within the 
 59.36  biotechnology and health sciences industry zone or otherwise 
 60.1   ceases to be or is not a qualified business. 
 60.2      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 60.3   the following terms have the meanings given. 
 60.4      (b) "Business" means any person who received tax benefits 
 60.5   enumerated in section 469.336. 
 60.6      (c) "Commissioner" means the commissioner of revenue. 
 60.7      Subd. 3.  [DISPOSITION OR REPAYMENT.] The repayment must be 
 60.8   paid to the state to the extent it represents a state tax 
 60.9   reduction and to the county to the extent it represents a 
 60.10  property tax reduction.  Any amount repaid to the state must be 
 60.11  deposited in the general fund.  Any amount repaid to the county 
 60.12  for the property tax exemption must be distributed to the local 
 60.13  governments with authority to levy taxes in the zone in the same 
 60.14  manner provided for distribution of payment of delinquent 
 60.15  property taxes.  Any repayment of local sales taxes must be 
 60.16  repaid to the city or county imposing the local sales tax. 
 60.17     Subd. 4.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
 60.18  taxes imposed under chapter 290 or 297A or local taxes collected 
 60.19  pursuant to section 297A.99, a business must file an amended 
 60.20  return with the commissioner of revenue and pay any taxes 
 60.21  required to be repaid within 30 days after ceasing to do 
 60.22  business in the zone.  The amount required to be repaid is 
 60.23  determined by calculating the tax for the period or periods for 
 60.24  which repayment is required without regard to the exemptions and 
 60.25  credits allowed under section 469.336. 
 60.26     (b) For the repayment of property taxes, the county auditor 
 60.27  shall prepare a tax statement for the business, applying the 
 60.28  applicable tax extension rates for each payable year and provide 
 60.29  a copy to the business.  The business must pay the taxes to the 
 60.30  county treasurer within 30 days after receipt of the tax 
 60.31  statement.  The taxpayer may appeal the valuation and 
 60.32  determination of the property tax to the tax court within 30 
 60.33  days after receipt of the tax statement. 
 60.34     (c) The provisions of chapters 270 and 289A relating to the 
 60.35  commissioner's authority to audit, assess, and collect the tax 
 60.36  and to hear appeals are applicable to the repayment required 
 61.1   under paragraph (a).  The commissioner may impose civil 
 61.2   penalties as provided in chapter 289A, and the additional tax 
 61.3   and penalties are subject to interest at the rate provided in 
 61.4   section 270.75, from 30 days after ceasing to do business in the 
 61.5   biotechnology and health sciences industry zone until the date 
 61.6   the tax is paid. 
 61.7      (d) If a property tax is not repaid under paragraph (b), 
 61.8   the county treasurer shall add the amount required to be repaid 
 61.9   to the property taxes assessed against the property for payment 
 61.10  in the year following the year in which the treasurer discovers 
 61.11  that the business ceased to operate in the biotechnology and 
 61.12  health sciences industry zone. 
 61.13     (e) For determining the tax required to be repaid, a tax 
 61.14  reduction is deemed to have been received on the date that the 
 61.15  tax would have been due if the taxpayer had not been entitled to 
 61.16  the exemption, or on the date a refund was issued for a 
 61.17  refundable credit. 
 61.18     (f) The commissioner may assess the repayment of taxes 
 61.19  under paragraph (c) any time within two years after the business 
 61.20  ceases to operate in the biotechnology and health sciences 
 61.21  industry zone, or within any period of limitations for the 
 61.22  assessment of tax under section 289A.38, whichever period is 
 61.23  later. 
 61.24     Subd. 5.  [WAIVER AUTHORITY.] The commissioner may waive 
 61.25  all or part of a repayment, if the commissioner, in consultation 
 61.26  with the commissioner of trade and economic development and 
 61.27  appropriate officials from the local government units in which 
 61.28  the business is located, determines that requiring repayment of 
 61.29  the tax is not in the best interest of the state or the local 
 61.30  government units and the business ceased operating as a result 
 61.31  of circumstances beyond its control including, but not limited 
 61.32  to: 
 61.33     (1) a natural disaster; 
 61.34     (2) unforeseen industry trends; or 
 61.35     (3) loss of a major supplier or customer. 
 61.36     [EFFECTIVE DATE.] This section is effective the day 
 62.1   following final enactment. 
 62.2      Sec. 20.  [469.341] [ZONE PERFORMANCE; REMEDIES.] 
 62.3      Subdivision 1.  [REPORTING REQUIREMENT.] An applicant 
 62.4   receiving designation of a biotechnology and health sciences 
 62.5   industry zone under section 469.334 must annually report to the 
 62.6   commissioner on its progress in meeting the zone performance 
 62.7   goals under the development plan for the zone and the 
 62.8   applicant's compliance with the business subsidy law under 
 62.9   sections 116J.993 to 116J.995. 
 62.10     Subd. 2.  [PROCEDURES.] For reports required by subdivision 
 62.11  1, the commissioner may prescribe: 
 62.12     (1) the required time or times by which the reports must be 
 62.13  filed; 
 62.14     (2) the form of the report; and 
 62.15     (3) the information required to be included in the report. 
 62.16     Subd. 3.  [REMEDIES.] If the commissioner determines, based 
 62.17  on a report filed under subdivision 1 or other available 
 62.18  information, that a zone or subzone is failing to meet its 
 62.19  performance goals, the commissioner may take any actions the 
 62.20  commissioner determines appropriate, including modification of 
 62.21  the boundaries of the zone or a subzone or termination of the 
 62.22  zone or a subzone.  Before taking any action, the commissioner 
 62.23  shall consult with the applicant and the affected local 
 62.24  government units, including notifying them of the proposed 
 62.25  actions to be taken.  The commissioner shall publish any order 
 62.26  modifying a zone in the State Register and on the Internet.  The 
 62.27  applicant may appeal the commissioner's order under the 
 62.28  contested case procedures of chapter 14. 
 62.29     Subd. 4.  [EXISTING BUSINESSES.] (a) An action to remove 
 62.30  area from a zone or to terminate a zone under this section does 
 62.31  not apply to: 
 62.32     (1) the property tax on improvements constructed before the 
 62.33  first January 2 following publication of the commissioner's 
 62.34  order; 
 62.35     (2) sales tax on purchases made before the first day of the 
 62.36  next calendar month beginning at least 30 days after publication 
 63.1   of the commissioner's order; and 
 63.2      (3) individual income tax or corporate franchise tax 
 63.3   attributable to a facility that was in operation before the 
 63.4   publication of the commissioner's order. 
 63.5      (b) The tax exemptions specified in paragraph (a) terminate 
 63.6   on the date on which the zone expires under the original 
 63.7   designation. 
 63.8      [EFFECTIVE DATE.] This section is effective the day 
 63.9   following final enactment. 
 63.10                             ARTICLE 3
 63.11                           FEDERAL UPDATE 
 63.12     Section 1.  Minnesota Statutes 2002, section 289A.02, 
 63.13  subdivision 7, as amended by Laws 2003, chapter 127, article 4, 
 63.14  section 1, is amended to read: 
 63.15     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
 63.16  defined otherwise, "Internal Revenue Code" means the Internal 
 63.17  Revenue Code of 1986, as amended through December 31, 2002 June 
 63.18  15, 2003. 
 63.19     [EFFECTIVE DATE.] This section is effective the day 
 63.20  following final enactment and is intended to adopt the 
 63.21  provisions of H.R. 2, the Jobs and Growth Tax Relief 
 63.22  Reconciliation Act of 2003, if it is enacted into law. 
 63.23     Sec. 2.  Minnesota Statutes 2002, section 290.01, 
 63.24  subdivision 19, as amended by Laws 2003, chapter 127, article 4, 
 63.25  section 2, is amended to read: 
 63.26     Subd. 19.  [NET INCOME.] The term "net income" means the 
 63.27  federal taxable income, as defined in section 63 of the Internal 
 63.28  Revenue Code of 1986, as amended through the date named in this 
 63.29  subdivision, incorporating any elections made by the taxpayer in 
 63.30  accordance with the Internal Revenue Code in determining federal 
 63.31  taxable income for federal income tax purposes, and with the 
 63.32  modifications provided in subdivisions 19a to 19f. 
 63.33     In the case of a regulated investment company or a fund 
 63.34  thereof, as defined in section 851(a) or 851(g) of the Internal 
 63.35  Revenue Code, federal taxable income means investment company 
 63.36  taxable income as defined in section 852(b)(2) of the Internal 
 64.1   Revenue Code, except that:  
 64.2      (1) the exclusion of net capital gain provided in section 
 64.3   852(b)(2)(A) of the Internal Revenue Code does not apply; 
 64.4      (2) the deduction for dividends paid under section 
 64.5   852(b)(2)(D) of the Internal Revenue Code must be applied by 
 64.6   allowing a deduction for capital gain dividends and 
 64.7   exempt-interest dividends as defined in sections 852(b)(3)(C) 
 64.8   and 852(b)(5) of the Internal Revenue Code; and 
 64.9      (3) the deduction for dividends paid must also be applied 
 64.10  in the amount of any undistributed capital gains which the 
 64.11  regulated investment company elects to have treated as provided 
 64.12  in section 852(b)(3)(D) of the Internal Revenue Code.  
 64.13     The net income of a real estate investment trust as defined 
 64.14  and limited by section 856(a), (b), and (c) of the Internal 
 64.15  Revenue Code means the real estate investment trust taxable 
 64.16  income as defined in section 857(b)(2) of the Internal Revenue 
 64.17  Code.  
 64.18     The net income of a designated settlement fund as defined 
 64.19  in section 468B(d) of the Internal Revenue Code means the gross 
 64.20  income as defined in section 468B(b) of the Internal Revenue 
 64.21  Code. 
 64.22     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
 64.23  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
 64.24  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
 64.25  Protection Act, Public Law Number 104-188, the provisions of 
 64.26  Public Law Number 104-117, the provisions of sections 313(a) and 
 64.27  (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
 64.28  1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
 64.29  1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
 64.30  and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
 64.31  Public Law Number 105-34, the provisions of section 6010 of the 
 64.32  Internal Revenue Service Restructuring and Reform Act of 1998, 
 64.33  Public Law Number 105-206, the provisions of section 4003 of the 
 64.34  Omnibus Consolidated and Emergency Supplemental Appropriations 
 64.35  Act, 1999, Public Law Number 105-277, and the provisions of 
 64.36  section 318 of the Consolidated Appropriation Act of 2001, 
 65.1   Public Law Number 106-554, shall become effective at the time 
 65.2   they become effective for federal purposes. 
 65.3      The Internal Revenue Code of 1986, as amended through 
 65.4   December 31, 1996, shall be in effect for taxable years 
 65.5   beginning after December 31, 1996. 
 65.6      The provisions of sections 202(a) and (b), 221(a), 225, 
 65.7   312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
 65.8   (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
 65.9   1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
 65.10  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
 65.11  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
 65.12  the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
 65.13  7002, and 7003 of the Internal Revenue Service Restructuring and 
 65.14  Reform Act of 1998, Public Law Number 105-206, the provisions of 
 65.15  section 3001 of the Omnibus Consolidated and Emergency 
 65.16  Supplemental Appropriations Act, 1999, Public Law Number 
 65.17  105-277, the provisions of section 3001 of the Miscellaneous 
 65.18  Trade and Technical Corrections Act of 1999, Public Law Number 
 65.19  106-36, and the provisions of section 316 of the Consolidated 
 65.20  Appropriation Act of 2001, Public Law Number 106-554, shall 
 65.21  become effective at the time they become effective for federal 
 65.22  purposes. 
 65.23     The Internal Revenue Code of 1986, as amended through 
 65.24  December 31, 1997, shall be in effect for taxable years 
 65.25  beginning after December 31, 1997. 
 65.26     The provisions of sections 5002, 6009, 6011, and 7001 of 
 65.27  the Internal Revenue Service Restructuring and Reform Act of 
 65.28  1998, Public Law Number 105-206, the provisions of section 9010 
 65.29  of the Transportation Equity Act for the 21st Century, Public 
 65.30  Law Number 105-178, the provisions of sections 1004, 4002, and 
 65.31  5301 of the Omnibus Consolidation and Emergency Supplemental 
 65.32  Appropriations Act, 1999, Public Law Number 105-277, the 
 65.33  provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
 65.34  Act of 1998, Public Law Number 105-369, the provisions of 
 65.35  sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
 65.36  Work Incentives Improvement Act of 1999, Public Law Number 
 66.1   106-170, the provisions of the Installment Tax Correction Act of 
 66.2   2000, Public Law Number 106-573, and the provisions of section 
 66.3   309 of the Consolidated Appropriation Act of 2001, Public Law 
 66.4   Number 106-554, shall become effective at the time they become 
 66.5   effective for federal purposes. 
 66.6      The Internal Revenue Code of 1986, as amended through 
 66.7   December 31, 1998, shall be in effect for taxable years 
 66.8   beginning after December 31, 1998.  
 66.9      The provisions of the FSC Repeal and Extraterritorial 
 66.10  Income Exclusion Act of 2000, Public Law Number 106-519, and the 
 66.11  provision of section 412 of the Job Creation and Worker 
 66.12  Assistance Act of 2002, Public Law Number 107-147, shall become 
 66.13  effective at the time it became effective for federal purposes. 
 66.14     The Internal Revenue Code of 1986, as amended through 
 66.15  December 31, 1999, shall be in effect for taxable years 
 66.16  beginning after December 31, 1999.  The provisions of sections 
 66.17  306 and 401 of the Consolidated Appropriation Act of 2001, 
 66.18  Public Law Number 106-554, and the provision of section 
 66.19  632(b)(2)(A) of the Economic Growth and Tax Relief 
 66.20  Reconciliation Act of 2001, Public Law Number 107-16, and 
 66.21  provisions of sections 101 and 402 of the Job Creation and 
 66.22  Worker Assistance Act of 2002, Public Law Number 107-147, shall 
 66.23  become effective at the same time it became effective for 
 66.24  federal purposes. 
 66.25     The Internal Revenue Code of 1986, as amended through 
 66.26  December 31, 2000, shall be in effect for taxable years 
 66.27  beginning after December 31, 2000.  The provisions of sections 
 66.28  659a and 671 of the Economic Growth and Tax Relief 
 66.29  Reconciliation Act of 2001, Public Law Number 107-16, the 
 66.30  provisions of sections 104, 105, and 111 of the Victims of 
 66.31  Terrorism Tax Relief Act of 2001, Public Law Number 107-134, and 
 66.32  the provisions of sections 201, 403, 413, and 606 of the Job 
 66.33  Creation and Worker Assistance Act of 2002, Public Law Number 
 66.34  107-147, shall become effective at the same time it became 
 66.35  effective for federal purposes. 
 66.36     The Internal Revenue Code of 1986, as amended through March 
 67.1   15, 2002, shall be in effect for taxable years beginning after 
 67.2   December 31, 2001. 
 67.3      The provisions of sections 101 and 102 of the Victims of 
 67.4   Terrorism Tax Relief Act of 2001, Public Law Number 107-134, 
 67.5   shall become effective at the same time it becomes effective for 
 67.6   federal purposes. 
 67.7      The Internal Revenue Code of 1986, as amended through 
 67.8   December 31, 2002 June 15, 2003, shall be in effect for taxable 
 67.9   years beginning after December 31, 2002.  The provisions of 
 67.10  section 201 of the Jobs and Growth Tax Relief and Reconciliation 
 67.11  Act of 2003, H.R. 2, if it is enacted into law, are effective at 
 67.12  the same time it became effective for federal purposes. 
 67.13     Except as otherwise provided, references to the Internal 
 67.14  Revenue Code in subdivisions 19a to 19g mean the code in effect 
 67.15  for purposes of determining net income for the applicable year. 
 67.16     [EFFECTIVE DATE.] This section is effective the day 
 67.17  following final enactment and is intended to adopt the 
 67.18  provisions of H.R. 2, the Jobs and Growth Tax Relief 
 67.19  Reconciliation Act of 2003, if it is enacted into law. 
 67.20     Sec. 3.  Minnesota Statutes 2002, section 290.01, 
 67.21  subdivision 31, as amended by Laws 2003, chapter 127, article 4, 
 67.22  section 3, is amended to read: 
 67.23     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 67.24  defined otherwise, "Internal Revenue Code" means the Internal 
 67.25  Revenue Code of 1986, as amended through December 31, 2002 June 
 67.26  15, 2003. 
 67.27     [EFFECTIVE DATE.] This section is effective the day 
 67.28  following final enactment and is intended to adopt the 
 67.29  provisions of H.R. 2, the Jobs and Growth Tax Relief 
 67.30  Reconciliation Act of 2003, if it is enacted into law. 
 67.31     Sec. 4.  Minnesota Statutes 2002, section 290A.03, 
 67.32  subdivision 15, as amended by Laws 2003, chapter 127, article 4, 
 67.33  section 4, is amended to read: 
 67.34     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 67.35  means the Internal Revenue Code of 1986, as amended 
 67.36  through December 31, 2002 June 15, 2003. 
 68.1      [EFFECTIVE DATE.] This section is effective for refunds 
 68.2   payable for rents paid in 2003 and thereafter and property taxes 
 68.3   payable in 2004 and thereafter and is intended to adopt the 
 68.4   provisions of H.R. 2, the Jobs and Growth Tax Relief 
 68.5   Reconciliation Act of 2003, if it is enacted into law. 
 68.6      Sec. 5.  [EFFECTIVE DATE.] 
 68.7      This article is effective only after the state makes a 
 68.8   certification to the Secretary of the Treasury of the United 
 68.9   States that satisfies the requirements of section 601(e) of the 
 68.10  Jobs and Growth Tax Relief and Reconciliation Act of 2003, H.R. 
 68.11  2.  The commissioner of finance shall certify to the 
 68.12  commissioner of revenue when the requirements of this section 
 68.13  have been met. 
 68.14                             ARTICLE 4 
 68.15                           PROPERTY TAXES 
 68.16     Section 1.  Minnesota Statutes 2002, section 272.02, 
 68.17  subdivision 25, is amended to read: 
 68.18     Subd. 25.  [ICE ARENAS; BASEBALL PARKS.] (a) Real and 
 68.19  personal property is exempt if it is owned and operated by a 
 68.20  private, nonprofit corporation exempt from federal income 
 68.21  taxation pursuant to United States Code, title 26, section 
 68.22  501(c)(3), primarily used for an ice arena or ice rink, and used 
 68.23  primarily for youth and high school programs. 
 68.24     (b) Real property is exempt if it is owned and operated by 
 68.25  a private, nonprofit corporation exempt from federal income 
 68.26  taxation pursuant to United States Code, title 26, section 
 68.27  501(c)(3), and primarily used as a baseball park by amateur 
 68.28  baseball players. 
 68.29     [EFFECTIVE DATE.] This section is effective for taxes 
 68.30  levied in 2003, payable in 2004, and thereafter. 
 68.31     Sec. 2.  Minnesota Statutes 2002, section 272.02, is 
 68.32  amended by adding a subdivision to read: 
 68.33     Subd. 56.  [ELDERLY LIVING FACILITY.] An elderly living 
 68.34  facility is exempt from taxation if it meets all of the 
 68.35  following requirements: 
 68.36     (1) the facility is located in a city of the first class 
 69.1   with a population of more than 350,000; 
 69.2      (2) the facility is owned and operated by a nonprofit 
 69.3   corporation organized under chapter 317A; 
 69.4      (3) the construction of the facility was commenced after 
 69.5   January 1, 2002, and before June 1, 2003; 
 69.6      (4) the facility consists of two buildings, which are 
 69.7   connected to a church that is exempt from taxation under 
 69.8   subdivision 6; 
 69.9      (5) the land for the facility was donated to the nonprofit 
 69.10  corporation by the church to which the facility is connected; 
 69.11     (6) the residents of the facility must be (i) at least 62 
 69.12  years of age or (ii) handicapped; 
 69.13     (7) the facility operates an on-site congregate dining 
 69.14  program in which participation by residents is mandatory, and 
 69.15  provides assisted living or similar social and physical support 
 69.16  services for residents; and 
 69.17     (8) at least 30 percent of the units in the facility are 
 69.18  occupied by persons whose annual income does not exceed 50 
 69.19  percent of median family income for the area. 
 69.20     The property is exempt under this subdivision for taxes 
 69.21  levied in each year or partial year of the term of the 
 69.22  facility's initial permanent financing or 25 years, whichever is 
 69.23  later. 
 69.24     [EFFECTIVE DATE.] This section is effective the day 
 69.25  following final enactment. 
 69.26     Sec. 3.  Minnesota Statutes 2002, section 273.11, 
 69.27  subdivision 13, is amended to read: 
 69.28     Subd. 13.  [VALUATION OF INCOME-PRODUCING PROPERTY.] 
 69.29  Beginning with the 1995 assessment, only accredited assessors or 
 69.30  senior accredited assessors or other licensed assessors who have 
 69.31  successfully completed at least two income-producing property 
 69.32  appraisal courses may value income-producing property for ad 
 69.33  valorem tax purposes.  "Income-producing property" as used in 
 69.34  this subdivision means the taxable property in class 3a and 3b 
 69.35  in section 273.13, subdivision 24; class 4a and 4c, except for 
 69.36  seasonal recreational property not used for commercial purposes, 
 70.1   and class 4d in section 273.13, subdivision 25; and class 5 in 
 70.2   section 273.13, subdivision 31.  "Income-producing property" 
 70.3   includes any property in class 4e in section 273.13, subdivision 
 70.4   25, that would be income-producing property under the definition 
 70.5   in this subdivision if it were not substandard.  
 70.6   "Income-producing property appraisal course" as used in this 
 70.7   subdivision means a course of study of approximately 30 
 70.8   instructional hours, with a final comprehensive test.  An 
 70.9   assessor must successfully complete the final examination for 
 70.10  each of the two required courses.  The course must be approved 
 70.11  by the board of assessors. 
 70.12     [EFFECTIVE DATE.] This section is effective beginning with 
 70.13  the 2004 assessment for property taxes payable in 2005. 
 70.14     Sec. 4.  Minnesota Statutes 2002, section 273.13, 
 70.15  subdivision 25, is amended to read: 
 70.16     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 70.17  estate containing four or more units and used or held for use by 
 70.18  the owner or by the tenants or lessees of the owner as a 
 70.19  residence for rental periods of 30 days or more.  Class 4a also 
 70.20  includes hospitals licensed under sections 144.50 to 144.56, 
 70.21  other than hospitals exempt under section 272.02, and contiguous 
 70.22  property used for hospital purposes, without regard to whether 
 70.23  the property has been platted or subdivided.  The market value 
 70.24  of class 4a property has a class rate of 1.8 percent for taxes 
 70.25  payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 
 70.26  percent for taxes payable in 2004 and thereafter, except that 
 70.27  class 4a property consisting of a structure for which 
 70.28  construction commenced after June 30, 2001, has a class rate of 
 70.29  1.25 percent of market value for taxes payable in 2003 and 
 70.30  subsequent years. 
 70.31     (b) Class 4b includes: 
 70.32     (1) residential real estate containing less than four units 
 70.33  that does not qualify as class 4bb, other than seasonal 
 70.34  residential, and recreational; 
 70.35     (2) manufactured homes not classified under any other 
 70.36  provision; 
 71.1      (3) a dwelling, garage, and surrounding one acre of 
 71.2   property on a nonhomestead farm classified under subdivision 23, 
 71.3   paragraph (b) containing two or three units; 
 71.4      (4) unimproved property that is classified residential as 
 71.5   determined under subdivision 33.  
 71.6      The market value of class 4b property has a class rate of 
 71.7   1.5 percent for taxes payable in 2002, and 1.25 percent for 
 71.8   taxes payable in 2003 and thereafter. 
 71.9      (c) Class 4bb includes: 
 71.10     (1) nonhomestead residential real estate containing one 
 71.11  unit, other than seasonal residential, and recreational; and 
 71.12     (2) a single family dwelling, garage, and surrounding one 
 71.13  acre of property on a nonhomestead farm classified under 
 71.14  subdivision 23, paragraph (b). 
 71.15     Class 4bb property has the same class rates as class 1a 
 71.16  property under subdivision 22. 
 71.17     Property that has been classified as seasonal recreational 
 71.18  residential property at any time during which it has been owned 
 71.19  by the current owner or spouse of the current owner does not 
 71.20  qualify for class 4bb. 
 71.21     (d) Class 4c property includes: 
 71.22     (1) except as provided in subdivision 22, paragraph (c), 
 71.23  real property devoted to temporary and seasonal residential 
 71.24  occupancy for recreation purposes, including real property 
 71.25  devoted to temporary and seasonal residential occupancy for 
 71.26  recreation purposes and not devoted to commercial purposes for 
 71.27  more than 250 days in the year preceding the year of 
 71.28  assessment.  For purposes of this clause, property is devoted to 
 71.29  a commercial purpose on a specific day if any portion of the 
 71.30  property is used for residential occupancy, and a fee is charged 
 71.31  for residential occupancy.  In order for a property to be 
 71.32  classified as class 4c, seasonal recreational residential for 
 71.33  commercial purposes, at least 40 percent of the annual gross 
 71.34  lodging receipts related to the property must be from business 
 71.35  conducted during 90 consecutive days and either (i) at least 60 
 71.36  percent of all paid bookings by lodging guests during the year 
 72.1   must be for periods of at least two consecutive nights; or (ii) 
 72.2   at least 20 percent of the annual gross receipts must be from 
 72.3   charges for rental of fish houses, boats and motors, 
 72.4   snowmobiles, downhill or cross-country ski equipment, or charges 
 72.5   for marina services, launch services, and guide services, or the 
 72.6   sale of bait and fishing tackle.  For purposes of this 
 72.7   determination, a paid booking of five or more nights shall be 
 72.8   counted as two bookings.  Class 4c also includes commercial use 
 72.9   real property used exclusively for recreational purposes in 
 72.10  conjunction with class 4c property devoted to temporary and 
 72.11  seasonal residential occupancy for recreational purposes, up to 
 72.12  a total of two acres, provided the property is not devoted to 
 72.13  commercial recreational use for more than 250 days in the year 
 72.14  preceding the year of assessment and is located within two miles 
 72.15  of the class 4c property with which it is used.  Class 4c 
 72.16  property classified in this clause also includes the remainder 
 72.17  of class 1c resorts provided that the entire property including 
 72.18  that portion of the property classified as class 1c also meets 
 72.19  the requirements for class 4c under this clause; otherwise the 
 72.20  entire property is classified as class 3.  Owners of real 
 72.21  property devoted to temporary and seasonal residential occupancy 
 72.22  for recreation purposes and all or a portion of which was 
 72.23  devoted to commercial purposes for not more than 250 days in the 
 72.24  year preceding the year of assessment desiring classification as 
 72.25  class 1c or 4c, must submit a declaration to the assessor 
 72.26  designating the cabins or units occupied for 250 days or less in 
 72.27  the year preceding the year of assessment by January 15 of the 
 72.28  assessment year.  Those cabins or units and a proportionate 
 72.29  share of the land on which they are located will be designated 
 72.30  class 1c or 4c as otherwise provided.  The remainder of the 
 72.31  cabins or units and a proportionate share of the land on which 
 72.32  they are located will be designated as class 3a.  The owner of 
 72.33  property desiring designation as class 1c or 4c property must 
 72.34  provide guest registers or other records demonstrating that the 
 72.35  units for which class 1c or 4c designation is sought were not 
 72.36  occupied for more than 250 days in the year preceding the 
 73.1   assessment if so requested.  The portion of a property operated 
 73.2   as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 73.3   nonresidential facility operated on a commercial basis not 
 73.4   directly related to temporary and seasonal residential occupancy 
 73.5   for recreation purposes shall not qualify for class 1c or 4c; 
 73.6      (2) qualified property used as a golf course if: 
 73.7      (i) it is open to the public on a daily fee basis.  It may 
 73.8   charge membership fees or dues, but a membership fee may not be 
 73.9   required in order to use the property for golfing, and its green 
 73.10  fees for golfing must be comparable to green fees typically 
 73.11  charged by municipal courses; and 
 73.12     (ii) it meets the requirements of section 273.112, 
 73.13  subdivision 3, paragraph (d). 
 73.14     A structure used as a clubhouse, restaurant, or place of 
 73.15  refreshment in conjunction with the golf course is classified as 
 73.16  class 3a property; 
 73.17     (3) real property up to a maximum of one acre of land owned 
 73.18  by a nonprofit community service oriented organization; provided 
 73.19  that the property is not used for a revenue-producing activity 
 73.20  for more than six days in the calendar year preceding the year 
 73.21  of assessment and the property is not used for residential 
 73.22  purposes on either a temporary or permanent basis.  For purposes 
 73.23  of this clause, a "nonprofit community service oriented 
 73.24  organization" means any corporation, society, association, 
 73.25  foundation, or institution organized and operated exclusively 
 73.26  for charitable, religious, fraternal, civic, or educational 
 73.27  purposes, and which is exempt from federal income taxation 
 73.28  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 73.29  Revenue Code of 1986, as amended through December 31, 1990.  For 
 73.30  purposes of this clause, "revenue-producing activities" shall 
 73.31  include but not be limited to property or that portion of the 
 73.32  property that is used as an on-sale intoxicating liquor or 3.2 
 73.33  percent malt liquor establishment licensed under chapter 340A, a 
 73.34  restaurant open to the public, bowling alley, a retail store, 
 73.35  gambling conducted by organizations licensed under chapter 349, 
 73.36  an insurance business, or office or other space leased or rented 
 74.1   to a lessee who conducts a for-profit enterprise on the 
 74.2   premises.  Any portion of the property which is used for 
 74.3   revenue-producing activities for more than six days in the 
 74.4   calendar year preceding the year of assessment shall be assessed 
 74.5   as class 3a.  The use of the property for social events open 
 74.6   exclusively to members and their guests for periods of less than 
 74.7   24 hours, when an admission is not charged nor any revenues are 
 74.8   received by the organization shall not be considered a 
 74.9   revenue-producing activity; 
 74.10     (4) post-secondary student housing of not more than one 
 74.11  acre of land that is owned by a nonprofit corporation organized 
 74.12  under chapter 317A and is used exclusively by a student 
 74.13  cooperative, sorority, or fraternity for on-campus housing or 
 74.14  housing located within two miles of the border of a college 
 74.15  campus; 
 74.16     (5) manufactured home parks as defined in section 327.14, 
 74.17  subdivision 3; 
 74.18     (6) real property that is actively and exclusively devoted 
 74.19  to indoor fitness, health, social, recreational, and related 
 74.20  uses, is owned and operated by a not-for-profit corporation, and 
 74.21  is located within the metropolitan area as defined in section 
 74.22  473.121, subdivision 2; 
 74.23     (7) a leased or privately owned noncommercial aircraft 
 74.24  storage hangar not exempt under section 272.01, subdivision 2, 
 74.25  and the land on which it is located, provided that: 
 74.26     (i) the land is on an airport owned or operated by a city, 
 74.27  town, county, metropolitan airports commission, or group 
 74.28  thereof; and 
 74.29     (ii) the land lease, or any ordinance or signed agreement 
 74.30  restricting the use of the leased premise, prohibits commercial 
 74.31  activity performed at the hangar. 
 74.32     If a hangar classified under this clause is sold after June 
 74.33  30, 2000, a bill of sale must be filed by the new owner with the 
 74.34  assessor of the county where the property is located within 60 
 74.35  days of the sale; and 
 74.36     (8) residential real estate, a portion of which is used by 
 75.1   the owner for homestead purposes, and that is also a place of 
 75.2   lodging, if all of the following criteria are met: 
 75.3      (i) rooms are provided for rent to transient guests that 
 75.4   generally stay for periods of 14 or fewer days; 
 75.5      (ii) meals are provided to persons who rent rooms, the cost 
 75.6   of which is incorporated in the basic room rate; 
 75.7      (iii) meals are not provided to the general public except 
 75.8   for special events on fewer than seven days in the calendar year 
 75.9   preceding the year of the assessment; and 
 75.10     (iv) the owner is the operator of the property. 
 75.11  The market value subject to the 4c classification under this 
 75.12  clause is limited to five rental units.  Any rental units on the 
 75.13  property in excess of five, must be valued and assessed as class 
 75.14  3a.  The portion of the property used for purposes of a 
 75.15  homestead by the owner must be classified as class 1a property 
 75.16  under subdivision 22. 
 75.17     Class 4c property has a class rate of 1.5 percent of market 
 75.18  value, except that (i) each parcel of seasonal residential 
 75.19  recreational property not used for commercial purposes has the 
 75.20  same class rates as class 4bb property, (ii) manufactured home 
 75.21  parks assessed under clause (5) have the same class rate as 
 75.22  class 4b property, (iii) commercial-use seasonal residential 
 75.23  recreational property has a class rate of one percent for the 
 75.24  first $500,000 of market value, which includes any market value 
 75.25  receiving the one percent rate under subdivision 22, and 1.25 
 75.26  percent for the remaining market value, (iv) the market value of 
 75.27  property described in clause (4) has a class rate of one 
 75.28  percent, (v) the market value of property described in clauses 
 75.29  (2) and (6) has a class rate of 1.25 percent, and (vi) that 
 75.30  portion of the market value of property in clause (8) qualifying 
 75.31  for class 4c property has a class rate of 1.25 percent.  
 75.32     (e) Class 4d property is qualifying low-income rental 
 75.33  housing certified to the assessor by the housing finance agency 
 75.34  under sections 273.126 and 462A.071.  Class 4d includes land in 
 75.35  proportion to the total market value of the building that is 
 75.36  qualifying low-income rental housing.  For all properties 
 76.1   qualifying as class 4d, the market value determined by the 
 76.2   assessor must be based on the normal approach to value using 
 76.3   normal unrestricted rents. 
 76.4      Class 4d property has a class rate of 0.9 percent for taxes 
 76.5   payable in 2002, and one percent for taxes payable in 2003 and 
 76.6   1.25 percent for taxes payable in 2004 and thereafter.  
 76.7      [EFFECTIVE DATE.] This section is effective beginning with 
 76.8   the 2004 assessment, for property taxes payable in 2005. 
 76.9      Sec. 5.  Minnesota Statutes 2002, section 275.025, 
 76.10  subdivision 1, is amended to read: 
 76.11     Subdivision 1.  [LEVY AMOUNT.] The state general levy is 
 76.12  levied against commercial-industrial property and seasonal 
 76.13  recreational property, as defined in this section.  The state 
 76.14  general levy is $592,000,000 for taxes payable in 2002.  For 
 76.15  taxes payable in subsequent years, the levy is increased each 
 76.16  year by multiplying the amount for the prior year by the sum of 
 76.17  one plus the rate of increase, if any, in the implicit price 
 76.18  deflator for government consumption expenditures and gross 
 76.19  investment for state and local governments prepared by the 
 76.20  Bureau of Economic Analysts of the United States Department of 
 76.21  Commerce for the 12-month period ending March 31 of the year 
 76.22  prior to the year the taxes are payable.  The tax under this 
 76.23  section is not treated as a local tax rate under section 469.177 
 76.24  and is not the levy of a governmental unit under chapters 276A 
 76.25  and 473F.  Beginning in fiscal year 2004, and in each year 
 76.26  thereafter, the commissioner of finance shall deposit in an 
 76.27  education reserve account, which account is hereby established, 
 76.28  the increased amount of the state general levy received for 
 76.29  deposit in the general fund for that year over the amount of the 
 76.30  state general levy received for deposit in the general fund in 
 76.31  fiscal year 2003.  The amounts in the education reserve account 
 76.32  do not lapse or cancel each year, but remain until appropriated 
 76.33  by law for education aid or higher education funding. 
 76.34     The commissioner shall increase or decrease the preliminary 
 76.35  or final rate for a year as necessary to account for errors and 
 76.36  tax base changes that affected a preliminary or final rate for 
 77.1   either of the two preceding years.  Adjustments are allowed to 
 77.2   the extent that the necessary information is available to the 
 77.3   commissioner at the time the rates for a year must be certified, 
 77.4   and for the following reasons: 
 77.5      (1) an erroneous report of taxable value by a local 
 77.6   official; 
 77.7      (2) an erroneous calculation by the commissioner; and 
 77.8      (3) an increase or decrease in taxable value for 
 77.9   commercial-industrial or seasonal residential recreational 
 77.10  property reported on the abstracts of tax lists submitted under 
 77.11  section 275.29 that was not reported on the abstracts of 
 77.12  assessment submitted under section 270.11, subdivision 2, for 
 77.13  the same year. 
 77.14  The commissioner may, but need not, make adjustments if the 
 77.15  total difference in the tax levied for the year would be less 
 77.16  than $100,000. 
 77.17     [EFFECTIVE DATE.] This section is effective June 30, 2003.  
 77.18     Sec. 6.  Minnesota Statutes 2002, section 275.065, 
 77.19  subdivision 3, is amended to read: 
 77.20     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
 77.21  county auditor shall prepare and the county treasurer shall 
 77.22  deliver after November 10 and on or before November 24 each 
 77.23  year, by first class mail to each taxpayer at the address listed 
 77.24  on the county's current year's assessment roll, a notice of 
 77.25  proposed property taxes.  
 77.26     (b) The commissioner of revenue shall prescribe the form of 
 77.27  the notice. 
 77.28     (c) The notice must inform taxpayers that it contains the 
 77.29  amount of property taxes each taxing authority proposes to 
 77.30  collect for taxes payable the following year.  In the case of a 
 77.31  town, or in the case of the state general tax, the final tax 
 77.32  amount will be its proposed tax.  In the case of taxing 
 77.33  authorities required to hold a public meeting under subdivision 
 77.34  6, the notice must clearly state that each taxing authority, 
 77.35  including regional library districts established under section 
 77.36  134.201, and including the metropolitan taxing districts as 
 78.1   defined in paragraph (i), but excluding all other special taxing 
 78.2   districts and towns, will hold a public meeting to receive 
 78.3   public testimony on the proposed budget and proposed or final 
 78.4   property tax levy, or, in case of a school district, on the 
 78.5   current budget and proposed property tax levy.  It must clearly 
 78.6   state the time and place of each taxing authority's meeting, a 
 78.7   telephone number for the taxing authority that taxpayers may 
 78.8   call if they have questions related to the notice, and an 
 78.9   address where comments will be received by mail.  
 78.10     (d) The notice must state for each parcel: 
 78.11     (1) the market value of the property as determined under 
 78.12  section 273.11, and used for computing property taxes payable in 
 78.13  the following year and for taxes payable in the current year as 
 78.14  each appears in the records of the county assessor on November 1 
 78.15  of the current year; and, in the case of residential property, 
 78.16  whether the property is classified as homestead or 
 78.17  nonhomestead.  The notice must clearly inform taxpayers of the 
 78.18  years to which the market values apply and that the values are 
 78.19  final values; 
 78.20     (2) the items listed below, shown separately by county, 
 78.21  city or town, and state general tax, net of the residential and 
 78.22  agricultural homestead credit under section 273.1384, voter 
 78.23  approved school levy, other local school levy, and the sum of 
 78.24  the special taxing districts, and as a total of all taxing 
 78.25  authorities:  
 78.26     (i) the actual tax for taxes payable in the current year; 
 78.27     (ii) the tax change due to spending factors, defined as the 
 78.28  proposed tax minus the constant spending tax amount; 
 78.29     (iii) the tax change due to other factors, defined as the 
 78.30  constant spending tax amount minus the actual current year tax; 
 78.31  and 
 78.32     (iv) (ii) the proposed tax amount. 
 78.33     If the county levy under clause (2) includes an amount for 
 78.34  a lake improvement district as defined under sections 103B.501 
 78.35  to 103B.581, the amount attributable for that purpose must be 
 78.36  separately stated from the remaining county levy amount.  
 79.1      In the case of a town or the state general tax, the final 
 79.2   tax shall also be its proposed tax unless the town changes its 
 79.3   levy at a special town meeting under section 365.52.  If a 
 79.4   school district has certified under section 126C.17, subdivision 
 79.5   9, that a referendum will be held in the school district at the 
 79.6   November general election, the county auditor must note next to 
 79.7   the school district's proposed amount that a referendum is 
 79.8   pending and that, if approved by the voters, the tax amount may 
 79.9   be higher than shown on the notice.  In the case of the city of 
 79.10  Minneapolis, the levy for the Minneapolis library board and the 
 79.11  levy for Minneapolis park and recreation shall be listed 
 79.12  separately from the remaining amount of the city's levy.  In the 
 79.13  case of the city of St. Paul, the levy for the St. Paul library 
 79.14  agency must be listed separately from the remaining amount of 
 79.15  the city's levy.  In the case of a parcel where tax increment or 
 79.16  the fiscal disparities areawide tax under chapter 276A or 473F 
 79.17  applies, the proposed tax levy on the captured value or the 
 79.18  proposed tax levy on the tax capacity subject to the areawide 
 79.19  tax must each be stated separately and not included in the sum 
 79.20  of the special taxing districts; and 
 79.21     (3) the increase or decrease between the total taxes 
 79.22  payable in the current year and the total proposed taxes, 
 79.23  expressed as a percentage. 
 79.24     For purposes of this section, the amount of the tax on 
 79.25  homesteads qualifying under the senior citizens' property tax 
 79.26  deferral program under chapter 290B is the total amount of 
 79.27  property tax before subtraction of the deferred property tax 
 79.28  amount. 
 79.29     (e) The notice must clearly state that the proposed or 
 79.30  final taxes do not include the following: 
 79.31     (1) special assessments; 
 79.32     (2) levies approved by the voters after the date the 
 79.33  proposed taxes are certified, including bond referenda, and 
 79.34  school district levy referenda, and; 
 79.35     (3) a levy limit increase referenda approved by the voters 
 79.36  by the first Tuesday after the first Monday in November of the 
 80.1   levy year as provided under section 275.73; 
 80.2      (3) (4) amounts necessary to pay cleanup or other costs due 
 80.3   to a natural disaster occurring after the date the proposed 
 80.4   taxes are certified; 
 80.5      (4) (5) amounts necessary to pay tort judgments against the 
 80.6   taxing authority that become final after the date the proposed 
 80.7   taxes are certified; and 
 80.8      (5) (6) the contamination tax imposed on properties which 
 80.9   received market value reductions for contamination. 
 80.10     (f) Except as provided in subdivision 7, failure of the 
 80.11  county auditor to prepare or the county treasurer to deliver the 
 80.12  notice as required in this section does not invalidate the 
 80.13  proposed or final tax levy or the taxes payable pursuant to the 
 80.14  tax levy. 
 80.15     (g) If the notice the taxpayer receives under this section 
 80.16  lists the property as nonhomestead, and satisfactory 
 80.17  documentation is provided to the county assessor by the 
 80.18  applicable deadline, and the property qualifies for the 
 80.19  homestead classification in that assessment year, the assessor 
 80.20  shall reclassify the property to homestead for taxes payable in 
 80.21  the following year. 
 80.22     (h) In the case of class 4 residential property used as a 
 80.23  residence for lease or rental periods of 30 days or more, the 
 80.24  taxpayer must either: 
 80.25     (1) mail or deliver a copy of the notice of proposed 
 80.26  property taxes to each tenant, renter, or lessee; or 
 80.27     (2) post a copy of the notice in a conspicuous place on the 
 80.28  premises of the property.  
 80.29     The notice must be mailed or posted by the taxpayer by 
 80.30  November 27 or within three days of receipt of the notice, 
 80.31  whichever is later.  A taxpayer may notify the county treasurer 
 80.32  of the address of the taxpayer, agent, caretaker, or manager of 
 80.33  the premises to which the notice must be mailed in order to 
 80.34  fulfill the requirements of this paragraph. 
 80.35     (i) For purposes of this subdivision, subdivisions 5a and 
 80.36  6, "metropolitan special taxing districts" means the following 
 81.1   taxing districts in the seven-county metropolitan area that levy 
 81.2   a property tax for any of the specified purposes listed below: 
 81.3      (1) metropolitan council under section 473.132, 473.167, 
 81.4   473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
 81.5      (2) metropolitan airports commission under section 473.667, 
 81.6   473.671, or 473.672; and 
 81.7      (3) metropolitan mosquito control commission under section 
 81.8   473.711. 
 81.9      For purposes of this section, any levies made by the 
 81.10  regional rail authorities in the county of Anoka, Carver, 
 81.11  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
 81.12  398A shall be included with the appropriate county's levy and 
 81.13  shall be discussed at that county's public hearing. 
 81.14     (j) If a statutory or home rule charter city or a town has 
 81.15  exercised the local levy option provided by section 473.388, 
 81.16  subdivision 7, it may include in the notice of its proposed 
 81.17  taxes the amount of its proposed taxes attributable to its 
 81.18  exercise of the option.  In the first year of the city or town's 
 81.19  exercise of this option, the statement shall include an estimate 
 81.20  of the reduction of the metropolitan council's tax on the parcel 
 81.21  due to exercise of that option.  The metropolitan council's levy 
 81.22  shall be adjusted accordingly. 
 81.23     [EFFECTIVE DATE.] This section is effective for notices 
 81.24  prepared in 2003 for taxes payable in 2004, and thereafter. 
 81.25     Sec. 7.  Minnesota Statutes 2002, section 275.066, is 
 81.26  amended to read: 
 81.27     275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 
 81.28     For the purposes of property taxation and property tax 
 81.29  state aids, the term "special taxing districts" includes the 
 81.30  following entities: 
 81.31     (1) watershed districts under chapter 103D; 
 81.32     (2) sanitary districts under sections 115.18 to 115.37; 
 81.33     (3) regional sanitary sewer districts under sections 115.61 
 81.34  to 115.67; 
 81.35     (4) regional public library districts under section 
 81.36  134.201; 
 82.1      (5) park districts under chapter 398; 
 82.2      (6) regional railroad authorities under chapter 398A; 
 82.3      (7) hospital districts under sections 447.31 to 447.38; 
 82.4      (8) St. Cloud metropolitan transit commission under 
 82.5   sections 458A.01 to 458A.15; 
 82.6      (9) Duluth transit authority under sections 458A.21 to 
 82.7   458A.37; 
 82.8      (10) regional development commissions under sections 
 82.9   462.381 to 462.398; 
 82.10     (11) housing and redevelopment authorities under sections 
 82.11  469.001 to 469.047; 
 82.12     (12) port authorities under sections 469.048 to 469.068; 
 82.13     (13) economic development authorities under sections 
 82.14  469.090 to 469.1081; 
 82.15     (14) metropolitan council under sections 473.123 to 
 82.16  473.549; 
 82.17     (15) metropolitan airports commission under sections 
 82.18  473.601 to 473.680; 
 82.19     (16) metropolitan mosquito control commission under 
 82.20  sections 473.701 to 473.716; 
 82.21     (17) Morrison county rural development financing authority 
 82.22  under Laws 1982, chapter 437, section 1; 
 82.23     (18) Croft Historical Park District under Laws 1984, 
 82.24  chapter 502, article 13, section 6; 
 82.25     (19) East Lake county medical clinic district under Laws 
 82.26  1989, chapter 211, sections 1 to 6; 
 82.27     (20) Floodwood area ambulance district under Laws 1993, 
 82.28  chapter 375, article 5, section 39; 
 82.29     (21) Middle Mississippi river watershed management 
 82.30  organization under sections 103B.211 and 103B.241; 
 82.31     (22) emergency medical services special taxing districts 
 82.32  under section 144F.01; 
 82.33     (23) a county levying under the authority of section 
 82.34  103B.241, 103B.245, or 103B.251; and 
 82.35     (24) Southern St. Louis County Special Taxing District; 
 82.36  Chris Jensen Nursing Home under section 12; and 
 83.1      (25) any other political subdivision of the state of 
 83.2   Minnesota, excluding counties, school districts, cities, and 
 83.3   towns, that has the power to adopt and certify a property tax 
 83.4   levy to the county auditor, as determined by the commissioner of 
 83.5   revenue. 
 83.6      Sec. 8.  Minnesota Statutes 2002, section 473.167, 
 83.7   subdivision 3, is amended to read: 
 83.8      Subd. 3.  [TAX.] The council may levy a tax on all taxable 
 83.9   property in the metropolitan area, as defined in section 
 83.10  473.121, to provide funds for loans made pursuant to 
 83.11  subdivisions 2 and 2a.  This tax for the right-of-way 
 83.12  acquisition loan fund shall be certified by the council, levied, 
 83.13  and collected in the manner provided by section 473.13.  The tax 
 83.14  shall be in addition to that authorized by section 473.249 and 
 83.15  any other law and shall not affect the amount or rate of taxes 
 83.16  which may be levied by the council or any metropolitan agency or 
 83.17  local governmental unit.  The amount of the levy shall be as 
 83.18  determined and certified by the council, provided that the tax 
 83.19  levied by the metropolitan council for the right-of-way 
 83.20  acquisition loan fund shall not exceed the product of (1) the 
 83.21  metropolitan council's property tax levy under this subdivision 
 83.22  for taxes payable in 1997 multiplied by (2) an index for market 
 83.23  valuation changes equal to the total market valuation of all 
 83.24  taxable property located within the metropolitan area for the 
 83.25  current taxes payable year divided by the total market valuation 
 83.26  of all taxable property located within the metropolitan area for 
 83.27  taxes payable in 1997. 
 83.28     For the purpose of determining the metropolitan council's 
 83.29  property tax levy limitation for the right-of-way acquisition 
 83.30  loan fund, "total market valuation" means the total market 
 83.31  valuation of all taxable property within the metropolitan area 
 83.32  without valuation adjustments for fiscal disparities (chapter 
 83.33  473F), tax increment financing (sections 469.174 to 469.179), 
 83.34  and high voltage transmission lines (section 273.425) $2,828,379 
 83.35  for taxes payable in 2004 and $2,828,379 for taxes payable in 
 83.36  2005.  The amount of the levy for taxes payable in 2006 and 
 84.1   subsequent years shall not exceed the product of (1) the 
 84.2   metropolitan council's property tax levy limitation under this 
 84.3   subdivision for the previous year, multiplied by (2) one plus a 
 84.4   percentage equal to the growth in the implicit price deflator as 
 84.5   defined in section 275.70, subdivision 2. 
 84.6      [EFFECTIVE DATE; APPLICATION.] This section is effective 
 84.7   the day following final enactment and applies in the counties of 
 84.8   Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
 84.9      Sec. 9.  Minnesota Statutes 2002, section 473.249, 
 84.10  subdivision 1, is amended to read: 
 84.11     Subdivision 1.  [INDEXED LIMIT.] (a) The metropolitan 
 84.12  council may levy a tax on all taxable property in the 
 84.13  metropolitan area defined in section 473.121 to provide funds 
 84.14  for the purposes of sections 473.121 to 473.249 and for the 
 84.15  purpose of carrying out other responsibilities of the council as 
 84.16  provided by law.  This tax for general purposes shall be levied 
 84.17  and collected in the manner provided by section 473.13. 
 84.18     (b) The property tax levied by the metropolitan council for 
 84.19  general purposes shall not exceed $10,522,329 for taxes payable 
 84.20  in 2004 and $10,522,329 for taxes payable in 2005. 
 84.21     (c) The property tax levy limitation for general purposes 
 84.22  for taxes payable in 2006 and subsequent years shall not exceed 
 84.23  the product of:  (1) the metropolitan council's property tax 
 84.24  levy limitation for general purposes for the previous year 
 84.25  determined under this subdivision multiplied by (2) the lesser 
 84.26  of 
 84.27     (i) an index for market valuation changes equal to the 
 84.28  total market valuation of all taxable property located within 
 84.29  the metropolitan area for the current taxes payable year divided 
 84.30  by the total market valuation of all taxable property located 
 84.31  within the metropolitan area for the previous taxes payable 
 84.32  year; 
 84.33     (ii) an index equal to the implicit price deflator for 
 84.34  government consumption expenditures and gross investment for 
 84.35  state and local governments for the most recent month for which 
 84.36  data are available divided by the same implicit price deflator 
 85.1   for the same month of the previous year; or 
 85.2      (iii) 103 percent. 
 85.3      (c) For the purpose of determining the metropolitan 
 85.4   council's property tax levy limitation for general purposes, 
 85.5   "total market valuation" means the total market valuation of all 
 85.6   taxable property within the metropolitan area without valuation 
 85.7   adjustments for fiscal disparities (chapter 473F), tax increment 
 85.8   financing (sections 469.174 to 469.179), and high voltage 
 85.9   transmission lines (section 273.425) one plus a percentage equal 
 85.10  to the growth in the implicit price deflator as defined in 
 85.11  section 275.70, subdivision 2. 
 85.12     [EFFECTIVE DATE; APPLICATION.] This section is effective 
 85.13  the day following final enactment and applies in the counties of 
 85.14  Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
 85.15     Sec. 10.  Minnesota Statutes 2002, section 473.253, 
 85.16  subdivision 1, is amended to read: 
 85.17     Subdivision 1.  [SOURCES OF FUNDS.] The council shall 
 85.18  credit to the livable communities demonstration account the 
 85.19  revenues provided in this subdivision.  This tax shall be levied 
 85.20  and collected in the manner provided by section 473.13.  The 
 85.21  levy shall not exceed the following amount for the years 
 85.22  specified:  
 85.23     (a)(1) for taxes payable in 1996, 50 percent of (i) the 
 85.24  metropolitan mosquito control commission's property tax levy for 
 85.25  taxes payable in 1995 multiplied by (ii) an index for market 
 85.26  valuation changes equal to the total market valuation of all 
 85.27  taxable property located within the metropolitan area for the 
 85.28  current taxes payable year divided by the total market valuation 
 85.29  of all taxable property located in the metropolitan area for the 
 85.30  previous taxes payable year; and 
 85.31     (2) for taxes payable in 1997 and subsequent years through 
 85.32  2003, the product of (i) the property tax levy limit under this 
 85.33  subdivision for the previous year multiplied by (ii) an index 
 85.34  for market valuation changes equal to the total market valuation 
 85.35  of all taxable property located within the metropolitan area for 
 85.36  the current taxes payable year divided by the total market 
 86.1   valuation of all taxable property located in the metropolitan 
 86.2   area for the previous taxes payable year; 
 86.3      (2) for taxes payable in 2004 and 2005, $8,259,070; and 
 86.4      (3) for taxes payable in 2006 and subsequent years, the 
 86.5   product of (i) the property tax levy limit under this 
 86.6   subdivision for the previous year multiplied by (ii) one plus a 
 86.7   percentage equal to the growth in the implicit price deflator as 
 86.8   defined in section 275.70, subdivision 2. 
 86.9      For the purposes of this subdivision, "total market 
 86.10  valuation" means the total market valuation of all taxable 
 86.11  property within the metropolitan area without valuation 
 86.12  adjustments for fiscal disparities under chapter 473F, tax 
 86.13  increment financing under sections 469.174 to 469.179, and high 
 86.14  voltage transmission lines under section 273.425. 
 86.15     (b) The metropolitan council, for the purposes of the fund, 
 86.16  is considered a unique taxing jurisdiction for purposes of 
 86.17  receiving aid pursuant to section 273.1398.  For aid to be 
 86.18  received in 1996, the fund's homestead and agricultural credit 
 86.19  base shall equal 50 percent of the metropolitan mosquito control 
 86.20  commission's certified homestead and agricultural credit aid for 
 86.21  1995, determined under section 273.1398, subdivision 2, less any 
 86.22  permanent aid reduction under section 477A.0132.  For aid to be 
 86.23  received under section 273.1398 in 1997 and subsequent years, 
 86.24  the fund's homestead and agricultural credit base shall be 
 86.25  determined in accordance with section 273.1398, subdivision 1. 
 86.26     [EFFECTIVE DATE; APPLICATION.] This section is effective 
 86.27  the day following final enactment and applies in the counties of 
 86.28  Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
 86.29     Sec. 11.  2003 First Special Session H.F. No. 1, article 2, 
 86.30  section 118, subdivision 6, if enacted, is amended to read: 
 86.31     Subd. 6.  [OPERATING COSTS OF PHASES THREE TO SIX.] (a) The 
 86.32  ongoing costs of the commissioner in operating phases three to 
 86.33  six of the statewide public safety radio communication system 
 86.34  shall be allocated among and paid by the following users, all in 
 86.35  accordance with the statewide public safety radio communication 
 86.36  system plan developed by the planning committee under section 
 87.1   473.907: 
 87.2      (1) the state of Minnesota for its operations using the 
 87.3   system; 
 87.4      (2) all local government units using the system; and 
 87.5      (3) other eligible users of the system. 
 87.6      (b) Each local government and other eligible users of 
 87.7   phases three to six of the system shall pay to the commissioner 
 87.8   all sums charged under this section, at the times and in the 
 87.9   manner determined by the commissioner.  The governing body of 
 87.10  each local government shall take all action that may be 
 87.11  necessary to provide the funds required for these payments and 
 87.12  to make the payments when due.  
 87.13     (c) If the governing body of any local government using 
 87.14  phase three, four, five, or six of the system fails to meet any 
 87.15  payment to the commissioner under this subdivision when due, the 
 87.16  commissioner may certify to the auditor of the county in which 
 87.17  the government unit is located the amount required for payment 
 87.18  of the amount due with interest at six percent per year.  The 
 87.19  auditor shall levy and extend the amount due, with interest, as 
 87.20  a tax upon all taxable property in the government unit for the 
 87.21  next calendar year, free from any existing limitations imposed 
 87.22  by law or charter.  This tax shall be collected in the same 
 87.23  manner as the general taxes of the government unit, and the 
 87.24  proceeds of the tax, when collected, shall be paid by the county 
 87.25  treasurer to the commissioner and credited to the government 
 87.26  unit for which the tax was levied. 
 87.27     [EFFECTIVE DATE.] This section is effective the day 
 87.28  following final enactment. 
 87.29     Sec. 12.  [SOUTHERN ST. LOUIS COUNTY SPECIAL TAXING 
 87.30  DISTRICT; CHRIS JENSEN NURSING HOME.] 
 87.31     Subdivision 1.  [ESTABLISHED.] The Southern St. Louis 
 87.32  County Special Taxing District for purposes of the Chris Jensen 
 87.33  Nursing Home is established. 
 87.34     Subd. 2.  [AREA.] The district in subdivision 1 includes 
 87.35  all that part of St. Louis county comprising the cities of 
 87.36  Duluth, Proctor, Hermantown, Brookston, Floodwood, and 
 88.1   Meadowlands, and the townships of Alborn, Alden, Arrowhead, 
 88.2   Brevator, Canosia, Culver, Duluth, Elmer, Fine Lakes, Floodwood, 
 88.3   Fredenberg, Gensen, Grand Lake, Halden, Industrial, Lakewood, 
 88.4   Meadowlands, Midway, Ness, New Independence, Normanna, 
 88.5   Northland, North Star, Pequaywan, Prairie Lake, Rice Lake, 
 88.6   Solway, Stoney Brook, and Van Buren, and unorganized 
 88.7   congressional townships of 52-21, 53-16, and 53-15. 
 88.8      Subd. 3.  [PURPOSE.] The district established in 
 88.9   subdivision 1 is established to operate, maintain, and improve 
 88.10  the Chris Jensen Nursing Home. 
 88.11     Subd. 4.  [LEVY AUTHORITY.] The district established under 
 88.12  subdivision 1 is a public corporation and political subdivision 
 88.13  of the state with all the powers, rights, privileges, 
 88.14  immunities, and duties that may be validly granted to or imposed 
 88.15  on a municipal corporation as provided in this section, and a 
 88.16  special taxing district as defined by Minnesota Statutes, 
 88.17  section 275.066, clause (24), with the power to adopt and 
 88.18  certify a property tax levy to the county auditor.  The maximum 
 88.19  allowable annual levy for this special taxing district must not 
 88.20  exceed 1.90 percent of the taxable tax capacity of the district 
 88.21  in the first year and 1.33 percent of the taxable tax capacity 
 88.22  of the district in the second year and thereafter. 
 88.23     Subd. 5.  [MEMBERS; SELECTION; TERMS.] The nursing home 
 88.24  board is composed of nine members selected as follows: 
 88.25     (1) The mayor of the city of Duluth shall appoint three 
 88.26  members, subject to approval of the Duluth city council.  Each 
 88.27  member appointed under this clause must live in the city of 
 88.28  Duluth and at least two must be Duluth city council members.  
 88.29  All three appointees serve at the pleasure of the mayor, except 
 88.30  that each member shall serve until a successor has been selected 
 88.31  and qualified. 
 88.32     (2) The St. Louis county board shall appoint three county 
 88.33  board members.  Two appointees must reside in the city of Duluth 
 88.34  and one must reside in the district but outside the city of 
 88.35  Duluth.  The members appointed under this clause serve at the 
 88.36  pleasure of the county board, except that each member shall 
 89.1   serve until a successor has been selected and qualified. 
 89.2      (3) The St. Louis county auditor must convene and preside 
 89.3   at a meeting of the mayors of the cities of Hermantown and 
 89.4   Proctor at which the mayors must appoint a city council member 
 89.5   from one of the two cities to serve on the nursing home board.  
 89.6   The member appointed under this clause serves at the pleasure of 
 89.7   each mayor and either mayor may require the member's resignation 
 89.8   at any time, except that the member shall serve until a 
 89.9   successor has been selected and qualified. 
 89.10     (4) The St. Louis county auditor must convene and preside 
 89.11  at a meeting of the chairs of the town board of supervisors from 
 89.12  each of the townships of Rice Lake, Grand Lake, Lakewood, and 
 89.13  Canosia at which the chairs must appoint a resident of one of 
 89.14  the townships to serve on the nursing home board.  The term of 
 89.15  the first person appointed after the effective date of this 
 89.16  section shall expire December 31 of the third full year 
 89.17  following appointment.  Thereafter, the term of the person 
 89.18  appointed under this clause is three years, except that the 
 89.19  member shall serve until a successor has been selected and 
 89.20  qualified. 
 89.21     (5) The St. Louis county auditor must convene and preside 
 89.22  at a meeting of the mayors of the cities of Brookston, 
 89.23  Floodwood, and Meadowlands, and the chairs of the town boards of 
 89.24  supervisors from all of the townships in the district not 
 89.25  included in clause (4), at which the mayors and town board 
 89.26  chairs must appoint a resident of one of the cities, townships, 
 89.27  or unorganized areas to serve on the nursing home board.  The 
 89.28  term of the first person appointed after the effective date of 
 89.29  this section shall expire December 31 of the third full year 
 89.30  following appointment.  Thereafter, the term of the person 
 89.31  appointed under this clause is three years, except that the 
 89.32  member shall serve until a successor has been selected and 
 89.33  qualified. 
 89.34     After the initial appointment of members under clauses (3) 
 89.35  to (5), the nursing home board must notify the St. Louis county 
 89.36  auditor whenever a member needs to be appointed under these 
 90.1   clauses, and the county auditor must convene one or more 
 90.2   meetings as necessary to fill the position.  Meetings to make 
 90.3   appointments under clauses (3) to (5) are subject to the Open 
 90.4   Meeting Law, Minnesota Statutes, chapter 13D. 
 90.5      Subd. 6.  [TIME LIMITS FOR SELECTION; ALTERNATIVE 
 90.6   APPOINTMENT BY DISTRICT JUDGE.] The appointing authorities must 
 90.7   make initial appointments to the nursing home board as soon as 
 90.8   practicable, but no later than 60 days after the effective date 
 90.9   of this section.  A vacant position on the nursing home board 
 90.10  for which the member serves at the pleasure of the appointing 
 90.11  authority, must be filled as soon as practicable, but no later 
 90.12  than 60 days, after the vacancy occurs.  For members who serve 
 90.13  terms, a successor must be appointed at any time within 60 days 
 90.14  before the expiration of the term.  Each appointment for a 
 90.15  successor must be made in the same manner as the original 
 90.16  appointment.  If any appointment is not made within the time 
 90.17  required, the chief judge of the state's sixth judicial district 
 90.18  shall appoint a person who meets the qualifications for 
 90.19  appointment to the particular nursing home board seat, if 
 90.20  notified in writing by any interested person residing in the 
 90.21  district.  A person appointed by the chief judge serves as if 
 90.22  appointed by the regular appointing authority. 
 90.23     Subd. 7.  [VACANCIES.] A position must be deemed vacant 
 90.24  under the conditions specified in Minnesota Statutes, section 
 90.25  351.02, or if the member fails to attend two consecutive regular 
 90.26  meetings of the board without the consent of the board.  The 
 90.27  board may consent to a second consecutive absence up to 30 days 
 90.28  after it occurs.  A vacancy must be filled in the same manner as 
 90.29  the original appointment. 
 90.30     Subd. 8.  [OPEN MEETING LAW.] All meetings of the nursing 
 90.31  home board are subject to the Open Meeting Law, Minnesota 
 90.32  Statutes, chapter 13D. 
 90.33     Subd. 9.  [PROPERTY.] All assets, liabilities, employees, 
 90.34  and property of the Chris Jensen Nursing Home shall be 
 90.35  transferred to the nursing home board from St. Louis county on 
 90.36  the first day of the year after the formation of the nursing 
 91.1   home board, but no later than January 1, 2005. 
 91.2      Subd. 10.  [ORGANIZATION AND OPERATION OF THE BOARD.] The 
 91.3   nursing home board shall elect officers and establish bylaws at 
 91.4   its first meeting. 
 91.5      Subd. 11.  [EFFECTIVE DATE; LOCAL APPROVAL.] This section 
 91.6   is effective the day after the governing body of St. Louis 
 91.7   county and its chief clerical officer timely complete their 
 91.8   compliance with Minnesota Statutes, section 645.021, 
 91.9   subdivisions 2 and 3. 
 91.10     If effective before September 1, 2003, the first levy is 
 91.11  the payable 2004 levy; if effective between September 1, 2003, 
 91.12  and September 1, 2004, the first levy is the payable 2005 levy; 
 91.13  if effective after August 31, 2004, the first levy is the 
 91.14  payable 2006 levy. 
 91.15     Sec. 13.  [REPEALER.] 
 91.16     (a) Minnesota Statutes 2002, section 272.02, subdivision 
 91.17  26, is repealed. 
 91.18     (b) Minnesota Statutes 2002, section 275.065, subdivision 
 91.19  3a, is repealed. 
 91.20     [EFFECTIVE DATE.] Paragraph (a) is effective for the 2003 
 91.21  assessment and thereafter, for taxes payable in 2004 and 
 91.22  thereafter.  Paragraph (b) is repealed beginning with proposed 
 91.23  notices prepared in 2003 for taxes payable in 2004. 
 91.24                             ARTICLE 5
 91.25                             CITY AIDS
 91.26     Section 1.  Minnesota Statutes 2002, section 4A.02, is 
 91.27  amended to read: 
 91.28     4A.02 [STATE DEMOGRAPHER.] 
 91.29     (a) The director shall appoint a state demographer.  The 
 91.30  demographer must be professionally competent in demography and 
 91.31  must possess demonstrated ability based upon past performance.  
 91.32     (b) The demographer shall: 
 91.33     (1) continuously gather and develop demographic data 
 91.34  relevant to the state; 
 91.35     (2) design and test methods of research and data 
 91.36  collection; 
 92.1      (3) periodically prepare population projections for the 
 92.2   state and designated regions and periodically prepare 
 92.3   projections for each county or other political subdivision of 
 92.4   the state as necessary to carry out the purposes of this 
 92.5   section; 
 92.6      (4) review, comment on, and prepare analysis of population 
 92.7   estimates and projections made by state agencies, political 
 92.8   subdivisions, other states, federal agencies, or nongovernmental 
 92.9   persons, institutions, or commissions; 
 92.10     (5) serve as the state liaison with the United States 
 92.11  Bureau of the Census, coordinate state and federal demographic 
 92.12  activities to the fullest extent possible, and aid the 
 92.13  legislature in preparing a census data plan and form for each 
 92.14  decennial census; 
 92.15     (6) compile an annual study of population estimates on the 
 92.16  basis of county, regional, or other political or geographical 
 92.17  subdivisions as necessary to carry out the purposes of this 
 92.18  section and section 4A.03; 
 92.19     (7) by January 1 of each year, issue a report to the 
 92.20  legislature containing an analysis of the demographic 
 92.21  implications of the annual population study and population 
 92.22  projections; 
 92.23     (8) prepare maps for all counties in the state, all 
 92.24  municipalities with a population of 10,000 or more, and other 
 92.25  municipalities as needed for census purposes, according to scale 
 92.26  and detail recommended by the United States Bureau of the 
 92.27  Census, with the maps of cities showing precinct boundaries; 
 92.28     (9) prepare an estimate of population and of the number of 
 92.29  households for each governmental subdivision for which the 
 92.30  metropolitan council does not prepare an annual estimate, and 
 92.31  convey the estimates to the governing body of each political 
 92.32  subdivision by May 1 of each year; 
 92.33     (10) direct, under section 414.01, subdivision 14, and 
 92.34  certify population and household estimates of annexed or 
 92.35  detached areas of municipalities or towns after being notified 
 92.36  of the order or letter of approval by the Minnesota municipal 
 93.1   board; and 
 93.2      (11) prepare, for any purpose for which a population 
 93.3   estimate is required by law or needed to implement a law, a 
 93.4   population estimate of a municipality or town whose population 
 93.5   is affected by action under section 379.02 or 414.01, 
 93.6   subdivision 14; and 
 93.7      (12) prepare an estimate of average household size for each 
 93.8   statutory or home rule charter city with a population of 2,500 
 93.9   or more by May 1 of each year. 
 93.10     (c) A governing body may challenge an estimate made under 
 93.11  paragraph (b) by filing their specific objections in writing 
 93.12  with the state demographer by June 10.  If the challenge does 
 93.13  not result in an acceptable estimate by June 24, the governing 
 93.14  body may have a special census conducted by the United States 
 93.15  Bureau of the Census.  The political subdivision must notify the 
 93.16  state demographer by July 1 of its intent to have the special 
 93.17  census conducted.  The political subdivision must bear all costs 
 93.18  of the special census.  Results of the special census must be 
 93.19  received by the state demographer by the next April 15 to be 
 93.20  used in that year's May 1 estimate to the political subdivision 
 93.21  under paragraph (b). 
 93.22     [EFFECTIVE DATE.] This section is effective beginning July 
 93.23  1, 2003. 
 93.24     Sec. 2.  Minnesota Statutes 2002, section 477A.011, 
 93.25  subdivision 34, is amended to read: 
 93.26     Subd. 34.  [CITY REVENUE NEED.] (a) For a city with a 
 93.27  population equal to or greater than 2,500, "city revenue need" 
 93.28  is the sum of (1) 3.462312 5.0734098 times the pre-1940 housing 
 93.29  percentage; plus (2) 2.093826 times the commercial industrial 
 93.30  percentage; plus (3) 6.862552 19.141678 times the population 
 93.31  decline percentage; plus (4) .00026 times the city 
 93.32  population (3) 2504.06334 times the road accidents factor; 
 93.33  plus (5) 152.0141 (4) 355.0547; minus (5) the metropolitan area 
 93.34  factor; minus (6) 49.10638 times the household size. 
 93.35     (b) For a city with a population less than 2,500, "city 
 93.36  revenue need" is the sum of (1) 1.795919 2.387 times the 
 94.1   pre-1940 housing percentage; plus (2) 1.562138 2.67591 times the 
 94.2   commercial industrial percentage; plus (3) 4.177568 3.16042 
 94.3   times the population decline percentage; plus (4) 1.04013 1.206 
 94.4   times the transformed population; minus (5) 107.475 62.772. 
 94.5      (c) The city revenue need cannot be less than zero. 
 94.6      (d) For calendar year 1998 2005 and subsequent years, the 
 94.7   city revenue need for a city, as determined in paragraphs (a) to 
 94.8   (c), is multiplied by the ratio of the annual implicit price 
 94.9   deflator for government consumption expenditures and gross 
 94.10  investment for state and local governments as prepared by the 
 94.11  United States Department of Commerce, for the most recently 
 94.12  available year to the 1993 2003 implicit price deflator for 
 94.13  state and local government purchases. 
 94.14     [EFFECTIVE DATE.] This section is effective for aid payable 
 94.15  in 2004 and thereafter. 
 94.16     Sec. 3.  Minnesota Statutes 2002, section 477A.011, 
 94.17  subdivision 36, is amended to read: 
 94.18     Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
 94.19  provided in this subdivision, "city aid base" means, for each 
 94.20  city, the sum of the local government aid and equalization aid 
 94.21  it was originally certified to receive in calendar year 1993 
 94.22  under Minnesota Statutes 1992, section 477A.013, subdivisions 3 
 94.23  and 5, and the amount of disparity reduction aid it received in 
 94.24  calendar year 1993 under Minnesota Statutes 1992, section 
 94.25  273.1398, subdivision 3 is zero. 
 94.26     (b) For aids payable in 1996 and thereafter, a city that in 
 94.27  1992 or 1993 transferred an amount from governmental funds to 
 94.28  its sewer and water fund, which amount exceeded its net levy for 
 94.29  taxes payable in the year in which the transfer occurred, has a 
 94.30  "city aid base" equal to the sum of (i) its city aid base, as 
 94.31  calculated under paragraph (a), and (ii) one-half of the 
 94.32  difference between its city aid distribution under section 
 94.33  477A.013, subdivision 9, for aids payable in 1995 and its city 
 94.34  aid base for aids payable in 1995. 
 94.35     (c) The city aid base for any city with a population less 
 94.36  than 500 is increased by $40,000 for aids payable in calendar 
 95.1   year 1995 and thereafter, and the maximum amount of total aid it 
 95.2   may receive under section 477A.013, subdivision 9, paragraph 
 95.3   (c), is also increased by $40,000 for aids payable in calendar 
 95.4   year 1995 only, provided that: 
 95.5      (i) the average total tax capacity rate for taxes payable 
 95.6   in 1995 exceeds 200 percent; 
 95.7      (ii) the city portion of the tax capacity rate exceeds 100 
 95.8   percent; and 
 95.9      (iii) its city aid base is less than $60 per capita. 
 95.10     (d) (c) The city aid base for a city is increased by 
 95.11  $20,000 in 1998 and thereafter and the maximum amount of total 
 95.12  aid it may receive under section 477A.013, subdivision 9, 
 95.13  paragraph (c), is also increased by $20,000 in calendar year 
 95.14  1998 only, provided that: 
 95.15     (i) the city has a population in 1994 of 2,500 or more; 
 95.16     (ii) the city is located in a county, outside of the 
 95.17  metropolitan area, which contains a city of the first class; 
 95.18     (iii) the city's net tax capacity used in calculating its 
 95.19  1996 aid under section 477A.013 is less than $400 per capita; 
 95.20  and 
 95.21     (iv) at least four percent of the total net tax capacity, 
 95.22  for taxes payable in 1996, of property located in the city is 
 95.23  classified as railroad property. 
 95.24     (e) (d) The city aid base for a city is increased by 
 95.25  $200,000 in 1999 and thereafter and the maximum amount of total 
 95.26  aid it may receive under section 477A.013, subdivision 9, 
 95.27  paragraph (c), is also increased by $200,000 in calendar year 
 95.28  1999 only, provided that: 
 95.29     (i) the city was incorporated as a statutory city after 
 95.30  December 1, 1993; 
 95.31     (ii) its city aid base does not exceed $5,600; and 
 95.32     (iii) the city had a population in 1996 of 5,000 or more. 
 95.33     (f) (e) The city aid base for a city is increased by 
 95.34  $450,000 in 1999 to 2008 and the maximum amount of total aid it 
 95.35  may receive under section 477A.013, subdivision 9, paragraph 
 95.36  (c), is also increased by $450,000 in calendar year 1999 only, 
 96.1   provided that: 
 96.2      (i) the city had a population in 1996 of at least 50,000; 
 96.3      (ii) its population had increased by at least 40 percent in 
 96.4   the ten-year period ending in 1996; and 
 96.5      (iii) its city's net tax capacity for aids payable in 1998 
 96.6   is less than $700 per capita. 
 96.7      (g) (f) Beginning in 2004, the city aid base for a city is 
 96.8   equal to the sum of its city aid base in 2003 and the amount of 
 96.9   additional aid it was certified to receive under section 477A.06 
 96.10  in 2003.  For 2004 only, the maximum amount of total aid a city 
 96.11  may receive under section 477A.013, subdivision 9, paragraph 
 96.12  (c), is also increased by the amount it was certified to receive 
 96.13  under section 477A.06 in 2003. 
 96.14     (h) (g) The city aid base for a city is increased by 
 96.15  $150,000 for aids payable in 2000 and thereafter, and the 
 96.16  maximum amount of total aid it may receive under section 
 96.17  477A.013, subdivision 9, paragraph (c), is also increased by 
 96.18  $150,000 in calendar year 2000 only, provided that: 
 96.19     (1) the city has a population that is greater than 1,000 
 96.20  and less than 2,500; 
 96.21     (2) its commercial and industrial percentage for aids 
 96.22  payable in 1999 is greater than 45 percent; and 
 96.23     (3) the total market value of all commercial and industrial 
 96.24  property in the city for assessment year 1999 is at least 15 
 96.25  percent less than the total market value of all commercial and 
 96.26  industrial property in the city for assessment year 1998. 
 96.27     (i) (h) The city aid base for a city is increased by 
 96.28  $200,000 in 2000 and thereafter, and the maximum amount of total 
 96.29  aid it may receive under section 477A.013, subdivision 9, 
 96.30  paragraph (c), is also increased by $200,000 in calendar year 
 96.31  2000 only, provided that: 
 96.32     (1) the city had a population in 1997 of 2,500 or more; 
 96.33     (2) the net tax capacity of the city used in calculating 
 96.34  its 1999 aid under section 477A.013 is less than $650 per 
 96.35  capita; 
 96.36     (3) the pre-1940 housing percentage of the city used in 
 97.1   calculating 1999 aid under section 477A.013 is greater than 12 
 97.2   percent; 
 97.3      (4) the 1999 local government aid of the city under section 
 97.4   477A.013 is less than 20 percent of the amount that the formula 
 97.5   aid of the city would have been if the need increase percentage 
 97.6   was 100 percent; and 
 97.7      (5) the city aid base of the city used in calculating aid 
 97.8   under section 477A.013 is less than $7 per capita. 
 97.9      (j) The city aid base for a city is increased by $225,000 
 97.10  in calendar years 2000 to 2002 and the maximum amount of total 
 97.11  aid it may receive under section 477A.013, subdivision 9, 
 97.12  paragraph (c), is also increased by $225,000 in calendar year 
 97.13  2000 only, provided that: 
 97.14     (1) the city had a population of at least 5,000; 
 97.15     (2) its population had increased by at least 50 percent in 
 97.16  the ten-year period ending in 1997; 
 97.17     (3) the city is located outside of the Minneapolis-St. Paul 
 97.18  metropolitan statistical area as defined by the United States 
 97.19  Bureau of the Census; and 
 97.20     (4) the city received less than $30 per capita in aid under 
 97.21  section 477A.013, subdivision 9, for aids payable in 1999. 
 97.22     (k) (i) The city aid base for a city is increased by 
 97.23  $102,000 in 2000 and thereafter, and the maximum amount of total 
 97.24  aid it may receive under section 477A.013, subdivision 9, 
 97.25  paragraph (c), is also increased by $102,000 in calendar year 
 97.26  2000 only, provided that: 
 97.27     (1) the city has a population in 1997 of 2,000 or more; 
 97.28     (2) the net tax capacity of the city used in calculating 
 97.29  its 1999 aid under section 477A.013 is less than $455 per 
 97.30  capita; 
 97.31     (3) the net levy of the city used in calculating 1999 aid 
 97.32  under section 477A.013 is greater than $195 per capita; and 
 97.33     (4) the 1999 local government aid of the city under section 
 97.34  477A.013 is less than 38 percent of the amount that the formula 
 97.35  aid of the city would have been if the need increase percentage 
 97.36  was 100 percent. 
 98.1      (l) (j) The city aid base for a city is increased by 
 98.2   $32,000 in 2001 and thereafter, and the maximum amount of total 
 98.3   aid it may receive under section 477A.013, subdivision 9, 
 98.4   paragraph (c), is also increased by $32,000 in calendar year 
 98.5   2001 only, provided that: 
 98.6      (1) the city has a population in 1998 that is greater than 
 98.7   200 but less than 500; 
 98.8      (2) the city's revenue need used in calculating aids 
 98.9   payable in 2000 was greater than $200 per capita; 
 98.10     (3) the city net tax capacity for the city used in 
 98.11  calculating aids available in 2000 was equal to or less than 
 98.12  $200 per capita; 
 98.13     (4) the city aid base of the city used in calculating aid 
 98.14  under section 477A.013 is less than $65 per capita; and 
 98.15     (5) the city's formula aid for aids payable in 2000 was 
 98.16  greater than zero. 
 98.17     (m) (k) The city aid base for a city is increased by $7,200 
 98.18  in 2001 and thereafter, and the maximum amount of total aid it 
 98.19  may receive under section 477A.013, subdivision 9, paragraph 
 98.20  (c), is also increased by $7,200 in calendar year 2001 only, 
 98.21  provided that: 
 98.22     (1) the city had a population in 1998 that is greater than 
 98.23  200 but less than 500; 
 98.24     (2) the city's commercial industrial percentage used in 
 98.25  calculating aids payable in 2000 was less than ten percent; 
 98.26     (3) more than 25 percent of the city's population was 60 
 98.27  years old or older according to the 1990 census; 
 98.28     (4) the city aid base of the city used in calculating aid 
 98.29  under section 477A.013 is less than $15 per capita; and 
 98.30     (5) the city's formula aid for aids payable in 2000 was 
 98.31  greater than zero. 
 98.32     (n) (l) The city aid base for a city is increased by 
 98.33  $45,000 in 2001 and thereafter and by an additional $50,000 in 
 98.34  calendar years 2002 to 2011, and the maximum amount of total aid 
 98.35  it may receive under section 477A.013, subdivision 9, paragraph 
 98.36  (c), is also increased by $45,000 in calendar year 2001 only, 
 99.1   and by $50,000 in calendar year 2002 only, provided that: 
 99.2      (1) the net tax capacity of the city used in calculating 
 99.3   its 2000 aid under section 477A.013 is less than $810 per 
 99.4   capita; 
 99.5      (2) the population of the city declined more than two 
 99.6   percent between 1988 and 1998; 
 99.7      (3) the net levy of the city used in calculating 2000 aid 
 99.8   under section 477A.013 is greater than $240 per capita; and 
 99.9      (4) the city received less than $36 per capita in aid under 
 99.10  section 477A.013, subdivision 9, for aids payable in 2000. 
 99.11     (o) (m) The city aid base for a city with a population of 
 99.12  10,000 or more which is located outside of the seven-county 
 99.13  metropolitan area is increased in 2002 and thereafter, and the 
 99.14  maximum amount of total aid it may receive under section 
 99.15  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
 99.16  in calendar year 2002 only, by an amount equal to the lesser of: 
 99.17     (1)(i) the total population of the city, as determined by 
 99.18  the United States Bureau of the Census, in the 2000 census, (ii) 
 99.19  minus 5,000, (iii) times 60; or 
 99.20     (2) $2,500,000. 
 99.21     (p) (n) The city aid base is increased by $50,000 in 2002 
 99.22  and thereafter, and the maximum amount of total aid it may 
 99.23  receive under section 477A.013, subdivision 9, paragraph (c), is 
 99.24  also increased by $50,000 in calendar year 2002 only, provided 
 99.25  that: 
 99.26     (1) the city is located in the seven-county metropolitan 
 99.27  area; 
 99.28     (2) its population in 2000 is between 10,000 and 20,000; 
 99.29  and 
 99.30     (3) its commercial industrial percentage, as calculated for 
 99.31  city aid payable in 2001, was greater than 25 percent. 
 99.32     (q) (o) The city aid base for a city is increased by 
 99.33  $150,000 in calendar years 2002 to 2011 and the maximum amount 
 99.34  of total aid it may receive under section 477A.013, subdivision 
 99.35  9, paragraph (c), is also increased by $150,000 in calendar year 
 99.36  2002 only, provided that: 
100.1      (1) the city had a population of at least 3,000 but no more 
100.2   than 4,000 in 1999; 
100.3      (2) its home county is located within the seven-county 
100.4   metropolitan area; 
100.5      (3) its pre-1940 housing percentage is less than 15 
100.6   percent; and 
100.7      (4) its city net tax capacity per capita for taxes payable 
100.8   in 2000 is less than $900 per capita. 
100.9      (r) (p) The city aid base for a city is increased by 
100.10  $200,000 beginning in calendar year 2003 and the maximum amount 
100.11  of total aid it may receive under section 477A.013, subdivision 
100.12  9, paragraph (c), is also increased by $200,000 in calendar year 
100.13  2003 only, provided that the city qualified for an increase in 
100.14  homestead and agricultural credit aid under Laws 1995, chapter 
100.15  264, article 8, section 18. 
100.16     (q) The city aid base for a city is increased by $200,000 
100.17  in 2004 only and the maximum amount of total aid it may receive 
100.18  under section 477A.013, subdivision 9, is also increased by 
100.19  $200,000 in calendar year 2004 only, if the city is the site of 
100.20  a nuclear dry cask storage facility. 
100.21     (r) The city aid base for a city is increased by $10,000 in 
100.22  2004 and thereafter and the maximum total aid it may receive 
100.23  under section 477A.013, subdivision 9, is also increased by 
100.24  $10,000 in calendar year 2004 only, if the city was included in 
100.25  a federal major disaster designation issued on April 1, 1998 and 
100.26  its pre-1940 housing stock was decreased by more than 40 percent 
100.27  between 1990 and 2000. 
100.28     [EFFECTIVE DATE.] This section is effective beginning with 
100.29  aids payable in 2004. 
100.30     Sec. 4.  Minnesota Statutes 2002, section 477A.011, is 
100.31  amended by adding a subdivision to read: 
100.32     Subd. 38.  [HOUSEHOLD SIZE.] "Household size" means the 
100.33  average number of persons per household in the jurisdiction as 
100.34  most recently estimated and reported by the state demographer as 
100.35  of July 1 of the aid calculation year. 
100.36     [EFFECTIVE DATE.] This section is effective for aid payable 
101.1   in 2004 and thereafter. 
101.2      Sec. 5.  Minnesota Statutes 2002, section 477A.011, is 
101.3   amended by adding a subdivision to read: 
101.4      Subd. 39.  [ROAD ACCIDENTS FACTOR.] "Road accidents factor" 
101.5   means the average annual number of vehicular accidents occurring 
101.6   on public roads, streets, and alleys in the jurisdiction as 
101.7   reported to the commissioner of revenue by the commissioner of 
101.8   public safety by July 1 of the aid calculation year using the 
101.9   most recent three-year period for which the commissioner of 
101.10  public safety has complete information, divided by the 
101.11  jurisdiction's population. 
101.12     [EFFECTIVE DATE.] This section is effective for aid payable 
101.13  in 2004 and thereafter. 
101.14     Sec. 6.  Minnesota Statutes 2002, section 477A.011, is 
101.15  amended by adding a subdivision to read: 
101.16     Subd. 40.  [METROPOLITAN AREA FACTOR.] "Metropolitan area 
101.17  factor" means 35.20915 for cities located in the metropolitan 
101.18  area. 
101.19     [EFFECTIVE DATE.] This section is effective for aid payable 
101.20  in 2004 and thereafter. 
101.21     Sec. 7.  Minnesota Statutes 2002, section 477A.013, 
101.22  subdivision 8, is amended to read: 
101.23     Subd. 8.  [CITY FORMULA AID.] In calendar year 1994 2004 
101.24  and subsequent years, the formula aid for a city is equal to the 
101.25  need increase percentage multiplied by the difference between 
101.26  (1) the city's revenue need multiplied by its population, and 
101.27  (2) the sum of the city's net tax capacity multiplied by the tax 
101.28  effort rate, and the taconite aids under sections 298.28 and 
101.29  298.282, multiplied by the following percentages:  
101.30     (i) zero percent for aids payable in 2004; 
101.31     (ii) 25 percent for aids payable in 2005; 
101.32     (iii) 50 percent for aids payable in 2006; 
101.33     (iv) 75 percent for aids payable in 2007; and 
101.34     (v) 100 percent for aids payable in 2008 and thereafter.  
101.35  No city may have a formula aid amount less than zero.  The need 
101.36  increase percentage must be the same for all cities.  
102.1      Notwithstanding the prior sentence, in 1995 only, the need 
102.2   increase percentage for a city shall be twice the need increase 
102.3   percentage applicable to other cities if:  
102.4      (1) the city, in 1992 or 1993, transferred an amount from 
102.5   governmental funds to their sewer and water fund, and 
102.6      (2) the amount transferred exceeded their net levy for 
102.7   taxes payable in the year in which the transfer occurred. 
102.8      The applicable need increase percentage or percentages must 
102.9   be calculated by the department of revenue so that the total of 
102.10  the aid under subdivision 9 equals the total amount available 
102.11  for aid under section 477A.03 after the subtraction under 
102.12  section 477A.014, subdivisions 4 and 5.  
102.13     [EFFECTIVE DATE.] This section is effective for aid payable 
102.14  in 2004 and thereafter. 
102.15     Sec. 8.  Minnesota Statutes 2002, section 477A.013, 
102.16  subdivision 9, is amended to read: 
102.17     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
102.18  2002 and thereafter, each city shall receive an aid distribution 
102.19  equal to the sum of (1) the city formula aid under subdivision 
102.20  8, and (2) its city aid base. 
102.21     (b) The percentage increase aid for a first class city in 
102.22  calendar year 1995 and thereafter, except for 2002, 2004 shall 
102.23  not exceed the percentage increase in the sum of the aid to all 
102.24  cities under this section in the current calendar year compared 
102.25  to the sum of the aid to all cities in the previous year amount 
102.26  of its aid in calendar year 2003 after the reductions under this 
102.27  article.  For aids payable in 2002 only, the amount of the aid 
102.28  paid to a first class city shall not exceed the sum of its aid 
102.29  amount for calendar year 2001 under this section and its aid 
102.30  payment in calendar year 2001 under section 273.1398, 
102.31  subdivision 2, by more than 2.5 percent. 
102.32     (c) For aids payable in all years except 2002 2005 and 
102.33  thereafter, the total aid for any city, except a first class 
102.34  city, shall not exceed the sum of (1) ten percent of the city's 
102.35  net levy for the year prior to the aid distribution plus (2) its 
102.36  total aid in the previous year.  For aids payable in 2002 only, 
103.1   the total aid for any city, except a first class city, shall not 
103.2   exceed the sum of (1) 40 percent of the city's net levy for 
103.3   taxes payable in the year prior to the aid distribution plus (2) 
103.4   40 percent of its total aid in the previous year under section 
103.5   273.1398, subdivision 2, plus (3) its total aid in the previous 
103.6   year under this section.  For aids payable in 2005 and 
103.7   thereafter, the total aid for any city with a population of 
103.8   2,500 or more may not decrease from its total aid under this 
103.9   section in the previous year by an amount greater than ten 
103.10  percent of its net levy in the year prior to the aid 
103.11  distribution. 
103.12     (d) For aids payable in 2004 only, the total aid for a city 
103.13  with a population less than 2,500 may not be less than the 
103.14  amount it was certified to receive in 2003 minus the greater of 
103.15  (1) the reduction to this aid payment in 2003 under this 
103.16  article, or (2) five percent of its 2003 aid amount.  For aids 
103.17  payable in 2005 and thereafter, the total aid for a city with a 
103.18  population less than 2,500 must not be less than the amount it 
103.19  was certified to receive in the previous year minus five percent 
103.20  of its 2003 certified aid amount. 
103.21     [EFFECTIVE DATE.] This section is effective beginning with 
103.22  aids payable in 2004. 
103.23     Sec. 9.  Minnesota Statutes 2002, section 477A.03, 
103.24  subdivision 2, is amended to read: 
103.25     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
103.26  discharge the duties imposed by sections 477A.011 to 477A.014 is 
103.27  annually appropriated from the general fund to the commissioner 
103.28  of revenue.  
103.29     (b) Aid payments to counties under section 477A.0121 are 
103.30  limited to $20,265,000 in 1996.  Aid payments to counties under 
103.31  section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
103.32  payable in 1998 and thereafter, the total aids paid under 
103.33  section 477A.0121 are the amounts certified to be paid in the 
103.34  previous year, adjusted for inflation as provided under 
103.35  subdivision 3. 
103.36     (c)(i) For aids payable in 1998 and thereafter, the total 
104.1   aids paid to counties under section 477A.0122 are the amounts 
104.2   certified to be paid in the previous year, adjusted for 
104.3   inflation as provided under subdivision 3. 
104.4      (ii) Aid payments to counties under section 477A.0122 in 
104.5   2000 are further increased by an additional $20,000,000 in 2000. 
104.6      (d) Aid payments to cities in 2002 under section 477A.013, 
104.7   subdivision 9, are limited to the amounts certified to be paid 
104.8   in the previous year, adjusted for inflation as provided in 
104.9   subdivision 3, and increased by $140,000,000.  For aids payable 
104.10  in 2003, the total aids paid under section 477A.013, subdivision 
104.11  9, are the amounts certified to be paid in the previous year, 
104.12  adjusted for inflation as provided under subdivision 3.  For 
104.13  aids payable in 2004, the total aids paid under section 
104.14  477A.013, subdivision 9, are the amounts certified to be paid in 
104.15  the previous year, adjusted for inflation as provided under 
104.16  subdivision 3, and increased by the amount certified to be paid 
104.17  in 2003 under section 477A.06.  For aids payable in 2005 and 
104.18  thereafter, the total aids paid under section 477A.013, 
104.19  subdivision 9, are the amounts certified to be paid in the 
104.20  previous year, adjusted for inflation as provided under 
104.21  subdivision 3.  The additional amount authorized under 
104.22  subdivision 4 is not included when calculating the appropriation 
104.23  limits under this paragraph. 
104.24     (e) Reimbursements made to counties under section 477A.0123 
104.25  in calendar year 2005 and thereafter are limited to an amount 
104.26  equal to the maximum allowed appropriation under this section in 
104.27  the previous year, multiplied by a percent to be established by 
104.28  law.  If no percent is established by law, the appropriation is 
104.29  limited to the total amount appropriated for this purpose in the 
104.30  previous year.  
104.31     [EFFECTIVE DATE.] This section is effective for aids 
104.32  payable in 2004 and thereafter. 
104.33     Sec. 10.  Minnesota Statutes 2002, section 477A.03, is 
104.34  amended by adding a subdivision to read: 
104.35     Subd. 2a.  [CITIES.] For aids payable in 2004, the total 
104.36  aids paid under section 477A.013, subdivision 9, are limited to 
105.1   $429,000,000.  For aids payable in 2005 and thereafter, the 
105.2   total aids paid under section 477A.013, subdivision 9, are 
105.3   increased to $437,052,000. 
105.4      [EFFECTIVE DATE.] This section is effective for aids 
105.5   payable in 2004 and thereafter. 
105.6      Sec. 11.  [DEFINITIONS.] 
105.7      (a) For purposes of sections 11 to 13, the following terms 
105.8   have the meanings given them in this section. 
105.9      (b) The 2003 and 2004 "levy plus aid revenue base" for a 
105.10  city is the sum of that city's certified property tax levy for 
105.11  taxes payable in 2003, plus the sum of the amounts the city was 
105.12  certified to receive in 2003 as: 
105.13     (1) local government aid under Minnesota Statutes, section 
105.14  477A.013; 
105.15     (2) existing low-income housing aid under Minnesota 
105.16  Statutes, section 477A.06; 
105.17     (3) new construction low-income housing aid under Minnesota 
105.18  Statutes, section 477A.065; and 
105.19     (4) taconite aids under Minnesota Statutes, sections 298.28 
105.20  and 298.282, including any aid which was required to be placed 
105.21  in a special fund for expenditure in the next succeeding year. 
105.22     (c) "Total revenue" for a city for calendar year 2003 is 
105.23  the total revenue amount for that city, as reported by the state 
105.24  auditor for calendar year 2000, excluding grants between 
105.25  political subdivisions and amounts borrowed by the city but 
105.26  including net transfers from an enterprise fund. 
105.27     [EFFECTIVE DATE.] This section is effective the day 
105.28  following final enactment. 
105.29     Sec. 12.  [2003 CITY AID REDUCTIONS.] 
105.30     The commissioner of revenue shall compute an aid reduction 
105.31  amount for each city for 2003 equal to 9.3 percent of the city's 
105.32  levy plus aid revenue base for 2003. 
105.33     The reduction amount is limited to 3.7 percent of the 
105.34  city's total revenues for 2003 if a city has a population under 
105.35  1,000 or if the city has a three-year levy plus aid revenue base 
105.36  increase average of less than two percent.  For all other 
106.1   cities, the reduction amount is limited to 5.25 percent of the 
106.2   city's total revenues for 2003. 
106.3      The reduction is further limited to the sum of the city's 
106.4   payable 2003 distribution pursuant to Minnesota Statutes, 
106.5   section 477A.013, and related sections, and the city's payable 
106.6   2003 reimbursement under Minnesota Statutes, section 273.1384. 
106.7      The reduction is applied first to the city's distribution 
106.8   pursuant to Minnesota Statutes, section 477A.013, and then if 
106.9   necessary to the city's reimbursements pursuant to Minnesota 
106.10  Statutes, section 273.1384. 
106.11     To the extent that sufficient information is available on 
106.12  each successive payment date within the year, the commissioner 
106.13  of revenue shall pay any remaining 2003 distribution or 
106.14  reimbursement amount reduced under this section in equal 
106.15  installments on the payment dates provided in law. 
106.16     [EFFECTIVE DATE.] This section is effective the day 
106.17  following final enactment. 
106.18     Sec. 13.  [2004 CITY AID REDUCTIONS.] 
106.19     The commissioner of revenue shall compute an aid reduction 
106.20  amount for 2004 for each city as provided in this section. 
106.21     The initial aid reduction amount for each city is the 
106.22  amount by which the city's aid distribution under Minnesota 
106.23  Statutes, section 477A.013, and related provisions payable in 
106.24  2003 exceeds the city's 2004 distribution under those provisions.
106.25     The minimum aid reduction amount for a city is the amount 
106.26  of its reduction in 2003 under section 12.  If a city receives 
106.27  an increase to its city aid base under Minnesota Statutes, 
106.28  section 477A.011, subdivision 36, its minimum aid reduction is 
106.29  reduced by an equal amount. 
106.30     The maximum aid reduction amount for a city is an amount 
106.31  equal to 14 percent of the city's total 2004 levy plus aid 
106.32  revenue base, except that if the city has a city net tax 
106.33  capacity for aids payable in 2004, as defined in Minnesota 
106.34  Statutes, section 477A.011, subdivision 20, of $700 per capita 
106.35  or less, the maximum aid reduction shall not exceed an amount 
106.36  equal to 13 percent of the city's total 2004 levy plus aid 
107.1   revenue base. 
107.2      If the initial aid reduction amount for a city is less than 
107.3   the minimum aid reduction amount for that city, the final aid 
107.4   reduction amount for the city is the sum of the initial aid 
107.5   reduction amount and the lesser of the amount of the city's 
107.6   payable 2004 reimbursement under Minnesota Statutes, section 
107.7   273.1384, or the difference between the minimum and initial aid 
107.8   reduction amounts for the city. 
107.9      If the initial aid reduction amount for a city is greater 
107.10  than the maximum aid reduction amount for the city, the city 
107.11  receives an additional distribution under this section equal to 
107.12  the result of subtracting the maximum aid reduction amount from 
107.13  the initial aid reduction amount.  This distribution shall be 
107.14  paid in equal installments in 2004 on the dates specified in 
107.15  Minnesota Statutes, section 477A.015.  The amount necessary for 
107.16  these additional distributions is appropriated to the 
107.17  commissioner of revenue from the general fund in fiscal year 
107.18  2005. 
107.19     The initial aid reduction is applied to the city's 
107.20  distribution pursuant to Minnesota Statutes, section 477A.013, 
107.21  and any aid reduction in excess of the initial aid reduction is 
107.22  applied to the city's reimbursements pursuant to Minnesota 
107.23  Statutes, section 273.1384. 
107.24     To the extent that sufficient information is available on 
107.25  each payment date in 2004, the commissioner of revenue shall pay 
107.26  the reimbursements reduced under this section in equal 
107.27  installments on the payment dates provided in law. 
107.28     [EFFECTIVE DATE.] This section is effective the day 
107.29  following final enactment. 
107.30     Sec. 14.  [REPEALER.] 
107.31     Minnesota Statutes 2002, sections 477A.011, subdivision 37; 
107.32  477A.0132; 477A.03, subdivisions 3 and 4; 477A.06; and 477A.07, 
107.33  are repealed effective for aids payable in 2004 and thereafter. 
107.34                             ARTICLE 6
107.35                    OTHER INTERGOVERNMENTAL AIDS
107.36     Section 1.  Minnesota Statutes 2002, section 273.1398, 
108.1   subdivision 4a, is amended to read: 
108.2      Subd. 4a.  [TEMPORARY AID OFFSET FOR COURT COSTS.] (a) In 
108.3   calendar years 2004 and 2005, the commissioner of revenue shall 
108.4   pay the amounts determined in paragraph (d) to the eligible 
108.5   counties on the dates specified in subdivision 6.  By July 15 of 
108.6   the year preceding the year in which the state assumes the cost 
108.7   of court administration in the judicial district as specified 
108.8   under section 480.183, 2003, the supreme court shall determine 
108.9   and certify to the commissioner of revenue for each county the 
108.10  county's share of the costs to be assumed in the judicial 
108.11  districts specified under section 480.183, subdivision 1, during 
108.12  each of the succeeding fiscal year years. 
108.13     (b) The amount certified in paragraph (a) shall be equal to 
108.14  the following: 
108.15     (1) 103 percent of the required court administration 
108.16  expenditures as defined under section 480.183, subdivision 3, 
108.17  for calendar year 2003, as determined under subdivision 4b, 
108.18  paragraph (a); plus 
108.19     (2) an adjustment for any cumulative percentage increase in 
108.20  salary expenditures as defined under section 480.183, 
108.21  subdivision 2, in excess of a maintenance of effort increase of 
108.22  six percent; less 
108.23     (3) an amount equal to the county's share of transferred 
108.24  fines collected by the district courts in the county during the 
108.25  calendar year preceding certification 2002, increased by two 
108.26  percent for counties in districts one and three, and by 4.04 
108.27  percent for counties in districts six and ten.  
108.28     The court and the county may, if both parties agree, 
108.29  negotiate and certify an amount higher than the amount 
108.30  calculated under this paragraph. 
108.31     (c) For purposes of this subdivision, the adjustment in 
108.32  paragraph (b), clause (2), shall be equal to: 
108.33     (1) the sum of the court administration expenditures as 
108.34  defined under section 480.183, subdivision 3, required under 
108.35  subdivision 4b, paragraph (a), plus the temporary aid payment 
108.36  under subdivision 4c; multiplied by 
109.1      (2) the difference between (i) the cumulative percentage 
109.2   increase in actual and anticipated salary settlements for court 
109.3   employees from July 1, 2001, until the date of the court 
109.4   transfer and (ii) the percentage specified in subdivision 4b, 
109.5   paragraph (a).  
109.6      (d) Payments to a county under subdivision 2 or section 
109.7   273.166 for the calendar year in which the state assumes the 
109.8   cost of court administration as defined under section 480.183, 
109.9   subdivision 3, in the judicial district must be permanently 
109.10  reduced by an amount equal to 75 percent of the net cost to the 
109.11  state for assumption of district court costs as certified in 
109.12  paragraph (a). For calendar year 2004, each county in judicial 
109.13  districts one and three shall receive an amount equal to 25 
109.14  percent of the amount certified under paragraph (b), and each 
109.15  county in judicial districts six and ten shall receive an amount 
109.16  equal to the amount certified under paragraph (b).  For calendar 
109.17  year 2005, each county in judicial districts six and ten shall 
109.18  receive an amount equal to 25 percent of the amount certified 
109.19  under paragraph (b), and each county in judicial districts one 
109.20  and three receives zero. 
109.21     (e) Payments to a county under subdivision 2 or section 
109.22  273.166 for the calendar year after the calendar year in which 
109.23  the state assumes the cost of court administration as defined 
109.24  under section 480.183, subdivision 3, in the judicial district 
109.25  must be permanently reduced by an amount equal to 25 percent of 
109.26  the net cost to the state for assumption of district court costs 
109.27  as certified in paragraph (a), provided that this amount must be 
109.28  increased or decreased by an amount equal to the positive or 
109.29  negative difference between the amount of fee and fine revenue 
109.30  certified under paragraph (b), clause (3), and the actual amount 
109.31  of fee and fine revenue of the county for the calendar year when 
109.32  certification takes place. 
109.33     (f) Payments to a county under subdivision 2 for calendar 
109.34  year 2001 are permanently increased by an amount equal to 7.5 
109.35  percent of the county's share of transferred fines collected by 
109.36  the district courts in the county during calendar year 1998, as 
110.1   determined under paragraph (a).  If the amount determined in 
110.2   paragraph (a) exceeds the amount of aid a county is scheduled to 
110.3   be paid under subdivision 2 in 2000, then the county shall not 
110.4   receive an aid increase under this paragraph. 
110.5      (g) Payments to a county under subdivision 2 or section 
110.6   273.166, for the cost of mandated services, as defined in 
110.7   section 480.183, subdivision 4, in the judicial district, must 
110.8   be permanently reduced in 2002 by an amount equal to the cost to 
110.9   the state for assumption of mandated court services as defined 
110.10  in section 480.183, subdivision 4.  The supreme court shall 
110.11  determine the amount for each county and certify it to the 
110.12  commissioner of revenue by July 15, 2001. 
110.13     [EFFECTIVE DATE.] This section is effective for aid payable 
110.14  in 2004 and 2005. 
110.15     Sec. 2.  Minnesota Statutes 2002, section 273.1398, 
110.16  subdivision 4c, is amended to read: 
110.17     Subd. 4c.  [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 
110.18  calendar years 2004 and 2005, each county in a judicial district 
110.19  that has not been transferred to the state by January 1 of that 
110.20  year shall receive additional homestead and agricultural 
110.21  credit temporary court maintenance of effort cost aid.  This 
110.22  amount is in addition to the amount calculated under subdivision 
110.23  2 and must not be included in the definition of homestead and 
110.24  agricultural credit base under subdivision 1, paragraph (j).  
110.25  The amount of additional aid is equal to the difference between 
110.26  (1) the amount budgeted for court administration costs in 2001 
110.27  as determined under subdivision 4b, paragraph (b), multiplied by 
110.28  the maintenance of effort percent for the calendar year as 
110.29  determined under subdivision 4b, paragraph (a), and (2) the 
110.30  amount calculated under subdivision 4b, paragraph (a), for 
110.31  calendar year 2003, except that the payment under this section 
110.32  is reduced by 50 percent in the calendar year in which the 
110.33  district is transferred to the state.  This additional aid must 
110.34  be used only to fund court administration expenditures as 
110.35  defined in section 480.183, subdivision 3.  This amount must be 
110.36  added to the state court's base budget in the year when the 
111.1   court in that judicial district in which the county is located 
111.2   is transferred to the state. 
111.3      [EFFECTIVE DATE.] This section is effective for aid payable 
111.4   in 2004 and 2005 for counties in judicial districts one, three, 
111.5   six, and ten. 
111.6      Sec. 3.  Minnesota Statutes 2002, section 273.1398, 
111.7   subdivision 6, is amended to read: 
111.8      Subd. 6.  [PAYMENT.] The commissioner shall certify the 
111.9   aids provided in subdivisions 2, 2b, 3, and 5 subdivision 3 
111.10  before September 1 of the year preceding the distribution year 
111.11  to the county auditor of the affected local government.  The 
111.12  aids provided in subdivisions 2, 2b, 3, 4a, and 5 4c must be 
111.13  paid to local governments other than school districts at the 
111.14  times provided in section 477A.015 for payment of local 
111.15  government aid to taxing jurisdictions, except that the first 
111.16  one-half payment of disparity reduction aid provided in 
111.17  subdivision 3 must be paid on or before August 31.  The 
111.18  disparity reduction credit provided in subdivision 4 must be 
111.19  paid to taxing jurisdictions other than school districts at the 
111.20  time provided in section 473H.10, subdivision 3.  Aids and 
111.21  credit reimbursements to school districts must be certified to 
111.22  the commissioner of children, families, and learning and paid 
111.23  under section 273.1392.  Payment shall not be made to any taxing 
111.24  jurisdiction that has ceased to levy a property tax.  
111.25     [EFFECTIVE DATE.] This section is effective for aid payable 
111.26  in 2004 and thereafter. 
111.27     Sec. 4.  Minnesota Statutes 2002, section 273.1398, 
111.28  subdivision 8, is amended to read: 
111.29     Subd. 8.  [APPROPRIATION.] (a) An amount sufficient to pay 
111.30  the aids and credits provided under this section for school 
111.31  districts, intermediate school districts, or any group of school 
111.32  districts levying as a single taxing entity, is annually 
111.33  appropriated from the general fund to the commissioner of 
111.34  children, families, and learning.  An amount sufficient to pay 
111.35  the aids and credits provided under this section for counties, 
111.36  cities, towns, and special taxing districts is annually 
112.1   appropriated from the general fund to the commissioner of 
112.2   revenue.  A jurisdiction's aid amount may be increased or 
112.3   decreased based on any prior year adjustments for homestead 
112.4   credit or other property tax credit or aid programs. 
112.5      (b) The commissioner of finance shall bill the commissioner 
112.6   of revenue for the cost of preparation of local impact notes as 
112.7   required by section 3.987 only to the extent to which those 
112.8   costs exceed those costs incurred in fiscal year 1997 and for 
112.9   any other new costs attributable to the local impact note 
112.10  function required by section 3.987, not to exceed $100,000 in 
112.11  fiscal years 1998 and 1999 and $200,000 in fiscal year 2000 and 
112.12  thereafter. 
112.13     The commissioner of revenue shall deduct the amount billed 
112.14  under this paragraph from aid payments to be made to cities and 
112.15  counties under subdivision 2 on a pro rata basis.  The amount 
112.16  deducted under this paragraph is appropriated to the 
112.17  commissioner of finance for the preparation of local impact 
112.18  notes.  
112.19     [EFFECTIVE DATE.] This section is effective for aid payable 
112.20  in 2004 and thereafter. 
112.21     Sec. 5.  [477A.0124] [COUNTY PROGRAM AID.] 
112.22     Subdivision 1.  [CALENDAR YEAR 2004.] In 2004, each county 
112.23  shall receive program aid in an amount equal to the sum of: 
112.24     (1) the amount of county attached machinery aid computed 
112.25  for the county for payment in 2003 under section 273.138 prior 
112.26  to any reduction under laws enacted in 2003; 
112.27     (2) the amount of county homestead and agricultural credit 
112.28  aid computed for the county for payment in 2003 under section 
112.29  273.1398, subdivision 2, prior to any reduction under laws 
112.30  enacted in 2003, minus the amount certified under section 
112.31  273.1398, subdivision 4a, paragraph (b), for counties in 
112.32  judicial districts one, three, six, and ten, and by 25 percent 
112.33  of the amount certified under section 273.1398, subdivision 4a, 
112.34  paragraph (b), for counties located in judicial districts two 
112.35  and four; 
112.36     (3) the amount of county manufactured home homestead and 
113.1   agricultural credit aid computed for the county for payment in 
113.2   2003 under section 273.166 prior to any reduction under laws 
113.3   enacted in 2003; 
113.4      (4) the amount of county criminal justice aid computed for 
113.5   the county for payment in 2003 under section 477A.0121 prior to 
113.6   any reduction under laws enacted in 2003; and 
113.7      (5) the amount of county family preservation aid computed 
113.8   for the county for payment in 2003 under section 477A.0122 prior 
113.9   to any reduction under laws enacted in 2003. 
113.10     Subd. 2.  [DEFINITIONS.] (a) For the purposes of this 
113.11  section, the following terms have the meanings given them. 
113.12     (b) "County program aid" means the sum of "county need aid,"
113.13  "county tax base equalization aid," and "county transition aid." 
113.14     (c) "Age-adjusted population" means a county's population 
113.15  multiplied by the county age index. 
113.16     (d) "County age index" means the percentage of the 
113.17  population over age 65 within the county divided by the 
113.18  percentage of the population over age 65 within the state, 
113.19  except that the age index for any county may not be greater than 
113.20  1.8 nor less than 0.8. 
113.21     (e) "Population over age 65" means the population over age 
113.22  65 established as of July 1 in an aid calculation year by the 
113.23  most recent federal census, by a special census conducted under 
113.24  contract with the United States Bureau of the Census, by a 
113.25  population estimate made by the metropolitan council, or by a 
113.26  population estimate of the state demographer made pursuant to 
113.27  section 4A.02, whichever is the most recent as to the stated 
113.28  date of the count or estimate for the preceding calendar year. 
113.29     (f) "Part I crimes" means the three-year average annual 
113.30  number of Part I crimes reported for each county by the 
113.31  department of public safety for the most recent years available. 
113.32  By July 1 of each year, the commissioner of public safety shall 
113.33  certify to the commissioner of revenue the number of Part I 
113.34  crimes reported for each county for the three most recent 
113.35  calendar years available. 
113.36     (g) "Households receiving food stamps" means the average 
114.1   monthly number of households receiving food stamps for the three 
114.2   most recent years for which data is available.  By July 1 of 
114.3   each year, the commissioner of human services must certify to 
114.4   the commissioner of revenue the average monthly number of 
114.5   households in the state and in each county that receive food 
114.6   stamps, for the three most recent calendar years available. 
114.7      (h) "County net tax capacity" means the net tax capacity of 
114.8   the county, computed analogously to city net tax capacity under 
114.9   section 477A.011, subdivision 20. 
114.10     Subd. 3.  [COUNTY NEED AID.] For 2005 and subsequent years, 
114.11  the money appropriated to county need aid each calendar year 
114.12  shall be allocated as follows:  40 percent based on each 
114.13  county's share of age-adjusted population, 40 percent based on 
114.14  each county's share of the state total of households receiving 
114.15  food stamps, and 20 percent based on each county's share of the 
114.16  state total of Part I crimes. 
114.17     Subd. 4.  [COUNTY TAX-BASE EQUALIZATION AID.] (a) For 2005 
114.18  and subsequent years, the money appropriated to county tax-base 
114.19  equalization aid each calendar year shall be apportioned among 
114.20  the counties according to each county's tax-base equalization 
114.21  aid factor. 
114.22     (b) A county's tax-base equalization aid factor is equal to 
114.23  the amount by which (i) $185 times the county's population, 
114.24  exceeds (ii) 9.45 percent of the county's net tax capacity. 
114.25     (c) In the case of a county with a population less than 
114.26  10,000, the factor determined in paragraph (b) shall be 
114.27  multiplied by a factor of three. 
114.28     (d) In the case of a county with a population greater than 
114.29  or equal to 10,000, but less than 12,500, the factor determined 
114.30  in paragraph (b) shall be multiplied by a factor of two. 
114.31     (e) In the case of a county with a population greater than 
114.32  500,000, the factor determined in paragraph (b) shall be 
114.33  multiplied by a factor of 0.25. 
114.34     Subd. 5.  [COUNTY TRANSITION AID.] (a) For 2005, a county 
114.35  is eligible for transition aid equal to the amount, if any, by 
114.36  which: 
115.1      (1) the difference between: 
115.2      (i) the aid the county received under subdivision 1 in 
115.3   2004, divided by the total aid paid to all counties under 
115.4   subdivision 1, multiplied by $205,000,000; and 
115.5      (ii) the amount of aid the county is certified to receive 
115.6   in 2005 under subdivisions 3 and 4; 
115.7   exceeds: 
115.8      (2) three percent of the county's adjusted net tax capacity.
115.9   A county's aid under this paragraph may not be less than zero. 
115.10     (b) In 2006, a county is eligible to receive two-thirds of 
115.11  the transition aid it received in 2005. 
115.12     (c) In 2007, a county is eligible to receive one-third of 
115.13  the transition aid it received in 2005. 
115.14     (d) No county shall receive aid under this subdivision 
115.15  after 2007. 
115.16     [EFFECTIVE DATE.] This section is effective for aids 
115.17  payable in 2004 and subsequent years. 
115.18     Sec. 6.  Minnesota Statutes 2002, section 477A.03, is 
115.19  amended by adding a subdivision to read: 
115.20     Subd. 2b.  [COUNTIES.] (a) For aids payable in calendar 
115.21  year 2005 and thereafter, the total aids paid to counties under 
115.22  section 477A.0124, subdivision 3, are limited to $100,500,000.  
115.23  Each calendar year, $500,000 shall be retained by the 
115.24  commissioner of revenue to make reimbursements to the 
115.25  commissioner of finance for payments made under section 611.27.  
115.26  For calendar year 2004, the amount shall be in addition to the 
115.27  payments authorized under section 477A.0124, subdivision 1.  For 
115.28  calendar year 2005 and subsequent years, the amount shall be 
115.29  deducted from the appropriation under this paragraph.  The 
115.30  reimbursements shall be to defray the additional costs 
115.31  associated with court-ordered counsel under section 611.27.  Any 
115.32  retained amounts not used for reimbursement in a year shall be 
115.33  included in the next distribution of county need aid that is 
115.34  certified to the county auditors for the purpose of property tax 
115.35  reduction for the next taxes payable year. 
115.36     (b) For aids payable in 2005 and thereafter, the total aids 
116.1   under section 477A.0124, subdivision 4, are limited to 
116.2   $105,000,000.  The commissioner of finance shall bill the 
116.3   commissioner of revenue for the cost of preparation of local 
116.4   impact notes as required by section 3.987, not to exceed 
116.5   $207,000 in fiscal year 2004 and thereafter.  The commissioner 
116.6   of children, families, and learning shall bill the commissioner 
116.7   of revenue for the cost of preparation of local impact notes for 
116.8   school districts as required by section 3.987, not to exceed 
116.9   $7,000 in fiscal year 2004 and thereafter.  The commissioner of 
116.10  revenue shall deduct the amounts billed under this paragraph 
116.11  from the appropriation under this paragraph.  The amounts 
116.12  deducted are appropriated to the commissioner of finance and the 
116.13  commissioner of children, families, and learning for the 
116.14  preparation of local impact notes. 
116.15     [EFFECTIVE DATE.] This section is effective for aid payable 
116.16  in 2004 and thereafter. 
116.17     Sec. 7.  Minnesota Statutes 2002, section 611.27, 
116.18  subdivision 13, is amended to read: 
116.19     Subd. 13.  [PUBLIC DEFENSE SERVICES; CORRECTIONAL FACILITY 
116.20  INMATES.] All billings for services rendered and ordered under 
116.21  subdivision 7 shall require the approval of the chief district 
116.22  public defender before being forwarded on a monthly basis to the 
116.23  state public defender.  In cases where adequate representation 
116.24  cannot be provided by the district public defender and where 
116.25  counsel has been appointed under a court order, the state public 
116.26  defender shall forward to the commissioner of finance all 
116.27  billings for services rendered under the court order.  The 
116.28  commissioner shall pay for services from county criminal justice 
116.29  aid retained by the commissioner of revenue for that purpose 
116.30  under section 477A.0121, subdivision 4, or from county program 
116.31  aid retained by the commissioner of revenue for that purpose 
116.32  under section 477A.0124, subdivision 1, clause (4), or 477A.03, 
116.33  subdivision 2b, paragraph (a). 
116.34     The costs of appointed counsel and associated services in 
116.35  cases arising from new criminal charges brought against indigent 
116.36  inmates who are incarcerated in a Minnesota state correctional 
117.1   facility are the responsibility of the state board of public 
117.2   defense.  In such cases the state public defender may follow the 
117.3   procedures outlined in this section for obtaining court-ordered 
117.4   counsel. 
117.5      [EFFECTIVE DATE.] This section is effective for payments in 
117.6   2004 and subsequent years. 
117.7      Sec. 8.  Minnesota Statutes 2002, section 611.27, 
117.8   subdivision 15, is amended to read: 
117.9      Subd. 15.  [COSTS OF TRANSCRIPTS.] In appeal cases and 
117.10  postconviction cases where the state public defender's office 
117.11  does not have sufficient funds to pay for transcripts and other 
117.12  necessary expenses because it has spent or committed all of the 
117.13  transcript funds in its annual budget, the state public defender 
117.14  may forward to the commissioner of finance all billings for 
117.15  transcripts and other necessary expenses.  The commissioner 
117.16  shall pay for these transcripts and other necessary expenses 
117.17  from county criminal justice aid retained by the commissioner of 
117.18  revenue under section 477A.0121, subdivision 4, or from county 
117.19  program aid retained by the commissioner of revenue for that 
117.20  purpose under section 477A.0124, subdivision 1, clause (4), or 
117.21  477A.03, subdivision 2, paragraph (c). 
117.22     [EFFECTIVE DATE.] This section is effective for payments in 
117.23  2004 and subsequent years. 
117.24     Sec. 9.  [DEFINITIONS.] 
117.25     (a) For purposes of sections 9 to 15, the following terms 
117.26  have the meanings given them in this section. 
117.27     (b) The 2003 and 2004 "levy plus aid revenue base" for a 
117.28  county is the sum of that county's certified property tax levy 
117.29  for taxes payable in 2003, plus the sum of the amounts the 
117.30  county was certified to receive in the designated calendar year 
117.31  as: 
117.32     (1) homestead and agricultural credit aid under Minnesota 
117.33  Statutes, section 273.1398, subdivision 2, plus any additional 
117.34  aid under section 16, minus the amount calculated under section 
117.35  273.1398, subdivision 4a, paragraph (b), for counties in 
117.36  judicial districts one, three, six, and ten, and 25 percent of 
118.1   the amount calculated under section 273.1398, subdivision 4a, 
118.2   paragraph (b), for counties in judicial districts two and four; 
118.3      (2) the amount of county manufactured home homestead and 
118.4   agricultural credit aid computed for the county for payment in 
118.5   2003 under section 273.166; 
118.6      (3) criminal justice aid under Minnesota Statutes, section 
118.7   477A.0121; 
118.8      (4) family preservation aid under Minnesota Statutes, 
118.9   section 477A.0122; 
118.10     (5) taconite aids under Minnesota Statutes, sections 298.28 
118.11  and 298.282, including any aid which was required to be placed 
118.12  in a special fund for expenditure in the next succeeding year; 
118.13  and 
118.14     (6) county program aid under section 477A.0124. 
118.15     [EFFECTIVE DATE.] This section is effective the day 
118.16  following final enactment. 
118.17     Sec. 10.  [2003 COUNTY AID REDUCTIONS.] 
118.18     The commissioner of revenue shall compute an aid reduction 
118.19  amount for each county for 2003 equal to 3.21 percent of the 
118.20  county's levy plus aid revenue base for 2003. 
118.21     The reduction is limited to the sum of the county's payable 
118.22  2003 distributions pursuant to Minnesota Statutes, sections 
118.23  273.138; 273.1384; 273.1398, subdivision 2; 273.166; 477A.0121; 
118.24  and 477A.0122. 
118.25     The aid reduction is applied first to reduce the county's 
118.26  2003 distribution pursuant to Minnesota Statutes, section 
118.27  273.138, then to reduce, in this sequence, the aid payable in 
118.28  2003 under Minnesota Statutes, sections 273.1398, subdivision 2; 
118.29  273.166; 477A.0121; and 477A.0122.  Then, if necessary, the 
118.30  county's reimbursements pursuant to Minnesota Statutes, section 
118.31  273.1384, are to be reduced. 
118.32     To the extent that sufficient information is available on 
118.33  each successive payment date within the year, the commissioner 
118.34  of revenue shall pay any remaining 2003 distribution or 
118.35  reimbursement amount reduced under this section in equal 
118.36  installments on the payment dates provided in law. 
119.1      [EFFECTIVE DATE.] This section is effective the day 
119.2   following final enactment. 
119.3      Sec. 11.  [2003 TOWNSHIP AID REDUCTIONS.] 
119.4      The commissioner of revenue shall compute an aid reduction 
119.5   amount for each township for 2003 equal to two percent of the 
119.6   town's certified levy for taxes payable in 2003. 
119.7      The reduction is limited to the amount of the town's 
119.8   payable 2003 reimbursement pursuant to Minnesota Statutes, 
119.9   section 273.1384.  
119.10     To the extent that sufficient information is available on 
119.11  each successive payment date within the year, the commissioner 
119.12  of revenue shall pay any remaining 2003 reimbursement amount for 
119.13  the town in equal installments on the payment dates provided in 
119.14  law. 
119.15     [EFFECTIVE DATE.] This section is effective the day 
119.16  following final enactment. 
119.17     Sec. 12.  [2003 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 
119.18     The commissioner of revenue shall compute an aid reduction 
119.19  amount for each special taxing district for 2003 equal to 1.5 
119.20  percent of the district's certified levy for taxes payable in 
119.21  2003. 
119.22     The reduction is limited to the amount of the district's 
119.23  payable 2003 reimbursement pursuant to Minnesota Statutes, 
119.24  section 273.1384. 
119.25     To the extent that sufficient information is available on 
119.26  each successive payment date within the year, the commissioner 
119.27  of revenue shall pay any remaining 2003 reimbursement amount for 
119.28  the district in equal installments on the payment dates provided 
119.29  in law. 
119.30     [EFFECTIVE DATE.] This section is effective the day 
119.31  following final enactment. 
119.32     Sec. 13.  [2004 COUNTY AID REDUCTIONS.] 
119.33     The commissioner of revenue shall compute an aid reduction 
119.34  amount for 2004 for each county as provided in this section. 
119.35     The commissioner of revenue shall compute an aid reduction 
119.36  amount for each county for 2004 equal to 5.689 percent of the 
120.1   county's levy plus aid revenue base for 2004. 
120.2      The reduction is further limited to the sum of the county's 
120.3   payable 2004 distributions under Minnesota Statutes, sections 
120.4   477A.0124 and 273.1384. 
120.5      The aid reduction is applied first to the county's 
120.6   distributions pursuant to Minnesota Statutes, section 477A.0124, 
120.7   and then, if necessary, to reduce the county's reimbursements 
120.8   pursuant to Minnesota Statutes, section 273.1384. 
120.9      To the extent that sufficient information is available on 
120.10  each payment date in 2004, the commissioner of revenue shall pay 
120.11  any remaining 2004 distribution or reimbursement amount reduced 
120.12  under this section in equal installments on the payment dates 
120.13  provided in law. 
120.14     [EFFECTIVE DATE.] This section is effective the day 
120.15  following final enactment. 
120.16     Sec. 14.  [2004 TOWNSHIP AID REDUCTIONS.] 
120.17     The commissioner of revenue shall compute an aid reduction 
120.18  amount for each township for 2004 equal to three percent of the 
120.19  town's certified levy for taxes payable in 2003.  
120.20     The reduction is limited to the amount of the town's 
120.21  payable 2004 reimbursement pursuant to Minnesota Statutes, 
120.22  section 273.1384. 
120.23     To the extent that sufficient information is available on 
120.24  each successive payment date within the year, the commissioner 
120.25  of revenue shall pay any remaining 2004 reimbursement amount for 
120.26  the town in equal installments on the payment dates provided in 
120.27  law. 
120.28     [EFFECTIVE DATE.] This section is effective the day 
120.29  following final enactment. 
120.30     Sec. 15.  [2004 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 
120.31     The commissioner of revenue shall compute an aid reduction 
120.32  amount for each special taxing district for 2004 equal to two 
120.33  percent of the district's certified levy for taxes payable in 
120.34  2003.  
120.35     The reduction is limited to the amount of the district's 
120.36  payable 2004 reimbursement pursuant to Minnesota Statutes, 
121.1   section 273.1384. 
121.2      To the extent that sufficient information is available on 
121.3   each successive payment date within the year, the commissioner 
121.4   of revenue shall pay any remaining 2004 reimbursement amount for 
121.5   the district in equal installments on the payment dates provided 
121.6   in law. 
121.7      [EFFECTIVE DATE.] This section is effective the day 
121.8   following final enactment. 
121.9      Sec. 16.  [HACA ADJUSTMENT; COURT TAKEOVER ERROR.] 
121.10     In calendar years 2003 and 2004, any county whose 2002 aid 
121.11  reduction, related to the state assumption of funding for 
121.12  mandated court services, was based on costs not assumed by the 
121.13  state shall receive the following aid adjustments; 
121.14     (1) in calendar year 2003, a permanent increase of $50,000 
121.15  in its aid payment under Minnesota Statutes, section 273.1398, 
121.16  subdivision 2, above its certified 2003 aid amount; and 
121.17     (2) in calendar year 2004, a permanent increase of an 
121.18  additional $50,000 in its county program aid payment under 
121.19  Minnesota Statutes, section 477A.0124, subdivision 1, clause (2).
121.20     [EFFECTIVE DATE.] This section is effective for aids 
121.21  payable in 2003 and 2004. 
121.22     Sec. 17.  [REPEALER.] 
121.23     (a) Minnesota Statutes 2002, sections 273.138, subdivision 
121.24  2, and the parts of subdivisions 5 and 7 relating to counties; 
121.25  273.1398, subdivisions 2, 2c, and 4d; 273.166; 477A.0121; 
121.26  477A.0122; 477A.0123; 477A.0132; 477A.03, subdivision 3; and 
121.27  477A.07, are repealed effective for aid payable in 2004 and 
121.28  thereafter. 
121.29     (b) Minnesota Statutes 2002, section 273.138, subdivisions 
121.30  3 and 6, and the parts of subdivisions 5 and 7 relating to 
121.31  school districts are repealed effective for calendar year 2003. 
121.32                             ARTICLE 7 
121.33                            LEVY LIMITS 
121.34     Section 1.  Minnesota Statutes 2002, section 275.70, 
121.35  subdivision 5, is amended to read: 
121.36     Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
122.1   portions of ad valorem taxes levied by a local governmental unit 
122.2   for the following purposes or in the following manner: 
122.3      (1) to pay the costs of the principal and interest on 
122.4   bonded indebtedness or to reimburse for the amount of liquor 
122.5   store revenues used to pay the principal and interest due on 
122.6   municipal liquor store bonds in the year preceding the year for 
122.7   which the levy limit is calculated; 
122.8      (2) to pay the costs of principal and interest on 
122.9   certificates of indebtedness issued for any corporate purpose 
122.10  except for the following: 
122.11     (i) tax anticipation or aid anticipation certificates of 
122.12  indebtedness; 
122.13     (ii) certificates of indebtedness issued under sections 
122.14  298.28 and 298.282; 
122.15     (iii) certificates of indebtedness used to fund current 
122.16  expenses or to pay the costs of extraordinary expenditures that 
122.17  result from a public emergency; or 
122.18     (iv) certificates of indebtedness used to fund an 
122.19  insufficiency in tax receipts or an insufficiency in other 
122.20  revenue sources; 
122.21     (3) to provide for the bonded indebtedness portion of 
122.22  payments made to another political subdivision of the state of 
122.23  Minnesota; 
122.24     (4) to fund payments made to the Minnesota state armory 
122.25  building commission under section 193.145, subdivision 2, to 
122.26  retire the principal and interest on armory construction bonds; 
122.27     (5) property taxes approved by voters which are levied 
122.28  against the referendum market value as provided under section 
122.29  275.61; 
122.30     (6) to fund matching requirements needed to qualify for 
122.31  federal or state grants or programs to the extent that either 
122.32  (i) the matching requirement exceeds the matching requirement in 
122.33  calendar year 2001, or (ii) it is a new matching requirement 
122.34  that did not exist prior to 2002; 
122.35     (7) to pay the expenses reasonably and necessarily incurred 
122.36  in preparing for or repairing the effects of natural disaster 
123.1   including the occurrence or threat of widespread or severe 
123.2   damage, injury, or loss of life or property resulting from 
123.3   natural causes, in accordance with standards formulated by the 
123.4   emergency services division of the state department of public 
123.5   safety, as allowed by the commissioner of revenue under section 
123.6   275.74, subdivision 2; 
123.7      (8) pay amounts required to correct an error in the levy 
123.8   certified to the county auditor by a city or county in a levy 
123.9   year, but only to the extent that when added to the preceding 
123.10  year's levy it is not in excess of an applicable statutory, 
123.11  special law or charter limitation, or the limitation imposed on 
123.12  the governmental subdivision by sections 275.70 to 275.74 in the 
123.13  preceding levy year; 
123.14     (9) to pay an abatement under section 469.1815; 
123.15     (10) to pay any costs attributable to increases in the 
123.16  employer contribution rates under chapter 353 that are effective 
123.17  after June 30, 2001; 
123.18     (11) to pay the operating or maintenance costs of a county 
123.19  jail as authorized in section 641.01 or 641.262, or of a 
123.20  correctional facility as defined in section 241.021, subdivision 
123.21  1, paragraph (5), to the extent that the county can demonstrate 
123.22  to the commissioner of revenue that the amount has been included 
123.23  in the county budget as a direct result of a rule, minimum 
123.24  requirement, minimum standard, or directive of the department of 
123.25  corrections, or to pay the operating or maintenance costs of a 
123.26  regional jail as authorized in section 641.262.  For purposes of 
123.27  this clause, a district court order is not a rule, minimum 
123.28  requirement, minimum standard, or directive of the department of 
123.29  corrections.  If the county utilizes this special levy, except 
123.30  to pay operating or maintenance costs of a new regional jail 
123.31  facility under sections 641.262 to 641.264 which will not 
123.32  replace an existing jail facility, any amount levied by the 
123.33  county in the previous levy year for the purposes specified 
123.34  under this clause and included in the county's previous year's 
123.35  levy limitation computed under section 275.71, shall be deducted 
123.36  from the levy limit base under section 275.71, subdivision 2, 
124.1   when determining the county's current year levy limitation.  The 
124.2   county shall provide the necessary information to the 
124.3   commissioner of revenue for making this determination; 
124.4      (12) to pay for operation of a lake improvement district, 
124.5   as authorized under section 103B.555.  If the county utilizes 
124.6   this special levy, any amount levied by the county in the 
124.7   previous levy year for the purposes specified under this clause 
124.8   and included in the county's previous year's levy limitation 
124.9   computed under section 275.71 shall be deducted from the levy 
124.10  limit base under section 275.71, subdivision 2, when determining 
124.11  the county's current year levy limitation.  The county shall 
124.12  provide the necessary information to the commissioner of revenue 
124.13  for making this determination; 
124.14     (13) to repay a state or federal loan used to fund the 
124.15  direct or indirect required spending by the local government due 
124.16  to a state or federal transportation project or other state or 
124.17  federal capital project.  This authority may only be used if the 
124.18  project is not a local government initiative; 
124.19     (14) for counties only, to pay the costs reasonably 
124.20  expected to be incurred in 2002 related to the redistricting of 
124.21  election districts and establishment of election precincts under 
124.22  sections 204B.135 and 204B.14, the notice required by section 
124.23  204B.14, subdivision 4, and the reassignment of voters in the 
124.24  statewide registration system, not to exceed $1 per capita, 
124.25  provided that the county shall distribute a portion of the 
124.26  amount levied under this clause equal to 25 cents times the 
124.27  population of the city to all cities in the county with a 
124.28  population of 30,000 or more; 
124.29     (15) to pay for court administration costs as required 
124.30  under section 273.1398, subdivision 4b, less the (i) county's 
124.31  share of transferred fines and fees collected by the district 
124.32  courts in the county for calendar year 2001 and (ii) the aid 
124.33  amount certified to be paid to the county in 2004 under section 
124.34  273.1398, subdivision 4c; however, for taxes levied to pay for 
124.35  these costs in the year in which the court financing is 
124.36  transferred to the state, the amount under this section clause 
125.1   is limited to one-third of the aid reduction the amount of aid 
125.2   the county is certified to receive under section 273.1398, 
125.3   subdivision 4a; and 
125.4      (16) (15) to fund a police or firefighters relief 
125.5   association as required under section 69.77 to the extent that 
125.6   the required amount exceeds the amount levied for this purpose 
125.7   in 2001. 
125.8      [EFFECTIVE DATE.] This section is effective for taxes 
125.9   payable in 2004 and thereafter. 
125.10     Sec. 2.  Minnesota Statutes 2002, section 275.71, 
125.11  subdivision 2, is amended to read: 
125.12     Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
125.13  local governmental unit for taxes levied in 2001 is equal to the 
125.14  greater of: 
125.15     (1) the sum of its adjusted levy limit base for taxes 
125.16  levied in 1999 plus the amount it levied in 1999 under Minnesota 
125.17  Statutes 1999 Supplement, section 275.70, subdivision 5, clauses 
125.18  (8) and (13), multiplied by: 
125.19     (i) one plus the percentage growth in the implicit price 
125.20  deflator for the 12-month period ending March 30, 2000; 
125.21     (ii) one plus a percentage equal to the annual percentage 
125.22  increase in the estimated number of households, if any, for the 
125.23  most recent 12-month period that was available on July 1, 2000; 
125.24  and 
125.25     (iii) one plus a percentage equal to 50 percent of the 
125.26  percentage increase in the taxable market value of the 
125.27  jurisdiction due to new construction of class 3 property, as 
125.28  defined in section 273.13, subdivision 24, except for 
125.29  state-assessed utility and railroad operating property, for the 
125.30  most recent year for which data was available as of July 1, 
125.31  2000; or 
125.32     (2) an amount equal to: 
125.33     (i) the sum of the amount it levied in 2000 plus the amount 
125.34  of aids it was certified to receive in calendar year 2001 under 
125.35  sections 273.1398, 298.282, 477A.011 to 477A.03, prior to any 
125.36  aid reductions under section 273.1399, subdivision 5, 477A.06, 
126.1   and 477A.065; less 
126.2      (ii) the amount it levied in 2000 that would qualify as 
126.3   special levies under section 275.70, subdivision 6, for taxes 
126.4   levied in 2001.  The local governmental unit shall provide the 
126.5   commissioner of revenue with sufficient information to make this 
126.6   calculation. 
126.7      (b) If the governmental unit was not subject to levy limits 
126.8   for taxes levied in 1999, its levy limit base for taxes levied 
126.9   in 2001 is equal to the amount calculated under paragraph (a), 
126.10  clause (2). 
126.11     (c) The levy limit base for a local governmental unit for 
126.12  taxes levied in 2002 2003 is equal to its adjusted levy limit 
126.13  base in the previous year, plus the amount of tree growth tax it 
126.14  received in calendar year 2001 under sections 270.31 to 270.39, 
126.15  and plus, in the case of a city, the amount it was certified to 
126.16  receive in calendar year 2001 under section 273.166, subject to 
126.17  any adjustments under section 275.72, plus any aid amounts 
126.18  received in 2003 under section 273.138 or 273.166, minus the 
126.19  difference between its levy limit under subdivision 5 for taxes 
126.20  levied in 2002 and the amount it actually levied under that 
126.21  subdivision in that year, and (3) certified property tax 
126.22  replacement aid payable in 2003 under section 174.242. 
126.23     [EFFECTIVE DATE.] This section is effective for taxes 
126.24  levied in 2003. 
126.25     Sec. 3.  Minnesota Statutes 2002, section 275.71, 
126.26  subdivision 4, is amended to read: 
126.27     Subd. 4.  [ADJUSTED LEVY LIMIT BASE.] (a) For taxes levied 
126.28  in 2001 and 2002 2003, the adjusted levy limit base is equal to 
126.29  the levy limit base computed under subdivisions 2 and 3 or 
126.30  section 275.72, multiplied reduced by: 
126.31     (1) one plus a percentage equal to the percentage growth in 
126.32  the implicit price deflator; 
126.33     (2) one plus a percentage equal to the percentage increase 
126.34  in number of households, if any, for the most recent 12-month 
126.35  period for which data is available; and 
126.36     (3) one plus a percentage equal to 50 percent of the 
127.1   percentage increase in the taxable market value of the 
127.2   jurisdiction due to new construction of class 3 property, as 
127.3   defined in section 273.13, subdivision 24, except for 
127.4   state-assessed utility and railroad operating property, for the 
127.5   most recent year for which data is available 40 percent of the 
127.6   difference between (1) the sum of 2003 certified aid payments, 
127.7   under sections 273.138, 273.1398 except for amounts certified 
127.8   under subdivision 4a, paragraph (b), 273.166, 477A.011 to 
127.9   477A.03, 477A.06, and 477A.07, before any reduction under 
127.10  articles 5 and 6, and (2) the sum of the aids paid in 2004 under 
127.11  those same sections, after any reductions in 2004 under articles 
127.12  5 and 6. 
127.13     (b) For counties only, for taxes levied in 2001 and 2002, 
127.14  the adjusted levy limit base is also reduced by any amount of 
127.15  levy reduction required under section 275.07, subdivision 1, 
127.16  paragraph (b), clause (ii).  For taxes levied in 2003 only, the 
127.17  adjusted levy limit base is increased by 60 percent of the 
127.18  difference between a jurisdiction's market value credit in 2003 
127.19  before any reductions under articles 5 and 6, and its market 
127.20  value credit in 2004 after reductions in articles 5 and 6. 
127.21     [EFFECTIVE DATE.] This section is effective for taxes 
127.22  payable in 2004. 
127.23     Sec. 4.  Minnesota Statutes 2002, section 275.71, 
127.24  subdivision 5, is amended to read: 
127.25     Subd. 5.  [PROPERTY TAX LEVY LIMIT.] Notwithstanding any 
127.26  other provision of a municipal charter which limits ad valorem 
127.27  taxes to a lesser amount, or which would require a separate 
127.28  voter approval for any increase, For taxes levied in 2001 and 
127.29  2002 2003, the property tax levy limit for a local governmental 
127.30  unit is equal to its adjusted levy limit base determined under 
127.31  subdivision 4 plus any additional levy authorized under section 
127.32  275.73, which is levied against net tax capacity, reduced by the 
127.33  sum of (i) the total amount of aids and reimbursements that the 
127.34  local governmental unit is certified to receive under sections 
127.35  477A.011 to 477A.014, except for the increases in city aid bases 
127.36  in calendar year 2002 under section 477A.011, subdivision 36, 
128.1   paragraphs (n), (p), and (q) (l), (n), and (o), (ii) homestead 
128.2   and agricultural aids it is certified to receive under section 
128.3   273.1398, (iii) taconite aids under sections 298.28 and 298.282 
128.4   including any aid which was required to be placed in a special 
128.5   fund for expenditure in the next succeeding year, 
128.6   (iv) low-income housing aid under sections 477A.06 and 
128.7   477A.065 temporary court aid under section 273.1398, subdivision 
128.8   4a, and (v) property tax replacement aids under section 
128.9   174.242 estimated payments to the local governmental unit under 
128.10  section 272.029, adjusted for any error in estimation in the 
128.11  preceding year. 
128.12     [EFFECTIVE DATE.] This section is effective for taxes 
128.13  payable in 2004. 
128.14     Sec. 5.  Minnesota Statutes 2002, section 275.71, 
128.15  subdivision 6, is amended to read: 
128.16     Subd. 6.  [LEVIES IN EXCESS OF LEVY LIMITS.] (a) If the 
128.17  levy made by a city or county exceeds the levy limit provided in 
128.18  sections 275.70 to 275.74, except when the excess levy is due to 
128.19  the rounding of the rate in accordance with section 275.28, the 
128.20  county auditor shall only extend the amount of taxes permitted 
128.21  under sections 275.70 to 275.74, as provided for in section 
128.22  275.16. 
128.23     (b) For taxes levied in 2002, payable in 2003 only, if an 
128.24  error was made in calculating the levy limit adjustment related 
128.25  to a special levy for jails authorized under section 275.70, 
128.26  subdivision 5, clause (11), in the previous year, the following 
128.27  adjustments must be made: 
128.28     (1) the county's levy limit base for taxes levied in 2002 
128.29  must be based on the corrected adjusted levy limit base for 
128.30  taxes levied in 2001; and 
128.31     (2) the county's final levy limit for taxes levied in 2002, 
128.32  payable in 2003, must also be temporarily reduced by an amount 
128.33  equal to the amount of county levy spread in the previous year 
128.34  in excess of the total recalculated levy limit plus authorized 
128.35  special levies for taxes levied in 2001, payable in 2002. 
128.36     (c) The commissioner of revenue shall inform counties 
129.1   affected by paragraph (b) of the levy error and levy adjustments 
129.2   required under this provision by June 15, 2002.  The county may 
129.3   provide additional information to the commissioner indicating 
129.4   why these adjustments may be in error by July 15, 2002.  The 
129.5   commissioner shall certify the final levy adjustment to the 
129.6   affected counties by August 1, 2002.  The levy reduction imposed 
129.7   under paragraph (b), clause (2), may be spread over a period not 
129.8   to exceed three years, upon agreement between the county and the 
129.9   commissioner. 
129.10     [EFFECTIVE DATE.] This section is effective for taxes 
129.11  payable in 2004. 
129.12     Sec. 6.  Minnesota Statutes 2002, section 275.72, 
129.13  subdivision 3, is amended to read: 
129.14     Subd. 3.  [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If a 
129.15  local governmental unit, as a result of an annexation 
129.16  agreement prior to January 1, 1999, has different tax rates in 
129.17  various parts of the jurisdiction due to different service 
129.18  levels, it may petition the commissioner of revenue to adjust 
129.19  its levy limits established under section 275.71.  The 
129.20  commissioner shall adjust the levy limits to reflect scheduled 
129.21  changes in tax rates related to increasing service levels in 
129.22  areas currently receiving less city services.  The local 
129.23  governmental unit shall provide the commissioner with any 
129.24  information the commissioner deems necessary in making the levy 
129.25  limit adjustment. 
129.26     [EFFECTIVE DATE.] This section is effective for taxes 
129.27  levied in 2003, payable in 2004. 
129.28     Sec. 7.  Minnesota Statutes 2002, section 275.73, 
129.29  subdivision 2, is amended to read:  
129.30     Subd. 2.  [LEVY EFFECTIVE DATE.] An additional levy 
129.31  approved under subdivision 1 at a general or special election 
129.32  held prior to September 1 on or before the first Tuesday after 
129.33  the first Monday in November in any levy year may be levied in 
129.34  that same levy year and subsequent levy years.  An additional 
129.35  levy approved under subdivision 1 at a general or special 
129.36  election held after August 31 the first Tuesday after the first 
130.1   Monday in November in any levy year shall not be levied in that 
130.2   same levy but may be levied in subsequent levy years. 
130.3      [EFFECTIVE DATE.] This section is effective for taxes 
130.4   payable in 2004. 
130.5      Sec. 8.  Minnesota Statutes 2002, section 275.74, 
130.6   subdivision 3, is amended to read: 
130.7      Subd. 3.  [INFORMATION NECESSARY TO CALCULATE THE 2001 LEVY 
130.8   LIMIT BASE.] A local governmental unit must provide the 
130.9   commissioner with the information required to calculate the 
130.10  alternative 2001 levy limit base amount under section 275.71, 
130.11  subdivision 2, paragraph (a), clause (2), by July 20, 2001 of 
130.12  the levy year.  If the information is not received by the 
130.13  commissioner by that date, or is not deemed sufficient to make 
130.14  the calculation under that clause, the commissioner has the 
130.15  discretion to set the local governmental unit's 2001 levy limit 
130.16  for all purposes including those purposes for which special 
130.17  levies may be made, base equal to the amount calculated under 
130.18  section 275.71, subdivision 2, paragraph (a), clause (1) of the 
130.19  local governmental unit's certified levy for the prior year. 
130.20     [EFFECTIVE DATE.] This section is effective for taxes 
130.21  payable in 2004. 
130.22                             ARTICLE 8 
130.23                         SALES AND USE TAX 
130.24     Section 1.  Minnesota Statutes 2002, section 168.27, 
130.25  subdivision 4a, is amended to read: 
130.26     Subd. 4a.  [LIMITED USED VEHICLE LICENSE.] (a) A limited 
130.27  used vehicle license shall be provided to a nonprofit charitable 
130.28  organization that qualifies for tax exemption under section 
130.29  501(c)(3) of the Internal Revenue Code whose primary business in 
130.30  the transfer of vehicles is to raise funds for the corporation, 
130.31  who acquires vehicles for sale through donation, and who uses a 
130.32  licensed motor vehicle auctioneer to sell vehicles to retail 
130.33  customers individuals, or who sells and reassigns vehicles to a 
130.34  licensed motor vehicle dealer.  This license does not apply to 
130.35  educational institutions whose primary purpose is to train 
130.36  students in the repair, maintenance, and sale of motor 
131.1   vehicles.  A limited used vehicle license allows the 
131.2   organization to accept assignment of vehicles without the 
131.3   requirement to transfer title as provided in section 168A.10 
131.4   until sold or donated to a retail customer an individual.  
131.5   Limited used vehicle license holders are not entitled to dealer 
131.6   plates, and shall report all vehicles held for resale to the 
131.7   department of public safety in a manner and time prescribed by 
131.8   the department. 
131.9      (b) A nonprofit charitable organization with a limited used 
131.10  vehicle license shall, within 90 days after a vehicle donation, 
131.11  send a donor a receipt for the donated vehicle which states its 
131.12  model; age; level of use, including, but not limited to, the 
131.13  mileage; its condition, and whether a visual inspection 
131.14  disclosed any readily apparent defects that would materially 
131.15  reduce the value of the property.  The receipt must include the 
131.16  date of the donation and must state whether the vehicle was 
131.17  operable or inoperable at the time of the donation. 
131.18     [EFFECTIVE DATE.] This section is effective for sales and 
131.19  transfers made after June 30, 2003. 
131.20     Sec. 2.  Minnesota Statutes 2002, section 289A.20, 
131.21  subdivision 4, is amended to read: 
131.22     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
131.23  chapter 297A are due and payable to the commissioner monthly on 
131.24  or before the 20th day of the month following the month in which 
131.25  the taxable event occurred, or following another reporting 
131.26  period as the commissioner prescribes or as allowed under 
131.27  section 289A.18, subdivision 4, paragraph (f) or (g), except 
131.28  that use taxes due on an annual use tax return as provided under 
131.29  section 289A.11, subdivision 1, are payable by April 15 
131.30  following the close of the calendar year. 
131.31     (b) For a fiscal year ending before July 1, 2002, A vendor 
131.32  having a liability of $120,000 or more during a fiscal year 
131.33  ending June 30 must remit the June liability for the next year 
131.34  in the following manner: 
131.35     (1) Two business days before June 30 of the year, the 
131.36  vendor must remit 75 85 percent of the estimated June liability 
132.1   to the commissioner.  
132.2      (2) On or before August 20 of the year, the vendor must pay 
132.3   any additional amount of tax not remitted in June. 
132.4      (c) A vendor having a liability of $120,000 or more during 
132.5   a fiscal year ending June 30 must remit all liabilities on 
132.6   returns due for periods beginning in the subsequent calendar 
132.7   year by electronic means on or before the 20th day of the month 
132.8   following the month in which the taxable event occurred, or on 
132.9   or before the 20th day of the month following the month in which 
132.10  the sale is reported under section 289A.18, subdivision 4, 
132.11  except for 75 85 percent of the estimated June liability, which 
132.12  is due two business days before June 30.  The remaining amount 
132.13  of the June liability is due on August 20.  
132.14     [EFFECTIVE DATE.] This section, paragraph (a), is effective 
132.15  for sales and purchases made on or after January 1, 2004.  The 
132.16  rest of this section is effective for payments made after 
132.17  December 31, 2003. 
132.18     Sec. 3.  Minnesota Statutes 2002, section 289A.31, 
132.19  subdivision 7, is amended to read: 
132.20     Subd. 7.  [SALES AND USE TAX.] (a) The sales and use tax 
132.21  required to be collected by the retailer under chapter 297A 
132.22  constitutes a debt owed by the retailer to Minnesota, and the 
132.23  sums collected must be held as a special fund in trust for the 
132.24  state of Minnesota. 
132.25     A retailer who does not maintain a place of business within 
132.26  this state as defined by section 297A.66, subdivision 1, shall 
132.27  not be indebted to Minnesota for amounts of tax that it was 
132.28  required to collect but did not collect unless the retailer knew 
132.29  or had been advised by the commissioner of its obligation to 
132.30  collect the tax.  
132.31     (b) The use tax required to be paid by a purchaser is a 
132.32  debt owed by the purchaser to Minnesota. 
132.33     (c) The tax imposed by chapter 297A, and interest and 
132.34  penalties, is a personal debt of the individual required to file 
132.35  a return from the time the liability arises, irrespective of 
132.36  when the time for payment of that liability occurs.  The debt 
133.1   is, in the case of the executor or administrator of the estate 
133.2   of a decedent and in the case of a fiduciary, that of the 
133.3   individual in an official or fiduciary capacity unless the 
133.4   individual has voluntarily distributed the assets held in that 
133.5   capacity without reserving sufficient assets to pay the tax, 
133.6   interest, and penalties, in which case the individual is 
133.7   personally liable for the deficiency. 
133.8      (d) Liability for payment of sales and use taxes includes 
133.9   any responsible person or entity described in the personal 
133.10  liability provisions of section 270.101. 
133.11     (e) Any amounts collected, even if erroneously or illegally 
133.12  collected, from a purchaser under a representation that they are 
133.13  taxes imposed under chapter 297A are state funds from the time 
133.14  of collection and must be reported on a return filed with the 
133.15  commissioner.  
133.16     (f) The tax imposed under chapter 297A on sales of tickets 
133.17  to the premises of or events sponsored by the state agricultural 
133.18  society and conducted on the state fairgrounds during the period 
133.19  of the annual state fair may be retained by the state 
133.20  agricultural society if the funds are used and matched as 
133.21  required under section 37.13, subdivision 2. 
133.22     [EFFECTIVE DATE.] This section is effective for sales taxes 
133.23  collected on sales occurring after June 30, 2003. 
133.24     Sec. 4.  Minnesota Statutes 2002, section 289A.60, 
133.25  subdivision 15, as amended by Laws 2003, chapter 127, article 6, 
133.26  section 2, if enacted, is amended to read: 
133.27     Subd. 15.  [ACCELERATED PAYMENT OF JUNE SALES TAX 
133.28  LIABILITY; PENALTY FOR UNDERPAYMENT.] (a) For payments made 
133.29  after December 31, 2002, and before January 1, 2004, if a vendor 
133.30  is required by law to submit an estimation of June sales tax 
133.31  liabilities and 75 percent payment by a certain date, the vendor 
133.32  shall pay a penalty equal to ten percent of the amount of actual 
133.33  June liability required to be paid in June less the amount 
133.34  remitted in June.  The penalty must not be imposed, however, if 
133.35  the amount remitted in June equals the lesser of 75 percent of 
133.36  the preceding May's liability or 75 percent of the average 
134.1   monthly liability for the previous calendar year. 
134.2      (b) For payments made after December 31, 2003, if a vendor 
134.3   is required by law to submit an estimation of June sales tax 
134.4   liabilities and 85 percent payment by a certain date, the vendor 
134.5   shall pay a penalty equal to ten percent of the amount of actual 
134.6   June liability required to be paid in June less the amount 
134.7   remitted in June.  The penalty must not be imposed, however, if 
134.8   the amount remitted in June equals the lesser of 85 percent of 
134.9   the preceding May's liability or 85 percent of the average 
134.10  monthly liability for the previous calendar year. 
134.11     [EFFECTIVE DATE.] Paragraph (a) of this section is 
134.12  effective for payments made after December 31, 2002, and before 
134.13  January 1, 2004.  Paragraph (b) of this section is effective for 
134.14  payments made after December 31, 2003. 
134.15     Sec. 5.  Minnesota Statutes 2002, section 297A.70, 
134.16  subdivision 8, is amended to read: 
134.17     Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
134.18  SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 
134.19  but not limited to, end user equipment used for construction, 
134.20  ownership, operation, maintenance, and enhancement of the 
134.21  backbone system of the regionwide public safety radio 
134.22  communication system established under sections 473.891 to 
134.23  473.905, are exempt.  For purposes of this subdivision, backbone 
134.24  system is defined in section 473.891, subdivision 9.  This 
134.25  subdivision is effective for purchases, sales, storage, use, or 
134.26  consumption occurring before August 1, 2003 2005, in the 
134.27  counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and 
134.28  Washington. 
134.29     [EFFECTIVE DATE.] This section is effective the day 
134.30  following final enactment. 
134.31     Sec. 6.  Minnesota Statutes 2002, section 297A.70, 
134.32  subdivision 10, is amended to read: 
134.33     Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] (a) Tickets 
134.34  or admissions to an event are exempt if all the gross receipts 
134.35  are recorded as such, in accordance with generally accepted 
134.36  accounting principles, on the books of one or more organizations 
135.1   that whose primary mission is to provide an opportunity for 
135.2   citizens of the state to participate in the creation, 
135.3   performance, or appreciation of the arts, and provided that each 
135.4   organization is: 
135.5      (1) an organization described in section 501(c)(3) of the 
135.6   Internal Revenue Code in which voluntary contributions make up 
135.7   at least the following percent of the organization's annual 
135.8   revenue in its most recently completed 12-month fiscal year, or 
135.9   in the current year if the organization has not completed a 
135.10  12-month fiscal year: 
135.11     (i) for sales made after July 31, 2001, and before July 1, 
135.12  2002, for the organization's fiscal year completed in calendar 
135.13  year 2000, three percent; 
135.14     (ii) for sales made on or after July 1, 2002, and on or 
135.15  before June 30, 2003, for the organization's fiscal year 
135.16  completed in calendar year 2001, three percent; 
135.17     (iii) for sales made on or after July 1, 2003, and on or 
135.18  before June 30, 2004, for the organization's fiscal year 
135.19  completed in calendar year 2002, four percent; and 
135.20     (iv) for sales made in each 12-month period, beginning on 
135.21  July 1, 2004, and each subsequent year, for the organization's 
135.22  fiscal year completed in the preceding calendar year, five 
135.23  percent; 
135.24     (2) a municipal board that promotes cultural and arts 
135.25  activities; or 
135.26     (3) the University of Minnesota, provided that the event is 
135.27  held at a university-owned facility.  
135.28  The exemption only applies if the entire proceeds, after 
135.29  reasonable expenses, are used solely to provide opportunities 
135.30  for citizens of the state to participate in the creation, 
135.31  performance, or appreciation of the arts. 
135.32     (b) Tickets or admissions to the premises of the Minnesota 
135.33  zoological garden are exempt, provided that the exemption under 
135.34  this paragraph does not apply to tickets or admissions to 
135.35  performances or events held on the premises unless the 
135.36  performance or event is sponsored and conducted exclusively by 
136.1   the Minnesota zoological board or employees of the Minnesota 
136.2   zoological garden. 
136.3      Sec. 7.  Minnesota Statutes 2002, section 297A.70, 
136.4   subdivision 14, is amended to read: 
136.5      Subd. 14.  [FUND-RAISING EVENTS SPONSORED BY NONPROFIT 
136.6   GROUPS.] (a) Sales of tangible personal property at, and 
136.7   admission charges for fund-raising events sponsored by, a 
136.8   nonprofit organization are exempt if: 
136.9      (1) all gross receipts are recorded as such, in accordance 
136.10  with generally accepted accounting practices, on the books of 
136.11  the nonprofit organization; and 
136.12     (2) the entire proceeds, less the necessary expenses for 
136.13  the event, will be used solely and exclusively for charitable, 
136.14  religious, or educational purposes.  Exempt sales include the 
136.15  sale of food, meals, and drinks at the fund-raising event. 
136.16     (b) This exemption is limited in the following manner: 
136.17     (1) it does not apply to admission charges for events 
136.18  involving bingo or other gambling activities or to charges for 
136.19  use of amusement devices involving bingo or other gambling 
136.20  activities; 
136.21     (2) all gross receipts are taxable if the profits are not 
136.22  used solely and exclusively for charitable, religious, or 
136.23  educational purposes; 
136.24     (3) it does not apply unless the organization keeps a 
136.25  separate accounting record, including receipts and disbursements 
136.26  from each fund-raising event that documents all deductions from 
136.27  gross receipts with receipts and other records; 
136.28     (4) it does not apply to any sale made by or in the name of 
136.29  a nonprofit corporation as the active or passive agent of a 
136.30  person that is not a nonprofit corporation; 
136.31     (5) all gross receipts are taxable if fund-raising events 
136.32  exceed 24 days per year; and 
136.33     (6) it does not apply to fund-raising events conducted on 
136.34  premises leased for more than five days but less than 30 days; 
136.35  and 
136.36     (7) it does not apply if the risk of the event is not borne 
137.1   by the nonprofit organization and the benefit to the nonprofit 
137.2   organization is less than the total amount of the state and 
137.3   local tax revenues foregone by this exemption. 
137.4      (c) For purposes of this subdivision, a "nonprofit 
137.5   organization" means any unit of government, corporation, 
137.6   society, association, foundation, or institution organized and 
137.7   operated for charitable, religious, educational, civic, 
137.8   fraternal, and senior citizens' or veterans' purposes, no part 
137.9   of the net earnings of which inures to the benefit of a private 
137.10  individual. 
137.11     Sec. 8.  Minnesota Statutes 2002, section 297A.70, 
137.12  subdivision 16, is amended to read: 
137.13     Subd. 16.  [CAMP FEES.] Camp Fees to camps or other 
137.14  recreation facilities are exempt for: 
137.15     (1) services primarily for children, adults accompanying 
137.16  children, or persons with disabilities; or 
137.17     (2) educational or religious activities; 
137.18  and the camp or facilities are owned and operated by an exempt 
137.19  organization under section 501(c)(3) of the Internal Revenue 
137.20  Code are exempt if the camps or facilities provide educational 
137.21  and social activities for young people primarily age 18 and 
137.22  under. 
137.23     Sec. 9.  Minnesota Statutes 2002, section 297A.71, is 
137.24  amended by adding a subdivision to read: 
137.25     Subd. 35.  [WALKER ART CENTER.] Materials, equipment, and 
137.26  supplies used or consumed in construction of the Walker Art 
137.27  Center are exempt if more than $70,000,000 is raised from 
137.28  private sources to pay for a portion of the costs of the project.
137.29     [EFFECTIVE DATE.] This section is effective for purchases 
137.30  made on or after June 1, 2003. 
137.31     Sec. 10.  Minnesota Statutes 2002, section 297B.01, 
137.32  subdivision 7, is amended to read: 
137.33     Subd. 7.  [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 
137.34  ACQUIRED.] (a) "Sale," "sells," "selling," "purchase," 
137.35  "purchased," or "acquired" means any transfer of title of any 
137.36  motor vehicle, whether absolutely or conditionally, for a 
138.1   consideration in money or by exchange or barter for any purpose 
138.2   other than resale in the regular course of business.  
138.3      (b) Any motor vehicle utilized by the owner only by leasing 
138.4   such vehicle to others or by holding it in an effort to so lease 
138.5   it, and which is put to no other use by the owner other than 
138.6   resale after such lease or effort to lease, shall be considered 
138.7   property purchased for resale.  
138.8      (c) The terms also shall include any transfer of title or 
138.9   ownership of a motor vehicle by other means, for or without 
138.10  consideration, except that these terms shall not include: 
138.11     (1) the acquisition of a motor vehicle by inheritance from 
138.12  or by bequest of, a decedent who owned it; 
138.13     (2) the transfer of a motor vehicle which was previously 
138.14  licensed in the names of two or more joint tenants and 
138.15  subsequently transferred without monetary consideration to one 
138.16  or more of the joint tenants; 
138.17     (3) the transfer of a motor vehicle by way of gift between 
138.18  individuals, or gift from a limited used vehicle dealer licensed 
138.19  under section 168.27, subdivision 4a, to an individual, when the 
138.20  transfer is with no monetary or other consideration or 
138.21  expectation of consideration and the parties to the transfer 
138.22  submit an affidavit to that effect at the time the title 
138.23  transfer is recorded; 
138.24     (4) the voluntary or involuntary transfer of a motor 
138.25  vehicle between a husband and wife in a divorce proceeding; or 
138.26     (5) the transfer of a motor vehicle by way of a gift to an 
138.27  organization that is exempt from federal income taxation under 
138.28  section 501(c)(3) of the Internal Revenue Code, as amended 
138.29  through December 31, 1996, when the motor vehicle will be used 
138.30  exclusively for religious, charitable, or educational purposes. 
138.31     [EFFECTIVE DATE.] This section is effective for sales made 
138.32  after June 30, 2007. 
138.33     Sec. 11.  Laws 1980, chapter 511, section 1, subdivision 2, 
138.34  as amended by Laws 1991, chapter 291, article 8, section 22, and 
138.35  Laws 1998, chapter 389, article 8, section 25, is amended to 
138.36  read: 
139.1      Subd. 2.  Notwithstanding Minnesota Statutes, Section 
139.2   477A.016, or any other law, ordinance, or city charter provision 
139.3   to the contrary, the city of Duluth may, by ordinance, impose an 
139.4   additional sales tax of up to one and one-half percent on sales 
139.5   transactions which are described in Minnesota Statutes 2000, 
139.6   Section 297A.01, Subdivision 3, Clause (c).  When the city 
139.7   council determines that the taxes imposed under this subdivision 
139.8   and under section 26 at a rate of one-half of one percent have 
139.9   produced revenue sufficient to pay (1) the debt service on bonds 
139.10  in a principal amount of $8,000,000 issued for capital 
139.11  improvements to the Duluth Entertainment and Convention Center, 
139.12  and (2) debt service on outstanding bonds originally issued in 
139.13  the principal amount of $4,970,000 to finance capital 
139.14  improvements to the Great Lakes Aquarium since the imposition of 
139.15  the taxes at the rate of one and one-half percent, the rate of 
139.16  the tax under this subdivision is reduced to one percent.  The 
139.17  imposition of this tax shall not be subject to voter referendum 
139.18  under either state law or city charter provisions.  
139.19     [EFFECTIVE DATE.] This section is effective the day after 
139.20  the governing body of the city of Duluth and its chief clerical 
139.21  officer comply with Minnesota Statutes, section 645.021, 
139.22  subdivisions 2 and 3. 
139.23     Sec. 12.  Laws 1980, chapter 511, section 2, as amended by 
139.24  Laws 1998, chapter 389, article 8, section 26, is amended to 
139.25  read: 
139.26     Sec. 2.  [CITY OF DULUTH; TAX ON RECEIPTS BY HOTELS AND 
139.27  MOTELS.] 
139.28     Notwithstanding Minnesota Statutes, Section 477A.016, or 
139.29  any other law, or ordinance, or city charter provision to the 
139.30  contrary, the city of Duluth may, by ordinance, impose an 
139.31  additional tax of one and one-half percent upon the gross 
139.32  receipts from the sale of lodging for periods of less than 30 
139.33  days in hotels and motels located in the city.  When the city 
139.34  council determines that the taxes imposed under this section and 
139.35  section 25 at a rate of one-half of one percent have produced 
139.36  revenue sufficient to pay (1) the debt service on bonds in a 
140.1   principal amount of $8,000,000 issued for capital improvements 
140.2   for the Duluth Entertainment and Convention Center, and (2) the 
140.3   debt service on outstanding bonds originally issued in the 
140.4   principal amount of $4,970,000 to finance capital improvements 
140.5   to the Great Lakes Aquarium since the imposition of the taxes at 
140.6   the rate of one and one-half percent, the rate of the tax under 
140.7   this section is reduced to one percent.  The tax shall be 
140.8   collected in the same manner as the tax set forth in the Duluth 
140.9   city charter, section 54(d), paragraph one.  The imposition of 
140.10  this tax shall not be subject to voter referendum under either 
140.11  state law or city charter provisions. 
140.12     [EFFECTIVE DATE.] This section is effective the day after 
140.13  the governing body of the city of Duluth and its chief clerical 
140.14  officer comply with Minnesota Statutes, section 645.021, 
140.15  subdivisions 2 and 3. 
140.16     Sec. 13.  Laws 1993, chapter 375, article 9, section 46, 
140.17  subdivision 2, as amended by Laws 1997, chapter 231, article 7, 
140.18  section 40, and Laws 1998, chapter 389, article 8, section 30, 
140.19  is amended to read: 
140.20     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
140.21  authorized by subdivision 1 may only be used by the city to pay 
140.22  the cost of collecting the tax, and to pay for the following 
140.23  projects or to secure or pay any principal, premium, or interest 
140.24  on bonds issued in accordance with subdivision 3 for the 
140.25  following projects.  
140.26     (a) To pay all or a portion of the capital expenses of 
140.27  construction, equipment and acquisition costs for the expansion 
140.28  and remodeling of the St. Paul Civic Center complex, including 
140.29  the demolition of the existing arena and the construction and 
140.30  equipping of a new arena. 
140.31     (b) The remainder of the funds must be spent for: 
140.32     (1) capital projects to further residential, cultural, 
140.33  commercial, and economic development in both downtown St. Paul 
140.34  and St. Paul neighborhoods.  The amount apportioned under this 
140.35  paragraph shall be no less than 60 percent of the revenues 
140.36  derived from the tax each year, except to the extent that a 
141.1   portion of that amount is required to pay debt service on (1) 
141.2   bonds issued for the purposes of paragraph (a) prior to March 1, 
141.3   1998; or (2) bonds issued for the purposes of paragraph (a) 
141.4   after March 1, 1998, but only if the city council determines 
141.5   that 40 percent of the revenues derived from the tax together 
141.6   with other revenues pledged to the payment of the bonds, 
141.7   including the proceeds of definitive bonds, is expected to 
141.8   exceed the annual debt service on the bonds; and 
141.9      (2) the capital and operating expenses of cultural 
141.10  organizations in the city, provided that the amount spent under 
141.11  this clause may not exceed must equal ten percent of the total 
141.12  amount spent under this paragraph in any year.  
141.13     (c) The amount apportioned under paragraph (b) shall be no 
141.14  less than 60 percent of the revenues derived from the tax each 
141.15  year, except to the extent that a portion of that amount is 
141.16  required to pay debt service on (1) bonds issued for the 
141.17  purposes of paragraph (a) prior to March 1, 1998; or (2) bonds 
141.18  issued for the purposes of paragraph (a) after March 1, 1998, 
141.19  but only if the city council determines that 40 percent of the 
141.20  revenues derived from the tax together with other revenues 
141.21  pledged to the payment of the bonds, including the proceeds of 
141.22  definitive bonds, is expected to exceed the annual debt service 
141.23  on the bonds. 
141.24     (d) If in any year more than 40 percent of the revenue 
141.25  derived from the tax authorized by subdivision 1 is used to pay 
141.26  debt service on the bonds issued for the purposes of paragraph 
141.27  (a) and to fund a reserve for the bonds, the amount of the debt 
141.28  service payment that exceeds 40 percent of the revenue must be 
141.29  determined for that year.  In any year when 40 percent of the 
141.30  revenue produced by the sales tax exceeds the amount required to 
141.31  pay debt service on the bonds and to fund a reserve for the 
141.32  bonds under paragraph (a), the amount of the excess must be made 
141.33  available for capital projects to further residential, cultural, 
141.34  commercial, and economic development in the neighborhoods and 
141.35  downtown until the cumulative amounts determined for all years 
141.36  under the preceding sentence have been made available under this 
142.1   sentence.  The amount made available as reimbursement in the 
142.2   preceding sentence is not included in the 60 percent determined 
142.3   under paragraph (b) (c). 
142.4      (d) (e) By January 15 of each odd-numbered year, the mayor 
142.5   and the city council must report to the legislature on the use 
142.6   of sales tax revenues during the preceding two-year period. 
142.7      [EFFECTIVE DATE.] This section is effective for 
142.8   distributions after April 30, 2003. 
142.9      Sec. 14.  Laws 1999, chapter 243, article 4, section 19, as 
142.10  amended by Laws 2001, First Special Session chapter 5, article 
142.11  12, section 88, is amended to read: 
142.12     Sec. 19.  [EFFECTIVE DATES.] 
142.13     Sections 1, 2, 5, 7, 9, and 11 are effective for sales and 
142.14  purchases made after June 30, 1999.  
142.15     Section 3 is effective for amended returns and refund 
142.16  claims filed on or after July 1, 1999. 
142.17     Section 4 is effective the day following final enactment 
142.18  and applies retroactively to all open tax years and to 
142.19  assessments and appeals under Minnesota Statutes, sections 
142.20  289A.38 and 289A.65, for which the time limits have not expired 
142.21  on the date of final enactment of this act.  The provisions of 
142.22  Minnesota Statutes, section 289A.50, apply to refunds claimed 
142.23  under section 4.  Refunds claimed under section 4 must be filed 
142.24  by the later of December 31, 1999, or the time limit under 
142.25  Minnesota Statutes, section 289A.40, subdivision 1. 
142.26     Section 6 is effective retroactively for sales and 
142.27  purchases made after June 30, 1998. 
142.28     Section 8 is effective for purchases and sales made after 
142.29  the date of final enactment.  
142.30     Section 10 is effective for purchases made after the date 
142.31  of final enactment and before July 1, 2003 2005. 
142.32     Section 12 is effective the day after final enactment.  
142.33  Section 12, paragraphs (a) to (c), apply to all local sales 
142.34  taxes enacted after July 1, 1999.  Section 12, paragraph (d), 
142.35  applies to all local sales taxes in effect at the time of, or 
142.36  imposed after the day of, the enactment of this section. 
143.1      Section 13 is effective the day following final enactment. 
143.2      [EFFECTIVE DATE.] This section is effective the day 
143.3   following final enactment. 
143.4      Sec. 15.  Laws 2001, First Special Session chapter 5, 
143.5   article 12, section 95, as amended by Laws 2002, chapter 377, 
143.6   article 3, section 24, is amended to read: 
143.7      Sec. 95.  [REPEALER.] 
143.8      (a) Minnesota Statutes 2000, sections 297A.61, subdivision 
143.9   16; 297A.68, subdivision 21; and 297A.71, subdivision 2, are 
143.10  repealed effective for sales and purchases occurring after June 
143.11  30, 2001, except that the repeal of section 297A.61, subdivision 
143.12  16, paragraph (d), is effective for sales and purchases 
143.13  occurring after July 31, 2001. 
143.14     (b) Minnesota Statutes 2000, sections 297A.62, subdivision 
143.15  2, and 297A.64, subdivision 1, are repealed effective for sales 
143.16  and purchases made after December 31, 2005. 
143.17     (c) Minnesota Statutes 2000, section 297A.71, subdivision 
143.18  15, is repealed effective for sales and purchases made after 
143.19  June 30, 2002. 
143.20     (d) Minnesota Statutes 2000, section 289A.60, subdivision 
143.21  15, is repealed effective for liabilities after January 1, 2004. 
143.22     (e) Minnesota Statutes 2000, section 297A.71, subdivision 
143.23  16, is repealed effective for sales and purchases occurring 
143.24  after December 31, 2002. 
143.25     Sec. 16.  Laws 2002, chapter 377, article 3, section 15, 
143.26  the effective date, is amended to read: 
143.27     [EFFECTIVE DATE.] This section is effective for sales made 
143.28  after August 31, 2002, and on or before December 31, 2003 2004. 
143.29     Sec. 17.  [STATE CONVENTION CENTER.] 
143.30     Subdivision 1.  [EXEMPTION.] Building materials, supplies, 
143.31  or equipment used or consumed in constructing or equipping 
143.32  improvements to a state convention center located in a city 
143.33  outside the metropolitan area as defined in section 473.121, 
143.34  subdivision 2, and governed by an 11-person board of which four 
143.35  are appointed by the governor are exempt if the improvements are 
143.36  financed in whole or in part by nonstate resources including, 
144.1   but not limited to, revenue or general obligations issued by the 
144.2   state convention center board of the city in which the center is 
144.3   located.  This exemption applies regardless of whether the items 
144.4   are purchased by the owner or by a contractor, subcontractor, or 
144.5   builder. 
144.6      Subd. 2.  [LEGISLATIVE INTENT.] This section is intended to 
144.7   clarify the original intent of Minnesota Statutes, section 
144.8   297A.71, subdivision 2. 
144.9      [EFFECTIVE DATE.] This section is effective the day 
144.10  following final enactment and applies retroactively to sales and 
144.11  purchases made after June 30, 1995, and before July 1, 2001. 
144.12     Sec. 18.  [LODGING TAX; ITASCA COUNTY AUTHORITY.] 
144.13     Notwithstanding Minnesota Statutes, section 469.190, 
144.14  subdivisions 1 and 4, no town located in Itasca county may 
144.15  impose the local lodging tax authorized in Minnesota Statutes, 
144.16  section 469.190, but the county of Itasca may impose the local 
144.17  lodging tax authorized in that section in all towns and 
144.18  unorganized territories within the county.  Any existing taxes 
144.19  imposed by a town in that county will expire the day that a 
144.20  county tax is imposed under this section. 
144.21     If the county board exercises the authority under this 
144.22  section, it must determine by resolution that imposition of the 
144.23  tax is in the county's interest.  The resolution is subject to 
144.24  the same notice and reverse referendum requirements that would 
144.25  apply under Minnesota Statutes, section 469.190, subdivision 5, 
144.26  if the county was only imposing the tax in an unorganized 
144.27  territory.  The provisions of Minnesota Statutes, section 
144.28  469.190, subdivisions 2, 3, 6, and 7, also apply to a tax 
144.29  imposed under this section. 
144.30     [EFFECTIVE DATE.] This section is effective the day after 
144.31  the governing body of Itasca county and its chief clerical 
144.32  officer comply with Minnesota Statutes, section 645.021, 
144.33  subdivisions 2 and 3. 
144.34     Sec. 19.  [STUDY OF LOCAL SALES TAX.] 
144.35     (a) The commissioner of revenue shall study the local sales 
144.36  taxes in Minnesota and provide a written report and 
145.1   recommendations to the legislature, in compliance with Minnesota 
145.2   Statutes, sections 3.195 and 3.197, by February 1, 2004.  The 
145.3   study must report on: 
145.4      (1) the authorized uses of revenue from local sales taxes 
145.5   in effect, and the proposed uses of revenue from local sales 
145.6   taxes recently proposed but not enacted; 
145.7      (2) the local approval requirements for local sales taxes; 
145.8      (3) the duration of local sales taxes and whether the full 
145.9   duration authorized in law was necessary to provide sufficient 
145.10  revenue for the authorized uses of the local sales tax; 
145.11     (4) if the authorized uses of the local sales tax revenues 
145.12  are regional in nature or limited in benefit to the jurisdiction 
145.13  in which the tax is imposed; 
145.14     (5) the estimated portion of revenue raised through the 
145.15  local sales taxes that comes from (i) residents of the 
145.16  jurisdiction in which the tax is imposed; (ii) Minnesota 
145.17  residents who live outside the jurisdiction; and (iii) 
145.18  non-Minnesota residents; 
145.19     (6) the ability of jurisdictions to raise revenue by other 
145.20  means, including the local property tax, and the extent to which 
145.21  the jurisdictions assess property taxes in comparison to other 
145.22  similar jurisdictions, and the state average, expressed in terms 
145.23  of levy as a percent of adjusted net tax capacity; 
145.24     (7) how jurisdictions that do not impose local sales taxes 
145.25  raise revenue to fund projects similar to those funded through 
145.26  local sales taxes; and 
145.27     (8) the compatibility of local sales taxes with the 
145.28  policies underlying the streamlined sales tax project. 
145.29     (b) The study must make recommendations on: 
145.30     (1) the appropriate role of local sales taxes as a part of 
145.31  Minnesota's state and local revenue system, including: 
145.32     (i) the appropriate uses of local sales taxes; and 
145.33     (ii) whether local sales taxes should be limited to 
145.34  jurisdictions that do not meet minimum thresholds of raising 
145.35  revenue through other means, including local property tax; 
145.36     (2) criteria to be used in evaluating local sales tax 
146.1   proposals, designed to direct the use of local sales taxes 
146.2   toward: 
146.3      (i) projects that are regional in nature; 
146.4      (ii) projects that require capital expenditures; and 
146.5      (iii) projects in jurisdictions with inadequate fiscal 
146.6   capacity to fund the projects through other means; and 
146.7      (3) the feasibility of authorizing the commissioner of 
146.8   revenue to approve or deny local sales taxes proposals based on 
146.9   a uniform set of criteria, including the advisability of 
146.10  requiring local approval by referendum or revocation by reverse 
146.11  referendum, and if the referendum should be a criterion 
146.12  necessary for a proposal to be considered for authorization or 
146.13  should occur after authorization but as a condition of the tax 
146.14  being implemented. 
146.15     Sec. 20.  [REPEALER.] 
146.16     (a) Minnesota Statutes 2002, section 37.13, subdivision 2, 
146.17  is repealed effective July 1, 2003, but the repealer does not 
146.18  apply to sales taxes retained on sales occurring before July 1, 
146.19  2003. 
146.20     (b) Minnesota Statutes 2002, section 325E.112, subdivision 
146.21  2a, is repealed effective July 1, 2003. 
146.22                             ARTICLE 9 
146.23                           SPECIAL TAXES 
146.24     Section 1.  Minnesota Statutes 2002, section 62J.692, 
146.25  subdivision 4, is amended to read: 
146.26     Subd. 4.  [DISTRIBUTION OF FUNDS.] (a) The commissioner 
146.27  shall annually distribute medical education funds to all 
146.28  qualifying applicants based on the following criteria:  
146.29     (1) total medical education funds available for 
146.30  distribution; 
146.31     (2) total number of eligible trainee FTEs in each clinical 
146.32  medical education program; and 
146.33     (3) the statewide average cost per trainee as determined by 
146.34  the application information provided in the first year of the 
146.35  biennium, by type of trainee, in each clinical medical education 
146.36  program.  
147.1      (b) Funds distributed shall not be used to displace current 
147.2   funding appropriations from federal or state sources.  
147.3      (c) Funds shall be distributed to the sponsoring 
147.4   institutions indicating the amount to be distributed to each of 
147.5   the sponsor's clinical medical education programs based on the 
147.6   criteria in this subdivision and in accordance with the 
147.7   commissioner's approval letter.  Each clinical medical education 
147.8   program must distribute funds to the training sites as specified 
147.9   in the commissioner's approval letter.  Sponsoring institutions, 
147.10  which are accredited through an organization recognized by the 
147.11  department of education or the Centers for Medicare and Medicaid 
147.12  Services, may contract directly with training sites to provide 
147.13  clinical training.  To ensure the quality of clinical training, 
147.14  those accredited sponsoring institutions must: 
147.15     (1) develop contracts specifying the terms, expectations, 
147.16  and outcomes of the clinical training conducted at sites; and 
147.17     (2) take necessary action if the contract requirements are 
147.18  not met.  Action may include the withholding of payments under 
147.19  this section or the removal of students from the site.  
147.20     (d) Any funds not distributed in accordance with the 
147.21  commissioner's approval letter must be returned to the medical 
147.22  education and research fund within 30 days of receiving notice 
147.23  from the commissioner.  The commissioner shall distribute 
147.24  returned funds to the appropriate training sites in accordance 
147.25  with the commissioner's approval letter. 
147.26     (e) The commissioner shall distribute by June 30 of each 
147.27  year an amount equal to the funds transferred under section 
147.28  62J.694, subdivision 2a, paragraph (b) subdivision 10, plus five 
147.29  percent interest to the University of Minnesota board of regents 
147.30  for the costs of the academic health center as specified under 
147.31  section 62J.694, subdivision 2a, paragraph (a) instructional 
147.32  costs of health professional programs at the academic health 
147.33  center and for interdisciplinary academic initiatives within the 
147.34  academic health center. 
147.35     (f) A maximum of $150,000 of the funds dedicated to the 
147.36  commissioner under section 297F.10, subdivision 1, paragraph 
148.1   (b), clause (2), may be used by the commissioner for 
148.2   administrative expenses associated with implementing this 
148.3   section. 
148.4      Sec. 2.  Minnesota Statutes 2002, section 62J.692, is 
148.5   amended by adding a subdivision to read: 
148.6      Subd. 10.  [TRANSFERS FROM UNIVERSITY OF MINNESOTA.] Of the 
148.7   funds dedicated to the academic health center under section 
148.8   297F.10, subdivision 1, paragraph (b), clause (1), $4,850,000 
148.9   shall be transferred annually to the commissioner of health no 
148.10  later than April 15 of each year for distribution under 
148.11  subdivision 4, paragraph (e).  
148.12     Sec. 3.  Minnesota Statutes 2002, section 270.60, 
148.13  subdivision 4, is amended to read: 
148.14     Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
148.15  shall pay to a county in which an Indian gaming casino is 
148.16  located: 
148.17     (1) ten percent of the state share of all taxes generated 
148.18  from activities on reservations and collected under a tax 
148.19  agreement under this section with the tribal government for the 
148.20  reservation located in the county; or 
148.21     (2) five percent of excise taxes collected by the state 
148.22  that are determined by the department of revenue to have been 
148.23  generated from activities on a reservation located in the 
148.24  county, the tribal government of which does not have a tax 
148.25  agreement under this section and did not have a tax agreement on 
148.26  June 30, 2003. 
148.27     If the tribe has casinos located in more than one county, 
148.28  the payment must be divided equally among the counties in which 
148.29  the casinos are located. 
148.30     (b) The commissioner shall make the payments required under 
148.31  this subdivision by February 28 of the year following the year 
148.32  the taxes are collected. 
148.33     (c) An amount sufficient to make the payments authorized by 
148.34  this subdivision is annually appropriated from the general fund 
148.35  to the commissioner.  
148.36     [EFFECTIVE DATE.] This section is effective for taxes 
149.1   collected after June 30, 2003. 
149.2      Sec. 4.  Minnesota Statutes 2002, section 287.12, is 
149.3   amended to read: 
149.4      287.12 [TAXES, HOW APPORTIONED.] 
149.5      (a) All taxes paid to the county treasurer under the 
149.6   provisions of sections 287.01 to 287.12 must be apportioned, 97 
149.7   percent to the general fund of the state, and three percent to 
149.8   the county revenue fund. 
149.9      (b) On or before the 20th day of each month the county 
149.10  treasurer shall determine and pay to the commissioner of revenue 
149.11  for deposit in the state treasury and credit to the general fund 
149.12  the state's portion of the receipts from the mortgage registry 
149.13  tax during the preceding month subject to the electronic payment 
149.14  requirements of section 270.771.  The county treasurer shall 
149.15  provide any related reports requested by the commissioner of 
149.16  revenue. 
149.17     (c) Counties must remit the state's portion of the June 
149.18  receipts collected through June 25 and the estimated state's 
149.19  portion of the receipts to be collected during the remainder of 
149.20  the month to the commissioner of revenue two business days 
149.21  before June 30 of each year.  The remaining amount of the June 
149.22  receipts is due on August 20. 
149.23     [EFFECTIVE DATE.] This section is effective January 1, 2004.
149.24     Sec. 5.  Minnesota Statutes 2002, section 287.29, 
149.25  subdivision 1, is amended to read: 
149.26     Subdivision 1.  [APPOINTMENT AND PAYMENT OF TAX PROCEEDS.] 
149.27  (a) The proceeds of the taxes levied and collected under 
149.28  sections 287.21 to 287.39 must be apportioned, 97 percent to the 
149.29  general fund of the state, and three percent to the county 
149.30  revenue fund. 
149.31     (b) On or before the 20th day of each month, the county 
149.32  treasurer shall determine and pay to the commissioner of revenue 
149.33  for deposit in the state treasury and credit to the general fund 
149.34  the state's portion of the receipts for deed tax from the 
149.35  preceding month subject to the electronic transfer requirements 
149.36  of section 270.771.  The county treasurer shall provide any 
150.1   related reports requested by the commissioner of revenue. 
150.2      (c) Counties must remit the state's portion of the June 
150.3   receipts collected through June 25 and the estimated state's 
150.4   portion of the receipts to be collected during the remainder of 
150.5   the month to the commissioner of revenue two business days 
150.6   before June 30 of each year.  The remaining amount of the June 
150.7   receipts is due on August 20. 
150.8      [EFFECTIVE DATE.] This section is effective January 1, 2004.
150.9      Sec. 6.  Minnesota Statutes 2002, section 287.31, is 
150.10  amended by adding a subdivision to read: 
150.11     Subd. 3.  [UNDERPAYMENTS OF ACCELERATED PAYMENT OF JUNE TAX 
150.12  RECEIPTS.] If a county fails to timely remit the state portion 
150.13  of the actual June tax receipts at the time required by section 
150.14  287.12 or 287.29, the county shall pay a penalty equal to ten 
150.15  percent of the state portion of actual June receipts less the 
150.16  amount remitted to the commissioner of revenue in June.  The 
150.17  penalty must not be imposed, however, if the amount remitted in 
150.18  June equals either: 
150.19     (1) 90 percent of the state's portion of the preceding 
150.20  May's receipts; or 
150.21     (2) 90 percent of the average monthly amount of the state's 
150.22  portion for the previous calendar year. 
150.23     [EFFECTIVE DATE.] This section is effective January 1, 2004.
150.24     Sec. 7.  Minnesota Statutes 2002, section 297F.09, 
150.25  subdivision 1, is amended to read: 
150.26     Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
150.27  or before the 18th day of each calendar month, a distributor 
150.28  with a place of business in this state shall file a return with 
150.29  the commissioner showing the quantity of cigarettes manufactured 
150.30  or brought in from outside the state or purchased during the 
150.31  preceding calendar month and the quantity of cigarettes sold or 
150.32  otherwise disposed of in this state and outside this state 
150.33  during that month.  A licensed distributor outside this state 
150.34  shall in like manner file a return showing the quantity of 
150.35  cigarettes shipped or transported into this state during the 
150.36  preceding calendar month.  Returns must be made in the form and 
151.1   manner prescribed by the commissioner and must contain any other 
151.2   information required by the commissioner.  The return must be 
151.3   accompanied by a remittance for the full unpaid tax liability 
151.4   shown by it.  The return for the May liability and 85 percent of 
151.5   the estimated June liability is due on the date payment of the 
151.6   tax is due. 
151.7      [EFFECTIVE DATE.] This section is effective January 1, 2004.
151.8      Sec. 8.  Minnesota Statutes 2002, section 297F.09, 
151.9   subdivision 2, is amended to read: 
151.10     Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
151.11  On or before the 18th day of each calendar month, a distributor 
151.12  with a place of business in this state shall file a return with 
151.13  the commissioner showing the quantity and wholesale sales price 
151.14  of each tobacco product: 
151.15     (1) brought, or caused to be brought, into this state for 
151.16  sale; and 
151.17     (2) made, manufactured, or fabricated in this state for 
151.18  sale in this state, during the preceding calendar month.  
151.19  Every licensed distributor outside this state shall in like 
151.20  manner file a return showing the quantity and wholesale sales 
151.21  price of each tobacco product shipped or transported to 
151.22  retailers in this state to be sold by those retailers, during 
151.23  the preceding calendar month.  Returns must be made in the form 
151.24  and manner prescribed by the commissioner and must contain any 
151.25  other information required by the commissioner.  The return must 
151.26  be accompanied by a remittance for the full tax liability shown, 
151.27  less 1.5 percent of the liability as compensation to reimburse 
151.28  the distributor for expenses incurred in the administration of 
151.29  this chapter.  The return for the May liability and 85 percent 
151.30  of the estimated June liability is due on the date payment of 
151.31  the tax is due. 
151.32     [EFFECTIVE DATE.] The part of this section abolishing the 
151.33  1.5 percent reimbursement is effective for sales made after June 
151.34  30, 2003.  The rest of this section is effective January 1, 2004.
151.35     Sec. 9.  Minnesota Statutes 2002, section 297F.09, is 
151.36  amended by adding a subdivision to read: 
152.1      Subd. 10.  [ACCELERATED TAX PAYMENT; CIGARETTE OR TOBACCO 
152.2   PRODUCTS DISTRIBUTOR.] A cigarette or tobacco products 
152.3   distributor having a liability of $120,000 or more during a 
152.4   fiscal year ending June 30, shall remit the June liability for 
152.5   the next year in the following manner:  
152.6      (a) Two business days before June 30 of the year, the 
152.7   distributor shall remit the actual May liability and 85 percent 
152.8   of the estimated June liability to the commissioner and file the 
152.9   return in the form and manner prescribed by the commissioner. 
152.10     (b) On or before August 18 of the year, the distributor 
152.11  shall submit a return showing the actual June liability and pay 
152.12  any additional amount of tax not remitted in June.  A penalty is 
152.13  imposed equal to ten percent of the amount of June liability 
152.14  required to be paid in June, less the amount remitted in June.  
152.15  However, the penalty is not imposed if the amount remitted in 
152.16  June equals the lesser of:  
152.17     (1) 85 percent of the actual June liability; or 
152.18     (2) 85 percent of the preceding May's liability. 
152.19     [EFFECTIVE DATE.] This section is effective for taxpayers 
152.20  having a liability of $120,000 or more during the fiscal year 
152.21  ending June 30, 2003, and each fiscal year thereafter, and for 
152.22  accelerated payments becoming due in 2004 and thereafter. 
152.23     Sec. 10.  Minnesota Statutes 2002, section 297F.10, 
152.24  subdivision 1, as amended by Laws 2003, chapter 128, article 1, 
152.25  section 155, if enacted, is amended to read: 
152.26     Subdivision 1.  [TAX AND USE TAX ON CIGARETTES.] Revenue 
152.27  received from cigarette taxes, as well as related penalties, 
152.28  interest, license fees, and miscellaneous sources of revenue 
152.29  shall be deposited by the commissioner in the state treasury and 
152.30  credited as follows: 
152.31     (a) first to the general obligation special tax bond debt 
152.32  service account in each fiscal year the amount required to 
152.33  increase the balance on hand in the account on each December 1 
152.34  to an amount equal to the full amount of principal and interest 
152.35  to come due on all outstanding bonds whose debt service is 
152.36  payable primarily from the proceeds of the tax to and including 
153.1   the second following July 1; and 
153.2      (b) after the requirements of paragraph (a) have been met, 
153.3      (1) the revenue produced by 3.25 mills of the tax on 
153.4   cigarettes weighing not more than three pounds a thousand and 
153.5   6.5 mills of the tax on cigarettes weighing more than three 
153.6   pounds a thousand must be credited to the academic health center 
153.7   special revenue fund hereby created and is annually appropriated 
153.8   to the board of regents at the University of Minnesota for 
153.9   academic health center funding at the University of Minnesota; 
153.10  and 
153.11     (2) the revenue produced by 1.25 mills of the tax on 
153.12  cigarettes weighing not more than three pounds a thousand and 
153.13  2.5 mills of the tax on cigarettes weighing more than three 
153.14  pounds a thousand must be credited to the medical education and 
153.15  research costs account hereby created in the special revenue 
153.16  fund and is annually appropriated to the commissioner of health 
153.17  for distribution under section 62J.692, subdivision 4; and 
153.18     (3) the balance of the revenues derived from taxes, 
153.19  penalties, and interest (under this chapter) and from license 
153.20  fees and miscellaneous sources of revenue shall be credited to 
153.21  the general fund. 
153.22     [EFFECTIVE DATE.] This section is effective for all 
153.23  revenues received after June 30, 2003.  
153.24     Sec. 11.  Minnesota Statutes 2002, section 297G.01, is 
153.25  amended by adding a subdivision to read: 
153.26     Subd. 21.  [LOW-ALCOHOL DAIRY COCKTAIL.] "Low-alcohol dairy 
153.27  cocktail" means a premixed cocktail, or any other product except 
153.28  liqueur-filled candy, that: 
153.29     (1) consists primarily of milk products; 
153.30     (2) contains distilled spirits; 
153.31     (3) is drinkable as a beverage or is promoted as an 
153.32  alcoholic product; and 
153.33     (4) contains less than 3.2 percent alcohol by volume. 
153.34     [EFFECTIVE DATE.] This section is effective for sales made 
153.35  after June 30, 2003. 
153.36     Sec. 12.  Minnesota Statutes 2002, section 297G.03, 
154.1   subdivision 1, is amended to read: 
154.2      Subdivision 1.  [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 
154.3   The following excise tax is imposed on all distilled spirits and 
154.4   wine manufactured, imported, sold, or possessed in this state: 
154.5                                   Standard             Metric
154.6   (a) Distilled spirits,      $5.03 per gallon   $1.33 per liter
154.7   liqueurs, cordials, 
154.8   and specialties regardless 
154.9   of alcohol content 
154.10  (excluding ethyl alcohol) 
154.11  (b) Wine containing         $ .30 per gallon   $ .08 per liter 
154.12  14 percent or less
154.13  alcohol by volume 
154.14  (except cider as defined 
154.15  in section 297G.01, 
154.16  subdivision 3a) 
154.17  (c) Wine containing         $ .95 per gallon   $ .25 per liter
154.18  more than 14 percent 
154.19  but not more than 21
154.20  percent alcohol by volume 
154.21  (d) Wine containing more    $1.82 per gallon   $ .48 per liter
154.22  than 21 percent but not 
154.23  more than 24 percent
154.24  alcohol by volume 
154.25  (e) Wine containing more    $3.52 per gallon   $ .93 per liter
154.26  than 24 percent alcohol
154.27  by volume
154.28  (f) Natural and             $1.82 per gallon   $ .48 per liter
154.29  artificial sparkling wines
154.30  containing alcohol 
154.31  (g) Cider as defined in     $ .15 per gallon   $ .04 per liter
154.32  section 297G.01,
154.33  subdivision 3a
154.34  (h) Low alcohol dairy       $ .08 per gallon   $ .02 per liter
154.35  cocktails
154.36     In computing the tax on a package of distilled spirits or 
155.1   wine, a proportional tax at a like rate on all fractional parts 
155.2   of a gallon or liter must be paid, except that the tax on a 
155.3   fractional part of a gallon less than 1/16 of a gallon is the 
155.4   same as for 1/16 of a gallon. 
155.5      [EFFECTIVE DATE.] This section is effective for sales made 
155.6   after June 30, 2003. 
155.7      Sec. 13.  Minnesota Statutes 2002, section 297G.09, is 
155.8   amended by adding a subdivision to read: 
155.9      Subd. 9.  [ACCELERATED TAX PAYMENT; PENALTY.] A person 
155.10  liable for tax under this chapter having a liability of $120,000 
155.11  or more during a fiscal year ending June 30, shall remit the 
155.12  June liability for the next year in the following manner:  
155.13     (a) Two business days before June 30 of the year, the 
155.14  taxpayer shall remit the actual May liability and 85 percent of 
155.15  the estimated June liability to the commissioner and file the 
155.16  return in the form and manner prescribed by the commissioner. 
155.17     (b) On or before August 18 of the year, the taxpayer shall 
155.18  submit a return showing the actual June liability and pay any 
155.19  additional amount of tax not remitted in June.  A penalty is 
155.20  imposed equal to ten percent of the amount of June liability 
155.21  required to be paid in June less the amount remitted in June.  
155.22  However, the penalty is not imposed if the amount remitted in 
155.23  June equals the lesser of:  
155.24     (1) 85 percent of the actual June liability; or 
155.25     (2) 85 percent of the preceding May liability. 
155.26     [EFFECTIVE DATE.] This section is effective for taxpayers 
155.27  having a liability of $120,000 or more during the fiscal year 
155.28  ending June 30, 2003, and each fiscal year thereafter, and for 
155.29  accelerated payments becoming due in 2004 and thereafter. 
155.30     Sec. 14.  Minnesota Statutes 2002, section 349.16, is 
155.31  amended by adding a subdivision to read: 
155.32     Subd. 11.  [AGREEMENT TO PAY TAXES.] An organization which 
155.33  is recognized by federal law, regulation, or other ruling as a 
155.34  quasi-governmental organization that would otherwise be exempt 
155.35  from one or more taxes under chapter 297E must agree to pay all 
155.36  taxes under chapter 297E on lawful gambling conducted by the 
156.1   organization as a condition of receiving or renewing a license 
156.2   or premises permit. 
156.3                              ARTICLE 10 
156.4                      LOCAL ECONOMIC DEVELOPMENT
156.5      Section 1.  Minnesota Statutes 2002, section 469.169, is 
156.6   amended by adding a subdivision to read: 
156.7      Subd. 16.  [ADDITIONAL BORDER CITY ALLOCATIONS.] (a) In 
156.8   addition to tax reductions authorized in subdivisions 7 to 15, 
156.9   the commissioner shall allocate $750,000 for tax reductions to 
156.10  border city enterprise zones in cities located on the western 
156.11  border of the state.  The commissioner shall make allocations to 
156.12  zones in cities on the western border on a per capita basis.  
156.13  Allocations made under this subdivision may be used for tax 
156.14  reductions as provided in section 469.171, or for other offsets 
156.15  of taxes imposed on or remitted by businesses located in the 
156.16  enterprise zone, but only if the municipality determines that 
156.17  the granting of the tax reduction or offset is necessary in 
156.18  order to retain a business within or attract a business to the 
156.19  zone.  Any portion of the allocation provided in this paragraph 
156.20  may alternatively be used for tax reductions under section 
156.21  469.1732 or 469.1734. 
156.22     (b) The commissioner shall allocate $750,000 for tax 
156.23  reductions under section 469.1732 or 469.1734 to cities with 
156.24  border city enterprise zones located on the western border of 
156.25  the state.  The commissioner shall allocate this amount among 
156.26  the cities on a per capita basis.  Any portion of the allocation 
156.27  provided in this paragraph may alternatively be used for tax 
156.28  reductions as provided in section 469.171. 
156.29     [EFFECTIVE DATE.] This section is effective the day 
156.30  following final enactment. 
156.31     Sec. 2.  Minnesota Statutes 2002, section 469.174, 
156.32  subdivision 6, as amended by Laws 2003, chapter 127, article 10, 
156.33  section 2, is amended to read: 
156.34     Subd. 6.  [MUNICIPALITY.] "Municipality" means the city, 
156.35  however organized, in which the district is located, with the 
156.36  following exceptions: 
157.1      (1) for a project undertaken pursuant to sections 469.152 
157.2   to 469.165, "municipality" has the meaning given in sections 
157.3   469.152 to 469.165; and 
157.4      (2) for a project undertaken pursuant to sections 469.142 
157.5   to 469.151, or a county or multicounty project undertaken 
157.6   pursuant to sections 469.004 to 469.008 or special law, 
157.7   "municipality" means the county in which the district is located.
157.8      [EFFECTIVE DATE.] This section is effective for districts 
157.9   for which the request for certification was made after July 31, 
157.10  1979. 
157.11     Sec. 3.  Minnesota Statutes 2002, section 469.174, 
157.12  subdivision 10, is amended to read: 
157.13     Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
157.14  district" means a type of tax increment financing district 
157.15  consisting of a project, or portions of a project, within which 
157.16  the authority finds by resolution that one or more of the 
157.17  following conditions, reasonably distributed throughout the 
157.18  district, exists: 
157.19     (1) parcels consisting of 70 percent of the area of the 
157.20  district are occupied by buildings, streets, utilities, paved or 
157.21  gravel parking lots, or other similar structures and more than 
157.22  50 percent of the buildings, not including outbuildings, are 
157.23  structurally substandard to a degree requiring substantial 
157.24  renovation or clearance; or 
157.25     (2) the property consists of vacant, unused, underused, 
157.26  inappropriately used, or infrequently used railyards, rail 
157.27  storage facilities, or excessive or vacated railroad 
157.28  rights-of-way; or 
157.29     (3) tank facilities, or property whose immediately previous 
157.30  use was for tank facilities, as defined in section 115C.02, 
157.31  subdivision 15, if the tank facilities: 
157.32     (i) have or had a capacity of more than 1,000,000 gallons; 
157.33     (ii) are located adjacent to rail facilities; and 
157.34     (iii) have been removed or are unused, underused, 
157.35  inappropriately used, or infrequently used; or 
157.36     (4) a qualifying disaster area, as defined in subdivision 
158.1   10b. 
158.2      (b) For purposes of this subdivision, "structurally 
158.3   substandard" shall mean containing defects in structural 
158.4   elements or a combination of deficiencies in essential utilities 
158.5   and facilities, light and ventilation, fire protection including 
158.6   adequate egress, layout and condition of interior partitions, or 
158.7   similar factors, which defects or deficiencies are of sufficient 
158.8   total significance to justify substantial renovation or 
158.9   clearance. 
158.10     (c) A building is not structurally substandard if it is in 
158.11  compliance with the building code applicable to new buildings or 
158.12  could be modified to satisfy the building code at a cost of less 
158.13  than 15 percent of the cost of constructing a new structure of 
158.14  the same square footage and type on the site.  The municipality 
158.15  may find that a building is not disqualified as structurally 
158.16  substandard under the preceding sentence on the basis of 
158.17  reasonably available evidence, such as the size, type, and age 
158.18  of the building, the average cost of plumbing, electrical, or 
158.19  structural repairs, or other similar reliable evidence.  The 
158.20  municipality may not make such a determination without an 
158.21  interior inspection of the property, but need not have an 
158.22  independent, expert appraisal prepared of the cost of repair and 
158.23  rehabilitation of the building.  An interior inspection of the 
158.24  property is not required, if the municipality finds that (1) the 
158.25  municipality or authority is unable to gain access to the 
158.26  property after using its best efforts to obtain permission from 
158.27  the party that owns or controls the property; and (2) the 
158.28  evidence otherwise supports a reasonable conclusion that the 
158.29  building is structurally substandard.  Items of evidence that 
158.30  support such a conclusion include recent fire or police 
158.31  inspections, on-site property tax appraisals or housing 
158.32  inspections, exterior evidence of deterioration, or other 
158.33  similar reliable evidence.  Written documentation of the 
158.34  findings and reasons why an interior inspection was not 
158.35  conducted must be made and retained under section 469.175, 
158.36  subdivision 3, clause (1). 
159.1      (d) A parcel is deemed to be occupied by a structurally 
159.2   substandard building for purposes of the finding under paragraph 
159.3   (a) if all of the following conditions are met: 
159.4      (1) the parcel was occupied by a substandard building 
159.5   within three years of the filing of the request for 
159.6   certification of the parcel as part of the district with the 
159.7   county auditor; 
159.8      (2) the substandard building was demolished or removed by 
159.9   the authority or the demolition or removal was financed by the 
159.10  authority or was done by a developer under a development 
159.11  agreement with the authority; 
159.12     (3) the authority found by resolution before the demolition 
159.13  or removal that the parcel was occupied by a structurally 
159.14  substandard building and that after demolition and clearance the 
159.15  authority intended to include the parcel within a district; and 
159.16     (4) upon filing the request for certification of the tax 
159.17  capacity of the parcel as part of a district, the authority 
159.18  notifies the county auditor that the original tax capacity of 
159.19  the parcel must be adjusted as provided by section 469.177, 
159.20  subdivision 1, paragraph (h). 
159.21     (e) For purposes of this subdivision, a parcel is not 
159.22  occupied by buildings, streets, utilities, paved or gravel 
159.23  parking lots, or other similar structures unless 15 percent of 
159.24  the area of the parcel contains buildings, streets, utilities, 
159.25  paved or gravel parking lots, or other similar structures. 
159.26     (f) For districts consisting of two or more noncontiguous 
159.27  areas, each area must qualify as a redevelopment district under 
159.28  paragraph (a) to be included in the district, and the entire 
159.29  area of the district must satisfy paragraph (a). 
159.30     [EFFECTIVE DATE.] This section is effective for districts 
159.31  for which the request for certification is made after the day 
159.32  following final enactment. 
159.33     Sec. 4.  Minnesota Statutes 2002, section 469.174, is 
159.34  amended by adding a subdivision to read: 
159.35     Subd. 10b.  [QUALIFIED DISASTER AREA.] A "qualified 
159.36  disaster area" is an area that meets the following requirements: 
160.1      (1) parcels consisting of 70 percent of the area of the 
160.2   district were occupied by buildings, streets, utilities, paved 
160.3   or gravel parking lots, or other similar structures immediately 
160.4   before the disaster or emergency; 
160.5      (2) the area of the district was subject to a disaster or 
160.6   emergency, as defined in section 273.123, subdivision 1, within 
160.7   the 18-month period ending on the day the request for 
160.8   certification of the district is made; and 
160.9      (3) 50 percent or more of the buildings in the area have 
160.10  suffered substantial damage as a result of the disaster or 
160.11  emergency. 
160.12     [EFFECTIVE DATE.] This section is effective for districts 
160.13  for which the request for certification is made after the day 
160.14  following final enactment.  
160.15     Sec. 5.  Minnesota Statutes 2002, section 469.1763, 
160.16  subdivision 2, is amended to read: 
160.17     Subd. 2.  [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 
160.18  increment financing district, an amount equal to at least 75 
160.19  percent of the total revenue derived from tax increments paid by 
160.20  properties in the district must be expended on activities in the 
160.21  district or to pay bonds, to the extent that the proceeds of the 
160.22  bonds were used to finance activities in the district or to pay, 
160.23  or secure payment of, debt service on credit enhanced bonds.  
160.24  For districts, other than redevelopment districts for which the 
160.25  request for certification was made after June 30, 1995, the 
160.26  in-district percentage for purposes of the preceding sentence is 
160.27  80 percent.  Not more than 25 percent of the total revenue 
160.28  derived from tax increments paid by properties in the district 
160.29  may be expended, through a development fund or otherwise, on 
160.30  activities outside of the district but within the defined 
160.31  geographic area of the project except to pay, or secure payment 
160.32  of, debt service on credit enhanced bonds.  For districts, other 
160.33  than redevelopment districts for which the request for 
160.34  certification was made after June 30, 1995, the pooling 
160.35  percentage for purposes of the preceding sentence is 20 
160.36  percent.  The revenue derived from tax increments for the 
161.1   district that are expended on costs under section 469.176, 
161.2   subdivision 4h, paragraph (b), may be deducted first before 
161.3   calculating the percentages that must be expended within and 
161.4   without the district.  
161.5      (b) In the case of a housing district, a housing project, 
161.6   as defined in section 469.174, subdivision 11, is an activity in 
161.7   the district.  
161.8      (c) All administrative expenses are for activities outside 
161.9   of the district, except that if the only expenses for activities 
161.10  outside of the district under this subdivision are for the 
161.11  purposes described in paragraph (d), administrative expenses 
161.12  will be considered as expenditures for activities in the 
161.13  district. 
161.14     (d) The authority may elect, in the tax increment financing 
161.15  plan for the district, to increase by up to ten percentage 
161.16  points the permitted amount of expenditures for activities 
161.17  located outside the geographic area of the district under 
161.18  paragraph (a).  As permitted by section 469.176, subdivision 4k, 
161.19  the expenditures, including the permitted expenditures under 
161.20  paragraph (a), need not be made within the geographic area of 
161.21  the project.  Expenditures that meet the requirements of this 
161.22  paragraph are legally permitted expenditures of the district, 
161.23  notwithstanding section 469.176, subdivisions 4b, 4c, and 4j.  
161.24  To qualify for the increase under this paragraph, the 
161.25  expenditures must: 
161.26     (1) be used exclusively to assist housing that meets the 
161.27  requirement for a qualified low-income building, as that term is 
161.28  used in section 42 of the Internal Revenue Code; 
161.29     (2) not exceed the qualified basis of the housing, as 
161.30  defined under section 42(c) of the Internal Revenue Code, less 
161.31  the amount of any credit allowed under section 42 of the 
161.32  Internal Revenue Code; and 
161.33     (3) be used to: 
161.34     (i) acquire and prepare the site of the housing; 
161.35     (ii) acquire, construct, or rehabilitate the housing; or 
161.36     (iii) make public improvements directly related to the 
162.1   housing. 
162.2      [EFFECTIVE DATE.] This section is effective for districts 
162.3   for which the request for certification was made after April 30, 
162.4   1990. 
162.5      Sec. 6.  Minnesota Statutes 2002, section 469.1763, 
162.6   subdivision 4, is amended to read: 
162.7      Subd. 4.  [USE OF REVENUES FOR DECERTIFICATION.] (a) In 
162.8   each year beginning with the sixth year following certification 
162.9   of the district, if the applicable in-district percent of the 
162.10  revenues derived from tax increments paid by properties in the 
162.11  district that remain after exceeds the amount of expenditures 
162.12  that have been made for costs permitted under subdivision 3, an 
162.13  amount equal to the difference between the in-district percent 
162.14  of the revenues derived from tax increments paid by properties 
162.15  in the district and the amount of expenditures that have been 
162.16  made for costs permitted under subdivision 3 must be used and 
162.17  only used to pay or defease the following or be set aside to pay 
162.18  the following: 
162.19     (1) outstanding bonds, as defined in subdivision 3, 
162.20  paragraphs (a), clause (2), and (b); 
162.21     (2) contracts, as defined in subdivision 3, paragraph (a), 
162.22  clauses (3) and (4); or 
162.23     (3) credit enhanced bonds to which the revenues derived 
162.24  from tax increments are pledged, but only to the extent that 
162.25  revenues of the district for which the credit enhanced bonds 
162.26  were issued are insufficient to pay the bonds and to the extent 
162.27  that the increments from the applicable pooling percent share 
162.28  for the district are insufficient. 
162.29     (b) When the outstanding bonds have been defeased and when 
162.30  sufficient money has been set aside to pay contractual 
162.31  obligations as defined in subdivision 3, paragraph (a), clauses 
162.32  (3) and (4), the district must be decertified and the pledge of 
162.33  tax increment discharged. 
162.34     Sec. 7.  Minnesota Statutes 2002, section 469.177, 
162.35  subdivision 1, is amended to read: 
162.36     Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
163.1   after adoption of a tax increment financing plan, the auditor of 
163.2   any county in which the district is situated shall, upon request 
163.3   of the authority, certify the original net tax capacity of the 
163.4   tax increment financing district and that portion of the 
163.5   district overlying any subdistrict as described in the tax 
163.6   increment financing plan and shall certify in each year 
163.7   thereafter the amount by which the original net tax capacity has 
163.8   increased or decreased as a result of a change in tax exempt 
163.9   status of property within the district and any subdistrict, 
163.10  reduction or enlargement of the district or changes pursuant to 
163.11  subdivision 4.  
163.12     (b) For districts approved under section 469.175, 
163.13  subdivision 3, or parcels added to existing districts after May 
163.14  1, 1988, if the classification under section 273.13 of property 
163.15  located in a district changes to a classification that has a 
163.16  different assessment ratio, the original net tax capacity of 
163.17  that property must be redetermined at the time when its use is 
163.18  changed as if the property had originally been classified in the 
163.19  same class in which it is classified after its use is changed. 
163.20     (c) The amount to be added to the original net tax capacity 
163.21  of the district as a result of previously tax exempt real 
163.22  property within the district becoming taxable equals the net tax 
163.23  capacity of the real property as most recently assessed pursuant 
163.24  to section 273.18 or, if that assessment was made more than one 
163.25  year prior to the date of title transfer rendering the property 
163.26  taxable, the net tax capacity assessed by the assessor at the 
163.27  time of the transfer.  If improvements are made to tax exempt 
163.28  property after certification of the district and before the 
163.29  parcel becomes taxable, the assessor shall, at the request of 
163.30  the authority, separately assess the estimated market value of 
163.31  the improvements.  If the property becomes taxable, the county 
163.32  auditor shall add to original net tax capacity, the net tax 
163.33  capacity of the parcel, excluding the separately assessed 
163.34  improvements.  If substantial taxable improvements were made to 
163.35  a parcel after certification of the district and if the property 
163.36  later becomes tax exempt, in whole or part, as a result of the 
164.1   authority acquiring the property through foreclosure or exercise 
164.2   of remedies under a lease or other revenue agreement or as a 
164.3   result of tax forfeiture, the amount to be added to the original 
164.4   net tax capacity of the district as a result of the property 
164.5   again becoming taxable is the amount of the parcel's value that 
164.6   was included in original net tax capacity when the parcel was 
164.7   first certified.  The amount to be added to the original net tax 
164.8   capacity of the district as a result of enlargements equals the 
164.9   net tax capacity of the added real property as most recently 
164.10  certified by the commissioner of revenue as of the date of 
164.11  modification of the tax increment financing plan pursuant to 
164.12  section 469.175, subdivision 4. 
164.13     (d) For districts approved under section 469.175, 
164.14  subdivision 3, or parcels added to existing districts after May 
164.15  1, 1988, if the net tax capacity of a property increases because 
164.16  the property no longer qualifies under the Minnesota 
164.17  Agricultural Property Tax Law, section 273.111; the Minnesota 
164.18  Open Space Property Tax Law, section 273.112; or the 
164.19  Metropolitan Agricultural Preserves Act, chapter 473H, or 
164.20  because platted, unimproved property is improved or three years 
164.21  pass after approval of the plat under section 273.11, 
164.22  subdivision 1, the increase in net tax capacity must be added to 
164.23  the original net tax capacity.  
164.24     (e) The amount to be subtracted from the original net tax 
164.25  capacity of the district as a result of previously taxable real 
164.26  property within the district becoming tax exempt, or a reduction 
164.27  in the geographic area of the district, shall be the amount of 
164.28  original net tax capacity initially attributed to the property 
164.29  becoming tax exempt or being removed from the district.  If the 
164.30  net tax capacity of property located within the tax increment 
164.31  financing district is reduced by reason of a court-ordered 
164.32  abatement, stipulation agreement, voluntary abatement made by 
164.33  the assessor or auditor or by order of the commissioner of 
164.34  revenue, the reduction shall be applied to the original net tax 
164.35  capacity of the district when the property upon which the 
164.36  abatement is made has not been improved since the date of 
165.1   certification of the district and to the captured net tax 
165.2   capacity of the district in each year thereafter when the 
165.3   abatement relates to improvements made after the date of 
165.4   certification.  The county auditor may specify reasonable form 
165.5   and content of the request for certification of the authority 
165.6   and any modification thereof pursuant to section 469.175, 
165.7   subdivision 4.  
165.8      (f) If a parcel of property contained a substandard 
165.9   building that was demolished or removed and if the authority 
165.10  elects to treat the parcel as occupied by a substandard building 
165.11  under section 469.174, subdivision 10, paragraph (b), the 
165.12  auditor shall certify the original net tax capacity of the 
165.13  parcel using the greater of (1) the current net tax capacity of 
165.14  the parcel, or (2) the estimated market value of the parcel for 
165.15  the year in which the building was demolished or removed, but 
165.16  applying the class rates for the current year. 
165.17     (g) For a redevelopment district qualifying under section 
165.18  469.174, subdivision 10, paragraph (a), clause (4), as a 
165.19  qualified disaster area, the auditor shall certify the value of 
165.20  the land as the original tax capacity for any parcel in the 
165.21  district that contains a building that suffered substantial 
165.22  damage as a result of the disaster or emergency. 
165.23     [EFFECTIVE DATE.] This section is effective for districts 
165.24  for which the request for certification is made after the day 
165.25  following final enactment. 
165.26     Sec. 8.  [469.1794] [DURATION EXTENSION TO OFFSET 
165.27  DEFICITS.] 
165.28     Subdivision 1.  [AUTHORITY.] Subject to the conditions and 
165.29  limitations imposed by this section, an authority may, by 
165.30  resolution, extend the duration limit under section 469.176, 
165.31  subdivision 1b, 1c, 1e, or 1g, that applies to a preexisting 
165.32  district by up to the maximum number of years permitted under 
165.33  subdivision 5, plus any amount authorized by the commissioner of 
165.34  revenue under subdivision 6. 
165.35     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
165.36  the following terms have the meanings given. 
166.1      (b) "Extended district" means a tax increment financing 
166.2   district whose duration limit is extended under this section. 
166.3      (c) "Preexisting district" has the meaning given in section 
166.4   469.1792, subdivision 2. 
166.5      (d) "Preexisting obligation" has the meaning given in 
166.6   section 469.1792, subdivision 2. 
166.7      (e) "Qualifying obligation" means: 
166.8      (1) a preexisting obligation that is: 
166.9      (i) a general obligation bond of the municipality; 
166.10     (ii) a general obligation bond of the authority; 
166.11     (iii) a revenue bond of the authority to which other 
166.12  revenues or money of the authority in addition to tax increments 
166.13  are pledged to pay; 
166.14     (iv) an interfund loan, including an advance or payment 
166.15  made by the municipality or authority after June 1, 2002, to pay 
166.16  an obligation listed in items (i) to (iii); 
166.17     (v) an obligation assumed by a developer before January 1, 
166.18  2001, to repay a general obligation bond issued by a 
166.19  municipality to fund cleanup and development activities, if the 
166.20  developer assumed the obligation more than five years after the 
166.21  issuance of the bonds; or 
166.22     (2) a bond issued to refinance a preexisting obligation 
166.23  under clause (1). 
166.24     Subd. 3.  [PRECONDITIONS.] Before an authority may extend 
166.25  the duration of district under this section, the following 
166.26  conditions must be met with regard to the district: 
166.27     (1) the original local tax rate under section 469.177, 
166.28  subdivision 1a, does not apply under an election made under 
166.29  section 469.1792, subdivision 3, or under other operation of 
166.30  law; 
166.31     (2) for a district in the metropolitan area or taconite tax 
166.32  relief area, the fiscal disparities contribution is computed 
166.33  under section 469.177, subdivision 3, paragraph (a); 
166.34     (3) the municipality has transferred any available 
166.35  increments in other districts to pay qualified obligations of 
166.36  the district or other districts in the municipality under 
167.1   section 469.1763, subdivision 6; and 
167.2      (4) the authority finds that, taking into account all of 
167.3   the increments that are available to pay qualifying obligations 
167.4   for the district, the increments from the district will be 
167.5   insufficient to pay the amount of qualifying obligations and 
167.6   that the insufficiency is a result of (i) the changes in the 
167.7   class rates and (ii) elimination of the state-determined general 
167.8   education property tax levy under Laws 2001, First Special 
167.9   Session chapter 5. 
167.10     Subd. 4.  [NOTICE; HEARING; AND APPROVALS.] The authority 
167.11  may extend the duration of a district under this section only 
167.12  after the municipality has approved the extension after 
167.13  providing public notice and holding a hearing in the manner 
167.14  provided under section 469.175, subdivision 3. 
167.15     Subd. 5.  [MAXIMUM EXTENSION.] (a) The maximum extension 
167.16  for a district under this subdivision equals the lesser of: 
167.17     (1) four years; or 
167.18     (2) the tax reform percentage for the district, determined 
167.19  under paragraph (b), multiplied by the remaining duration of the 
167.20  district rounded to the nearest whole number.  Fractions in 
167.21  excess of one-third are rounded up. 
167.22     (b) The tax reform percentage for the district, as 
167.23  estimated by the county auditor, equals: 
167.24     (1)(i) the total taxes paid by the original tax capacity 
167.25  for the district for taxes payable in 2001, minus 
167.26     (ii) the average of the total taxes paid by the original 
167.27  tax capacity for the district for taxes payable in 2002 and in 
167.28  2003, divided by 
167.29     (2) the total taxes paid by the original tax capacity for 
167.30  the district for taxes payable in 2001. 
167.31     (c) In the resolution approving the extension, the 
167.32  municipality may elect to treat all preexisting obligations as 
167.33  qualified obligations for purposes of this section.  If the 
167.34  municipality makes an election under this paragraph, the maximum 
167.35  duration is reduced by one-half of the amount otherwise 
167.36  permitted under paragraph (a).  
168.1      (d) The remaining duration of a district is the number of 
168.2   calendar years, beginning after December 31, 2001, in which the 
168.3   district may collect increment under its duration limit under 
168.4   section 469.176, subdivision 1b, 1c, 1e, or 1g, or a special law 
168.5   approved before January 1, 2002, as applicable. 
168.6      (e) For purposes of this subdivision, "taxes" exclude taxes 
168.7   levied against market value, rather than tax capacity, and the 
168.8   state general tax under section 275.025. 
168.9      Subd. 6.  [COMMISSIONER AUTHORITY.] (a) If the municipality 
168.10  determines that the extension permitted under subdivision 5 will 
168.11  not provide sufficient revenue to pay in full the amount of 
168.12  qualifying obligations, the municipality may apply to the 
168.13  commissioner of revenue for an additional duration extension.  
168.14  The commissioner may authorize an extension of the duration of 
168.15  the district of up to two years after determining that: 
168.16     (1) the insufficiency of revenues to pay the qualifying 
168.17  obligations, which will be offset by the additional extension of 
168.18  the duration limit, result from (i) the changes in the class 
168.19  rates and (ii) elimination of the state-determined general 
168.20  education property tax levy under Laws 2001, First Special 
168.21  Session chapter 5; 
168.22     (2) the municipality has or is transferring all available 
168.23  increments from other preexisting districts and after August 1, 
168.24  2001, has not entered into new obligations or authorized new 
168.25  spending that reduced the amount of those increments that are 
168.26  available for transfer to pay qualifying obligations; and 
168.27     (3) increases in increments over the term of the district 
168.28  are unlikely to eliminate the insufficiency. 
168.29     (b) The commissioner may: 
168.30     (1) establish the form of and time for applications under 
168.31  this subdivision; and 
168.32     (2) require the municipality to provide the information 
168.33  that the commissioner determines is necessary or useful in 
168.34  evaluating the application. 
168.35     (c) This subdivision does not apply to a district if the 
168.36  authority has made an election under subdivision 5, paragraph 
169.1   (c).  
169.2      Subd. 7.  [LIMITS ON USE OF INCREMENTS.] (a) Tax increments 
169.3   of an extended district may only be used to pay preexisting 
169.4   obligations of the district and administrative expenses, 
169.5   effective upon the final required approval of the extension 
169.6   under this section.  All tax increments that are attributable to 
169.7   an extension of the duration of a district under this section 
169.8   must be used only to pay qualified obligations of the district.  
169.9   If increments from a district subject to this subdivision are 
169.10  pledged to pay preexisting obligations that are not qualified 
169.11  obligations, increments received under the duration limit, 
169.12  determined without regard to this section, must be used to pay 
169.13  qualified obligations and preexisting obligations that are not 
169.14  qualified obligations in proportion to their relative shares of 
169.15  all payments due on all preexisting obligations. 
169.16     (b) If the authority elects to extend the duration of a 
169.17  district under this section and if increments from one or more 
169.18  other districts are pledged to pay preexisting obligations of 
169.19  the extended district, increments from all of the districts may 
169.20  only be used to pay preexisting obligations and administrative 
169.21  expenses. 
169.22     Subd. 8.  [DECERTIFICATION.] An extended district must be 
169.23  decertified at the end of the first calendar year when 
169.24  sufficient increments have been received to pay the qualified 
169.25  obligations of the extended district.  Any remaining unspent 
169.26  increments must be distributed as excess increments under 
169.27  section 469.176, subdivision 2, clause (4). 
169.28     [EFFECTIVE DATE.] This section is effective the day 
169.29  following final enactment and applies to districts for which the 
169.30  request for certification was made on, before, or after August 
169.31  1, 1979, and before August 1, 2001. 
169.32     Sec. 9.  Minnesota Statutes 2002, section 474A.061, 
169.33  subdivision 1, as amended by Laws 2003, chapter 127, article 12, 
169.34  section 22, is amended to read: 
169.35     Subdivision 1.  [ALLOCATION APPLICATION.] (a) An issuer may 
169.36  apply for an allocation under this section by submitting to the 
170.1   department an application on forms provided by the department, 
170.2   accompanied by (1) a preliminary resolution, (2) a statement of 
170.3   bond counsel that the proposed issue of obligations requires an 
170.4   allocation under this chapter and the Internal Revenue Code, (3) 
170.5   the type of qualified bonds to be issued, (4) an application 
170.6   deposit in the amount of one percent of the requested allocation 
170.7   before the last Monday in July, or in the amount of two percent 
170.8   of the requested allocation on or after the last Monday in July, 
170.9   (5) a public purpose scoring worksheet for manufacturing project 
170.10  and enterprise zone facility project applications, and (6) for 
170.11  residential rental projects, a statement from the applicant or 
170.12  bond counsel as to whether the project preserves existing 
170.13  federally subsidized housing for residential rental project 
170.14  applications and whether the project is restricted to persons 
170.15  who are 55 years of age or older.  The issuer must pay the 
170.16  application deposit by a check made payable to the department of 
170.17  finance.  The Minnesota housing finance agency, the Minnesota 
170.18  rural finance authority, and the Minnesota higher education 
170.19  services office may apply for and receive an allocation under 
170.20  this section without submitting an application deposit. 
170.21     (b) An entitlement issuer may not apply for an allocation 
170.22  from the public facilities pool unless it has either permanently 
170.23  issued bonds equal to the amount of its entitlement allocation 
170.24  for the current year plus any amount of bonding authority 
170.25  carried forward from previous years or returned for reallocation 
170.26  all of its unused entitlement allocation.  An entitlement issuer 
170.27  may not apply for an allocation from the housing pool unless it 
170.28  either has permanently issued bonds equal to any amount of 
170.29  bonding authority carried forward from a previous year or has 
170.30  returned for reallocation all of its unused entitlement 
170.31  allocation any unused bonding authority carried forward from a 
170.32  previous year.  For purposes of this subdivision, its 
170.33  entitlement allocation includes an amount obtained under section 
170.34  474A.04, subdivision 6.  This paragraph does not apply to an 
170.35  application from the Minnesota housing finance agency for an 
170.36  allocation under subdivision 2a for cities who choose to have 
171.1   the agency issue bonds on their behalf.  
171.2      (c) If an application is rejected under this section, the 
171.3   commissioner must notify the applicant and return the 
171.4   application deposit to the applicant within 30 days unless the 
171.5   applicant requests in writing that the application be 
171.6   resubmitted.  The granting of an allocation of bonding authority 
171.7   under this section must be evidenced by a certificate of 
171.8   allocation.  
171.9      [EFFECTIVE DATE.] This section is effective the day 
171.10  following final enactment. 
171.11     Sec. 10.  [CITY OF NEW HOPE; TAX INCREMENT FINANCING 
171.12  DISTRICT.] 
171.13     Subdivision 1.  [SPECIAL RULES.] (a) At the election of the 
171.14  city, upon adoption of the tax increment financing plan for a 
171.15  district or districts described in this section, the rules 
171.16  provided under this section apply to each such district. 
171.17     For purposes of this section, "district" means a 
171.18  redevelopment or soils condition tax increment financing 
171.19  district established by the city of New Hope or the economic 
171.20  development authority of the city within the following area:  
171.21  beginning at the intersection of Winnetka Avenue N. and the 
171.22  westerly extension of 58th Avenue N., east on the westerly 
171.23  extension of 58th Avenue N. to Sumter Avenue N., south on Sumter 
171.24  Avenue N. to Bass Lake Road, east on Bass Lake Road to the city 
171.25  boundaries of New Hope and Crystal, MN, south along that city 
171.26  boundary to St. Raphael Drive, west on St. Raphael Drive to 
171.27  Sumter Avenue N., south on Sumter Avenue N. to 53rd Avenue N., 
171.28  west on 53rd Avenue N. to Winnetka Avenue N., north on Winnetka 
171.29  Avenue N. to 55th Avenue N., west on 55th Avenue N. to Zealand 
171.30  Avenue N., north on Zealand Avenue N. to Bass Lake Road, east on 
171.31  Bass Lake Road to Yukon Avenue N., north on Yukon Avenue N. to 
171.32  Meadow Lake Road E., east on Meadow Lake Road E. to the 
171.33  intersection with the west property line of New Hope golf 
171.34  course, south along the west property line of New Hope golf 
171.35  course to Bass Lake Road, east on Bass Lake Road to Winnetka 
171.36  Avenue N., north on Winnetka Avenue N. to the point of 
172.1   beginning.  The total number of parcels that may be included 
172.2   within all such redevelopment or soils condition tax increment 
172.3   financing districts must not exceed 131 and the total acreage, 
172.4   including roads, easements, and rights-of-way, must not exceed 
172.5   130 acres. 
172.6      (b) The five-year rule under Minnesota Statutes, section 
172.7   469.1763, subdivision 3, applies as if the limit is nine years. 
172.8      (c) The limitations on expenditure of increment outside of 
172.9   the district under Minnesota Statutes, section 469.1763, 
172.10  subdivision 2, apply as follows: 
172.11     (1) administrative expenses are treated as expenditures for 
172.12  activities within the district; 
172.13     (2) the percentage of increments that may be spent on 
172.14  activities outside of the district under Minnesota Statutes, 
172.15  section 469.1763, subdivision 2, is increased by 15 percentage 
172.16  points; 
172.17     (3) increments spent outside of the district may only be 
172.18  spent on costs, such as property acquisition and public 
172.19  improvements, that are fairly apportioned to parcels on which 
172.20  the ultimate use is planned for housing; and 
172.21     (4) increments may only be expended on improvements within 
172.22  the area identified in paragraph (a). 
172.23     (d) The requirements for qualifying a redevelopment 
172.24  district under Minnesota Statutes, section 469.174, subdivision 
172.25  10, do not apply to the parcels identified as 08-118-21-22-0001, 
172.26  08-118-21-33-0008, 08-118-21-33-0009, 08-118-21-33-0010, 
172.27  08-118-21-33-0011, 08-118-21-33-0013, 08-118-21-33-0018, 
172.28  08-118-21-33-0019, 08-118-21-33-0025, 08-118-21-33-0027, 
172.29  08-118-21-33-0029, 08-118-21-33-0082, and 08-118-21-33-0087, 
172.30  which are deemed substandard for the purpose of qualifying the 
172.31  district as a redevelopment district.  
172.32     Subd. 2.  [EXPIRATION.] (a) The exception under subdivision 
172.33  1, paragraph (c), from the limitations of Minnesota Statutes, 
172.34  section 469.1763, subdivision 2, expires 20 years after the 
172.35  receipt of the first increment from a district for which the 
172.36  city has elected that this section applies.  
173.1      (b) The authority to approve tax increment financing plans 
173.2   to establish a tax increment financing district subject to this 
173.3   section expires on December 31, 2013.  
173.4      Subd. 3.  [EFFECTIVE DATE.] This section is effective upon 
173.5   approval by the governing bodies of the city of New Hope and 
173.6   Hennepin county and upon compliance by the city with Minnesota 
173.7   Statutes, section 645.021, subdivision 3. 
173.8      Sec. 11.  [EFFECTIVE DATE.] 
173.9      Unless specifically provided otherwise in that article, 
173.10  Laws 2003, chapter 127, article 12, is effective the day 
173.11  following the final enactment of Laws 2003, chapter 127. 
173.12                             ARTICLE 11 
173.13                           MISCELLANEOUS 
173.14     Section 1.  Minnesota Statutes 2002, section 3.986, 
173.15  subdivision 4, is amended to read: 
173.16     Subd. 4.  [POLITICAL SUBDIVISION.] A "political 
173.17  subdivision" is a school district, county, or home rule charter 
173.18  or statutory city. 
173.19     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
173.20     Sec. 2.  Minnesota Statutes 2002, section 16A.152, 
173.21  subdivision 1, is amended to read: 
173.22     Subdivision 1.  [CASH FLOW ACCOUNT ESTABLISHED.] (a) A cash 
173.23  flow account is created in the general fund in the state 
173.24  treasury.  Beginning July 1, 2003, the commissioner of finance 
173.25  shall restrict part or all of the balance before reserves in the 
173.26  general fund as may be necessary to fund the cash flow account, 
173.27  up to $350,000,000. 
173.28     (b) The Amounts restricted are transferred to in the cash 
173.29  flow account and shall remain in the account until drawn down 
173.30  and used to meet cash flow deficiencies resulting from uneven 
173.31  distribution of revenue collections and required expenditures 
173.32  during a fiscal year. 
173.33     Sec. 3.  Minnesota Statutes 2002, section 16A.152, 
173.34  subdivision 1b, is amended to read: 
173.35     Subd. 1b.  [BUDGET RESERVE INCREASE.] On June 30 July 1, 
173.36  2003, the commissioner of finance shall transfer 
174.1   $3,900,000 $300,000,000 to the budget reserve account in the 
174.2   general fund.  On June 30 July 1, 2004, the commissioner of 
174.3   finance shall transfer $12,300,000 $296,000,000 to the budget 
174.4   reserve account in the general fund.  On June 30, 2005, the 
174.5   commissioner of finance shall transfer $12,000,000 to the budget 
174.6   reserve account in the general fund.  The amounts necessary for 
174.7   this purpose are appropriated from the general fund. 
174.8      Sec. 4.  Minnesota Statutes 2002, section 16A.152, 
174.9   subdivision 2, is amended to read: 
174.10     Subd. 2.  [ADDITIONAL REVENUES; PRIORITY.] If on the basis 
174.11  of a forecast of general fund revenues and expenditures, the 
174.12  commissioner of finance determines that there will be a positive 
174.13  unrestricted budgetary general fund balance at the close of the 
174.14  biennium, the commissioner of finance must allocate money to the 
174.15  budget reserve until the total amount in the account equals 
174.16  $653,000,000 the following accounts and purposes in priority 
174.17  order: 
174.18     (1) the cash flow account established in subdivision 1 
174.19  until that account reaches $350,000,000; and 
174.20     (2) the budget reserve account established in subdivision 
174.21  1a until that account reaches $653,000,000. 
174.22     The amounts necessary to meet the requirements of this 
174.23  section are appropriated from the general fund within two weeks 
174.24  after the forecast is released. 
174.25     Sec. 5.  Minnesota Statutes 2002, section 18B.07, 
174.26  subdivision 2, as amended by Laws 2003, chapter 127, article 13, 
174.27  section 1, is amended to read: 
174.28     Subd. 2.  [PROHIBITED PESTICIDE USE.] (a) A person may not 
174.29  use, store, handle, distribute, or dispose of a pesticide, 
174.30  rinsate, pesticide container, or pesticide application equipment 
174.31  in a manner: 
174.32     (1) that is inconsistent with a label or labeling as 
174.33  defined by FIFRA; 
174.34     (2) that endangers humans, damages agricultural products, 
174.35  food, livestock, fish, or wildlife; or 
174.36     (3) that will cause unreasonable adverse effects on the 
175.1   environment.  
175.2      (b) A person may not direct a pesticide onto property 
175.3   beyond the boundaries of the target site.  A person may not 
175.4   apply a pesticide resulting in damage to adjacent property. 
175.5      (c) A person may not directly apply a pesticide on a human 
175.6   by overspray or target site spray, except when: 
175.7      (1) the pesticide is intended for use on a human; 
175.8      (2) the pesticide application is for mosquito control 
175.9   operations; 
175.10     (3) the pesticide application is for control of gypsy moth, 
175.11  forest tent caterpillar, or other pest species, as determined by 
175.12  the commissioner, and the pesticide used is a biological agent; 
175.13  or 
175.14     (4) the pesticide application is for a public health risk, 
175.15  as determined by the commissioner of health, and the 
175.16  commissioner of health, in consultation with the commissioner of 
175.17  agriculture, determines that the application is warranted based 
175.18  on the commissioner's balancing of the public health risk with 
175.19  the risk that the pesticide application poses to the health of 
175.20  the general population, with special attention to the health of 
175.21  children. 
175.22     (d) For pesticide applications under paragraph (c), clause 
175.23  (2), the following conditions apply: 
175.24     (1) no practicable and effective alternative method of 
175.25  control exists; 
175.26     (2) the pesticide is among the least toxic available for 
175.27  control of the target pest; and 
175.28     (3) notification to residents in the area to be treated is 
175.29  provided at least 24 hours before application through direct 
175.30  notification, posting daily on the treating organization's Web 
175.31  site, if any, and by sending a broadcast e-mail to those persons 
175.32  who request notification of such, of those areas to be treated 
175.33  by adult mosquito control techniques during the next calendar 
175.34  day.  For control operations related to human disease, notice 
175.35  under this paragraph may be given less than 24 hours in advance. 
175.36     (e) For pesticide applications under paragraph (c), clauses 
176.1   (3) and (4), the following conditions apply: 
176.2      (1) no practicable and effective alternative method of 
176.3   control exists; 
176.4      (2) the pesticide is among the least toxic available for 
176.5   control of the target pest; and 
176.6      (3) notification of residents in the area to be treated is 
176.7   provided by direct notification and through publication in a 
176.8   newspaper of general circulation within the affected area. 
176.9      (f) For purposes of this subdivision, "direct notification" 
176.10  may include mailings, public meetings, posted placards, 
176.11  neighborhood newsletters, or other means of contact designed to 
176.12  reach as many residents as possible. 
176.13     (g) A person may not apply a pesticide in a manner so as to 
176.14  expose a worker in an immediately adjacent, open field. 
176.15     Sec. 6.  [270.30] [TAX PREPARATION SERVICES.] 
176.16     Subdivision 1.  [SCOPE.] (a) This section applies to a 
176.17  person who offers, provides, or facilitates the provision of 
176.18  refund anticipation loans, as part of or in connection with the 
176.19  provision of tax preparation services. 
176.20     (b) This section does not apply to: 
176.21     (1) a tax preparer who provides tax preparation services 
176.22  for fewer than six clients in a calendar year; 
176.23     (2) the provision by a person of tax preparation services 
176.24  to a spouse, parent, grandparent, child, or sibling; and 
176.25     (3) the provision of services by an employee for an 
176.26  employer. 
176.27     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
176.28  the following terms have the meanings given. 
176.29     (b) "Client" means an individual for whom a tax preparer 
176.30  performs or agrees to perform tax preparation services. 
176.31     (c) "Person" means an individual, corporation, partnership, 
176.32  limited liability company, association, trustee, or other legal 
176.33  entity. 
176.34     (d) "Refund anticipation loan" means a loan, whether 
176.35  provided by the tax preparer or another entity such as a 
176.36  financial institution, in anticipation of, and whose payment is 
177.1   secured by, a client's federal or state income tax refund or 
177.2   both. 
177.3      (e) "Tax preparation services" means services provided for 
177.4   a fee or other consideration to a client to: 
177.5      (1) assist with preparing or filing state or federal 
177.6   individual income tax returns; 
177.7      (2) assume final responsibility for completed work on an 
177.8   individual income tax return on which preliminary work has been 
177.9   done by another; or 
177.10     (3) offer or facilitate the provision of refund 
177.11  anticipation loans.  
177.12     (f) "Tax preparer" or "preparer" means a person providing 
177.13  tax preparation services subject to this section. 
177.14     Subd. 3.  [STANDARDS OF CONDUCT.] No tax preparer shall: 
177.15     (1) without good cause fail to promptly, diligently, and 
177.16  without unreasonable delay complete a client's tax return; 
177.17     (2) obtain the signature of a client to a tax return or 
177.18  authorizing document that contains blank spaces to be filled in 
177.19  after it has been signed; 
177.20     (3) fail to sign a client's tax return when payment for 
177.21  services rendered has been made; 
177.22     (4) fail or refuse to give a client a copy of any document 
177.23  requiring the client's signature within a reasonable time after 
177.24  the client signs the document; 
177.25     (5) fail to retain for at least four years a copy of 
177.26  individual income tax returns; 
177.27     (6) fail to maintain a confidential relationship between 
177.28  themselves and their clients or former clients; 
177.29     (7) fail to take commercially reasonable measures to 
177.30  safeguard a client's nonpublic personal information; 
177.31     (8) make, authorize, publish, disseminate, circulate, or 
177.32  cause to make, either directly or indirectly, any false, 
177.33  deceptive, or misleading statement or representation relating to 
177.34  or in connection with the offering or provision of tax 
177.35  preparation services; 
177.36     (9) require a client to enter into a loan arrangement in 
178.1   order to complete a tax return; 
178.2      (10) claim credits or deductions on a client's tax return 
178.3   for which the tax preparer knows or reasonably should know the 
178.4   taxpayer does not qualify; 
178.5      (11) charge, offer to accept, or accept a fee based upon a 
178.6   percentage of an anticipated refund for tax preparation 
178.7   services; 
178.8      (12) under any circumstances, withhold or fail to return to 
178.9   a client a document provided by the client for use in preparing 
178.10  the client's tax return. 
178.11     Subd. 4.  [REQUIRED DISCLOSURES; REFUND ANTICIPATION 
178.12  LOANS.] (a) If a tax preparer offers to make or facilitate a 
178.13  refund anticipation loan to the client, the preparer must make 
178.14  the disclosures in this subdivision.  The disclosures must be 
178.15  made before or at the same time the preparer offers the refund 
178.16  anticipation loan to the client. 
178.17     (b) The tax preparer must provide to a client a written 
178.18  notice on a single sheet of paper, separate from any other 
178.19  document or writing, containing: 
178.20     (1) a legend, centered at the top on the single sheet of 
178.21  paper, in bold, capital letters, and in 28-point type stating 
178.22  "NOTICE"; 
178.23     (2) the following verbatim statements: 
178.24     (i) "This a loan.  The annual percentage rate (APR), based 
178.25  on the estimated payment period, is (fill in the estimated APR)."
178.26     (ii) "Your refund will be used to repay the loan.  As a 
178.27  result, the amount of your refund will be reduced by (fill in 
178.28  appropriate dollar amount) for fees, interest, and other 
178.29  charges." 
178.30     (iii) "You can get your refund in about two weeks if you 
178.31  file your return electronically and have the Internal Revenue 
178.32  Service send your refund to your own bank account." and 
178.33     (3) if the client is subject to additional interest when a 
178.34  refund is delayed, the following verbatim statement must also be 
178.35  included in the notice:  "If you choose to take this loan and 
178.36  your refund is delayed, you may have to pay additional interest."
179.1      (c) All required statements must be in capital and small 
179.2   font type fonts, in a minimum of 14-point type, with at least a 
179.3   double space between each line in the statement and four spaces 
179.4   between each statement. 
179.5      (d) The notice must be signed and dated by the tax preparer 
179.6   and the client. 
179.7      Subd. 5.  [ITEMIZED BILL REQUIRED.] A tax preparer must 
179.8   provide an itemized statement of the charges for services, at 
179.9   least separately stating the charges for: 
179.10     (1) return preparation; 
179.11     (2) electronic filing; and 
179.12     (3) providing or facilitating a refund anticipation loan. 
179.13     Subd. 6.  [ENFORCEMENT; PENALTIES.] The commissioner may 
179.14  impose an administrative penalty of not more than $1,000 per 
179.15  violation of subdivision 3, 4, or 5.  The commissioner may 
179.16  terminate a tax preparer's authority to transmit returns 
179.17  electronically to the state, if the commissioner determines the 
179.18  tax preparer engaged in a pattern and practice of violating this 
179.19  section.  Imposition of a penalty under this subdivision is 
179.20  subject to the contested case procedure under chapter 14.  The 
179.21  commissioner shall collect the penalty in the same manner as the 
179.22  income tax. 
179.23     Subd. 7.  [ENFORCEMENT; CIVIL ACTIONS.] (a) Any violation 
179.24  of this section is an unfair, deceptive, and unlawful trade 
179.25  practice within the meaning of section 8.31. 
179.26     (b) A client may bring a civil action seeking redress for a 
179.27  violation of this section in the conciliation or the district 
179.28  court of the county in which unlawful action is alleged to have 
179.29  been committed or where the respondent resides or has a 
179.30  principal place of business. 
179.31     (c) A district court finding for the plaintiff must award 
179.32  actual damages, including incidental and consequential damages, 
179.33  reasonable attorney fees, court costs, and any other equitable 
179.34  relief as the court considers appropriate. 
179.35     Subd. 8.  [EXEMPTIONS; ENFORCEMENT PROVISIONS.] The 
179.36  provisions of subdivisions 6 and 7 do not apply to: 
180.1      (1) an attorney admitted to practice under section 481.01; 
180.2      (2) a certified public accountant holding a certificate 
180.3   under section 326A.04 or a person issued a permit to practice 
180.4   under section 326A.05; 
180.5      (3) a person designated as a registered accounting 
180.6   practitioner under Minnesota Rules, part 1105.6600, or a 
180.7   registered accounting practitioner firm issued a permit under 
180.8   Minnesota Rules, part 1105.7100; 
180.9      (4) an enrolled agent who has passed the special enrollment 
180.10  examination administered by the Internal Revenue Service; and 
180.11     (5) any fiduciary, or the regular employees of a fiduciary, 
180.12  while acting on behalf of the fiduciary estate, the testator, 
180.13  trustor, grantor, or beneficiaries of them. 
180.14     Sec. 7.  Minnesota Statutes 2002, section 270A.03, 
180.15  subdivision 2, is amended to read: 
180.16     Subd. 2.  [CLAIMANT AGENCY.] "Claimant agency" means any 
180.17  state agency, as defined by section 14.02, subdivision 2, the 
180.18  regents of the University of Minnesota, any district court of 
180.19  the state, any county, any statutory or home rule charter city 
180.20  presenting a claim for a municipal hospital or a public library 
180.21  or a municipal ambulance service, a hospital district, a private 
180.22  nonprofit hospital that leases its building from the county in 
180.23  which it is located, any public agency responsible for child 
180.24  support enforcement, any public agency responsible for the 
180.25  collection of court-ordered restitution, and any public agency 
180.26  established by general or special law that is responsible for 
180.27  the administration of a low-income housing program.  A county 
180.28  may act as a claimant agency on behalf of an ambulance service 
180.29  licensed under chapter 144E if the ambulance service's primary 
180.30  service area is located at least in part within the county, but 
180.31  more than one county may not act as a claimant agency for a 
180.32  licensed ambulance service with respect to the same debt. 
180.33     Sec. 8.  Minnesota Statutes 2002, section 270A.07, 
180.34  subdivision 1, is amended to read: 
180.35     Subdivision 1.  [NOTIFICATION REQUIREMENT.] (a) Any 
180.36  claimant agency, seeking collection of a debt through setoff 
181.1   against a refund due, shall submit to the commissioner 
181.2   information indicating the amount of each debt and information 
181.3   identifying the debtor, as required by section 270A.04, 
181.4   subdivision 3.  
181.5      (b) For each setoff of a debt against a refund due, the 
181.6   commissioner shall charge a fee of $10.  The proceeds of fees 
181.7   shall be allocated by depositing $2.55 of each $10 fee collected 
181.8   into a department of revenue recapture revolving fund and 
181.9   depositing the remaining balance into the general fund.  The 
181.10  sums deposited into the revolving fund are appropriated to the 
181.11  commissioner for the purpose of administering the Revenue 
181.12  Recapture Act. 
181.13     (c) For each debt for which a county acts as claimant 
181.14  agency on behalf of a licensed ambulance service, the county may 
181.15  charge the ambulance service a fee not to exceed the cost of 
181.16  administering the claim. 
181.17     (d) The claimant agency shall notify the commissioner when 
181.18  a debt has been satisfied or reduced by at least $200 within 30 
181.19  days after satisfaction or reduction. 
181.20     Sec. 9.  Minnesota Statutes 2002, section 270A.07, 
181.21  subdivision 2, is amended to read: 
181.22     Subd. 2.  [SETOFF PROCEDURES.] (a) The commissioner, upon 
181.23  receipt of notification, shall initiate procedures to detect any 
181.24  refunds otherwise payable to the debtor.  When the commissioner 
181.25  determines that a refund is due to a debtor whose debt was 
181.26  submitted by a claimant agency, the commissioner shall first 
181.27  deduct the fee in subdivision 1, paragraph (b), and then remit 
181.28  the refund or the amount claimed, whichever is less, to the 
181.29  agency.  In transferring or remitting moneys to the claimant 
181.30  agency, the commissioner shall provide information indicating 
181.31  the amount applied against each debtor's obligation and the 
181.32  debtor's address listed on the tax return.  
181.33     (b) The commissioner shall remit to the debtor the amount 
181.34  of any refund due in excess of the debt submitted for setoff by 
181.35  the claimant agency.  Notice of the amount setoff and address of 
181.36  the claimant agency shall accompany any disbursement to the 
182.1   debtor of the balance of a refund, or shall be sent to the 
182.2   debtor at the time of setoff if the entire refund is set off.  
182.3   The notice shall also advise the debtor of the right to contest 
182.4   the validity of the claim, other than a claim based upon child 
182.5   support under section 518.171, 518.54, 518.551, or chapter 518C 
182.6   at a hearing, subject to the restrictions in this paragraph.  
182.7   The debtor must assert this right by written request to the 
182.8   claimant agency, which request the claimant agency must receive 
182.9   within 45 days of the date of the notice.  This right does not 
182.10  apply to (1) issues relating to the validity of the claim that 
182.11  have been previously raised at a hearing under this section or 
182.12  section 270A.09; (2) issues relating to the validity of the 
182.13  claim that were not timely raised by the debtor under section 
182.14  270A.08, subdivision 2; (3) issues relating to the validity of 
182.15  the claim that have been previously raised at a hearing 
182.16  conducted under rules promulgated by the United States 
182.17  Department of Housing and Urban Development or any public agency 
182.18  that is responsible for the administration of a low-income 
182.19  housing program, or that were not timely raised by the debtor 
182.20  under those rules; or (4) issues relating to the validity of the 
182.21  claim for which a hearing is discretionary under section 
182.22  270A.09.  The notice shall include an explanation of the right 
182.23  of the spouse who does not owe the debt to request the claimant 
182.24  agency to repay the spouse's portion of a joint refund. 
182.25     Sec. 10.  Minnesota Statutes 2002, section 273.1341, as 
182.26  added by Laws 2003, chapter 127, article 11, section 2, is 
182.27  amended to read: 
182.28     273.1341 [TACONITE ASSISTANCE AREA.] 
182.29     A "taconite assistance area" means the geographic area that 
182.30  falls within the boundaries of a school district that contains: 
182.31     (1) a municipality in which the assessed valuation of 
182.32  unmined iron ore on May 1, 1941, was not less than 40 percent of 
182.33  the assessed valuation of all real property; or 
182.34     (2) a municipality in which on January 1, 1977, or the 
182.35  applicable assessment date, there is a taconite concentrating 
182.36  plant or where taconite is mined or quarried or where there is 
183.1   located an electric generating plant which qualifies as a 
183.2   taconite facility. 
183.3      [EFFECTIVE DATE.] This section is effective for taxes 
183.4   payable in 2004 and thereafter. 
183.5      Sec. 11.  Minnesota Statutes 2002, section 276A.01, 
183.6   subdivision 2, is amended to read: 
183.7      Subd. 2.  [AREA.] "Area" means the territory included 
183.8   within all tax relief taconite assistance areas defined in 
183.9   section 273.134, paragraph (b) 273.1341. 
183.10     Sec. 12.  Minnesota Statutes 2002, section 289A.08, 
183.11  subdivision 16, as amended by Laws 2003, First Special Session 
183.12  chapter 1, article 2, section 81, is amended to read: 
183.13     Subd. 16.  [TAX REFUND OR RETURN PREPARERS; ELECTRONIC 
183.14  FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return 
183.15  preparer," as defined in section 289A.60, subdivision 13, 
183.16  paragraph (g), who prepared more than 500 Minnesota individual 
183.17  income tax returns for the prior calendar year must file all 
183.18  Minnesota individual income tax returns prepared for the current 
183.19  calendar year by electronic means. 
183.20     (b) For tax returns prepared for the tax year beginning in 
183.21  2001, the "500" in paragraph (a) is reduced to 250. 
183.22     (c) For tax returns prepared for tax years beginning after 
183.23  December 31, 2001, the "500" in paragraph (a) is reduced to 100. 
183.24     (d) Paragraph (a) does not apply to a return if the 
183.25  taxpayer has indicated on the return that the taxpayer did not 
183.26  want the return filed by electronic means. 
183.27     (e) For each return that is not filed electronically by a 
183.28  tax refund or return preparer under this subdivision, including 
183.29  returns filed under paragraph (d), a paper filing fee of $5 is 
183.30  imposed upon the preparer.  The fee is collected from the 
183.31  preparer in the same manner as income tax.  The fee does not 
183.32  apply to returns that the commissioner requires to be filed in 
183.33  paper form. 
183.34     [EFFECTIVE DATE.] This section is effective for returns 
183.35  filed for tax years beginning after December 31, 2002. 
183.36     Sec. 13.  Minnesota Statutes 2002, section 290.091, 
184.1   subdivision 2, is amended to read: 
184.2      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
184.3   this section, the following terms have the meanings given: 
184.4      (a) "Alternative minimum taxable income" means the sum of 
184.5   the following for the taxable year: 
184.6      (1) the taxpayer's federal alternative minimum taxable 
184.7   income as defined in section 55(b)(2) of the Internal Revenue 
184.8   Code; 
184.9      (2) the taxpayer's itemized deductions allowed in computing 
184.10  federal alternative minimum taxable income, but excluding: 
184.11     (i) the charitable contribution deduction under section 170 
184.12  of the Internal Revenue Code to the extent that the deduction 
184.13  exceeds 1.3 1.0 percent of adjusted gross income, as defined in 
184.14  section 62 of the Internal Revenue Code; 
184.15     (ii) the medical expense deduction; 
184.16     (iii) the casualty, theft, and disaster loss deduction; and 
184.17     (iv) the impairment-related work expenses of a disabled 
184.18  person; 
184.19     (3) for depletion allowances computed under section 613A(c) 
184.20  of the Internal Revenue Code, with respect to each property (as 
184.21  defined in section 614 of the Internal Revenue Code), to the 
184.22  extent not included in federal alternative minimum taxable 
184.23  income, the excess of the deduction for depletion allowable 
184.24  under section 611 of the Internal Revenue Code for the taxable 
184.25  year over the adjusted basis of the property at the end of the 
184.26  taxable year (determined without regard to the depletion 
184.27  deduction for the taxable year); 
184.28     (4) to the extent not included in federal alternative 
184.29  minimum taxable income, the amount of the tax preference for 
184.30  intangible drilling cost under section 57(a)(2) of the Internal 
184.31  Revenue Code determined without regard to subparagraph (E); 
184.32     (5) to the extent not included in federal alternative 
184.33  minimum taxable income, the amount of interest income as 
184.34  provided by section 290.01, subdivision 19a, clause (1); and 
184.35     (6) the amount of addition required by section 290.01, 
184.36  subdivision 19a, clause (7); 
185.1      less the sum of the amounts determined under the following: 
185.2      (1) interest income as defined in section 290.01, 
185.3   subdivision 19b, clause (1); 
185.4      (2) an overpayment of state income tax as provided by 
185.5   section 290.01, subdivision 19b, clause (2), to the extent 
185.6   included in federal alternative minimum taxable income; 
185.7      (3) the amount of investment interest paid or accrued 
185.8   within the taxable year on indebtedness to the extent that the 
185.9   amount does not exceed net investment income, as defined in 
185.10  section 163(d)(4) of the Internal Revenue Code.  Interest does 
185.11  not include amounts deducted in computing federal adjusted gross 
185.12  income; and 
185.13     (4) amounts subtracted from federal taxable income as 
185.14  provided by section 290.01, subdivision 19b, clause (12). 
185.15     In the case of an estate or trust, alternative minimum 
185.16  taxable income must be computed as provided in section 59(c) of 
185.17  the Internal Revenue Code. 
185.18     (b) "Investment interest" means investment interest as 
185.19  defined in section 163(d)(3) of the Internal Revenue Code. 
185.20     (c) "Tentative minimum tax" equals 6.4 percent of 
185.21  alternative minimum taxable income after subtracting the 
185.22  exemption amount determined under subdivision 3. 
185.23     (d) "Regular tax" means the tax that would be imposed under 
185.24  this chapter (without regard to this section and section 
185.25  290.032), reduced by the sum of the nonrefundable credits 
185.26  allowed under this chapter.  
185.27     (e) "Net minimum tax" means the minimum tax imposed by this 
185.28  section. 
185.29     [EFFECTIVE DATE.] This section is effective for taxable 
185.30  years beginning after December 31, 2002. 
185.31     Sec. 14.  Minnesota Statutes 2002, section 298.018, 
185.32  subdivision 1, is amended to read: 
185.33     Subdivision 1.  [WITHIN THE TACONITE TAX RELIEF ASSISTANCE 
185.34  AREA.] The proceeds of the tax paid under sections 298.015 to 
185.35  298.017 on minerals and energy resources mined or extracted 
185.36  within the taconite tax relief assistance area defined in 
186.1   section 273.134, paragraph (b) 273.1341, shall be allocated as 
186.2   follows: 
186.3      (1) five percent to the city or town within which the 
186.4   minerals or energy resources are mined or extracted; 
186.5      (2) ten percent to the taconite municipal aid account to be 
186.6   distributed as provided in section 298.282; 
186.7      (3) ten percent to the school district within which the 
186.8   minerals or energy resources are mined or extracted; 
186.9      (4) 20 percent to a group of school districts comprised of 
186.10  those school districts wherein the mineral or energy resource 
186.11  was mined or extracted or in which there is a qualifying 
186.12  municipality as defined by section 273.134, paragraph (b), in 
186.13  direct proportion to school district indexes as follows:  for 
186.14  each school district, its pupil units determined under section 
186.15  126C.05 for the prior school year shall be multiplied by the 
186.16  ratio of the average adjusted net tax capacity per pupil unit 
186.17  for school districts receiving aid under this clause as 
186.18  calculated pursuant to chapters 122A, 126C, and 127A for the 
186.19  school year ending prior to distribution to the adjusted net tax 
186.20  capacity per pupil unit of the district.  Each district shall 
186.21  receive that portion of the distribution which its index bears 
186.22  to the sum of the indices for all school districts that receive 
186.23  the distributions; 
186.24     (5) 20 percent to the county within which the minerals or 
186.25  energy resources are mined or extracted; 
186.26     (6) 20 percent to St. Louis county acting as the counties' 
186.27  fiscal agent to be distributed as provided in sections 273.134 
186.28  to 273.136; 
186.29     (7) five percent to the iron range resources and 
186.30  rehabilitation board for the purposes of section 298.22; 
186.31     (8) five percent to the northeast Minnesota economic 
186.32  protection trust fund; and 
186.33     (9) five percent to the taconite environmental protection 
186.34  fund. 
186.35     The proceeds of the tax shall be distributed on July 15 
186.36  each year. 
187.1      Sec. 15.  Minnesota Statutes 2002, section 298.018, 
187.2   subdivision 2, is amended to read: 
187.3      Subd. 2.  [OUTSIDE THE TACONITE TAX RELIEF ASSISTANCE 
187.4   AREA.] The proceeds of the tax paid under sections 298.015 to 
187.5   298.017 on minerals and energy resources mined or extracted 
187.6   outside of the taconite tax relief assistance area defined in 
187.7   section 273.134, paragraph (b) 273.1341, shall be deposited in 
187.8   the general fund. 
187.9      Sec. 16.  Minnesota Statutes 2002, section 298.22, 
187.10  subdivision 2, is amended to read: 
187.11     Subd. 2.  [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 
187.12  There is hereby created the iron range resources and 
187.13  rehabilitation board, consisting of 13 members, five of whom are 
187.14  state senators appointed by the subcommittee on committees of 
187.15  the rules committee of the senate, and five of whom are 
187.16  representatives, appointed by the speaker of the house of 
187.17  representatives.  The remaining members shall be appointed one 
187.18  each by the senate majority leader, the speaker of the house of 
187.19  representatives, and the governor and must be nonlegislators who 
187.20  reside in a tax relief taconite assistance area as defined in 
187.21  section 273.134, paragraph (b) 273.1341.  The members shall be 
187.22  appointed in January of every odd-numbered year, except that the 
187.23  initial nonlegislator members shall be appointed by July 1, 
187.24  1999, and shall serve until January of the next odd-numbered 
187.25  year.  Vacancies on the board shall be filled in the same manner 
187.26  as the original members were chosen.  At least a majority of the 
187.27  legislative members of the board shall be elected from state 
187.28  senatorial or legislative districts in which over 50 percent of 
187.29  the residents reside within a tax relief taconite assistance 
187.30  area as defined in section 273.134, paragraph (b) 273.1341.  All 
187.31  expenditures and projects made by the commissioner of iron range 
187.32  resources and rehabilitation shall be consistent with the 
187.33  priorities established in subdivision 8 and shall first be 
187.34  submitted to the iron range resources and rehabilitation board 
187.35  for approval by a majority of the board of expenditures and 
187.36  projects for rehabilitation purposes as provided by this 
188.1   section, and the method, manner, and time of payment of all 
188.2   funds proposed to be disbursed shall be first approved or 
188.3   disapproved by the board.  The board shall biennially make its 
188.4   report to the governor and the legislature on or before November 
188.5   15 of each even-numbered year.  The expenses of the board shall 
188.6   be paid by the state from the funds raised pursuant to this 
188.7   section. 
188.8      Sec. 17.  Minnesota Statutes 2002, section 298.22, 
188.9   subdivision 8, is amended to read: 
188.10     Subd. 8.  [SPENDING PRIORITY.] In making or approving any 
188.11  expenditures on programs or projects, the commissioner and the 
188.12  board shall give the highest priority to programs and projects 
188.13  that target relief to those areas of the taconite tax 
188.14  relief taconite assistance area as defined in section 273.134, 
188.15  paragraph (b) 273.1341, that have the largest percentages of job 
188.16  losses and population losses directly attributable to the 
188.17  economic downturn in the taconite industry since the 1980s.  The 
188.18  commissioner and the board shall compare the 1980 population and 
188.19  employment figures with the 2000 population and employment 
188.20  figures, and shall specifically consider the job losses in 2000 
188.21  and 2001 resulting from the closure of LTV Steel Mining Company, 
188.22  in making or approving expenditures consistent with this 
188.23  subdivision, as well as the areas of residence of persons who 
188.24  suffered job loss for which relief is to be targeted under this 
188.25  subdivision.  This subdivision supersedes any other conflicting 
188.26  provisions of law and does not preclude the commissioner and the 
188.27  board from making expenditures for programs and projects in 
188.28  other areas. 
188.29     Sec. 18.  Minnesota Statutes 2002, section 298.2211, 
188.30  subdivision 1, is amended to read: 
188.31     Subdivision 1.  [PURPOSE; GRANT OF AUTHORITY.] In order to 
188.32  accomplish the legislative purposes specified in sections 
188.33  469.142 to 469.165 and chapter 462C, within tax relief areas the 
188.34  taconite assistance area as defined in section 273.134 273.1341, 
188.35  the commissioner of iron range resources and rehabilitation may 
188.36  exercise the following powers:  (1) all powers conferred upon a 
189.1   rural development financing authority under sections 469.142 to 
189.2   469.149; (2) all powers conferred upon a city under chapter 
189.3   462C; (3) all powers conferred upon a municipality or a 
189.4   redevelopment agency under sections 469.152 to 469.165; (4) all 
189.5   powers provided by sections 469.142 to 469.151 to further any of 
189.6   the purposes and objectives of chapter 462C and sections 469.152 
189.7   to 469.165; and (5) all powers conferred upon a municipality or 
189.8   an authority under sections 469.174 to 469.177, 469.178, except 
189.9   subdivision 2 thereof, and 469.179, subject to compliance with 
189.10  the provisions of section 469.175, subdivisions 1, 2, and 3; 
189.11  provided that any tax increments derived by the commissioner 
189.12  from the exercise of this authority may be used only to finance 
189.13  or pay premiums or fees for insurance, letters of credit, or 
189.14  other contracts guaranteeing the payment when due of net rentals 
189.15  under a project lease or the payment of principal and interest 
189.16  due on or repurchase of bonds issued to finance a project or 
189.17  program, to accumulate and maintain reserves securing the 
189.18  payment when due on bonds issued to finance a project or 
189.19  program, or to provide an interest rate reduction program 
189.20  pursuant to section 469.012, subdivision 7.  Tax increments and 
189.21  earnings thereon remaining in any bond reserve account after 
189.22  payment or discharge of any bonds secured thereby shall be used 
189.23  within one year thereafter in furtherance of this section or 
189.24  returned to the county auditor of the county in which the tax 
189.25  increment financing district is located.  If returned to the 
189.26  county auditor, the county auditor shall immediately allocate 
189.27  the amount among all government units which would have shared 
189.28  therein had the amount been received as part of the other ad 
189.29  valorem taxes on property in the district most recently paid, in 
189.30  the same proportions as other taxes were distributed, and shall 
189.31  immediately distribute it to the government units in accordance 
189.32  with the allocation. 
189.33     Sec. 19.  Minnesota Statutes 2002, section 298.2211, 
189.34  subdivision 2, is amended to read: 
189.35     Subd. 2.  [AREA OF OPERATION.] Projects undertaken, 
189.36  developed, or financed pursuant to this section shall be located 
190.1   within the tax relief taconite assistance area defined in 
190.2   section 273.134, paragraph (b) 273.1341. 
190.3      Sec. 20.  Minnesota Statutes 2002, section 298.2213, 
190.4   subdivision 3, is amended to read: 
190.5      Subd. 3.  [USE OF MONEY.] The money appropriated under this 
190.6   section may be used to provide loans, loan guarantees, interest 
190.7   buy-downs, and other forms of participation with private sources 
190.8   of financing, provided that a loan to a private enterprise must 
190.9   be for a principal amount not to exceed one-half of the cost of 
190.10  the project for which financing is sought, and the rate of 
190.11  interest on a loan must be no less than the lesser of eight 
190.12  percent or the rate of interest that is three percentage points 
190.13  less than a full faith and credit obligation of the United 
190.14  States government of comparable maturity, at the time that the 
190.15  loan is approved.  
190.16     Money appropriated in this section must be expended only in 
190.17  or for the benefit of the tax relief taconite assistance area 
190.18  defined in section 273.134, paragraph (b) 273.1341, and as 
190.19  otherwise provided in this section. 
190.20     Sec. 21.  Minnesota Statutes 2002, section 298.2214, 
190.21  subdivision 1, is amended to read: 
190.22     Subdivision 1.  [CREATION OF COMMITTEE; PURPOSE.] A 
190.23  committee is created to advise the commissioner of iron range 
190.24  resources and rehabilitation on providing higher education 
190.25  programs in the taconite tax relief assistance area defined in 
190.26  section 273.134, paragraph (b) 273.1341.  The committee is 
190.27  subject to section 15.059. 
190.28     Sec. 22.  Minnesota Statutes 2002, section 298.2214, 
190.29  subdivision 3, is amended to read: 
190.30     Subd. 3.  [ADVISORY FUNCTION.] The committee shall advise 
190.31  the commissioner regarding development of a contract with the 
190.32  state university system.  The contract would require the system 
190.33  to provide courses within the taconite tax relief assistance 
190.34  area defined in section 273.1341. 
190.35     Sec. 23.  Minnesota Statutes 2002, section 298.223, 
190.36  subdivision 1, is amended to read: 
191.1      Subdivision 1.  [CREATION; PURPOSES.] A fund called the 
191.2   taconite environmental protection fund is created for the 
191.3   purpose of reclaiming, restoring and enhancing those areas of 
191.4   northeast Minnesota located within a tax relief the taconite 
191.5   assistance area defined in section 273.134, paragraph 
191.6   (b) 273.1341, that are adversely affected by the environmentally 
191.7   damaging operations involved in mining taconite and iron ore and 
191.8   producing iron ore concentrate and for the purpose of promoting 
191.9   the economic development of northeast Minnesota.  The taconite 
191.10  environmental protection fund shall be used for the following 
191.11  purposes: 
191.12     (a) to initiate investigations into matters the iron range 
191.13  resources and rehabilitation board determines are in need of 
191.14  study and which will determine the environmental problems 
191.15  requiring remedial action; 
191.16     (b) reclamation, restoration, or reforestation of minelands 
191.17  not otherwise provided for by state law; 
191.18     (c) local economic development projects including 
191.19  construction of sewer and water systems, and other public works 
191.20  located within a tax relief the taconite assistance area defined 
191.21  in section 273.134, paragraph (b) 273.1341; 
191.22     (d) monitoring of mineral industry related health problems 
191.23  among mining employees. 
191.24     Sec. 24.  Minnesota Statutes 2002, section 298.28, 
191.25  subdivision 7, is amended to read: 
191.26     Subd. 7.  [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 
191.27  For the 1998 distribution, 6.5 cents per taxable ton shall be 
191.28  paid to the iron range resources and rehabilitation board for 
191.29  the purposes of section 298.22.  That amount shall be increased 
191.30  in 1999 and subsequent years in the same proportion as the 
191.31  increase in the implicit price deflator as provided in section 
191.32  298.24, subdivision 1.  The amount distributed pursuant to this 
191.33  subdivision shall be expended within or for the benefit of a tax 
191.34  relief the taconite assistance area defined in section 273.134, 
191.35  paragraph (b) 273.1341.  No part of the fund provided in this 
191.36  subdivision may be used to provide loans for the operation of 
192.1   private business unless the loan is approved by the governor. 
192.2      Sec. 25.  Minnesota Statutes 2002, section 298.28, 
192.3   subdivision 11, is amended to read: 
192.4      Subd. 11.  [REMAINDER.] (a) The proceeds of the tax imposed 
192.5   by section 298.24 which remain after the distributions and 
192.6   payments in subdivisions 2 to 10a, as certified by the 
192.7   commissioner of revenue, and paragraphs (b), (c), (d), and (e) 
192.8   have been made, together with interest earned on all money 
192.9   distributed under this section prior to distribution, shall be 
192.10  divided between the taconite environmental protection fund 
192.11  created in section 298.223 and the northeast Minnesota economic 
192.12  protection trust fund created in section 298.292 as follows:  
192.13  Two-thirds to the taconite environmental protection fund and 
192.14  one-third to the northeast Minnesota economic protection trust 
192.15  fund.  The proceeds shall be placed in the respective special 
192.16  accounts. 
192.17     (b) There shall be distributed to each city, town, and 
192.18  county the amount that it received under section 294.26 in 
192.19  calendar year 1977; provided, however, that the amount 
192.20  distributed in 1981 to the unorganized territory number 2 of 
192.21  Lake county and the town of Beaver Bay based on the 
192.22  between-terminal trackage of Erie Mining Company will be 
192.23  distributed in 1982 and subsequent years to the unorganized 
192.24  territory number 2 of Lake county and the towns of Beaver Bay 
192.25  and Stony River based on the miles of track of Erie Mining 
192.26  Company in each taxing district. 
192.27     (c) There shall be distributed to the iron range resources 
192.28  and rehabilitation board the amounts it received in 1977 under 
192.29  section 298.22.  The amount distributed under this paragraph 
192.30  shall be expended within or for the benefit of the tax relief 
192.31  taconite assistance area defined in section 273.134 273.1341. 
192.32     (d) There shall be distributed to each school district 62 
192.33  percent of the amount that it received under section 294.26 in 
192.34  calendar year 1977. 
192.35     (e) In 2003 only, $100,000 must be distributed to a 
192.36  township located in a taconite tax relief area as defined in 
193.1   section 273.134, paragraph (a), that received $119,259 of 
193.2   homestead and agricultural credit aid and $182,014 in local 
193.3   government aid in 2001. 
193.4      Sec. 26.  Minnesota Statutes 2002, section 298.292, 
193.5   subdivision 2, is amended to read: 
193.6      Subd. 2.  [USE OF MONEY.] Money in the northeast Minnesota 
193.7   economic protection trust fund may be used for the following 
193.8   purposes:  
193.9      (1) to provide loans, loan guarantees, interest buy-downs 
193.10  and other forms of participation with private sources of 
193.11  financing, but a loan to a private enterprise shall be for a 
193.12  principal amount not to exceed one-half of the cost of the 
193.13  project for which financing is sought, and the rate of interest 
193.14  on a loan shall be no less than the lesser of eight percent or 
193.15  an interest rate three percentage points less than a full faith 
193.16  and credit obligation of the United States government of 
193.17  comparable maturity, at the time that the loan is approved; 
193.18     (2) to fund reserve accounts established to secure the 
193.19  payment when due of the principal of and interest on bonds 
193.20  issued pursuant to section 298.2211; 
193.21     (3) to pay in periodic payments or in a lump sum payment 
193.22  any or all of the interest on bonds issued pursuant to chapter 
193.23  474 for the purpose of constructing, converting, or retrofitting 
193.24  heating facilities in connection with district heating systems 
193.25  or systems utilizing alternative energy sources; and 
193.26     (4) to invest in a venture capital fund or enterprise that 
193.27  will provide capital to other entities that are engaging in, or 
193.28  that will engage in, projects or programs that have the purposes 
193.29  set forth in subdivision 1.  No investments may be made in a 
193.30  venture capital fund or enterprise unless at least two other 
193.31  unrelated investors make investments of at least $500,000 in the 
193.32  venture capital fund or enterprise, and the investment by the 
193.33  northeast Minnesota economic protection trust fund may not 
193.34  exceed the amount of the largest investment by an unrelated 
193.35  investor in the venture capital fund or enterprise.  For 
193.36  purposes of this subdivision, an "unrelated investor" is a 
194.1   person or entity that is not related to the entity in which the 
194.2   investment is made or to any individual who owns more than 40 
194.3   percent of the value of the entity, in any of the following 
194.4   relationships:  spouse, parent, child, sibling, employee, or 
194.5   owner of an interest in the entity that exceeds ten percent of 
194.6   the value of all interests in it.  For purposes of determining 
194.7   the limitations under this clause, the amount of investments 
194.8   made by an investor other than the northeast Minnesota economic 
194.9   protection trust fund is the sum of all investments made in the 
194.10  venture capital fund or enterprise during the period beginning 
194.11  one year before the date of the investment by the northeast 
194.12  Minnesota economic protection trust fund.  
194.13     Money from the trust fund shall be expended only in or for 
194.14  the benefit of the tax relief taconite assistance area defined 
194.15  in section 273.134, paragraph (b) 273.1341. 
194.16     Sec. 27.  Minnesota Statutes 2002, section 298.293, is 
194.17  amended to read: 
194.18     298.293 [EXPENDING FUNDS.] 
194.19     The funds provided by section 298.28, subdivision 11, 
194.20  relating to the northeast Minnesota economic protection trust 
194.21  fund, except money expended pursuant to Laws 1982, Second 
194.22  Special Session, chapter 2, sections 8 to 14, shall be expended 
194.23  only in an amount that does not exceed the sum of the net 
194.24  interest, dividends, and earnings arising from the investment of 
194.25  the trust for the preceding 12 calendar months from the date of 
194.26  the authorization plus, for fiscal year 1983, $10,000,000 from 
194.27  the corpus of the fund.  The funds may be spent only in or for 
194.28  the benefit of those areas that are tax relief areas the 
194.29  taconite assistance area as defined in section 273.134, 
194.30  paragraph (b) 273.1341.  If during any year the taconite 
194.31  property tax account under sections 273.134 to 273.136 does not 
194.32  contain sufficient funds to pay the property tax relief 
194.33  specified in Laws 1977, chapter 423, article X, section 4, there 
194.34  is appropriated from this trust fund to the relief account 
194.35  sufficient funds to pay the relief specified in Laws 1977, 
194.36  chapter 423, article X, section 4. 
195.1      Sec. 28.  Minnesota Statutes 2002, section 298.298, is 
195.2   amended to read: 
195.3      298.298 [LONG-RANGE PLAN.] 
195.4      Consistent with the policy established in sections 298.291 
195.5   to 298.298, the iron range resources and rehabilitation board 
195.6   shall prepare and present to the governor and the legislature by 
195.7   January 1, 1984 a long-range plan for the use of the northeast 
195.8   Minnesota economic protection trust fund for the economic 
195.9   development and diversification of the tax relief taconite 
195.10  assistance area defined in section 273.134, paragraph 
195.11  (b) 273.1341.  The iron range resources and rehabilitation board 
195.12  shall, before November 15 of each even numbered year, prepare a 
195.13  report to the governor and legislature updating and revising 
195.14  this long-range plan and reporting on the iron range resources 
195.15  and rehabilitation board's progress on those matters assigned to 
195.16  it by law.  After January 1, 1984, no project shall be approved 
195.17  by the iron range resources and rehabilitation board which is 
195.18  not consistent with the goals and objectives established in the 
195.19  long-range plan. 
195.20     Sec. 29.  Minnesota Statutes 2002, section 429.101, 
195.21  subdivision 1, is amended to read: 
195.22     Subdivision 1.  [ORDINANCES.] (a) In addition to any other 
195.23  method authorized by law or charter, the governing body of any 
195.24  municipality may provide for the collection of unpaid special 
195.25  charges for all or any part of the cost of: 
195.26     (1) snow, ice, or rubbish removal from sidewalks,; 
195.27     (2) weed elimination from streets or private property,; 
195.28     (3) removal or elimination of public health or safety 
195.29  hazards from private property, excluding any structure included 
195.30  under the provisions of sections 463.15 to 463.26,; 
195.31     (4) installation or repair of water service lines, street 
195.32  sprinkling or other dust treatment of streets,; 
195.33     (5) the trimming and care of trees and the removal of 
195.34  unsound trees from any street,; 
195.35     (6) the treatment and removal of insect infested or 
195.36  diseased trees on private property, the repair of sidewalks and 
196.1   alleys,; 
196.2      (7) the operation of a street lighting system, or; 
196.3      (8) the operation and maintenance of a fire protection or a 
196.4   pedestrian skyway system,; or 
196.5      (9) reinspections which find noncompliance after the due 
196.6   date for compliance with an order to correct a municipal housing 
196.7   maintenance code violation; 
196.8   as a special assessment against the property benefited.  
196.9      (b) The council may by ordinance adopt regulations 
196.10  consistent with this section to make this authority effective, 
196.11  including, at the option of the council, provisions for placing 
196.12  primary responsibility upon the property owner or occupant to do 
196.13  the work personally(except in the case of street sprinkling or 
196.14  other dust treatment, alley repair, tree trimming, care, and 
196.15  removal or the operation of a street lighting system) upon 
196.16  notice before the work is undertaken, and for collection from 
196.17  the property owner or other person served of the charges when 
196.18  due before unpaid charges are made a special assessment.  
196.19     [EFFECTIVE DATE.] This section is effective the day 
196.20  following final enactment. 
196.21     Sec. 30.  Minnesota Statutes 2002, section 473.704, 
196.22  subdivision 17, as amended by Laws 2003, chapter 127, article 
196.23  13, section 4, is amended to read: 
196.24     Subd. 17.  [ENTRY TO PROPERTY.] (a) Members of the 
196.25  commission, its officers, and employees, while on the business 
196.26  of the commission, may enter upon any property within or outside 
196.27  the district at reasonable times to determine the need for 
196.28  control programs.  They may take all necessary and proper steps 
196.29  for the control programs on property within the district as the 
196.30  director of the commission may designate.  Subject to the 
196.31  paramount control of the county and state authorities, 
196.32  commission members and officers and employees of the commission 
196.33  may enter upon any property and clean up any stagnant pool of 
196.34  water, the shores of lakes and streams, and other breeding 
196.35  places for mosquitoes within the district.  The commission may 
196.36  apply insecticides approved by the director to any area within 
197.1   or outside the district that is found to be a breeding place for 
197.2   mosquitoes.  The commission shall give reasonable notification 
197.3   to the governing body of the local unit of government prior to 
197.4   applying insecticides outside of the district on land located 
197.5   within the jurisdiction of the local unit of government.  The 
197.6   commission shall not enter upon private property if the owner 
197.7   objects except (1) to monitor for disease-bearing mosquitoes, 
197.8   ticks, or black gnats, or (2) for control of mosquito species 
197.9   capable of carrying a human disease in the local area of a human 
197.10  disease outbreak regardless of whether there has been an 
197.11  occurrence of the disease in a human being.  The commission 
197.12  shall make a reasonable attempt to contact an objecting owner 
197.13  before entering on the owner's private property. 
197.14     (b) The commissioner of natural resources must approve 
197.15  mosquito control plans or make modifications as the commissioner 
197.16  of natural resources deems necessary for the protection of 
197.17  public water, wild animals, and natural resources before control 
197.18  operations are started on state lands administered by the 
197.19  commissioner of natural resources. 
197.20     Sec. 31.  Laws 1998, chapter 389, article 16, section 35, 
197.21  subdivision 1, as amended by Laws 2001, First Special Session 
197.22  chapter 5, article 20, section 19, is amended to read: 
197.23     Subdivision 1.  [BAT STUDY.] $100,000 is appropriated from 
197.24  the general fund for fiscal year 1999 to the legislative 
197.25  coordinating commission to study alternative methods of taxing 
197.26  business.  The appropriations under this section and under Laws 
197.27  1997, chapter 231, article 5, section 18, subdivision 3, are 
197.28  available in fiscal years 2000 and 2001.  Any portion of this 
197.29  appropriation that cancels in 2001 is appropriated in 2002 and 
197.30  is available until June 30, 2003.  The date for completion of 
197.31  this study is extended through December 31, 2004, and the 
197.32  portion of the appropriation encumbered by the contracts between 
197.33  the legislative coordinating commission and the department of 
197.34  revenue and between the department of revenue and the University 
197.35  of Minnesota may be spent during the 2004-2005 biennium to pay 
197.36  obligations under the contracts. 
198.1      Sec. 32.  Laws 2001, First Special Session chapter 5, 
198.2   article 20, section 22, is amended to read: 
198.3      Sec. 22.  [BUDGET RESERVE INCREASE.] 
198.4      The commissioner of finance shall transfer the amount 
198.5   necessary to increase the budget reserve account in the general 
198.6   fund to $653,000,000 on July 1, 2001.  On July 1, 2003, the 
198.7   commissioner of finance shall transfer $31,000,000 to the budget 
198.8   reserve account in the general fund.  The amounts necessary for 
198.9   this purpose are appropriated from the general fund. 
198.10     Sec. 33.  [TRANSFER OF ENDOWMENT FUNDS.] 
198.11     On July 1, 2003, the commissioner of finance shall transfer 
198.12  the tobacco use prevention and local public health endowment 
198.13  fund and the medical education endowment fund to the general 
198.14  fund. 
198.15     Sec. 34.  [BUDGET RESERVE ADJUSTMENT.] 
198.16     If, prior to July 1, 2003, on the basis of the February 
198.17  2003 forecast and revenue and expenditure measures enacted into 
198.18  law in the 2003 regular and special legislative sessions, the 
198.19  commissioner of finance determines there will be a negative 
198.20  unrestricted budgetary balance in the general fund for the 
198.21  biennium ending June 30, 2005, the commissioner shall reduce the 
198.22  July 1, 2004, appropriation to the budget reserve account in 
198.23  Minnesota Statutes, section 16A.152, subdivision 1b, by the 
198.24  amount necessary to balance revenues and expenditures in the 
198.25  biennium ending June 30, 2005. 
198.26     [EFFECTIVE DATE.] This section is effective the day 
198.27  following final enactment. 
198.28     Sec. 35.  [TEMPORARY STATE FISCAL RELIEF.] 
198.29     Any temporary state fiscal relief received under Title VI 
198.30  of the Jobs Growth and Tax Relief Reconciliation Act of 2003 
198.31  must be deposited in the state treasury and credited to the 
198.32  general fund. 
198.33     [EFFECTIVE DATE.] This section is effective the day 
198.34  following final enactment. 
198.35     Sec. 36.  [APPROPRIATION.] 
198.36     (a) $100,000 in fiscal year 2004 and $100,000 in fiscal 
199.1   year 2005 are appropriated from the general fund to the 
199.2   commissioner of revenue to make grants to one or more nonprofit 
199.3   organizations, qualifying under section 501(c)(3) of the 
199.4   Internal Revenue Code of 1986, to coordinate, facilitate, 
199.5   encourage, and aid in the provision of taxpayer assistance 
199.6   services.  This appropriation does not become a part of the base.
199.7      (b) "Taxpayer assistance services" mean accounting and tax 
199.8   preparation services provided by volunteers to low-income and 
199.9   disadvantaged Minnesota residents to help them file federal and 
199.10  state income tax returns and Minnesota property tax refund 
199.11  claims and to provide personal representation before the 
199.12  department of revenue and Internal Revenue Service. 
199.13     Sec. 37.  [APPROPRIATION; COST OF ADMINISTRATION.] 
199.14     $200,000 in fiscal year 2004 is appropriated from the 
199.15  general fund to the commissioner of revenue for the cost of 
199.16  administering tax law changes enacted in 2003. 
199.17     [EFFECTIVE DATE.] This section is effective the day 
199.18  following final enactment.