HF 2323

3rd Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:02am

A bill for an act
relating to the financing and operation of state and local government; making
policy, technical, administrative, enforcement, collection, refund, clarifying,
and other changes to income, franchise, property, sales and use, estate, gift,
cigarette, tobacco, liquor, motor vehicle, gross receipts, minerals, tax increment
financing and other taxes and tax-related provisions; requiring certain additions;
conforming to federal section 179 expensing allowances; adding Minnesota
development subsidies to corporate taxable income; disallowing certain
subtractions; allowing certain nonrefundable credits; allowing a refundable
Minnesota child credit; repealing various credits; conforming to certain
federal tax provisions; expanding definition of domestic corporation to include
tax havens; modifying income tax rates; expanding and increasing credit
for research activities; accelerating single sales apportionment; modifying
minimum fees; allowing county local sales tax; eliminating certain existing
local sales taxes; adjusting county program aid; modifying levy limits; making
changes to residential homestead market value credit; providing flexibility
and mandate reduction provisions; making changes to various property tax
and local government aid-related provisions; providing temporary suspension
of new or increased maintenance of effort and matching fund requirements;
modifying county support of libraries; establishing the Council on Local
Results and Innovation; providing property tax system benchmarks, critical
indicators, and principles; establishing a property tax work group; creating
the Legislative Commission on Mandate Reform; making changes to certain
administrative procedures; modifying mortgage registry tax payments;
modifying truth in taxation provisions; providing clarification for eligibility
for property tax exemption for institutions of purely public charity; making
changes to property tax refund and senior citizen property tax deferral
programs; providing property tax exemptions; providing a property valuation
reduction for certain land constituting a riparian buffer; providing a partial
valuation exclusion for disaster damaged homes; extending deadline for special
service district and housing improvement districts; requiring a fiscal disparity
study; extending emergency medical service special taxing district; providing
emergency debt certificates; providing and modifying local taxes; expanding
county authorization to abate certain improvements; providing municipal
street improvement districts; establishing a seasonal recreational property tax
deferral program; expanding sales and use tax base; defining solicitor for
purposes of nexus; providing a bovine tuberculosis testing grant; modifying
tax preparation services law; modifying authority of municipalities to issue
bonds for certain other postemployment benefits; allowing use of increment to
offset state aid reductions; allowing additional authority to spend increments
for housing replacement district plans; modifying and authorizing certain tax
increment financing districts; providing equitable funding health and human
services reform; modifying JOBZ provisions; repealing international economic
development and biotechnology and health science industry zones; modifying
basic sliding fee program funding; providing appointments; requiring reports;
appropriating money; amending Minnesota Statutes 2008, sections 3.842,
subdivision 4a; 3.843; 16C.28, subdivision 1a; 40A.09; 84.82, subdivision
10; 84.922, subdivision 11; 86B.401, subdivision 12; 123B.10, subdivision
1; 134.34, subdivisions 1, 4; 245.4932, subdivision 1; 253B.045, subdivision
2; 254B.04, subdivision 1; 270C.12, by adding a subdivision; 270C.445;
270C.56, subdivision 3; 272.02, subdivision 7, by adding subdivisions; 272.029,
subdivision 6; 273.111, by adding a subdivision; 273.1231, subdivision 1;
273.1232, subdivision 1; 273.124, subdivision 1; 273.13, subdivisions 25, 34;
273.1384, subdivisions 1, 4, by adding a subdivision; 273.1393; 275.025,
subdivisions 1, 2; 275.065, subdivisions 1, 1a, 1c, 3, 6; 275.07, subdivisions
1, 4, by adding a subdivision; 275.70, subdivisions 3, 5; 275.71, subdivisions
2, 4, 5; 276.04, subdivision 2; 279.10; 282.08; 287.08; 289A.02, subdivision
7, as amended; 289A.11, subdivision 1; 289A.20, subdivision 4; 289A.31,
subdivision 5; 290.01, subdivisions 5, 19, as amended, 19a, as amended, 19b,
19c, as amended, 19d, as amended, 29, 31, as amended, by adding subdivisions;
290.014, subdivision 2; 290.06, subdivisions 2c, 2d, by adding subdivisions;
290.0671, subdivision 1; 290.068, subdivisions 1, 3, 4; 290.091, subdivision 2;
290.0921, subdivision 3; 290.0922, subdivisions 1, 3, by adding a subdivision;
290.17, subdivisions 2, 4; 290.191, subdivisions 2, 3; 290A.03, subdivision
15, as amended; 290A.04, subdivision 2; 290B.03, subdivision 1; 290B.04,
subdivisions 3, 4; 290B.05, subdivision 1; 291.005, subdivision 1, as amended;
291.03, subdivision 1; 295.75, subdivision 2; 297A.61, subdivisions 3, 4, 5, 6,
10, 14a, 17a, 21, 38, by adding subdivisions; 297A.62, by adding a subdivision;
297A.63; 297A.64, subdivision 2; 297A.66, subdivision 1, by adding a
subdivision; 297A.67, subdivisions 15, 23; 297A.815, subdivision 3; 297A.83,
subdivision 3; 297A.94; 297A.99, subdivisions 1, 6; 297B.02, subdivision 1;
297F.01, by adding a subdivision; 297F.05, subdivisions 1, 3, 4, by adding a
subdivision; 297G.03, subdivision 1; 297G.04; 298.001, by adding a subdivision;
298.018, subdivisions 1, 2, by adding a subdivision; 298.227; 298.24, subdivision
1; 298.28, subdivisions 2, 11, by adding a subdivision; 306.243, by adding a
subdivision; 344.18; 365.28; 375.194, subdivision 5; 383A.75, subdivision 3;
428A.101; 428A.21; 429.011, subdivision 2a; 429.021, subdivision 1; 429.041,
subdivisions 1, 2; 446A.086, subdivision 8; 465.719, subdivision 9; 469.015;
469.174, subdivision 22; 469.175, subdivisions 1, 6; 469.176, subdivisions 3, 6,
by adding a subdivision; 469.1763, subdivisions 2, 3; 469.178, subdivision 7;
469.315; 469.3192; 473.13, subdivision 1; 473H.04, by adding a subdivision;
473H.05, subdivision 1; 475.51, subdivision 4; 475.52, subdivision 6; 475.58,
subdivision 1; 477A.011, subdivision 36; 477A.0124, by adding a subdivision;
477A.013, subdivision 9, by adding a subdivision; 477A.03, subdivisions 2a,
2b; 641.12, subdivision 1; Laws 1986, chapter 396, section 4, subdivision 3;
by adding a subdivision; Laws 1986, chapter 400, section 44, as amended;
Laws 1991, chapter 291, article 8, section 27, subdivision 3, as amended; Laws
1993, chapter 375, article 9, section 46, subdivision 2, as amended, by adding
a subdivision; Laws 1995, chapter 264, article 5, sections 44, subdivision 4,
as amended; 45, subdivision 1, as amended; Laws 1996, chapter 471, article
2, section 30; Laws 1998, chapter 389, article 8, section 37, subdivision 1;
Laws 2001, First Special Session chapter 5, article 3, section 8, as amended;
Laws 2002, chapter 377, article 3, section 25; Laws 2006, chapter 259, article
3, section 12, subdivision 3; Laws 2008, chapter 366, article 5, section 34;
article 6, sections 9; 10; article 7, section 16, subdivision 3; proposing coding
for new law in Minnesota Statutes, chapters 3; 6; 14; 17; 256E; 270C; 272;
273; 275; 290; 292; 297A; 435; 475; 477A; proposing coding for new law as
Minnesota Statutes, chapter 290D; repealing Minnesota Statutes 2008, sections
245.4835; 245.714; 246.54; 254B.02, subdivision 3; 256B.19, subdivision 1;
256I.08; 272.02, subdivision 83; 273.113; 275.065, subdivisions 5a, 6b, 6c, 8,
9, 10; 289A.50, subdivision 10; 290.01, subdivision 6b; 290.06, subdivisions
24, 28, 30, 31, 32, 33, 34; 290.067, subdivisions 1, 2, 2a, 2b, 3, 4; 290.0672;
290.0674; 290.0679; 290.0802; 290.0921, subdivision 7; 290.191, subdivision
4; 290.491; 297A.61, subdivision 45; 297A.68, subdivisions 38, 41; 469.316;
469.317; 469.321; 469.3215; 469.322; 469.323; 469.324; 469.325; 469.326;
469.327; 469.328; 469.329; 469.330; 469.331; 469.332; 469.333; 469.334;
469.335; 469.336; 469.337; 469.338; 469.339; 469.340; 469.341; 477A.0124,
subdivisions 3, 4, 5; 477A.03, subdivision 5; Laws 2009, chapter 3, section 1;
Laws 2009, chapter 12, article 1, section 8.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND
ESTATE AND GIFT TAXES

Section 1.

Minnesota Statutes 2008, section 289A.02, subdivision 7, as amended by
Laws 2009, chapter 12, article 1, section 1, is amended to read:

Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin December
31, 2008 deleted text end new text begin March 31, 2009 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2008, section 289A.31, subdivision 5, is amended to read:

Subd. 5.

Withholding tax, withholding from payments to out-of-state
contractors, and withholding by partnerships and small business corporations.

(a)
Except as provided in paragraph (b), an employer or person withholding tax under section
290.92 or 290.923, subdivision 2, who fails to pay to or deposit with the commissioner a
sum or sums required by those sections to be deducted, withheld, and paid, is personally
and individually liable to the state for the sum or sums, and added penalties and interest,
and is not liable to another person for that payment or payments. The sum or sums
deducted and withheld under section 290.92, subdivision 2a or 3, or 290.923, subdivision
2, must be held as a special fund in trust for the state of Minnesota.

(b) If the employer or person withholding tax under section 290.92 or 290.923,
subdivision 2, fails to deduct and withhold the tax in violation of those sections, and later
the taxes against which the tax may be credited are paid, the tax required to be deducted
and withheld will not be collected from the employer. This does not, however, relieve the
employer from liability for any penalties and interest otherwise applicable for failure to
deduct and withhold. new text begin This paragraph does not apply to an employer subject to paragraph
(g), or to a contractor required to withhold under section 290.92, subdivision 31.
new text end

(c) Liability for payment of withholding taxes includes a responsible person or entity
described in the personal liability provisions of section 270C.56.

(d) Liability for payment of withholding taxes includes a third party lender or surety
described in section 270C.59.

(e) A partnership or S corporation required to withhold and remit tax under section
290.92, subdivisions 4b and 4c, is liable for payment of the tax to the commissioner, and a
person having control of or responsibility for the withholding of the tax or the filing of
returns due in connection with the tax is personally liable for the tax due.

(f) A payor of sums required to be withheld under section 290.9705, subdivision
1, is liable to the state for the amount required to be deducted, and is not liable to an
out-of-state contractor for the amount of the payment.

new text begin (g) If an employer fails to withhold tax from the wages of an employee when
required to do so under section 290.92, subdivision 2a, by reason of treating the employee
as not being an employee, then the liability for tax is equal to three percent of the wages
paid to the employee. The liability for tax of an employee is not affected by the assessment
or collection of tax under this paragraph. The employer is not entitled to recover from the
employee any tax determined under this paragraph.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes required to be withheld
after June 30, 2009.
new text end

Sec. 3.

Minnesota Statutes 2008, section 290.01, subdivision 5, is amended to read:

Subd. 5.

Domestic corporation.

The term "domestic" when applied to a corporation
means a corporation:

(1) created or organized in the United States, or under the laws of the United States
or of any state, the District of Columbia, or any political subdivision of any of the
foregoing but not including the Commonwealth of Puerto Rico, or any possession of
the United States;

(2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue
Code; deleted text begin or
deleted text end

(3) which qualifies as a FSC, as defined in section 922 of the Internal Revenue Code deleted text begin . deleted text end new text begin ;
new text end

new text begin (4) which is incorporated in a tax haven;
new text end

new text begin (5) which is engaged in activity in a tax haven sufficient for the tax haven to impose
a net income tax under United States constitutional standards and section 290.015; or
new text end

new text begin (6) which has the average of its property, payroll, and sales factors, as defined under
section 290.191, within the 50 states of the United States and the District of Columbia of
20 percent or more.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 4.

Minnesota Statutes 2008, section 290.01, is amended by adding a subdivision
to read:

new text begin Subd. 5c. new text end

new text begin Tax haven. new text end

new text begin (a) "Tax haven" means a foreign jurisdiction designated
under this subdivision.
new text end

new text begin (b) The commissioner may designate a foreign jurisdiction as a tax haven by
administrative rule if the jurisdiction:
new text end

new text begin (1) has no or nominal effective tax on the relevant income; and
new text end

new text begin (2)(i) has laws or practices that prevent effective exchange of information for tax
purposes with other governments on taxpayers benefiting from the tax regime;
new text end

new text begin (ii) has a tax regime that lacks transparency. A tax regime lacks transparency if the
details of legislative, legal, or administrative provisions are not open and apparent or are
not consistently applied among similarly situated taxpayers, or if the information needed
by tax authorities to determine a taxpayer's correct tax liability, such as accounting records
and underlying documentation, is not adequately available;
new text end

new text begin (iii) facilitates the establishment of foreign-owned entities without the need for a
local substantive presence or prohibits these entities from having any commercial impact
on the local economy;
new text end

new text begin (iv) explicitly or implicitly excludes the jurisdiction's resident taxpayers from taking
advantage of the tax regime's benefits or prohibits enterprises that benefit from the regime
from operating in the jurisdiction's domestic markets; or
new text end

new text begin (v) has created a tax regime that is favorable for tax avoidance, based upon an
overall assessment of relevant factors, including whether the jurisdiction has a significant
untaxed offshore financial or other services sector relative to its overall economy.
new text end

new text begin (c) The following foreign jurisdictions are deemed to be tax havens, unless the
commissioner, by revenue notice, revokes the listing of a jurisdiction:
new text end

new text begin (1) Anguilla;
new text end

new text begin (2) Antigua and Barbuda;
new text end

new text begin (3) Aruba;
new text end

new text begin (4) Bahamas;
new text end

new text begin (5) Barbados;
new text end

new text begin (6) Belize;
new text end

new text begin (7) Bermuda;
new text end

new text begin (8) British Virgin Islands;
new text end

new text begin (9) Cayman Islands;
new text end

new text begin (10) Cook Islands;
new text end

new text begin (11) Dominica;
new text end

new text begin (12) Gibraltar;
new text end

new text begin (13) Grenada;
new text end

new text begin (14) Guernsey-Sark-Alderney;
new text end

new text begin (15) Isle of Man;
new text end

new text begin (16) Jersey;
new text end

new text begin (17) Latvia;
new text end

new text begin (18) Liechtenstein;
new text end

new text begin (19) Luxembourg;
new text end

new text begin (20) Nauru;
new text end

new text begin (21) Netherlands Antilles;
new text end

new text begin (22) Panama;
new text end

new text begin (23) Samoa;
new text end

new text begin (24) St. Kitts and Nevis;
new text end

new text begin (25) St. Lucia;
new text end

new text begin (26) St. Vincent and Grenadines;
new text end

new text begin (27) Turks and Caicos; and
new text end

new text begin (28) Vanuatu.
new text end

new text begin (d) The commissioner shall revoke a foreign jurisdiction's listing under paragraph
(b) or (c), as applicable, if the United States enters into a tax treaty or other agreement
with the foreign jurisdiction that provides for prompt, obligatory, and automatic exchange
of information with the United States government relevant to enforcing the provisions of
federal tax laws and the treaty or other agreement was in effect for the taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 5.

Minnesota Statutes 2008, section 290.01, subdivision 19, as amended by Laws
2009, chapter 12, article 1, section 2, is amended to read:

Subd. 19.

Net income.

The term "net income" means the federal taxable income,
as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
date named in this subdivision, incorporating the federal effective dates of changes to the
Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
Revenue Code must be applied by allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
Revenue Code; and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of
the Internal Revenue Code means the gross income as defined in section 468B(b) of the
Internal Revenue Code.

The Internal Revenue Code of 1986, as amended through deleted text begin December 31, 2008 deleted text end new text begin March
31, 2009 new text end , shall be in effect for taxable years beginning after December 31, 1996.

Except as otherwise provided, references to the Internal Revenue Code in
subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
the applicable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008. In enacting this section and other provisions of this article, the
legislature intends net income to include and tax to apply to interest paid on any Build
America Bond, as defined under section 54AA of the Internal Revenue Code of 1986,
notwithstanding the provisions of section 1531 of Division B, Title I of the American
Recovery and Reinvestment Act of 2009, Public Law 111-5.
new text end

Sec. 6.

Minnesota Statutes 2008, section 290.01, subdivision 19a, as amended by Laws
2009, chapter 12, article 1, section 3, is amended to read:

Subd. 19a.

Additions to federal taxable income.

For individuals, estates, and
trusts, there shall be added to federal taxable income:

(1)(i) interest income on obligations of any state deleted text begin other than Minnesota deleted text end or a political or
governmental subdivision, municipality, or governmental agency or instrumentality of any
state deleted text begin other than Minnesota deleted text end exempt from federal income taxes under the Internal Revenue
Code or any other federal statute new text begin , but excluding interest on qualified obligations new text end ; and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except the portion of the exempt-interest dividends derived from interest income
on obligations of the state of Minnesota or its political or governmental subdivisions,
municipalities, governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all shareholders represents
95 percent or more of the exempt-interest dividends that are paid by the regulated
investment company as defined in section 851(a) of the Internal Revenue Code, or the
fund of the regulated investment company as defined in section 851(g) of the Internal
Revenue Code, making the payment new text begin and only to the extent the interest is paid on qualified
obligations new text end ; and

(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
government described in section 7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe is located;

(2) new text begin (i) new text end the amount of income deleted text begin or deleted text end new text begin , new text end sales and use new text begin , motor vehicle sales, or excise new text end taxes
paid or accrued within the taxable year under this chapter and the amount of taxes based
on net income paid deleted text begin or deleted text end new text begin , new text end sales and use new text begin , motor vehicle sales, or excise new text end taxes paid to any other
state or to any province or territory of Canada deleted text begin , deleted text end new text begin ; new text end

new text begin (ii) the amount of real and personal property taxes paid or accrued within the taxable
year;
new text end

new text begin (iii) qualified residence interest, as defined in section 163(h) of the Internal Revenue
Code, to the extent allowed as a deduction under section 63(d) of the Internal Revenue
Code; and
new text end

new text begin (iv) charitable contributions, as defined in section 170(c) of the Internal Revenue
Code, to the extent allowed as a deduction under section 170(a) of the Internal Revenue
Code,
new text end

to the extent allowed as deleted text begin a deduction deleted text end new text begin deductions new text end under section 63(d) of the Internal Revenue
Code deleted text begin , but the addition deleted text end new text begin ; but the sum of the additions made under items (i), (ii), (iii), and
(iv) new text end may not be more than the amount by which the itemized deductions as allowed under
section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction
as defined in section 63(c) of the Internal Revenue Code, disregarding the deleted text begin amount deleted text end new text begin amounts new text end
allowed under deleted text begin section deleted text end new text begin sections new text end 63(c)(1)(C) new text begin and 63(c)(1)(E) new text end of the Internal Revenue Code.
For the purpose of this paragraph, the disallowance of itemized deductions under section
68 of the Internal Revenue Code of 1986, income or sales and use tax deleted text begin is deleted text end new text begin , motor vehicle
sales or excise tax, real and personal property taxes, qualified residence interest, and
charitable contributions are new text end the last itemized deleted text begin deduction deleted text end new text begin deductions new text end disallowed;

(3) the capital gain amount of a lump-sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the taxable year under this
chapter and taxes based on net income paid to any other state or any province or territory
of Canada, to the extent allowed as a deduction in determining federal adjusted gross
income. For the purpose of this paragraph, income taxes do not include the taxes imposed
by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;

(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
other than expenses or interest used in computing net interest income for the subtraction
allowed under subdivision 19b, clause (1);

(6) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(7) 80 percent of the depreciation deduction allowed under section 168(k) of the
Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
in the taxable year generates a deduction for depreciation under section 168(k) and the
activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
limited to excess of the depreciation claimed by the activity under section 168(k) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k) is allowed;

(8) new text begin for taxable years beginning before January 1, 2009, new text end 80 percent of the amount by
which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
through December 31, 2003;

(9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(10) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans;

(11) the amount of expenses disallowed under section 290.10, subdivision 2;

(12) the amount deducted for qualified tuition and related expenses under section
222 of the Internal Revenue Code, to the extent deducted from gross income;

(13) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
from gross income; deleted text begin and
deleted text end

(14) the additional standard deduction for property taxes payable that is allowable
under section 63(c)(1)(C) of the Internal Revenue Code deleted text begin . deleted text end new text begin ;
new text end

new text begin (15) the additional deduction for qualified motor vehicle sales tax allowable under
section 63(c)(1)(E) of the Internal Revenue Code; and
new text end

new text begin (16) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008, except that clause (16) is effective for taxable years ending after
December 31, 2008.
new text end

Sec. 7.

Minnesota Statutes 2008, section 290.01, subdivision 19b, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

deleted text begin (3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;
deleted text end

deleted text begin (4) income as provided under section 290.0802;
deleted text end

deleted text begin (5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;
deleted text end

deleted text begin (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
under the provisions of Public Law 109-1;
deleted text end

deleted text begin (7) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;
deleted text end

deleted text begin (8) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;
deleted text end

deleted text begin (9) deleted text end new text begin (3) new text end in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. The resulting delayed depreciation cannot be
less than zero;

deleted text begin (10) job opportunity building zone income as provided under section 469.316;
deleted text end

deleted text begin (11) deleted text end new text begin (4) new text end to the extent included in federal taxable income, the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service performed in Minnesota, excluding compensation
for services performed under the Active Guard Reserve (AGR) program. For purposes of
this clause, "active service" means (i) state active service as defined in section 190.05,
subdivision 5a, clause (1); (ii) federally funded state active service as defined in section
190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05,
subdivision 5c, but "active service" excludes service performed in accordance with section
190.08, subdivision 3;

deleted text begin (12) deleted text end new text begin (5) new text end to the extent included in federal taxable income, the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States or
United Nations for active duty performed outside Minnesota under United States Code,
title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
the United Nations;

deleted text begin (13) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;
deleted text end

deleted text begin (14) deleted text end new text begin (6) new text end in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

deleted text begin (15) deleted text end new text begin (7) new text end to the extent included in federal taxable income, compensation paid to a
service member as defined in United States Code, title 10, section 101(a)(5), for military
service as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section
101(2); new text begin and
new text end

deleted text begin (16) international economic development zone income as provided under section
469.325; and
deleted text end

deleted text begin (17) to the extent included in federal taxable income, the amount of national service
educational awards received from the National Service Trust under United States Code,
title 42, sections 12601 to 12604, for service in an approved Americorps National Service
program.
deleted text end

new text begin (8) to the extent included in federal taxable income, discharge of indebtedness
income from reacquisition of business indebtedness included in federal taxable income
under section 108(i) of the Internal Revenue Code. This subtraction applies only to the
extent that the income was included in net income in a prior year as a result of the addition
under subdivision 19a, clause (16).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008, except that clause (8) is effective for taxable years ending after
December 31, 2008.
new text end

Sec. 8.

Minnesota Statutes 2008, section 290.01, subdivision 19c, as amended by Laws
2009, chapter 12, article 1, section 4, is amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;

(11) new text begin for taxable years beginning before January 1, 2009, new text end the amount of any deemed
dividend from a foreign operating corporation determined pursuant to section 290.17,
subdivision 4, paragraph (g). The deemed dividend shall be reduced by the amount of the
addition to income required by clauses (20), (21), (22), and (23);

(12) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(13) the amount of net income excluded under section 114 of the Internal Revenue
Code;

(14) any increase in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard to
the provisions of Division C, title III, section deleted text begin 304(a)(1)-(2) deleted text end new text begin 303(b) new text end of Public Law 110-343;

(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
has an activity that in the taxable year generates a deduction for depreciation under
section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k)(1)(A) and (k)(4)(A) is allowed;

(16) new text begin for taxable years beginning before January 1, 2009, new text end 80 percent of the amount by
which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
through December 31, 2003;

(17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(18) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans;

(19) the amount of expenses disallowed under section 290.10, subdivision 2;

(20) an amount equal to the interest and intangible expenses, losses, and costs paid,
accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
of a corporation that is a member of the taxpayer's unitary business group that qualifies
as a foreign operating corporation. For purposes of this clause, intangible expenses and
costs include:

(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;

(ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar expenses and costs.

For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.

This clause does not apply to any item of interest or intangible expenses or costs paid,
accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
to such item of income to the extent that the income to the foreign operating corporation
is income from sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;

(21) except as already included in the taxpayer's taxable income pursuant to clause
(20), any interest income and income generated from intangible property received or
accrued by a foreign operating corporation that is a member of the taxpayer's unitary
group. For purposes of this clause, income generated from intangible property includes:

(i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;

(ii) income from factoring transactions or discounting transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar income.

For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.

This clause does not apply to any item of interest or intangible income received or accrued
by a foreign operating corporation with respect to such item of income to the extent that
the income is income from sources without the United States as defined in subtitle A,
chapter 1, subchapter N, part 1, of the Internal Revenue Code;

(22) the dividends attributable to the income of a foreign operating corporation that
is a member of the taxpayer's unitary group in an amount that is equal to the dividends
paid deduction of a real estate investment trust under section 561(a) of the Internal
Revenue Code for amounts paid or accrued by the real estate investment trust to the
foreign operating corporation;

(23) the income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to gains derived from the sale of real or personal
property located in the United States; deleted text begin and
deleted text end

(24) the additional amount allowed as a deduction for donation of computer
technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the
extent deducted from taxable income deleted text begin . deleted text end new text begin ; and new text end

new text begin (25) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008, except that clause (25) is effective for taxable years ending after
December 31, 2008.
new text end

Sec. 9.

Minnesota Statutes 2008, section 290.01, subdivision 19d, as amended by Laws
2009, chapter 12, article 1, section 5, is amended to read:

Subd. 19d.

Corporations; modifications decreasing federal taxable income.

For
corporations, there shall be subtracted from federal taxable income after the increases
provided in subdivision 19c:

(1) the amount of foreign dividend gross-up added to gross income for federal
income tax purposes under section 78 of the Internal Revenue Code;

(2) the amount of salary expense not allowed for federal income tax purposes due to
claiming the work opportunity credit under section 51 of the Internal Revenue Code;

(3) any dividend (not including any distribution in liquidation) paid within the
taxable year by a national or state bank to the United States, or to any instrumentality of
the United States exempt from federal income taxes, on the preferred stock of the bank
owned by the United States or the instrumentality;

(4) amounts disallowed for intangible drilling costs due to differences between
this chapter and the Internal Revenue Code in taxable years beginning before January
1, 1987, as follows:

(i) to the extent the disallowed costs are represented by physical property, an amount
equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7, subject to the modifications contained in subdivision 19e; and

(ii) to the extent the disallowed costs are not represented by physical property, an
amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
290.09, subdivision 8;

(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
Internal Revenue Code, except that:

(i) for capital losses incurred in taxable years beginning after December 31, 1986,
capital loss carrybacks shall not be allowed;

(ii) for capital losses incurred in taxable years beginning after December 31, 1986,
a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
allowed;

(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
capital loss carryback to each of the three taxable years preceding the loss year, subject to
the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and

(iv) for capital losses incurred in taxable years beginning before January 1, 1987,
a capital loss carryover to each of the five taxable years succeeding the loss year to the
extent such loss was not used in a prior taxable year and subject to the provisions of
Minnesota Statutes 1986, section 290.16, shall be allowed;

(6) an amount for interest and expenses relating to income not taxable for federal
income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
291 of the Internal Revenue Code in computing federal taxable income;

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for
which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
reasonable allowance for depletion based on actual cost. In the case of leases the deduction
must be apportioned between the lessor and lessee in accordance with rules prescribed
by the commissioner. In the case of property held in trust, the allowable deduction must
be apportioned between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
of the trust's income allocable to each;

(8) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
1986, section 290.09, subdivision 7;

(9) amounts included in federal taxable income that are due to refunds of income,
excise, or franchise taxes based on net income or related minimum taxes paid by the
corporation to Minnesota, another state, a political subdivision of another state, the
District of Columbia, or a foreign country or possession of the United States to the extent
that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
clause (1), in a prior taxable year;

deleted text begin (10) 80 percent of royalties, fees, or other like income accrued or received from a
foreign operating corporation or a foreign corporation which is part of the same unitary
business as the receiving corporation, unless the income resulting from such payments or
accruals is income from sources within the United States as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Code;
deleted text end

deleted text begin (11) deleted text end new text begin (10) new text end income or gains from the business of mining as defined in section 290.05,
subdivision 1, clause (a), that are not subject to Minnesota franchise tax;

deleted text begin (12) deleted text end new text begin (11) new text end the amount of disability access expenditures in the taxable year which are
not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue
Code;

deleted text begin (13) deleted text end new text begin (12) new text end the amount of qualified research expenses not allowed for federal income
tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
that the amount exceeds the amount of the credit allowed under section 290.068;

deleted text begin (14) deleted text end new text begin (13) new text end the amount of salary expenses not allowed for federal income tax purposes
due to claiming the Indian employment credit under section 45A(a) of the Internal
Revenue Code;

deleted text begin (15) deleted text end new text begin (14) new text end for taxable years beginning before January 1, 2008, the amount of the
federal small ethanol producer credit allowed under section 40(a)(3) of the Internal
Revenue Code which is included in gross income under section 87 of the Internal Revenue
Code;

deleted text begin (16) deleted text end new text begin (15) new text end for a corporation whose foreign sales corporation, as defined in section
922 of the Internal Revenue Code, constituted a foreign operating corporation during any
taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
claiming the deduction under section 290.21, subdivision 4, for income received from
the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
income excluded under section 114 of the Internal Revenue Code, provided the income is
not income of a foreign operating company;

deleted text begin (17) deleted text end new text begin (16) new text end any decrease in subpart F income, as defined in section 952(a) of the
Internal Revenue Code, for the taxable year when subpart F income is calculated without
regard to the provisions of Division C, title III, section deleted text begin 304(a)(1)-(2) deleted text end new text begin 303(b) new text end of Public
Law 110-343;

deleted text begin (18) deleted text end new text begin (17) new text end in each of the five tax years immediately following the tax year in which
an addition is required under subdivision 19c, clause (15), an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
resulting delayed depreciation cannot be less than zero; deleted text begin and deleted text end

deleted text begin (19) deleted text end new text begin (18) new text end in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of
the amount of the addition deleted text begin . deleted text end new text begin ; and new text end

new text begin (19) to the extent included in federal taxable income, discharge of indebtedness
income from reacquisition of business indebtedness included in federal taxable income
under section 108(i) of the Internal Revenue Code. This subtraction applies only to the
extent that the income was included in net income in a prior year as a result of the addition
under subdivision 19c, clause (25).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008, except that clause (19) is effective for taxable years ending after
December 31, 2008.
new text end

Sec. 10.

Minnesota Statutes 2008, section 290.01, subdivision 29, is amended to read:

Subd. 29.

Taxable income.

The term "taxable income" means:

(1) for individuals, estates, and trusts, the same as taxable net income;

(2) for corporations, the taxable net income less

(i) the net operating loss deduction under section 290.095; new text begin and
new text end

(ii) the dividends received deduction under section 290.21, subdivision 4; new text begin plus
new text end

(iii) deleted text begin the exemption for operating in a job opportunity building zone under section
469.317; deleted text end new text begin Minnesota development subsidies.
new text end

deleted text begin (iv) the exemption for operating in a biotechnology and health sciences industry
zone under section 469.337; and
deleted text end

deleted text begin (v) the exemption for operating in an international economic development zone
under section 469.326.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 11.

Minnesota Statutes 2008, section 290.01, subdivision 31, as amended by Laws
2009, chapter 12, article 1, section 7, is amended to read:

Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin December
31, 2008 deleted text end new text begin March 31, 2009 new text end . Internal Revenue Code also includes any uncodified provision
in federal law that relates to provisions of the Internal Revenue Code that are incorporated
into Minnesota law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
except the changes incorporated by federal changes are effective at the same time as the
changes were effective for federal purposes.
new text end

Sec. 12.

Minnesota Statutes 2008, section 290.01, is amended by adding a subdivision
to read:

new text begin Subd. 33. new text end

new text begin Minnesota development subsidies. new text end

new text begin (a) "Minnesota development
subsidies" means the greater of the following amounts:
new text end

new text begin (1) one-half of the amount deducted by the taxpayer in computing federal taxable
income for the taxable year, as property taxes, business expenses, or otherwise, that is
attributable to property taxes paid by the taxpayer, either directly or indirectly through a
lease or otherwise, on property located in a tax increment financing district, as defined in
section 469.174, or that receives an abatement under sections 469.1813 to 469.1815, if the
owner of the property or a related party has entered a development or similar agreement
with respect to the increment district or derives a benefit from the abatement by its
property having access to or use of public improvements financed with the abatement or
otherwise; or
new text end

new text begin (2) the amount of payments received by the taxpayer under a development or similar
agreement that provides for payments or reimbursements from the proceeds of increments
from a tax increment financing district or from an abatement under sections 469.1813 to
469.1815, but excluding reimbursements under a development action response plan, as
defined in section 469.174, subdivision 17, to pay for its costs incurred to fund removal
or remedial actions.
new text end

new text begin (b) For purposes of this subdivision, "tax increment financing district" excludes:
new text end

new text begin (1) a housing district, as defined in section 469.174, subdivision 11;
new text end

new text begin (2) a soils condition district, as defined in section 469.174, subdivision 19; and
new text end

new text begin (3) a hazardous substance subdistrict, as defined in section 469.174, subdivision 23.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 13.

Minnesota Statutes 2008, section 290.01, is amended by adding a subdivision
to read:

new text begin Subd. 34. new text end

new text begin Qualified obligations. new text end

new text begin (a) "Qualified obligations" means:
new text end

new text begin (1) obligations of the state of Minnesota or a political or governmental subdivision,
municipality, or governmental agency or instrumentality of the state of Minnesota if the
obligations were sold before July 1, 2009; or
new text end

new text begin (2) general obligations of the state of Minnesota sold after June 30, 2009, if the
commissioner of finance elects to issue the obligations exempt from taxation under
sections 290.06, subdivision 2c, and 290.091. The commissioner shall make the election
only if, in the commissioner's opinion, doing so is in the best interest of the state because it
will reduce the state's net borrowing costs. Prior to making the election, the commissioner
shall estimate whether (i) the present value of the reduction in state borrowing costs due to
issuing the obligations exempt from taxation under sections 290.06 and 290.091 exceeds
(ii) the present value of the revenues the state would collect if the obligations were
issued subject to taxation under sections 290.06 and 290.091. In making the estimate,
the commissioner may rely on data from past issuances of obligations by the state and
other states without income taxes or that impose their state income taxes on their bonds,
judgments about current market conditions, and any other relevant information, and the
commissioner shall use a reasonable methodology for preparing the estimate after seeking
advice and comments from the state economist or another qualified professional economist.
new text end

new text begin (b) If the commissioner of finance elects to issue qualified obligations under
paragraph (a), clause (2), the commissioner must provide a written report to the chairs
of the committees of the senate and the house of representatives with jurisdiction over
taxes and capital investment on the decision to issue qualified obligations, including the
estimate of the net savings in borrowing costs from the use of qualified obligations and
a detailed description of how the estimate was prepared. This report must be provided
within 15 days after the bonds are sold.
new text end

new text begin (c) The authority to issue tax-exempt obligations under paragraph (a), clause (2),
expires July 1, 2011. If the commissioner of finance elects to issue tax-exempt bonds
under this section during calendar year 2009 or 2010, the commissioner shall prepare a
report for the 2011 legislature evaluating whether the issuance resulted in a net reduction
in state borrowing costs, taking into account the effects of the tax exemption, and shall file
the report by January 31, 2011, under the provisions of Minnesota Statutes, section 3.195.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 14.

Minnesota Statutes 2008, section 290.014, subdivision 2, is amended to read:

Subd. 2.

Nonresident individuals.

Except as provided in section 290.015, a
nonresident individual is subject to the return filing requirements and to tax as provided in
this chapter to the extent that the income of the nonresident individual is:

(1) allocable to this state under section 290.17, 290.191, or 290.20;

(2) taxed to the individual under the Internal Revenue Code (or not taxed under the
Internal Revenue Code by reason of its character but of a character which is taxable under
this chapter) in the individual's capacity as a beneficiary of an estate with income allocable
to this state under section 290.17, 290.191, or 290.20 and the income, taking into account
the income character provisions of section 662(b) of the Internal Revenue Code, would be
allocable to this state under section 290.17, 290.191, or 290.20 if realized by the individual
directly from the source from which realized by the estate;

(3) taxed to the individual under the Internal Revenue Code (or not taxed under the
Internal Revenue Code by reason of its character but of a character that is taxable under
this chapter) in the individual's capacity as a beneficiary or grantor or other person treated
as a substantial owner of a trust with income allocable to this state under section 290.17,
290.191, or 290.20 and the income, taking into account the income character provisions of
section 652(b), 662(b), or 664(b) of the Internal Revenue Code, would be allocable to this
state under section 290.17, 290.191, or 290.20 if realized by the individual directly from
the source from which realized by the trust;

(4) taxed to the individual under the Internal Revenue Code (or not taxed under the
Internal Revenue Code by reason of its character but of a character which is taxable under
this chapter) in the individual's capacity as a limited or general partner in a partnership
with income allocable to this state under section 290.17, 290.191, or 290.20 and the
income, taking into account the income character provisions of section 702(b) of the
Internal Revenue Code, would be allocable to this state under section 290.17, 290.191,
or 290.20 if realized by the individual directly from the source from which realized by
the partnership; deleted text begin or deleted text end

(5) taxed to the individual under the Internal Revenue Code (or not taxed under the
Internal Revenue Code by reason of its character but of a character which is taxable under
this chapter) in the individual's capacity as a shareholder of a corporation treated as an
"S" corporation under section 290.9725, and income allocable to this state under section
290.17, 290.191, or 290.20 and the income, taking into account the income character
provisions of section 1366(b) of the Internal Revenue Code, would be allocable to this
state under section 290.17, 290.191, or 290.20 if realized by the individual directly from
the source from which realized by the corporation deleted text begin . deleted text end new text begin ; or new text end

new text begin (6) taxed to the individual under the Internal Revenue Code (or not taxed under the
Internal Revenue Code by reason of its character but of a character which is taxable under
this chapter) in the individual's capacity as the sole member of a limited liability company
that is disregarded for federal income tax purposes, with income allocable to this state
under section 290.17, 290.191, or 290.20, as though realized by the individual directly
from the source from which it was realized by the limited liability company.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 15.

Minnesota Statutes 2008, section 290.06, subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income
taxes imposed by this chapter upon married individuals filing joint returns and surviving
spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
applying to their taxable net income the following schedule of rates:

(1) on the first deleted text begin $25,680 deleted text end new text begin $33,220 new text end , 5.35 percent;

(2) on all over deleted text begin $25,680 deleted text end new text begin $33,220 new text end , but not over deleted text begin $102,030 deleted text end new text begin $131,970 new text end , 7.05 percent;

(3) on all over deleted text begin $102,030 deleted text end new text begin $131,970 new text end , new text begin but not over $300,000, new text end 7.85 percent deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) on all over $300,000, nine percent.
new text end

Married individuals filing separate returns, estates, and trusts must compute their
income tax by applying the above rates to their taxable income, except that the income
brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) on the first deleted text begin $17,570 deleted text end new text begin $22,730 new text end , 5.35 percent;

(2) on all over deleted text begin $17,570 deleted text end new text begin $22,730 new text end , but not over deleted text begin $57,710 deleted text end new text begin $74,650 new text end , 7.05 percent;

(3) on all over deleted text begin $57,710 deleted text end new text begin $74,650 new text end , new text begin but not over $169,700, new text end 7.85 percent deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) on all over $169,700, nine percent.
new text end

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying
as a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) on the first deleted text begin $21,630 deleted text end new text begin $27,980 new text end , 5.35 percent;

(2) on all over deleted text begin $21,630 deleted text end new text begin $27,980 new text end , but not over deleted text begin $86,910 deleted text end new text begin $112,420 new text end , 7.05 percent;

(3) on all over deleted text begin $86,910 deleted text end new text begin $112,420 new text end , new text begin but not over $255,560, new text end 7.85 percent deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) on all over $255,560, nine percent.
new text end

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the
tax of any individual taxpayer whose taxable net income for the taxable year is less than
an amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not
more than $100. The amount of tax for each bracket shall be computed at the rates set
forth in this subdivision, provided that the commissioner may disregard a fractional part of
a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute
the individual's Minnesota income tax as provided in this subdivision. After the
application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income
as defined in section 62 of the Internal Revenue Code and increased by the additions
required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
deleted text begin and deleted text end (13) new text begin , and (16), new text end and reduced by the Minnesota assignable portion of the subtraction
for United States government interest under section 290.01, subdivision 19b, clause (1),
and the subtractions under section 290.01, subdivision 19b, clauses deleted text begin (9), (10), (14), (15),
and (16) deleted text end new text begin (3), (6), (7), and (8) new text end , after applying the allocation and assignability provisions of
section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), deleted text begin and deleted text end (13) new text begin , and (16), new text end
and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), deleted text begin (9),
(10), (14), (15), and (16) deleted text end new text begin (3), (6), (7), and (8) new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 16.

Minnesota Statutes 2008, section 290.06, subdivision 2d, is amended to read:

Subd. 2d.

Inflation adjustment of brackets.

(a) For taxable years beginning after
December 31, deleted text begin 2000 deleted text end new text begin 2009 new text end , the minimum and maximum dollar amounts for each rate
bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
percentage determined under paragraph (b). For the purpose of making the adjustment as
provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
rate brackets as they existed for taxable years beginning after December 31, deleted text begin 1999 deleted text end new text begin 2008 new text end ,
and before January 1, deleted text begin 2001 deleted text end new text begin 2010 new text end . The rate applicable to any rate bracket must not be
changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.

(b) The commissioner shall adjust the rate brackets and by the percentage determined
pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that new text begin :
new text end

new text begin (1) in section 1(f)(2)(A) the words "increasing or decreasing" shall be substituted
for the word "increasing";
new text end

new text begin (2) in section 1(f)(3)(A) the words "differs from" shall be substituted for the word
"exceeds"; and
new text end

new text begin (3) new text end in section 1(f)(3)(B) the word deleted text begin "1999" deleted text end new text begin "2008" new text end shall be substituted for the word
"1992." For deleted text begin 2001 deleted text end new text begin 2010 new text end , the commissioner shall then determine the percent change from
the 12 months ending on August 31, deleted text begin 1999 deleted text end new text begin 2008 new text end , to the 12 months ending on August 31,
deleted text begin 2000 deleted text end new text begin 2009 new text end , and in each subsequent year, from the 12 months ending on August 31, deleted text begin 1999 deleted text end new text begin
2008 new text end , to the 12 months ending on August 31 of the year preceding the taxable year. The
determination of the commissioner pursuant to this subdivision shall not be considered a
"rule" and shall not be subject to the Administrative Procedure Act contained in chapter 14.

No later than December 15 of each year, the commissioner shall announce the
specific percentage that will be used to adjust the tax rate brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 17.

Minnesota Statutes 2008, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 36. new text end

new text begin Mortgage interest credit. new text end

new text begin (a) An individual is allowed a credit against
the tax imposed by this chapter equal to seven percent of the lesser of:
new text end

new text begin (1) $6,000; or
new text end

new text begin (2) qualified residence interest deduction for which the individual is eligible under
section 63(d) of the Internal Revenue Code, minus $4,000.
new text end

new text begin (b) The amount of the credit allowed must be reduced by the amount of the
taxpayer's liability under section 290.091, determined before the credit allowed by this
section is subtracted from regular tax liability.
new text end

new text begin (c) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under subdivision 2c, paragraph (e).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 18.

Minnesota Statutes 2008, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Charitable contributions credit. new text end

new text begin (a) An individual is allowed a credit
against the tax imposed by this chapter equal to eight percent of the amount by which
eligible charitable contributions exceed the greater of:
new text end

new text begin (1) two percent of the individual's adjusted gross income for the taxable year; or
new text end

new text begin (2) $500.
new text end

new text begin (b) For purposes of this subdivision, "eligible charitable contributions" means
charitable contributions allowable as a deduction for the taxable year under section
170(a) of the Internal Revenue Code, subject to the limitations of section 170(b) of the
Internal Revenue Code, and determined without regard to whether or not the taxpayers
itemize deductions.
new text end

new text begin (c) For purposes of this subdivision, "adjusted gross income" has the meaning given
in section 62 of the Internal Revenue Code.
new text end

new text begin (d) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under subdivision 2c, paragraph (e).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 19.

Minnesota Statutes 2008, section 290.0671, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual is allowed a credit against the tax
imposed by this chapter equal to a percentage of earned income. To receive a credit, a
taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.

(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
whichever is greater, in excess of $15,080, but in no case is the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals ten
percent of the first $9,720 of earned income and 20 percent of earned income over
$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income
or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is
the credit less than zero.

(e) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income
not subject to tax under this chapter, deleted text begin including income excluded under section 290.01,
subdivision 19b, clause (10) or (16), deleted text end the credit must be allocated based on the ratio of
federal adjusted gross income reduced by the earned income not subject to tax under
this chapter over federal adjusted gross income. For purposes of this paragraph, the
subtractions for military pay under section 290.01, subdivision 19b, clauses deleted text begin (11) and (12) deleted text end new text begin
(4) and (5) new text end , are not considered "earned income not subject to tax under this chapter."

For the purposes of this paragraph, the exclusion of combat pay under section 112
of the Internal Revenue Code is not considered "earned income not subject to tax under
this chapter."

(g) For tax years beginning after December 31, 2001, and before December 31,
2004, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
$1,000 for married taxpayers filing joint returns.

(h) For tax years beginning after December 31, 2004, and before December 31,
2007, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
$2,000 for married taxpayers filing joint returns.

(i) For tax years beginning after December 31, 2007, and before December 31, 2010,
the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
(d), after being adjusted for inflation under subdivision 7, are each increased by $3,000 for
married taxpayers filing joint returns. For tax years beginning after December 31, 2008,
the $3,000 is adjusted annually for inflation under subdivision 7.

(j) The commissioner shall construct tables showing the amount of the credit at
various income levels and make them available to taxpayers. The tables shall follow
the schedule contained in this subdivision, except that the commissioner may graduate
the transition between income brackets.

Sec. 20.

Minnesota Statutes 2008, section 290.068, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

A deleted text begin corporation, other than a corporation treated as an
"S" corporation under section 290.9725, deleted text end new text begin taxpayer new text end is allowed a credit against deleted text begin the portion
of deleted text end the deleted text begin franchise deleted text end tax computed under section 290.06 deleted text begin , subdivision 1, deleted text end for the taxable year
equal to:

deleted text begin (a) 5 deleted text end new text begin (1) ten new text end percent of the first $2,000,000 of the excess (if any) of

deleted text begin (1) deleted text end new text begin (i) new text end the qualified research expenses for the taxable year, over

deleted text begin (2) deleted text end new text begin (ii) new text end the base amount; and

deleted text begin (b) deleted text end new text begin (2) new text end 2.5 percent on all of such excess expenses over $2,000,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 21.

Minnesota Statutes 2008, section 290.068, subdivision 3, is amended to read:

Subd. 3.

Limitation; carryover.

(a)(1) The credit for the taxable year shall not
exceed the liability for tax. "Liability for tax" for purposes of this section means the tax
imposed under section 290.06, subdivision 1, for the taxable year reduced by the sum of
the nonrefundable credits allowed under this chapter.

(2) deleted text begin In the case of a corporation which is deleted text end new text begin For new text end a partner in a partnership new text begin and for a
shareholder in an S corporation new text end , the credit allowed for the taxable year shall not exceed
the lesser of the amount determined under clause (1) for the taxable year or an amount
(separately computed with respect to the deleted text begin corporation's deleted text end new text begin taxpayer's new text end interest in the trade or
business or entity) equal to the amount of tax attributable to that portion of taxable income
which is allocable or apportionable to the deleted text begin corporation's deleted text end new text begin taxpayer's new text end interest in the trade or
business or entity.

(b) If the amount of the credit determined under this section for any taxable year
exceeds the limitation under clause (a), the excess shall be a research credit carryover to
each of the 15 succeeding taxable years. The entire amount of the excess unused credit for
the taxable year shall be carried first to the earliest of the taxable years to which the credit
may be carried and then to each successive year to which the credit may be carried. The
amount of the unused credit which may be added under this clause shall not exceed the
taxpayer's liability for tax less the research credit for the taxable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 22.

Minnesota Statutes 2008, section 290.068, subdivision 4, is amended to read:

Subd. 4.

Partnerships new text begin and S corporations new text end .

In the case of partnerships new text begin and S
corporations new text end the credit shall be allocated in the same manner provided by deleted text begin section deleted text end new text begin sections
new text end 41(f)(2) new text begin and 41(g) new text end of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 23.

new text begin [290.0682] MINNESOTA CHILD CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Adjusted gross income" has the meaning given in section 62 of the Internal
Revenue Code.
new text end

new text begin (c) "Qualifying child" has the meaning given in section 24(c) of the Internal
Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An individual is allowed a credit against the tax
imposed by this chapter equal to the lesser of:
new text end

new text begin (1) $200 for each qualifying child; or
new text end

new text begin (2) ten percent of adjusted gross income in excess of $14,000.
new text end

new text begin (b) The credit allowed in paragraph (a) is reduced by an amount equal to five percent
of adjusted gross income in excess of $28,000, but in no case is the credit less than zero.
new text end

new text begin (c) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin Subd. 3. new text end

new text begin Credit refundable. new text end

new text begin If the amount of credit that an individual is eligible
to receive under this section exceeds the claimant's tax liability under this chapter, the
commissioner shall refund the excess to the claimant.
new text end

new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds required by this
section is appropriated to the commissioner from the general fund.
new text end

new text begin Subd. 5. new text end

new text begin Inflation adjustment. new text end

new text begin The adjusted gross income floor in subdivision 2,
paragraph (a), clause (2), and the phaseout threshold in subdivision 2, paragraph (b),
must be adjusted for inflation. For tax years beginning after December 31, 2009, the
commissioner shall annually adjust the adjusted gross income floor and the phaseout
threshold by the percentage determined pursuant to section 1(f) of the Internal Revenue
Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for the word
"1992." For 2010, the commissioner shall then determine the percent change from the
12 months ending on August 31, 2008, to the 12 months ending on August 31, 2009,
and in each subsequent year, from the 12 months ending on August 31, 2008, to the 12
months ending on August 31 of the year preceding the taxable year. The adjusted gross
income floor and the phaseout threshold as adjusted for inflation must be rounded to
the nearest $10. If the amount ends in $5, the amount is rounded up to the nearest $10.
The determination of the commissioner under this subdivision is not a rule under the
Administrative Procedure Act.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 24.

Minnesota Statutes 2008, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for
the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative
minimum taxable income, but excluding:

deleted text begin (i) the charitable contribution deduction under section 170 of the Internal Revenue
Code;
deleted text end

deleted text begin (ii) deleted text end new text begin (i) new text end the medical expense deduction;

deleted text begin (iii) deleted text end new text begin (ii) new text end the casualty, theft, and disaster loss deduction; and

deleted text begin (iv) deleted text end new text begin (iii) new text end the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal
Revenue Code, with respect to each property (as defined in section 614 of the Internal
Revenue Code), to the extent not included in federal alternative minimum taxable income,
the excess of the deduction for depletion allowable under section 611 of the Internal
Revenue Code for the taxable year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the
amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the
amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
to (9), (12), deleted text begin and deleted text end (13) new text begin , and (16) new text end ;

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision
19b, clause (2), to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as
defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
amounts deducted in computing federal adjusted gross income; and

(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b, clauses deleted text begin (6) and (9) to (16) deleted text end new text begin (3) to (8) new text end .

In the case of an estate or trust, alternative minimum taxable income must be
computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3)
of the Internal Revenue Code.

(c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
income after subtracting the exemption amount determined under subdivision 3.

(d) "Regular tax" means the tax that would be imposed under this chapter (without
regard to this section and section 290.032), reduced by the sum of the nonrefundable
credits allowed under this chapter.

(e) "Net minimum tax" means the minimum tax imposed by this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 25.

Minnesota Statutes 2008, section 290.0921, subdivision 3, is amended to read:

Subd. 3.

Alternative minimum taxable income.

"Alternative minimum taxable
income" is Minnesota net income as defined in section 290.01, subdivision 19, and
includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
Minnesota tax return, the minimum tax must be computed on a separate company basis.
If a corporation is part of a tax group filing a unitary return, the minimum tax must be
computed on a unitary basis. The following adjustments must be made.

(1) For purposes of the depreciation adjustments under section 56(a)(1) and
56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
income tax purposes, including any modification made in a taxable year under section
290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7,
paragraph (c).

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
allowance in the first taxable year after December 31, 2000.

(2) The portion of the depreciation deduction allowed for federal income tax
purposes under section 168(k) of the Internal Revenue Code that is required as an
addition under section 290.01, subdivision 19c, clause (15), is disallowed in determining
alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section 290.01, subdivision
19d, clause deleted text begin (18) deleted text end new text begin (17) new text end , is allowed as a depreciation deduction in determining alternative
minimum taxable income.

(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
of the Internal Revenue Code does not apply.

(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
Revenue Code does not apply.

(6) The special rule for dividends from section 936 companies under section
56(g)(4)(C)(iii) does not apply.

(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
Code does not apply.

(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
Internal Revenue Code must be calculated without regard to subparagraph (E) and the
subtraction under section 290.01, subdivision 19d, clause (4).

(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
Revenue Code does not apply.

(10) The tax preference for charitable contributions of appreciated property under
section 57(a)(6) of the Internal Revenue Code does not apply.

(11) For purposes of calculating the tax preference for accelerated depreciation or
amortization on certain property placed in service before January 1, 1987, under section
57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
deduction allowed under section 290.01, subdivision 19e.

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, not previously deducted is a
depreciation or amortization allowance in the first taxable year after December 31, 2004.

(12) For purposes of calculating the adjustment for adjusted current earnings in
section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
minimum taxable income as defined in this subdivision, determined without regard to the
adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.

(13) For purposes of determining the amount of adjusted current earnings under
section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), new text begin or new text end (ii) the
amount of refunds of income, excise, or franchise taxes subtracted as provided in section
290.01, subdivision 19d, clause (9) deleted text begin , or (iii) the amount of royalties, fees or other like
income subtracted as provided in section 290.01, subdivision 19d, clause (10) deleted text end .

deleted text begin (14) Alternative minimum taxable income excludes the income from operating in a
job opportunity building zone as provided under section 469.317. deleted text end

deleted text begin (15) Alternative minimum taxable income excludes the income from operating in a
biotechnology and health sciences industry zone as provided under section 469.337. deleted text end

deleted text begin (16) Alternative minimum taxable income excludes the income from operating in an
international economic development zone as provided under section 469.326. deleted text end

new text begin (14) Alternative minimum taxable income includes Minnesota development
subsidies.
new text end

Items of tax preference must not be reduced below zero as a result of the
modifications in this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009, except the changes to clauses (3) and (13) and the new clause (14) are
effective for taxable years beginning after December 31, 2008.
new text end

Sec. 26.

Minnesota Statutes 2008, section 290.0922, subdivision 1, is amended to read:

Subdivision 1.

Imposition.

(a) In addition to the tax imposed by this chapter without
regard to this section, the franchise tax imposed on a corporation required to file under
section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation
under section 290.9725 for the taxable year includes a tax equal to the following amounts:

If the sum of the corporation's Minnesota property, payrolls, and sales or receipts is:						the tax equals:
		deleted text begin less than deleted text end	deleted text begin $ deleted text end	deleted text begin 500,000 deleted text end		deleted text begin $ deleted text end	deleted text begin 0 deleted text end
	deleted text begin $ deleted text end	deleted text begin 500,000 to deleted text end	deleted text begin $ deleted text end	deleted text begin 999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 100 deleted text end
	deleted text begin $ deleted text end	deleted text begin 1,000,000 to deleted text end	deleted text begin $ deleted text end	deleted text begin 4,999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 300 deleted text end
	deleted text begin $ deleted text end	deleted text begin 5,000,000 to deleted text end	deleted text begin $ deleted text end	deleted text begin 9,999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 1,000 deleted text end
	deleted text begin $ deleted text end	deleted text begin 10,000,000 to deleted text end	deleted text begin $ deleted text end	deleted text begin 19,999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 2,000 deleted text end
	deleted text begin $ deleted text end	deleted text begin 20,000,000 or more deleted text end				deleted text begin $ deleted text end	deleted text begin 5,000 deleted text end
		new text begin less than new text end	new text begin $ new text end	new text begin 830,000 new text end		new text begin $ new text end	new text begin 0 new text end
	new text begin $ new text end	new text begin 830,000 to new text end	new text begin $ new text end	new text begin 1,659,999 new text end		new text begin $ new text end	new text begin 170 new text end
	new text begin $ new text end	new text begin 1,660,000 to new text end	new text begin $ new text end	new text begin 8,319,999 new text end		new text begin $ new text end	new text begin 500 new text end
	new text begin $ new text end	new text begin 8,320,000 to new text end	new text begin $ new text end	new text begin 16,649,999 new text end		new text begin $ new text end	new text begin 1,660 new text end
	new text begin $ new text end	new text begin 16,650,000 to new text end	new text begin $ new text end	new text begin 33,299,999 new text end		new text begin $ new text end	new text begin 3,330 new text end
	new text begin $ new text end	new text begin 33,300,000 or more new text end				new text begin $ new text end	new text begin 8,320 new text end

(b) A tax is imposed for each taxable year on a corporation required to file a return
under section 289A.12, subdivision 3, that is treated as an "S" corporation under section
290.9725 and on a partnership required to file a return under section 289A.12, subdivision
3, other than a partnership that derives over 80 percent of its income from farming. The
tax imposed under this paragraph is due on or before the due date of the return for the
taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe
the return to be used for payment of this tax. The tax under this paragraph is equal to
the following amounts:

If the sum of the S corporation's or partnership's Minnesota property, payrolls, and sales or receipts is:							the tax equals:
		deleted text begin less than deleted text end	deleted text begin $ deleted text end	deleted text begin 500,000 deleted text end		deleted text begin $ deleted text end	deleted text begin 0 deleted text end
	deleted text begin $ deleted text end	deleted text begin 500,000 to deleted text end	deleted text begin $ deleted text end	deleted text begin 999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 100 deleted text end
	deleted text begin $ deleted text end	deleted text begin 1,000,000 to deleted text end	deleted text begin $ deleted text end	deleted text begin 4,999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 300 deleted text end
	deleted text begin $ deleted text end	deleted text begin 5,000,000 to deleted text end	deleted text begin $ deleted text end	deleted text begin 9,999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 1,000 deleted text end
	deleted text begin $ deleted text end	deleted text begin 10,000,000 to deleted text end	deleted text begin $ deleted text end	deleted text begin 19,999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 2,000 deleted text end
	deleted text begin $ deleted text end	deleted text begin 20,000,000 or more deleted text end				deleted text begin $ deleted text end	deleted text begin 5,000 deleted text end
		new text begin less than new text end	new text begin $ new text end	new text begin 830,000 new text end		new text begin $ new text end	new text begin 0 new text end
	new text begin $ new text end	new text begin 830,000 to new text end	new text begin $ new text end	new text begin 1,659,999 new text end		new text begin $ new text end	new text begin 170 new text end
	new text begin $ new text end	new text begin 1,660,000 to new text end	new text begin $ new text end	new text begin 8,319,999 new text end		new text begin $ new text end	new text begin 500 new text end
	new text begin $ new text end	new text begin 8,320,000 to new text end	new text begin $ new text end	new text begin 16,649,999 new text end		new text begin $ new text end	new text begin 1,660 new text end
	new text begin $ new text end	new text begin 16,650,000 to new text end	new text begin $ new text end	new text begin 33,299,999 new text end		new text begin $ new text end	new text begin 3,330 new text end
	new text begin $ new text end	new text begin 33,300,000 or more new text end				new text begin $ new text end	new text begin 8,320 new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 27.

Minnesota Statutes 2008, section 290.0922, subdivision 3, is amended to read:

Subd. 3.

Definitions.

(a) "Minnesota sales or receipts" means the total sales
apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts
attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the
total sales or receipts apportioned or attributed to Minnesota pursuant to any other
apportionment formula applicable to the taxpayer.

(b) "Minnesota property" means total Minnesota tangible property as provided in
section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota deleted text begin ,
but does not include: (1) property located in a job opportunity building zone designated
under section 469.314, (2) property of a qualified business located in a biotechnology and
health sciences industry zone designated under section 469.334, or (3) for taxable years
beginning during the duration of the zone, property of a qualified business located in the
international economic development zone designated under section 469.322 deleted text end . Intangible
property shall not be included in Minnesota property for purposes of this section.
Taxpayers who do not utilize tangible property to apportion income shall nevertheless
include Minnesota property for purposes of this section. On a return for a short taxable
year, the amount of Minnesota property owned, as determined under section 290.191,
shall be included in Minnesota property based on a fraction in which the numerator is the
number of days in the short taxable year and the denominator is 365.

(c) "Minnesota payrolls" means total Minnesota payrolls as provided in section
290.191, subdivision 12 deleted text begin , but does not include: (1) job opportunity building zone payrolls
under section 469.310, subdivision 8, (2) biotechnology and health sciences industry zone
payrolls under section 469.330, subdivision 8, or (3) for taxable years beginning during
the duration of the zone, international economic development zone payrolls under section
469.321, subdivision 9 deleted text end . Taxpayers who do not utilize payrolls to apportion income shall
nevertheless include Minnesota payrolls for purposes of this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 28.

Minnesota Statutes 2008, section 290.0922, is amended by adding a
subdivision to read:

new text begin Subd. 5. new text end

new text begin Inflation adjustment. new text end

new text begin The commissioner shall adjust the dollar amounts
of both the fee and the property, payrolls, and sales or receipts thresholds in subdivision
1 by the percentage determined pursuant to the provisions of section 1(f) of the Internal
Revenue Code, except that in section 1(f)(3)(B) the word "2008" must be substituted for
the word "1992." For 2010, the commissioner shall then determine the percent change from
the 12 months ending on August 31, 2008, to the 12 months ending on August 31, 2009,
and in each subsequent year, from the 12 months ending on August 31, 2008, to the 12
months ending on August 31 of the year preceding the taxable year. The determination of
the commissioner pursuant to this subdivision is not a "rule" subject to the Administrative
Procedure Act contained in chapter 14. The fee amounts as adjusted must be rounded to
the nearest $10 and the threshold amounts must be adjusted to the nearest $10,000. For
fee amounts that end in $5, the amount is rounded up to the nearest $10 and for threshold
amounts that end in $5,000, the amount is rounded up to the nearest $10,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 29.

Minnesota Statutes 2008, section 290.17, subdivision 2, is amended to read:

Subd. 2.

Income not derived from conduct of a trade or business.

The income of
a taxpayer subject to the allocation rules that is not derived from the conduct of a trade or
business must be assigned in accordance with paragraphs (a) to (f):

(a)(1) Subject to paragraphs (a)(2) and (a)(3), income from wages as defined in
section 3401(a) and (f) of the Internal Revenue Code is assigned to this state if, and to the
extent that, the work of the employee is performed within it; all other income from such
sources is treated as income from sources without this state.

Severance pay shall be considered income from labor or personal or professional
services.

(2) In the case of an individual who is a nonresident of Minnesota and who is an
athlete or entertainer, income from compensation for labor or personal services performed
within this state shall be determined in the following manner:

(i) The amount of income to be assigned to Minnesota for an individual who is a
nonresident salaried athletic team employee shall be determined by using a fraction in
which the denominator contains the total number of days in which the individual is under
a duty to perform for the employer, and the numerator is the total number of those days
spent in Minnesota. For purposes of this paragraph, off-season training activities, unless
conducted at the team's facilities as part of a team imposed program, are not included in
the total number of duty days. Bonuses earned as a result of play during the regular season
or for participation in championship, play-off, or all-star games must be allocated under
the formula. Signing bonuses are not subject to allocation under the formula if they are
not conditional on playing any games for the team, are payable separately from any other
compensation, and are nonrefundable; and

(ii) The amount of income to be assigned to Minnesota for an individual who is a
nonresident, and who is an athlete or entertainer not listed in clause (i), for that person's
athletic or entertainment performance in Minnesota shall be determined by assigning to
this state all income from performances or athletic contests in this state.

(3) For purposes of this section, amounts received by a nonresident as "retirement
income" as defined in section (b)(1) of the State Income Taxation of Pension Income
Act, Public Law 104-95, are not considered income derived from carrying on a trade
or business or from wages or other compensation for work an employee performed in
Minnesota, and are not taxable under this chapter.

(b) Income or gains from tangible property located in this state that is not employed
in the business of the recipient of the income or gains must be assigned to this state.

(c) Income or gains from intangible personal property not employed in the business
of the recipient of the income or gains must be assigned to this state if the recipient of the
income or gains is a resident of this state or is a resident trust or estate.

Gain on the sale of a partnership interest is allocable to this state in the ratio of the
original cost of partnership tangible property in this state to the original cost of partnership
tangible property everywhere, determined at the time of the sale. If more than 50 percent
of the value of the partnership's assets consists of intangibles, gain or loss from the sale
of the partnership interest is allocated to this state in accordance with the sales factor of
the partnership for its first full tax period immediately preceding the tax period of the
partnership during which the partnership interest was sold.

new text begin Gain on the sale of an interest in a single member limited liability company that
is disregarded for federal income tax purposes is allocable to this state as if the single
member limited liability company did not exist and the assets of the limited liability
company are personally owned by the sole member.
new text end

Gain on the sale of goodwill or income from a covenant not to compete that is
connected with a business operating all or partially in Minnesota is allocated to this state
to the extent that the income from the business in the year preceding the year of sale was
assignable to Minnesota under subdivision 3.

When an employer pays an employee for a covenant not to compete, the income
allocated to this state is in the ratio of the employee's service in Minnesota in the calendar
year preceding leaving the employment of the employer over the total services performed
by the employee for the employer in that year.

(d) Income from winnings on a bet made by an individual while in Minnesota is
assigned to this state. In this paragraph, "bet" has the meaning given in section 609.75,
subdivision 2, as limited by section 609.75, subdivision 3, clauses (1), (2), and (3).

(e) All items of gross income not covered in paragraphs (a) to (d) and not part of the
taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.

(f) For the purposes of this section, working as an employee shall not be considered
to be conducting a trade or business.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 30.

Minnesota Statutes 2008, section 290.17, subdivision 4, is amended to read:

Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly
within this state or partly within and partly without this state is part of a unitary business,
the entire income of the unitary business is subject to apportionment pursuant to section
290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source and none may be allocated
to a particular place except as provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to business income subject to subdivision 5,
income of an insurance company, or income of an investment company determined under
section 290.36.

(b) The term "unitary business" means business activities or operations which
result in a flow of value between them. The term may be applied within a single legal
entity or between multiple entities and without regard to whether each entity is a sole
proprietorship, a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use,
evidenced by centralized management or executive force, centralized purchasing,
advertising, accounting, or other controlled interaction, but the absence of these
centralized activities will not necessarily evidence a nonunitary business. Unity is also
presumed when business activities or operations are of mutual benefit, dependent upon or
contributory to one another, either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business
entity that carries on business activity outside the state different in kind from that
conducted within this state, and the other business is conducted entirely outside the state, it
is presumed that the two business operations are unitary in nature, interrelated, connected,
and interdependent unless it can be shown to the contrary.

(e) Unity of ownership is not deemed to exist when a corporation is involved unless
that corporation is a member of a group of two or more business entities and more than 50
percent of the voting stock of each member of the group is directly or indirectly owned
by a common owner or by common owners, either corporate or noncorporate, or by one
or more of the member corporations of the group. For this purpose, the term "voting
stock" shall include membership interests of mutual insurance holding companies formed
under section 66A.40.

(f) The net income and apportionment factors under section 290.191 or 290.20 of
foreign corporations and other foreign entities which are part of a unitary business shall
not be included in the net income or the apportionment factors of the unitary business.
A foreign corporation or other foreign entity which is required to file a return under this
chapter shall file on a separate return basis. deleted text begin The net income and apportionment factors
under section 290.191 or 290.20 of foreign operating corporations shall not be included in
the net income or the apportionment factors of the unitary business except as provided in
paragraph (g).
deleted text end

deleted text begin (g) The adjusted net income of a foreign operating corporation shall be deemed to
be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
proportion to each shareholder's ownership, with which such corporation is engaged in
a unitary business. Such deemed dividend shall be treated as a dividend under section
290.21, subdivision 4.
deleted text end

deleted text begin Dividends actually paid by a foreign operating corporation to a corporate shareholder
which is a member of the same unitary business as the foreign operating corporation shall
be eliminated from the net income of the unitary business in preparing a combined report
for the unitary business. The adjusted net income of a foreign operating corporation
shall be its net income adjusted as follows:
deleted text end

deleted text begin (1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
Rico, or a United States possession or political subdivision of any of the foregoing shall
be a deduction; and
deleted text end

deleted text begin (2) the subtraction from federal taxable income for payments received from foreign
corporations or foreign operating corporations under section 290.01, subdivision 19d,
clause (10), shall not be allowed.
deleted text end

deleted text begin If a foreign operating corporation incurs a net loss, neither income nor deduction
from that corporation shall be included in determining the net income of the unitary
business.
deleted text end

deleted text begin (h) deleted text end new text begin (g) new text end For purposes of determining the net income of a unitary business and the
factors to be used in the apportionment of net income pursuant to section 290.191 or
290.20, there must be included only the income and apportionment factors of domestic
corporations or other domestic entities deleted text begin other than foreign operating corporations deleted text end that are
determined to be part of the unitary business pursuant to this subdivision, notwithstanding
that foreign corporations or other foreign entities might be included in the unitary business.

deleted text begin (i) deleted text end new text begin (h) new text end Deductions for expenses, interest, or taxes otherwise allowable under
this chapter that are connected with or allocable against dividends deleted text begin , deemed dividends
described in paragraph (g), or royalties, fees, or other like income described in section
290.01, subdivision 19d, clause (10), deleted text end shall not be disallowed.

deleted text begin (j) deleted text end new text begin (i) new text end Each corporation or other entity, except a sole proprietorship, that is part of
a unitary business must file combined reports as the commissioner determines. On the
reports, all intercompany transactions between entities included pursuant to paragraph
deleted text begin (h) deleted text end new text begin (g) new text end must be eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using each entity's
Minnesota factors for apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all entities included pursuant
to paragraph deleted text begin (h) deleted text end new text begin (g) new text end in the denominators of the apportionment formula.

deleted text begin (k) deleted text end new text begin (j) new text end If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part
of the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must
be prorated or accounted for separately.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 31.

Minnesota Statutes 2008, section 290.191, subdivision 2, is amended to read:

Subd. 2.

Apportionment formula of general application.

deleted text begin (a) deleted text end Except for those
trades or businesses required to use a different formula under subdivision 3 or section
290.36, and for those trades or businesses that receive permission to use some other
method under section 290.20 or under subdivision 4, a trade or business required to
apportion its net income must apportion its income to this state on the basis of the
deleted text begin percentage obtained by taking the sum of:
deleted text end

deleted text begin (1) the percent for the sales factor under paragraph (b) of the deleted text end percentage which
the sales made within this state in connection with the trade or business during the tax
period are of the total sales wherever made in connection with the trade or business during
the tax period deleted text begin ; deleted text end new text begin .
new text end

deleted text begin (2) the percent for the property factor under paragraph (b) of the percentage which
the total tangible property used by the taxpayer in this state in connection with the trade or
business during the tax period is of the total tangible property, wherever located, used by
the taxpayer in connection with the trade or business during the tax period; and
deleted text end

deleted text begin (3) the percent for the payroll factor under paragraph (b) of the percentage which
the taxpayer's total payrolls paid or incurred in this state or paid in respect to labor
performed in this state in connection with the trade or business during the tax period are
of the taxpayer's total payrolls paid or incurred in connection with the trade or business
during the tax period.
deleted text end

deleted text begin (b) For purposes of paragraph (a) and subdivision 3, the following percentages apply
for the taxable years specified:
deleted text end

deleted text begin Taxable years beginning during calendar year deleted text end			deleted text begin Sales factor percent deleted text end			deleted text begin Property factor percent deleted text end		deleted text begin Payroll factor percent deleted text end
deleted text begin 2007 deleted text end			deleted text begin 78 deleted text end			deleted text begin 11 deleted text end		deleted text begin 11 deleted text end
deleted text begin 2008 deleted text end			deleted text begin 81 deleted text end			deleted text begin 9.5 deleted text end		deleted text begin 9.5 deleted text end
deleted text begin 2009 deleted text end			deleted text begin 84 deleted text end			deleted text begin 8 deleted text end		deleted text begin 8 deleted text end
deleted text begin 2010 deleted text end			deleted text begin 87 deleted text end			deleted text begin 6.5 deleted text end		deleted text begin 6.5 deleted text end
deleted text begin 2011 deleted text end			deleted text begin 90 deleted text end			deleted text begin 5 deleted text end		deleted text begin 5 deleted text end
deleted text begin 2012 deleted text end			deleted text begin 93 deleted text end			deleted text begin 3.5 deleted text end		deleted text begin 3.5 deleted text end
deleted text begin 2013 deleted text end			deleted text begin 96 deleted text end			deleted text begin 2 deleted text end		deleted text begin 2 deleted text end
deleted text begin 2014 and later calendar years deleted text end			deleted text begin 100 deleted text end			deleted text begin 0 deleted text end		deleted text begin 0 deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 32.

Minnesota Statutes 2008, section 290.191, subdivision 3, is amended to read:

Subd. 3.

Apportionment formula for financial institutions.

Except for an
investment company required to apportion its income under section 290.36, a financial
institution that is required to apportion its net income must apportion its net income to this
state on the basis of the percentage deleted text begin obtained by taking the sum of:
deleted text end

deleted text begin (1) the percent for the sales factor under subdivision 2, paragraph (b), of the
percentage deleted text end which the receipts from within this state in connection with the trade or
business during the tax period are of the total receipts in connection with the trade or
business during the tax period, from wherever derived deleted text begin ; deleted text end new text begin .
new text end

deleted text begin (2) the percent for the property factor under subdivision 2, paragraph (b), of the
percentage which the sum of the total tangible property used by the taxpayer in this
state and the intangible property owned by the taxpayer and attributed to this state in
connection with the trade or business during the tax period is of the sum of the total
tangible property, wherever located, used by the taxpayer and the intangible property
owned by the taxpayer and attributed to all states in connection with the trade or business
during the tax period; and
deleted text end

deleted text begin (3) the percent for the payroll factor under subdivision 2, paragraph (b), of the
percentage which the taxpayer's total payrolls paid or incurred in this state or paid in
respect to labor performed in this state in connection with the trade or business during
the tax period are of the taxpayer's total payrolls paid or incurred in connection with
the trade or business during the tax period.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 33.

Minnesota Statutes 2008, section 290A.03, subdivision 15, as amended by
Laws 2009, chapter 12, article 1, section 10, is amended to read:

Subd. 15.

Internal Revenue Code.

"Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through deleted text begin December 31, 2008 deleted text end new text begin March 31, 2009 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on
property taxes payable after December 31, 2009, and rent paid after December 31, 2008,
and thereafter.
new text end

Sec. 34.

Minnesota Statutes 2008, section 291.005, subdivision 1, as amended by Laws
2009, chapter 12, article 1, section 11, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following
terms used in this chapter shall have the following meanings:

(1) "Federal gross estate" means the gross estate of a decedent as valued and
otherwise determined for federal estate tax purposes by federal taxing authorities pursuant
to the provisions of the Internal Revenue Code.

(2) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included therein which has its situs outside Minnesota,
and (b) including therein any property omitted from the federal gross estate which is
includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
authorities.

(3) "Personal representative" means the executor, administrator or other person
appointed by the court to administer and dispose of the property of the decedent. If there
is no executor, administrator or other person appointed, qualified, and acting within this
state, then any person in actual or constructive possession of any property having a situs in
this state which is included in the federal gross estate of the decedent shall be deemed
to be a personal representative to the extent of the property and the Minnesota estate tax
due with respect to the property.

(4) "Resident decedent" means an individual whose domicile at the time of death
was in Minnesota.

(5) "Nonresident decedent" means an individual whose domicile at the time of
death was not in Minnesota.

(6) "Situs of property" means, with respect to real property, the state or country in
which it is located; with respect to tangible personal property, the state or country in which
it was normally kept or located at the time of the decedent's death; and with respect to
intangible personal property, the state or country in which the decedent was domiciled
at death. new text begin For a nonresident decedent with an ownership interest in a pass-through entity
with assets that include real or tangible personal property, situs of the real or tangible
personal property is determined as if the pass-through entity does not exist and the real
or tangible personal property is personally owned by the decedent. If the pass-through
entity is owned by a person or persons in addition to the decedent, ownership of the
property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.
new text end

(7) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(8) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through deleted text begin December 31, 2008 deleted text end new text begin March 31, 2009 new text end .

(9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
defined by section 2011(b)(3) of the Internal Revenue Code, increased by new text begin : new text end

new text begin (i) new text end the amount of deduction for state death taxes allowed under section 2058 of
the Internal Revenue Code deleted text begin . deleted text end new text begin ; and
new text end

new text begin (ii) the amount of taxable gifts as defined in section 292.16 and made by the
decedent within three years of the decedent's date of death.
new text end

new text begin (10) "Pass-through entity" includes the following:
new text end

new text begin (i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;
new text end

new text begin (ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
new text end

new text begin (iii) a single member limited liability company or similar entity, regardless of
whether it is taxed as an association or is disregarded for federal income tax purposes
under Code of Federal Regulations, title 26, section 301.7701-3; or
new text end

new text begin (iv) a trust.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
except the changes incorporated by federal changes are effective at the same time as the
changes were effective for federal purposes, and except that the changes to clauses (6) to
(10) are effective for decedents dying after December 31, 2008.
new text end

Sec. 35.

Minnesota Statutes 2008, section 291.03, subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

(a) The tax imposed shall be an amount equal to the
proportion of the maximum credit for state death taxes computed under section 2011 of
the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of federal
adjusted taxable estate, as the Minnesota gross estate bears to the value of the federal
gross estate. new text begin The tax is reduced by the gift tax paid by the decedent under section 292.17
on gifts included in the Minnesota adjusted gross estate.
new text end

(b) The tax determined under this subdivision must not be greater than the sum of
the following amounts multiplied by a fraction, the numerator of which is the Minnesota
gross estate and the denominator of which is the federal gross estate:

(1) the rates and brackets under section 2001(c) of the Internal Revenue Code
multiplied by the sum of:

(i) the taxable estate, as defined under section 2051 of the Internal Revenue Code;
plus

(ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
Code; less

(2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
Code; and less

(3) the federal credit allowed under section 2010 of the Internal Revenue Code.

(c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through December 31, 2000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2008.
new text end

Sec. 36.

new text begin [292.16] DEFINITIONS.
new text end

new text begin (a) For purposes of this chapter, the following definitions apply.
new text end

new text begin (b) The definitions of terms defined in section 291.005 apply.
new text end

new text begin (c) "Taxable gifts" means:
new text end

new text begin (1) the transfers by gift which are included in taxable gifts for federal gift tax
purposes under the following sections of the Internal Revenue Code:
new text end

new text begin (i) section 2503;
new text end

new text begin (ii) sections 2511 to 2514; and
new text end

new text begin (iii) sections 2516 to 2519; less
new text end

new text begin (2) the deductions allowed in sections 2522 to 2524 of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2009.
new text end

Sec. 37.

new text begin [292.17] GIFT TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Imposition. new text end

new text begin (a) A tax is imposed on the transfer of property by gift
by any individual resident or nonresident in an amount equal to ten percent of the amount
of the taxable gift.
new text end

new text begin (b) The donor is liable for payment of the tax. If the gift tax is not paid when due,
the recipient of any gift is personally liable for the tax to the extent of the value of the gift.
new text end

new text begin Subd. 2. new text end

new text begin Lifetime credit. new text end

new text begin A credit of $100,000 is allowed against the tax imposed
under this section. This credit applies to the cumulative amount of taxable gifts made
by the donor during the donor's lifetime.
new text end

new text begin Subd. 3. new text end

new text begin Out-of-state gifts. new text end

new text begin Taxable gifts exclude the transfer of tangible personal
property and real property having a situs outside this state. "Situs of taxable gifts" means,
with respect to real property, the state or country in which it is located; with respect to
tangible personal property, the state or country in which it was normally kept or located
at the time of making the gift; and with respect to intangible personal property, the state
or country in which the individual was domiciled at the time of making the gift. For a
nonresident individual making a gift of an ownership interest in a pass-through entity
with assets that include real or tangible personal property, situs of the real or tangible
personal property is determined as if the pass-through entity does not exist and the real or
tangible personal property is personally owned by the individual making the gift. If the
pass-through entity is owned by a person or persons in addition to the individual making
the gift, ownership of the property is attributed to the individual in proportion to the
individual's capital ownership share of the pass-through entity.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2009.
new text end

Sec. 38.

new text begin [292.18] RETURNS.
new text end

new text begin (a) Any individual who makes a taxable gift during the taxable year shall file a gift
tax return in the form and manner prescribed by the commissioner.
new text end

new text begin (b) If the donor dies before filing the return, the executor of the donor's will or
the administrator of the donor's estate shall file the return. If the donor becomes legally
incompetent before filing the return, the guardian or conservator shall file the return.
new text end

new text begin (c) The return must include:
new text end

new text begin (1) each gift made during the calendar year which is to be included in computing the
taxable gifts;
new text end

new text begin (2) the deductions claimed and allowable under section 292.16, paragraph (c),
clause (2);
new text end

new text begin (3) a description of the gift, and the donee's name, address, and Social Security
number;
new text end

new text begin (4) the fair market value of gifts not made in money; and
new text end

new text begin (5) any other information the commissioner requires to administer the gift tax.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2009.
new text end

Sec. 39.

new text begin [292.19] FILING REQUIREMENTS.
new text end

new text begin Gift tax returns must be filed by the April 15 following the close of the calendar
year, except if a gift is made during the calendar year in which the donor dies, the return
for the donor must be filed by the last date, including extensions, for filing the gift tax
return for federal gift tax purposes for the donor.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2009.
new text end

Sec. 40.

new text begin [292.20] APPRAISAL OF PROPERTY; DECLARATION BY DONOR.
new text end

new text begin The commissioner may require the donor or the donee to show the property subject
to the tax under section 292.17 to the commissioner upon demand and may employ
a suitable person to appraise the property. The donor shall submit a declaration, in a
form prescribed by the commissioner and including any certification required by the
commissioner, that the property shown by the donor on the gift tax return includes all of
the property transferred by gift for the calendar year and not excluded from taxable gifts
under section 292.16, paragraph (c), clause (2).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2009.
new text end

Sec. 41.

new text begin [292.21] ADMINISTRATIVE PROVISIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Payment of tax; penalty for late payment. new text end

new text begin The tax imposed under
section 292.17 is due and payable to the commissioner by the April 15 following the close
of the calendar year during which the gift was made. The return required under section
292.18 must be included with the payment. If a taxable gift is made during the calendar
year in which the donor dies, the due date is the last date, including extensions, for filing
the gift tax return for federal gift tax purposes for the donor. If any person fails to pay the
tax due within the time specified under this section, a penalty applies equal to ten percent
of the amount due and unpaid or $100, whichever is greater. The unpaid tax and penalty
bear interest at the rate under section 270C.40 from the due date of the return.
new text end

new text begin Subd. 2. new text end

new text begin Extensions. new text end

new text begin The commissioner may, for good cause, extend the time for
filing a gift tax return, if a written request is filed with a tentative return accompanied by a
payment of the tax, which is estimated in the tentative return, on or before the last day for
filing the return. Any person to whom an extension is granted must pay, in addition to the
tax, interest at the rate under section 270C.40 from the date on which the tax would have
been due without the extension.
new text end

new text begin Subd. 3. new text end

new text begin Changes in federal gift tax. new text end

new text begin If the amount of a taxpayer's taxable gifts
for federal gift tax purposes, as reported on the taxpayer's federal gift tax return for any
calendar year, is changed or corrected by the Internal Revenue Service or other officer
of the United States or other competent authority, the taxpayer shall report the change or
correction in federal taxable gifts within 180 days after the final determination of the
change or correction, and concede the accuracy of the determination or provide a letter
detailing how the federal determination is incorrect or does not change the Minnesota
gift tax. Any taxpayer filing an amended federal gift tax return shall also file within
180 days an amended return under this chapter and shall include any information the
commissioner requires. The time for filing the report or amended return may be extended
by the commissioner upon due cause shown. Notwithstanding any limitation of time in
this chapter, if, upon examination, the commissioner finds that the taxpayer is liable for
the payment of an additional tax, the commissioner shall, within a reasonable time from
the receipt of the report or amended return, notify the taxpayer of the amount of additional
tax, together with interest computed at the rate under section 270C.40 from the date when
the original tax was due and payable. Within 30 days of the mailing of the notice, the
taxpayer shall pay the commissioner the amount of the additional tax and interest. If, upon
examination of the report or amended return and related information, the commissioner
finds that the taxpayer has overpaid the tax due the state, the commissioner shall refund
the overpayment to the taxpayer.
new text end

new text begin Subd. 4. new text end

new text begin Application of federal rules. new text end

new text begin In administering the tax under this chapter,
the commissioner shall apply the provisions of sections 2701 to 2704 of the Internal
Revenue Code. The words "secretary or his delegate," as used in those sections of the
Internal Revenue Code, means the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2009.
new text end

Sec. 42.

new text begin [292.22] CREDIT AGAINST ESTATE TAX.
new text end

new text begin A credit is allowed against the estate tax imposed under chapter 291 in the amount
of any tax imposed and paid under this chapter for a gift includable in the Minnesota
adjusted taxable estate of the donor under section 291.005.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2009.
new text end

Sec. 43.

Minnesota Statutes 2008, section 469.315, is amended to read:

469.315 TAX INCENTIVES AVAILABLE IN ZONES.

Qualified businesses that operate in a job opportunity building zone, individuals who
invest in a qualified business that operates in a job opportunity building zone, and property
located in a job opportunity building zone qualify for:

deleted text begin (1) exemption from individual income taxes as provided under section 469.316;
deleted text end

deleted text begin (2) exemption from corporate franchise taxes as provided under section 469.317; deleted text end

deleted text begin (3) deleted text end new text begin (1) new text end exemption from the state sales and use tax and any local sales and use taxes
on qualifying purchases as provided in section 297A.68, subdivision 37;

deleted text begin (4) deleted text end new text begin (2) new text end exemption from the state sales tax on motor vehicles and any local sales tax
on motor vehicles as provided under section 297B.03;

deleted text begin (5) deleted text end new text begin (3) new text end exemption from the property tax as provided in section 272.02, subdivision
64;

deleted text begin (6) deleted text end new text begin (4) new text end exemption from the wind energy production tax under section 272.029,
subdivision 7; and

deleted text begin (7) deleted text end new text begin (5) new text end the jobs credit allowed under section 469.318.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 44.

Minnesota Statutes 2008, section 469.3192, is amended to read:

469.3192 PROHIBITION AGAINST AMENDMENTS TO BUSINESS
SUBSIDY AGREEMENT.

new text begin (a) new text end Except as authorized under new text begin paragraphs (b) and (c) or new text end section 469.3191, under
no circumstance shall terms of any agreement required as a condition for eligibility for
benefits listed under section 469.315 be amended to change job creation, job retention,
or wage goals included in the agreement.

new text begin (b) A business may elect to void a business subsidy agreement permitting it to
qualify for benefits listed under section 469.315 within 30 days after enactment of section
46, effective for obligations under the agreement that apply to periods after December 31,
2008. The authority to void an agreement expires 180 days after enactment of section 46.
new text end

new text begin (c) A business that does not elect to void an agreement under paragraph (b) may
negotiate a modified or new business subsidy agreement to reflect the state's repeal of the
benefits of the individual income and corporate franchise tax exemptions under sections
469.316 and 469.317.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 45. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall identify and correct internal cross-references to sections
that are affected by section 46. The revisor may make changes necessary to correct the
punctuation, grammar, or structure of the remaining text to preserve its meaning.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 46. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2008, sections 289A.50, subdivision 10; 290.01, subdivision
6b; 290.06, subdivisions 33 and 34; 290.067, subdivisions 1, 2, 2a, 2b, 3, and 4; 290.0672;
290.0674; 290.0679; 290.0802; 290.0921, subdivision 7; 290.191, subdivision 4; and
290.491, new text end new text begin and new text end new text begin Laws 2009, chapter 3, section 1; and Laws 2009, chapter 12, article 1,
section 8, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2008, sections 272.02, subdivision 83; 290.06, subdivisions
24, 28, 30, 31, and 32; 297A.68, subdivisions 38 and 41; 469.316; 469.317; 469.321;
469.3215; 469.322; 469.323; 469.324; 469.325; 469.326; 469.327; 469.328; 469.329;
469.330; 469.331; 469.332; 469.333; 469.334; 469.335; 469.336; 469.337; 469.338;
469.339; 469.340; and 469.341, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective for taxable years beginning after
December 31, 2008. Paragraph (b) is effective for taxable years beginning after December
31, 2009.
new text end

ARTICLE 2

COUNTY REVENUE REFORM

Section 1.

Minnesota Statutes 2008, section 275.70, subdivision 3, is amended to read:

Subd. 3.

Local governmental unit.

"Local governmental unit" means a county deleted text begin , or a
statutory or home rule charter city with a population greater than 2,500 deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in calendar year
2009, payable in 2010 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2008, section 275.71, subdivision 2, is amended to read:

Subd. 2.

Levy limit base.

deleted text begin (a) deleted text end The levy limit base for a local governmental unit for
taxes levied in 2008 is its levy aid base from the previous year, subject to any adjustments
under section 275.72. For taxes levied in 2009 deleted text begin and 2010 deleted text end , the levy limit base for a local
governmental unit is its adjusted levy limit base in the previous year, subject to any
adjustments under section 275.72.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in calendar year
2009, payable in 2010 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2008, section 275.71, subdivision 4, is amended to read:

Subd. 4.

Adjusted levy limit base.

For taxes levied in 2008 deleted text begin through 2010 deleted text end new text begin and 2009 new text end ,
the adjusted levy limit base is equal to the levy limit base computed under subdivision 2
or section 275.72, multiplied by:

(1) one plus the lesser of 3.9 percent or the percentage growth in the implicit price
deflator;

(2) one plus a percentage equal to 50 percent of the percentage increase in the number
of households, if any, for the most recent 12-month period for which data is available; and

(3) one plus a percentage equal to 50 percent of the percentage increase in the
taxable market value of the jurisdiction due to new construction of class 3 property, as
defined in section 273.13, subdivision 4, except for state-assessed utility and railroad
property, for the most recent year for which data is available.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in calendar year
2009, payable in 2010 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2008, section 275.71, subdivision 5, is amended to read:

Subd. 5.

Property tax levy limit.

For taxes levied in deleted text begin 2008 through 2010 deleted text end new text begin 2009 new text end , the
property tax levy limit for a local governmental unit is equal to its adjusted levy limit
base determined under subdivision 4 plus any additional levy authorized under section
275.73, which is levied against net tax capacity, reduced by the sum of (i) the total amount
of aids and reimbursements that the local governmental unit is certified to receive under
sections 477A.011 to 477A.014, (ii) new text begin the amount of aid reduction under section 477A.0124,
subdivision 6, paragraph (c), (iii) new text end taconite aids under sections 298.28 and 298.282
including any aid which was required to be placed in a special fund for expenditure in the
next succeeding year, deleted text begin (iii) deleted text end new text begin (iv) new text end estimated payments to the local governmental unit under
section 272.029, adjusted for any error in estimation in the preceding year, and deleted text begin (iv) deleted text end new text begin (v) new text end
aids under section 477A.16.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in calendar year
2009, payable in 2010 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2008, section 297A.99, subdivision 1, is amended to read:

Subdivision 1.

Authorization; scope.

(a) A political subdivision of this state may
impose a general sales tax (1) under section 297A.992, (2) under section 297A.993, (3)
new text begin under section 297A.994, or (4) new text end if permitted by special law enacted prior to May 20, 2008,
or deleted text begin (4) deleted text end new text begin (5) new text end if the political subdivision enacted and imposed the tax before January 1, 1982,
and its predecessor provision.

(b) This section governs the imposition of a general sales tax by the political
subdivision. The provisions of this section preempt the provisions of any special law:

(1) enacted before June 2, 1997, or

(2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
provision from this section's rules by reference.

(c) This section does not apply to or preempt a sales tax on motor vehicles or a
special excise tax on motor vehicles.

(d) Until after May 31, 2010, a political subdivision may not advertise, promote,
expend funds, or hold a referendum to support imposing a local option sales tax unless
it is for extension of an existing tax or the tax was authorized by a special law enacted
prior to May 20, 2008.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

new text begin [297A.994] COUNTY LOCAL OPTION SALES TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization; rates. new text end

new text begin Notwithstanding section 297A.99,
subdivisions 2, 3, and 5, or 477A.016, or any other law, a county board may, by resolution,
impose a general sales tax of one-half of one percent on sales and uses taxable under this
chapter. In addition, an excise tax of $20 per motor vehicle is imposed on motor vehicles,
purchased or acquired from any person engaged within the county in the business of selling
motor vehicles at retail if a county imposes a local sales and use tax under this section.
new text end

new text begin Subd. 2. new text end

new text begin Application of election requirement. new text end

new text begin (a) Imposition of the tax under this
section is not subject to the requirements of section 297A.99, subdivision 3.
new text end

new text begin (b) Before imposing the tax under this section, the county must publish a notice of
its intention to impose the tax and the date and time of a hearing to obtain public comment
on the matter. The notice must be published in the official newspaper of the county, or
in a newspaper of general circulation in the county. The notice must be published at
least 14 days before the date of the hearing, but not more than 28 days. Following the
public hearing the county board may determine to take no further action, or may adopt
a resolution imposing the tax. If the county intends to impose the tax it must notify the
commissioner of revenue of its intent by September 1, 2009.
new text end

new text begin (c) A county may impose the tax only upon obtaining the approval of the majority
of voters voting on the question of imposing the tax, if a petition requesting a vote on
imposition of the tax is signed by voters equal to the greater of (1) 500, or (2) ten percent
of the votes cast in the county at the last general election is filed with the county auditor
within 30 days after the public hearing. The vote on the tax may be held at a general or
special election. The commissioner of revenue shall prepare a suggested form of the
question to be presented at the election.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues from the tax imposed under this section
must first be used to fund obligations under section 297A.9945. Remaining revenues
are deposited in the county general fund.
new text end

new text begin Subd. 4. new text end

new text begin Administration, collection, and enforcement. new text end

new text begin The administration,
collection, and enforcement of the provisions in section 297A.99, subdivisions 4, and 6 to
12, apply to a tax imposed under this section.
new text end

new text begin Subd. 5. new text end

new text begin Termination. new text end

new text begin A county may terminate a tax imposed under this section
upon resolution of the county board and notification to the commissioner of revenue, if
all obligations under section 297A.9945 have been paid.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

new text begin [297A.9945] EFFECT ON EXISTING LOCAL SALES TAXES;
SATISFACTION OF PREEXISTING OBLIGATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Preemption of preexisting local sales taxes. new text end

new text begin (a) Notwithstanding
section 297A.99 or any other law or local ordinance to the contrary, all general local
sales and use taxes in a county or a part of a county is preempted on the day that a
county local sales tax under section 297A.994 takes effect, except the following taxes
are not preempted:
new text end

new text begin (1) a local tax imposed under section 297A.992 or 297A.993;
new text end

new text begin (2) a local sales tax authorized by special law in a city of the first class;
new text end

new text begin (3) a local sales tax authorized by a special law in a city with a population in 2007 of
at least 100,000, provided that it complies with paragraph (c); and
new text end

new text begin (4) a local sales tax in a county as authorized under Laws 2008, chapter 366, article
7, section 18.
new text end

new text begin (b) A local sales tax that is imposed by a city located in two or more counties is
preempted if one or more counties in which the city is located impose the county tax. A
replacement tax must be imposed under subdivision 6 in any portion of the city located in
a county that has not imposed the tax under section 297A.994.
new text end

new text begin (c) If a city with a population in 2007 of at least 100,000 would like to maintain an
existing local sales tax, the city council must pass a resolution to that effect within two
months of the enactment of this section. The city council must provide a copy of the
resolution to the commissioner of revenue and to the county in which the city is located
within five business days of the passage of the resolution.
new text end

new text begin Subd. 2. new text end

new text begin County payment to cities; forgone sales tax revenue. new text end

new text begin (a) If a local
sales tax imposed in a city located partially or totally within a county is preempted under
subdivision 1, the county shall pay a portion of its local sales tax revenues, as provided
under subdivision 4 or 5, to the city to fund obligations allowed under the law authorizing
the city tax. The county must make these payments to the city within five business days
after it receives the revenues from the commissioner.
new text end

new text begin (b) If the local sales tax was imposed under a joint powers agreement in cities
located in more than one county, the share of the obligation to be funded by the county
must be determined under subdivision 5.
new text end

new text begin (c) The requirement to make these payments ceases on the earliest of the following:
new text end

new text begin (1) the date on which the city tax was required to expire under the special law
authorizing it;
new text end

new text begin (2) when the city has received sufficient revenues from its tax and from payments
under this section to pay in full or to defease debt obligations issued by the city under the
law authorizing the city sales tax and to pay any additional spending obligations allowed
under the special law and not funded by the issuance of debt obligations; or
new text end

new text begin (3) the city becomes a city of the first class and imposes a city sales tax.
new text end

new text begin Subd. 3. new text end

new text begin Dedication of tax to fund county projects. new text end

new text begin If a county imposed local
sales tax is preempted under subdivision 1, the revenues from the tax imposed under
section 297A.994 are pledged first to pay and secure the bond obligations secured by and
to be paid with the revenues from the preempted county sales tax.
new text end

new text begin Subd. 4. new text end

new text begin Calculation of forgone revenue in cities located entirely within a
county. new text end

new text begin For purposes of subdivision 2, the forgone revenue to be paid to the city located
entirely in a county imposing a tax under section 297A.994 is calculated as follows:
new text end

new text begin (1) in the first 12 months after the tax is preempted, the county shall make quarterly
payments to a city entirely located within the county equal to the amount that the city
received from the commissioner of revenue from the preempted tax in the corresponding
quarter in the previous year, multiplied by a percentage equal to the percentage change in
total state sales tax revenue in the previous quarter compared to the total state sales tax
revenue for the fifth preceding quarter; and
new text end

new text begin (2) in subsequent years, the county shall make quarterly payments to the city equal
to the payment made in the corresponding quarter in the previous year, multiplied by the
ratio of the total quarterly remittance to the county in the current year compared to the
total quarterly remittance to the county in the previous year.
new text end

new text begin Subd. 5. new text end

new text begin Calculation of forgone revenue in cities located partially within a
county. new text end

new text begin (a) For purposes of subdivision 2, the forgone revenue to be paid to the city
located partially in a county imposing a tax under section 297A.994 is calculated as
provided in this subdivision.
new text end

new text begin (b) The commissioner of revenue shall determine the percentage of the city's local
sales tax revenue attributable to transactions located in the county. The commissioner
may consult with the county and the city to determine a reasonable percentage, or the
commissioner may set the percentage equal to the percentage of the city's market value
for the most recently available assessment year of class 3 property, except utility real and
personal property located in the county. The sum of the percentage of a city's local sales
tax revenue attributable to each county in which the city is located must equal 100 percent.
The determination of the commissioner is final.
new text end

new text begin (c) In the first 12 months after the tax is preempted, the county shall make quarterly
payments to a city partially located within the county equal to the amount that the city
received from the commissioner from the preempted tax in the corresponding quarter in
the previous year, multiplied by (1) a percentage equal to one plus the percentage change
in total state sales tax revenue in the previous quarter compared to the total state sales tax
revenue for the fifth preceding quarter, and (2) one plus the percentage calculated in
paragraph (b).
new text end

new text begin (d) In subsequent years, the county shall make quarterly payments to the city equal
to the payment made in the corresponding quarter in the previous year multiplied by the
ratio of the total quarterly remittance to the county in the current year compared to the
total quarterly remittance to the county in the previous year.
new text end

new text begin (e) A county's share of a city's obligations from the special law authorizing the city's
sales tax is equal to the total obligation under the special law multiplied by one plus the
percentage determined under paragraph (b).
new text end

new text begin Subd. 6. new text end

new text begin Establishment of special sales tax districts within certain cities. new text end

new text begin (a)
For any city located in two or more counties, if at least one county imposes a county
sales tax under subdivision 1, and at least one county does not impose a county sales tax,
a special sales tax district is established in the portion of the city that is not subject to
a county sales tax.
new text end

new text begin (b) The governing body of the city is the governing body of the special taxing district
and the special taxing district shall impose a replacement local sales tax by resolution
to take effect upon the preemption of the city's sales tax under subdivision 1. The
replacement tax must be imposed at the same rate as the city tax it replaces. Revenues
from the replacement tax are pledged to and may only be used for the purposes permitted
by law for the city sales tax, which it replaces. The authority to impose this tax expires
upon the city's receipt of sufficient revenues to pay the obligations to which the city sales
tax was pledged and other spending permitted by the law authorizing imposition of the
city sales tax from the sum of the following:
new text end

new text begin (1) the city sales tax;
new text end

new text begin (2) county payments of forgone sales tax revenues under this section; and
new text end

new text begin (3) the special taxing district sales tax.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2008, section 477A.0124, is amended by adding a
subdivision to read:

new text begin Subd. 6. new text end

new text begin County program aid. new text end

new text begin (a) For calendar year 2010 and thereafter, a county's
program aid under this section is equal to (1) its county program aid amount certified for
aids payable in 2009 under this section, minus (2) an amount determined under paragraph
(b) or (c). A county's program aid shall not be less than zero.
new text end

new text begin (b) For a county that does not impose a tax under section 297A.994, the amount
subtracted under paragraph (a) is equal to 3.58 percent of the county's 2009 levy plus aid
revenue base. The "2009 levy plus aid revenue base" for a county is equal to the sum of
the county's certified property tax levy for taxes payable in 2009 plus the amount the
county was certified to receive in county program aid in 2009 under this section and
the amount the county was certified to receive in taconite aids in 2009 under sections
298.28 and 292.282, including any aid that was required to be placed in a special fund for
expenditure in the next succeeding year.
new text end

new text begin (c) For a county that imposes a tax under section 297A.994, the amount subtracted
under paragraph (a) is equal to (1) 50 percent of its net sales tax revenue for the preceding
12-month period in excess of the greater of (i) $70,000, or (ii) $7 per capita, plus (2) 25
percent of its net sales tax revenue for the preceding 12-month period in excess of the
greater of (i) $170,000, or (ii) $17 per capita.
new text end

new text begin (d) For purposes of this subdivision, "net sales tax revenue for the preceding
12-month period" means the sales tax revenue for the county for the 12-month period
ending July 1 of the year in which the aid under this section is certified minus its estimated
existing obligations under section 297A.9945 for the year in which the aid is paid. For
the first two years in which the aid is offset under this paragraph, the commissioner of
revenue shall estimate the offset based on available data regarding sales tax collections in
the county. Beginning with the third year in which the aid is offset under this paragraph,
the offset will be based on actual sales tax collections in the county in the 12-month period
ending July 1 of the year in which the aid is certified.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2010 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2008, section 477A.03, subdivision 2b, is amended to read:

Subd. 2b.

Counties.

(a) For aids payable in 2009 and thereafter, new text begin in addition to
new text end the total aid payable under section deleted text begin 477A.0124, subdivision 3, is $111,500,000 minus
one-half of the total aid amount determined under section 477A.0124, subdivision 5,
paragraph (b), subject to adjustment in subdivision 5. Each calendar year, deleted text end new text begin 477A.0124,
new text end $500,000 deleted text begin shall be retained by deleted text end new text begin is appropriated to new text end the commissioner of revenue to make
reimbursements to the commissioner of finance for payments made under section
611.27 new text begin ; the reimbursement shall be used to defray the additional costs associated with
court-ordered counsel under section 611.27. $357,000 is appropriated to the commissioner
of revenue to make reimbursements to the commissioner of finance for the preparation of
local impact notes under section 3.987, and $7,000 is appropriated to the commissioner of
revenue to reimburse the commissioner of education for the preparation of local impact
notes for school districts under section 3.987 new text end . deleted text begin For calendar year 2004, the amount shall
be in addition to the payments authorized under section 477A.0124, subdivision 1.
For calendar year 2005 and subsequent years, the amount shall be deducted from the
appropriation under this paragraph. The reimbursements shall be to defray the additional
costs associated with court-ordered counsel under section 611.27. deleted text end new text begin The commissioner of
finance shall annually use at least $150,000 of the $357,000 appropriation to contract with
the representative associations for counties, cities, towns, and school districts to establish
a local impact network of political subdivisions for preparing local impact notes that
provide information to the legislature as provided in section 270C.991, subdivision 7. new text end Any
deleted text begin retained deleted text end new text begin appropriated new text end amounts not used for reimbursement deleted text begin in a year shall be included in
the next distribution of county need aid that is certified to the county auditors for the
purpose of property tax reduction for the next taxes payable year. deleted text end new text begin under this subdivision
shall be returned to the general fund.
new text end

(b) For aids payable in 2009 deleted text begin and thereafter, the total aid under section deleted text end deleted text begin 477A.0124,
subdivision 4 deleted text end deleted text begin , is $116,132,923 minus one-half of the total aid amount determined under
deleted text end deleted text begin section deleted text end deleted text begin 477A.0124, subdivision 5 deleted text end deleted text begin , paragraph (b), subject to adjustment in subdivision
deleted text end deleted text begin 5. The commissioner of finance shall bill the commissioner of revenue for the cost of
deleted text end deleted text begin preparation of local impact notes as required by section deleted text end deleted text begin 3.987 deleted text end deleted text begin , not to exceed $207,000 in
deleted text end deleted text begin fiscal year 2004 and thereafter. The commissioner of education shall bill the commissioner
deleted text end deleted text begin of revenue for the cost of preparation of local impact notes for school districts as
required deleted text end deleted text begin by section deleted text end deleted text begin 3.987 deleted text end deleted text begin , not to exceed $7,000 in fiscal year 2004 and thereafter. The
commissioner deleted text end deleted text begin of revenue shall deduct the amounts billed under this paragraph from
the appropriation deleted text end deleted text begin under this paragraph. The amounts deducted are appropriated to the
commissioner of deleted text end deleted text begin finance and the commissioner of education for the preparation of local
impact notes. deleted text end new text begin , the total aid is the amount certified to be paid in 2009 under this subdivision,
subject to the reduction in section 477A.0133, subdivision 2.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, section 477A.0124, subdivisions 3, 4, and 5, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2010 and thereafter.
new text end

ARTICLE 3

PROPERTY TAX REFORM, ACCOUNTABILITY, VALUE, AND
EFFICIENCY PROVISIONS

Section 1.

new text begin [6.90] COUNCIL ON LOCAL RESULTS AND INNOVATION.
new text end

new text begin Subdivision 1. new text end

new text begin Creation. new text end

new text begin The Council on Local Results and Innovation consists of
11 members, as follows:
new text end

new text begin (1) the state auditor;
new text end

new text begin (2) two persons who are not members of the legislature, appointed by the chair of the
Property and Local Sales Tax Division of the house of representatives Taxes Committee;
new text end

new text begin (3) two persons who are not members of the legislature, appointed by the designated
lead minority member of the Property and Local Sales Tax Division of the house of
representatives Taxes Committee;
new text end

new text begin (4) two persons who are not members of the legislature, appointed by the chair of
the Taxes Division on Property Taxes of the senate Taxes Committee;
new text end

new text begin (5) two persons who are not members of the legislature, appointed by the designated
lead minority member of the Taxes Division on Property Taxes of the senate Taxes
Committee;
new text end

new text begin (6) one person who is not a member of the legislature, appointed by the Association
of Minnesota Counties; and
new text end

new text begin (7) one person who is not a member of the legislature, appointed by the League
of Minnesota Cities.
new text end

new text begin Each appointment under clauses (2) to (5) must include one person with expertise
or interest in county government and one person with expertise or interest in city
government. The appointing authorities must use their best efforts to ensure that a majority
of council members have experience with local performance measurement systems. The
membership of the council must include geographically balanced representation as well as
representation balanced between large and small jurisdictions. The appointments under
clauses (2) to (7) must be made within two months of the date of enactment.
new text end

new text begin Appointees to the council under clauses (2) to (5) serve terms of four years, except
that one of each of the initial appointments under clauses (2) to (5) shall serve a term of
two years; each appointing agent must designate which appointee is serving the two-year
term. Subsequent appointments for members appointed under clauses (2) to (5) must
be made by the council, including appointments to replace any appointees who might
resign from the council prior to completion of their term. Appointees under clauses (2) to
(5) are not eligible to vote on appointing their successor, nor on the successors of other
appointees whose terms are expiring contemporaneously. In making appointments, the
council shall make all possible efforts to reflect the geographical distribution and meet the
qualifications of appointees required of the initial appointees. Subsequent appointments
for members appointed under clauses (6) and (7) must be made by the original appointing
authority. Appointees to the council under clauses (2) to (7) may serve no more than two
consecutive terms.
new text end

new text begin Subd. 2. new text end

new text begin Duties. new text end

new text begin (a) By February 15, 2010, the council shall develop a standard
set of approximately ten performance measures for counties and ten performance
measures for cities that will aid residents, taxpayers, and state and local elected officials
in determining the efficacy of counties and cities in providing services, and measure
residents' opinions of those services. In developing its measures, the council must solicit
input from private citizens. Counties and cities that elect to participate in the standard
measures system shall report their results to the state auditor under section 6.91, who
shall compile the results and make them available to all interested parties by publishing
them on the auditor's Web site and report them to the legislative tax committees. Each
year after the initial designation of performance measures, the council shall evaluate the
usefulness of the standard set of performance measures and may revise the set by adding
or removing measures as it deems appropriate.
new text end

new text begin (b) By February 15, 2011, the council shall develop minimum standards for
comprehensive performance measurement systems, which may vary by size and type
of governing jurisdiction.
new text end

new text begin (c) In addition to its specific duties under paragraphs (a) and (b), the council
shall generally promote the use of performance measurement for governmental entities
across the state and shall serve as a resource for all governmental entities seeking to
implement a system of local performance measurement. The council may highlight and
promote systems that are innovative, or are ones that it deems to be best practices of local
performance measurement systems across the state and nation. The council should give
preference in its recommendations to systems that are results-oriented. The council may,
with the cooperation of the state auditor, establish and foster a collaborative network
of practitioners of local performance measurement systems. The council may support
the Association of Minnesota Counties and the League of Minnesota Cities to seek and
receive private funding to provide expert technical assistance to local governments for
the purposes of replicating best practices.
new text end

new text begin Subd. 3. new text end

new text begin Reports. new text end

new text begin (a) The council shall report its initial set of standard performance
measures to the Property and Local Sales Tax Division of the house of representatives
Taxes Committee and the Taxes Division on Property Taxes of the senate Taxes Committee
by February 28, 2010.
new text end

new text begin (b) By February 1 of each subsequent year, the council shall report to the committees
with jurisdiction over taxes in the house of representatives and the senate on participation
in and results of the performance measurement system, along with any revisions in the
standard set of performance measures for the upcoming year. These reports may be made
by the state auditor in lieu of the council if agreed to by the auditor and the council.
new text end

new text begin Subd. 4. new text end

new text begin Operation of council. new text end

new text begin (a) The state auditor shall convene the initial
meeting of the council.
new text end

new text begin (b) The chair of the council shall be elected by the members. Once elected, a chair
shall serve a term of two years.
new text end

new text begin (c) Members of the council serve without compensation.
new text end

new text begin (d) Council members shall share and rotate responsibilities for administrative
support of the council.
new text end

new text begin (e) Chapter 13D does not apply to meetings of the council. Meetings of the council
must be open to the public and the council must provide notice of a meeting on the state
auditor's Web site at least seven days before the meeting. A meeting of the council occurs
when a quorum is present.
new text end

new text begin (f) The council must meet at least two times prior to the initial release of the standard
set of measurements. After the initial set has been developed, the council must meet a
minimum of once per year.
new text end

new text begin Subd. 5. new text end

new text begin Termination. new text end

new text begin The council expires on January 1, 2019.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [6.91] LOCAL PERFORMANCE MEASUREMENT AND REPORTING.
new text end

new text begin Subdivision 1. new text end

new text begin Reports of local performance measures. new text end

new text begin (a) A county or city that
elects to participate in the standard measures program must report its results to its citizens
annually through publication, direct mailing, posting on the jurisdiction's Web site, or
through a presentation at the jurisdiction's truth-in-taxation hearing under section 275.065.
new text end

new text begin (b) Each year, jurisdictions participating in the local performance measurement
and improvement program must file a report with the state auditor by July 1, in a form
prescribed by the auditor. All reports must include a declaration that the jurisdiction has
complied with, or will have complied with by the end of the year, the requirement in
paragraph (a). For jurisdictions participating in the standard measures program, the report
shall consist of the jurisdiction's results for the standard set of performance measures
under section 6.90, subdivision 2, paragraph (a). In 2011, jurisdictions participating in the
comprehensive performance measurement program must submit a resolution approved by
its local governing body indicating that it either has implemented or is in the process of
implementing a local performance measurement system that meets the minimum standards
specified by the council under section 6.90, subdivision 2, paragraph (b). In 2012 and
thereafter, jurisdictions participating in the comprehensive performance measurement
program must submit a statement approved by its local governing body affirming that
it has implemented a local performance measurement system that meets the minimum
standards specified by the council under section 6.90, subdivision 2, paragraph (b).
new text end

new text begin Subd. 2. new text end

new text begin Benefits of participation. new text end

new text begin (a) A county or city that elects to participate in
the standard measures program for 2010 is: (1) eligible for per capita reimbursement of
$0.25 per capita in 2011, but not to exceed $25,000 for any government entity; (2) exempt
from levy limits under sections 275.70 to 275.74 for taxes payable in 2011, if levy limits
are in effect; and (3) exempt from the truth-in-taxation public hearing requirement under
section 275.065, subdivision 6, for taxes payable in 2011, if the hearing requirement is
in effect.
new text end

new text begin (b) Any county or city that elects to participate in the standard measures program for
2011 is eligible for per capita reimbursement of $0.25 per capita in 2012, but not to exceed
$25,000 for any government entity. Any jurisdiction participating in the comprehensive
performance measurement program is exempt from levy limits under sections 275.70
to 275.74 for taxes payable in 2012 if levy limits are in effect, and is exempt from the
truth-in-taxation public hearing requirement under section 275.065, subdivision 6, for
taxes payable in 2012, if the hearing requirement is in effect.
new text end

new text begin (c) Any county or city that elects to participate in the standard measures program
for 2012 or any year thereafter is eligible for per capita reimbursement of $0.25 per
capita in the following year, but not to exceed $25,000 for any government entity. Any
jurisdiction participating in the comprehensive performance measurement program for
2012 or any year thereafter is exempt from levy limits under sections 275.70 to 275.74
for taxes payable in the following year, if levy limits are in effect, and is exempt from
the truth-in-taxation public hearing requirement under section 275.065, subdivision 6, for
taxes payable in the following year, if the hearing requirement is in effect.
new text end

new text begin Subd. 3. new text end

new text begin Certification of participation. new text end

new text begin (a) The state auditor shall certify to
the commissioner of revenue by August 1 of each year the counties and cities that are
participating in the standard measures program and the comprehensive performance
measurement program.
new text end

new text begin (b) The commissioner of revenue shall make per capita aid payments under this
section on the second payment date specified in section 477A.015, in the same year that
the measurements were reported.
new text end

new text begin (c) The commissioner of revenue shall notify each county and city that is entitled to
exemption from levy limits by August 10 of each levy year.
new text end

new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin (a) The amount necessary to fund obligations to counties
under subdivision 2 is annually appropriated from the general fund to the commissioner of
revenue.
new text end

new text begin (b) The amount necessary to fund obligations to cities under subdivision 2 is
annually appropriated from the general fund to the commissioner of revenue.
new text end

new text begin (c) The sum of $6,000 in fiscal year 2010 and $2,000 in each fiscal year thereafter is
annually appropriated from the general fund to the state auditor to carry out the auditor's
responsibilities under sections 6.90 to 6.91.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective December 31, 2009.
new text end

Sec. 3.

Minnesota Statutes 2008, section 134.34, subdivision 1, is amended to read:

Subdivision 1.

Local support levels.

new text begin (a) new text end A regional library basic system support
grant shall be made to any regional public library system where there are at least three
participating counties and where each participating city and county is providing for
public library service support the lesser of deleted text begin (a) deleted text end new text begin (1) new text end an amount equivalent to .82 percent
of the new text begin average of the new text end adjusted net tax capacity of the taxable property of that city or
county, as determined by the commissioner of revenue for the second new text begin , third, and fourth new text end
year preceding that calendar year deleted text begin in 1991 and later years deleted text end or deleted text begin (b) deleted text end new text begin (2) new text end a per capita amount
calculated under the provisions of this subdivision. The per capita amount is established
for calendar year 1993 as $7.62. In succeeding calendar years, the per capita amount shall
be increased by a percentage equal to one-half of the percentage by which the total state
adjusted net tax capacity of property as determined by the commissioner of revenue for
the second year preceding that calendar year increases over that total adjusted net tax
capacity for the third year preceding that calendar year.

new text begin (b) new text end The minimum level of support new text begin specified under this subdivision or subdivision 4
new text end shall be certified annually to the participating cities and counties by the Department of
Education. new text begin If a city or county chooses to reduce its local support in accordance with
subdivision 4, paragraph (b) or (c), it shall notify its regional public library system. The
regional public library system shall notify the Department of Education that a revised
certification is required. The revised minimum level of support shall be certified to the
city or county by the Department of Education.
new text end

new text begin (c) new text end A city which is a part of a regional public library system shall not be required to
provide this level of support if the property of that city is already taxable by the county
for the support of that regional public library system. In no event shall the Department
of Education require any city or county to provide a higher level of support than the
level of support specified in this section in order for a system to qualify for a regional
library basic system support grant. This section shall not be construed to prohibit a city
or county from providing a higher level of support for public libraries than the level of
support specified in this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for calendar years 2009 and
thereafter, except that the change in paragraph (a) is effective for calendar years 2011
and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2008, section 134.34, subdivision 4, is amended to read:

Subd. 4.

Limitation.

new text begin (a) new text end A regional library basic system support grant shall not be
made to a regional public library system for a participating city or county which decreases
the dollar amount provided for support for operating purposes of public library service
below the amount provided by it for the second new text begin or third new text end preceding year new text begin , whichever is less new text end .
For purposes of this subdivision and subdivision 1, any funds provided under section
473.757, subdivision 2, for extending library hours of operation shall not be considered
amounts provided by a city or county for support for operating purposes of public library
service. This subdivision shall not apply to participating cities or counties where the
adjusted net tax capacity of that city or county has decreased, if the dollar amount of the
reduction in support is not greater than the dollar amount by which support would be
decreased if the reduction in support were made in direct proportion to the decrease in
adjusted net tax capacity.

new text begin (b) In addition, in any calendar year in which a city's or county's aid under sections
477A.011 to 477A.014, or credits under section 273.1384 are reduced after the city or
county has certified its levy payable in that year, it may reduce its local support by the
lesser of (1) ten percent, or (2) a percent equal to the percent the aid or credit reduction is
of the city or county's revenue base as defined in paragraph (e), based on aids certified for
the current calendar year. For calendar year 2009 only, the reduction under this paragraph
shall be based on 2008 aid and credit reductions under the December 2008 unallotment, as
well as any aid and credit reductions in calendar year 2009. For calendar year 2009 only,
the commissioner of revenue shall calculate the reductions under this paragraph and certify
them to the commissioner of education within 15 days of this provision becoming law.
new text end

new text begin (c) In addition, in any payable year in which the total amounts certified for city or
county aids under sections 477A.011 to 477A.014 are less than the total amounts paid
under those sections in the previous calendar year, a city or county may reduce its local
support by the lesser of (1) ten percent, or (2) a percentage equal to the ratio of (i) the
difference between the sum of the aid it was paid under sections 477A.011 to 477A.014
and the credit reimbursements it received under section 273.1384 in the previous calendar
year and the aid it is certified to be paid in the current calendar year under sections
477A.011 to 477A.014 and the credits estimated to be paid under section 273.1384, to (ii)
its revenue base for the previous year, based on aids actually paid in the previous calendar
year. The commissioner of revenue shall calculate the percent aid cut for each county and
city under this paragraph and certify the percentage cuts to the commissioner of education
by August 1 of the year prior to the year in which the reduced aids and credits are to be
paid. The percentage of reduction related to reductions to credit reimbursements under
section 273.1384 shall be based on the best estimation available as of July 30.
new text end

new text begin (d) Notwithstanding paragraph (a), (b), or (c), no city or county shall reduce its
support for public libraries below the minimum level specified in subdivision 1. No county
may make a reduction under paragraph (b) or (c) in a year in which it is receiving local
sales tax revenue under section 297A.994.
new text end

new text begin (e) For purposes of this subdivision, "revenue base" means the sum of:
new text end

new text begin (1) its levy for taxes payable in the current calendar year, including the levy on
the fiscal disparities distribution under section 276A.06, subdivision 3, paragraph (a),
or 473F.08, subdivision 3, paragraph (a);
new text end

new text begin (2) its aid under sections 477A.011 to 477A.014 in the current calendar year; and
new text end

new text begin (3) its taconite aid in the current calendar year under sections 298.28 and 298.282.
new text end

new text begin (f) The sum of $21,000 in fiscal year 2010 and each fiscal year thereafter is
appropriated from the general fund to the commissioner of education to carry out the
additional responsibilities under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for support in calendar year 2009 and
thereafter for library grants paid in fiscal year 2010 and thereafter, except that the changes
in paragraph (a) are effective for support in calendar year 2010 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2008, section 245.4932, subdivision 1, is amended to read:

Subdivision 1.

Collaborative responsibilities.

The children's mental health
collaborative shall have the following authority and responsibilities regarding federal
revenue enhancement:

(1) the collaborative must establish an integrated fund;

(2) the collaborative shall designate a lead county or other qualified entity as the
fiscal agency for reporting, claiming, and receiving payments;

(3) the collaborative or lead county may enter into subcontracts with other counties,
school districts, special education cooperatives, municipalities, and other public and
nonprofit entities for purposes of identifying and claiming eligible expenditures to enhance
federal reimbursement;

(4) the collaborative shall use any enhanced revenue attributable to the activities of
the collaborative, including administrative and service revenue, solely to provide mental
health services or to expand the operational target population. The lead county or other
qualified entity may not use enhanced federal revenue for any other purpose;

deleted text begin (5) the members of the collaborative must continue the base level of expenditures,
as defined in section 245.492, subdivision 2, for services for children with emotional or
behavioral disturbances and their families from any state, county, federal, or other public
or private funding source which, in the absence of the new federal reimbursement earned
under sections 245.491 to 245.495, would have been available for those services. The
base year for purposes of this subdivision shall be the accounting period closest to state
fiscal year 1993;
deleted text end

deleted text begin (6) deleted text end new text begin (5) new text end the collaborative or lead county must develop and maintain an accounting and
financial management system adequate to support all claims for federal reimbursement,
including a clear audit trail and any provisions specified in the contract with the
commissioner of human services;

deleted text begin (7) deleted text end new text begin (6) new text end the collaborative or its members may elect to pay the nonfederal share of the
medical assistance costs for services designated by the collaborative; and

deleted text begin (8) deleted text end new text begin (7) new text end the lead county or other qualified entity may not use federal funds or local
funds designated as matching for other federal funds to provide the nonfederal share of
medical assistance.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning January 1, 2012.
new text end

Sec. 6.

Minnesota Statutes 2008, section 253B.045, subdivision 2, is amended to read:

Subd. 2.

Facilities.

Each county or a group of counties shall maintain or provide
by contract a facility for confinement of persons held temporarily for observation,
evaluation, diagnosis, treatment, and care. deleted text begin When the temporary confinement is provided
at a regional treatment center, the commissioner shall charge the county of financial
responsibility for the costs of confinement of persons hospitalized under section 253B.05,
subdivisions 1 and 2, and section 253B.07, subdivision 2b, except that the commissioner
shall bill the responsible health plan first. If the person has health plan coverage, but the
hospitalization does not meet the criteria in subdivision 6 or section 62M.07, 62Q.53,
or 62Q.535, the county is responsible. deleted text end When a person is temporarily confined in a
Department of Corrections facility solely under subdivision 1a, and not based on any
separate correctional authority:

(1) the commissioner of corrections may charge the county of financial responsibility
for the costs of confinement; and

(2) the Department of Human Services shall use existing appropriations to fund
all remaining nonconfinement costs. The funds received by the commissioner for the
confinement and nonconfinement costs are appropriated to the department for these
purposes.

"County of financial responsibility" means the county in which the person resides at the
time of confinement or, if the person has no residence in this state, the county which
initiated the confinement. The charge for confinement in a facility operated by the
commissioner of human services shall be based on the commissioner's determination of
the cost of care pursuant to section 246.50, subdivision 5. When there is a dispute as to
which county is the county of financial responsibility, the county charged for the costs of
confinement shall pay for them pending final determination of the dispute over financial
responsibility. Disputes about the county of financial responsibility shall be submitted to
the commissioner to be settled in the manner prescribed in section 256G.09.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning January 1, 2012.
new text end

Sec. 7.

Minnesota Statutes 2008, section 254B.04, subdivision 1, is amended to read:

Subdivision 1.

Eligibility.

(a) Persons eligible for benefits under Code of Federal
Regulations, title 25, part 20, persons eligible for medical assistance benefits under
sections 256B.055, 256B.056, and 256B.057, subdivisions 1, 2, 5, and 6, or who meet
the income standards of section 256B.056, subdivision 4, and persons eligible for general
assistance medical care under section 256D.03, subdivision 3, are entitled to chemical
dependency fund services. State money appropriated for this paragraph must be placed in
a separate account established for this purpose.

Persons with dependent children who are determined to be in need of chemical
dependency treatment pursuant to an assessment under section 626.556, subdivision 10, or
a case plan under section 260C.201, subdivision 6, or 260C.212, shall be assisted by the
local agency to access needed treatment services. Treatment services must be appropriate
for the individual or family, which may include long-term care treatment or treatment in a
facility that allows the dependent children to stay in the treatment facility. deleted text begin The county
shall pay for out-of-home placement costs, if applicable. deleted text end

(b) A person not entitled to services under paragraph (a), but with family income
that is less than 215 percent of the federal poverty guidelines for the applicable family
size, shall be eligible to receive chemical dependency fund services within the limit
of funds appropriated for this group for the fiscal year. If notified by the state agency
of limited funds, a county must give preferential treatment to persons with dependent
children who are in need of chemical dependency treatment pursuant to an assessment
under section 626.556, subdivision 10, or a case plan under section 260C.201, subdivision
6, or 260C.212. A county may spend money from its own sources to serve persons under
this paragraph. State money appropriated for this paragraph must be placed in a separate
account established for this purpose.

(c) Persons whose income is between 215 percent and 412 percent of the federal
poverty guidelines for the applicable family size shall be eligible for chemical dependency
services on a sliding fee basis, within the limit of funds appropriated for this group for the
fiscal year. Persons eligible under this paragraph must contribute to the cost of services
according to the sliding fee scale established under subdivision 3. A county may spend
money from its own sources to provide services to persons under this paragraph. State
money appropriated for this paragraph must be placed in a separate account established
for this purpose.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning January 1, 2012.
new text end

Sec. 8.

new text begin [256E.40] EQUITABLE FUNDING HEALTH AND HUMAN SERVICES
REFORM.
new text end

new text begin Subdivision 1. new text end

new text begin Reform. new text end

new text begin The goals in reforming local funding of the health and
human services delivery system are to:
new text end

new text begin (1) sustain the funding of county provided services;
new text end

new text begin (2) maintain Minnesota's ability to obtain federal funds to provide these services;
new text end

new text begin (3) equalize and make transparent the demands that providing these services makes
on the property tax system; and
new text end

new text begin (4) encourage local innovation and pilot programs using local revenues without
the risk of long-term obligations.
new text end

new text begin Subd. 2. new text end

new text begin Consolidated program funding. new text end

new text begin (a) Each county is required to dedicate a
portion of local property tax, determined under this section, to fund the local share of the
following programs as required by state law:
new text end

new text begin (1) the Comprehensive Mental Health Acts, sections 245.461 to 245.4889, excluding
case management services under section 256B.0625, subdivision 20, and children's
residential treatment under section 256B.0945;
new text end

new text begin (2) the Consolidated Chemical Dependency Treatment Fund under chapter 254B;
new text end

new text begin (3) the Commitment and Treatment Act, chapter 253B, as it relates to individuals
with mental illness or chemical dependency;
new text end

new text begin (4) hold orders under section 253B.045, subdivision 2;
new text end

new text begin (5) nursing facilities which are reimbursed through group residential housing under
chapter 256I due to their status as Institutions for Mental Diseases;
new text end

new text begin (6) services for which the county makes payments under section 256B.19; and
new text end

new text begin (7) the local share of the costs related to services provided by regional treatment
centers and state nursing facilities under section 246.54.
new text end

new text begin (b) The commissioner of revenue shall provide estimates to the commissioner
of human services of the expected revenue from this dedication in each county. The
commissioner of human services shall devise a mechanism for collecting or allocating
the sum of these dedications between these programs as necessary to meet federal match
requirements. The commissioner shall make recommendations to the chairs of the house
and senate committees dealing with health and human service funding and taxes, no later
than January 1, 2011. Any contribution in excess of the amount needed to meet federal
match requirements shall be spent on the various programs at the discretion of the county.
new text end

new text begin (c) In 2012, the required dedication of a county's portion of its local property tax
is equal to a uniform percentage of its adjusted net tax capacity for the most recently
available year, limited as provided in paragraph (d). The commissioner of revenue shall
determine the percentage so that the total amount dedicated in all counties in 2012, after
the limits in paragraph (d), is equal to the total estimated amount of local source revenues
that all counties would otherwise be required to pay for these programs and services listed
in paragraph (a) in calendar year 2012 as if the county funding mechanisms for these
programs and services for calendar year 2011 were still in effect. The commissioner of
human services shall provide the commissioner of revenue with the information necessary
to make this calculation by July 30, 2011.
new text end

new text begin (d) In 2013 and future years, the required dedication of a county's portion of its local
property tax is equal to a percentage of its adjusted net tax capacity adjusted as required in
paragraph (d). The percentage is the same as the percentage used in the previous year.
new text end

new text begin (e) In calendar year 2012, a county's revenue dedication under paragraph (b) cannot
be greater than the sum of (1) its estimated amount of required local source revenues for
these programs and services in calendar year 2011, plus (2) one percent of its calendar
year 2011 property tax levy. In calendar year 2013 and future years, a county's revenue
dedication under paragraph (c) cannot be greater than the sum of (1) its revenue dedicated
under this subdivision in the previous year, multiplied by one plus its percentage increase
in its adjusted net tax capacity for the most recently available year, plus (2) one percent of
its property tax levy from the previous year.
new text end

new text begin Subd. 3. new text end

new text begin County discretionary spending. new text end

new text begin Nothing in this section shall be construed
as prohibiting counties from spending local source revenues on health and human services
in excess of the amount calculated under subdivision 2 but a county may not be required
to continue spending local source revenue at a higher level than the amount determined in
subdivision 2.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax levies payable in
2012 and thereafter and program spending beginning January 1, 2012.
new text end

Sec. 9.

new text begin [270C.991] PROPERTY TAX SYSTEM BENCHMARKS AND
CRITICAL INDICATORS.
new text end

new text begin Subdivision 1. new text end

new text begin Purpose. new text end

new text begin State policy makers should be provided with the tools to
create a more accountable and efficient property tax system. This section provides the
principles and available tools necessary to work toward achieving that goal.
new text end

new text begin Subd. 2. new text end

new text begin Property tax principles. new text end

new text begin To better evaluate the various property tax
proposals that come before the legislature, the following basic property tax principles
should be taken into consideration. The property taxes proposed should be:
new text end

new text begin (1) transparent and understandable;
new text end

new text begin (2) simple and efficient;
new text end

new text begin (3) equitable;
new text end

new text begin (4) stable and predictable;
new text end

new text begin (5) compliance and accountability;
new text end

new text begin (6) competitive, both nationally and globally; and
new text end

new text begin (7) responsive to economic conditions.
new text end

new text begin Subd. 3. new text end

new text begin Major indicators. new text end

new text begin There are many different types of indicators available to
legislators to evaluate tax legislation. Indicators are useful to have available as benchmarks
when legislators are contemplating changes. Each tool has its own limitation, and no one
tool is perfect or should be used independently. Some of the tools measure the global
characteristics of the entire tax system, while others are only a measure of the property tax
impacts and its administration. The following is a list of the available major indicators:
new text end

new text begin (1) property tax principles scale, the components of which are listed in subdivision
2, as they relate to the various features of the property tax system;
new text end

new text begin (2) price of government report, as required under section 16A.102;
new text end

new text begin (3) tax incidence report, as required under section 270C.13;
new text end

new text begin (4) tax expenditure budget and report, as required under section 270C.11;
new text end

new text begin (5) state tax rankings;
new text end

new text begin (6) property tax levy plus aid data, and market value and net tax capacity data, by
taxing district for current and past years;
new text end

new text begin (7) effective tax rate (tax as a percent of market value) and the equalized effective
tax rate (effective tax rate adjusted for assessment differences);
new text end

new text begin (8) assessment sales ratio study, as required under section 127A.48;
new text end

new text begin (9) "Voss" database, which matches homeowner property taxes and household
income;
new text end

new text begin (10) revenue estimates under section 270C.11, subdivision 5, and state fiscal notes
under section 477A.03, subdivision 2b; and
new text end

new text begin (11) local impact notes, with improved local analysis as described in subdivision 7.
new text end

new text begin Subd. 4. new text end

new text begin Property tax working group. new text end

new text begin (a) A property tax working group is
established as provided in this subdivision. The goals of the working group are:
new text end

new text begin (1) to investigate ways to simplify the property tax system and make advisory
recommendations on ways to make the system more understandable;
new text end

new text begin (2) to reexamine the property tax calendar to determine what changes could be made
to shorten the two-year cycle from assessment through property tax collection; and
new text end

new text begin (3) to determine the cost versus the benefits of the various property tax components,
including property classifications, credits, aids, exclusions, exemptions, and abatements,
and to suggest ways to achieve some of the goals in simpler and more cost-efficient ways.
new text end

new text begin (b) The 12-member working group shall consist of the following members:
new text end

new text begin (1) two state representatives, both appointed by the chair of the house of
representatives Taxes Committee, one from the majority party and one from the minority
party;
new text end

new text begin (2) two senators, both appointed by the chair of the senate Taxes Committee, one
from the majority party and one from the minority party;
new text end

new text begin (3) the commissioner of revenue, or designee;
new text end

new text begin (4) one person, appointed by the Association of Minnesota Counties;
new text end

new text begin (5) one person, appointed by the League of Minnesota Cities;
new text end

new text begin (6) one person, appointed by the Minnesota Association of Townships;
new text end

new text begin (7) one person, appointed by the Minnesota Chamber of Commerce;
new text end

new text begin (8) one person, appointed by the Minnesota Association of Assessing Officers; and
new text end

new text begin (9) two homeowners, one who is under 65 years of age, and one who is 65 years of
age or older, both appointed by the commissioner of revenue.
new text end

new text begin The commissioner of revenue shall chair the initial meeting, and the working
group shall elect a chair at that initial meeting. The working group will meet at the call
of the chair. Members of the working group shall serve without compensation. The
commissioner of revenue must provide administrative support to the working group.
Chapter 13D does not apply to meetings of the working group. Meetings of the working
group must be open to the public and the working group must provide notice of a meeting
to potentially interested persons at least seven days before the meeting. A meeting of the
council occurs when a quorum is present.
new text end

new text begin (c) The working group shall make its advisory recommendations to the chairs of the
house of representatives and senate Taxes Committees on or before February 1, 2011, at
which time the working group shall be finished and this subdivision expires. The advisory
recommendations should be reviewed by the Taxes Committee under subdivision 5.
new text end

new text begin Subd. 5. new text end

new text begin Taxes Committee review and resolution. new text end

new text begin On or before March 1,
2011, and every two years thereafter, the house of representatives and senate Taxes
Committees must review the major indicators as contained in subdivision 3, and ascertain
the accountability and efficiency of the property tax system. The house of representatives
and senate Taxes Committees shall prepare a resolution on targets and benchmarks for
use during the current biennium.
new text end

new text begin Subd. 6. new text end

new text begin Department of Revenue; revenue estimates. new text end

new text begin As provided under
section 270C.11, subdivision 5, the Department of Revenue is required to prepare an
estimate of the effect on the state's tax revenues which result from the passage of a
legislative bill establishing, extending, or restricting a tax expenditure. Beginning
with the 2010 legislative session, those revenue estimates must also identify how the
property tax principles contained in subdivision 2 apply to the proposed tax changes. The
commissioner of revenue shall develop a scale for measuring the appropriate principles
for each proposed change. The department shall quantify the effects, if possible, or at a
minimum, shall identify the relevant factors so that legislators are aware of possible
outcomes, including administrative difficulties and cost. The interaction of property tax
shifting should be identified and quantified to the degree possible.
new text end

new text begin Subd. 7. new text end

new text begin Local impact notes. new text end

new text begin Local impact notes are statements that provide
information about changes in local government responsibility, administration, and cost due
to changes in state law. The local impact note process seeks the participation of political
subdivisions to gather information as needed by the legislature. The local impact network
of political subdivisions shall consist of representation from associations from Minnesota
counties, cities, towns, and school districts, and other members as needed. They shall,
among other things, work with the legislature and the commissioner of finance to analyze:
new text end

new text begin (1) changes in tax revenues for local governments;
new text end

new text begin (2) changes in expenditures for local governments, including program and
administration costs; and
new text end

new text begin (3) incidences of tax shifting, including identifying the target audience (taxpayers
who will benefit from the tax shift) and the impact audience (taxpayers who will bear the
burden of the tax shift).
new text end

new text begin For tax bills the local impact network of political subdivisions shall rate the impact
on Minnesota's tax system using the tax principles contained in subdivision 2.
new text end

new text begin Some of the cost for preparing this information shall be distributed to the local
impact network as provided under section 477A.03, subdivision 2b, paragraph (b).
new text end

new text begin Subd. 8. new text end

new text begin Appropriation. new text end

new text begin The sum of $30,000 in fiscal year 2010 and $25,000 in
each fiscal year thereafter is appropriated from the general fund to the commissioner of
revenue to carry out the commissioner's added responsibilities under subdivision 6.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2008, section 273.1384, is amended by adding a
subdivision to read:

new text begin Subd. 3a. new text end

new text begin Reimbursement reductions. new text end

new text begin (a) Each year, each county's reimbursement
under this section shall be reduced by a uniform percentage so that the total reduction
in reimbursements equals the sum of: (i) the amount appropriated under section 6.91,
subdivision 4, paragraph (a); (ii) one-half of the total amount appropriated under section
6.91, subdivision 4, paragraph (c); and (iii) one-half of the total amount appropriated
under section 270C.991, subdivision 8.
new text end

new text begin (b) Each year, each city's reimbursement under this section shall be reduced by a
uniform percentage so that the total reduction in reimbursements equals the sum of: (i)
the amount appropriated under section 6.91, subdivision 4, paragraph (b); (ii) one-half of
the total amount appropriated under section 6.91, subdivision 4, paragraph (c); and (iii)
one-half of the total amount appropriated under section 270C.991, subdivision 8.
new text end

new text begin (c) Each year, each school district's reimbursement under this section shall be
reduced by a uniform percentage so that the total reduction in reimbursements equals the
amount appropriated under section 134.34, subdivision 4.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2009 and
thereafter.
new text end

Sec. 11.

new text begin [275.77] TEMPORARY SUSPENSION OF NEW OR INCREASED
MAINTENANCE OF EFFORT AND MATCHING FUND REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the following terms have
the meanings given them:
new text end

new text begin (1) "maintenance of effort" means a requirement imposed on a political subdivision
by state law to continue providing funding of a service or program at a given or increasing
level based on its funding of the service and program in prior years;
new text end

new text begin (2) "matching fund requirement" means a requirement imposed on a political
subdivision by state law to fund a portion of a program or service but does not mean
required nonstate contributions to state capital funded projects or other nonstate
contributions required in order to receive a grant or loan the political subdivision has
requested or applied for; and
new text end

new text begin (3) "political subdivision" means a county, town, or statutory or home rule charter
city.
new text end

new text begin Subd. 2. new text end

new text begin Temporary suspension. new text end

new text begin (a) Notwithstanding any other provision of law
to the contrary, any new maintenance of effort or matching fund requirement enacted
after January 1, 2009, that will require spending by a political subdivision shall not be
effective until January 1, 2012.
new text end

new text begin (b) Notwithstanding any other provision of law to the contrary, any changes to
existing maintenance of effort or matching fund requirement enacted after January 1,
2009, that will require new spending by a political subdivision shall not be effective
until January 1, 2012.
new text end

new text begin (c) The suspension of changes to existing maintenance of effort and matching fund
requirements under paragraph (b) does not apply if the spending is required by federal law
and there would be a cost to the state budget without the change.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 12. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, sections 245.4835; 245.714; 246.54; 254B.02, subdivision
3; 256B.19, subdivision 1; and 256I.08, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2012, contingent upon the
implementation of alternative funding mechanisms for the sections being repealed, using
the funding provided in section 256E.40, or other sections of law.
new text end

ARTICLE 4

LOCAL GOVERNMENT FLEXIBILITY AND MANDATE
REDUCTION PROVISIONS

Section 1.

Minnesota Statutes 2008, section 3.842, subdivision 4a, is amended to read:

Subd. 4a.

Objections to rules.

(a) For purposes of this subdivision, "committee"
means the house of representatives policy committee or senate policy committee with
primary jurisdiction over state governmental operations. The commission new text begin , the Legislative
Commission on Mandate Reform, new text end or a committee may object to a rule as provided in
this subdivision. If the commission new text begin , the Legislative Commission on Mandate Reform, new text end
or a committee objects to all or some portion of a rule because the commission new text begin , the
Legislative Commission on Mandate Reform, new text end or new text begin a new text end committee considers it to be beyond
the procedural or substantive authority delegated to the agency, including a proposed rule
submitted under section 14.15, subdivision 4, or 14.26, subdivision 3, paragraph (c), the
commission new text begin , the Legislative Commission on Mandate Reform, new text end or new text begin a new text end committee may file
that objection in the Office of the Secretary of State. The filed objection must contain a
concise statement of the commission's new text begin , the Legislative Commission on Mandate Reform, new text end
or new text begin a new text end committee's reasons for its action. An objection to a proposed rule submitted by the
commission new text begin , the Legislative Commission on Mandate Reform, new text end or a committee under
section 14.15, subdivision 4, or 14.26, subdivision 3, paragraph (c), may not be filed
before the rule is adopted.

(b) The secretary of state shall affix to each objection a certification of the date and
time of its filing and as soon after the objection is filed as practicable shall transmit a
certified copy of it to the agency issuing the rule in question and to the revisor of statutes.
The secretary of state shall also maintain a permanent register open to public inspection of
all objections by the commission new text begin , the Legislative Commission on Mandate Reform, new text end or
new text begin a new text end committee.

(c) The commission new text begin , the Legislative Commission on Mandate Reform, new text end or new text begin a
new text end committee shall publish and index an objection filed under this section in the next issue
of the State Register. The revisor of statutes shall indicate the existence of the objection
adjacent to the rule in question when that rule is published in Minnesota Rules.

(d) Within 14 days after the filing of an objection by the commission new text begin , the Legislative
Commission on Mandate Reform, new text end or new text begin a new text end committee to a rule, the issuing agency shall
respond in writing to the objecting entity. After receipt of the response, the commission new text begin ,
the Legislative Commission on Mandate Reform, new text end or new text begin a new text end committee may withdraw or modify
its objection.

(e) After the filing of an objection by the commission new text begin , the Legislative Commission
on Mandate Reform, new text end or new text begin a new text end committee that is not subsequently withdrawn, the burden is
upon the agency in any proceeding for judicial review or for enforcement of the rule to
establish that the whole or portion of the rule objected to is valid.

(f) The failure of the commission new text begin , the Legislative Commission on Mandate Reform, new text end
or a committee to object to a rule is not an implied legislative authorization of its validity.

(g) In accordance with sections 14.44 and 14.45, the commission new text begin , the Legislative
Commission on Mandate Reform, new text end or a committee may petition for a declaratory judgment
to determine the validity of a rule objected to by the commission new text begin , the Legislative
Commission on Mandate Reform, new text end or new text begin a new text end committee. The action must be started within two
years after an objection is filed in the Office of the Secretary of State.

(h) The commission new text begin , the Legislative Commission on Mandate Reform, new text end or a
committee may intervene in litigation arising from agency action. For purposes of this
paragraph, agency action means the whole or part of a rule, or the failure to issue a rule.

Sec. 2.

Minnesota Statutes 2008, section 3.843, is amended to read:

3.843 PUBLIC HEARINGS BY STATE AGENCIES.

By a vote of a majority of its members, the commission new text begin or the Legislative
Commission on Mandate Reform new text end may request any agency issuing rules to hold a
public hearing in respect to recommendations made under section 3.842, including
recommendations made by the commission new text begin or the Legislative Commission on Mandate
Reform new text end to promote adequate and proper rules by that agency and recommendations
contained in the commission's biennial report. The agency shall give notice as provided in
section 14.14, subdivision 1, of a hearing under this section, to be conducted in accordance
with sections 14.05 to 14.28. The hearing must be held not more than 60 days after receipt
of the request or within any other longer time period specified by the commission new text begin or the
Legislative Commission on Mandate Reform new text end in the request.

Sec. 3.

new text begin [3.99] LEGISLATIVE COMMISSION ON MANDATE REFORM;
ESTABLISHED.
new text end

new text begin Subdivision 1. new text end

new text begin Established. new text end

new text begin The Legislative Commission on Mandate Reform is
established as provided in this section, with the powers and duties given it in sections
3.842, subdivision 4a; 3.843; and 3.99 to 3.992.
new text end

new text begin Subd. 2. new text end

new text begin Membership. new text end

new text begin The commission consists of four senators appointed by the
senate Subcommittee on Committees of the Committee on Rules and Administration,
three senators appointed by the senate minority leader, four state representatives appointed
by the speaker of the house, and three state representatives appointed by the house
of representatives minority leader. The appointing authorities must ensure balanced
geographic representation. Each appointing authority must make appointments as soon as
possible.
new text end

new text begin Subd. 3. new text end

new text begin Terms; vacancies. new text end

new text begin Members of the commission serve for a two-year term
beginning upon appointment and expiring upon appointment of a successor after the
opening of the next regular session of the legislature in the odd-numbered year. A vacancy
in the membership of the commission must be filled for the unexpired term in a manner
that will preserve the representation established by this section.
new text end

new text begin Subd. 4. new text end

new text begin Chair. new text end

new text begin The commission must meet as soon as practicable after members
are appointed in each odd-numbered year to elect its chair and other officers as it may
determine necessary. A chair serves a two-year term, expiring in the odd-numbered year
after a successor is elected. The chair must alternate biennially between the senate and the
house of representatives.
new text end

new text begin Subd. 5. new text end

new text begin Compensation. new text end

new text begin Members may be reimbursed for their reasonable
expenses as members of the legislature.
new text end

new text begin Subd. 6. new text end

new text begin Staff. new text end

new text begin The Legislative Coordinating Commission must provide
administrative support to the commission, including secretarial services, record keeping,
and grants administration.
new text end

new text begin Subd. 7. new text end

new text begin Meetings; procedures; tie votes. new text end

new text begin The first meeting of the biennium must
be convened by the member designated by the senate majority leader if a senator is to chair
the commission for the biennium, or by the speaker of the house if a state representative
is to chair the commission for the biennium. The commission meets at the call of the
chair. Commission action requires a positive vote of at least four house of representatives
members and at least four senate members.
new text end

new text begin Subd. 8. new text end

new text begin Funding. new text end

new text begin The Legislative Coordinating Commission shall annually bill the
commissioner of revenue for costs incurred by the Legislative Coordinating Commission
in providing administrative support and to make the grants authorized by the Legislative
Commission on Mandate Reform, in an amount not to exceed $100,000 per year. The
commissioner of revenue shall deduct one-half of the certified costs from payments to
counties under section 477A.03, subdivision 2b, and one-half of the certified costs from
payments to cities under section 477A.03, subdivision 2a.
new text end

Sec. 4.

new text begin [3.991] LEGISLATIVE COMMISSION ON MANDATE REFORM;
REVIEW AND RECOMMENDATIONS TO LEGISLATURE.
new text end

new text begin The Legislative Commission on Mandate Reform must solicit from local
governments information on state laws and rules that local governments consider to be
problematic mandates. The commission must review the mandates identified and consider
why each mandate was enacted or adopted, whether the reason for it still exists, the costs
to local governments to comply with the mandate, and whether repeal or modification
of the mandate is appropriate. Before the beginning of each legislative session, the
commission must prepare for introduction a bill to repeal or modify those laws or rules the
commission determines are unnecessary.
new text end

Sec. 5.

new text begin [3.992] LEGISLATIVE COMMISSION ON MANDATE REFORM;
GRANTS.
new text end

new text begin Upon recommendation of the Legislative Commission on Mandate Reform,
the commissioner of revenue may make grants to the League of Minnesota Cities,
the Association of Minnesota Counties, Minnesota Association of Townships, other
organizations representing local governments, the Board of Regents of the University of
Minnesota, the Board of Trustees of Minnesota State Colleges and Universities, or other
accredited postsecondary institutions to research and make recommendations on mandate
reform. The commissioner must specify the work to be done, the completion date, and
the maximum grant amount, and may specify any other conditions the commissioner
deems necessary or useful.
new text end

Sec. 6.

new text begin [3.993] EXPIRATION.
new text end

new text begin Sections 3.99 to 3.992 expire June 30, 2013.
new text end

Sec. 7.

new text begin [14.128] EFFECTIVE DATE FOR RULES REQUIRING LOCAL
IMPLEMENTATION.
new text end

new text begin Subdivision 1. new text end

new text begin Determination. new text end

new text begin An agency must determine if a local government
will be required to adopt or amend an ordinance or other regulation to comply with a
proposed agency rule. An agency must make this determination before the close of the
hearing record or before the agency submits the record to the administrative law judge if
there is no hearing. The administrative law judge must review and approve or disapprove
the agency's determination. "Local government" means a town, county, or home rule
charter or statutory city.
new text end

new text begin Subd. 2. new text end

new text begin Effective dates. new text end

new text begin If the agency determines that the proposed rule requires
adoption or amendment of an ordinance or other regulation, or if the administrative law
judge disapproves the agency's determination that the rule does not have this effect, the
rule may not become effective until:
new text end

new text begin (1) the next July 1 or January 1 after notice of final adoption is published in the
State Register; or
new text end

new text begin (2) a later date provided by law or specified in the proposed rule.
new text end

new text begin Subd. 3. new text end

new text begin Exceptions. new text end

new text begin Subdivision 2 does not apply:
new text end

new text begin (1) to a rule adopted under section 14.388, 14.389, or 14.3895, or under another law
specifying that the rulemaking procedures of this chapter do not apply;
new text end

new text begin (2) if the administrative law judge approves an agency's determination that the rule
has been proposed pursuant to a specific federal statutory or regulatory mandate that
requires the rule to take effect before the date specified in subdivision 2; or
new text end

new text begin (3) if the governor waives application of subdivision 2.
new text end

Sec. 8.

Minnesota Statutes 2008, section 16C.28, subdivision 1a, is amended to read:

Subd. 1a.

Establishment and purpose.

(a) The state recognizes the importance of
the inclusion of a best value contracting system for construction as an alternative to the
current low-bid system of procurement. In order to accomplish that goal, state and local
governmental entities shall be able to choose the best value system in different phases.

(b) "Best value" means the procurement method defined in section 16C.02,
subdivision 4a.

(c) The following entities are eligible to participate in phase I:

(1) state agencies;

(2) counties;

(3) cities; and

(4) school districts with the highest 25 percent enrollment of students in the state.

Phase I begins on July 1, 2007.

(d) The following entities are eligible to participate in phase II:

(1) those entities included in phase I; and

(2) school districts with the highest 50 percent enrollment of students in the state.

Phase II begins two years from July 1, 2007.

(e) The following entities are eligible to participate in phase III:

(1) all entities included in phases I and II; and

(2) all other townships, school districts, and political subdivisions in the state.

Phase III begins three years from July 1, 2007.

deleted text begin (f) The commissioner or any agency for which competitive bids or proposals are
required may not use best value contracting as defined in section 16C.02, subdivision 4a,
for more than one project annually, or 20 percent of its projects, whichever is greater, in
each of the first three fiscal years in which best value construction contracting is used.
deleted text end

Sec. 9.

Minnesota Statutes 2008, section 306.243, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Abandonment; end of operation as cemetery. new text end

new text begin A county that has accepted
responsibility for an abandoned cemetery may prohibit further burials in the abandoned
cemetery, and may cease all acceptance of responsibility for new burials.
new text end

Sec. 10.

Minnesota Statutes 2008, section 344.18, is amended to read:

344.18 COMPENSATION OF VIEWERS.

Fence viewers must be paid for their services by the person employing them deleted text begin at the
rate of $15 each for each day's employment. $60 must be deposited with the town or city
treasurer before the service is performed. Upon completion of the service, any of the $60
not spent to compensate the fence viewers must be returned to the depositor deleted text end . new text begin The town
board may by resolution require the person employing the fence viewers to post a bond or
other security acceptable to the board for the total estimated costs before the viewing takes
place. The total estimated costs may include the cost of professional and other services,
hearing costs, administrative costs, recording costs, and other costs and expenses which
the town may incur in connection with the viewing.
new text end

Sec. 11.

Minnesota Statutes 2008, section 365.28, is amended to read:

365.28 PUBLIC BURIAL GROUND IS TOWN'S AFTER TEN YEARS.

A tract of land in a town becomes town property after it has been used as a public
burial ground for ten years if the tract is not owned by a cemetery association. The town
board shall control the burial ground as it controls other town cemeteries. new text begin A town that has
assumed ownership of a cemetery may prohibit further burials in it.
new text end

Sec. 12.

Minnesota Statutes 2008, section 429.041, subdivision 1, is amended to read:

Subdivision 1.

Plans and specifications, advertisement for bids.

When the
council determines to make any improvement, it shall let the contract for all or part of
the work, or order all or part of the work done by day labor or otherwise as authorized by
subdivision 2, no later than one year after the adoption of the resolution ordering such
improvement, unless a different time limit is specifically stated in the resolution ordering
the improvement. The council shall cause plans and specifications of the improvement
to be made, or if previously made, to be modified, if necessary, and to be approved and
filed with the clerk, and if the estimated cost exceeds deleted text begin $50,000 deleted text end new text begin the amount in section
471.345, subdivision 3 new text end , shall advertise for bids for the improvement in the newspaper and
such other papers and for such length of time as it may deem advisable. If the estimated
cost exceeds deleted text begin $100,000 deleted text end new text begin twice the amount in section 471.345, subdivision 3 new text end , publication
shall be made no less than three weeks before the last day for submission of bids once
in the newspaper and at least once in either a newspaper published in a city of the first
class or a trade paper. To be eligible as such a trade paper, a publication shall have all
the qualifications of a legal newspaper except that instead of the requirement that it shall
contain general and local news, such trade paper shall contain building and construction
news of interest to contractors in this state, among whom it shall have a general circulation.
The advertisement shall specify the work to be done, shall state the time when the bids
will be publicly opened for consideration by the council, which shall be not less than ten
days after the first publication of the advertisement when the estimated cost is less than
deleted text begin $100,000 deleted text end new text begin twice the amount in section 471.345, subdivision 3, new text end and not less than three
weeks after such publication in other cases, and shall state that no bids will be considered
unless sealed and filed with the clerk and accompanied by a cash deposit, cashier's check,
bid bond, or certified check payable to the clerk, for such percentage of the amount of the
bid as the council may specify. In providing for the advertisement for bids the council
may direct that the bids shall be opened publicly by two or more designated officers or
agents of the municipality and tabulated in advance of the meeting at which they are to
be considered by the council. Nothing herein shall prevent the council from advertising
separately for various portions of the work involved in an improvement, or from itself,
supplying by such means as may be otherwise authorized by law, all or any part of the
materials, supplies, or equipment to be used in the improvement or from combining two or
more improvements in a single set of plans and specifications or a single contract.

Sec. 13.

Minnesota Statutes 2008, section 429.041, subdivision 2, is amended to read:

Subd. 2.

Contracts; day labor.

In contracting for an improvement, the council shall
require the execution of one or more written contracts and bonds, conditioned as required
by law. The council shall award the contract to the lowest responsible bidder or it may
reject all bids. If any bidder to whom a contract is awarded fails to enter promptly into
a written contract and to furnish the required bond, the defaulting bidder shall forfeit to
the municipality the amount of the defaulter's cash deposit, cashier's check, bid bond, or
certified check, and the council may thereupon award the contract to the next lowest
responsible bidder. When it appears to the council that the cost of the entire work projected
will be less than deleted text begin $50,000 deleted text end new text begin the amount in section 471.345, subdivision 3 new text end , or whenever no
bid is submitted after proper advertisement or the only bids submitted are higher than
the engineer's estimate, the council may advertise for new bids or, without advertising
for bids, directly purchase the materials for the work and do it by the employment of day
labor or in any other manner the council considers proper. The council may have the
work supervised by the city engineer or other qualified person but shall have the work
supervised by a registered engineer if done by day labor and it appears to the council that
the entire cost of all work and materials for the improvement will be more than deleted text begin $25,000 deleted text end new text begin
the lowest amount in section 471.345, subdivision 4 new text end . In case of improper construction
or unreasonable delay in the prosecution of the work by the contractor, the council may
order and cause the suspension of the work at any time and relet the contract, or order
a reconstruction of any portion of the work improperly done, and where the cost of
completion or reconstruction necessary will be less than deleted text begin $50,000 deleted text end new text begin the amount in section
471.345, subdivision 3 new text end , the council may do it by the employment of day labor.

Sec. 14.

Minnesota Statutes 2008, section 469.015, is amended to read:

469.015 LETTING OF CONTRACTS; PERFORMANCE BONDS.

Subdivision 1.

Bids; notice.

All construction work, and work of demolition or
clearing, and every purchase of equipment, supplies, or materials, necessary in carrying
out the purposes of sections 469.001 to 469.047, that involve expenditure of deleted text begin $50,000 deleted text end new text begin the
amount in section 471.345, subdivision 3, new text end or more shall be awarded by contract. Before
receiving bids the authority shall publish, once a week for two consecutive weeks in an
official newspaper of general circulation in the community a notice that bids will be
received for that construction work, or that purchase of equipment, supplies, or materials.
The notice shall state the nature of the work and the terms and conditions upon which the
contract is to be let, naming a time and place where bids will be received, opened and read
publicly, which time shall be not less than seven days after the date of the last publication.
After the bids have been received, opened and read publicly and recorded, the authority
shall award the contract to the lowest responsible bidder, provided that the authority
reserves the right to reject any or all bids. Each contract shall be executed in writing, and
the person to whom the contract is awarded shall give sufficient bond to the authority for its
faithful performance. If no satisfactory bid is received, the authority may readvertise. The
authority may establish reasonable qualifications to determine the fitness and responsibility
of bidders and to require bidders to meet the qualifications before bids are accepted.

Subd. 1a.

Best value alternative.

As an alternative to the procurement method
described in subdivision 1, the authority may issue a request for proposals and award the
contract to the vendor or contractor offering the best value under a request for proposals as
described in section 16C.28, subdivision 1, paragraph (a), clause (2), and paragraph (c).

Subd. 2.

Exception; emergency.

If the authority by a vote of four-fifths of its
members shall declare that an emergency exists requiring the immediate purchase of any
equipment or material or supplies at a cost in excess of deleted text begin $50,000 deleted text end new text begin the amount in section
471.345, subdivision 3, new text end but not exceeding deleted text begin $75,000 deleted text end new text begin half again as much as the amount in
section 471.345, subdivision 3 new text end , or making of emergency repairs, it shall not be necessary
to advertise for bids, but the material, equipment, or supplies may be purchased in the
open market at the lowest price obtainable, or the emergency repairs may be contracted for
or performed without securing formal competitive bids. An emergency, for purposes of
this subdivision, shall be understood to be unforeseen circumstances or conditions which
result in the placing in jeopardy of human life or property.

Subd. 3.

Performance and payment bonds.

Performance and payment bonds shall
be required from contractors for any works of construction as provided in and subject
to all the provisions of sections 574.26 to 574.31 except for contracts entered into by
an authority for an expenditure of less than deleted text begin $50,000 deleted text end new text begin the minimum threshold amount in
section 471.345, subdivision 3 new text end .

Subd. 4.

Exceptions.

(a) An authority need not require competitive bidding in the
following circumstances:

(1) in the case of a contract for the acquisition of a low-rent housing project:

(i) for which financial assistance is provided by the federal government;

(ii) which does not require any direct loan or grant of money from the municipality
as a condition of the federal financial assistance; and

(iii) for which the contract provides for the construction of the project upon land that
is either owned by the authority for redevelopment purposes or not owned by the authority
at the time of the contract but the contract provides for the conveyance or lease to the
authority of the project or improvements upon completion of construction;

(2) with respect to a structured parking facility:

(i) constructed in conjunction with, and directly above or below, a development; and

(ii) financed with the proceeds of tax increment or parking ramp general obligation
or revenue bonds;

(3) until August 1, 2009, with respect to a facility built for the purpose of facilitating
the operation of public transit or encouraging its use:

(i) constructed in conjunction with, and directly above or below, a development; and

(ii) financed with the proceeds of parking ramp general obligation or revenue bonds
or with at least 60 percent of the construction cost being financed with funding provided
by the federal government; and

(4) in the case of any building in which at least 75 percent of the usable square
footage constitutes a housing development project if:

(i) the project is financed with the proceeds of bonds issued under section 469.034 or
from nongovernmental sources;

(ii) the project is either located on land that is owned or is being acquired by the
authority only for development purposes, or is not owned by the authority at the time the
contract is entered into but the contract provides for conveyance or lease to the authority
of the project or improvements upon completion of construction; and

(iii) the authority finds and determines that elimination of the public bidding
requirements is necessary in order for the housing development project to be economical
and feasible.

(b) An authority need not require a performance bond for the following projects:

(1) a contract described in paragraph (a), clause (1);

(2) a construction change order for a housing project in which 30 percent of the
construction has been completed;

(3) a construction contract for a single-family housing project in which the authority
acts as the general construction contractor; or

(4) a services or materials contract for a housing project.

For purposes of this paragraph, "services or materials contract" does not include
construction contracts.

Subd. 5.

Security in lieu of bond.

The authority may accept a certified check or
cashier's check in the same amount as required for a bond in lieu of a performance bond
for contracts entered into by an authority for an expenditure of less than deleted text begin $50,000 deleted text end new text begin the
minimum threshold amount in section 471.345, subdivision 3 new text end . The check must be held by
the authority for 90 days after the contract has been completed. If no suit is brought within
the 90 days, the authority must return the amount of the check to the person making it. If a
suit is brought within the 90-day period, the authority must disburse the amount of the
check pursuant to the order of the court.

Sec. 15.

Minnesota Statutes 2008, section 641.12, subdivision 1, is amended to read:

Subdivision 1.

Fee.

A county board may require that each person who is booked for
confinement at a county or regional jail, and not released upon completion of the booking
process, pay a fee deleted text begin of up to $10 deleted text end to the sheriff's department of the county in which the jail
is located new text begin to cover costs incurred by the county in the booking of that person new text end . The fee
is payable immediately from any money then possessed by the person being booked, or
any money deposited with the sheriff's department on the person's behalf. If the person
has no funds at the time of booking or during the period of any incarceration, the sheriff
shall notify the district court in the county where the charges related to the booking are
pending, and shall request the assessment of the fee. Notwithstanding section 609.10 or
609.125, upon notification from the sheriff, the district court must order the fee paid to the
sheriff's department as part of any sentence or disposition imposed. If the person is not
charged, is acquitted, or if the charges are dismissed, the sheriff shall return the fee to the
person at the last known address listed in the booking records.

Sec. 16. new text begin LEGISLATIVE COMMISSION ON MANDATE REFORM; FIRST
MEETING.
new text end

new text begin The first meeting of the Legislative Commission on Mandate Reform must be held
as soon as practicable after all appointments are made. The speaker of the house must
designate a commission member to convene the first meeting. The first commission serves
until a new commission is appointed at the beginning of the next biennium.
new text end

ARTICLE 5

TRUTH IN TAXATION

Section 1.

Minnesota Statutes 2008, section 123B.10, subdivision 1, is amended to read: