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HF 4437

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 05/18/2018 05:59pm

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A bill for an act
relating to transportation finance; proposing a constitutional amendment to the
Minnesota Constitution, article XIV, to allocate state general sales tax revenue
related to motor vehicle repair and replacement parts exclusively to fund roads;
making conforming and technical changes; amending Minnesota Statutes 2017
Supplement, section 297A.94; proposing coding for new law as Minnesota Statutes,
chapter 160A.

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

ARTICLE 1

CONSTITUTIONAL AMENDMENT

Section 1. CONSTITUTIONAL AMENDMENT PROPOSED.

An amendment to the Minnesota Constitution is proposed to the people. If the amendment
is adopted, a section shall be added to article XIV, to read:

Sec. 14.

Beginning July 1, 2024, the revenue from the general state sales and use tax
law that is attributed by law to the sale and purchase of motor vehicle repair and replacement
parts must be allocated solely to roads and bridges. No change in the apportionment of the
revenue may be made within six years of the last previous change. Revenue under this
section does not include revenue from the tax under article XI, section 15.

Sec. 2. SUBMISSION TO VOTERS.

(a) The proposed amendment under section 1 must be submitted to the people at the
2018 general election. The question submitted must be:

"Shall the Minnesota Constitution be amended to increase funding for roads and bridges
by dedicating existing sales tax revenue from the sale of motor vehicle parts?

Yes .
No .
"

(b) The title required under Minnesota Statutes, section 204D.15, subdivision 1, for the
question submitted to the people under paragraph (a) is "Increase Road and Bridge Funds
by Dedicating Existing Sales Taxes on Motor Vehicles."

ARTICLE 2

CONSTITUTIONAL AMENDMENT IMPLEMENTATION

Section 1.

[160A.01] DEFINITIONS.

For the purposes of this chapter, the terms defined in section 160.02 have the same
meanings.

Sec. 2.

[160A.10] DISTRIBUTION OF DEDICATED FUNDS.

(a) Revenue under section 297A.94, subdivision 1, paragraph (g), must be allocated as
follows:

(1) 4.5 percent to the small cities assistance account under section 162.145, subdivision
2; and

(2) 95.5 percent to the highway user tax distribution fund.

(b) The portion of revenue distributed to the trunk highway fund under paragraph (a)
must be deposited in the construction account under section 160A.15.

Sec. 3.

[160A.15] TRUNK HIGHWAY FUND; CONSTRUCTION ACCOUNT.

(a) A construction account is established in the trunk highway fund. The account consists
of funds deposited under section 160A.10, and any other money donated, allotted, transferred,
or otherwise provided to the account.

(b) Money in the account is available solely for actual trunk highway system construction,
reconstruction, and improvement projects, which includes expenditures for design,
engineering, environmental analysis, acquisition of property rights, project delivery, and
construction.

Sec. 4.

Minnesota Statutes 2017 Supplement, section 297A.94, is amended to read:


297A.94 DEPOSIT OF REVENUES.

Subdivision 1.

Deposits.

(a) Except as provided in this section, the commissioner shall
deposit the revenues, including interest and penalties, derived from the taxes imposed by
this chapter in the state treasury and credit them to the general fund.

(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic
account in the special revenue fund if:

(1) the taxes are derived from sales and use of property and services purchased for the
construction and operation of an agricultural resource project; and

(2) the purchase was made on or after the date on which a conditional commitment was
made for a loan guaranty for the project under section 41A.04, subdivision 3.

The commissioner of management and budget shall certify to the commissioner the date on
which the project received the conditional commitment. The amount deposited in the loan
guaranty account must be reduced by any refunds and by the costs incurred by the Department
of Revenue to administer and enforce the assessment and collection of the taxes.

(c) The commissioner shall deposit the revenues, including interest and penalties, derived
from the taxes imposed on sales and purchases included in section 297A.61, subdivision 3,
paragraph (g), clauses (1) and (4), in the state treasury, and credit them as follows:

(1) first to the general obligation special tax bond debt service account in each fiscal
year the amount required by section 16A.661, subdivision 3, paragraph (b); and

(2) after the requirements of clause (1) have been met, the balance to the general fund.

(d) Beginning with sales taxes remitted after July 1, 2017, the commissioner shall deposit
in the state treasury the revenues collected under section 297A.64, subdivision 1, including
interest and penalties and minus refunds, and credit them to the highway user tax distribution
fund.

(e) The commissioner shall deposit the revenues, including interest and penalties,
collected under section 297A.64, subdivision 5, in the state treasury and credit them to the
general fund. By July 15 of each year the commissioner shall transfer to the highway user
tax distribution fund an amount equal to the excess fees collected under section 297A.64,
subdivision 5
, for the previous calendar year.

(f) Beginning with sales taxes remitted after July 1, 2017, in conjunction with the deposit
of revenues under paragraph (d), the commissioner shall deposit into the state treasury and
credit to the highway user tax distribution fund an amount equal to the estimated revenues
derived from the tax rate imposed under section 297A.62, subdivision 1, on the lease or
rental for not more than 28 days of rental motor vehicles subject to section 297A.64. The
commissioner shall estimate the amount of sales tax revenue deposited under this paragraph
based on the amount of revenue deposited under paragraph (d).

(g) Starting after July 1, 2017, The commissioner shall deposit an amount of the
remittances
monthly into the state treasury and credit them to the highway user tax
distribution fund as a portion of the estimated amount of
the taxes collected from the sale
and purchase of motor vehicle repair and replacement parts in that month, and credit the
amounts specified in this paragraph in the manner provided under section 160A.10
. For the
remittances between July 1, 2017, and June 30, 2019, the monthly deposit amount is
$2,628,000. For remittances in each subsequent fiscal year, the monthly deposit amount is
$12,137,000 equal to 1/12 of the most recent percentage estimate for the fiscal year under
subdivision 2, multiplied by the total sales tax revenues collected in the previous calendar
year
. For purposes of this paragraph, "motor vehicle" has the meaning given in section
297B.01, subdivision 11 , and . For purposes of this section, "motor vehicle repair and
replacement parts" includes (i) all parts, tires, accessories, and equipment incorporated into
or affixed to the motor vehicle as part of the motor vehicle maintenance and repair, and (ii)
paint, oil, and other fluids that remain on or in the motor vehicle as part of the motor vehicle
maintenance or repair. For purposes of this paragraph, "tire" means any tire of the type used
on highway vehicles, if wholly or partially made of rubber and if marked according to
federal regulations for highway use.

(h) 72.43 percent of the revenues, including interest and penalties, transmitted to the
commissioner under section 297A.65, must be deposited by the commissioner in the state
treasury as follows:

(1) 50 percent of the receipts must be deposited in the heritage enhancement account in
the game and fish fund, and may be spent only on activities that improve, enhance, or protect
fish and wildlife resources, including conservation, restoration, and enhancement of land,
water, and other natural resources of the state;

(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and may
be spent only for state parks and trails;

(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and may
be spent only on metropolitan park and trail grants;

(4) three percent of the receipts must be deposited in the natural resources fund, and
may be spent only on local trail grants; and

(5) two percent of the receipts must be deposited in the natural resources fund, and may
be spent only for the Minnesota Zoological Garden, the Como Park Zoo and Conservatory,
and the Duluth Zoo.

(i) The revenue dedicated under paragraph (h) may not be used as a substitute for
traditional sources of funding for the purposes specified, but the dedicated revenue shall
supplement traditional sources of funding for those purposes. Land acquired with money
deposited in the game and fish fund under paragraph (h) must be open to public hunting
and fishing during the open season, except that in aquatic management areas or on lands
where angling easements have been acquired, fishing may be prohibited during certain times
of the year and hunting may be prohibited. At least 87 percent of the money deposited in
the game and fish fund for improvement, enhancement, or protection of fish and wildlife
resources under paragraph (h) must be allocated for field operations.

(j) The commissioner must deposit the revenues, including interest and penalties minus
any refunds, derived from the sale of items regulated under section 624.20, subdivision 1,
that may be sold to persons 18 years old or older and that are not prohibited from use by
the general public under section 624.21, in the state treasury and credit:

(1) 25 percent to the volunteer fire assistance grant account established under section
88.068;

(2) 25 percent to the fire safety account established under section 297I.06, subdivision
3; and

(3) the remainder to the general fund.

For purposes of this paragraph, the percentage of total sales and use tax revenue derived
from the sale of items regulated under section 624.20, subdivision 1, that are allowed to be
sold to persons 18 years old or older and are not prohibited from use by the general public
under section 624.21, is a set percentage of the total sales and use tax revenues collected in
the state, with the percentage determined under section 39.

(k) The revenues deposited under paragraphs (a) to (j) do not include the revenues,
including interest and penalties, generated by the sales tax imposed under section 297A.62,
subdivision 1a
, which must be deposited as provided under the Minnesota Constitution,
article XI, section 15.

Subd. 2.

Motor vehicle repair and replacement parts estimation; legislative report.

(a) Beginning February 28, 2021, and by February 28 each odd-numbered year or more
frequently thereafter, the commissioner must estimate the percentage of total sales tax
revenues, including interest and penalties, collected in the previous calendar year that is
attributable to sales and purchases of motor vehicle repair and replacement parts, based on
federal data and department consumption models. Beginning July 1 following a percentage
estimate revision, the estimate is effective for deposits under subdivision 1, paragraph (g).

(b) By November 1 in a fiscal year in which a revised estimate becomes effective, the
commissioner must submit a report on the estimate and estimation methodology to the
chairs, ranking minority members, and staff of the legislative committees with jurisdiction
over taxes and transportation policy and finance.

Sec. 5. SALES TAX DEDICATION PHASE-IN.

(a) The commissioner of revenue must determine remittance amounts under Minnesota
Statutes, section 297A.94, subdivision 1, paragraph (g), from July 1, 2020, through June
30, 2024, as provided in this section, notwithstanding the requirements of that paragraph.

(b) For the remittances beginning July 1, 2020, the monthly deposit amount is calculated
as 1/12 of the percentage estimate under paragraph (c) for the fiscal year, multiplied by the
total sales tax revenues collected in the previous calendar year, multiplied by:

(1) 60 percent from July 1, 2020, through June 30, 2021;

(2) 70 percent from July 1, 2021, through June 30, 2022;

(3) 80 percent from July 1, 2022, through June 30, 2023; and

(4) 90 percent from July 1, 2023, through June 30, 2024.

(c) The commissioner must use the most recent of (1) the estimate developed under
Laws 2017, First Special Session chapter 3, article 3, section 123; or (2) the estimate in
effect under Minnesota Statutes, section 297A.94, subdivision 2, at the time of the calculation.

Sec. 6. REVISOR'S INSTRUCTION.

The revisor of statutes shall recodify Minnesota Statutes, sections 161.04 to 161.085,
as Minnesota Statutes, chapter 160A. The revisor shall correct any cross-references made
necessary by this recodification.

Sec. 7. EFFECTIVE DATE.

This article is effective July 1, 2020, if the constitutional amendment in article 1 is
ratified.

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