SF 115

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; reducing rates and adjusting the 
  1.3             brackets of the individual income tax; increasing the 
  1.4             exemption amount for the alternative minimum tax; 
  1.5             repealing the insurance premiums tax on health 
  1.6             maintenance organizations and nonprofit health service 
  1.7             plan corporations; phasing out health care taxes; 
  1.8             making conforming changes; changing property tax class 
  1.9             rates; increasing the education homestead credit; 
  1.10            reducing the general education levy; amending 
  1.11            Minnesota Statutes 1998, sections 60A.15, subdivision 
  1.12            1; 62J.041, subdivision 1; 62Q.095, subdivision 6; 
  1.13            62R.24; 214.16, subdivisions 2 and 3; 256L.02, 
  1.14            subdivision 3; 270B.01, subdivision 8; 270B.14, 
  1.15            subdivision 1; 273.13, subdivisions 22, 23, 24, 25, 
  1.16            and 31; 273.1382, subdivision 1; 290.06, subdivisions 
  1.17            2c and 2d; 290.091, subdivisions 1, 2, 3, and 6; and 
  1.18            295.52, subdivision 7; repealing Minnesota Statutes 
  1.19            1998, sections 13.99, subdivision 86b; 16A.724; 
  1.20            16A.76; 144.1484, subdivision 2; 256L.02, subdivision 
  1.21            4; 273.127; 273.1382, subdivision 1a; 295.50; 295.51; 
  1.22            295.52; 295.53; 295.54; 295.55; 295.56; 295.57; 
  1.23            295.58; 295.581; 295.582; and 295.59. 
  1.24  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.25                             ARTICLE 1
  1.26                            INCOME TAXES
  1.27     Section 1.  Minnesota Statutes 1998, section 290.06, 
  1.28  subdivision 2c, is amended to read: 
  1.29     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  1.30  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  1.31  married individuals filing joint returns and surviving spouses 
  1.32  as defined in section 2(a) of the Internal Revenue Code must be 
  1.33  computed by applying to their taxable net income the following 
  1.34  schedule of rates: 
  2.1      (1) On the first $19,910 $34,500, 6 5.5 percent; 
  2.2      (2) On all over $19,910 $34,500, but not 
  2.3   over $79,120 $150,000, 8 7.5 percent; 
  2.4      (3) On all over $79,120 $150,000, 8.5 8.25 percent. 
  2.5      Married individuals filing separate returns, estates, and 
  2.6   trusts must compute their income tax by applying the above rates 
  2.7   to their taxable income, except that the income brackets will be 
  2.8   one-half of the above amounts.  
  2.9      (b) The income taxes imposed by this chapter upon unmarried 
  2.10  individuals must be computed by applying to taxable net income 
  2.11  the following schedule of rates: 
  2.12     (1) On the first $13,620 $17,250, 6 5.5 percent; 
  2.13     (2) On all over $13,620 $17,250, but not 
  2.14  over $44,750 $75,000, 8 7.5 percent; 
  2.15     (3) On all over $44,750 $75,000, 8.5 8.25 percent. 
  2.16     (c) The income taxes imposed by this chapter upon unmarried 
  2.17  individuals qualifying as a head of household as defined in 
  2.18  section 2(b) of the Internal Revenue Code must be computed by 
  2.19  applying to taxable net income the following schedule of rates: 
  2.20     (1) On the first $16,770 $25,870, 6 5.5 percent; 
  2.21     (2) On all over $16,770 $25,870, but not 
  2.22  over $67,390 $112,500, 8 7.5 percent; 
  2.23     (3) On all over $67,390 $112,500, 8.5 8.25 percent. 
  2.24     (d) In lieu of a tax computed according to the rates set 
  2.25  forth in this subdivision, the tax of any individual taxpayer 
  2.26  whose taxable net income for the taxable year is less than an 
  2.27  amount determined by the commissioner must be computed in 
  2.28  accordance with tables prepared and issued by the commissioner 
  2.29  of revenue based on income brackets of not more than $100.  The 
  2.30  amount of tax for each bracket shall be computed at the rates 
  2.31  set forth in this subdivision, provided that the commissioner 
  2.32  may disregard a fractional part of a dollar unless it amounts to 
  2.33  50 cents or more, in which case it may be increased to $1. 
  2.34     (e) An individual who is not a Minnesota resident for the 
  2.35  entire year must compute the individual's Minnesota income tax 
  2.36  as provided in this subdivision.  After the application of the 
  3.1   nonrefundable credits provided in this chapter, the tax 
  3.2   liability must then be multiplied by a fraction in which:  
  3.3      (1) the numerator is the individual's Minnesota source 
  3.4   federal adjusted gross income as defined in section 62 of the 
  3.5   Internal Revenue Code disregarding income or loss flowing from a 
  3.6   corporation having a valid election for the taxable year under 
  3.7   section 1362 of the Internal Revenue Code but which is not an 
  3.8   "S" corporation under section 290.9725 and increased by the 
  3.9   additions required under section 290.01, subdivision 19a, 
  3.10  clauses (1) and (9), after applying the allocation and 
  3.11  assignability provisions of section 290.081, clause (a), or 
  3.12  290.17; and 
  3.13     (2) the denominator is the individual's federal adjusted 
  3.14  gross income as defined in section 62 of the Internal Revenue 
  3.15  Code of 1986, increased by the amounts specified in section 
  3.16  290.01, subdivision 19a, clauses (1), (5), (6), (7), and (9), 
  3.17  and reduced by the amounts specified in section 290.01, 
  3.18  subdivision 19b, clauses (1), (11), and (12). 
  3.19     Sec. 2.  Minnesota Statutes 1998, section 290.06, 
  3.20  subdivision 2d, is amended to read: 
  3.21     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  3.22  taxable years beginning after December 31, 1991 1999, the 
  3.23  minimum and maximum dollar amounts for each rate bracket for 
  3.24  which a tax is imposed in subdivision 2c shall be adjusted for 
  3.25  inflation by the percentage determined under paragraph (b).  For 
  3.26  the purpose of making the adjustment as provided in this 
  3.27  subdivision all of the rate brackets provided in subdivision 2c 
  3.28  shall be the rate brackets as they existed for taxable years 
  3.29  beginning after December 31, 1990 1998, and before January 
  3.30  1, 1992 2000.  The rate applicable to any rate bracket must not 
  3.31  be changed.  The dollar amounts setting forth the tax shall be 
  3.32  adjusted to reflect the changes in the rate brackets.  The rate 
  3.33  brackets as adjusted must be rounded to the nearest $10 amount.  
  3.34  If the rate bracket ends in $5, it must be rounded up to the 
  3.35  nearest $10 amount.  
  3.36     (b) The commissioner shall adjust the rate brackets and by 
  4.1   the percentage determined pursuant to the provisions of section 
  4.2   1(f) of the Internal Revenue Code, except that in section 
  4.3   1(f)(3)(B) the word "1990 1999" shall be substituted for the 
  4.4   word "1987 1992."  For 1991 2000, the commissioner shall then 
  4.5   determine the percent change from the 12 months ending on August 
  4.6   31, 1990 1999, to the 12 months ending on August 31, 1991 2000, 
  4.7   and in each subsequent year, from the 12 months ending on August 
  4.8   31, 1990 1999, to the 12 months ending on August 31 of the year 
  4.9   preceding the taxable year.  The determination of the 
  4.10  commissioner pursuant to this subdivision shall not be 
  4.11  considered a "rule" and shall not be subject to the 
  4.12  Administrative Procedure Act contained in chapter 14.  
  4.13     No later than December 15 of each year, the commissioner 
  4.14  shall announce the specific percentage that will be used to 
  4.15  adjust the tax rate brackets. 
  4.16     Sec. 3.  Minnesota Statutes 1998, section 290.091, 
  4.17  subdivision 1, is amended to read: 
  4.18     Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
  4.19  other taxes imposed by this chapter a tax is imposed on 
  4.20  individuals, estates, and trusts equal to the excess (if any) of 
  4.21     (a) an amount equal to seven 6.8 percent of alternative 
  4.22  minimum taxable income after subtracting the exemption amount, 
  4.23  over 
  4.24     (b) the regular tax for the taxable year. 
  4.25     Sec. 4.  Minnesota Statutes 1998, section 290.091, 
  4.26  subdivision 2, is amended to read: 
  4.27     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  4.28  this section, the following terms have the meanings given: 
  4.29     (a) "Alternative minimum taxable income" means the sum of 
  4.30  the following for the taxable year: 
  4.31     (1) the taxpayer's federal alternative minimum taxable 
  4.32  income as defined in section 55(b)(2) of the Internal Revenue 
  4.33  Code; 
  4.34     (2) the taxpayer's itemized deductions allowed in computing 
  4.35  federal alternative minimum taxable income, but excluding: 
  4.36     (i) the Minnesota charitable contribution deduction; 
  5.1      (ii) the medical expense deduction; 
  5.2      (iii) the casualty, theft, and disaster loss deduction; and 
  5.3      (iv) the impairment-related work expenses of a disabled 
  5.4   person; 
  5.5      (3) for depletion allowances computed under section 613A(c) 
  5.6   of the Internal Revenue Code, with respect to each property (as 
  5.7   defined in section 614 of the Internal Revenue Code), to the 
  5.8   extent not included in federal alternative minimum taxable 
  5.9   income, the excess of the deduction for depletion allowable 
  5.10  under section 611 of the Internal Revenue Code for the taxable 
  5.11  year over the adjusted basis of the property at the end of the 
  5.12  taxable year (determined without regard to the depletion 
  5.13  deduction for the taxable year); 
  5.14     (4) to the extent not included in federal alternative 
  5.15  minimum taxable income, the amount of the tax preference for 
  5.16  intangible drilling cost under section 57(a)(2) of the Internal 
  5.17  Revenue Code determined without regard to subparagraph (E); 
  5.18     (5) to the extent not included in federal alternative 
  5.19  minimum taxable income, the amount of interest income as 
  5.20  provided by section 290.01, subdivision 19a, clause (1); 
  5.21     (6) amounts added to federal taxable income as provided by 
  5.22  section 290.01, subdivision 19a, clauses (5), (6), and (7); 
  5.23     less the sum of the amounts determined under the following 
  5.24  clauses (1) to (4): 
  5.25     (1) interest income as defined in section 290.01, 
  5.26  subdivision 19b, clause (1); 
  5.27     (2) an overpayment of state income tax as provided by 
  5.28  section 290.01, subdivision 19b, clause (2), to the extent 
  5.29  included in federal alternative minimum taxable income; 
  5.30     (3) the amount of investment interest paid or accrued 
  5.31  within the taxable year on indebtedness to the extent that the 
  5.32  amount does not exceed net investment income, as defined in 
  5.33  section 163(d)(4) of the Internal Revenue Code.  Interest does 
  5.34  not include amounts deducted in computing federal adjusted gross 
  5.35  income; and 
  5.36     (4) amounts subtracted from federal taxable income as 
  6.1   provided by section 290.01, subdivision 19b, clauses (11) and 
  6.2   (12). 
  6.3      In the case of an estate or trust, alternative minimum 
  6.4   taxable income must be computed as provided in section 59(c) of 
  6.5   the Internal Revenue Code. 
  6.6      (b) "Investment interest" means investment interest as 
  6.7   defined in section 163(d)(3) of the Internal Revenue Code. 
  6.8      (c) "Tentative minimum tax" equals seven 6.8 percent of 
  6.9   alternative minimum taxable income after subtracting the 
  6.10  exemption amount determined under subdivision 3. 
  6.11     (d) "Regular tax" means the tax that would be imposed under 
  6.12  this chapter (without regard to this section and section 
  6.13  290.032), reduced by the sum of the nonrefundable credits 
  6.14  allowed under this chapter.  
  6.15     (e) "Net minimum tax" means the minimum tax imposed by this 
  6.16  section. 
  6.17     (f) "Minnesota charitable contribution deduction" means a 
  6.18  charitable contribution deduction under section 170 of the 
  6.19  Internal Revenue Code to or for the use of an entity described 
  6.20  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
  6.21  federal deduction for charitable contributions is limited under 
  6.22  section 170(b) of the Internal Revenue Code, the allowable 
  6.23  contributions in the year of contribution are deemed to be first 
  6.24  contributions to entities described in section 290.21, 
  6.25  subdivision 3, clauses (a) to (e). 
  6.26     Sec. 5.  Minnesota Statutes 1998, section 290.091, 
  6.27  subdivision 3, is amended to read: 
  6.28     Subd. 3.  [EXEMPTION AMOUNT.] (a) For purposes of computing 
  6.29  the alternative minimum tax, the initial exemption amount is the 
  6.30  exemption determined under section 55(d) of the Internal Revenue 
  6.31  Code, as amended through December 31, 1992, except that 
  6.32  alternative minimum taxable income as determined under this 
  6.33  section must be substituted in the computation of the phase out 
  6.34  under section 55(d)(3). equals the following amounts: 
  6.35     (1) for an individual who is not a married individual and 
  6.36  is not a surviving spouse, $30,000; 
  7.1      (2) for a married individual filing a separate return or an 
  7.2   estate or a trust, one-half of the amount determined under 
  7.3   clause (3) for joint returns; 
  7.4      (3) for an individual filing a joint return or a surviving 
  7.5   spouse, $60,000. 
  7.6      (b) The exemption amount is determined by reducing the 
  7.7   initial exemption amount, as determined under paragraph (a), by 
  7.8   25 percent of the amount of alternative minimum taxable income 
  7.9   of the taxpayer that exceeds: 
  7.10     (1) for an individual who is not a married individual and 
  7.11  is not a surviving spouse, $112,500; 
  7.12     (2) for a married individual filing a separate return or an 
  7.13  estate or a trust, one-half of the amount determined under 
  7.14  clause (3); 
  7.15     (3) for an individual filing a joint return or a surviving 
  7.16  spouse, $225,000. 
  7.17     Sec. 6.  Minnesota Statutes 1998, section 290.091, 
  7.18  subdivision 6, is amended to read: 
  7.19     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
  7.20  is allowed against the tax imposed by this chapter on 
  7.21  individuals, trusts, and estates equal to the minimum tax credit 
  7.22  for the taxable year.  The minimum tax credit equals the 
  7.23  adjusted net minimum tax for taxable years beginning after 
  7.24  December 31, 1988, reduced by the minimum tax credits allowed in 
  7.25  a prior taxable year.  The credit may not exceed the excess (if 
  7.26  any) for the taxable year of 
  7.27     (1) the regular tax, over 
  7.28     (2) the greater of (i) the tentative alternative minimum 
  7.29  tax, or (ii) zero. 
  7.30     (b) The adjusted net minimum tax for a taxable year equals 
  7.31  the lesser of the net minimum tax or the excess (if any) of 
  7.32     (1) the tentative minimum tax, over 
  7.33     (2) seven 6.8 percent of the sum of 
  7.34     (i) adjusted gross income as defined in section 62 of the 
  7.35  Internal Revenue Code, 
  7.36     (ii) interest income as defined in section 290.01, 
  8.1   subdivision 19a, clause (1), 
  8.2      (iii) the amount added to federal taxable income as 
  8.3   provided by section 290.01, subdivision 19a, clauses (5), (6), 
  8.4   and (7), 
  8.5      (iv) interest on specified private activity bonds, as 
  8.6   defined in section 57(a)(5) of the Internal Revenue Code, to the 
  8.7   extent not included under clause (ii), 
  8.8      (v) depletion as defined in section 57(a)(1), determined 
  8.9   without regard to the last sentence of paragraph (1), of the 
  8.10  Internal Revenue Code, less 
  8.11     (vi) the deductions allowed in computing alternative 
  8.12  minimum taxable income provided in subdivision 2, paragraph (a), 
  8.13  clause (2) of the first series of clauses and clauses (1), (2), 
  8.14  (3), and (4) of the second series of clauses, and 
  8.15     (vii) the exemption amount determined under subdivision 3. 
  8.16     In the case of an individual who is not a Minnesota 
  8.17  resident for the entire year, adjusted net minimum tax must be 
  8.18  multiplied by the fraction defined in section 290.06, 
  8.19  subdivision 2c, paragraph (e).  In the case of a trust or 
  8.20  estate, adjusted net minimum tax must be multiplied by the 
  8.21  fraction defined under subdivision 4, paragraph (b). 
  8.22     Sec. 7.  [EFFECTIVE DATE.] 
  8.23     Sections 1 to 6 are effective for taxable years beginning 
  8.24  after December 31, 1998. 
  8.25                             ARTICLE 2
  8.26                        PROPERTY TAX REFORM
  8.27     Section 1.  Minnesota Statutes 1998, section 273.13, 
  8.28  subdivision 22, is amended to read: 
  8.29     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
  8.30  23, real estate which is residential and used for homestead 
  8.31  purposes is class 1.  The market value of class 1a property must 
  8.32  be determined based upon the value of the house, garage, and 
  8.33  land.  
  8.34     The first $75,000 of market value of class 1a property has 
  8.35  a net class rate of one percent of its market value; and the 
  8.36  market value of class 1a property that exceeds $75,000 has a 
  9.1   class rate of 1.7 1.5 percent of its market value.  
  9.2      (b) Class 1b property includes homestead real estate or 
  9.3   homestead manufactured homes used for the purposes of a 
  9.4   homestead by 
  9.5      (1) any blind person, or the blind person and the blind 
  9.6   person's spouse; or 
  9.7      (2) any person, hereinafter referred to as "veteran," who: 
  9.8      (i) served in the active military or naval service of the 
  9.9   United States; and 
  9.10     (ii) is entitled to compensation under the laws and 
  9.11  regulations of the United States for permanent and total 
  9.12  service-connected disability due to the loss, or loss of use, by 
  9.13  reason of amputation, ankylosis, progressive muscular 
  9.14  dystrophies, or paralysis, of both lower extremities, such as to 
  9.15  preclude motion without the aid of braces, crutches, canes, or a 
  9.16  wheelchair; and 
  9.17     (iii) has acquired a special housing unit with special 
  9.18  fixtures or movable facilities made necessary by the nature of 
  9.19  the veteran's disability, or the surviving spouse of the 
  9.20  deceased veteran for as long as the surviving spouse retains the 
  9.21  special housing unit as a homestead; or 
  9.22     (3) any person who: 
  9.23     (i) is permanently and totally disabled and 
  9.24     (ii) receives 90 percent or more of total income from 
  9.25     (A) aid from any state as a result of that disability; or 
  9.26     (B) supplemental security income for the disabled; or 
  9.27     (C) workers' compensation based on a finding of total and 
  9.28  permanent disability; or 
  9.29     (D) social security disability, including the amount of a 
  9.30  disability insurance benefit which is converted to an old age 
  9.31  insurance benefit and any subsequent cost of living increases; 
  9.32  or 
  9.33     (E) aid under the federal Railroad Retirement Act of 1937, 
  9.34  United States Code Annotated, title 45, section 228b(a)5; or 
  9.35     (F) a pension from any local government retirement fund 
  9.36  located in the state of Minnesota as a result of that 
 10.1   disability; or 
 10.2      (G) pension, annuity, or other income paid as a result of 
 10.3   that disability from a private pension or disability plan, 
 10.4   including employer, employee, union, and insurance plans and 
 10.5      (iii) has household income as defined in section 290A.03, 
 10.6   subdivision 5, of $50,000 or less; or 
 10.7      (4) any person who is permanently and totally disabled and 
 10.8   whose household income as defined in section 290A.03, 
 10.9   subdivision 5, is 275 percent or less of the federal poverty 
 10.10  level. 
 10.11     Property is classified and assessed under clause (4) only 
 10.12  if the government agency or income-providing source certifies, 
 10.13  upon the request of the homestead occupant, that the homestead 
 10.14  occupant satisfies the disability requirements of this paragraph.
 10.15     Property is classified and assessed pursuant to clause (1) 
 10.16  only if the commissioner of economic security certifies to the 
 10.17  assessor that the homestead occupant satisfies the requirements 
 10.18  of this paragraph.  
 10.19     Permanently and totally disabled for the purpose of this 
 10.20  subdivision means a condition which is permanent in nature and 
 10.21  totally incapacitates the person from working at an occupation 
 10.22  which brings the person an income.  The first $32,000 market 
 10.23  value of class 1b property has a net class rate of .45 percent 
 10.24  of its market value.  The remaining market value of class 1b 
 10.25  property has a net class rate using the rates for class 1 or 
 10.26  class 2a property, whichever is appropriate, of similar market 
 10.27  value.  
 10.28     (c) Class 1c property is commercial use real property that 
 10.29  abuts a lakeshore line and is devoted to temporary and seasonal 
 10.30  residential occupancy for recreational purposes but not devoted 
 10.31  to commercial purposes for more than 250 days in the year 
 10.32  preceding the year of assessment, and that includes a portion 
 10.33  used as a homestead by the owner, which includes a dwelling 
 10.34  occupied as a homestead by a shareholder of a corporation that 
 10.35  owns the resort or a partner in a partnership that owns the 
 10.36  resort, even if the title to the homestead is held by the 
 11.1   corporation or partnership.  For purposes of this clause, 
 11.2   property is devoted to a commercial purpose on a specific day if 
 11.3   any portion of the property, excluding the portion used 
 11.4   exclusively as a homestead, is used for residential occupancy 
 11.5   and a fee is charged for residential occupancy.  Class 1c 
 11.6   property has a class rate of one percent of total market value 
 11.7   with the following limitation:  the area of the property must 
 11.8   not exceed 100 feet of lakeshore footage for each cabin or 
 11.9   campsite located on the property up to a total of 800 feet and 
 11.10  500 feet in depth, measured away from the lakeshore.  If any 
 11.11  portion of the class 1c resort property is classified as class 
 11.12  4c under subdivision 25, the entire property must meet the 
 11.13  requirements of subdivision 25, paragraph (d), clause (1), to 
 11.14  qualify for class 1c treatment under this paragraph. 
 11.15     (d) Class 1d property includes structures that meet all of 
 11.16  the following criteria: 
 11.17     (1) the structure is located on property that is classified 
 11.18  as agricultural property under section 273.13, subdivision 23; 
 11.19     (2) the structure is occupied exclusively by seasonal farm 
 11.20  workers during the time when they work on that farm, and the 
 11.21  occupants are not charged rent for the privilege of occupying 
 11.22  the property, provided that use of the structure for storage of 
 11.23  farm equipment and produce does not disqualify the property from 
 11.24  classification under this paragraph; 
 11.25     (3) the structure meets all applicable health and safety 
 11.26  requirements for the appropriate season; and 
 11.27     (4) the structure is not salable as residential property 
 11.28  because it does not comply with local ordinances relating to 
 11.29  location in relation to streets or roads. 
 11.30     The market value of class 1d property has the same class 
 11.31  rates as class 1a property under paragraph (a). 
 11.32     Sec. 2.  Minnesota Statutes 1998, section 273.13, 
 11.33  subdivision 23, is amended to read: 
 11.34     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 11.35  land including any improvements that is homesteaded.  The market 
 11.36  value of the house and garage and immediately surrounding one 
 12.1   acre of land has the same class rates as class 1a property under 
 12.2   subdivision 22.  The value of the remaining land including 
 12.3   improvements up to $115,000 has a net class rate of 0.35 0.3 
 12.4   percent of market value.  The remaining value of class 2a 
 12.5   property over $115,000 of market value that does not exceed 320 
 12.6   acres has a net class rate of 0.8 0.7 percent of market value.  
 12.7   The remaining property over $115,000 market value in excess of 
 12.8   320 acres has a class rate of 1.25 one percent of market value. 
 12.9      (b) Class 2b property is (1) real estate, rural in 
 12.10  character and used exclusively for growing trees for timber, 
 12.11  lumber, and wood and wood products; (2) real estate that is not 
 12.12  improved with a structure and is used exclusively for growing 
 12.13  trees for timber, lumber, and wood and wood products, if the 
 12.14  owner has participated or is participating in a cost-sharing 
 12.15  program for afforestation, reforestation, or timber stand 
 12.16  improvement on that particular property, administered or 
 12.17  coordinated by the commissioner of natural resources; (3) real 
 12.18  estate that is nonhomestead agricultural land; or (4) a landing 
 12.19  area or public access area of a privately owned public use 
 12.20  airport.  Class 2b property has a net class rate of 1.25 one 
 12.21  percent of market value. 
 12.22     (c) Agricultural land as used in this section means 
 12.23  contiguous acreage of ten acres or more, used during the 
 12.24  preceding year for agricultural purposes.  "Agricultural 
 12.25  purposes" as used in this section means the raising or 
 12.26  cultivation of agricultural products or enrollment in the 
 12.27  Reinvest in Minnesota program under sections 103F.501 to 
 12.28  103F.535 or the federal Conservation Reserve Program as 
 12.29  contained in Public Law Number 99-198.  Contiguous acreage on 
 12.30  the same parcel, or contiguous acreage on an immediately 
 12.31  adjacent parcel under the same ownership, may also qualify as 
 12.32  agricultural land, but only if it is pasture, timber, waste, 
 12.33  unusable wild land, or land included in state or federal farm 
 12.34  programs.  Agricultural classification for property shall be 
 12.35  determined excluding the house, garage, and immediately 
 12.36  surrounding one acre of land, and shall not be based upon the 
 13.1   market value of any residential structures on the parcel or 
 13.2   contiguous parcels under the same ownership. 
 13.3      (d) Real estate, excluding the house, garage, and 
 13.4   immediately surrounding one acre of land, of less than ten acres 
 13.5   which is exclusively and intensively used for raising or 
 13.6   cultivating agricultural products, shall be considered as 
 13.7   agricultural land.  
 13.8      Land shall be classified as agricultural even if all or a 
 13.9   portion of the agricultural use of that property is the leasing 
 13.10  to, or use by another person for agricultural purposes. 
 13.11     Classification under this subdivision is not determinative 
 13.12  for qualifying under section 273.111. 
 13.13     The property classification under this section supersedes, 
 13.14  for property tax purposes only, any locally administered 
 13.15  agricultural policies or land use restrictions that define 
 13.16  minimum or maximum farm acreage. 
 13.17     (e) The term "agricultural products" as used in this 
 13.18  subdivision includes production for sale of:  
 13.19     (1) livestock, dairy animals, dairy products, poultry and 
 13.20  poultry products, fur-bearing animals, horticultural and nursery 
 13.21  stock described in sections 18.44 to 18.61, fruit of all kinds, 
 13.22  vegetables, forage, grains, bees, and apiary products by the 
 13.23  owner; 
 13.24     (2) fish bred for sale and consumption if the fish breeding 
 13.25  occurs on land zoned for agricultural use; 
 13.26     (3) the commercial boarding of horses if the boarding is 
 13.27  done in conjunction with raising or cultivating agricultural 
 13.28  products as defined in clause (1); 
 13.29     (4) property which is owned and operated by nonprofit 
 13.30  organizations used for equestrian activities, excluding racing; 
 13.31  and 
 13.32     (5) game birds and waterfowl bred and raised for use on a 
 13.33  shooting preserve licensed under section 97A.115.  
 13.34     (f) If a parcel used for agricultural purposes is also used 
 13.35  for commercial or industrial purposes, including but not limited 
 13.36  to:  
 14.1      (1) wholesale and retail sales; 
 14.2      (2) processing of raw agricultural products or other goods; 
 14.3      (3) warehousing or storage of processed goods; and 
 14.4      (4) office facilities for the support of the activities 
 14.5   enumerated in clauses (1), (2), and (3), 
 14.6   the assessor shall classify the part of the parcel used for 
 14.7   agricultural purposes as class 1b, 2a, or 2b, whichever is 
 14.8   appropriate, and the remainder in the class appropriate to its 
 14.9   use.  The grading, sorting, and packaging of raw agricultural 
 14.10  products for first sale is considered an agricultural purpose.  
 14.11  A greenhouse or other building where horticultural or nursery 
 14.12  products are grown that is also used for the conduct of retail 
 14.13  sales must be classified as agricultural if it is primarily used 
 14.14  for the growing of horticultural or nursery products from seed, 
 14.15  cuttings, or roots and occasionally as a showroom for the retail 
 14.16  sale of those products.  Use of a greenhouse or building only 
 14.17  for the display of already grown horticultural or nursery 
 14.18  products does not qualify as an agricultural purpose.  
 14.19     The assessor shall determine and list separately on the 
 14.20  records the market value of the homestead dwelling and the one 
 14.21  acre of land on which that dwelling is located.  If any farm 
 14.22  buildings or structures are located on this homesteaded acre of 
 14.23  land, their market value shall not be included in this separate 
 14.24  determination.  
 14.25     (g) To qualify for classification under paragraph (b), 
 14.26  clause (4), a privately owned public use airport must be 
 14.27  licensed as a public airport under section 360.018.  For 
 14.28  purposes of paragraph (b), clause (4), "landing area" means that 
 14.29  part of a privately owned public use airport properly cleared, 
 14.30  regularly maintained, and made available to the public for use 
 14.31  by aircraft and includes runways, taxiways, aprons, and sites 
 14.32  upon which are situated landing or navigational aids.  A landing 
 14.33  area also includes land underlying both the primary surface and 
 14.34  the approach surfaces that comply with all of the following:  
 14.35     (i) the land is properly cleared and regularly maintained 
 14.36  for the primary purposes of the landing, taking off, and taxiing 
 15.1   of aircraft; but that portion of the land that contains 
 15.2   facilities for servicing, repair, or maintenance of aircraft is 
 15.3   not included as a landing area; 
 15.4      (ii) the land is part of the airport property; and 
 15.5      (iii) the land is not used for commercial or residential 
 15.6   purposes. 
 15.7   The land contained in a landing area under paragraph (b), clause 
 15.8   (4), must be described and certified by the commissioner of 
 15.9   transportation.  The certification is effective until it is 
 15.10  modified, or until the airport or landing area no longer meets 
 15.11  the requirements of paragraph (b), clause (4).  For purposes of 
 15.12  paragraph (b), clause (4), "public access area" means property 
 15.13  used as an aircraft parking ramp, apron, or storage hangar, or 
 15.14  an arrival and departure building in connection with the airport.
 15.15     Sec. 3.  Minnesota Statutes 1998, section 273.13, 
 15.16  subdivision 24, is amended to read: 
 15.17     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 15.18  property and utility real and personal property, except class 5 
 15.19  property as identified in subdivision 31, clause (1), is class 
 15.20  3a.  Each parcel has a class rate of 2.45 two percent of the 
 15.21  first tier of market value, and 3.5 three percent of the 
 15.22  remaining market value, except that in the case of contiguous 
 15.23  parcels of commercial and industrial property owned by the same 
 15.24  person or entity, only the value equal to the first-tier value 
 15.25  of the contiguous parcels qualifies for the reduced class rate.  
 15.26  For the purposes of this subdivision, the first tier means the 
 15.27  first $150,000 of market value.  In the case of utility property 
 15.28  owned by one person or entity, only one parcel in each county 
 15.29  has a reduced class rate on the first tier of market value. 
 15.30     For purposes of this paragraph, parcels are considered to 
 15.31  be contiguous even if they are separated from each other by a 
 15.32  road, street, vacant lot, waterway, or other similar intervening 
 15.33  type of property. 
 15.34     (b) Employment property defined in section 469.166, during 
 15.35  the period provided in section 469.170, shall constitute class 
 15.36  3b and has a the class rate of 2.3 percent of the first $50,000 
 16.1   of market value and 3.5 percent of the remainder, except that 
 16.2   for employment property located in a border city enterprise zone 
 16.3   designated pursuant to section 469.168, subdivision 4, paragraph 
 16.4   (c), the class rate of the first tier of market value and the 
 16.5   class rate of the remainder is rates determined under paragraph 
 16.6   (a), unless the governing body of the city designated as an 
 16.7   enterprise zone determines that a specific parcel shall be 
 16.8   assessed pursuant to the first clause of this sentence.  The 
 16.9   governing body may provide for assessment under the first clause 
 16.10  of the preceding sentence only for property which is located in 
 16.11  an area which has been designated by the governing body for the 
 16.12  receipt of tax reductions authorized by section 469.171, 
 16.13  subdivision 1. 
 16.14     (c) Structures which are (i) located on property classified 
 16.15  as class 3a, (ii) constructed under an initial building permit 
 16.16  issued after January 2, 1996, (iii) located in a transit zone as 
 16.17  defined under section 473.3915, subdivision 3, (iv) located 
 16.18  within the boundaries of a school district, and (v) not 
 16.19  primarily used for retail or transient lodging purposes, shall 
 16.20  have a class rate equal to 85 percent of the class rate of the 
 16.21  second tier of the commercial property rate under paragraph (a) 
 16.22  on any portion of the market value that does not qualify for the 
 16.23  first tier class rate under paragraph (a).  As used in item (v), 
 16.24  a structure is primarily used for retail or transient lodging 
 16.25  purposes if over 50 percent of its square footage is used for 
 16.26  those purposes.  A class rate equal to 85 percent of the class 
 16.27  rate of the second tier of the commercial property class rate 
 16.28  under paragraph (a) shall also apply to improvements to existing 
 16.29  structures that meet the requirements of items (i) to (v) if the 
 16.30  improvements are constructed under an initial building permit 
 16.31  issued after January 2, 1996, even if the remainder of the 
 16.32  structure was constructed prior to January 2, 1996.  For the 
 16.33  purposes of this paragraph, a structure shall be considered to 
 16.34  be located in a transit zone if any portion of the structure 
 16.35  lies within the zone.  If any property once eligible for 
 16.36  treatment under this paragraph ceases to remain eligible due to 
 17.1   revisions in transit zone boundaries, the property shall 
 17.2   continue to receive treatment under this paragraph for a period 
 17.3   of three years. 
 17.4      Sec. 4.  Minnesota Statutes 1998, section 273.13, 
 17.5   subdivision 25, is amended to read: 
 17.6      Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 17.7   estate containing four or more units and used or held for use by 
 17.8   the owner or by the tenants or lessees of the owner as a 
 17.9   residence for rental periods of 30 days or more.  Class 4a also 
 17.10  includes hospitals licensed under sections 144.50 to 144.56, 
 17.11  other than hospitals exempt under section 272.02, and contiguous 
 17.12  property used for hospital purposes, without regard to whether 
 17.13  the property has been platted or subdivided.  Class 4a property 
 17.14  in a city with a population of 5,000 or less, that is (1) 
 17.15  located outside of the metropolitan area, as defined in section 
 17.16  473.121, subdivision 2, or outside any county contiguous to the 
 17.17  metropolitan area, and (2) whose city boundary is at least 15 
 17.18  miles from the boundary of any city with a population greater 
 17.19  than 5,000 has a class rate of 2.15 percent of market value.  
 17.20  All other class 4a property has a class rate of 2.5 two percent 
 17.21  of market value.  For purposes of this paragraph, population has 
 17.22  the same meaning given in section 477A.011, subdivision 3. 
 17.23     (b) Class 4b includes: 
 17.24     (1) residential real estate containing less than four units 
 17.25  that does not qualify as class 4bb, other than seasonal 
 17.26  residential, and recreational; 
 17.27     (2) manufactured homes not classified under any other 
 17.28  provision; 
 17.29     (3) a dwelling, garage, and surrounding one acre of 
 17.30  property on a nonhomestead farm classified under subdivision 23, 
 17.31  paragraph (b) containing two or three units; 
 17.32     (4) unimproved property that is classified residential as 
 17.33  determined under subdivision 33.  
 17.34     Class 4b property has a class rate of 1.7 1.5 percent of 
 17.35  market value.  
 17.36     (c) Class 4bb includes: 
 18.1      (1) nonhomestead residential real estate containing one 
 18.2   unit, other than seasonal residential, and recreational; and 
 18.3      (2) a single family dwelling, garage, and surrounding one 
 18.4   acre of property on a nonhomestead farm classified under 
 18.5   subdivision 23, paragraph (b). 
 18.6      Class 4bb has a class rate of 1.25 one percent on the first 
 18.7   $75,000 of market value and a class rate of 1.7 1.5 percent of 
 18.8   its market value that exceeds $75,000. 
 18.9      Property that has been classified as seasonal recreational 
 18.10  residential property at any time during which it has been owned 
 18.11  by the current owner or spouse of the current owner does not 
 18.12  qualify for class 4bb. 
 18.13     (d) Class 4c property includes: 
 18.14     (1) except as provided in subdivision 22, paragraph (c), 
 18.15  real property devoted to temporary and seasonal residential 
 18.16  occupancy for recreation purposes, including real property 
 18.17  devoted to temporary and seasonal residential occupancy for 
 18.18  recreation purposes and not devoted to commercial purposes for 
 18.19  more than 250 days in the year preceding the year of 
 18.20  assessment.  For purposes of this clause, property is devoted to 
 18.21  a commercial purpose on a specific day if any portion of the 
 18.22  property is used for residential occupancy, and a fee is charged 
 18.23  for residential occupancy.  In order for a property to be 
 18.24  classified as class 4c, seasonal recreational residential for 
 18.25  commercial purposes, at least 40 percent of the annual gross 
 18.26  lodging receipts related to the property must be from business 
 18.27  conducted during 90 consecutive days and either (i) at least 60 
 18.28  percent of all paid bookings by lodging guests during the year 
 18.29  must be for periods of at least two consecutive nights; or (ii) 
 18.30  at least 20 percent of the annual gross receipts must be from 
 18.31  charges for rental of fish houses, boats and motors, 
 18.32  snowmobiles, downhill or cross-country ski equipment, or charges 
 18.33  for marina services, launch services, and guide services, or the 
 18.34  sale of bait and fishing tackle.  For purposes of this 
 18.35  determination, a paid booking of five or more nights shall be 
 18.36  counted as two bookings.  Class 4c also includes commercial use 
 19.1   real property used exclusively for recreational purposes in 
 19.2   conjunction with class 4c property devoted to temporary and 
 19.3   seasonal residential occupancy for recreational purposes, up to 
 19.4   a total of two acres, provided the property is not devoted to 
 19.5   commercial recreational use for more than 250 days in the year 
 19.6   preceding the year of assessment and is located within two miles 
 19.7   of the class 4c property with which it is used.  Class 4c 
 19.8   property classified in this clause also includes the remainder 
 19.9   of class 1c resorts provided that the entire property including 
 19.10  that portion of the property classified as class 1c also meets 
 19.11  the requirements for class 4c under this clause; otherwise the 
 19.12  entire property is classified as class 3.  Owners of real 
 19.13  property devoted to temporary and seasonal residential occupancy 
 19.14  for recreation purposes and all or a portion of which was 
 19.15  devoted to commercial purposes for not more than 250 days in the 
 19.16  year preceding the year of assessment desiring classification as 
 19.17  class 1c or 4c, must submit a declaration to the assessor 
 19.18  designating the cabins or units occupied for 250 days or less in 
 19.19  the year preceding the year of assessment by January 15 of the 
 19.20  assessment year.  Those cabins or units and a proportionate 
 19.21  share of the land on which they are located will be designated 
 19.22  class 1c or 4c as otherwise provided.  The remainder of the 
 19.23  cabins or units and a proportionate share of the land on which 
 19.24  they are located will be designated as class 3a.  The owner of 
 19.25  property desiring designation as class 1c or 4c property must 
 19.26  provide guest registers or other records demonstrating that the 
 19.27  units for which class 1c or 4c designation is sought were not 
 19.28  occupied for more than 250 days in the year preceding the 
 19.29  assessment if so requested.  The portion of a property operated 
 19.30  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 19.31  nonresidential facility operated on a commercial basis not 
 19.32  directly related to temporary and seasonal residential occupancy 
 19.33  for recreation purposes shall not qualify for class 1c or 4c; 
 19.34     (2) qualified property used as a golf course if: 
 19.35     (i) it is open to the public on a daily fee basis.  It may 
 19.36  charge membership fees or dues, but a membership fee may not be 
 20.1   required in order to use the property for golfing, and its green 
 20.2   fees for golfing must be comparable to green fees typically 
 20.3   charged by municipal courses; and 
 20.4      (ii) it meets the requirements of section 273.112, 
 20.5   subdivision 3, paragraph (d). 
 20.6      A structure used as a clubhouse, restaurant, or place of 
 20.7   refreshment in conjunction with the golf course is classified as 
 20.8   class 3a property. 
 20.9      (3) real property up to a maximum of one acre of land owned 
 20.10  by a nonprofit community service oriented organization; provided 
 20.11  that the property is not used for a revenue-producing activity 
 20.12  for more than six days in the calendar year preceding the year 
 20.13  of assessment and the property is not used for residential 
 20.14  purposes on either a temporary or permanent basis.  For purposes 
 20.15  of this clause, a "nonprofit community service oriented 
 20.16  organization" means any corporation, society, association, 
 20.17  foundation, or institution organized and operated exclusively 
 20.18  for charitable, religious, fraternal, civic, or educational 
 20.19  purposes, and which is exempt from federal income taxation 
 20.20  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 20.21  Revenue Code of 1986, as amended through December 31, 1990.  For 
 20.22  purposes of this clause, "revenue-producing activities" shall 
 20.23  include but not be limited to property or that portion of the 
 20.24  property that is used as an on-sale intoxicating liquor or 3.2 
 20.25  percent malt liquor establishment licensed under chapter 340A, a 
 20.26  restaurant open to the public, bowling alley, a retail store, 
 20.27  gambling conducted by organizations licensed under chapter 349, 
 20.28  an insurance business, or office or other space leased or rented 
 20.29  to a lessee who conducts a for-profit enterprise on the 
 20.30  premises.  Any portion of the property which is used for 
 20.31  revenue-producing activities for more than six days in the 
 20.32  calendar year preceding the year of assessment shall be assessed 
 20.33  as class 3a.  The use of the property for social events open 
 20.34  exclusively to members and their guests for periods of less than 
 20.35  24 hours, when an admission is not charged nor any revenues are 
 20.36  received by the organization shall not be considered a 
 21.1   revenue-producing activity; 
 21.2      (4) post-secondary student housing of not more than one 
 21.3   acre of land that is owned by a nonprofit corporation organized 
 21.4   under chapter 317A and is used exclusively by a student 
 21.5   cooperative, sorority, or fraternity for on-campus housing or 
 21.6   housing located within two miles of the border of a college 
 21.7   campus; 
 21.8      (5) manufactured home parks as defined in section 327.14, 
 21.9   subdivision 3; and 
 21.10     (6) real property that is actively and exclusively devoted 
 21.11  to indoor fitness, health, social, recreational, and related 
 21.12  uses, is owned and operated by a not-for-profit corporation, and 
 21.13  is located within the metropolitan area as defined in section 
 21.14  473.121, subdivision 2. 
 21.15     Class 4c property has a class rate of 1.8 1.5 percent of 
 21.16  market value, except that (i) for each parcel of seasonal 
 21.17  residential recreational property not used for commercial 
 21.18  purposes the first $75,000 of market value has a class rate 
 21.19  of 1.25 one percent, and the market value that exceeds $75,000 
 21.20  has a class rate of 2.2 1.8 percent, (ii) manufactured home 
 21.21  parks assessed under clause (5) have a class rate of two 1.5 
 21.22  percent, and (iii) property described in paragraph (d), clause 
 21.23  (4), has the same class rate as the rate applicable to the first 
 21.24  tier of class 4bb nonhomestead residential real estate under 
 21.25  paragraph (c).  
 21.26     (e) Class 4d property is qualifying low-income rental 
 21.27  housing certified to the assessor by the housing finance agency 
 21.28  under sections 273.126 and 462A.071.  Class 4d includes land in 
 21.29  proportion to the total market value of the building that is 
 21.30  qualifying low-income rental housing.  For all properties 
 21.31  qualifying as class 4d, the market value determined by the 
 21.32  assessor must be based on the normal approach to value using 
 21.33  normal unrestricted rents. 
 21.34     Class 4d property has a class rate of one percent of market 
 21.35  value.  
 21.36     (f) Class 4e property consists of the residential portion 
 22.1   of any structure located within a city that was converted from 
 22.2   nonresidential use to residential use, provided that: 
 22.3      (1) the structure had formerly been used as a warehouse; 
 22.4      (2) the structure was originally constructed prior to 1940; 
 22.5      (3) the conversion was done after December 31, 1995, but 
 22.6   before January 1, 2003; and 
 22.7      (4) the conversion involved an investment of at least 
 22.8   $25,000 per residential unit. 
 22.9      Class 4e property has a class rate of 2.3 percent, provided 
 22.10  that a structure is eligible for class 4e classification only in 
 22.11  the 12 assessment years immediately following the conversion. 
 22.12     Sec. 5.  Minnesota Statutes 1998, section 273.13, 
 22.13  subdivision 31, is amended to read: 
 22.14     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 22.15     (1) tools, implements, and machinery of an electric 
 22.16  generating, transmission, or distribution system or a pipeline 
 22.17  system transporting or distributing water, gas, crude oil, or 
 22.18  petroleum products or mains and pipes used in the distribution 
 22.19  of steam or hot or chilled water for heating or cooling 
 22.20  buildings, which are fixtures; 
 22.21     (2) unmined iron ore and low-grade iron-bearing formations 
 22.22  as defined in section 273.14; and 
 22.23     (3) all other property not otherwise classified. 
 22.24     Class 5 property has a class rate of 3.5 three percent of 
 22.25  market value. 
 22.26     Sec. 6.  Minnesota Statutes 1998, section 273.1382, 
 22.27  subdivision 1, is amended to read: 
 22.28     Subdivision 1.  [EDUCATION HOMESTEAD CREDIT.] Each year, 
 22.29  the respective county auditors shall determine the initial tax 
 22.30  rate for each school district for the general education levy 
 22.31  certified under section 126C.13, subdivision 2 or 3.  That rate 
 22.32  plus the school district's education homestead credit tax rate 
 22.33  adjustment under section 275.08, subdivision 1e, shall be the 
 22.34  general education homestead credit local tax rate for the 
 22.35  district.  The auditor shall then determine a general education 
 22.36  homestead credit for each homestead within the county equal to 
 23.1   68 percent for taxes payable in 1999 and 69 100 percent for 
 23.2   taxes payable in 2000 and thereafter of the general education 
 23.3   homestead credit local tax rate times the net tax capacity of 
 23.4   the homestead for the taxes payable year.  The amount of general 
 23.5   education homestead credit for a homestead may not exceed $320 
 23.6   for taxes payable in 1999 and $335 $430 for taxes payable in 
 23.7   2000 and thereafter.  In the case of an agricultural homestead, 
 23.8   only the net tax capacity of the house, garage, and surrounding 
 23.9   one acre of land shall be used in determining the property's 
 23.10  education homestead credit. 
 23.11     Sec. 7.  [EDUCATION LEVY REDUCTION.] 
 23.12     In addition to any amount appropriated by other law, 
 23.13  $90,000,000 in fiscal year 2001 and $100,000,000 in fiscal year 
 23.14  2002 and subsequent years are appropriated from the general fund 
 23.15  to the commissioner of children, families, and learning to fund 
 23.16  a reduction in the statewide general education property tax levy.
 23.17     Sec. 8.  [REPEALER.] 
 23.18     Minnesota Statutes 1998, sections 273.127; and 273.1382, 
 23.19  subdivision 1a, are repealed. 
 23.20     Sec. 9.  [EFFECTIVE DATE.] 
 23.21     Sections 1 to 6 and 8 are effective for property taxes 
 23.22  payable in 2000 and subsequent years. 
 23.23                             ARTICLE 3
 23.24                         HEALTH CARE TAXES
 23.25     Section 1.  Minnesota Statutes 1998, section 60A.15, 
 23.26  subdivision 1, is amended to read: 
 23.27     Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
 23.28  before April 1, June 1, and December 1 of each year, every 
 23.29  domestic and foreign company, including town and farmers' mutual 
 23.30  insurance companies, domestic mutual insurance companies, and 
 23.31  marine insurance companies, health maintenance organizations, 
 23.32  community integrated service networks, and nonprofit health 
 23.33  service plan corporations, shall pay to the commissioner of 
 23.34  revenue installments equal to one-third of the insurer's total 
 23.35  estimated tax for the current year.  Except as provided 
 23.36  in paragraphs paragraph (d), (e), (h), and (i), installments 
 24.1   must be based on a sum equal to two percent of the premiums 
 24.2   described in paragraph (b). 
 24.3      (b) Installments under paragraph (a), or (d), or (e) are 
 24.4   percentages of gross premiums less return premiums on all direct 
 24.5   business received by the insurer in this state, or by its agents 
 24.6   for it, in cash or otherwise, during such year. 
 24.7      (c) Failure of a company to make payments of at least 
 24.8   one-third of either (1) the total tax paid during the previous 
 24.9   calendar year or (2) 80 percent of the actual tax for the 
 24.10  current calendar year shall subject the company to the penalty 
 24.11  and interest provided in this section, unless the total tax for 
 24.12  the current tax year is $500 or less. 
 24.13     (d) For health maintenance organizations, nonprofit health 
 24.14  service plan corporations, and community integrated service 
 24.15  networks, the installments must be based on an amount determined 
 24.16  under paragraph (h) or (i). 
 24.17     (e) For purposes of computing installments for town and 
 24.18  farmers' mutual insurance companies and for mutual property 
 24.19  casualty companies with total assets on December 31, 1989, of 
 24.20  $1,600,000,000 or less, the following rates apply: 
 24.21     (1) for all life insurance, two percent; 
 24.22     (2) for town and farmers' mutual insurance companies and 
 24.23  for mutual property and casualty companies with total assets of 
 24.24  $5,000,000 or less, on all other coverages, one percent; and 
 24.25     (3) for mutual property and casualty companies with total 
 24.26  assets on December 31, 1989, of $1,600,000,000 or less, on all 
 24.27  other coverages, 1.26 percent. 
 24.28     (f) (e) If the aggregate amount of premium tax payments 
 24.29  under this section and the fire marshal tax payments under 
 24.30  section 299F.21 made during a calendar year is equal to or 
 24.31  exceeds $120,000, all tax payments in the subsequent calendar 
 24.32  year must be paid by means of a funds transfer as defined in 
 24.33  section 336.4A-104, paragraph (a).  The funds transfer payment 
 24.34  date, as defined in section 336.4A-401, must be on or before the 
 24.35  date the payment is due.  If the date the payment is due is not 
 24.36  a funds transfer business day, as defined in section 336.4A-105, 
 25.1   paragraph (a), clause (4), the payment date must be on or before 
 25.2   the funds transfer business day next following the date the 
 25.3   payment is due.  
 25.4      (g) (f) Premiums under medical assistance, general 
 25.5   assistance medical care, the MinnesotaCare program, and the 
 25.6   Minnesota comprehensive health insurance plan and all payments, 
 25.7   revenues, and reimbursements received from the federal 
 25.8   government for Medicare-related coverage as defined in section 
 25.9   62A.31, subdivision 3, paragraph (e), are not subject to tax 
 25.10  under this section. 
 25.11     (h) For calendar years 1997, 1998, and 1999, the 
 25.12  installments for health maintenance organizations, community 
 25.13  integrated service networks, and nonprofit health service plan 
 25.14  corporations must be based on an amount equal to one percent of 
 25.15  premiums described under paragraph (b).  Health maintenance 
 25.16  organizations, community integrated service networks, and 
 25.17  nonprofit health service plan corporations that have met the 
 25.18  cost containment goals established under section 62J.04 in the 
 25.19  individual and small employer market for calendar year 1996 are 
 25.20  exempt from payment of the tax imposed under this section for 
 25.21  premiums paid after March 30, 1997, and before April 1, 1998.  
 25.22  Health maintenance organizations, community integrated service 
 25.23  networks, and nonprofit health service plan corporations that 
 25.24  have met the cost containment goals established under section 
 25.25  62J.04 in the individual and small employer market for calendar 
 25.26  year 1997 are exempt from payment of the tax imposed under this 
 25.27  section for premiums paid after March 30, 1998, and before April 
 25.28  1, 1999.  Health maintenance organizations, community integrated 
 25.29  service networks, and nonprofit health service plan corporations 
 25.30  that have met the cost containment goals established under 
 25.31  section 62J.04 in the individual and small employer market for 
 25.32  calendar year 1998 are exempt from payment of the tax imposed 
 25.33  under this section for premiums paid after March 30, 1999, and 
 25.34  before January 1, 2000.  
 25.35     (i) For calendar years after 1999, the commissioner of 
 25.36  finance shall determine the balance of the health care access 
 26.1   fund on September 1 of each year beginning September 1, 1999.  
 26.2   If the commissioner determines that there is no structural 
 26.3   deficit for the next fiscal year, no tax shall be imposed under 
 26.4   paragraph (d) for the following calendar year.  If the 
 26.5   commissioner determines that there will be a structural deficit 
 26.6   in the fund for the following fiscal year, then the 
 26.7   commissioner, in consultation with the commissioner of revenue, 
 26.8   shall determine the amount needed to eliminate the structural 
 26.9   deficit and a tax shall be imposed under paragraph (d) for the 
 26.10  following calendar year.  The commissioner shall determine the 
 26.11  rate of the tax as either one-quarter of one percent, one-half 
 26.12  of one percent, three-quarters of one percent, or one percent of 
 26.13  premiums described in paragraph (b), whichever is the lowest of 
 26.14  those rates that the commissioner determines will produce 
 26.15  sufficient revenue to eliminate the projected structural 
 26.16  deficit.  The commissioner of finance shall publish in the State 
 26.17  Register by October 1 of each year the amount of tax to be 
 26.18  imposed for the following calendar year.  In determining the 
 26.19  structural balance of the health care access fund for fiscal 
 26.20  years 2000 and 2001, the commissioner shall disregard the 
 26.21  transfer amount from the health care access fund to the general 
 26.22  fund for expenditures associated with the services provided to 
 26.23  pregnant women and children under the age of two enrolled in the 
 26.24  MinnesotaCare program.  
 26.25     (j) In approving the premium rates as required in sections 
 26.26  62L.08, subdivision 8, and 62A.65, subdivision 3, the 
 26.27  commissioners of health and commerce shall ensure that any 
 26.28  exemption from the tax as described in paragraphs (h) and (i) is 
 26.29  reflected in the premium rate. 
 26.30     Sec. 2.  Minnesota Statutes 1998, section 62J.041, 
 26.31  subdivision 1, is amended to read: 
 26.32     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 26.33  section, the following definitions apply. 
 26.34     (b) "Health plan company" has the definition provided in 
 26.35  section 62Q.01. 
 26.36     (c) "Total expenditures" means incurred claims or 
 27.1   expenditures on health care services, administrative expenses, 
 27.2   charitable contributions, and all other payments made by health 
 27.3   plan companies out of premium revenues. 
 27.4      (d) "Net expenditures" means total expenditures minus 
 27.5   exempted taxes and assessments and payments or allocations made 
 27.6   to establish or maintain reserves.  
 27.7      (e) "Exempted taxes and assessments" means direct payments 
 27.8   for taxes to government agencies, contributions to the Minnesota 
 27.9   comprehensive health association, the medical assistance 
 27.10  provider's surcharge under section 256.9657, the MinnesotaCare 
 27.11  provider tax under Minnesota Statutes 1998, section 295.52, 
 27.12  assessments by the health coverage reinsurance association, 
 27.13  assessments by the Minnesota life and health insurance guaranty 
 27.14  association, assessments by the Minnesota risk adjustment 
 27.15  association, and any new assessments imposed by federal or state 
 27.16  law. 
 27.17     (f) "Consumer cost-sharing or subscriber liability" means 
 27.18  enrollee coinsurance, copayment, deductible payments, and 
 27.19  amounts in excess of benefit plan maximums. 
 27.20     Sec. 3.  Minnesota Statutes 1998, section 62Q.095, 
 27.21  subdivision 6, is amended to read: 
 27.22     Subd. 6.  [EXEMPTION.] A health plan company, to the extent 
 27.23  that it operates as a staff model health plan company as defined 
 27.24  in section 295.50, subdivision 12b, by employing allied 
 27.25  independent health care providers to deliver health care 
 27.26  services to enrollees, is exempt from this section.  For 
 27.27  purposes of this subdivision, "staff model health plan company" 
 27.28  means a health plan company as defined in section 62Q.01, 
 27.29  subdivision 4, which employs one or more types of health care 
 27.30  providers to deliver health care services to the health plan 
 27.31  company's enrollees. 
 27.32     Sec. 4.  Minnesota Statutes 1998, section 62R.24, is 
 27.33  amended to read: 
 27.34     62R.24 [TAXES AND ASSESSMENTS.] 
 27.35     Effective January 1, 1998, as a condition to entering a 
 27.36  contract described in section 62R.17, a self-insured employer 
 28.1   plan or the qualified employer must voluntarily pay the one 
 28.2   percent premium tax imposed in section 60A.15, subdivision 1, 
 28.3   paragraph (d), and assessments by the Minnesota Comprehensive 
 28.4   Health Association. 
 28.5      Sec. 5.  Minnesota Statutes 1998, section 214.16, 
 28.6   subdivision 2, is amended to read: 
 28.7      Subd. 2.  [BOARD COOPERATION REQUIRED.] The board shall 
 28.8   assist the commissioner of health in data collection activities 
 28.9   required under Laws 1992, chapter 549, article 7, and shall 
 28.10  assist the commissioner of revenue in activities related to 
 28.11  collection of the health care provider tax required under Laws 
 28.12  1992, chapter 549, article 9.  Upon the request of the 
 28.13  commissioner or the commissioner of revenue, the board shall 
 28.14  make available names and addresses of current licensees and 
 28.15  provide other information or assistance as needed. 
 28.16     Sec. 6.  Minnesota Statutes 1998, section 214.16, 
 28.17  subdivision 3, is amended to read: 
 28.18     Subd. 3.  [GROUNDS FOR DISCIPLINARY ACTION.] The board 
 28.19  shall take disciplinary action, which may include license 
 28.20  revocation, against a regulated person for: 
 28.21     (1) intentional failure to provide the commissioner of 
 28.22  health with the data required under chapter 62J; 
 28.23     (2) intentional failure to provide the commissioner of 
 28.24  revenue with data on gross revenue and other information 
 28.25  required for the commissioner to implement sections 295.50 to 
 28.26  295.58; 
 28.27     (3) intentional failure to pay the health care provider tax 
 28.28  required under section 295.52; and 
 28.29     (4) (2) entering into a contract or arrangement that is 
 28.30  prohibited under sections 62J.70 to 62J.73. 
 28.31     Sec. 7.  Minnesota Statutes 1998, section 256L.02, 
 28.32  subdivision 3, is amended to read: 
 28.33     Subd. 3.  [FINANCIAL MANAGEMENT.] (a) The commissioner 
 28.34  shall manage spending for the MinnesotaCare program in a manner 
 28.35  that maintains a minimum reserve in accordance with section 
 28.36  16A.76.  As part of each state revenue and expenditure forecast, 
 29.1   the commissioner must make an assessment of the expected 
 29.2   expenditures for the covered services for the remainder of the 
 29.3   current biennium and for the following biennium.  The estimated 
 29.4   expenditure, including the reserve requirements described in 
 29.5   section 16A.76, shall be compared to an estimate of the revenues 
 29.6   that will be available in the health care access fund the 
 29.7   appropriations for the MinnesotaCare program.  In making the 
 29.8   comparison for the following biennium, the commissioner shall 
 29.9   assume that the appropriations for the current biennium will be 
 29.10  increased by the projected increase in the consumer price index. 
 29.11  Based on this comparison, and after consulting with the chairs 
 29.12  of the house ways and means committee and the senate finance 
 29.13  committee, and the legislative commission on health care access, 
 29.14  the commissioner shall, as necessary, make the adjustments 
 29.15  specified in paragraph (b) to ensure that expenditures remain 
 29.16  within the limits of available revenues for the remainder of the 
 29.17  current biennium and for the following biennium actual and 
 29.18  projected appropriations for the MinnesotaCare program.  The 
 29.19  commissioner shall not hire additional staff using 
 29.20  appropriations from the health care access fund for 
 29.21  MinnesotaCare until the commissioner of finance makes a 
 29.22  determination that the adjustments implemented under paragraph 
 29.23  (b) are sufficient to allow MinnesotaCare expenditures to remain 
 29.24  within the limits of available revenues actual and projected 
 29.25  appropriations for the remainder of the current biennium and for 
 29.26  the following biennium. 
 29.27     (b) The adjustments the commissioner shall use must be 
 29.28  implemented in this order:  first, stop enrollment of single 
 29.29  adults and households without children; second, upon 45 days' 
 29.30  notice, stop coverage of single adults and households without 
 29.31  children already enrolled in the MinnesotaCare program; third, 
 29.32  upon 90 days' notice, decrease the premium subsidy amounts by 
 29.33  ten percent for families with gross annual income above 200 
 29.34  percent of the federal poverty guidelines; fourth, upon 90 days' 
 29.35  notice, decrease the premium subsidy amounts by ten percent for 
 29.36  families with gross annual income at or below 200 percent; and 
 30.1   fifth, require applicants to be uninsured for at least six 
 30.2   months prior to eligibility in the MinnesotaCare program.  If 
 30.3   these measures are insufficient to limit the expenditures to the 
 30.4   estimated amount of revenue, the commissioner shall further 
 30.5   limit enrollment or decrease premium subsidies. 
 30.6      Sec. 8.  Minnesota Statutes 1998, section 270B.01, 
 30.7   subdivision 8, is amended to read: 
 30.8      Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
 30.9   chapter only, unless expressly stated otherwise, "Minnesota tax 
 30.10  laws" means the taxes, refunds, and fees administered by or paid 
 30.11  to the commissioner under chapters 115B (except taxes imposed 
 30.12  under sections 115B.21 to 115B.24), 289A (except taxes imposed 
 30.13  under sections 298.01, 298.015, and 298.24), 290, 290A, 291, 
 30.14  297A, and 297H and sections 295.50 to 295.59, or any similar 
 30.15  Indian tribal tax administered by the commissioner pursuant to 
 30.16  any tax agreement between the state and the Indian tribal 
 30.17  government, and includes any laws for the assessment, 
 30.18  collection, and enforcement of those taxes, refunds, and fees. 
 30.19     Sec. 9.  Minnesota Statutes 1998, section 270B.14, 
 30.20  subdivision 1, is amended to read: 
 30.21     Subdivision 1.  [DISCLOSURE TO COMMISSIONER OF HUMAN 
 30.22  SERVICES.] (a) On the request of the commissioner of human 
 30.23  services, the commissioner shall disclose return information 
 30.24  regarding taxes imposed by chapter 290, and claims for refunds 
 30.25  under chapter 290A, to the extent provided in paragraph (b) and 
 30.26  for the purposes set forth in paragraph (c). 
 30.27     (b) Data that may be disclosed are limited to data relating 
 30.28  to the identity, whereabouts, employment, income, and property 
 30.29  of a person owing or alleged to be owing an obligation of child 
 30.30  support. 
 30.31     (c) The commissioner of human services may request data 
 30.32  only for the purposes of carrying out the child support 
 30.33  enforcement program and to assist in the location of parents who 
 30.34  have, or appear to have, deserted their children.  Data received 
 30.35  may be used only as set forth in section 256.978. 
 30.36     (d) The commissioner shall provide the records and 
 31.1   information necessary to administer the supplemental housing 
 31.2   allowance to the commissioner of human services.  
 31.3      (e) At the request of the commissioner of human services, 
 31.4   the commissioner of revenue shall electronically match the 
 31.5   social security numbers and names of participants in the 
 31.6   telephone assistance plan operated under sections 237.69 to 
 31.7   237.711, with those of property tax refund filers, and determine 
 31.8   whether each participant's household income is within the 
 31.9   eligibility standards for the telephone assistance plan. 
 31.10     (f) The commissioner may provide records and information 
 31.11  collected under Minnesota Statutes 1998, sections 295.50 to 
 31.12  295.59, to the commissioner of human services for purposes of 
 31.13  the Medicaid Voluntary Contribution and Provider-Specific Tax 
 31.14  Amendments of 1991, Public Law Number 102-234.  Upon the written 
 31.15  agreement by the United States Department of Health and Human 
 31.16  Services to maintain the confidentiality of the data, the 
 31.17  commissioner may provide records and information collected under 
 31.18  Minnesota Statutes 1998, sections 295.50 to 295.59, to the 
 31.19  Health Care Financing Administration section of the United 
 31.20  States Department of Health and Human Services for purposes of 
 31.21  meeting federal reporting requirements.  
 31.22     (g) The commissioner may provide records and information to 
 31.23  the commissioner of human services as necessary to administer 
 31.24  the early refund of refundable tax credits. 
 31.25     (h) The commissioner may disclose information to the 
 31.26  commissioner of human services necessary to verify income for 
 31.27  eligibility and premium payment under the MinnesotaCare program, 
 31.28  under section 256L.05, subdivision 2. 
 31.29     Sec. 10.  Minnesota Statutes 1998, section 295.52, 
 31.30  subdivision 7, is amended to read: 
 31.31     Subd. 7.  [TAX REDUCTION.] Notwithstanding subdivisions 1, 
 31.32  1a, 2, 3, and 4, the tax imposed under this section equals for 
 31.33  calendar years year: 
 31.34     (1) 1998 and 1999 shall be equal to, 1.5 percent of the 
 31.35  gross revenues received on or after January 1, 1998, and before 
 31.36  January 1, 2000.  The commissioner shall extend the reduced tax 
 32.1   rate of 1.5 percent for gross revenues received on or after 
 32.2   January 1, 2000, and before January 1, 2002, if the commissioner 
 32.3   of finance determines that the health care access fund 
 32.4   structural balance projected for fiscal year 2001 will remain 
 32.5   positive, prior to any increase of the one percent premium tax 
 32.6   under section 60A.15, subdivision 1, paragraph (h), and prior to 
 32.7   any tax expenditures related to the increase in the maximum tax 
 32.8   credit for research expenses under section 295.53, subdivision 
 32.9   4a, as amended by Laws 1997, chapter 225 1999; 
 32.10     (2) 1999, one percent of the gross revenues received on or 
 32.11  after January 1, 1999, and before January 1, 2000; 
 32.12     (3) 2000, 0.5 percent of the gross revenues received on or 
 32.13  after January 1, 2000, and before January 1, 2001; and 
 32.14     (4) 2001 and later for gross revenues received on or after 
 32.15  January 1, 2001, zero. 
 32.16     Sec. 11.  [REPEAL OF HEALTH CARE ACCESS FUND.] 
 32.17     Subdivision 1.  [TRANSFER TO GENERAL FUND.] Upon the repeal 
 32.18  of the health care access fund under section 12, paragraph (c), 
 32.19  the commissioner of finance shall transfer any funds in the 
 32.20  health care access fund to the general fund and the health care 
 32.21  access fund is combined with and becomes part of the general 
 32.22  fund. 
 32.23     Subd. 2.  [REVISOR'S INSTRUCTION.] In the next edition of 
 32.24  Minnesota Statutes, the revisor of statutes shall substitute 
 32.25  "general fund" for "health care access fund" each place health 
 32.26  care access fund appears. 
 32.27     Sec. 12.  [REPEALER.] 
 32.28     (a) Minnesota Statutes 1998, sections 295.50; 295.51; 
 32.29  295.52; 295.53; 295.54; 295.55; 295.56; 295.57; 295.58; 295.581; 
 32.30  295.582; and 295.59, are repealed. 
 32.31     (b) Minnesota Statutes 1998, sections 13.99, subdivision 
 32.32  86b; and 144.1484, subdivision 2, are repealed. 
 32.33     (c) Minnesota Statutes 1998, sections 16A.724; 16A.76; and 
 32.34  256L.02, subdivision 4, are repealed. 
 32.35     Sec. 13.  [EFFECTIVE DATE.] 
 32.36     Sections 1, 7, 11, and 12, paragraph (c), are effective 
 33.1   July 1, 1999. 
 33.2      Sections 2, 3, 4, 5, 6, 8, 9, and 12, paragraph (b), are 
 33.3   effective January 1, 2001. 
 33.4      Section 10 is effective for gross revenues received after 
 33.5   December 30, 1998. 
 33.6      Section 12, paragraph (a), is effective for gross revenues 
 33.7   received after December 31, 2000.