SF 1024

2nd Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to the financing and operation of state and local government; making
policy, technical, administrative, enforcement, collection, refund, and other
changes to income, franchise, property, sales and use, motor vehicle, health
care provider, cigarette and tobacco products, insurance premiums, aggregate
removal, mortgage, deed, and production taxes, and other taxes and tax-related
provisions; requiring withholding; providing and modifying income tax credits;
modifying taxation of certain compensation paid to nonresidents; providing
for taxation of foreign operating corporations; modifying and authorizing sales
tax exemptions; modifying and authorizing local government sales taxes;
modifying the residential and agricultural homestead market value credit;
modifying certain levies, property valuation procedures, property tax classes,
and tax bases; changing and providing property tax exemptions; modifying the
state general levy and providing for deposit of revenues; providing for aids to
local governments; increasing property tax refunds; extending a petrofund fee
exemption; modifying fiscal disparities computation for city of Bloomington;
changing provisions relating to fiscal disparities, education financing, state debt
collection procedures, sustainable forest incentives programs, and distributions
of production tax proceeds; conforming provisions to certain changes in
federal laws, changing and imposing powers, duties, and requirements on
certain local governments and authorities and state departments or agencies;
providing for issuance of obligations by political subdivisions, and use of
the proceeds of the debt; authorizing local governments to provide certain
development incentives; imposing conditions on local incentive grants; limiting
availability of JOBZ benefits; providing rules for operation of certain tax
increment financing districts; providing for financing of certain postretirement
benefits; validating certain trusts; transferring money to the budget reserve
account; appropriating money; amending Minnesota Statutes 2006, sections
3.987, subdivision 1; 3.988, subdivision 3; 3.989, subdivisions 2, 3; 13.4965,
subdivision 3; 16A.103, subdivision 2; 16A.152, subdivisions 1a, 1b, 2; 16D.04,
subdivisions 1, 2; 16D.11, subdivisions 2, 7; 37.13, by adding a subdivision;
62I.06, subdivision 6; 71A.04, subdivision 1; 97A.061, subdivision 2; 118A.03,
subdivision 3; 123B.53, subdivision 5; 123B.61; 126C.01, subdivision 3,
by adding a subdivision; 127A.48, subdivision 2, by adding a subdivision;
163.051, subdivision 5; 168.012, subdivision 1; 270.071, subdivision 7; 270.072,
subdivisions 2, 3, 6; 270.074, subdivision 3; 270.076, subdivision 1; 270.41,
subdivisions 1, 2, 3, 5, by adding a subdivision; 270.44; 270.45; 270.46;
270.47; 270.48; 270.50; 270A.03, subdivisions 2, 5; 270B.01, subdivision
8; 270B.02, subdivision 3; 270B.085, by adding a subdivision; 270B.14,
subdivision 3; 270C.306; 270C.34, subdivision 1; 270C.446, subdivision 2;
270C.56, subdivision 1; 270C.63, subdivision 9; 272.02, subdivision 64, by
adding subdivisions; 272.115, subdivision 1; 273.05, by adding a subdivision;
273.11, subdivision 1a; 273.111, subdivisions 2, 3, 6, 14; 273.112, subdivision 3;
273.117; 273.121; 273.123, subdivisions 2, 3, 7; 273.124, subdivisions 11, 13,
14, 21, by adding a subdivision; 273.125, subdivision 8; 273.128, subdivision
1; 273.13, subdivisions 22, 23, 24, 25, 33; 273.1315; 273.1384, subdivisions
1, 2; 273.1398, subdivision 4; 273.33, subdivision 2; 273.37, subdivision 2;
273.371, subdivision 1; 274.01, subdivision 1; 274.13, subdivision 1; 275.025,
subdivisions 1, 2, 4; 275.065, subdivisions 3, 5a; 275.067; 276.04, by adding a
subdivision; 276A.01, subdivision 3; 276A.04; 277.01, subdivision 2; 279.01,
subdivision 1; 279.37, subdivision 1a; 280.39; 287.22; 287.2205; 289A.02,
subdivision 7; 289A.08, subdivision 11; 289A.09, subdivision 2; 289A.12,
subdivision 14; 289A.18, subdivision 1; 289A.20, subdivision 4; 289A.31,
subdivision 7; 289A.40, subdivision 2; 289A.56, by adding a subdivision;
289A.60, subdivisions 8, 12, 15, 25, 27, by adding subdivisions; 290.01,
subdivisions 6b, 19, as amended, 19a, 19b, as amended, 19c, 19d, 29, 31, as
amended; 290.06, subdivision 33, by adding a subdivision; 290.067, subdivision
2b; 290.0671, subdivision 7; 290.0677, subdivision 1; 290.091, subdivisions 2,
3; 290.0921, subdivision 3; 290.0922, subdivision 2; 290.10; 290.17, subdivision
2; 290.191, subdivisions 2, 8; 290.34, by adding a subdivision; 290.92, by adding
a subdivision; 290A.03, subdivisions 7, 15, as amended; 290A.04, subdivisions
2, 2a, 4; 290A.10; 290B.03, subdivision 2; 290C.02, subdivision 3; 290C.04;
290C.05; 290C.07; 290C.11; 291.005, subdivision 1; 291.215, subdivision 1;
295.52, subdivisions 4, 4a; 295.54, subdivision 2; 297A.61, subdivisions 3,
4, 7, 10, 12, 24, by adding subdivisions; 297A.63, subdivision 1; 297A.665;
297A.668, by adding a subdivision; 297A.669, subdivisions 3, 13, 14, by adding
subdivisions; 297A.67, subdivisions 8, 9, 28; 297A.68, subdivisions 5, 11, 16, 35;
297A.69, subdivisions 3, 4; 297A.70, subdivisions 7, 8, by adding a subdivision;
297A.71, by adding subdivisions; 297A.72; 297A.90, subdivision 2; 297B.035,
subdivision 1; 297F.09, subdivision 10; 297F.21, subdivision 3; 297G.09,
subdivision 9; 297I.06, subdivisions 1, 2; 297I.15, by adding a subdivision;
297I.20, subdivision 2; 297I.40, subdivision 5; 298.22, subdivision 7, by adding
a subdivision; 298.221; 298.2211, subdivision 1, by adding a subdivision;
298.227; 298.24, subdivision 1; 298.25; 298.28, subdivisions 4, 5, 10; 298.292,
subdivision 2; 298.2961, subdivisions 4, 5; 298.75, subdivisions 1, 3, 7, by
adding a subdivision; 331A.05, subdivision 2; 365A.02; 365A.04; 365A.08;
365A.095; 373.01, subdivision 3; 375B.09; 383A.80, subdivision 4; 383B.117,
subdivision 2; 383B.80, subdivision 4; 410.32; 412.301; 424A.10, subdivision 3;
453A.02, subdivision 3; 469.169, by adding a subdivision; 469.1734, subdivision
6; 469.312, by adding a subdivision; 473.39, by adding a subdivision; 473.446,
subdivisions 2, 8; 473F.08, subdivision 5, by adding a subdivision; 475.52,
subdivision 6; 475.58, subdivisions 1, 3b; 477A.011, subdivision 36; 477A.0124,
subdivisions 4, 5; 477A.013, subdivisions 1, 8, 9; 477A.03, subdivisions 2a, 2b;
477A.12, subdivision 1; 477A.14, subdivision 1; Laws 1980, chapter 511, section
1, subdivision 2, as amended; Laws 1988, chapter 645, section 3, as amended;
Laws 1989, chapter 211, section 8, subdivision 4, as amended; Laws 1993,
chapter 375, article 9, section 45, subdivisions 2, as amended, 3, as amended,
4, as amended; Laws 1995, chapter 264, article 5, sections 44, subdivision 4,
as amended; 45, subdivision 1, as amended; Laws 1996, chapter 464, article
1, section 8, subdivision 3; Laws 1999, chapter 243, article 4, section 18,
subdivisions 1, 3, 4; Laws 2002, chapter 377, article 12, section 16, subdivision
1; Laws 2003, chapter 128, article 1, section 172, as amended; Laws 2005, First
Special Session chapter 3, article 5, section 39; article 10, section 23; Laws 2006,
chapter 259, article 11, section 3; proposing coding for new law in Minnesota
Statutes, chapters 270; 270C; 273; 274; 290; 290C; 297A; 383C; 383D; 383E;
469; 471; repealing Minnesota Statutes 2006, sections 16A.1522; 126C.21,
subdivision 4; 270.073; 270.41, subdivision 4; 270.43; 270.51; 270.52; 270.53;
275.025, subdivision 3; 279.01, subdivisions 2, 4; 295.60; 297A.61, subdivision
20; 297A.668, subdivision 6; 297A.67, subdivision 22; 473.4461; Laws 1998,
chapter 389, article 11, section 18.

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

ARTICLE 1

INCOME TAX

Section 1.

Minnesota Statutes 2006, section 290.01, subdivision 19a, 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 other than Minnesota or a political
or governmental subdivision, municipality, or governmental agency or instrumentality
of any state other than Minnesota exempt from federal income taxes under the Internal
Revenue Code or any other federal statute; 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; 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) the amount of income or sales and use taxes paid or accrued within the taxable
year under this chapter and the amount of taxes based on net income paid or sales and use
taxes paid to any other state or to any province or territory of Canada, to the extent allowed
as a deduction under section 63(d) of the Internal Revenue Code, but the addition 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. 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 is the last itemized deduction 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) 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; deleted text begin and
deleted text end

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

new text begin (11) the amount of expenses disallowed under section 290.10, subdivision 2 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, 2006.
new text end

Sec. 2.

Minnesota Statutes 2006, section 290.01, subdivision 19b, as amended by Laws
2007, chapter 1, section 2, 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;

(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;

(4) income as provided under section 290.0802;

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

(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;

(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;

(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;

(9) 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;

(10) job opportunity building zone income as provided under section 469.316;

(11) 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
services performed exclusively for purposes of basic combat training, advanced individual
training, annual training, and periodic inactive duty training; special training periodically
made available to reserve members; and service performed in accordance with section
190.08, subdivision 3;

(12) 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 new text begin under United States Code, title 10, section 101(d); United States Code, title 32,
section 101(12); or the authority of the United Nations new text end ;

(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;

(14) 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;

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

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

new 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 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, 2006.
new text end

Sec. 3.

Minnesota Statutes 2006, section 290.01, subdivision 19c, 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) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g);

(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 section 103 of Public Law 109-222;

(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) 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; deleted text begin and
deleted text end

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

new text begin (19) the amount of expenses disallowed under section 290.10, subdivision 2 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, 2006.
new text end

Sec. 4.

Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 34. new text end

new text begin Investment tax credit. new text end

new text begin (a) A credit is allowed against the tax imposed by
this chapter for a qualified taxpayer's investment in a qualified new business venture. The
credit shall equal 25 percent of the taxpayer's investment made in the business, but shall
not exceed the lesser of:
new text end

new text begin (1) the liability for tax under this chapter, including the applicable alternative
minimum tax;
new text end

new text begin (2) $25,000 for an individual not part of a partnership; or
new text end

new text begin (3) $300,000 for a pass-through entity.
new text end

new text begin (b) For purposes of this subdivision, a qualified taxpayer means:
new text end

new text begin (1) an accredited investor within the meaning of Regulation D of the Securities and
Exchange Commission, Code of Federal Regulations, title 17, section 230.501(a), whether
part of a pass-through entity or not; and
new text end

new text begin (2) an accredited investor who does not own, control, or hold power to vote 20
percent or more of the outstanding securities of the qualified business venture in which the
eligible investment is proposed.
new text end

new text begin (c) Pass-through entities and individuals may apply to the commissioner of
employment and economic development for certification as a qualifying pass-through
entity or individual. The application must be in the form and made under the procedures
specified by the commissioner of employment and economic development. The
commissioner of employment and economic development may provide certificates
entitling investors to tax credit under this subdivision, but must not issue a total amount of
certificates of more than $2,000,000. In awarding certificates under this paragraph, the
commissioner of employment and economic development shall award them to qualified
applicants in the order in which the applications are received.
new text end

new text begin (d) Each pass-through entity must provide each investor a statement indicating the
investor's share of the credit amount certified to the pass-through entity under paragraph
(c) based on its share of the pass-through entity's assets. The credit shall not exceed
$25,000 for each individual part of a pass-through entity.
new text end

new text begin (e) If the amount of the credit under this subdivision or any taxable year exceeds the
limitation under paragraph (a), clause (1), the excess shall be a credit carryover to each
of the ten succeeding years but shall not exceed $25,000 for an individual not part of a
partnership and $300,000 for a pass-through entity. The entire amount of the excess
unused credit must 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 that may be added under this paragraph may not exceed the
taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin (f) Unless otherwise provided under the rules of the Department of Employment and
Economic Development, a business is a qualified business venture for purposes of this
subdivision only if the business satisfies all of the following conditions:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota;
new text end

new text begin (3) the business is engaged in, or is committed to engage in, biotechnology or
medical device products or services or biotechnology or medical device-related products
and services in manufacturing, agriculture, processing or assembling products, conducting
research and development, or developing a new product or business process;
new text end

new text begin (4) the business is not engaged in real estate development, insurance, banking,
lending, lobbying, political consulting, wholesale or retail trade, leisure, hospitality,
transportation, construction, or professional services provided by attorneys, accountants,
business consultants, physicians, or health care consultants;
new text end

new text begin (5) the business has less than 100 employees;
new text end

new text begin (6) the business has not been in operation for more than ten consecutive years;
new text end

new text begin (7) the business has not received more than $1,000,000 in investments that have
qualified for and received tax credits under this section;
new text end

new text begin (8) the business has less than $1,000,000 in annual gross sales receipts;
new text end

new text begin (9) the business is not a subsidiary or an affiliate of a business that employs more
than 100 employees or has gross sales receipts for the previous year of more than
$1,000,000, computed by aggregating all of the employees and gross sales receipts of the
business entities affiliated with the business; and
new text end

new text begin (10) the business has not received private equity investments of more than
$2,000,000.
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, 2007.
new text end

Sec. 5.

Minnesota Statutes 2006, section 290.0677, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual is allowed a credit against the tax
due under this chapter equal to $59 for each month or portion thereof that the individual
was in active military service in a designated area after September 11, 2001, new text begin and before
January 1, 2007, new text end while a Minnesota domiciliary.

(b) new text begin An individual is allowed a credit against the tax due under this chapter equal to
$120 for each month or portion thereof that the individual was in active military service in
a designated area after December 31, 2006, while a Minnesota domiciliary.
new text end

new text begin (c) new text end For active service performed after September 11, 2001, and before December 31,
2006, the individual may claim the credit in the taxable year beginning after December 31,
2005, and before January 1, 2007.

deleted text begin (c) deleted text end new text begin (d) new text end For active service performed after December 31, 2006, the individual may
claim the credit for the taxable year in which the active service was performed.

deleted text begin (d) deleted text end new text begin (e) new text end If deleted text begin a Minnesota domiciliary is killed while performing active military service
in a designated area, the individual's surviving spouse or dependent child may take the
credit in the taxable year of the death. If a Minnesota domiciliary was killed while
performing active military service in a designated area between September 11, 2001, and
December 31, 2006, the individual's surviving spouse or dependent child may claim this
credit in the taxable year beginning after December 31, 2005, and before January 1, 2007 deleted text end new text begin
an individual entitled to the credit died prior to January 1, 2006, the individual's estate or
heirs at law, if the individual's probate estate has closed or the estate was not probated,
may claim the credit 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, 2006, except that paragraph (e) is effective retroactively for tax years
beginning after December 31, 2005.
new text end

Sec. 6.

new text begin [290.0681] MINNESOTA HOME CARE CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin The terms used in this section have the following
meanings unless otherwise provided for by text.
new text end

new text begin Subd. 2. new text end

new text begin Caregiver. new text end

new text begin "Caregiver" means an individual who provides unpaid
assistance on a daily basis that qualifies as personal care assistant services under section
256B.0655, subdivision 2, to a service recipient in either the individual's principal
residence or the service recipient's principal residence.
new text end

new text begin Subd. 3. new text end

new text begin Service recipient. new text end

new text begin "Service recipient" means an individual who:
new text end

new text begin (1) is the spouse, parent, stepparent, sibling, stepsibling, child, stepchild,
grandparent, or stepgrandparent of the taxpayer;
new text end

new text begin (2) does not reside in a setting licensed or registered by the commissioner of health
or human services; and
new text end

new text begin (3) has been screened by a county long-term care consultation team and determined
by that team to be eligible for placement in a nursing home or other long-term care facility.
new text end

new text begin Subd. 4. 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 $200 for each month during the tax year that the individual
is a caregiver for a service recipient. The maximum credit in a tax year shall be $1,200.
new text end

new text begin (b) The commissioner shall require individuals claiming the credit to certify that the
individual and the service recipient satisfy all the requirements of this section.
new text end

new text begin (c) Only one credit may be claimed for each service recipient in any tax year.
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 section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin Subd. 5. new text end

new text begin Credit limitations. new text end

new text begin (a) Eligibility for the credit in subdivision 4 is limited
to persons with total household income, as defined in section 290A.03, subdivision 5,
that does not exceed the maximum household income level eligible for a refund under
section 290A.04, subdivision 2.
new text end

new text begin (b) Eligibility for the credit in subdivision 4 is limited to persons who have been
certified by a long-term physician or physician's designee in accordance with procedures
established by the commissioner that the care provided by the caregiver:
new text end

new text begin (1) qualifies as personal care assistant services under section new text begin 256B.0655, subdivision
2 new text end ;
new text end

new text begin (2) is needed and provided in person on a daily basis; and
new text end

new text begin (3) is appropriate based on the service recipient's needs and is likely to delay or
avoid transferring the person to an out-of-home placement.
new text end

new text begin (c) The credit in subdivision 4 is reduced to $100 for any month in which a
service recipient receives more than four hours per day on average of federal, state, or
county-funded home care services as specified in section 256B.0651, subdivision 2.
new text end

new text begin Subd. 6. new text end

new text begin Credit refundable. new text end

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

new text begin Subd. 7. new text end

new text begin Caregiver training. new text end

new text begin For each year in which a credit is claimed under this
section, the caregiver must participate in at least eight hours of (1) caregiver training,
education, or counseling, or (2) caregiver support group sessions.
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, 2007.
new text end

Sec. 7.

new text begin [290.0683] CITIZENSHIP CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit. new text end

new text begin A taxpayer who is not a dependent as defined in sections 151
and 152 of the Internal Revenue Code is allowed a credit against the tax imposed by this
chapter in the amount of qualified citizenship expenses incurred for a qualified individual.
new text end

new text begin Subd. 2. new text end

new text begin Limitations on credit. new text end

new text begin The credit is not allowed if the sum of a taxpayer's
income and taxpayer's spouse's income, as defined in section 290.067, subdivision 2a,
exceeds 200 percent of the federal poverty level. For a taxpayer who is not a Minnesota
resident for the entire year, the maximum credit must be allocated using the percentage
calculated in section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin Subd. 3. new text end

new text begin Qualified individual. new text end

new text begin A "qualified individual" is the taxpayer, the
taxpayer's spouse, or an individual who qualifies as a dependent of the taxpayer under
sections 151 and 152 of the Internal Revenue Code. These individuals are only qualified
individuals from the time the individual submits an I-485 application to register permanent
residence or at the time the individual enters the United States on an immigrant visa, to the
time the individual becomes a naturalized United States citizen.
new text end

new text begin Subd. 4. new text end

new text begin Qualified citizenship expenses. new text end

new text begin Qualified citizenship expenses include:
new text end

new text begin (1) filing fees, including both application and biometric fingerprint fees, paid to
the United States Citizenship and Immigration Services in connection with an N-400
naturalization application for a qualified individual;
new text end

new text begin (2) amounts paid for enrollment of a qualified individual over the age of 18 at the
beginning of the year in an English language class offered by a school district in Minnesota
or a school that has been approved as a licensed school by the state of Minnesota; and
new text end

new text begin (3) any costs for citizenship classes.
new text end

new text begin Subd. 5. new text end

new text begin Credit to be refundable. new text end

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

new text begin Subd. 6. 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 of revenue from the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2006.
new text end

Sec. 8.

Minnesota Statutes 2006, section 290.10, is amended to read:

290.10 NONDEDUCTIBLE ITEMS.

new text begin Subdivision 1. new text end

new text begin Expenses, interest, and taxes. new text end

Except as provided in section 290.17,
subdivision 4, paragraph (i), in computing the net income of a taxpayer no deduction
shall in any case be allowed for expenses, interest and taxes connected with or allocable
against the production or receipt of all income not included in the measure of the tax
imposed by this chapter, except that for corporations engaged in the business of mining
or producing iron ore, the mining of which is subject to the occupation tax imposed by
section 298.01, subdivision 4, this shall not prevent the deduction of expenses and other
items to the extent that the expenses and other items are allowable under this chapter and
are not deductible, capitalizable, retainable in basis, or taken into account by allowance
or otherwise in computing the occupation tax and do not exceed the amounts taken for
federal income tax purposes for that year. Occupation taxes imposed under chapter 298,
royalty taxes imposed under chapter 299, or depletion expenses may not be deducted
under this deleted text begin clause deleted text end new text begin subdivision new text end .

new text begin Subd. 2. new text end

new text begin Fines, penalties, damages, and expenses. new text end

new text begin (a) No deduction from taxable
income for a trade or business expense under section 162(a) of the Internal Revenue Code
shall be allowed for any fine, penalty, damages, or expenses paid to:
new text end

new text begin (1) the government of the United States, a state, a territory or possession of the
United States, the District of Columbia, or the Commonwealth of Puerto Rico;
new text end

new text begin (2) the government of a foreign country; or
new text end

new text begin (3) a political subdivision of, or corporation or other entity serving as an agency or
instrumentality of, any government described in clause (1) or (2).
new text end

new text begin (b) For purposes of this subdivision, "fine, penalty, damages, or expenses" include,
but are not limited to, any amount:
new text end

new text begin (1) paid pursuant to a conviction or a plea of guilty or nolo contendere for any
crime in a criminal proceeding;
new text end

new text begin (2) paid as a civil penalty imposed by federal, state, or local law, including tax
penalties and interest;
new text end

new text begin (3) paid in settlement of the taxpayer's actual or potential liability for a civil or
criminal fine or penalty;
new text end

new text begin (4) forfeited as collateral posted in connection with a proceeding that could result in
imposition of a fine or penalty; or
new text end

new text begin (5) for legal fees and related expenses paid or incurred in the prosecution or civil
action arising from a violation of the law imposing the fine or civil penalty, court costs
assessed against the taxpayer, or stenographic and printing charges, compensatory
damages, punitive damages, or restitution.
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, 2006.
new text end

Sec. 9.

Minnesota Statutes 2006, 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) deleted text begin , deleted text end new text begin and new text end (a)(3), deleted text begin and (a)(4), deleted text end 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.

deleted text begin (4) Wages, otherwise assigned to this state under clause (1) and not qualifying under
clause (3), are not taxable under this chapter if the following conditions are met:
deleted text end

deleted text begin (i) the recipient was not a resident of this state for any part of the taxable year in
which the wages were received; and
deleted text end

deleted text begin (ii) the wages are for work performed while the recipient was a resident of this state.
deleted text end

(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.

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 for taxable years beginning after
December 31, 2006.
new text end

Sec. 10.

Minnesota Statutes 2006, section 290.92, is amended by adding a subdivision
to read:

new text begin Subd. 31. new text end

new text begin Payments to persons who are not employees. new text end

new text begin (a) For purposes of this
subdivision, "contractor" means a person carrying on a trade or business described in
industry code numbers 23 through 238990 of the North American Industry Classification
System.
new text end

new text begin (b) A contractor or a third-party bulk filer acting on behalf of a contractor, who
makes payments to an individual, carrying on a trade or business described above as a
sole proprietorship, must deduct and withhold two percent of the payment as Minnesota
withholding tax when the amount the contractor paid to that individual during the calendar
year exceeds $600.
new text end

new text begin (c) A payment subject to withholding under this subdivision must be treated as if
the payment were a wage paid by an employer to an employee. The requirements in the
definitions of "employee" and "employer" in subdivision 1 relating to geographic location
apply in determining whether withholding tax applies under this subdivision, but without
regard to whether the contractor or the individual otherwise satisfy the definition of an
employer or an employee. Each recipient of a payment subject to withholding under this
subdivision must furnish the contractor with a statement of the recipient's name, address,
and Social Security account number.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made after July 31,
2007.
new text end

Sec. 11. new text begin AUDIT AND REPORT TO LEGISLATURE.
new text end

new text begin The commissioner must conduct a random sample audit of withholdings under
Minnesota Statutes, section 290.92, subdivision 31, and returns associated with those
withholdings. The commissioner must report on the findings of the audit to the legislature
no later than January 15, 2009.
new text end

Sec. 12. new text begin TAXPAYER ASSISTANCE SERVICES; APPROPRIATION.
new text end

new text begin (a) $75,000 in fiscal year 2008 and $75,000 in fiscal year 2009 are appropriated from
the general fund to the commissioner of revenue to make grants to one or more nonprofit
organizations, qualifying under section 501(c)(3) of the Internal Revenue Code of 1986, to
coordinate, facilitate, encourage, and aid in the provision of taxpayer assistance services.
new text end

new text begin (b) "Taxpayer assistance services" means accounting and tax preparation services
provided by volunteers to low-income and disadvantaged Minnesota residents to help
them file federal and state income tax returns and Minnesota property tax refund claims
and may include provision of personal representation before the Department of Revenue
and Internal Revenue Service.
new text end

ARTICLE 2

FEDERAL UPDATE

Section 1.

Minnesota Statutes 2006, section 289A.02, subdivision 7, 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 May 18,
2006 deleted text end new text begin December 31, 2006 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 2006, section 290.01, subdivision 19, as amended by Laws
2007, chapter 1, section 1, 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 May 18 deleted text end new text begin December 31 new text end ,
2006, shall be in effect for taxable years beginning after December 31, 1996 deleted text begin , and before
January 1, 2006, and for taxable years beginning after December 31, 2006. The Internal
Revenue Code of 1986, as amended through December 31, 2006, is in effect for taxable
years beginning after December 31, 2005, and before January 1, 2007 deleted text end .

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 the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2006, section 290.01 subdivision 31, as amended by Laws
2007, chapter 1, section 3, is amended to read:

Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, deleted text begin for
taxable years beginning before January 1, 2006, and after December 31, 2006, deleted text end "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin May 18,
2006; and for taxable years beginning after December 31, 2005, and before January 1,
2007, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
through deleted text end December 31, 2006.

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. 4.

Minnesota Statutes 2006, section 290A.03, subdivision 15, as amended by
Laws 2007, chapter 1, section 4, is amended to read:

Subd. 15.

Internal Revenue Code.

deleted text begin For taxable years beginning before January 1,
2006, and after December 31, 2006, deleted text end "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through deleted text begin May 18, 2006; and for taxable years beginning after
December 31, 2005, and before January 1, 2007, "Internal Revenue Code" means the
Internal Revenue Code of 1986, as amended through deleted text end December 31, 2006.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on
property taxes payable on or after December 31, 2006, and rent paid on or after December
31, 2005.
new text end

Sec. 5.

Minnesota Statutes 2006, section 291.005, subdivision 1, 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.

(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 May 18, 2006 deleted text end new text begin December 31, 2006 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 the amount of
deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 3

CORPORATE INCOME TAX

Section 1.

Minnesota Statutes 2006, section 290.01, subdivision 6b, is amended to read:

Subd. 6b.

Foreign operating corporation.

The term "foreign operating
corporation," when applied to a corporation, means a domestic corporation with the
following characteristics:

(1) it is part of a unitary business at least one member of which is taxable in this state;

(2) it is not a foreign sales corporation under section 922 of the Internal Revenue
Code, as amended through December 31, 1999, for the taxable year;

(3) new text begin either new text end (i) deleted text begin the average of the percentages of its property and payrolls, including
the pro rata share of its unitary partnerships' property and payrolls, assigned to locations
outside the United States, where the United States includes the District of Columbia and
excludes the commonwealth of Puerto Rico and possessions of the United States, as
determined under section 290.191 or 290.20, is 80 percent or more; or (ii) deleted text end it has in effect a
valid election under section 936 of the Internal Revenue Code; new text begin or (ii) at least 80 percent
of the gross income from all sources of the corporation in the tax year is active foreign
business income; new text end and

(4) deleted text begin it has $1,000,000 of payroll and $2,000,000 of property, as determined under
section 290.191 or 290.20, that are located outside the United States. If the domestic
corporation does not have payroll as determined under section 290.191 or 290.20, but it
or its partnerships have paid $1,000,000 for work, performed directly for the domestic
corporation or the partnerships, outside the United States, then paragraph (3)(i) shall not
require payrolls to be included in the average calculation deleted text end new text begin for purposes of this subdivision,
active foreign business income means gross income that is (i) derived from sources
without the United States, as defined in subtitle A, chapter 1, subchapter N, part 1, of the
Internal Revenue Code; and (ii) attributable to the active conduct of a trade or business in
a foreign country 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, 2006.
new text end

Sec. 2.

Minnesota Statutes 2006, section 290.01, subdivision 19c, 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) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g) new text begin . The deemed dividend
shall be reduced by the amount of the addition to income required by clauses (19), (20),
(21), and (22) new text end ;

(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 section 103 of Public Law 109-222;

(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) 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; deleted text begin and
deleted text end

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

new text begin (19) 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:
new text end

new text begin (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;
new text end

new text begin (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar expenses and costs new text end .

new text begin 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.
new text end

new text begin 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;
new text end

new text begin (20) except as already included in the taxpayer's taxable income pursuant to clause
(19), 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:
new text end

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

new text begin (ii) income from factoring transactions or discounting transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar income.
new text end

new text begin 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.
new text end

new text begin 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;
new text end

new text begin (21) 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; and
new text end

new text begin (22) 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.
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, 2006.
new text end

Sec. 3.

Minnesota Statutes 2006, section 290.01, subdivision 19d, 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 federal jobs 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 (11), 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;

(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 new text begin , 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 new text end ;

(11) 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;

(12) 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;

(13) 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;

(14) 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;

(15) the amount of any refund of environmental taxes paid under section 59A of the
Internal Revenue Code;

(16) 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;

(17) 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;

(18) 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 section 614 of Public Law 107-147;

(19) 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; and

(20) 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2006.
new text end

Sec. 4.

Minnesota Statutes 2006, section 290.191, subdivision 2, is amended to read:

Subd. 2.

Apportionment formula of general application.

(a) 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
percentage obtained by taking the sum of:

(1) the percent for the sales factor under paragraph (b) of the 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;

(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

(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.

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

Taxable years beginning during calendar year		Sales factor percent		Property factor percent		Payroll factor percent
2007		78		11		11
2008		deleted text begin 81 deleted text end new text begin 85 new text end		deleted text begin 9.5 deleted text end new text begin 7.5 new text end		deleted text begin 9.5 deleted text end new text begin 7.5 new text end
2009		deleted text begin 84 deleted text end new text begin 90 new text end		deleted text begin 8 deleted text end new text begin 5 new text end		deleted text begin 8 deleted text end new text begin 5 new text end
2010		deleted text begin 87 deleted text end new text begin 95 new text end		deleted text begin 6.5 deleted text end new text begin 2.5 new text end		deleted text begin 6.5 deleted text end new text begin 2.5 new text end
2011		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 deleted text end and later calendar years		100		0		0

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2006.
new text end

Sec. 5.

Minnesota Statutes 2006, section 290.34, is amended by adding a subdivision
to read:

new text begin Subd. 3a. new text end

new text begin Transactions without economic substance. new text end

new text begin (a) When any person,
directly or indirectly, engages in a transaction or series of transactions without economic
substance to create a loss or to reduce taxable income or to increase credits allowed in
determining Minnesota tax, the commissioner must determine the amount of a taxpayer's
taxable income or tax so as to reflect what would have been the taxpayer's taxable income
or tax but for the transaction or transactions without economic substance causing the
reduction in taxable income or tax.
new text end

new text begin (b) A transaction has economic substance only if a taxpayer shows by clear and
convincing evidence:
new text end

new text begin (1) the transaction changes in a meaningful way (apart from federal, state, local, and
foreign tax effects) the taxpayer's economic position; and
new text end

new text begin (2) the taxpayer has a substantial nontax purpose for entering into a transaction and
the transaction is a reasonable means of accomplishing the substantial nontax purpose.
new text end

new text begin A transaction does not have a substantial nontax purpose if it does not have a potential
for profit. A transaction has a substantial nontax purpose when the taxpayer reasonably
expects that the pretax profit for the transaction is substantial in relation to the present
value of the expected net tax benefits that would be allowed if the transaction were
respected for tax purposes, and the reasonably expected pretax profit from the transaction
exceeds the risk-free rate of return.
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, 2006.
new text end

Sec. 6. new text begin PURPOSE AND EFFECT.
new text end

new text begin It is the intent of the legislature that the provisions of this article must not be
construed as supplanting any existing Minnesota law.
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, 2006.
new text end

ARTICLE 4

SALES AND USE TAXES

Section 1.

Minnesota Statutes 2006, section 37.13, is amended by adding a subdivision
to read:

new text begin Subd. 3. new text end

new text begin Capital improvements. new text end

new text begin The society shall spend the amount of sales
tax retained under section 289A.31, subdivision 7, paragraph (f), exclusively to make
capital improvements to state-owned buildings and facilities on the State Fairgrounds.
The society shall match the amount retained with an equal amount from proceeds from
special assessments levied against commercial exhibits, concessions, and rentals, and
other special user fees specifically designated for capital improvements.
new text end

Sec. 2.

Minnesota Statutes 2006, section 168.012, subdivision 1, is amended to read:

Subdivision 1.

Vehicles exempt from tax, fees, or plate display.

(a) The following
vehicles are exempt from the provisions of this chapter requiring payment of tax and
registration fees, except as provided in subdivision 1c:

(1) vehicles owned and used solely in the transaction of official business by the
federal government, the state, or any political subdivision;

(2) vehicles owned and used exclusively by educational institutions and used solely
in the transportation of pupils to and from those institutions;

(3) vehicles used solely in driver education programs at nonpublic high schools;

(4) vehicles owned by nonprofit charities and used exclusively to transport disabled
persons for charitable, religious, or educational purposes;

(5) deleted text begin ambulances deleted text end new text begin vehicles new text end owned by ambulance services licensed under section
144E.10 deleted text begin , the general appearance of which is unmistakable deleted text end new text begin that are equipped and
specifically intended for emergency response or providing ambulance service new text end ; and

(6) vehicles owned by a commercial driving school licensed under section 171.34,
or an employee of a commercial driving school licensed under section 171.34, and the
vehicle is used exclusively for driver education and training.

(b) Vehicles owned by the federal government, municipal fire apparatuses including
fire-suppression support vehicles, police patrols, and ambulances, the general appearance
of which is unmistakable, are not required to register or display number plates.

(c) Unmarked vehicles used in general police work, liquor investigations, or arson
investigations, and passenger automobiles, pickup trucks, and buses owned or operated by
the Department of Corrections, must be registered and must display appropriate license
number plates, furnished by the registrar at cost. Original and renewal applications for
these license plates authorized for use in general police work and for use by the Department
of Corrections must be accompanied by a certification signed by the appropriate chief of
police if issued to a police vehicle, the appropriate sheriff if issued to a sheriff's vehicle,
the commissioner of corrections if issued to a Department of Corrections vehicle, or the
appropriate officer in charge if issued to a vehicle of any other law enforcement agency.
The certification must be on a form prescribed by the commissioner and state that the
vehicle will be used exclusively for a purpose authorized by this section.

(d) Unmarked vehicles used by the Departments of Revenue and Labor and Industry,
fraud unit, in conducting seizures or criminal investigations must be registered and must
display passenger vehicle classification license number plates, furnished at cost by the
registrar. Original and renewal applications for these passenger vehicle license plates
must be accompanied by a certification signed by the commissioner of revenue or the
commissioner of labor and industry. The certification must be on a form prescribed by
the commissioner and state that the vehicles will be used exclusively for the purposes
authorized by this section.

(e) Unmarked vehicles used by the Division of Disease Prevention and Control of the
Department of Health must be registered and must display passenger vehicle classification
license number plates. These plates must be furnished at cost by the registrar. Original
and renewal applications for these passenger vehicle license plates must be accompanied
by a certification signed by the commissioner of health. The certification must be on a
form prescribed by the commissioner and state that the vehicles will be used exclusively
for the official duties of the Division of Disease Prevention and Control.

(f) Unmarked vehicles used by staff of the Gambling Control Board in gambling
investigations and reviews must be registered and must display passenger vehicle
classification license number plates. These plates must be furnished at cost by the
registrar. Original and renewal applications for these passenger vehicle license plates must
be accompanied by a certification signed by the board chair. The certification must be on a
form prescribed by the commissioner and state that the vehicles will be used exclusively
for the official duties of the Gambling Control Board.

(g) All other motor vehicles must be registered and display tax-exempt number
plates, furnished by the registrar at cost, except as provided in subdivision 1c. All
vehicles required to display tax-exempt number plates must have the name of the state
department or political subdivision, nonpublic high school operating a driver education
program, or licensed commercial driving school, plainly displayed on both sides of the
vehicle; except that each state hospital and institution for persons who are mentally ill
and developmentally disabled may have one vehicle without the required identification
on the sides of the vehicle, and county social service agencies may have vehicles used
for child and vulnerable adult protective services without the required identification on
the sides of the vehicle. This identification must be in a color giving contrast with that
of the part of the vehicle on which it is placed and must endure throughout the term of
the registration. The identification must not be on a removable plate or placard and must
be kept clean and visible at all times; except that a removable plate or placard may be
utilized on vehicles leased or loaned to a political subdivision or to a nonpublic high
school driver education program.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for registrations and renewals after
June 30, 2007.
new text end

Sec. 3.

Minnesota Statutes 2006, section 289A.20, subdivision 4, is amended to read:

Subd. 4.

Sales and use tax.

(a) The taxes imposed by chapter 297A are due and
payable to the commissioner monthly on or before the 20th day of the month following the
month in which the taxable event occurred, or following another reporting period as the
commissioner prescribes or as allowed under section 289A.18, subdivision 4, paragraph
(f) or (g), except that use taxes due on an annual use tax return as provided under section
289A.11, subdivision 1, are payable by April 15 following the close of the calendar year.

(b) A vendor having a liability of $120,000 or more during a fiscal year ending June
30 must remit the June liability for the next year in the following manner:

(1) Two business days before June 30 of the year, the vendor must remit deleted text begin 78 deleted text end new text begin 30
new text end percent of the estimated June liability to the commissioner.

(2) On or before August 20 of the year, the vendor must pay any additional amount
of tax not remitted in June.

(c) A vendor having a liability of:

(1) $20,000 or more in the fiscal year ending June 30, 2005; or

(2) $10,000 or more in the fiscal year ending June 30, 2006, and fiscal years
thereafter,

must remit all liabilities on returns due for periods beginning in the subsequent calendar
year by electronic means on or before the 20th day of the month following the month in
which the taxable event occurred, or on or before the 20th day of the month following the
month in which the sale is reported under section 289A.18, subdivision 4, except for deleted text begin 78 deleted text end new text begin 30 new text end
percent of the estimated June liability, which is due two business days before June 30. The
remaining amount of the June liability is due on August 20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with June 2008 tax
liabilities.
new text end

Sec. 4.

Minnesota Statutes 2006, section 289A.31, subdivision 7, is amended to read:

Subd. 7.

Sales and use tax.

(a) The sales and use tax required to be collected by the
retailer under chapter 297A constitutes a debt owed by the retailer to Minnesota, and the
sums collected must be held as a special fund in trust for the state of Minnesota.

A retailer who does not maintain a place of business within this state as defined by
section 297A.66, subdivision 1, shall not be indebted to Minnesota for amounts of tax that
it was required to collect but did not collect unless the retailer knew or had been advised
by the commissioner of its obligation to collect the tax.

(b) The use tax required to be paid by a purchaser is a debt owed by the purchaser
to Minnesota.

(c) The tax imposed by chapter 297A, and interest and penalties, is a personal debt
of the individual required to file a return from the time the liability arises, irrespective
of when the time for payment of that liability occurs. The debt is, in the case of the
executor or administrator of the estate of a decedent and in the case of a fiduciary, that
of the individual in an official or fiduciary capacity unless the individual has voluntarily
distributed the assets held in that capacity without reserving sufficient assets to pay the tax,
interest, and penalties, in which case the individual is personally liable for the deficiency.

(d) Liability for payment of sales and use taxes includes any responsible person or
entity described in the personal liability provisions of section 270C.56.

(e) Any amounts collected, even if erroneously or illegally collected, from a
purchaser under a representation that they are taxes imposed under chapter 297A are
state funds from the time of collection and must be reported on a return filed with the
commissioner.

new text begin (f) The tax imposed under chapter 297A on sales of tickets to the premises of or
events sponsored by the Minnesota State Agricultural Society and conducted on the State
Fairgrounds during the period of annual State Fair may be retained by the Minnesota
State Agricultural Society if the funds are used and matched as required under section
37.13, subdivision 3.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases after June
30, 2007.
new text end

Sec. 5.

Minnesota Statutes 2006, section 289A.60, subdivision 15, is amended to read:

Subd. 15.

Accelerated payment of June sales tax liability; penalty for
underpayment.

For payments made after December 31, 2006, if a vendor is required by
law to submit an estimation of June sales tax liabilities and deleted text begin 78 deleted text end new text begin 30 new text end percent payment by a
certain date, the vendor shall pay a penalty equal to ten percent of the amount of actual
June liability required to be paid in June less the amount remitted in June. The penalty
must not be imposed, however, if the amount remitted in June equals the lesser of deleted text begin 78 deleted text end new text begin 30
new text end percent of the preceding May's liability or deleted text begin 78 deleted text end new text begin 30 new text end percent of the average monthly liability
for the previous calendar year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with June 2008 tax
liabilities.
new text end

Sec. 6.

Minnesota Statutes 2006, section 297A.61, subdivision 3, is amended to read:

Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase" include, but are not limited
to, each of the transactions listed in this subdivision.

(b) Sale and purchase include:

(1) any transfer of title or possession, or both, of tangible personal property, whether
absolutely or conditionally, for a consideration in money or by exchange or barter; and

(2) the leasing of or the granting of a license to use or consume, for a consideration
in money or by exchange or barter, tangible personal property, other than a manufactured
home used for residential purposes for a continuous period of 30 days or more.

(c) Sale and purchase include the production, fabrication, printing, or processing of
tangible personal property for a consideration for consumers who furnish either directly or
indirectly the materials used in the production, fabrication, printing, or processing.

(d) Sale and purchase include the preparing for a consideration of food.
Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
to, the following:

(1) prepared food sold by the retailer;

(2) soft drinks;

(3) candy;

(4) dietary supplements; and

(5) all food sold through vending machines new text begin , except milk and water sold in schools.
Schools are those defined in section 120A.05. For contracts entered into after the date
of final enactment of this act, any savings realized as a result of this exception must be
reflected in the revenues apportioned to schools or school districts from vending machine
sales new text end .

(e) A sale and a purchase includes the furnishing for a consideration of electricity,
gas, water, or steam for use or consumption within this state.

(f) A sale and a purchase includes the transfer for a consideration of prewritten
computer software whether delivered electronically, by load and leave, or otherwise.

(g) A sale and a purchase includes the furnishing for a consideration of the following
services:

(1) the privilege of admission to places of amusement, recreational areas, or athletic
events, and the making available of amusement devices, tanning facilities, reducing
salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;

(2) lodging and related services by a hotel, rooming house, resort, campground,
motel, or trailer camp and the granting of any similar license to use real property in a
specific facility, other than the renting or leasing of it for a continuous period of 30 days
or more under an enforceable written agreement that may not be terminated without
prior notice;

(3) nonresidential parking services, whether on a contractual, hourly, or other
periodic basis, except for parking at a meter;

(4) the granting of membership in a club, association, or other organization if:

(i) the club, association, or other organization makes available for the use of its
members sports and athletic facilities, without regard to whether a separate charge is
assessed for use of the facilities; and

(ii) use of the sports and athletic facility is not made available to the general public
on the same basis as it is made available to members.

Granting of membership means both onetime initiation fees and periodic membership
dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
swimming pools; and other similar athletic or sports facilities;

(5) delivery of aggregate materials and concrete block by a third party if the delivery
would be subject to the sales tax if provided by the seller of the aggregate material or
concrete block; and

(6) services as provided in this clause:

(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
include services provided by coin operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services, including services
provided by coin operated facilities operated by the customer, and rustproofing,
undercoating, and towing of motor vehicles;

(iii) building and residential cleaning, maintenance, and disinfecting and
exterminating services;

(iv) detective, security, burglar, fire alarm, and armored car services; but not
including services performed within the jurisdiction they serve by off-duty licensed peace
officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
organization for monitoring and electronic surveillance of persons placed on in-home
detention pursuant to court order or under the direction of the Minnesota Department
of Corrections;

(v) pet grooming services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
public utility lines. Services performed under a construction contract for the installation of
shrubbery, plants, sod, trees, bushes, and similar items are not taxable;

(vii) massages, except when provided by a licensed health care facility or
professional or upon written referral from a licensed health care facility or professional for
treatment of illness, injury, or disease; and

(viii) the furnishing of lodging, board, and care services for animals in kennels and
other similar arrangements, but excluding veterinary and horse boarding services.

In applying the provisions of this chapter, the terms "tangible personal property"
and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
and the provision of these taxable services, unless specifically provided otherwise.
Services performed by an employee for an employer are not taxable. Services performed
by a partnership or association for another partnership or association are not taxable if
one of the entities owns or controls more than 80 percent of the voting power of the
equity interest in the other entity. Services performed between members of an affiliated
group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
group of corporations" means those entities that would be classified as members of an
affiliated group as defined under United States Code, title 26, section 1504, disregarding
the exclusions in section 1504(b).

(h) A sale and a purchase includes the furnishing for a consideration of tangible
personal property or taxable services by the United States or any of its agencies or
instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
subdivisions.

(i) A sale and a purchase includes the furnishing for a consideration of
telecommunications services, including cable television services and direct satellite
services. Telecommunications services are taxed to the extent allowed under federal law.

(j) A sale and a purchase includes the furnishing for a consideration of installation if
the installation charges would be subject to the sales tax if the installation were provided
by the seller of the item being installed.

(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
65B.29, subdivision 1, clause (1).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchases and sales made on and
after July 1, 2007.
new text end

Sec. 7.

Minnesota Statutes 2006, section 297A.61, subdivision 12, is amended to read:

Subd. 12.

Farm machinery.

(a) "Farm machinery" means new or used machinery,
equipment, implements, accessories, and contrivances used directly and principally in
agricultural production of tangible personal property intended to be sold ultimately at
retail including, but not limited to:

(1) machinery for the preparation, seeding, or cultivation of soil for growing
agricultural crops;

(2) barn cleaners, milking systems, grain dryers, new text begin grain bins, new text end feeding systems
including stationary feed bunks, and similar installations, whether or not the equipment is
installed by the seller and becomes part of the real property; and

(3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe
fittings, valves, sprinklers, and other equipment necessary to the operation of an irrigation
system when sold as part of an irrigation system, whether or not the equipment is installed
by the seller and becomes part of the real property.

(b) Farm machinery does not include:

(1) repair or replacement parts;

(2) tools, shop equipment, deleted text begin grain bins, fencing material, deleted text end communication equipment,
and other farm supplies;

(3) motor vehicles taxed under chapter 297B;

(4) snowmobiles or snow blowers;

(5) lawn mowers except those used in the production of sod for sale, or garden-type
tractors or garden tillers; or

(6) machinery, equipment, implements, accessories, and contrivances used directly in
the production of horses not raised for slaughter, fur-bearing animals, or research animals.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales made after June 30, 2007.
new text end

Sec. 8.

Minnesota Statutes 2006, section 297A.668, is amended by adding a
subdivision to read:

new text begin Subd. 8. new text end

new text begin Manufactured and modular housing. new text end

new text begin (a) Notwithstanding other
subdivisions of this section, a sale of a manufactured or modular home shall be sourced to
the site where the housing is first set up or installed.
new text end

new text begin (b) For purposes of this section, "manufactured home" has the meaning given
in section 327.31, subdivision 6. For purposes of this section, "modular home" means
a building or structural unit that has been substantially manufactured or constructed,
in whole or in part, at an off-site location, with the final assembly occurring on-site
alone or with other units and attached to a permanent foundation site and occupied
as a single-family dwelling. Modular home construction must comply with applicable
standards adopted in Minnesota Rules authorized under chapter 16B. A modular home
does not include a structure subject to the requirements of the National Manufactured
Home Construction and Safety Standards Act of 1974 or a manufactured home.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2007.
new text end

Sec. 9.

Minnesota Statutes 2006, section 297A.67, subdivision 28, is amended to read:

Subd. 28.

Ambulance supplies, parts, and equipment.

The following sales to or
use by an ambulance service licensed under section 144E.10 are exempt:

(1) supplies and equipment used to provide medical care; and

(2) repair and replacement parts for ambulances new text begin and vehicles equipped and
specifically intended for emergency response new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2007.
new text end

Sec. 10.

Minnesota Statutes 2006, section 297A.68, subdivision 5, is amended to read:

Subd. 5.

Capital equipment.

(a) Capital equipment is exempt. deleted text begin The tax must be
imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and
then refunded in the manner provided in section 297A.75.
deleted text end

"Capital equipment" means machinery and equipment purchased or leased, and used
in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
or refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment
used primarily to electronically transmit results retrieved by a customer of an online
computerized data retrieval system.

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or regulate the production
equipment;

(2) machinery and equipment used for research and development, design, quality
control, and testing activities;

(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;

(4) materials and supplies used to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment;

(7) materials used to construct and install special purpose buildings used in the
production process;

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
as part of the delivery process regardless if mounted on a chassis, repair parts for
ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development, design, or production
of computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials, except for materials included in paragraph (b), clauses (6)
and (7);

(4) machinery or equipment used for nonproduction purposes, including, but not
limited to, the following: plant security, fire prevention, first aid, and hospital stations;
support operations or administration; pollution control; and plant cleaning, disposal of
scrap and waste, plant communications, space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as defined by section
297A.61, subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;

(7) machinery and equipment used by restaurants in the furnishing, preparing, or
serving of prepared foods as defined in section 297A.61, subdivision 31;

(8) machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3, paragraph (g), clause (6), items (i) to (vi) and (viii);

(9) machinery or equipment used in the transportation, transmission, or distribution
of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
tanks, mains, or other means of transporting those products. This clause does not apply to
machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
239.77; or

(10) any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.

(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For
purposes of this clause, (i) manufacturing begins with the removal of raw materials
from inventory and ends when the last process prior to loading for shipment has been
completed; (ii) fabricating begins with the removal from storage or inventory of the
property to be assembled, processed, altered, or modified and ends with the creation
or production of the new or changed product; (iii) mining begins with the removal of
overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
ends when the last process before stockpiling is completed; and (iv) refining begins with
the removal from inventory or storage of a natural resource and ends with the conversion
of the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical devices, including
computers and computer software, that are purchased or constructed to be used for the
activities set forth in paragraph (a), beginning with the removal of raw materials from
inventory through completion of the product, including packaging of the product.

(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).

(6) "Manufacturing" means an operation or series of operations where raw materials
are changed in form, composition, or condition by machinery and equipment and which
results in the production of a new article of tangible personal property. For purposes of
this subdivision, "manufacturing" includes the generation of electricity or steam to be
sold at retail.

(7) "Mining" means the extraction of minerals, ores, stone, or peat.

(8) "Online data retrieval system" means a system whose cumulation of information
is equally available and accessible to all its customers.

(9) "Primarily" means machinery and equipment used 50 percent or more of the time
in an activity described in paragraph (a).

(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.

(11) This subdivision does not apply to telecommunications equipment as
provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
for telecommunications services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2007.
new text end

Sec. 11.

Minnesota Statutes 2006, section 297A.69, subdivision 3, is amended to read:

Subd. 3.

Repair and replacement parts.

new text begin (a) new text end Repair and replacement parts,
except tires, used for maintenance or repair of farm machinery deleted text begin , logging equipment, deleted text end and
aquaculture production equipment are exempt, if the part replaces a machinery part
assigned a specific or generic part number by the manufacturer of the machinery.

new text begin (b) Repair and replacement parts, including tires, used for maintenance or repair of
logging equipment are exempt if the part replaces a machinery part assigned a specific or
generic part number by the manufacturer of the machinery.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2007.
new text end

Sec. 12.

Minnesota Statutes 2006, section 297A.69, subdivision 4, is amended to read:

Subd. 4.

Machinery, equipment, and fencing.

The following machinery,
equipment, and fencing is exempt:

(1) farm machinery;

(2) logging equipment, including chain saws used for commercial logging;

(3) fencing used for the containment of deleted text begin farmed cervidae, as defined in section
35.153, subdivision 3 deleted text end new text begin livestock as defined in section 17A.03, subdivision 5 new text end ;

(4) primary and backup generator units used to generate electricity for the purpose of
operating farm machinery, aquacultural production equipment, or logging equipment, or
providing light or space heating necessary for the production of livestock, dairy animals,
dairy products, or poultry and poultry products; and

(5) aquaculture production equipment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
January 1, 2007.
new text end

Sec. 13.

Minnesota Statutes 2006, section 297A.70, subdivision 8, is amended to read:

Subd. 8.

Regionwide public safety radio communication system; products and
services.

Products and services including, but not limited to, end user equipment used
for construction, ownership, operation, maintenance, and enhancement of the backbone
system of the regionwide public safety radio communication system established under
sections 403.21 to , are exempt. For purposes of this subdivision, backbone
system is defined in section 403.21, subdivision 9. This subdivision is effective for
purchases, sales, storage, use, or consumption for use in the first and second phases of the
system, as defined in section 403.21, subdivisions 3, 10, and 11, deleted text begin and deleted text end that portion of the
third phase of the system that is located in the southeast district of the State Patrol and
the counties of Benton, Sherburne, Stearns, and Wright new text begin , and that portion of the system
that is located in Itasca County new text end .

Sec. 14.

Minnesota Statutes 2006, section 297A.71, is amended by adding a
subdivision to read:

new text begin Subd. 40. new text end

new text begin Commuter rail; material, supplies, and equipment. new text end

new text begin Materials and
supplies used or consumed in, and equipment incorporated into, the construction or
improvement of a commuter rail transportation system operated under sections 174.80
to 174.90, are exempt. This exemption includes railroad cars and engines and related
equipment.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2006.
new text end

Sec. 15.

Minnesota Statutes 2006, section 297F.09, subdivision 10, is amended to read:

Subd. 10.

Accelerated tax payment; cigarette or tobacco products distributor.

A cigarette or tobacco products distributor having a liability of $120,000 or more during a
fiscal year ending June 30, shall remit the June liability for the next year in the following
manner:

(a) Two business days before June 30 of the year, the distributor shall remit the
actual May liability and deleted text begin 78 deleted text end new text begin 30 new text end percent of the estimated June liability to the commissioner
and file the return in the form and manner prescribed by the commissioner.

(b) On or before August 18 of the year, the distributor shall submit a return showing
the actual June liability and pay any additional amount of tax not remitted in June. A
penalty is imposed equal to ten percent of the amount of June liability required to be paid
in June, less the amount remitted in June. However, the penalty is not imposed if the
amount remitted in June equals the lesser of:

(1) deleted text begin 78 deleted text end new text begin 30 new text end percent of the actual June liability; or

(2) deleted text begin 78 deleted text end new text begin 30 new text end percent of the preceding May's liability.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with June 2008 tax
liabilities.
new text end

Sec. 16.

Minnesota Statutes 2006, section 297G.09, subdivision 9, is amended to read:

Subd. 9.

Accelerated tax payment; penalty.

A person liable for tax under this
chapter having a liability of $120,000 or more during a fiscal year ending June 30, shall
remit the June liability for the next year in the following manner:

(a) Two business days before June 30 of the year, the taxpayer shall remit the actual
May liability and deleted text begin 78 deleted text end new text begin 30 new text end percent of the estimated June liability to the commissioner and file
the return in the form and manner prescribed by the commissioner.

(b) On or before August 18 of the year, the taxpayer shall submit a return showing
the actual June liability and pay any additional amount of tax not remitted in June. A
penalty is imposed equal to ten percent of the amount of June liability required to be paid
in June less the amount remitted in June. However, the penalty is not imposed if the
amount remitted in June equals the lesser of:

(1) deleted text begin 78 deleted text end new text begin 30 new text end percent of the actual June liability; or

(2) deleted text begin 78 deleted text end new text begin 30 new text end percent of the preceding May liability.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with June 2008 tax
liabilities.
new text end

Sec. 17.

Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991,
chapter 291, article 8, section 22, and Laws 1998, chapter 389, article 8, section 25, and
Laws 2003, First Special Session chapter 21, article 8, section 11, is amended to read:

Subd. 2.

Notwithstanding Minnesota Statutes, Section 477A.016, or any other law,
ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance,
impose an additional sales tax of up to deleted text begin one and one-half deleted text end new text begin two and one-quarter new text end percent on
sales transactions which are described in Minnesota Statutes 2000, Section 297A.01,
Subdivision 3, Clause (c). When the city council determines that the taxes imposed
under this subdivision and under new text begin Laws 1998, chapter 389, article 8, new text end section 26 at a rate
of one-half of one percent have produced revenue sufficient to pay (1) the debt service
on bonds in a principal amount of $8,000,000 issued for capital improvements to the
Duluth Entertainment and Convention Center, and (2) debt service on outstanding bonds
originally issued in the principal amount of $4,970,000 to finance capital improvements to
the Great Lakes Aquarium since the imposition of the taxes at the rate of one and one-half
percent, the rate of the tax under this subdivision is reduced deleted text begin to deleted text end new text begin by one-half of new text end one percent.
The imposition of this tax shall not be subject to voter referendum under either state law
or city charter provisions. new text begin When the city council determines that the taxes imposed under
this subdivision at a rate of three-quarters of one percent and other sources of revenue
produce revenue sufficient to pay debt service on bonds in the principal amount up to
$37,931,000 plus issuance and discount costs, issued for capital improvements at the
Duluth Entertainment Convention Center, which include a new arena, the rate of tax under
this subdivision shall be reduced by three-quarters of one percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of
the city of Duluth and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 18.

Laws 1993, chapter 375, article 9, section 45, subdivision 2, as amended by
Laws 1997, chapter 231, article 7, section 36, is amended to read:

Subd. 2.

Use of revenues.

(a) Revenues received from taxes authorized by
subdivision 1 shall be used by Cook county to pay the cost of collecting the tax and to pay
all or a portion of the costs of expanding and improving the health care facility located
in the county and known as North Shore hospital. Authorized costs include, but are not
limited to, securing or paying debt service on bonds or other obligations issued to finance
the expansion and improvement of North Shore hospital. The total capital expenditures
payable from bond proceeds, excluding investment earnings on bond proceeds and tax
revenues, shall not exceed $4,000,000.

(b) Additional revenues received from taxes authorized by subdivision 1 may be
used by Cook county to pay all or a portion of the costs of betterment of North Shore
care center and providing additional improvements to North Shore hospital. Authorized
costs include, but are not limited to, securing or paying debt service on bonds or other
obligations issued to finance the remodeling of North Shore care center and additional
improvements to North Shore hospital. The total capital expenditures payable from bond
proceeds, excluding investment earnings on bond proceeds and tax revenues, shall not
exceed $2,200,000.

new text begin (c) If approved by the voters at a special election held before December 31, 2007,
additional revenues received from taxes authorized by subdivision 1 may be used by Cook
County to pay for the following projects:
new text end

new text begin (1) construction and improvements to a county community center and recreation
area, including, but not limited to, improvements and additions to the skateboard park,
hockey rink, ball fields, community center addition, county parking area, tennis courts,
and all associated improvements;
new text end

new text begin (2) construction and improvement to the Grand Marais pool; and
new text end

new text begin (3) construction and improvement to the Grand Marais Public Library.
new text end

new text begin Authorized expenses include, but are not limited to, paying construction expenses
related to these improvements, and paying debt service on bonds or other obligations
issued to finance acquisition and construction of these improvements.
new text end

Sec. 19.

Laws 1993, chapter 375, article 9, section 45, subdivision 3, as amended by
Laws 1997, chapter 231, article 7, section 37, is amended to read:

Subd. 3.

Expiration of taxing authority and expenditure limitation.

The
authority granted by subdivision 1 to Cook county to impose a sales tax shall expire
deleted text begin when the principal and interest on any bonds or obligations issued under subdivision
4, paragraph (a), to finance the expansion and improvement of North Shore hospital
described in subdivision 2, paragraph (a), have been paid, or at an earlier time as the
county shall, by resolution, determine deleted text end new text begin at the later of (1) 20 years, or (2) when the county
determines that the amount of revenues received is sufficient to pay for the principal and
interest on any bonds or obligations issued to finance the projects in subdivision 2 new text end . Any
funds remaining after completion of the improvements and retirement or redemption of
the bonds may be placed in the general fund of the county.

Sec. 20.

Laws 1993, chapter 375, article 9, section 45, subdivision 4, as amended by
Laws 1997, chapter 231, article 7, section 38, is amended to read:

Subd. 4.

Bonds.

(a) Cook county may issue general obligation bonds in an amount
not to exceed $4,000,000 for the expansion and improvement of North Shore hospital.

(b) Additionally, Cook county may issue general obligation bonds in an amount
not to exceed $2,200,000 for the betterment of North Shore care center and additional
improvements to North Shore hospital.

(c) The bonds may be issued without election under Minnesota Statutes, chapter
475, on the question of issuance of the bonds or a property tax to pay them. The debt
represented by the bonds shall not be included in computing any debt limitations applicable
to Cook county, and the levy of taxes required by Minnesota Statutes, section 475.61, to
pay principal of and interest on the bonds shall not be subject to any levy limitation or be
included in computing or applying any levy limitation applicable to the county.

new text begin (d) Cook County may issue bonds under Minnesota Statutes, chapter 475, to pay
capital and administrative expenses for the improvements authorized in subdivision 2,
paragraph (c), in an amount that does not exceed $14,000,000. An election to approve the
bonds under Minnesota Statutes, section 475.58, is not required. The issuance of bonds
under this subdivision is not subject to Minnesota Statutes, sections 275.60 and 275.61.
The debt represented by the bonds is not included in computing any debt limitation
applicable to the county, and any levy of taxes under Minnesota Statutes, section 475.61,
to pay principal and interest on the bonds is not subject to any levy limitation.
new text end

Sec. 21.

Laws 1999, chapter 243, article 4, section 18, subdivision 1, is amended to
read:

Subdivision 1.

Sales and use tax.

Notwithstanding Minnesota Statutes, section
deleted text begin 297A.48, subdivision 1a, deleted text end 477A.016, or any other provision of law, ordinance, or city
charter, if approved by the city voters at the first municipal general election held after the
date of final enactment of this act or at a special election held November 2, 1999, the city
of Proctor may impose by ordinance a sales and use tax of up to one-half of one percent
for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, section
, govern the imposition, administration, collection, and enforcement of
the tax authorized under this subdivision.

Sec. 22.

Laws 1999, chapter 243, article 4, section 18, subdivision 3, is amended to
read:

Subd. 3.

Use of revenues.

new text begin (a) new text end Revenues received from taxes authorized by
subdivisions 1 and 2 must be used by the city to pay the cost of collecting the taxes and to
pay for construction and improvement of the following city facilities:

(1) streets; and

(2) constructing and equipping the Proctor community activity center.

Authorized expenses include, but are not limited to, acquiring property, paying
construction and operating expenses related to the development of an authorized facility,
and paying debt service on bonds or other obligations, including lease obligations, issued
to finance the construction, expansion, or improvement of an authorized facility. The
capital expenses for all projects authorized under this paragraph that may be paid with
these taxes is limited to $3,600,000, plus an amount equal to the costs related to issuance
of the bonds.

new text begin (b) Additional revenues received from taxes authorized by subdivision 1, may be
used by the city to pay for the following capital improvement projects: public utilities,
including water, sanitary sewer, storm sewer, and electric; sidewalks; bikeways and trails;
and parks and recreation.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
upon compliance by the city of Proctor with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 23.

Laws 1999, chapter 243, article 4, section 18, subdivision 4, is amended to
read:

Subd. 4.

Bonding authority.

(a) The city may issue bonds under Minnesota
Statutes, chapter 475, to finance the capital expenditure and improvement projects
described in subdivision 3. An election to approve the bonds under Minnesota Statutes,
section 475.58, is not required.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes,
sections 275.60 and .

(c) The bonds are not included in computing any debt limitation applicable to the
city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of
and interest on the bonds is not subject to any levy limitation.

(d) new text begin For projects described in subdivision 3, paragraph (a), new text end the aggregate principal
amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital
expenditures and improvements, may not exceed $3,600,000, plus an amount equal to
the costs related to issuance of the bonds, including interest on the bonds. new text begin For projects
described in subdivision 3, paragraph (b), the aggregate principal amount of bonds may
not exceed $7,200,000, plus an amount equal to the costs related to issuance of the bonds,
including interest on the bonds.
new text end

(e) The sales and use and excise taxes authorized in this section may be pledged to
and used for the payment of the bonds and any bonds issued to refund them only if the
bonds and any refunding bonds are general obligations of the city.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
upon compliance by the city of Proctor with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 24.

Laws 2002, chapter 377, article 12, section 16, subdivision 1, is amended to
read:

Subdivision 1.

Nonprofit corporation may be established.

The city of Thief River
Falls may incorporate or authorize the incorporation of a nonprofit corporation to operate
a community or regional center in the city. new text begin A nonprofit corporation incorporated under
this section is exempt from payment of sales and use tax on materials, equipment, and
supplies consumed or incorporated into the construction of the community or regional
center. The exemption under this section applies to purchases by the nonprofit corporation,
a contractor, subcontractor, or builder.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for purchases made
on and after July 1, 2002.
new text end

Sec. 25.

Laws 2005, First Special Session chapter 3, article 5, section 39, is amended
to read:

Sec. 39. CITY OF BEMIDJI.

Subdivision 1.

Sales and use tax authorized.

Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to the
approval of the city voters at the general election held on November 5, 2002, new text begin and at the
general election held November 7, 2006, new text end the city of Bemidji may impose by ordinance
a sales and use tax of one-half of one percent for the purposes specified in subdivision
2. The provisions of Minnesota Statutes, section 297A.99, govern the imposition,
administration, collection, and enforcement of the tax authorized under this subdivision.

Subd. 2.

Use of revenues.

Revenues received from the tax authorized by
subdivision 1 must be used for the cost of collecting and administering the tax and to pay
new text begin for the projects listed in this subdivision:
new text end

new text begin (1) To pay new text end all or part of the capital or administrative costs of the acquisition,
construction, and improvement of parks and trails within the city, as provided for in the
city of Bemidji's parks, open space, and trail system plan, adopted by the Bemidji City
Council on November 21, 2001. Authorized expenses include, but are not limited to,
acquiring property, paying construction expenses related to the development of these
facilities and improvements, and securing and paying debt service on bonds or other
obligations issued to finance acquisition, construction, improvement, or development of
parks and trails within the city of Bemidji.

new text begin (2) To pay all or part of the city's share of costs for acquisition, design, and
construction of a regional event center, not to exceed $40,000,000 plus any associated
bond costs. Authorized expenses include, but are not limited to, acquiring property,
paying demolition and construction expenses, improving associated infrastructure, and
purchasing furniture, fixtures, and equipment for the regional event center, and securing
and paying debt service on bonds or other obligations issued to finance the regional event
center project.
new text end

Subd. 3.

Bonds.

new text begin (a) new text end Pursuant to the approval of the city voters at the general
election held on November 5, 2002, the city of Bemidji may issue, without an additional
election, general obligation bonds of the city in an amount not to exceed $9,826,000 to
pay capital and administrative expenses for the acquisition, construction, improvement,
and development of parks and trails as specified in subdivision 2. The debt represented by
the bonds must not be included in computing any debt limitations applicable to the city,
and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal
of any interest on the bonds must not be subject to any levy limitations or be included in
computing or applying any levy limitation applicable to the city.

new text begin (b) Pursuant to the approval of the city voters at the general election held on
November 7, 2006, the city of Bemidji may issue, without an additional election, general
obligation bonds of the city in an amount not to exceed $40,000,000 to pay capital and
administrative expenses for the acquisition, construction, improvement, and development
of the regional event center specified in subdivision 2. The debt represented by the bonds
must not be included in computing any debt limitations applicable to the city, and the levy
of taxes required by Minnesota Statutes, section , to pay the principal of any interest
on the bonds must not be subject to any levy limitations or be included in computing or
applying any levy limitation applicable to the city.
new text end

Subd. 4.

Termination of tax.

The tax imposed under subdivision 1 expires
when the Bemidji City Council determines that the amount described in subdivision 3 new text begin ,
paragraph (a), new text end has been received from the tax to finance the capital and administrative
costs for acquisition, construction, improvement, and development of parks and trails and
to repay or retire at maturity the principal, interest, and premium due on any bonds issued
for the park and trail improvements under subdivision 3 new text begin , paragraph (a), plus the earlier
of (1) 30 years, or (2) when the city council first determines that the additional revenues
received from the extension of the tax equals or exceeds the amount authorized to be spent
for the regional event center under subdivision 2, clause (2) new text end . Any funds remaining after
completion of the deleted text begin park and trail improvements deleted text end new text begin authorized projects new text end and retirement or
redemption of the bonds may be placed in the general fund of the city. The tax imposed
under subdivision 1 may expire at an earlier time if the city so determines by ordinance.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Bemidji and its chief clerical officer with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.
new text end

Sec. 26. new text begin CITY OF CLEARWATER; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, pursuant to the
approval of the voters on November 7, 2006, the city of Clearwater may impose by
ordinance a sales and use tax of up to one-half of one percent for the purposes specified in
subdivision 2. Except as otherwise provided in this section, the provisions of Minnesota
Statutes, section 297A.99, govern the imposition, administration, collection, and
enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, the city of Clearwater
may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up
to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person
engaged within the city in the business of selling motor vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin The proceeds of the tax imposed under this section shall
be used to pay for the costs of acquisition, construction, improvement, and development
of regional parks and trails, a pedestrian bridge, and land and buildings for a community
and recreation center.
new text end

new text begin Subd. 4. new text end

new text begin Bonding authority. new text end

new text begin The city of Clearwater may issue bonds in an amount
not to exceed $15,000,000 under Minnesota Statutes, chapter 475, to finance the capital
expenditures and improvements authorized by the referendum under subdivision 3. An
election to approve the bonds under Minnesota Statutes, section 475.59, is not required.
The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section
275.60 or 275.61. The debt represented by the bonds must not be included in computing
any debt limitations applicable to the city, and the levy of taxes required by Minnesota
Statutes, section 475.61, to pay the principal or any interest on the bonds must not be
subject to any levy limitation.
new text end

new text begin Subd. 5. new text end

new text begin Termination of tax. new text end

new text begin The tax authorized under subdivision 1 terminates at
the earlier of (1) 20 years after the date of initial imposition of the tax, or (2) when the
city council determines that sufficient funds have been raised from the tax to finance the
capital and administrative costs of the improvements described in subdivision 3, plus the
additional amount needed to pay the costs related to issuance of bonds under subdivision
4, including interest on the bonds. Any funds remaining after completion of the projects
specified in subdivision 3 and retirement or redemption of the bonds in subdivision 4 may
be placed in the general fund of the city. The tax imposed under subdivision 1 may expire
at an earlier time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Clearwater with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.
new text end

Sec. 27. new text begin CITY OF CLOQUET; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, if approved by the
voters pursuant to Minnesota Statutes, section 297A.99, or at a special election held for
this purpose, the city of Cloquet may impose by ordinance a sales and use tax of up to
one-half of one percent for the purposes specified in subdivision 3. Except as provided in
this section, the provisions of Minnesota Statutes, section 297A.99, govern the imposition,
administration, collection, and enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, the city of Cloquet
may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up
to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person
engaged within the city in the business of selling motor vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from taxes authorized by subdivisions
1 and 2 must be used by the city to pay the cost of collecting the taxes and to pay for
the following projects: construction and completion of park improvement projects,
including, but not limited to, reconstruction of a community swimming pool complex and
all associated improvements; St. Louis River Riverfront improvements; Veteran's Park
construction and improvements; construction of a community center; improvements to
the Hilltop Park soccer complex, Braun Park baseball complex, Athletic Park, Sunnyside
Park, and Cloquet Area Recreation Center/Pine Valley Arena; and development of
pedestrian trails within the city.
new text end

new text begin Authorized expenses include, but are not limited to, acquiring property and paying
construction expenses related to these improvements, and paying debt service on bonds or
other obligations issued to finance acquisition and construction of these improvements.
new text end

new text begin Subd. 4. new text end

new text begin Bonding authority. new text end

new text begin (a) The city may issue bonds under Minnesota
Statutes, chapter 475, to pay capital and administrative expenses for the improvements
described in subdivision 3 in an amount that does not exceed $7,500,000. An election to
approve the bonds under Minnesota Statutes, section 475.58, is not required.
new text end

new text begin (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes,
sections 275.60 and 275.61.
new text end

new text begin (c) The debt represented by the bonds is not included in computing any debt
limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section
475.61, to pay principal of and interest on the bonds is not subject to any levy limitation.
new text end

new text begin Subd. 5. new text end

new text begin Termination of taxes. new text end

new text begin The taxes imposed under subdivisions 1 and 2
expire at the earlier of (1) 30 years, or (2) when the city council determines that the amount
of revenues received from the taxes to finance the improvements described in subdivision
3 first equals or exceeds $7,500,000, plus the additional amount needed to pay the costs
related to issuance of bonds under subdivision 4, including interest on the bonds. Any
funds remaining after completion of the project and retirement or redemption of the bonds
may be placed in the general fund of the city. The taxes imposed under subdivisions 1 and
2 may expire at an earlier time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of
the city of Cloquet and its chief clerical officer timely comply with Minnesota Statutes,
section 645.021, subdivisions 2 and 3. new text end

Sec. 28. new text begin CITY OF CROOKSTON; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, if approved by the
voters at the next general election or a special election prior to December 31, 2008, the
city of Crookston may impose by ordinance a sales and use tax of up to one-half of one
percent for the purposes specified in subdivision 2. Except as provided in this section, the
provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration,
collection, and enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from taxes authorized by subdivision
1 must be used by the city to pay the cost of collecting the taxes and to pay all or part of
the capital costs of construction of a regional recreation center. Authorized expenses
include, but are not limited to, acquiring property and paying construction expenses
related to these facilities and improvements, and paying debt service on bonds or other
obligations issued to finance acquisition, development, and construction of these facilities
and improvements. The total amount of revenues that the city may raise under subdivision
1 to finance these projects is limited to $10,000,000 plus any associated bond costs.
new text end

new text begin Subd. 3. new text end

new text begin Bonding authority. new text end

new text begin Pursuant to the approval of the city voters to impose
the tax authorized under subdivision 1, the city may issue, without an additional election,
general obligation bonds of the city in an amount not to exceed $10,000,000 to pay
capital and administrative expenses for the projects described in subdivision 2. The debt
represented by the bonds is not included in computing any debt limitation applicable to the
city, and any levy of taxes under Minnesota Statutes, section 475.61, to pay principal of
and interest on the bonds is not subject to any levy limitation or be included in computing
or applying any levy limitation applicable to the city.
new text end

new text begin Subd. 5. new text end

new text begin Termination of taxes. new text end

new text begin The taxes imposed under subdivision 1 expire when
the Crookston city council determines that the amount of revenues received from the taxes
to finance the projects described in subdivision 2 first equals or exceeds $10,000,000,
plus the additional amount needed to pay the costs related to issuance of bonds under
subdivision 3, including interest on the bonds. Any funds remaining after completion of
the projects and retirement or redemption of the bonds may be placed in the general fund
of the city. The taxes imposed under subdivision 1 may expire at an earlier time if the
city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of
the city of Crookston and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3. new text end

Sec. 29. new text begin COOK COUNTY; LODGING AND ADMISSIONS TAXES.
new text end

new text begin Subdivision 1. new text end

new text begin Lodging tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, the Board of
Commissioners of Cook County may impose, by ordinance, a tax of up to one percent on
the gross receipts subject to the lodging tax under Minnesota Statutes, section 469.190.
This tax is in addition to any tax imposed under Minnesota Statutes, section 469.190, and
the total tax imposed under that section and this provision must not exceed four percent.
new text end

new text begin Subd. 2. new text end

new text begin Admissions and recreation tax. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, the Board of
Commissioners of Cook County may impose, by ordinance, a tax of up to three percent on
admissions to entertainment and recreational facilities and rental of recreation equipment.
new text end

new text begin In its ordinance, the Board of Commissioners of Cook County may provide that
entities exempt from the tax imposed under Minnesota Statutes, section 297A.70, are
not required to collect the taxes in subdivisions 1 and 2. The Board of Commissioners
of Cook County may also create lodging districts smaller than the county in which to
impose the tax.
new text end

new text begin Subd. 3. new text end

new text begin Use of taxes. new text end

new text begin The taxes imposed in subdivisions 1 and 2 must be used
to fund a new Cook County Event and Visitors Bureau as established by the Board of
Commissioners of Cook County. The Board of Commissioners of Cook County must
annually review the budget of the Cook County Event and Visitors Bureau.
new text end

new text begin Subd. 4. new text end

new text begin Termination of taxes. new text end

new text begin The taxes authorized under subdivisions 1 and 2
terminate ten years after the date of initial imposition of the taxes.
new text end

new text begin Subd. 5. new text end

new text begin Cook County Event and Visitors Bureau. new text end

new text begin (a) The Cook County Event
and Visitors Bureau shall be governed by a 14-member board of directors composed of:
new text end

new text begin (1) four directors to be appointed by the Grand Marais Area Tourism Association;
new text end

new text begin (2) two directors to be appointed by the Gunflint Trail Association;
new text end

new text begin (3) seven directors to be appointed by the Lutsen-Tofte Tourism Association; and
new text end

new text begin (4) one nonvoting member appointed by Grand Portage.
new text end

new text begin (b) The Cook County Event and Visitors Bureau may adjust its membership upon a
vote of approval by at least nine members.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases after June
30, 2007.
new text end

Sec. 30. new text begin CITY OF ELY; SALES AND USE TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, if approved by
the voters pursuant to Minnesota Statutes, section 297A.99, the city of Ely may impose by
ordinance a sales and use tax of up to one percent for the purposes specified in subdivision
3. Except as otherwise provided in this section, the provisions of Minnesota Statutes,
section 297A.99, govern the imposition, administration, collection, and enforcement of
the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, the city of Ely may
impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up to
$20 per motor vehicle, as defined by ordinance, purchased or acquired from any person
engaged within the city in the business of selling motor vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin The proceeds of the tax imposed under this section
must be used by the city of Ely to pay the costs of collecting and administering the tax
and to pay the following costs:
new text end

new text begin (1) establishment of an entry to the Boundary Waters that includes the chamber of
commerce, visitor center, and related facilities;
new text end

new text begin (2) construction of a pool facility that would support Independent School District
No. 696 and Ely Bloomenson Community Hospital;
new text end

new text begin (3) infrastructure improvement related to the expansion of the Ely Bloomenson
Community Hospital; and
new text end

new text begin (4) community center use transition to establish the Boundary Waters Historical
Center and provide for compliance with the Americans with Disabilities Act.
new text end

new text begin Subd. 4. new text end

new text begin Bonding authority. new text end

new text begin (a) If the tax authorized under subdivision 1 is
approved by the voters, the city of Ely may issue bonds under Minnesota Statutes,
chapter 475, to pay the capital and administrative expenses for the improvement projects
authorized under subdivision 2. The total amount of bonds issued for the projects listed in
subdivision 3 may not exceed $15,000,000 in aggregate. An election to approve the bonds
under Minnesota Statutes, section 475.58, is not required.
new text end

new text begin (b) The debt represented by the bonds is not included in computing any debt
limitation applicable to the city of Ely, and the levy of taxes under Minnesota Statutes,
section 475.61, to pay the principal of and interest on the bonds is not subject to any
levy limitation.
new text end

new text begin Subd. 5. new text end

new text begin Termination of tax. new text end

new text begin The tax authorized under this section expires when
the city council determines that the taxes imposed under this subdivision have raised
revenue sufficient to pay the bonds authorized in subdivision 3, including administrative
costs and interest.
new text end

new text begin Any funds remaining after completion of the projects and retirement or redemption
of the bonds may be placed in the general fund of the city. The taxes imposed under
subdivisions 1 and 2 may expire at an earlier time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Ely with Minnesota Statutes, section 645.021, subdivision 3.
new text end

Sec. 31. new text begin MINNETONKA WATER TREATMENT FACILITY.
new text end

new text begin Capital equipment used in or incorporated into the construction of a water treatment
facility owned by the city of Minnetonka is exempt from sales tax regardless of whether
purchased by the owner, contractor, subcontractor, or builder. The tax must be imposed
and collected as if the rate under Minnesota Statutes, section 297A.62, subdivision 1,
applied and then refunded to the city of Minnetonka in the manner provided in Minnesota
Statutes, section 297A.75.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made before
December 31, 2006.
new text end

Sec. 32. new text begin CITY OF NORTH MANKATO; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to
the approval of the voters on November 7, 2006, the city of North Mankato may impose
by ordinance a sales and use tax of one-half of one percent for the purposes specified
in subdivision 2. The provisions of Minnesota Statutes, section 297A.99, govern the
imposition, administration, collection, and enforcement of the taxes authorized under
this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the tax authorized by
subdivision 1 must be used to pay all or part of the capital costs of the following projects:
new text end

new text begin (1) the local share of the Trunk Highway 14/County State Aid Highway 41
interchange project; and
new text end

new text begin (2) development of regional parks and hiking and biking trails.
new text end

new text begin The total amount of revenues from the tax in subdivision 1 that may be used to fund
these projects is $4,000,000 plus any associated bond costs.
new text end

new text begin Subd. 3. new text end

new text begin Bonds. new text end

new text begin (a) The city of North Mankato, pursuant to the approval of the
voters at the November 7, 2006, referendum authorizing the imposition of the taxes in
this section, may issue bonds under Minnesota Statutes, chapter 475, to pay capital and
administrative expenses for the projects described in subdivision 2, in an amount that
does not exceed $4,000,000. A separate election to approve the bonds under Minnesota
Statutes, section 475.58, is not required.
new text end

new text begin (b) The debt represented by the bonds is not included in computing any debt
limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section
475.61, to pay principal and interest on the bonds is not subject to any levy limitation.
new text end

new text begin Subd. 4. new text end

new text begin Termination of taxes. new text end

new text begin The tax imposed under subdivision 1 expires
when the city council determines that the amount of revenues received from the taxes
to pay for the projects under subdivision 2, first equals or exceeds $4,000,000 plus the
additional amount needed to pay the costs related to issuance of bonds under subdivision
3, including interest on the bonds. Any funds remaining after completion of the projects
and retirement or redemption of the bonds shall be placed in a capital facilities and
equipment replacement fund of the city. The tax imposed under subdivision 1 may expire
at an earlier time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of North Mankato with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 33. new text begin CITY OF WINONA; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, if approved by the
voters at a special election held before December 31, 2007, the city of Winona may
impose by ordinance a sales and use tax of up to one-half of one percent for the purpose
specified in subdivision 2. Except as otherwise provided in this section, the provisions of
Minnesota Statutes, section 297A.99, govern the imposition, administration, collection,
and enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin The proceeds of the tax imposed under this section shall
be used to pay the city-borne costs for the construction of a street connection from the city
of Winona to Minnesota State Highways 61 and 43. The construction will provide access
to the city's newly built industrial park and additional access to a hospital.
new text end

new text begin Subd. 3. new text end

new text begin Bonding authority. new text end

new text begin The city of Winona may issue bonds in an amount
not to exceed $8,000,000 under Minnesota Statutes, chapter 475, to finance the capital
expenditures under subdivision 2. An election to approve the bonds under Minnesota
Statutes, section 475.58, is not required. The issuance of bonds under this subdivision is
not subject to Minnesota Statutes, section 275.60 or 275.61. The debt represented by the
bonds must not be included in computing any debt limitations applicable to the city, and
the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal or
any interest on the bonds must not be subject to any levy limitation.
new text end

new text begin Subd. 4. new text end

new text begin Termination of tax. new text end

new text begin The tax authorized under subdivision 1 terminates
at the earlier of: (1) five years after the date of initial imposition of the tax; or (2) when
the city council determines that sufficient funds have been raised from the tax to finance
the capital and administrative costs of the project described in subdivision 2, plus the
additional amount needed to pay the costs related to issuance of bonds under subdivision
3, including interest on the bonds. Any funds remaining after completion of the project
specified in subdivision 2 and retirement or redemption of the bonds in subdivision 3 may
be placed in the general fund of the city. The tax imposed under subdivision 1 may expire
at an earlier time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by
the governing body of the city of Winona with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.
new text end

ARTICLE 5

PROPERTY TAXES

Section 1.

Minnesota Statutes 2006, section 123B.53, subdivision 5, is amended to read:

Subd. 5.

Equalized debt service levy.

(a) The equalized debt service levy of a
district equals the sum of the first tier equalized debt service levy and the second tier
equalized debt service levy.

(b) A district's first tier equalized debt service levy equals the district's first tier debt
service equalization revenue times the lesser of one or the ratio of:

(1) the quotient derived by dividing the deleted text begin adjusted deleted text end new text begin debt service new text end net tax capacity of the
district for the year before the year the levy is certified by the adjusted pupil units in the
district for the school year ending in the year prior to the year the levy is certified; to

(2) $3,200.

(c) A district's second tier equalized debt service levy equals the district's second tier
debt service equalization revenue times the lesser of one or the ratio of:

(1) the quotient derived by dividing the deleted text begin adjusted deleted text end new text begin debt service new text end net tax capacity of the
district for the year before the year the levy is certified by the adjusted pupil units in the
district for the school year ending in the year prior to the year the levy is certified; to

(2) $8,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2008.
new text end

Sec. 2.

Minnesota Statutes 2006, section 126C.01, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Debt service net tax capacity. new text end

new text begin A school district's debt service net tax
capacity means the net tax capacity of the taxable property of the district as adjusted by
the commissioner of revenue under section , subdivision 17. The debt service net
tax capacity for any given calendar year must be used to compute the debt service levy
limitations for levies certified in the succeeding calendar year and aid for the school year
beginning in the second succeeding calendar year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment for
computing taxes payable in 2008.
new text end

Sec. 3.

Minnesota Statutes 2006, section 126C.01, subdivision 3, is amended to read:

Subd. 3.

Referendum market value.

"Referendum market value" means the market
value of all taxable property, excluding property classified as class 2, deleted text begin noncommercial
4c(1), or 4c(4) deleted text end under section 273.13. The portion of class 2a property consisting of the
house, garage, and surrounding one acre of land of an agricultural homestead is included
in referendum market value. Any class of property, or any portion of a class of property,
that is included in the definition of referendum market value and that has a class rate of
less than one percent under section 273.13 shall have a referendum market value equal
to its net tax capacity multiplied by 100.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2006, section 127A.48, subdivision 2, is amended to read:

Subd. 2.

Methodology.

In making its annual assessment/sales ratio studies, the
Department of Revenue must use a methodology consistent with the most recent Standard
on Assessment Ratio Studies published by the assessment standards committee of the
International Association of Assessing Officers. The commissioner of revenue shall
supplement this general methodology with specific procedures necessary for execution of
the study in accordance with other Minnesota laws impacting the assessment/sales ratio
study. The commissioner shall document these specific procedures in writing and shall
publish the procedures in the State Register, but these procedures will not be considered
"rules" pursuant to the Minnesota Administrative Procedure Act. new text begin When property is
sold and the purchaser changes its use in a manner that would result in a change of
classification of the property, the study must take into account that changed classification
as soon as practicable. new text end For purposes of this section, sections 270.12, subdivision 2,
clause (8), and 278.05, subdivision 4, the commissioner of revenue shall exclude from
the assessment/sales ratio study the sale of any nonagricultural property which does not
contain an improvement, if (1) the statutory basis on which the property's taxable value
as most recently assessed is less than market value as defined in section 273.11, or (2)
the property has undergone significant physical change or a change of use since the most
recent assessment.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2006, section 127A.48, is amended by adding a subdivision
to read:

new text begin Subd. 17. new text end

new text begin Debt service net tax capacity. new text end

new text begin To calculate each district's debt service
net tax capacity, the commissioner of revenue must recompute the amounts in this section
using an alternative sales ratio comparing the sales price to the estimated market value
of the property.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment for
computing taxes payable in 2008.
new text end

Sec. 6.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 85. new text end

new text begin Homestead of disabled veteran or surviving spouse. new text end

new text begin (a) Property
otherwise qualifying for homestead classification under section 273.13 is exempt from
taxation if it is the homestead of a military veteran, as defined in section 197.447, who
has a total and permanent service-connected disability. To qualify for exemption under
this subdivision, the veteran must have been honorably discharged from the United
States armed forces, as indicated by United States Government Form DD214 or other
official military discharge papers, and must be certified by the United States Veterans
Administration as having a total (100 percent) and permanent service-connected disability.
new text end

new text begin (b) If a disabled veteran qualifying for exemption under paragraph (a) predeceases
the veteran's spouse, and if upon the death of the veteran the spouse holds the legal or
beneficial title to the homestead and permanently resides there, the exemption from
taxation shall carry over to the benefit of the veteran's spouse until the spouse remarries or
sells or otherwise disposes of the property.
new text end

new text begin (c) In the case of an agricultural homestead, only the portion of the property
consisting of the house and garage and immediately surrounding one acre of land qualifies
for exemption under this subdivision.
new text end

new text begin (d) To first qualify for exemption under this section, a property owner must apply
to the assessor by July 1 of the assessment year, except that for assessment year 2007
application may be made until October 1, 2007. The application must be accompanied by
supporting documentation as required by the assessor. Once a property has been accepted
for exemption under this section, the property continues to qualify as long as it meets
the requirements of this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 86. new text end

new text begin Modular homes used as models by dealers. new text end

new text begin (a) A modular home
is exempt if it:
new text end

new text begin (1) is owned by a licensed manufactured home dealer and is located on land owned
or leased by that dealer;
new text end

new text begin (2) is a single-family model home;
new text end

new text begin (3) is not available for sale and is used exclusively as a model;
new text end

new text begin (4) is not permanently connected to any utilities except electricity; and
new text end

new text begin (5) is situated on a temporary foundation.
new text end

new text begin (b) The exemption under this subdivision is allowable for up to five assessment
years after the date it becomes located on the property, provided that the modular home
continues to meet all of the criteria under this subdivision each year. The owner of a
modular model home must notify the county assessor within 60 days that it has been
constructed or located on the property and must again notify the assessor if the modular
home ceases to meet any of the criteria. If more than one modular home is constructed or
situated on a property, the owner must notify the assessor within 60 days for each of the
models placed on the property.
new text end

new text begin (c) For purposes of this subdivision, a "modular home" means a building or
structural unit that has been in whole or substantial part manufactured or constructed at an
off-site location to be wholly or partially assembled on-site as a single family dwelling.
Construction of the modular home must comply with applicable standards adopted in
Minnesota Rules authorized under Minnesota Statutes, chapter 16B. A modular home does
not include a structure subject to the requirements of the National Manufactured Home
Construction and Safety Standards Act of 1974 or prefabricated buildings, as defined in
Minnesota Statutes, section 327.31, subdivision 6.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2007 and
thereafter, for taxes payable in 2008 and thereafter. The five-year assessment time period
begins with the 2007 assessment for a modular model home currently situated provided
it meets all of the criteria and the county assessor is notified within 90 days of the day
following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 87. new text end

new text begin Apprenticeship training facilities. new text end

new text begin Property used to operate a state or
federally approved apprenticeship program is exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for property taxes
payable in 2006 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 88. new text end

new text begin Monosloped roofs for feedlots and manure storage areas. new text end

new text begin A
monosloped, single-pitched roof installed over a feedlot or manure storage area to prevent
runoff is exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes levied in 2007,
payable in 2008, and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 89. new text end

new text begin Electric generation facility; personal property. new text end

new text begin (a) Notwithstanding
subdivision 9, clause (a), attached machinery and other personal property which is part of
a simple-cycle combustion-turbine electric generation facility that exceeds 150 megawatts
of installed capacity and that meets the requirements of this subdivision is exempt. At
the time of construction, the facility must:
new text end

new text begin (1) utilize natural gas as a primary fuel;
new text end

new text begin (2) be owned by an electric generation and transmission cooperative;
new text end

new text begin (3) be located within one mile of an existing 16-inch natural gas pipeline and a
69-kilovolt and a 230-kilovolt high-voltage electric transmission line;
new text end

new text begin (4) be designed to provide peaking, emergency backup, or contingency services;
new text end

new text begin (5) have received a certificate of need under section 216B.243 demonstrating
demand for its capacity; and
new text end

new text begin (6) have received by resolution the approval from the governing bodies of the county
and the city in which the proposed facility is to be located for the exemption of personal
property under this subdivision.
new text end

new text begin (b) Construction of the facility must be commenced after January 1, 2008, and
before January 1, 2012. Property eligible for this exemption does not include electric
transmission lines and interconnections or gas pipelines and interconnections appurtenant
to the property or the facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes levied in 2007,
payable in 2008, and thereafter.
new text end

Sec. 11.

Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:

Subdivision 1.

Requirement.

Except as otherwise provided in subdivision 5,
whenever any real estate is sold for a consideration in excess of $1,000, whether by
warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor,
grantee or the legal agent of either shall file a certificate of value with the county
auditor in the county in which the property is located when the deed or other document
is presented for recording. Contract for deeds are subject to recording under section
507.235, subdivision 1. Value shall, in the case of any deed not a gift, be the amount of
the full actual consideration thereof, paid or to be paid, including the amount of any lien
or liens assumed. The items and value of personal property transferred with the real
property must be listed and deducted from the sale price. The certificate of value shall
include the classification to which the property belongs for the purpose of determining
the fair market value of the property new text begin , and shall include any proposed change in use of the
property known to the person filing the certificate that could change the classification
of the property new text end . The certificate shall include financing terms and conditions of the sale
which are necessary to determine the actual, present value of the sale price for purposes
of the sales ratio study. new text begin If the property is being acquired as part of a like-kind exchange
under section 1031 of the Internal Revenue Code of 1986, as amended through December
31, 2006, that must be indicated on the certificate. new text end The commissioner of revenue shall
promulgate administrative rules specifying the financing terms and conditions which must
be included on the certificate. Pursuant to the authority of the commissioner of revenue in
section 270C.306, the certificate of value must include the Social Security number or the
federal employer identification number of the grantors and grantees. The identification
numbers of the grantors and grantees are private data on individuals or nonpublic data
as defined in section 13.02, subdivisions 9 and 12, but, notwithstanding that section, the
private or nonpublic data may be disclosed to the commissioner of revenue for purposes of
tax administration. The information required to be shown on the certificate of value is
limited to the information required as of the date of the acknowledgment on the deed or
other document to be recorded.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certificates filed after June 30,
2007.
new text end

Sec. 12.

Minnesota Statutes 2006, section 273.11, subdivision 1a, is amended to read:

Subd. 1a.

Limited market value.

In the case of all property classified as
agricultural homestead or nonhomestead, residential homestead or nonhomestead, timber,
deleted text begin or deleted text end noncommercial seasonal residential recreational, new text begin or class 1c homestead resort, new text end the
assessor shall compare the value with the taxable portion of the value determined in
the preceding assessment.

deleted text begin For assessment years 2004, 2005, and 2006, the amount of the increase shall not
exceed the greater of (1) 15 percent of the value in the preceding assessment, or (2) 25
percent of the difference between the current assessment and the preceding assessment.
deleted text end

For assessment year 2007, the amount of the increase shall not exceed the greater of
(1) 15 percent of the value in the preceding assessment, or (2) 33 percent of the difference
between the current assessment and the preceding assessment.

For assessment year 2008, the amount of the increase shall not exceed the greater of
(1) 15 percent of the value in the preceding assessment, or (2) 50 percent of the difference
between the current assessment and the preceding assessment.

This limitation shall not apply to increases in value due to improvements. For
purposes of this subdivision, the term "assessment" means the value prior to any exclusion
under subdivision 16.

The provisions of this subdivision shall be in effect through assessment year 2008
as provided in this subdivision.

For purposes of the assessment/sales ratio study conducted under section 127A.48,
and the computation of state aids paid under chapters 122A, 123A, 123B, new text begin excluding
section 123B.53, new text end 124D, 125A, 126C, 127A, and 477A, market values and net tax
capacities determined under this subdivision and subdivision 16, shall be used.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 13.

Minnesota Statutes 2006, section 273.111, subdivision 2, is amended to read:

Subd. 2.

Public policy.

The present general system of ad valorem property taxation
in the state of Minnesota does not provide an equitable basis for the taxation of certain
agricultural real property deleted text begin and has resulted in inadequate taxes on some lands and excessive
taxes on others deleted text end . Therefore, it is hereby declared to be the public policy of this state that
the public interest would best be served by deleted text begin equalizing tax burdens upon deleted text end new text begin implementing
a more realistic and fair system of valuation of new text end agricultural property within this state
deleted text begin through appropriate taxing measures deleted text end .

Sec. 14.

Minnesota Statutes 2006, section 273.111, subdivision 6, is amended to read:

Subd. 6.

Agricultural use.

Real property qualifying under subdivision 3 shall be
considered to be in agricultural use provided that deleted text begin annually deleted text end :

(1) new text begin in at least one of the three calendar years preceding the assessment year, new text end at least
deleted text begin 33-1/3 deleted text end new text begin 25 new text end percent of the total family income of the owner is derived therefrom, deleted text begin or deleted text end new text begin and new text end the
total production income deleted text begin including deleted text end new text begin , plus any new text end rental new text begin income new text end from the property is $300 plus
$10 per deleted text begin tillable deleted text end acre new text begin in the parcel subject to this section new text end ; and

(2) it is devoted to the production for sale of agricultural products as defined in
section 273.13, subdivision 23, paragraph (e).

new text begin In this subdivision, "total production income" means gross income as reported
for federal income tax purposes on Schedule F for the calendar year ending in the year
preceding the assessment year.
new text end

Slough, wasteland, and woodland contiguous to or surrounded by land that is entitled
to valuation and tax deferment under this section is considered to be in agricultural use if
under the same ownership and management.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 15.

Minnesota Statutes 2006, section 273.111, subdivision 14, is amended to read:

Subd. 14.

Applicability of special assessment provisions.

This section shall apply
to special local assessments levied after July 1, 1967, and payable in the years thereafter,
but shall not apply to any special assessments levied at any time by a county or district
court under deleted text begin the provisions of deleted text end chapter 116A new text begin , by a watershed district under chapter 103D, or
by a drainage authority under chapter 103E new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for special assessments levied after
May 31, 2007, or, as applied to special assessments levied before June 1, 2007, to property
that initially qualifies for valuation under section 273.111, for taxes levied in 2007.
new text end

Sec. 16.

new text begin [273.1115] AGGREGATE RESOURCE PRESERVATION PROPERTY
TAX LAW.
new text end

new text begin Subdivision 1. new text end

new text begin Requirements. new text end

new text begin Real estate is entitled to valuation under this section
only if all of the following requirements are met:
new text end

new text begin (1) the property is classified 1a, 1b, 2a, or 2b property under section 273.13,
subdivisions 22 and 23;
new text end

new text begin (2) the property is at least ten contiguous acres, when the application is filed under
subdivision 2;
new text end

new text begin (3) the owner has filed a completed application for deferment as specified in
subdivision 2 with the county assessor in the county in which the property is located;
new text end

new text begin (4) there are no delinquent taxes on the property; and
new text end

new text begin (5) a covenant on the land restricts its use as provided in subdivision 2, clause (4).
new text end

new text begin Subd. 2. new text end

new text begin Application. new text end

new text begin Application for valuation deferment under this section
must be filed by May 1 of the assessment year. Any application filed and granted
continues in effect for subsequent years until the property no longer qualifies, provided
that supplemental affidavits under subdivision 6 are timely filed. The application must
be filed with the assessor of the county in which the real property is located on such
form as may be prescribed by the commissioner of revenue. The application must be
executed and acknowledged in the manner required by law to execute and acknowledge a
deed and must contain at least the following information and any other information the
commissioner deems necessary:
new text end

new text begin (1) the legal description of the area;
new text end

new text begin (2) the name and address of owner;
new text end

new text begin (3) a copy of the affidavit filed under section 273.13, subdivision 23, paragraph (h),
in the case of property classified class 2b, clause (5); or in the case of property classified
1a, 1b, 2a, and 2b, clauses (1) to (3), the application must include a similar document with
the same information as contained in the affidavit under section 273.13, subdivision 23,
paragraph (h); and
new text end

new text begin (4) a statement of proof from the owner that the land contains a restrictive covenant
limiting its use for the property's surface to that which exists on the date of the application
and limiting its future use to the preparation and removal of the aggregate commercial
deposit under its surface.
new text end

new text begin To qualify under this clause, the covenant must be binding on the owner or the
owner's successor or assignee, and run with the land, except as provided in subdivision 4
allowing for the cancellation of the covenant under certain conditions.
new text end

new text begin Subd. 3. new text end

new text begin Determination of value. new text end

new text begin Upon timely application by the owner as
provided in subdivision 2, notwithstanding sections 272.03, subdivision 8, and 273.11,
the value of any qualifying land described in subdivision 2 must be valued as if it were
agricultural property, using a per acre valuation equal to the current year's per acre
valuation of agricultural land in the county. The assessor shall not consider any additional
value resulting from potential alternative and future uses of the property. The buildings
located on the land shall be valued by the assessor in the normal manner.
new text end

new text begin Subd. 4. new text end

new text begin Cancellation of covenant. new text end

new text begin The covenant required under subdivision
2 may be canceled in two ways:
new text end

new text begin (1) by the owner beginning with the next subsequent assessment year provided
that the additional taxes as determined under subdivision 5 are paid by the owner at the
time of cancellation; and
new text end

new text begin (2) by the city or town in which the property is located beginning with the next
subsequent assessment year, if the city council or town board:
new text end

new text begin (i) changes the conditional use of the property;
new text end

new text begin (ii) revokes the mining permit; or
new text end

new text begin (iii) changes the zoning to disallow mining.
new text end

new text begin No additional taxes are imposed on the property under this clause.
new text end

new text begin Subd. 4a. new text end

new text begin County termination. new text end

new text begin Within two years of the effective date of this
section, a county may, following notice and public hearing, terminate application of this
section in the county. The termination is effective upon adoption of a resolution of the
county board. A county has 60 days from receipt of the first application for enrollment
under this section to notify the applicant and any subsequent applicants of the county's
intent to begin the process of terminating application of this section in the county. The
county must act on the termination within six months. Upon termination by a vote of the
county board, all applications received during notification of intent to terminate shall be
deemed void. If the county board does not act on the termination within six months of
notification, all applications for valuation for deferment received shall be deemed eligible
to be enrolled under this section. Following this initial 60-day grace period, a termination
applies prospectively and does not affect property enrolled under this section prior to the
termination date. A county may reauthorize application of this section by a resolution of
the county board revoking the termination.
new text end

new text begin Subd. 5. new text end

new text begin Additional taxes. new text end

new text begin When real property which has been valued and assessed
under this section no longer qualifies, the portion of the land classified under subdivision
1, clause (1), is subject to additional taxes. The additional tax amount is determined by:
new text end

new text begin (1) computing the difference between (i) the current year's taxes determined in
accordance with subdivision 3, and (ii) an amount as determined by the assessor based
upon the property's current year's estimated market value of like real estate at its highest
and best use and the appropriate local tax rate; and
new text end

new text begin (2) multiplying the amount determined in clause (1) by the number of years the
land was in the program under this section.
new text end

new text begin The current year's estimated market value as determined by the assessor must not
exceed the market value that would result if the property was sold in an arms-length
transaction and must not be greater than it would have been had the actual bona fide sale
price of the property been used in lieu of that market value. The additional taxes must be
extended against the property on the tax list for the current year, except that interest or
penalties must not be levied on such additional taxes if timely paid.
new text end

new text begin The additional tax under this subdivision must not be imposed on that portion of the
property which has actively been mined and has been removed from the program based
upon the supplemental affidavits filed under subdivision 6.
new text end

new text begin Subd. 6. new text end

new text begin Supplemental affidavits; mining activity on land. new text end

new text begin When any portion
of the property begins to be actively mined, the owner must file a supplemental affidavit
within 60 days from the day any aggregate is removed stating the number of acres of the
property that is actively being mined. The acres actively being mined shall be (1) valued
and classified under section 273.13, subdivision 24, in the next subsequent assessment
year, and (2) removed from the aggregate resource preservation property tax program
under this section. The additional taxes under subdivision 5 must not be imposed on
the acres that are actively being mined and have been removed from the program under
this section.
new text end

new text begin Copies of the original affidavit and all supplemental affidavits must be filed with the
county assessor, the local zoning administrator, and the Department of Natural Resources,
Division of Land and Minerals. A supplemental affidavit must be filed each time a
subsequent portion of the property is actively mined, provided that the minimum acreage
change is five acres, even if the actual mining activity constitutes less than five acres.
Failure to file the affidavits timely shall result in the property losing its valuation deferment
under this section, and additional taxes must be imposed as calculated under subdivision 5.
new text end

new text begin Subd. 7. new text end

new text begin Lien. new text end

new text begin The additional tax imposed by this section is a lien upon the property
assessed to the same extent and for the same duration as other taxes imposed upon
property within this state and, when collected, must be distributed in the manner provided
by law for the collection and distribution of other property taxes.
new text end

new text begin Subd. 8. new text end

new text begin Continuation of tax treatment upon sale. new text end

new text begin When real property qualifying
under subdivision 1 is sold, additional taxes must not be extended against the property
if the property continues to qualify under subdivision 1, and the new owner files an
application with the assessor for continued deferment within 30 days after the sale.
new text end

new text begin Subd. 9. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, "commercial aggregate deposit"
and "actively mined" have the meanings given them in section 273.13, subdivision 23,
paragraph (h).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2008, payable
in 2009, and thereafter, except that for the 2008 assessment year, the application date
under subdivision 4 shall be September 1, 2008, and subdivision 4a is effective the day
following final enactment.
new text end

Sec. 17.

Minnesota Statutes 2006, section 273.112, subdivision 3, is amended to read:

Subd. 3.

Requirements.

Real estate shall be entitled to valuation and tax deferment
under this section only if it is:

(a) actively and exclusively devoted to golf, skiing, lawn bowling, croquet, polo,
new text begin soccer, new text end or archery or firearms range recreational use or other recreational uses carried
on at the establishment;

(b) five acres in size or more, except in the case of a lawn bowling or croquet green
or an archery or firearms range;

(c)(1) operated by private individuals or, in the case of a lawn bowling or croquet
green, by private individuals or corporations, and open to the public; or

(2) operated by firms or corporations for the benefit of employees or guests; or

(3) operated by private clubs having a membership of 50 or more or open to the
public, provided that the club does not discriminate in membership requirements or
selection on the basis of sex or marital status; and

(d) made available for use in the case of real estate devoted to golf without
discrimination on the basis of sex during the time when the facility is open to use by the
public or by members, except that use for golf may be restricted on the basis of sex no
more frequently than one, or part of one, weekend each calendar month for each sex and
no more than two, or part of two, weekdays each week for each sex.

If a golf club membership allows use of golf course facilities by more than one adult
per membership, the use must be equally available to all adults entitled to use of the golf
course under the membership, except that use may be restricted on the basis of sex as
permitted in this section. Memberships that permit play during restricted times may be
allowed only if the restricted times apply to all adults using the membership. A golf club
may not offer a membership or golfing privileges to a spouse of a member that provides
greater or less access to the golf course than is provided to that person's spouse under the
same or a separate membership in that club, except that the terms of a membership may
provide that one spouse may have no right to use the golf course at any time while the
other spouse may have either limited or unlimited access to the golf course.

A golf club may have or create an individual membership category which entitles a
member for a reduced rate to play during restricted hours as established by the club. The
club must have on record a written request by the member for such membership.

A golf club that has food or beverage facilities or services must allow equal access
to those facilities and services for both men and women members in all membership
categories at all times. Nothing in this paragraph shall be construed to require service or
access to facilities to persons under the age of 21 years or require any act that would
violate law or ordinance regarding sale, consumption, or regulation of alcoholic beverages.

For purposes of this subdivision and subdivision 7a, discrimination means a pattern
or course of conduct and not linked to an isolated incident.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 18.

Minnesota Statutes 2006, section 273.117, is amended to read:

273.117 CONSERVATION PROPERTY TAX VALUATION.

new text begin The value of new text end real property which is subject to a conservation restriction or easement
deleted text begin shall be entitled to reduced valuation under this section deleted text end new text begin may be adjusted by the assessor new text end if:

(a) The restriction or easement is for a conservation purpose as defined in section
84.64, subdivision 2, and is recorded on the property;

(b) The property is being used in accordance with the terms of the conservation
restriction or easement.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 19.

Minnesota Statutes 2006, section 273.123, subdivision 7, is amended to read:

Subd. 7.

Local option; other property.

The owner of homestead property
not qualifying for an adjustment in valuation pursuant to subdivisions 1 to 5 or of
nonhomestead property may receive a reduction in the amount of taxes payable on the
property for the year in which the destruction occurs and in the following year if:

(a) 50 percent or more of the homestead dwelling or other structure, as established
by the county assessor, is new text begin (i) new text end unintentionally or accidentally destroyed new text begin , or (ii) destroyed by
arson or vandalism, by someone other than the owner, new text end and the homestead is uninhabitable
or the other structure is not usable;

(b) the owner of the property makes written application to the county assessor as
soon as practical after the damage has occurred; and

(c) the owner of the property makes written application to the county board.

The county board may grant a reduction in the amount of property tax which the
owner must pay on the qualifying property in the year of destruction and in the following
year. Any reduction in the amount of tax payable which is authorized by county board
action shall be calculated based upon the number of months that the home is uninhabitable
or the other structure is unusable. The amount of net tax due from the taxpayer shall be
multiplied by a fraction, the numerator of which is the number of months the dwelling
was occupied by that taxpayer, or the number of months the other structure was used by
the taxpayer, and the denominator of which is 12. For purposes of this subdivision, if a
structure is occupied or used for a fraction of a month, it is considered a month. "Net tax"
is defined as the amount of tax after the subtraction of all of the state paid property tax
credits. If application is made following payment of all property taxes due for the year of
destruction, the amount of the reduction granted by the county board shall be refunded to
the taxpayer by the county treasurer as soon as practical.

Any reductions or refunds approved by the county board shall not be subject to
approval by the commissioner of revenue.

The county board may levy in the following year the amount of tax dollars lost to the
county government as a result of the reductions granted pursuant to this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for destruction that occurs in calendar
year 2006 and thereafter.
new text end

Sec. 20.

Minnesota Statutes 2006, section 273.124, subdivision 11, is amended to read:

Subd. 11.

Limitation on homestead treatment.

deleted text begin (a) For taxes payable in 2003
through 2005 only, deleted text end If the assessor has classified a property as both homestead and
nonhomestead, the greater of deleted text begin : deleted text end (1) the value attributable to the portion of the property
used as a homestead deleted text begin ; deleted text end new text begin , new text end or (2) deleted text begin the homestead value amount determined under paragraph
(b) deleted text end new text begin $76,000 new text end , is entitled to assessment as a homestead under section 273.13, subdivision
22 or 23.

deleted text begin (b) For taxes payable in 2003 only, the homestead value amount is $60,000. For
taxes payable in 2004 only, the homestead value amount is $45,000. For taxes payable in
2005 only, the homestead value amount is $30,000.
deleted text end

deleted text begin The homestead value amount must not exceed the property's taxable market value.
deleted text end

deleted text begin (c) deleted text end new text begin The limitation in this section does not apply to buildings containing fewer than
four residential units or to a single rented or leased dwelling unit located within or attached
to a private garage or similar structure owned by the owner of a homestead and located on
the premises of that homestead. new text end If the assessor has classified a property as both homestead
and nonhomestead, the reductions in tax provided under sections 273.135 and 273.1391
apply to the value of both the homestead and the nonhomestead portions of the property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 21.

Minnesota Statutes 2006, section 273.124, is amended by adding a subdivision
to read:

new text begin Subd. 22. new text end

new text begin Annual registration of certain relative homesteads. new text end

new text begin If the owner of
property or the owner's relative who occupies property that is classified as a homestead
under subdivision 1, paragraph (c), receives compensation for allowing occupancy of any
part of that property for a period that exceeds 31 consecutive days during the calendar
year, the recipient of the compensation must register the property with the city in which
it is located no later than 60 days after the initial rental period began. This requirement
applies to property located in a city that has a population over 25,000. Each city must
maintain a file of these property registrations that is open to the public, and retain the
registrations for one year after the date of filing.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2007.
new text end

Sec. 22.

Minnesota Statutes 2006, section 273.125, subdivision 8, is amended to read:

Subd. 8.

Manufactured homes; sectional structures.

(a) In this section,
"manufactured home" means a structure transportable in one or more sections, which is
built on a permanent chassis, and designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and contains the plumbing,
heating, air conditioning, and electrical systems in it. Manufactured home includes any
accessory structure that is an addition or supplement to the manufactured home and, when
installed, becomes a part of the manufactured home.

(b) Except as provided in paragraph (c), a manufactured home that meets each of the
following criteria must be valued and assessed as an improvement to real property, the
appropriate real property classification applies, and the valuation is subject to review and
the taxes payable in the manner provided for real property:

(1) the owner of the unit holds title to the land on which it is situated;

(2) the unit is affixed to the land by a permanent foundation or is installed at its
location in accordance with the Manufactured Home Building Code in sections 327.31
to 327.34, and rules adopted under those sections, or is affixed to the land like other real
property in the taxing district; and

(3) the unit is connected to public utilities, has a well and septic tank system, or is
serviced by water and sewer facilities comparable to other real property in the taxing
district.

(c) A manufactured home that meets each of the following criteria must be assessed
at the rate provided by the appropriate real property classification but must be treated as
personal property, and the valuation is subject to review and the taxes payable in the
manner provided in this section:

(1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit
is located in a manufactured home park but is not the homestead of the park owner;

(2) the unit is affixed to the land by a permanent foundation or is installed at its
location in accordance with the Manufactured Home Building Code contained in sections
327.31 to 327.34, and the rules adopted under those sections, or is affixed to the land like
other real property in the taxing district; and

(3) the unit is connected to public utilities, has a well and septic tank system, or is
serviced by water and sewer facilities comparable to other real property in the taxing
district.

(d) Sectional structures must be valued and assessed as an improvement to real
property if the owner of the structure holds title to the land on which it is located or is a
qualifying lessee of the land under section 273.19. In this paragraph "sectional structure"
means a building or structural unit that has been in whole or substantial part manufactured
or constructed at an off-site location to be wholly or partially assembled on-site alone or
with other units and attached to a permanent foundation.

(e) The commissioner of revenue may adopt rules under the Administrative
Procedure Act to establish additional criteria for the classification of manufactured homes
and sectional structures under this subdivision.

(f) A storage shed, deck, or similar improvement constructed on property that is
leased or rented as a site for a manufactured home, sectional structure, park trailer, or
travel trailer is taxable as provided in this section. In the case of property that is leased or
rented as a site for a travel trailer, a storage shed, deck, or similar improvement on the
site that is considered personal property under this paragraph is taxable only if its total
estimated market value is over deleted text begin $500 deleted text end new text begin $1,000 new text end . The property is taxable as personal property
to the lessee of the site if it is not owned by the owner of the site. The property is taxable
as real estate if it is owned by the owner of the site. As a condition of permitting the owner
of the manufactured home, sectional structure, park trailer, or travel trailer to construct
improvements on the leased or rented site, the owner of the site must obtain the permanent
home address of the lessee or user of the site. The site owner must provide the name
and address to the assessor upon request.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 23.

Minnesota Statutes 2006, section 273.128, subdivision 1, is amended to read:

Subdivision 1.

Requirement.

Low-income rental property classified as class 4d
under section 273.13, subdivision 25, is entitled to valuation under this section if at
least deleted text begin 75 deleted text end new text begin 25 new text end percent of the units in the rental housing property meet any of the following
qualifications:

(1) the units are subject to a housing assistance payments contract under Section 8
of the United States Housing Act of 1937, as amended;

(2) the units are rent-restricted and income-restricted units of a qualified low-income
housing project receiving tax credits under section 42(g) of the Internal Revenue Code of
1986, as amended;

(3) the units are financed by the Rural Housing Service of the United States
Department of Agriculture and receive payments under the rental assistance program
pursuant to section 521(a) of the Housing Act of 1949, as amended; or

(4) the units are subject to rent and income restrictions under the terms of financial
assistance provided to the rental housing property by the federal government deleted text begin or deleted text end new text begin , new text end the
state of Minnesota new text begin , or a local unit of government new text end as evidenced by a document recorded
against the property.

The restrictions must require assisted units to be occupied by residents whose
household income at the time of initial occupancy does not exceed 60 percent of the
greater of area or state median income, adjusted for family size, as determined by the
United States Department of Housing and Urban Development. The restriction must also
require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of
area or state median income, adjusted for family size, as determined by the United States
Department of Housing and Urban Development.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 24.

Minnesota Statutes 2006, section 273.13, subdivision 22, is amended to read:

Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b)
and (c), real estate which is residential and used for homestead purposes is class 1a. In the
case of a duplex or triplex in which one of the units is used for homestead purposes, the
entire property is deemed to be used for homestead purposes. The market value of class 1a
property must be determined based upon the value of the house, garage, and land.

The first $500,000 of market value of class 1a property has a net class rate of
one percent of its market value; and the market value of class 1a property that exceeds
$500,000 has a class rate of 1.25 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured
homes used for the purposes of a homestead by

(1) any person who is blind as defined in section 256D.35, or the blind person and
the blind person's spouse; or

(2) deleted text begin any person, hereinafter referred to as "veteran," who:
deleted text end

deleted text begin (i) served in the active military or naval service of the United States; and
deleted text end

deleted text begin (ii) is entitled to compensation under the laws and regulations of the United States
for permanent and total service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both
lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or
a wheelchair; and
deleted text end

deleted text begin (iii) has acquired a special housing unit with special fixtures or movable facilities
made necessary by the nature of the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the special housing unit
as a homestead; or
deleted text end

deleted text begin (3) deleted text end any person who is permanently and totally disabled.

Property is classified and assessed under clause deleted text begin (3) deleted text end new text begin (2) new text end only if the government
agency or income-providing source certifies, upon the request of the homestead occupant,
that the homestead occupant satisfies the disability requirements of this paragraph.

Property is classified and assessed pursuant to clause (1) only if the commissioner of
revenue certifies to the assessor that the homestead occupant satisfies the requirements of
this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a
condition which is permanent in nature and totally incapacitates the person from working
at an occupation which brings the person an income. The first $32,000 market value of
class 1b property has a net class rate of .45 percent of its market value. The remaining
market value of class 1b property has a class rate using the rates for class 1a or class 2a
property, whichever is appropriate, of similar market value.

(c) Class 1c property is commercial use real property that abuts a lakeshore line and
is devoted to temporary and seasonal residential occupancy for recreational purposes but
not devoted to commercial purposes for more than 250 days in the year preceding the
year of assessment, and that includes a portion used as a homestead by the owner, which
includes a dwelling occupied as a homestead by a shareholder of a corporation that owns
the resort, a partner in a partnership that owns the resort, or a member of a limited liability
company that owns the resort even if the title to the homestead is held by the corporation,
partnership, or limited liability company. For purposes of this clause, property is devoted
to a commercial purpose on a specific day if any portion of the property, excluding the
portion used exclusively as a homestead, is used for residential occupancy and a fee is
charged for residential occupancy. The portion of the property used as a homestead is class
1a property under paragraph (a). The remainder of the property is classified as follows:
the first $500,000 of market value is tier I, the next $1,700,000 of market value is tier II,
and any remaining market value is tier III. The class rates for class 1c are: tier I, 0.55
percent; tier II, 1.0 percent; and tier III, 1.25 percent. If a class 1c resort property has any
market value in tier III, the entire property must meet the requirements of subdivision 25,
paragraph (d), clause (1), to qualify for class 1c treatment under this paragraph.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time
when they work on that farm, and the occupants are not charged rent for the privilege of
occupying the property, provided that use of the structure for storage of farm equipment
and produce does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the
appropriate season; and

(4) the structure is not salable as residential property because it does not comply
with local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same class rates as class 1a property
under paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2007 and
thereafter, for taxes payable in 2008 and thereafter.
new text end

Sec. 25.

Minnesota Statutes 2006, section 273.13, subdivision 23, is amended to read:

Subd. 23.

Class 2.

(a) Class 2a property is agricultural land including any
improvements that is homesteaded. The market value of the house and garage and
immediately surrounding one acre of land has the same class rates as class 1a property
under subdivision 22. The value of the remaining land including improvements up to the
first tier valuation limit of agricultural homestead property has a net class rate of deleted text begin 0.55 deleted text end new text begin 0.5 new text end
percent of market value. The remaining property over the first tier has a class rate of one
percent of market value. For purposes of this subdivision, the "first tier valuation limit of
agricultural homestead property" and "first tier" means the limit certified under section
273.11, subdivision 23.

(b) Class 2b property is (1) new text begin unplatted new text end real estate, rural in character deleted text begin and used
exclusively for growing trees for timber, lumber, and wood and wood products; (2)
real estate deleted text end new text begin , new text end that is not improved with a structure deleted text begin and is used exclusively for growing
trees for timber, lumber, and wood and wood products, if the owner has participated or
is participating in a cost-sharing program for afforestation, reforestation, or timber stand
improvement on that particular property, administered or coordinated by the commissioner
of natural resources; (3) deleted text end new text begin and that consists of at least ten acres, including land used for
growing trees for timber, lumber, and wood and wood products, but not including land used
for agricultural purposes, provided that the presence of a minor, ancillary nonresidential
structure does not disqualify property from classification under this clause, new text end new text begin (2) new text end real estate
that is nonhomestead agricultural land; deleted text begin or (4) deleted text end new text begin (3) new text end a landing area or public access area of a
privately owned public use airport new text begin ; or (4) land with a commercial aggregate deposit that
is not actively being mined and is not otherwise classified as class 2a or 2b, clauses (1)
to (3) new text end . Class 2b property has a net class rate of one percent of market value new text begin , except that
property described in clause (1) has a net class rate of .55 percent if it consists of no
more than 1,920 acres and is being managed under a forest management plan that meets
the requirements of chapter 290C, but is not enrolled in the sustainable forest resource
management incentive program, provided that the owner of the property must apply to the
assessor annually to receive the reduced class rate and provide the information required by
the assessor to verify that the property qualifies for the reduced rate new text end .

(c) Agricultural land as used in this section means contiguous acreage of ten acres or
more, used during the preceding year for agricultural purposes. "Agricultural purposes" as
used in this section means the raising or cultivation of agricultural products. "Agricultural
purposes" also includes enrollment in the Reinvest in Minnesota program under sections
103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public
Law 99-198 if the property was classified as agricultural (i) under this subdivision for
the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage
on the same parcel, or contiguous acreage on an immediately adjacent parcel under the
same ownership, may also qualify as agricultural land, but only if it is pasture, timber,
waste, unusable wild land, or land included in state or federal farm programs. Agricultural
classification for property shall be determined excluding the house, garage, and
immediately surrounding one acre of land, and shall not be based upon the market value of
any residential structures on the parcel or contiguous parcels under the same ownership.

(d) Real estate, excluding the house, garage, and immediately surrounding one acre
of land, of less than ten acres which is exclusively and intensively used for raising or
cultivating agricultural products, shall be considered as agricultural land.

Land shall be classified as agricultural even if all or a portion of the agricultural use
of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under
section 273.111.

The property classification under this section supersedes, for property tax purposes
only, any locally administered agricultural policies or land use restrictions that define
minimum or maximum farm acreage.

(e) The term "agricultural products" as used in this subdivision includes production
for sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
bees, and apiary products by the owner;

(2) fish bred for sale and consumption if the fish breeding occurs on land zoned
for agricultural use;

(3) the commercial boarding of horses if the boarding is done in conjunction with
raising or cultivating agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for
equestrian activities, excluding racing;

(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed
under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, new text begin including short rotation woody crops, new text end and not
sold for timber, lumber, wood, or wood products; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.

(f) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2),
and (3),

the assessor shall classify the part of the parcel used for agricultural purposes as class
1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
use. The grading, sorting, and packaging of raw agricultural products for first sale is
considered an agricultural purpose. A greenhouse or other building where horticultural
or nursery products are grown that is also used for the conduct of retail sales must be
classified as agricultural if it is primarily used for the growing of horticultural or nursery
products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
those products. Use of a greenhouse or building only for the display of already grown
horticultural or nursery products does not qualify as an agricultural purpose.

The assessor shall determine and list separately on the records the market value of
the homestead dwelling and the one acre of land on which that dwelling is located. If any
farm buildings or structures are located on this homesteaded acre of land, their market
value shall not be included in this separate determination.

(g) To qualify for classification under paragraph (b), clause (4), a privately owned
public use airport must be licensed as a public airport under section 360.018. For purposes
of paragraph (b), clause (4), "landing area" means that part of a privately owned public use
airport properly cleared, regularly maintained, and made available to the public for use by
aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing
or navigational aids. A landing area also includes land underlying both the primary surface
and the approach surfaces that comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of
the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under paragraph (b), clause (4), must be described
and certified by the commissioner of transportation. The certification is effective until
it is modified, or until the airport or landing area no longer meets the requirements of
paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area"
means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival
and departure building in connection with the airport.

new text begin (h) To qualify for classification under paragraph (b), clause (4), the property must be
at least ten contiguous acres in size and the owner of the property must record with the
county recorder of the county in which the property is located an affidavit containing:
new text end

new text begin (1) a legal description of the property;
new text end

new text begin (2) a disclosure that the property contains a commercial aggregate deposit that is not
actively being mined but is present on the entire parcel enrolled;
new text end

new text begin (3) documentation that the conditional use under the county or local zoning
ordinance of this property is for mining; and
new text end

new text begin (4) documentation that a permit has been issued by the local unit of government
or the mining activity is allowed under local ordinance. The disclosure must include a
statement from a registered professional geologist, engineer, or soil scientist delineating
the deposit and certifying that it is a commercial aggregate deposit.
new text end

new text begin For purposes of this section and section , "commercial aggregate deposit"
means a deposit that will yield crushed stone or sand and gravel that is suitable for use
as a construction aggregate; and "actively mined" means the removal of top soil and
overburden in preparation for excavation or excavation of a commercial deposit.
new text end

new text begin (i) When any portion of the property under this subdivision or section new text begin 273.13,
subdivision 22 new text end , begins to be actively mined, the owner must file a supplemental affidavit
within 60 days from the day any aggregate is removed stating the number of acres of the
property that is actively being mined. The acres actively being mined must be (1) valued
and classified under section 273.13, subdivision 24, in the next subsequent assessment
year, and (2) removed from the aggregate resource preservation property tax program
under section , if the land was enrolled in that program. Copies of the original
affidavit and all supplemental affidavits must be filed with the county assessor, the local
zoning administrator, and the Department of Natural Resources, Division of Land and
Minerals. A supplemental affidavit must be filed each time a subsequent portion of the
property is actively mined, provided that the minimum acreage change is five acres, even
if the actual mining activity constitutes less than five acres.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable in
2008, and thereafter, except that paragraph (b), clause (4), is effective for taxes levied
in 2008, payable in 2009, and thereafter.
new text end

Sec. 26.

Minnesota Statutes 2006, section 273.13, subdivision 24, is amended to read:

Subd. 24.

Class 3.

(a) Commercial and industrial property and utility real and
personal property is class 3a.

(1) Except as otherwise provided, each parcel of commercial, industrial, or utility
real property has a class rate of 1.5 percent of the first tier of market value, and 2.0 percent
of the remaining market value. In the case of contiguous parcels of property owned by the
same person or entity, only the value equal to the first-tier value of the contiguous parcels
qualifies for the reduced class rate, except that contiguous parcels owned by the same
person or entity shall be eligible for the first-tier value class rate on each separate business
operated by the owner of the property, provided the business is housed in a separate
structure. For the purposes of this subdivision, the first tier means the first $150,000 of
market value. Real property owned in fee by a utility for transmission line right-of-way
shall be classified at the class rate for the higher tier.

For purposes of this subdivision, parcels are considered to be contiguous even if
they are separated from each other by a road, street, waterway, or other similar intervening
type of property. Connections between parcels that consist of power lines or pipelines do
not cause the parcels to be contiguous. Property owners who have contiguous parcels of
property that constitute separate businesses that may qualify for the first-tier class rate shall
notify the assessor by July 1, for treatment beginning in the following taxes payable year.

(2) deleted text begin All deleted text end Personal property that is deleted text begin : (i) deleted text end part of an electric generation deleted text begin , transmission, or
distribution deleted text end system deleted text begin ; or (ii) deleted text end new text begin , including tools, implements, and machinery, has a class rate
of 2.5 percent for taxes levied in 2008, payable in 2009, and 3.0 percent for taxes levied
in 2009, payable in 2010, and thereafter. new text end

new text begin (3) Personal property that is either: (i) new text end part of a pipeline system transporting
or distributing water, gas, crude oil, or petroleum products deleted text begin ; and (iii) not described in
clause (3), and all deleted text end new text begin , including tools, implements, and machinery, or (ii) part of an electric
transmission or distribution system, including tools, implements, and machinery, has a
class rate of 2.15 percent for taxes levied in 2008, payable in 2009, and 2.25 percent for
taxes levied in 2009, payable in 2010, and thereafter. new text end

new text begin (4) new text end railroad operating property has a class rate as provided under clause (1) for
the first tier of market value and the remaining market value. In the case of multiple
parcels in one county that are owned by one person or entity, only one first tier amount
is eligible for the reduced rate.

deleted text begin (3) The entire market value of personal property that is: (i) tools, implements, and
machinery of an electric generation, transmission, or distribution system; (ii) tools,
implements, and machinery of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; or (iii) deleted text end deleted text begin the deleted text end new text begin (5) Personal property consisting of new text end mains
and pipes used in the distribution of steam or hot or chilled water for heating or cooling
buildings, has a class rate as provided under clause (1) for the remaining market value
in excess of the first tier.

(b) Employment property defined in section 469.166, during the period provided
in section 469.170, shall constitute class 3b. The class rates for class 3b property are
determined under paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 27.

Minnesota Statutes 2006, section 273.13, subdivision 25, is amended to read:

Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more
units and used or held for use by the owner or by the tenants or lessees of the owner
as a residence for rental periods of 30 days or more, excluding property qualifying for
class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
than hospitals exempt under section 272.02, and contiguous property used for hospital
purposes, without regard to whether the property has been platted or subdivided. The
market value of class 4a property has a class rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class
4bb deleted text begin , other than seasonal residential recreational property deleted text end ;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
farm classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

The market value of class 4b property has a class rate of 1.25 percent.

(c) Class 4bb includes:

(1) nonhomestead residential real estate containing one unit deleted text begin , other than seasonal
residential recreational property deleted text end ; and

(2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b).

Class 4bb property has the same class rates as class 1a property under subdivision 22.

deleted text begin Property that has been classified as seasonal residential recreational property at
any time during which it has been owned by the current owner or spouse of the current
owner does not qualify for class 4bb.
deleted text end

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real property devoted to
temporary and seasonal residential occupancy for recreation purposes, deleted text begin including real
property devoted to temporary and seasonal residential occupancy for recreation purposes deleted text end
and deleted text begin not deleted text end devoted to commercial purposes for new text begin not new text end more than 250 days in the year preceding
the year of assessment. For purposes of this clause, property is devoted to a commercial
purpose on a specific day if any portion of the property is used for residential occupancy,
and a fee is charged for residential occupancy. In order for a property to be classified as
class 4c, deleted text begin seasonal residential recreational for commercial purposes, deleted text end at least 40 percent of
the annual gross lodging receipts related to the property must be from business conducted
during 90 consecutive days and either (i) at least 60 percent of all paid bookings by lodging
guests during the year must be for periods of at least two consecutive nights; or (ii) at least
20 percent of the annual gross receipts must be from charges for rental of fish houses,
boats and motors, snowmobiles, downhill or cross-country ski equipment, or charges for
marina services, launch services, and guide services, or the sale of bait and fishing tackle.
For purposes of this determination, a paid booking of five or more nights shall be counted
as two bookings. Class 4c also includes commercial use real property used exclusively
for recreational purposes in conjunction with class 4c property devoted to temporary
and seasonal residential occupancy for recreational purposes, up to a total of two acres,
provided the property is not devoted to commercial recreational use for more than 250
days in the year preceding the year of assessment and is located within two miles of the
class 4c property with which it is used. Owners of real property devoted to temporary and
seasonal residential occupancy for recreation purposes and all or a portion of which was
devoted to commercial purposes for not more than 250 days in the year preceding the year
of assessment desiring classification as class 1c or 4c, must submit a declaration to the
assessor designating the cabins or units occupied for 250 days or less in the year preceding
the year of assessment by January 15 of the assessment year. Those cabins or units and a
proportionate share of the land on which they are located will be designated class 1c or 4c
as otherwise provided. The remainder of the cabins or units and a proportionate share of
the land on which they are located will be designated as class 3a. The owner of property
desiring designation as class 1c or 4c property must provide guest registers or other
records demonstrating that the units for which class 1c or 4c designation is sought were
not occupied for more than 250 days in the year preceding the assessment if so requested.
The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, and (4) other
nonresidential facility operated on a commercial basis not directly related to temporary and
seasonal residential occupancy for recreation purposes shall not qualify for class 1c or 4c;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or
dues, but a membership fee may not be required in order to use the property for golfing,
and its green fees for golfing must be comparable to green fees typically charged by
municipal courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
with the golf course is classified as class 3a property;

(3) real property up to a maximum of deleted text begin one acre deleted text end new text begin three acres new text end of land owned new text begin and used
new text end by a nonprofit community service oriented organization deleted text begin ; provided that deleted text end new text begin and that is not used
for residential purposes on either a temporary or permanent basis, qualifies for class 4c
provided that it meets either of the following:
new text end

new text begin (i) new text end the property is not used for a revenue-producing activity for more than six days
in the calendar year preceding the year of assessment deleted text begin and the property is not used for
residential purposes on either a temporary or permanent basis deleted text end new text begin ; or
new text end

new text begin (ii) the organization makes annual charitable contributions and donations at least
equal to the property's previous year's property taxes and the property is allowed to be
used for public and community meetings or events for no charge, as appropriate to the
size of the facility new text end .

For purposes of this clause, new text begin (A) "charitable contributions and donations" has
the same meaning as lawful gambling purposes under section 349.12, subdivision 25,
excluding those purposes relating to the payment of taxes, assessments, fees, auditing
costs, and utility payments; (B) "property taxes" excludes the state general tax; (C) new text end a
"nonprofit community service oriented organization" means any corporation, society,
association, foundation, or institution organized and operated exclusively for charitable,
religious, fraternal, civic, or educational purposes, and which is exempt from federal
income taxation pursuant to section 501(c)(3), (10), or (19) of the Internal Revenue Code
of 1986, as amended through December 31, 1990 deleted text begin . For purposes of this clause, deleted text end new text begin ; and (D) new text end
"revenue-producing activities" shall include but not be limited to property or that portion
of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt liquor
establishment licensed under chapter 340A, a restaurant open to the public, bowling
alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
insurance business, or office or other space leased or rented to a lessee who conducts a
for-profit enterprise on the premises. Any portion of the property new text begin qualifying under item (i)
new text end which is used for revenue-producing activities for more than six days in the calendar year
preceding the year of assessment shall be assessed as class 3a. The use of the property
for social events open exclusively to members and their guests for periods of less than 24
hours, when an admission is not charged nor any revenues are received by the organization
shall not be considered a revenue-producing activity deleted text begin ; deleted text end new text begin .
new text end

new text begin The organization shall maintain records of its charitable contributions and donations
and of public meetings and events held on the property and make them available upon
request any time to the assessor to ensure eligibility. An organization meeting the
requirement under item (ii) must file an application by May 1 with the assessor for
eligibility for the current year's assessment. The commissioner shall prescribe a uniform
application form and instructions;
new text end

(4) postsecondary student housing of not more than one acre of land that is owned by
a nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;

(5) manufactured home parks as defined in section 327.14, subdivision 3;

(6) real property that is actively and exclusively devoted to indoor fitness, health,
social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
and is located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt
under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the
leased premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
be filed by the new owner with the assessor of the county where the property is located
within 60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed
agreement restricting the use of the premises, prohibiting commercial use or activity
performed at the hangar; deleted text begin and
deleted text end

(9) residential real estate, a portion of which is used by the owner for homestead
purposes, and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods
of 14 or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated
in the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer
than seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property new text begin ; and
new text end

new text begin (10) real property up to a maximum of three acres and operated as a restaurant
as defined under section 157.15, subdivision 12, provided it: (i) is located on a lake
as defined under section 103G.005, subdivision 15, paragraph (a), clause (3); and (ii)
is either devoted to commercial purposes for not more than 250 consecutive days, or
receives at least 60 percent of its annual gross receipts from business conducted during
four consecutive months. Gross receipts from the sale of alcoholic beverages must be
included in determining the property's qualification under clause (ii). The property's
primary business must be as a restaurant and not as a bar. Gross receipts from gift shop
sales located on the premises must be excluded. Owners of real property desiring 4c
classification under this clause must submit an annual declaration to the assessor by
February 1 of the current assessment year, based on the property's relevant information for
the preceding assessment year new text end .

The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22.

Class 4c property has a class rate of 1.5 percent of market value, except that (i) deleted text begin each
parcel of seasonal residential recreational property not used for commercial purposes has
the same class rates as class 4bb property, (ii) deleted text end manufactured home parks assessed under
clause (5) have the same class rate as class 4b property, deleted text begin (iii) deleted text end new text begin (ii) new text end commercial-use seasonal
residential recreational property new text begin and restaurant property under clause (10) new text end has a class rate
of one percent for the first $500,000 of market value, and 1.25 percent for the remaining
market value, deleted text begin (iv) deleted text end new text begin (iii) new text end the market value of property described in clause (4) has a class rate
of one percent, deleted text begin (v) deleted text end new text begin (iv) new text end the market value of property described in clauses (2) and (6) has
a class rate of 1.25 percent, and deleted text begin (vi) deleted text end new text begin (v) new text end that portion of the market value of property in
clause (9) qualifying for class 4c property has a class rate of 1.25 percent.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
of the units in the building qualify as low-income rental housing units as certified under
section 273.128, subdivision 3, only the proportion of qualifying units to the total number
of units in the building qualify for class 4d. The remaining portion of the building shall be
classified by the assessor based upon its use. Class 4d also includes the same proportion of
land as the qualifying low-income rental housing units are to the total units in the building.
For all properties qualifying as class 4d, the market value determined by the assessor must
be based on the normal approach to value using normal unrestricted rents.

Class 4d property has a class rate of 0.75 percent.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable in
2008, and thereafter, except that the application date in clause (10) for the 2007 assessment
is extended to September 1, 2007.
new text end

Sec. 28.

Minnesota Statutes 2006, section 273.13, subdivision 33, is amended to read:

Subd. 33.

Classification of unimproved property.

(a) All real property that is not
improved with a structure must be classified according to its current use.

(b) new text begin Except as provided in subdivision 23, paragraph (b), clause (1), new text end real property that
is not improved with a structure and for which there is no identifiable current use must be
classified according to its highest and best use permitted under the local zoning ordinance.
If the ordinance permits more than one use, the land must be classified according to the
highest and best use permitted under the ordinance. If no such ordinance exists, the
assessor shall consider the most likely potential use of the unimproved land based upon
the use made of surrounding land or land in proximity to the unimproved land.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 29.

Minnesota Statutes 2006, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property deleted text begin and seasonal residential recreational property, deleted text end as defined
in this section new text begin at the rate imposed under Minnesota Statutes 2002, section 275.025, for
taxes payable in 2004 new text end . deleted text begin The state general levy base amount is $592,000,000 for taxes
payable in 2002. For taxes payable in subsequent years, the levy base amount is increased
each year by multiplying the levy base amount for the prior year by the sum of one plus
the rate of increase, if any, in the implicit price deflator for government consumption
expenditures and gross investment for state and local governments prepared by the Bureau
of Economic Analysts of the United States Department of Commerce for the 12-month
period ending March 31 of the year prior to the year the taxes are payable. deleted text end The tax under
this section is not treated as a local tax rate under section 469.177 and is not the levy of a
governmental unit under chapters 276A and 473F.

deleted text begin The commissioner shall increase or decrease the preliminary or final rate for a year
as necessary to account for errors and tax base changes that affected a preliminary or final
rate for either of the two preceding years. Adjustments are allowed to the extent that the
necessary information is available to the commissioner at the time the rates for a year must
be certified, and for the following reasons:
deleted text end

deleted text begin (1) an erroneous report of taxable value by a local official;
deleted text end

deleted text begin (2) an erroneous calculation by the commissioner; and
deleted text end

deleted text begin (3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under
section that was not reported on the abstracts of assessment submitted under
section for the same year.
deleted text end

deleted text begin The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.
deleted text end

Sec. 30.

Minnesota Statutes 2006, section 275.025, subdivision 2, is amended to read:

Subd. 2.

Commercial-industrial tax capacity.

For the purposes of this section,
"commercial-industrial tax capacity" means the tax capacity of all taxable property
classified as class 3 or class 5(1) under section 273.13, except for deleted text begin electric generation
attached machinery under class 3 and deleted text end property described in section 473.625. County
commercial-industrial tax capacity amounts are not adjusted for the captured net tax
capacity of a tax increment financing district under section 469.177, subdivision 2, the
net tax capacity of transmission lines deducted from a local government's total net tax
capacity under section 273.425, or fiscal disparities contribution and distribution net
tax capacities under chapter 276A or 473F.

Sec. 31.

Minnesota Statutes 2006, section 275.025, subdivision 4, is amended to read:

Subd. 4.

Apportionment and levy of state general tax.

deleted text begin Ninety-five percent of the
state general tax must be levied by applying a uniform rate to all commercial-industrial tax
capacity and five percent of the state general tax must be levied by applying a uniform
rate to all seasonal residential recreational tax capacity. deleted text end On or before October 1 each
year, the commissioner of revenue shall certify the deleted text begin preliminary deleted text end state general levy rates to
each county auditor that must be used to prepare the notices of proposed property taxes
for taxes payable in the following year new text begin and to spread the tax new text end . deleted text begin By January 1 of each year,
the commissioner shall certify the final state general levy rate to each county auditor that
shall be used in spreading taxes.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 32.

Minnesota Statutes 2006, section 279.37, subdivision 1a, is amended to read:

Subd. 1a.

Class 3a property.

(a) The delinquent taxes upon a parcel of property
which was classified class 3a, for the previous year's assessment and had a total market
value of deleted text begin $200,000 deleted text end new text begin $500,000 new text end or less for that same assessment shall be eligible to be
composed into a confession of judgment. Property qualifying under this subdivision
shall be subject to the same provisions as provided in this section except as provided
in paragraphs (b) to (d).

(b) Current year taxes and penalty due at the time the confession of judgment
is entered must be paid.

(c) The down payment must include all special assessments due in the current tax
year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties,
and interest accrued against the parcel. The balance remaining is payable in four equal
annual installments.

(d) The amounts entered in judgment bear interest at the rate provided in section
279.03, subdivision 1a, commencing with the date the judgment is entered. The interest
rate is subject to change each year on the unpaid balance in the manner provided in section
279.03, subdivision 1a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for confessions of judgment entered
after June 30, 2007.
new text end

Sec. 33.

Minnesota Statutes 2006, section 280.39, is amended to read:

280.39 DELINQUENT TAXES MAY BE PAID IN INVERSE ORDER.

In any case where taxes for two or more years are delinquent against a parcel of land,
such taxes for one or more deleted text begin entire deleted text end years, if held by the state, may be paid in the inverse
order to that in which the taxes were levied, with accrued penalties, interest, and costs
upon the taxes so paid, without payment of the taxes for the first of such years; provided,
that such payment shall not affect the lien of any unpaid taxes or tax judgment. new text begin Payments
for delinquent taxes for a part of a year may be accepted if payment is received under
section 290A.10, and must be applied in the order specified in this section.
new text end

Sec. 34.

Minnesota Statutes 2006, section 290A.10, is amended to read:

290A.10 PROOF OF TAXES PAID.

new text begin Subdivision 1. new text end

new text begin Generally. new text end

Every claimant who files a claim for relief for property
taxes payable shall include with the claim a property tax statement or a reproduction
thereof in a form deemed satisfactory by the commissioner of revenue indicating that
there are no delinquent property taxes on the homestead. Indication on the property tax
statement from the county treasurer that there are no delinquent taxes on the homestead
shall be sufficient proof. Taxes included in a confession of judgment under section 279.37
shall not constitute delinquent taxes as long as the claimant is current on the payments
required to be made under section 279.37.

new text begin Subd. 2. new text end

new text begin Delinquent taxes. new text end

new text begin The governing body of a county may, by resolution,
allow claimants who would otherwise qualify for a refund, except for a property tax
delinquency under sections 279.02 and 279.03 on the homestead, to be eligible for
the refund but only if the refund is sent by electronic payment to the county where
the homestead on which property taxes are delinquent is located, to be applied to the
claimant's delinquent taxes under section 280.39.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on taxes payable in
2008 and thereafter.
new text end

Sec. 35.

Minnesota Statutes 2006, section 290C.07, is amended to read:

290C.07 CALCULATION OF INCENTIVE PAYMENT.

An approved claimant under the sustainable forest incentive program is eligible to
receive an annual payment. The payment shall equal the greater of:

(1) the difference between the property tax that would be paid on the land using the
previous year's statewide average total township tax rate and the class rate for class 2b
timberland under section 273.13, subdivision 23, paragraph (b), if the land were valued
at (i) the average statewide timberland market value per acre calculated under section
290C.06, and (ii) the average statewide timberland current use value per acre calculated
under section 290C.02, subdivision 5; new text begin or
new text end

(2) two-thirds of the property tax amount determined by using the previous year's
statewide average total township tax rate, the estimated market value per acre as calculated
in section 290C.06, and the class rate for 2b timberland under section 273.13, subdivision
23, paragraph (b) deleted text begin ; or deleted text end

deleted text begin (3) $1.50 deleted text end new text begin , provided that the payment shall be no less than $5 new text end per acre for each acre
enrolled in the sustainable forest incentive program.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made after June 30,
2007.
new text end

Sec. 36.

Minnesota Statutes 2006, section 473.446, subdivision 2, is amended to read:

Subd. 2.

Transit taxing district.

The metropolitan transit taxing district deleted text begin is hereby
designated as that portion of the metropolitan transit area lying within the following
named cities, towns, or unorganized territory within the counties indicated:
deleted text end

deleted text begin (a) Anoka County. Anoka, Blaine, Centerville, Columbia Heights, Coon Rapids,
Fridley, Circle Pines, Hilltop, Lexington, Lino Lakes, Spring Lake Park;
deleted text end

deleted text begin (b) Carver County. Chanhassen, the city of Chaska;
deleted text end

deleted text begin (c) Dakota County. Apple Valley, Burnsville, Eagan, Inver Grove Heights, Lilydale,
Mendota, Mendota Heights, Rosemount, South St. Paul, Sunfish Lake, West St. Paul;
deleted text end

deleted text begin (d) Ramsey County. All of the territory within Ramsey County;
deleted text end

deleted text begin (e) Hennepin County. Bloomington, Brooklyn Center, Brooklyn Park, Champlin,
Chanhassen, Crystal, Deephaven, Eden Prairie, Edina, Excelsior, Golden Valley,
Greenwood, Hopkins, Long Lake, Maple Grove, Medicine Lake, Minneapolis,
Minnetonka, Minnetonka Beach, Mound, New Hope, Orono, Osseo, Plymouth, Richfield,
Robbinsdale, St. Anthony, St. Louis Park, Shorewood, Spring Park, Tonka Bay, Wayzata,
Woodland, the unorganized territory of Hennepin County;
deleted text end

deleted text begin (f) Scott County. Prior Lake, Savage, Shakopee;
deleted text end

deleted text begin (g) Washington County. Baytown, the city of Stillwater, White Bear Lake, Bayport,
Birchwood, Cottage Grove, Dellwood, Lake Elmo, Landfall, Mahtomedi, Newport,
Oakdale, Oak Park Heights, Pine Springs, St. Paul Park, Willernie, Woodbury deleted text end new text begin means the
metropolitan area new text end .

The Metropolitan Council in its sole discretion may provide transit service by
contract deleted text begin beyond the boundaries of the metropolitan transit taxing district or deleted text end to cities and
towns deleted text begin within the taxing district deleted text end which are receiving financial assistance under section
473.388, upon petition therefor by an interested city, township or political subdivision
within the metropolitan transit area. The Metropolitan Council may establish such
terms and conditions as it deems necessary and advisable for providing the transit
service, including such combination of fares and direct payments by the petitioner as
will compensate the council for the full capital and operating cost of the service and the
related administrative activities of the council. The amount of the levy made by any
municipality to pay for the service shall be disregarded when calculation of levies subject
to limitations is made, provided that cities and towns receiving financial assistance under
section 473.388 shall not make a special levy under this subdivision without having first
exhausted the available local transit funds as defined in section 473.388. The council shall
not be obligated to extend service deleted text begin beyond the boundaries of the taxing district, or deleted text end to cities
and towns within the taxing district which are receiving financial assistance under section
473.388, under any law or contract unless or until payment therefor is received.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 37.

Minnesota Statutes 2006, section 473.446, subdivision 8, is amended to read:

Subd. 8.

State review.

The commissioner of revenue shall certify the council's levy
limitation under this section to the council by August 1 of the levy year. The council
must certify its proposed property tax levy under this section to the commissioner of
revenue by September 1 of the levy year. The commissioner of revenue shall annually
determine whether the property tax for transit purposes certified by the council for levy
following the adoption of its proposed budget is within the levy limitation imposed by
deleted text begin subdivisions deleted text end new text begin subdivision new text end 1 deleted text begin and 1b deleted text end . deleted text begin The deleted text end deleted text begin commissioner shall also annually determine
whether the transit tax imposed on all taxable property within the metropolitan transit area
but outside of the metropolitan transit taxing district is within the levy limitation imposed
deleted text end deleted text begin by subdivision 1a. deleted text end The determination must be completed prior to September 10 of each
year. If current information regarding market valuation in any county is not transmitted to
the commissioner in a timely manner, the commissioner may estimate the current market
valuation within that county for purposes of making the calculations.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 38.

Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
article 6, section 9, and Laws 2000, chapter 490, article 6, section 15, is amended to read:

Sec. 3. TAX; PAYMENT OF EXPENSES.

(a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
must not be levied at a rate that exceeds deleted text begin 0.063 percent of taxable market value deleted text end new text begin the amount
authorized to be levied under that section. The proceeds of the tax may be used for all
purposes of the hospital district, except as provided in paragraph (b) new text end .

(b) deleted text begin 0.048 percent of taxable market value of tax in paragraph (a) may be used only
for acquisition, betterment, and maintenance of the district's hospital and nursing home
facilities and equipment, and not for administrative or salary expenses.
deleted text end

deleted text begin (c) deleted text end 0.015 percent of taxable market value of the tax in paragraph (a) may be used
solely for the purpose of capital expenditures as it relates to ambulance acquisitions for
the Cook ambulance service and the Orr ambulance service and not for administrative
or salary expenses.

The part of the levy referred to in paragraph deleted text begin (c) deleted text end new text begin (b) new text end must be administered by the
Cook Hospital and passed on directly to the Cook area ambulance service board and the
city of Orr to be held in trust until funding for a new ambulance is needed by either the
Cook ambulance service or the Orr ambulance service.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance with Minnesota
Statutes, section 645.021, subdivision 3, by the governing body of the Cook-Orr Hospital
District.
new text end

Sec. 39.

Laws 1989, chapter 211, section 8, subdivision 4, as amended by Laws 2002,
chapter 390, section 24, and Laws 2003, chapter 127, article 2, section 22, subdivision 4,
is amended to read:

Subd. 4.

Tax levy.

The tax levied under Minnesota Statutes, section 447.34, shall
not exceed deleted text begin $300,000 for taxes levied in 2002. For taxes levied in 2003 and subsequent
years, the tax must not exceed the lesser of:
deleted text end

deleted text begin (1) the product of the hospital district's property tax levy limitation for the previous
year determined under this subdivision, multiplied by 103 percent; or
deleted text end

deleted text begin (2) the product of the hospital district's property tax levy limitation for the previous
year determined under this subdivision multiplied by the ratio of the most recent available
annual medical care expenditure category of the revised Consumer Price Index, U.S.
citywide average, for all urban consumers prepared by the United States Department of
Labor to the same annual index for the previous year deleted text end new text begin the amount authorized to be levied
under that section new text end .

The proceeds of the tax may be used for all purposes of the hospital district.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance with Minnesota
Statutes, section 645.021, subdivision 3, by the governing body of the Cook County
Hospital District.
new text end

Sec. 40. new text begin EDUCATION IMPROVEMENT ACCOUNT.
new text end

new text begin $78,000,000 of the proceeds of the tax under Minnesota Statutes, section 275.025,
for taxes payable in 2009 must be deposited in an education improvement account, which
is created in the general fund of the state treasury. $83,334,000 of the proceeds of the tax
under Minnesota Statutes, section 275.025, for taxes payable in 2010 and subsequent years
must be deposited in the education improvement account.
new text end

Sec. 41. new text begin VALUATION OF AGRICULTURAL PROPERTY.
new text end

new text begin By October 1, 2007, the commissioner of revenue must develop a method of valuing
agricultural property that accurately reflects the actual value of the property by October 1,
2007. The commissioner must report and make specific recommendations to the chairs
of the committees and divisions of the senate and house of representatives that have
jurisdiction over taxes and property taxes.
new text end

Sec. 42. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, sections 275.025, subdivision 3; 279.01, subdivision 4;
and 473.4461, 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 taxes levied in 2007, payable
in 2008, and thereafter.
new text end

ARTICLE 6

AIDS AND CREDITS; PROPERTY TAX REFUND

Section 1.

Minnesota Statutes 2006, section 97A.061, subdivision 2, is amended to
read:

Subd. 2.

Allocation.

(a) Except as provided in subdivision 3, the county treasurer
shall allocate the payment among the county, towns, and school districts on the same basis
as if the payments were taxes on the land received in the year. Payment of a town's or a
school district's allocation must be made by the county treasurer to the town or school
district within 30 days of receipt of the payment to the county. The county's share of the
payment shall be deposited in the county general revenue fund.

(b) The county treasurer of a county with a population over 39,000 but less than
42,000 in the 1950 federal census shall allocate the payment only among the towns and
school districts on the same basis as if the payments were taxes on the lands received
in the current year.

new text begin (c) If a town received a payment in calendar year 2006 or thereafter under this
subdivision, and subsequently incorporated as a city, the city will continue to receive any
future year's allocations that would have been made to the town had it not incorporated,
provided that the payments will terminate if the governing body of the city passes an
ordinance that prohibits hunting within the boundaries of the city.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid payments made in 2007
and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 273.1384, subdivision 1, is amended to read:

Subdivision 1.

Residential homestead market value credit.

Each county auditor
shall determine a homestead credit for each class 1a, 1b, and 2a homestead property
within the county equal to 0.4 percent of the first deleted text begin $76,000 deleted text end new text begin $86,000 new text end of market value of
the property minus deleted text begin .09 deleted text end new text begin .1 new text end percent of the market value in excess of deleted text begin $76,000 deleted text end new text begin $86,000 new text end .
The credit amount may not be less than zero. In the case of an agricultural or resort
homestead, only the market value of the house, garage, and immediately surrounding one
acre of land is eligible in determining the property's homestead credit. In the case of a
property that is classified as part homestead and part nonhomestead, (i) the credit shall
apply only to the homestead portion of the property, but (ii) if a portion of a property is
classified as nonhomestead solely because not all the owners occupy the property, not all
the owners have qualifying relatives occupying the property, or solely because not all the
spouses of owners occupy the property, the credit amount shall be initially computed as
if that nonhomestead portion were also in the homestead class and then prorated to the
owner-occupant's percentage of ownership. For the purpose of this section, when an
owner-occupant's spouse does not occupy the property, the percentage of ownership for
the owner-occupant spouse is one-half of the couple's ownership percentage.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2008 and
thereafter.
new text end

Sec. 3.

Minnesota Statutes 2006, section 273.1384, subdivision 2, is amended to read:

Subd. 2.

Agricultural homestead market value credit.

Property classified as class
2a agricultural homestead is eligible for an agricultural credit. The credit is computed
using the property's agricultural credit market value, defined for this purpose as the
property's class 2a market value excluding the market value of the house, garage, and
immediately surrounding one acre of land. The credit is equal to 0.3 percent of the first
deleted text begin $115,000 deleted text end new text begin $150,000 new text end of the property's agricultural credit market value minus .05 percent of
the property's agricultural credit market value in excess of deleted text begin $115,000 deleted text end new text begin $150,000 new text end , subject to a
maximum reduction of $115. In the case of property that is classified in part as class 2a
agricultural homestead and in part as class 2b nonhomestead farm land solely because not
all the owners occupy or farm the property, not all the owners have qualifying relatives
occupying or farming the property, or solely because not all the spouses of owners occupy
the property, the credit must be initially computed as if that nonhomestead agricultural
land was also classified as class 2a agricultural homestead and then prorated to the
owner-occupant's percentage of ownership.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2006, section 290A.04, subdivision 2, is amended to read:

Subd. 2.

Homeowners.

A claimant whose property taxes payable are in excess
of the percentage of the household income stated below shall pay an amount equal to
the percent of income shown for the appropriate household income level along with the
percent to be paid by the claimant of the remaining amount of property taxes payable.
The state refund equals the amount of property taxes payable that remain, up to the state
refund amount shown below.

Household Income

Percent of Income

Percent Paid by Claimant

Maximum State Refund

$0 to deleted text begin 1,189 deleted text end new text begin 1,399 new text end	1.0 percent	deleted text begin 15 deleted text end new text begin 10 new text end percent		deleted text begin $1,450 deleted text end new text begin $2,130 new text end
deleted text begin 1,190 deleted text end new text begin 1,400 new text end to deleted text begin 2,379 deleted text end new text begin 2,799 new text end	1.1 percent	deleted text begin 15 deleted text end new text begin 10 new text end percent		deleted text begin $1,450 deleted text end new text begin $2,130 new text end
deleted text begin 2,380 deleted text end new text begin 2,800 new text end to deleted text begin 3,589 deleted text end new text begin 4,219 new text end	1.2 percent	deleted text begin 15 deleted text end new text begin 10 new text end percent		deleted text begin $1,410 deleted text end new text begin $2,080 new text end
deleted text begin 3,590 deleted text end new text begin 4,220 new text end to deleted text begin 4,789 deleted text end new text begin 5,629 new text end	1.3 percent	deleted text begin 20 deleted text end new text begin 15 new text end percent		deleted text begin $1,410 deleted text end new text begin $2,080 new text end
deleted text begin 4,790 deleted text end new text begin 5,630 new text end to deleted text begin 5,979 deleted text end new text begin 7,029 new text end	1.4 percent	deleted text begin 20 deleted text end new text begin 15 new text end percent		deleted text begin $1,360 deleted text end new text begin $2,000 new text end
deleted text begin 5,980 deleted text end new text begin 7,030 new text end to deleted text begin 8,369 deleted text end new text begin 9,839 new text end	1.5 percent	deleted text begin 20 deleted text end new text begin 15 new text end percent		deleted text begin $1,360 deleted text end new text begin $2,000 new text end
deleted text begin 8,370 deleted text end new text begin 9,840 new text end to deleted text begin 9,559 deleted text end new text begin 11,239 new text end	1.6 percent	deleted text begin 25 deleted text end new text begin 20 new text end percent		deleted text begin $1,310 deleted text end new text begin $1,850 new text end
deleted text begin 9,560 deleted text end new text begin 11,240 new text end to deleted text begin 10,759 deleted text end new text begin 12,649 new text end	1.7 percent	deleted text begin 25 deleted text end new text begin 20 new text end percent		deleted text begin $1,310 deleted text end new text begin $1,850 new text end
deleted text begin 10,760 deleted text end new text begin 12,650 new text end to deleted text begin 11,949 deleted text end new text begin 14,049 new text end	1.8 percent	deleted text begin 25 deleted text end new text begin 20 new text end percent		deleted text begin $1,260 deleted text end new text begin $1,780 new text end
deleted text begin 11,950 deleted text end new text begin 14,050 new text end to deleted text begin 13,139 deleted text end new text begin 15,449 new text end	1.9 percent	deleted text begin 30 deleted text end new text begin 25 new text end percent		deleted text begin $1,260 deleted text end new text begin $1,780 new text end
deleted text begin 13,140 deleted text end new text begin 15,450 new text end to deleted text begin 14,349 deleted text end new text begin 16,869 new text end	2.0 percent	deleted text begin 30 deleted text end new text begin 25 new text end percent		deleted text begin $1,210 deleted text end new text begin $1,700 new text end
deleted text begin 14,350 deleted text end new text begin 16,870 new text end to deleted text begin 16,739 deleted text end new text begin 19,679 new text end	2.1 percent	deleted text begin 30 deleted text end new text begin 25 new text end percent		deleted text begin $1,210 deleted text end new text begin $1,700 new text end
deleted text begin 16,740 deleted text end new text begin 19,680 new text end to deleted text begin 17,929 deleted text end new text begin 21,079 new text end	2.2 percent	deleted text begin 35 deleted text end new text begin 30 new text end percent		deleted text begin $1,160 deleted text end new text begin $1,560 new text end
deleted text begin 17,930 deleted text end new text begin 21,080 new text end to deleted text begin 19,119 deleted text end new text begin 22,469 new text end	2.3 percent	deleted text begin 35 deleted text end new text begin 30 new text end percent		deleted text begin $1,160 deleted text end new text begin $1,560 new text end
deleted text begin 19,120 deleted text end new text begin 22,470 new text end to deleted text begin 20,319 deleted text end new text begin 23,879 new text end	2.4 percent	deleted text begin 35 deleted text end new text begin 30 new text end percent		deleted text begin $1,110 deleted text end new text begin $1,500 new text end
deleted text begin 20,320 deleted text end new text begin 23,880 new text end to deleted text begin 25,099 deleted text end new text begin 29,499 new text end	2.5 percent	deleted text begin 40 deleted text end new text begin 35 new text end percent		deleted text begin $1,110 deleted text end new text begin $1,500 new text end
deleted text begin 25,100 deleted text end new text begin 29,500 new text end to deleted text begin 28,679 deleted text end new text begin 33,709 new text end	2.6 percent	deleted text begin 40 deleted text end new text begin 35 new text end percent		deleted text begin $1,070 deleted text end new text begin $1,450 new text end
deleted text begin 28,680 deleted text end new text begin 33,710 new text end to deleted text begin 35,849 deleted text end new text begin 42,139 new text end	2.7 percent	deleted text begin 40 deleted text end new text begin 35 new text end percent		deleted text begin $1,070 deleted text end new text begin $1,450 new text end
deleted text begin 35,850 deleted text end new text begin 42,140 new text end to deleted text begin 41,819 deleted text end new text begin 49,159 new text end	2.8 percent	deleted text begin 45 deleted text end new text begin 40 new text end percent		deleted text begin $ 970 deleted text end new text begin $1,310 new text end
deleted text begin 41,820 deleted text end new text begin 49,160 new text end to deleted text begin 47,799 deleted text end new text begin 56,189 new text end	3.0 percent	deleted text begin 45 deleted text end new text begin 40 new text end percent		deleted text begin $ 970 deleted text end new text begin $1,310 new text end
deleted text begin 47,800 deleted text end new text begin 56,190 new text end to deleted text begin 53,779 deleted text end new text begin 63,209 new text end	3.2 percent	deleted text begin 45 deleted text end new text begin 40 new text end percent		deleted text begin $ 870 deleted text end new text begin $1,170 new text end
deleted text begin 53,780 deleted text end new text begin 63,210 new text end to deleted text begin 59,749 deleted text end new text begin 70,229 new text end	3.5 percent	deleted text begin 50 deleted text end new text begin 45 new text end percent		deleted text begin $ 780 deleted text end new text begin $1,010 new text end
deleted text begin 59,750 deleted text end new text begin 70,230 new text end to deleted text begin 65,729 deleted text end new text begin 77,259 new text end	4.0 percent	deleted text begin 50 deleted text end new text begin 45 new text end percent		deleted text begin $ 680 deleted text end new text begin $880 new text end
deleted text begin 65,730 deleted text end new text begin 77,260 new text end to deleted text begin 69,319 deleted text end new text begin 81,479 new text end	4.0 percent	deleted text begin 50 deleted text end new text begin 45 new text end percent		deleted text begin $ 580 deleted text end new text begin $750 new text end
deleted text begin 69,320 deleted text end new text begin 81,480 new text end to deleted text begin 71,719 deleted text end new text begin 84,299 new text end	4.0 percent	deleted text begin 50 deleted text end new text begin 45 new text end percent		deleted text begin $ 480 deleted text end new text begin $620 new text end
deleted text begin 71,720 deleted text end new text begin 84,300 new text end to deleted text begin 74,619 deleted text end new text begin 87,709 new text end	4.0 percent	deleted text begin 50 deleted text end new text begin 45 new text end percent		deleted text begin $ 390 deleted text end new text begin $510 new text end
deleted text begin 74,620 deleted text end new text begin 87,710 new text end to deleted text begin 77,519 deleted text end new text begin 91,119 new text end	4.0 percent	deleted text begin 50 deleted text end new text begin 45 new text end percent		deleted text begin $ 290 deleted text end new text begin $370 new text end

The payment made to a claimant shall be the amount of the state refund calculated
under this subdivision. No payment is allowed if the claimant's household income is
deleted text begin $77,520 deleted text end new text begin $91,120 new text end or more.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with refunds based on
property taxes payable in 2008.
new text end

Sec. 5.

Minnesota Statutes 2006, section 290A.04, subdivision 2a, is amended to read:

Subd. 2a.

Renters.

A claimant whose rent constituting property taxes exceeds the
percentage of the household income stated below must pay an amount equal to the percent
of income shown for the appropriate household income level along with the percent to
be paid by the claimant of the remaining amount of rent constituting property taxes. The
state refund equals the amount of rent constituting property taxes that remain, up to the
maximum state refund amount shown below.

Household Income

Percent of Income

Percent Paid by Claimant

Maximum State Refund

$0 to deleted text begin 3,589 deleted text end new text begin 4,219 new text end	1.0 percent	5 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 3,590 deleted text end new text begin 4,220 new text end to deleted text begin 4,779 deleted text end new text begin 5,619 new text end	1.0 percent	10 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 4,780 deleted text end new text begin 5,620 new text end to deleted text begin 5,969 deleted text end new text begin 7,019 new text end	1.1 percent	10 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 5,970 deleted text end new text begin 7,020 new text end to deleted text begin 8,369 deleted text end new text begin 9,839 new text end	1.2 percent	10 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 8,370 deleted text end new text begin 9,840 new text end to deleted text begin 10,759 deleted text end new text begin 12,649 new text end	1.3 percent	15 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 10,760 deleted text end new text begin 12,650 new text end to deleted text begin 11,949 deleted text end new text begin 14,049 new text end	1.4 percent	15 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 11,950 deleted text end new text begin 14,050 new text end to deleted text begin 13,139 deleted text end new text begin 15,449 new text end	1.4 percent	20 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 13,140 deleted text end new text begin 15,450 new text end to deleted text begin 15,539 deleted text end new text begin 18,269 new text end	1.5 percent	20 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 15,540 deleted text end new text begin 18,270 new text end to deleted text begin 16,729 deleted text end new text begin 19,669 new text end	1.6 percent	20 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 16,730 deleted text end new text begin 19,670 new text end to deleted text begin 17,919 deleted text end new text begin 21,059 new text end	1.7 percent	25 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 17,920 deleted text end new text begin 21,060 new text end to deleted text begin 20,319 deleted text end new text begin 23,879 new text end	1.8 percent	25 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 20,320 deleted text end new text begin 23,880 new text end to deleted text begin 21,509 deleted text end new text begin 25,279 new text end	1.9 percent	30 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 21,510 deleted text end new text begin 25,280 new text end to deleted text begin 22,699 deleted text end new text begin 26,679 new text end	2.0 percent	30 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 22,700 deleted text end new text begin 26,680 new text end to deleted text begin 23,899 deleted text end new text begin 28,089 new text end	2.2 percent	30 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 23,900 deleted text end new text begin 28,090 new text end to deleted text begin 25,089 deleted text end new text begin 29,489 new text end	2.4 percent	30 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 25,090 deleted text end new text begin 29,490 new text end to deleted text begin 26,289 deleted text end new text begin 30,899 new text end	2.6 percent	35 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 26,290 deleted text end new text begin 30,900 new text end to deleted text begin 27,489 deleted text end new text begin 32,309 new text end	2.7 percent	35 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 27,490 deleted text end new text begin 32,310 new text end to deleted text begin 28,679 deleted text end new text begin 33,709 new text end	2.8 percent	35 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 28,680 deleted text end new text begin 33,710 new text end to deleted text begin 29,869 deleted text end new text begin 35,109 new text end	2.9 percent	40 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 29,870 deleted text end new text begin 35,110 new text end to deleted text begin 31,079 deleted text end new text begin 36,529 new text end	3.0 percent	40 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 31,080 deleted text end new text begin 36,530 new text end to deleted text begin 32,269 deleted text end new text begin 37,929 new text end	3.1 percent	40 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 32,270 deleted text end new text begin 37,930 new text end to deleted text begin 33,459 deleted text end new text begin 39,329 new text end	3.2 percent	40 percent		deleted text begin $1,190 deleted text end new text begin $1,400 new text end
deleted text begin 33,460 deleted text end new text begin 39,330 new text end to deleted text begin 34,649 deleted text end new text begin 40,729 new text end	3.3 percent	45 percent		deleted text begin $1,080 deleted text end new text begin $1,270 new text end
deleted text begin 34,650 deleted text end new text begin 40,730 new text end to deleted text begin 35,849 deleted text end new text begin 42,139 new text end	3.4 percent	45 percent		deleted text begin $ . 960 deleted text end new text begin $1,130 new text end
deleted text begin 35,850 deleted text end new text begin 42,140 new text end to deleted text begin 37,049 deleted text end new text begin 43,549 new text end	3.5 percent	45 percent		deleted text begin $ . 830 deleted text end new text begin $980 new text end
deleted text begin 37,050 deleted text end new text begin 43,550 new text end to deleted text begin 38,239 deleted text end new text begin 44,949 new text end	3.5 percent	50 percent		deleted text begin $ . 720 deleted text end new text begin $850 new text end
deleted text begin 38,240 deleted text end new text begin 44,950 new text end to deleted text begin 39,439 deleted text end new text begin 46,359 new text end	3.5 percent	50 percent		deleted text begin $ . 600 deleted text end new text begin $710 new text end
deleted text begin 38,440 deleted text end new text begin 46,360 new text end to deleted text begin 40,629 deleted text end new text begin 47,759 new text end	3.5 percent	50 percent		deleted text begin $ . 360 deleted text end new text begin $420 new text end
deleted text begin 40,630 deleted text end new text begin 47,760 new text end to deleted text begin 41,819 deleted text end new text begin 49,159 new text end	3.5 percent	50 percent		deleted text begin $ . 120 deleted text end new text begin $140 new text end

The payment made to a claimant is the amount of the state refund calculated under
this subdivision. No payment is allowed if the claimant's household income is deleted text begin $41,820 deleted text end new text begin
$49,160 new text end or more.

Sec. 6.

Minnesota Statutes 2006, section 290A.04, subdivision 4, is amended to read:

Subd. 4.

Inflation adjustment.

Beginning for property tax refunds payable in
calendar year deleted text begin 2002 deleted text end new text begin 2009 new text end , the commissioner shall annually adjust the dollar amounts of the
income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation. The
commissioner shall make the inflation adjustments in accordance with section 1(f) of the
Internal Revenue Code, except that for purposes of this subdivision the percentage increase
shall be determined from the year ending on June 30, deleted text begin 2000 deleted text end new text begin 2007 new text end , to the year ending on
June 30 of the year preceding that in which the refund is payable. The commissioner shall
use the appropriate percentage increase to annually adjust the income thresholds and
maximum refunds under subdivisions 2 and 2a for inflation without regard to whether or
not the income tax brackets are adjusted for inflation in that year. The commissioner shall
round the thresholds and the maximum amounts, as adjusted to the nearest $10 amount. If
the amount ends in $5, the commissioner shall round it up to the next $10 amount.

The commissioner shall annually announce the adjusted refund schedule at the same
time provided under section 290.06. The determination of the commissioner under this
subdivision is not a rule under the Administrative Procedure Act.

Sec. 7.

Minnesota Statutes 2006, section 477A.011, subdivision 36, is amended to read:

Subd. 36.

City aid base.

(a) Except as otherwise provided in this subdivision,
"city aid base" is deleted text begin zero deleted text end new text begin equal to the city aid base used to calculate the aid certified under
Minnesota Statutes 2002, section 477A.011, subdivision 36, for aid payable in 2003 new text end .

(b) deleted text begin The city aid base for any city with a population less than 500 is increased by
$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount
of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end , paragraph (c), is also
increased by $40,000 for aids payable in calendar year 1995 only, provided that:
deleted text end

deleted text begin (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
deleted text end

deleted text begin (ii) the city portion of the tax capacity rate exceeds 100 percent; and
deleted text end

deleted text begin (iii) its city aid base is less than $60 per capita.
deleted text end

deleted text begin (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and
the maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end ,
paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
deleted text end

deleted text begin (i) the city has a population in 1994 of 2,500 or more;
deleted text end

deleted text begin (ii) the city is located in a county, outside of the metropolitan area, which contains a
city of the first class;
deleted text end

deleted text begin (iii) the city's net tax capacity used in calculating its 1996 aid under section
is less than $400 per capita; and
deleted text end

deleted text begin (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of
property located in the city is classified as railroad property.
deleted text end

deleted text begin (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and
the maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end ,
paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
deleted text end

deleted text begin (i) the city was incorporated as a statutory city after December 1, 1993;
deleted text end

deleted text begin (ii) its city aid base does not exceed $5,600; and
deleted text end

deleted text begin (iii) the city had a population in 1996 of 5,000 or more.
deleted text end

deleted text begin (e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the
maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end ,
paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
deleted text end

deleted text begin (i) the city had a population in 1996 of at least 50,000;
deleted text end

deleted text begin (ii) its population had increased by at least 40 percent in the ten-year period ending
in 1996; and
deleted text end

deleted text begin (iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
deleted text end

deleted text begin (f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and
thereafter, and the maximum amount of total aid it may receive under section deleted text begin 477A.013,
subdivision 9 deleted text end , paragraph (c), is also increased by $150,000 in calendar year 2000 only,
provided that:
deleted text end

deleted text begin (1) the city has a population that is greater than 1,000 and less than 2,500;
deleted text end

deleted text begin (2) its commercial and industrial percentage for aids payable in 1999 is greater
than 45 percent; and
deleted text end

deleted text begin (3) the total market value of all commercial and industrial property in the city
for assessment year 1999 is at least 15 percent less than the total market value of all
commercial and industrial property in the city for assessment year 1998.
deleted text end

deleted text begin (g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and
the maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end ,
paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
deleted text end

deleted text begin (1) the city had a population in 1997 of 2,500 or more;
deleted text end

deleted text begin (2) the net tax capacity of the city used in calculating its 1999 aid under section
is less than $650 per capita;
deleted text end

deleted text begin (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under
section is greater than 12 percent;
deleted text end

deleted text begin (4) the 1999 local government aid of the city under section is less than
20 percent of the amount that the formula aid of the city would have been if the need
increase percentage was 100 percent; and
deleted text end

deleted text begin (5) the city aid base of the city used in calculating aid under section
is less than $7 per capita.
deleted text end

deleted text begin (h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and
the maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end ,
paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
deleted text end

deleted text begin (1) the city has a population in 1997 of 2,000 or more;
deleted text end

deleted text begin (2) the net tax capacity of the city used in calculating its 1999 aid under section
is less than $455 per capita;
deleted text end

deleted text begin (3) the net levy of the city used in calculating 1999 aid under section is
greater than $195 per capita; and
deleted text end

deleted text begin (4) the 1999 local government aid of the city under section is less than
38 percent of the amount that the formula aid of the city would have been if the need
increase percentage was 100 percent.
deleted text end

deleted text begin (i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and
the maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end ,
paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
deleted text end

deleted text begin (1) the city has a population in 1998 that is greater than 200 but less than 500;
deleted text end

deleted text begin (2) the city's revenue need used in calculating aids payable in 2000 was greater
than $200 per capita;
deleted text end

deleted text begin (3) the city net tax capacity for the city used in calculating aids available in 2000
was equal to or less than $200 per capita;
deleted text end

deleted text begin (4) the city aid base of the city used in calculating aid under section
is less than $65 per capita; and
deleted text end

deleted text begin (5) the city's formula aid for aids payable in 2000 was greater than zero.
deleted text end

deleted text begin (j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and
the maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end ,
paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
deleted text end

deleted text begin (1) the city had a population in 1998 that is greater than 200 but less than 500;
deleted text end

deleted text begin (2) the city's commercial industrial percentage used in calculating aids payable in
2000 was less than ten percent;
deleted text end

deleted text begin (3) more than 25 percent of the city's population was 60 years old or older according
to the 1990 census;
deleted text end

deleted text begin (4) the city aid base of the city used in calculating aid under section
is less than $15 per capita; and
deleted text end

deleted text begin (5) the city's formula aid for aids payable in 2000 was greater than zero.
deleted text end

deleted text begin (k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and
by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of
total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end , paragraph (c), is also
increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002
only, provided that:
deleted text end

deleted text begin (1) the net tax capacity of the city used in calculating its 2000 aid under section
is less than $810 per capita;
deleted text end

deleted text begin (2) the population of the city declined more than two percent between 1988 and 1998;
deleted text end

deleted text begin (3) the net levy of the city used in calculating 2000 aid under section is
greater than $240 per capita; and
deleted text end

deleted text begin (4) the city received less than $36 per capita in aid under section deleted text begin 477A.013,
subdivision 9 deleted text end , for aids payable in 2000.
deleted text end

deleted text begin (l) The city aid base for a city with a population of 10,000 or more which is located
outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the
maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end ,
paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to
the lesser of:
deleted text end

deleted text begin (1)(i) the total population of the city, as determined by the United States Bureau of
the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
deleted text end

deleted text begin (2) $2,500,000.
deleted text end

deleted text begin (m) The city aid base is increased by $50,000 in 2002 and thereafter, and the
maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end ,
paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
deleted text end

deleted text begin (1) the city is located in the seven-county metropolitan area;
deleted text end

deleted text begin (2) its population in 2000 is between 10,000 and 20,000; and
deleted text end

deleted text begin (3) its commercial industrial percentage, as calculated for city aid payable in 2001,
was greater than 25 percent.
deleted text end

deleted text begin (n) The city aid base for a city is increased by $150,000 in calendar years 2002
to 2011 and the maximum amount of total aid it may receive under section deleted text begin 477A.013,
subdivision 9 deleted text end , paragraph (c), is also increased by $150,000 in calendar year 2002 only,
provided that:
deleted text end

deleted text begin (1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
deleted text end

deleted text begin (2) its home county is located within the seven-county metropolitan area;
deleted text end

deleted text begin (3) its pre-1940 housing percentage is less than 15 percent; and
deleted text end

deleted text begin (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900
per capita.
deleted text end

deleted text begin (o) The city aid base for a city is increased by $200,000 beginning in calendar
year 2003 and the maximum amount of total aid it may receive under section deleted text begin 477A.013,
subdivision 9 deleted text end , paragraph (c), is also increased by $200,000 in calendar year 2003 only,
provided that the city qualified for an increase in homestead and agricultural credit aid
under Laws 1995, chapter 264, article 8, section 18.
deleted text end

deleted text begin (p) The city aid base for a city is increased by $200,000 in 2004 only and the
maximum amount of total aid it may receive under section deleted text begin 477A.013, subdivision 9 deleted text end , is
also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear
dry cask storage facility.
deleted text end

deleted text begin (q) deleted text end The city aid base for a city is increased by $10,000 in 2004 and thereafter and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster
designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by
more than 40 percent between 1990 and 2000.

deleted text begin (r) deleted text end new text begin (c) new text end The city aid base for a city is increased by deleted text begin $25,000 deleted text end new text begin $30,000 new text end in deleted text begin 2006 only deleted text end new text begin
2008 and thereafter, new text end and the maximum total aid it may receive under section 477A.013,
subdivision 9, is also increased by deleted text begin $25,000 deleted text end new text begin $30,000 new text end in calendar year deleted text begin 2006 deleted text end new text begin 2008 new text end only if
the city had a population in 2003 of at least 1,000 and has a state park for which the city
provides rescue services and which comprised at least 14 percent of the total geographic
area included within the city boundaries in 2000.

deleted text begin (s) deleted text end new text begin (d) new text end The city aid base for a city with a population less than 5,000 is increased in
deleted text begin 2006 deleted text end new text begin 2008 new text end and thereafter and the minimum and maximum amount of total aid it may
receive under this section is also increased in calendar year 2006 only by an amount
equal to deleted text begin $6 deleted text end new text begin $9 new text end multiplied by its population.

deleted text begin (t) deleted text end new text begin (e) new text end The city aid base for a city is increased by $80,000 in 2007 deleted text begin only deleted text end new text begin and thereafter new text end
and the minimum and maximum amount of total aid it may receive under section
477A.013, subdivision 9, is also increased by $80,000 in calendar year 2007 only, if new text begin ,
as of May 1, 2006 new text end :

(1) deleted text begin as of May 1, 2006, deleted text end at least 25 percent of the tax capacity of the city is proposed
to be placed in trust status as tax-exempt Indian land;

(2) the placement of the land is being challenged administratively or in court; and

(3) due to the challenge, the land proposed to be placed in trust is deleted text begin still deleted text end on the tax
rolls deleted text begin as of deleted text end deleted text begin May 1, 2006 deleted text end .

deleted text begin (u) deleted text end new text begin (f) new text end The city aid base for a city is increased by $100,000 in 2007 and thereafter
and the minimum and maximum total amount of aid it may receive under this section is
also increased in calendar year 2007 only, provided that:

(1) the city has a 2004 estimated population greater than 200 but less than 2,000;

(2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;

(3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids
payable in 2006 was greater than 110 percent; and

(4) it is located in a county where at least 15,000 acres of land are classified as
tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with aids payable in 2008.
new text end

Sec. 8.

Minnesota Statutes 2006, section 477A.0124, subdivision 4, is amended to read:

Subd. 4.

County tax-base equalization aid.

(a) For 2006 and subsequent years,
the money appropriated to county tax-base equalization aid each calendar year, after the
payment under paragraph (f), shall be apportioned among the counties according to each
county's tax-base equalization aid factor.

(b) A county's tax-base equalization aid factor is equal to the amount by which (i)
deleted text begin $185 deleted text end new text begin $215 new text end times the county's population, exceeds (ii) percent of the county's
net tax capacity.

(c) In the case of a county with a population less than 10,000, the factor determined
in paragraph (b) shall be multiplied by a factor of three.

(d) In the case of a county with a population greater than or equal to 10,000, but less
than 12,500, the factor determined in paragraph (b) shall be multiplied by a factor of two.

(e) In the case of a county with a population greater than 500,000, the factor
determined in paragraph (b) shall be multiplied by a factor of 0.25.

(f) Before the money appropriated to county base equalization aid is apportioned
among the counties as provided in paragraph (a), an amount up to $73,259 is allocated
annually to Anoka County and up to $59,664 is annually allocated to Washington County
for the county to pay postretirement costs of health insurance premiums for court
employees. The allocation under this paragraph is in addition to the allocations under
paragraphs (a) to (e).

Sec. 9.

Minnesota Statutes 2006, section 477A.0124, subdivision 5, is amended to read:

Subd. 5.

County transition aid.

(a) For 2005, a county is eligible for transition
aid equal to the amount, if any, by which:

(1) the difference between:

(i) the aid the county received under subdivision 1 in 2004, divided by the total aid
paid to all counties under subdivision 1, multiplied by $205,000,000; and

(ii) the amount of aid the county is certified to receive in 2005 under subdivisions
3 and 4;

exceeds:

(2) three percent of the county's adjusted net tax capacity.

A county's aid under this paragraph may not be less than zero.

(b) In 2006, a county is eligible to receive two-thirds of the transition aid it received
in 2005.

(c) In 2007 new text begin and subsequent years new text end , a county is eligible to receive one-third of the
transition aid it received in 2005.

deleted text begin (d) No county shall receive aid under this subdivision after 2007.
deleted text end

Sec. 10.

Minnesota Statutes 2006, section 477A.013, subdivision 1, is amended to read:

Subdivision 1.

Towns.

deleted text begin In 2002, deleted text end deleted text begin no deleted text end new text begin In 2008 and subsequent years, each new text end town is
eligible for a distribution under this subdivision new text begin equal to 40 percent of the amount of
homestead and agricultural credit aid reimbursement it received under Minnesota Statutes
2000, section 273.1398, in calendar year 2001 new text end .

Sec. 11.

Minnesota Statutes 2006, section 477A.013, subdivision 8, is amended to read:

Subd. 8.

City formula aid.

In calendar year deleted text begin 2004 deleted text end new text begin 2008 new text end and subsequent years, the
formula aid for a city is equal to the need increase percentage multiplied by the difference
between (1) the city's revenue need multiplied by its population, and (2) the sum of the
city's net tax capacity multiplied by the tax effort rate deleted text begin ; the taconite aids under sections
298.28 and 298.282 to any city except a city directly impacted by a taconite mine or plant,
multiplied by the following percentages:
deleted text end

deleted text begin (i) zero percent for aids payable in 2004;
deleted text end

deleted text begin (ii) 25 percent for aids payable in 2005;
deleted text end

deleted text begin (iii) 50 percent for aids payable in 2006;
deleted text end

deleted text begin (iv) 75 percent for aids payable in 2007; and
deleted text end

deleted text begin (v) 100 percent for aids payable in 2008 and thereafter.
deleted text end

deleted text begin For purposes of this subdivision, "a city directly impacted by a taconite mine or
plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6)
Silver Bay, or (7) Virginia deleted text end .

No city may have a formula aid amount less than zero. The need increase percentage
must be the same for all cities.

The applicable need increase percentage must be calculated by the Department of
Revenue so that the total of the aid under subdivision 9 equals the total amount available
for aid under section 477A.03 after the subtraction under section 477A.014, subdivisions
4 and 5.

Sec. 12.

Minnesota Statutes 2006, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year deleted text begin 2002 and thereafter deleted text end new text begin 2009 new text end , each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, deleted text begin and deleted text end (2) its city aid base new text begin , and (3) one-half of the difference between its total
aid in the previous year under this section and its city aid base in the previous year. For aids
payable in 2010 and thereafter, each city shall receive an aid distribution equal to the sum
of (1) the city formula aid under subdivision 8, (2) its city aid base, and (3) its formula aid
under subdivision 8 in the previous year, prior to any adjustments under this subdivision new text end .

(b) For aids payable in deleted text begin 2005 deleted text end new text begin 2008 new text end and thereafter, the total aid for any city shall
not exceed the sum of (1) deleted text begin ten percent of the city's net levy for the year prior to the aid
distribution deleted text end new text begin $56 per capita new text end plus (2) deleted text begin its total aid in the previous year deleted text end new text begin in the case of a city
that receives a distribution under section 477A.011, subdivision 36, paragraph (d), the
amount it receives under that provision new text end . For aids payable in deleted text begin 2005 and thereafter deleted text end new text begin 2008 new text end , the
total aid for any city deleted text begin with a population of 2,500 or more deleted text end may not decrease from its total
aid under this section in the previous year deleted text begin by an amount greater than ten percent of its net
levy in the year prior to the aid distribution deleted text end .

(c) deleted text begin For aids payable in 2004 only, the total aid for a city with a population less
than 2,500 may not be less than the amount it was certified to receive in 2003 minus the
greater of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special
Session chapter 21, article 5, or (2) five percent of its 2003 aid amount. deleted text end deleted text begin For aids payable
in 2005 and thereafter, the total aid for a city with a population less than 2,500 must not be
less than the amount it was certified to receive in the previous year minus five percent
of its 2003 certified aid amount.
deleted text end

deleted text begin (d) deleted text end If a city's net tax capacity used in calculating aid under this section has decreased
in any year by more than 25 percent from its net tax capacity in the previous year due to
property becoming tax-exempt Indian land, the city's maximum allowed aid increase
under paragraph (b) shall be increased by an amount equal to (1) the city's tax rate in the
year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
resulting from the property becoming tax exempt.

Sec. 13.

Minnesota Statutes 2006, section 477A.03, subdivision 2a, is amended to read:

Subd. 2a.

Cities.

deleted text begin For aids payable in 2004, the total aids paid under section
477A.013, subdivision 9, are limited to $429,000,000. For aids payable in 2005, the
total aids paid under section 477A.013, subdivision 9, are limited to $437,052,000. deleted text end For
aids payable in 2006 and deleted text begin thereafter deleted text end new text begin 2007 new text end , the total aids paid under section 477A.013,
subdivision 9, is limited to $485,052,000.

new text begin For aids payable in 2008 and thereafter, the total aids paid under section 477A.013,
subdivision 9, is limited to $635,052,000.
new text end

Sec. 14.

Minnesota Statutes 2006, section 477A.03, subdivision 2b, is amended to read:

Subd. 2b.

Counties.

(a) For aids payable in calendar year 2005 deleted text begin and thereafter deleted text end new text begin to
2007 new text end , the total aids paid to counties under section 477A.0124, subdivision 3, are limited to
$100,500,000. new text begin For aids payable in calendar year 2008, the total aids paid to counties under
section 477A.0124, subdivision 3, are limited to $130,500,000. For aids payable in 2009
and subsequent years, the total aid limitation shall be the amount of the previous year's
limitation, increased by the percentage increase determined for the year under section
477A.145. new text end Each calendar year, $500,000 shall be retained by the commissioner of revenue
to make reimbursements to the commissioner of finance for payments made under section
611.27. 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. Any retained amounts not used for reimbursement 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.

(b) For aids payable in 2005, the total aids under section 477A.0124, subdivision 4,
are limited to $105,000,000. For aids payable in 2006 and deleted text begin thereafter deleted text end new text begin 2007 new text end , the total aid
under section 477A.0124, subdivision 4, is limited to $105,132,923. new text begin For aids payable in
2008, the total aid under section 477A.0124, subdivision 4, is limited to $135,132,923.
For aids payable in 2009 and subsequent years, the total aid limitation shall be the amount
of the previous year's limitation, increased by the percentage increase determined for the
year under section 477A.145. new text end The commissioner of finance shall bill the commissioner of
revenue for the cost of preparation of local impact notes as required by section 3.987, not
to exceed $207,000 in fiscal year 2004 and thereafter. The commissioner of education
shall bill the commissioner of revenue for the cost of preparation of local impact notes
for school districts as required by section 3.987, not to exceed $7,000 in fiscal year 2004
and thereafter. The commissioner of revenue shall deduct the amounts billed under
this paragraph from the appropriation under this paragraph. The amounts deducted are
appropriated to the commissioner of finance and the commissioner of education for the
preparation of local impact notes.

Sec. 15.

Minnesota Statutes 2006, section 477A.12, subdivision 1, is amended to read:

Subdivision 1.

Types of land; payments.

(a) As an offset for expenses incurred
by counties and towns in support of natural resources lands, the following amounts are
annually appropriated to the commissioner of natural resources from the general fund for
transfer to the commissioner of revenue. The commissioner of revenue shall pay the
transferred funds to counties as required by sections 477A.11 to 477A.145. The amounts
are:

(1) for acquired natural resources land, $3, as adjusted for inflation under section
477A.145, multiplied by the total number of acres of acquired natural resources land or,
at the county's option three-fourths of one percent of the appraised value of all acquired
natural resources land in the county, whichever is greater;

(2) 75 cents, as adjusted for inflation under section 477A.145, multiplied by the
number of acres of county-administered other natural resources land;

(3) deleted text begin 75 cents deleted text end new text begin $3 new text end , as adjusted for inflation under section 477A.145, multiplied by
the total number of acres of land utilization project land new text begin that is located entirely within a
wildlife management area as described in section 86A.05, subdivision 8; and 75 cents, as
adjusted for inflation under section 477A.145, multiplied by the total number of acres of
land utilization project land not located within a wildlife management area new text end ; and

(4) 37.5 cents, as adjusted for inflation under section 477A.145, multiplied by the
number of acres of commissioner-administered other natural resources land located in
each county as of July 1 of each year prior to the payment year.

(b) The amount determined under paragraph (a), clause (1), is payable for land
that is acquired from a private owner and owned by the Department of Transportation
for the purpose of replacing wetland losses caused by transportation projects, but only
if the county contains more than 500 acres of such land at the time the certification is
made under subdivision 2.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments in 2008 and thereafter.
new text end

Sec. 16.

Minnesota Statutes 2006, section 477A.14, subdivision 1, is amended to read:

Subdivision 1.

General distribution.

Except as provided in subdivision 2 or in
section 97A.061, subdivision 5, 40 percent of the total payment to the county shall be
deposited in the county general revenue fund to be used to provide property tax levy
reduction. The remainder shall be distributed by the county in the following priority:

(a) 37.5 cents, as adjusted for inflation under section 477A.145, for each acre
of county-administered other natural resources land shall be deposited in a resource
development fund to be created within the county treasury for use in resource
development, forest management, game and fish habitat improvement, and recreational
development and maintenance of county-administered other natural resources land. Any
county receiving less than $5,000 annually for the resource development fund may elect to
deposit that amount in the county general revenue fund;

(b) From the funds remaining, within 30 days of receipt of the payment to the county,
the county treasurer shall pay each organized township 30 cents, as adjusted for inflation
under section 477A.145, for each acre of acquired natural resources land new text begin , each acre of
land utilization project land located entirely within a wildlife management area, new text end and each
acre of land described in section 477A.12, subdivision 1, paragraph (b), and 7.5 cents, as
adjusted for inflation under section 477A.145, for each acre of other natural resources land
and each acre of land utilization project land new text begin not located within a wildlife management
area, new text end located within its boundaries. Payments for natural resources lands not located in
an organized township shall be deposited in the county general revenue fund. Payments
to counties and townships pursuant to this paragraph shall be used to provide property
tax levy reduction, except that of the payments for natural resources lands not located in
an organized township, the county may allocate the amount determined to be necessary
for maintenance of roads in unorganized townships. Provided that, if the total payment
to the county pursuant to section 477A.12 is not sufficient to fully fund the distribution
provided for in this clause, the amount available shall be distributed to each township and
the county general revenue fund on a pro rata basis; and

(c) Any remaining funds shall be deposited in the county general revenue fund.
Provided that, if the distribution to the county general revenue fund exceeds $35,000, the
excess shall be used to provide property tax levy reduction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments in 2008 and thereafter.
new text end

Sec. 17.

Laws 2006, chapter 259, article 11, section 3, is amended to read:

Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT,
PROPERTY TAX REIMBURSEMENT deleted text begin ; 2006 ONLY deleted text end .

Subdivision 1.

Aid appropriation.

$600,000 is appropriated new text begin annually new text end from the
general fund to the commissioner of revenue to be used to make payments to compensate
for the loss of property tax revenue due to the placement of land located in the city of
Mahnomen that was put in trust status by the United Stated Department of the Interior,
Bureau of Indian Affairs, during calendar year 2006. The commissioner shall pay the
county of Mahnomen, $450,000; the city of Mahnomen, $80,000; and Independent School
District No. 432, Mahnomen, $70,000 new text begin , provided that these payments shall be reduced
in 2007 and any subsequent year by the amount, if any, of payments to that political
subdivision made during the previous calendar year by the owner of the land that was
placed in trust new text end . The payments shall be made on July 20 deleted text begin , deleted text end new text begin of new text end 2006 new text begin , and each subsequent year new text end .

Subd. 2.

School district tax base adjustments.

The Department of Revenue
must reduce the referendum market value and the adjusted net tax capacity deleted text begin certified for
assessment year 2005 deleted text end used to calculate school levies for taxes payable in 2007 new text begin and
subsequent years new text end for Independent School District No. 432, Mahnomen, by the amounts of
any values attributable to property that is no longer subject to property taxation because
the land has been placed in trust in calendar year 2006 through action of the United States
Department of Interior, Bureau of Indian Affairs. The Mahnomen County auditor must
certify the reductions in value to the Department of Revenue in the form and manner
specified by the Department of Revenue.

Sec. 18. new text begin STUDY OF AIDS TO LOCAL GOVERNMENTS.
new text end

new text begin The chairs of the senate and house of representatives committees on taxes shall each
appoint five members to a study group of the tax committees to examine the current
system of aids to local governments and make recommendations on improvements to
the system. Of the five members appointed by each chair, two must be members of the
tax committee, one who is a majority party member and one who is a minority party
member. The remaining members must represent local units of government. The chairs
of the divisions of the tax committees having jurisdiction over property taxes shall also
be members and shall serve as cochairs of the study group. The group must report on its
specific recommendations to the legislature by December 15, 2008.
new text end

ARTICLE 7

MINERALS

Section 1.

Minnesota Statutes 2006, section 276A.01, subdivision 3, is amended to
read:

Subd. 3.

Commercial-industrial property.

"Commercial-industrial property"
means the following categories of property, as defined in section 273.13, excluding that
portion of the property (i) that may, by law, constitute the tax base for a tax increment
pledged pursuant to section 469.042 or 469.162 or sections 469.174 to 469.178,
certification of which was requested prior to May 1, 1996, to the extent and while the tax
increment is so pledged; or (ii) that is exempt from taxation under section 272.02:

(1) that portion of class 5 property consisting of unmined iron ore and low-grade
iron-bearing formations as defined in section 273.14, tools, implements, and machinery,
except the portion of high voltage transmission lines, the value of which is deducted from
net tax capacity under section 273.425; and

(2) that portion of class 3 and class 5 property which is either used or zoned for use
for any commercial or industrial purpose, new text begin including property that becomes taxable under
section 6, new text end except for such property which is, or, in the case of property under construction,
will when completed be used exclusively for residential occupancy and the provision of
services to residential occupants thereof. Property must be considered as used exclusively
for residential occupancy only if each of not less than 80 percent of its occupied residential
units is, or, in the case of property under construction, will when completed be occupied
under an oral or written agreement for occupancy over a continuous period of not less
than 30 days.

If the classification of property prescribed by section 273.13 is modified by
legislative amendment, the references in this subdivision are to the successor class or
classes of property, or portions thereof, that include the kinds of property designated
in this subdivision.

Sec. 2.

Minnesota Statutes 2006, section 276A.04, is amended to read:

276A.04 INCREASE IN NET TAX CAPACITY.

By July 15 of 1997 and each subsequent year, the auditor of each county in the
area shall determine the amount, if any, by which the net tax capacity determined in the
preceding year pursuant to section 276A.03, of commercial-industrial property subject to
taxation within each municipality in the county exceeds the net tax capacity in 1995 of
commercial-industrial property subject to taxation within that municipality new text begin , including the
total net tax capacity of property that becomes taxable under section 6 new text end . If a municipality is
located in two or more counties within the area, the auditors of those counties shall certify
the data required by section 276A.03 to the county auditor responsible for allocating
the levies of that municipality between or among the affected counties. That county
auditor shall determine the amount of the net excess, if any, for the municipality under
this section, and certify that amount under section 276A.05. The increase in total net tax
capacity determined by this section must be reduced by the amount of any decreases in
the net tax capacity of commercial-industrial property resulting from any court decisions,
court-related stipulation agreements, or abatements for a prior year, and only in the
amount of such decreases made during the 12-month period ending on May 1 of the
current assessment year, where the decreases, if originally reflected in the determination of
a prior year's net tax capacity under section 276A.03, would have resulted in a smaller
contribution from the municipality in that year. An adjustment for the decreases shall be
made only if the municipality made a contribution in a prior year based on the higher net
tax capacity of the commercial-industrial property.

Sec. 3.

Minnesota Statutes 2006, section 298.22, is amended by adding a subdivision
to read:

new text begin Subd. 5a. new text end

new text begin Forest trust. new text end

new text begin The board may purchase forest lands in the taconite
assistance area under section 273.1341 with funds specifically authorized for the purchase.
All of these forest lands must be held in trust for the benefit of the citizens of the area as
the Iron Range Miners' Memorial Forest. The board may use the forest trust lands for
recreation and economic uses. The board must deposit the proceeds from the sale of
timber or removal of gravel or other minerals from these forest lands into an Iron Range
Miners' Memorial Forest account established by the board. By majority vote of the board,
money in the Iron Range Miners' Memorial Forest account may be transferred into the
Douglas J. Johnson economic protection trust fund under sections 298.291 to 298.294.
new text end

Sec. 4.

Minnesota Statutes 2006, section 298.227, is amended to read:

298.227 TACONITE ECONOMIC DEVELOPMENT FUND.

new text begin Subdivision 1. new text end

new text begin Fund for producers. new text end

An amount equal to that distributed pursuant
to each taconite producer's taxable production and qualifying sales under section 298.28,
subdivision 9a, shall be held by the Iron Range Resources and Rehabilitation Board in
a separate taconite economic development fund for each taconite and direct reduced
ore producer.

new text begin Subd. 2. new text end

new text begin Committee review. new text end

Money from the fund for each producer shall be
released by the commissioner after review by a joint committee consisting of an equal
number of representatives of the salaried employees and the nonsalaried production and
maintenance employees of that producer. The District 11 director of the United States
Steelworkers of America, on advice of each local employee president, shall select
the employee members. In nonorganized operations, the employee committee shall be
elected by the nonsalaried production and maintenance employees. The review must be
completed no later than six months after the producer presents a proposal for expenditure
of the funds to the committee.

new text begin Subd. 3. new text end

new text begin Release of funds. new text end

The funds held pursuant to this section may be
released only for acquisition of equipment and facilities for the producer or for research
and development in Minnesota on new mining, or taconite, iron, or steel production
technology, but only if the producer provides a matching expenditure to be used for
the same purpose of at least 50 percent of the distribution based on 14.7 cents per ton
deleted text begin beginning with distributions in 2002 deleted text end .

new text begin Subd. 4. new text end

new text begin Limitation. new text end

new text begin The amount that may be released to a producer under this
section in any year is subject to the following limitation:
new text end

new text begin (1) in a calendar year following a calendar year during which the producer's total
production is less than 3,000,000 tons, the maximum distribution is an amount equal to
30.1 cents per ton;
new text end

new text begin (2) in a calendar year following a calendar year during which the producer's
total production is at least 3,000,000 tons and less than 8,000,001 tons, the maximum
distribution is $903,000; and
new text end

new text begin (3) in a calendar year following a calendar year during which the producer's total
production is in excess of 8,000,000 tons, the maximum distribution is $903,000 plus 60.2
cents for every ton by which the distribution exceeds 8,000,000 tons.
new text end

new text begin Subd. 5. new text end

new text begin Repayment required. new text end

If a producer uses money from the fund to procure
haulage trucks, mobile equipment, or mining shovels, and the producer removes the piece
of equipment from the taconite tax relief area defined in section 273.134 within ten years
from the date of receipt of the money from the fund, a portion of the money granted
from the fund must be repaid to the taconite economic development fund. The portion
of the money to be repaid is 100 percent of the grant if the equipment is removed from
the taconite tax relief area within 12 months after receipt of the money from the fund,
declining by ten percent for each of the subsequent nine years during which the equipment
remains within the taconite tax relief area.

new text begin Subd. 6. new text end

new text begin Sale of facility. new text end

If a taconite production facility is sold after operations at
the facility had ceased, any money remaining in the fund for the former producer may be
released to the purchaser of the facility on the terms otherwise applicable to the former
producer under this section.

new text begin Subd. 7. new text end

new text begin Other distributions. new text end

If a producer fails to provide matching funds for
a proposed expenditure within six months after the commissioner approves release of
the funds, the funds are available for release to another producer in proportion to the
distribution provided and under the conditions of this section. Any portion of the fund
which is not released by the commissioner within two years of its deposit in the fund shall
be divided between the taconite environmental protection fund created in section 298.223
and the Douglas J. Johnson economic protection trust fund created in section 298.292 for
placement in their respective special accounts. Two-thirds of the unreleased funds shall be
distributed to the taconite environmental protection fund and one-third to the Douglas J.
Johnson economic protection trust fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions in 2008 and
thereafter.
new text end

Sec. 5.

Minnesota Statutes 2006, section 298.24, subdivision 1, is amended to read:

Subdivision 1.

Imposed; calculation.

(a) For concentrate produced in 2001, 2002,
and 2003, there is imposed upon taconite and iron sulphides, and upon the mining and
quarrying thereof, and upon the production of iron ore concentrate therefrom, and upon
the concentrate so produced, a tax of $2.103 per gross ton of merchantable iron ore
concentrate produced therefrom. For concentrates produced in 2005, the tax rate is the
same rate imposed for concentrates produced in 2004.

(b) For concentrates produced in 2006 and subsequent years, the tax rate shall be
equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate
multiplied by the percentage increase in the implicit price deflator from the fourth quarter
of the second preceding year to the fourth quarter of the preceding year. "Implicit price
deflator" means the implicit price deflator for the gross domestic product prepared by the
Bureau of Economic Analysis of the United States Department of Commerce.

(c) On concentrates produced in 1997 and thereafter, an additional tax is imposed
equal to three cents per gross ton of merchantable iron ore concentrate for each one
percent that the iron content of the product exceeds 72 percent, when dried at 212 degrees
Fahrenheit.

(d) The tax shall be imposed on the average of the production for the current year
and the previous two years. The rate of the tax imposed will be the current year's tax rate.
This clause shall not apply in the case of the closing of a taconite facility if the property
taxes on the facility would be higher if this clause and section 298.25 were not applicable.

(e) If the tax or any part of the tax imposed by this subdivision is held to be
unconstitutional, a tax of $2.103 per gross ton of merchantable iron ore concentrate
produced shall be imposed.

(f) Consistent with the intent of this subdivision to impose a tax based upon the
weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly
determine the weight of merchantable iron ore concentrate included in fluxed pellets by
subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic
flux additives included in the pellets from the weight of the pellets. For purposes of this
paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite,
olivine, or other basic flux additives are combined with merchantable iron ore concentrate.
No subtraction from the weight of the pellets shall be allowed for binders, mineral and
chemical additives other than basic flux additives, or moisture.

(g)(1) Notwithstanding any other provision of this subdivision, for the first two years
of a plant's commercial production of direct reduced ore, no tax is imposed under this
section. As used in this paragraph, "commercial production" is production of more than
50,000 tons of direct reduced ore in the current year or in any prior year, "noncommercial
production" is production of 50,000 tons or less of direct reduced ore in any year, and
"direct reduced ore" is ore that results in a product that has an iron content of at least 75
percent. For the third year of a plant's commercial production of direct reduced ore, the
rate to be applied to direct reduced ore is 25 percent of the rate otherwise determined
under this subdivision. For the fourth commercial production year, the rate is 50 percent of
the rate otherwise determined under this subdivision; for the fifth commercial production
year, the rate is 75 percent of the rate otherwise determined under this subdivision; and for
all subsequent commercial production years, the full rate is imposed.

(2) Subject to clause (1), production of direct reduced ore in this state is subject to
the tax imposed by this section, but if that production is not produced by a producer
of taconite or iron sulfides, the production of taconite or iron sulfides consumed in the
production of direct reduced iron in this state is not subject to the tax imposed by this
section on taconite or iron sulfides.

(3) Notwithstanding any other provision of this subdivision, no tax is imposed
on direct reduced ore under this section during the facility's noncommercial production
of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial
production of direct reduced ore is subject to the tax imposed by this section on taconite
and iron sulphides. Three-year average production of direct reduced ore does not
include production of direct reduced ore in any noncommercial year. Three-year average
production for a direct reduced ore facility that has noncommercial production is the
average of the commercial production of direct reduced ore for the current year and the
previous two commercial years.

new text begin (4) This paragraph applies only to plants for which all environmental permits have
been obtained and construction has begun before January 1, 2009.
new text end

Sec. 6.

Minnesota Statutes 2006, section 298.25, is amended to read:

298.25 TAXES ADDITIONAL TO OCCUPATION TAX; IN LIEU OF OTHER
TAXES.

The taxes imposed under section 298.24 shall be in addition to the occupation tax
imposed upon the business of mining and producing iron ore. Except as herein otherwise
provided, such taxes shall be in lieu of all other taxes upon such taconite, iron sulphides,
and direct reduced ore or the lands in which they are contained, or upon the mining or
quarrying thereof, or the production of concentrate or direct reduced ore therefrom, or
upon the concentrate or direct reduced ore produced, or upon the machinery, equipment,
tools, supplies and buildings used in such mining, quarrying or production, or upon the
lands occupied by, or used in connection with, such mining, quarrying or production
facilities. If electric or steam power for the mining, transportation or concentration of
such taconite, concentrates or direct reduced ore produced therefrom is generated in
plants principally devoted to the generation of power for such purposes, the plants in
which such power is generated and all machinery, equipment, tools, supplies, transmission
and distribution lines used in the generation and distribution of such power, shall new text begin not new text end be
considered to be machinery, equipment, tools, supplies and buildings used in the mining,
quarrying, or production of taconite, taconite concentrates or direct reduced ore within
the meaning of this section new text begin , and shall be subject to general property taxation new text end . deleted text begin If part
of the power generated in such a plant is used for purposes other than the mining or
concentration of taconite or direct reduced ore or the transportation or loading of taconite,
the concentrates thereof or direct reduced ore, a proportionate share of the value of such
generating facilities, equal to the proportion that the power used for such other purpose
bears to the generating capacity of the plant, shall be subject to the general property tax
in the same manner as other property; provided, power generated in such a plant and
exchanged for an equivalent amount of power which is used for the mining, transportation,
or concentration of such taconite, concentrates or direct reduced ore produced therefrom,
shall be considered as used for such purposes within the meaning of this section. deleted text end Nothing
herein shall prevent the assessment and taxation of the surface of reserve land containing
taconite and not occupied by such facilities or used in connection therewith at the value
thereof without regard to the taconite or iron sulphides therein, nor the assessment and
taxation of merchantable iron ore or other minerals, or iron-bearing materials other than
taconite or iron sulphides in such lands in the manner provided by law, nor the assessment
and taxation of facilities used in producing sulphur or sulphur products from iron sulphide
concentrates, or in refining such sulphur products, under the general property tax laws.
Nothing herein shall except from general taxation or from taxation as provided by other
laws any property used for residential or townsite purposes, including utility services
thereto. new text begin This section does not provide an exemption from general property taxation for ore
docks even if located at the site of a taconite production facility. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2006, section 298.28, subdivision 4, is amended to read:

Subd. 4.

School districts.

(a) 17.15 cents per taxable ton new text begin , new text end plus the increase provided
in paragraph (d) new text begin , plus an amount equal to 3 cents per ton of the increased tax proceeds
attributable to the increase in the implicit price deflator as provided in section 298.24,
subdivision 1, new text end must be allocated to qualifying school districts to be distributed, based upon
the certification of the commissioner of revenue, under paragraphs (b) and (c), except as
otherwise provided in paragraph (f).

(b) 3.43 cents per taxable ton must be distributed to the school districts in which
the lands from which taconite was mined or quarried were located or within which the
concentrate was produced. The distribution must be based on the apportionment formula
prescribed in subdivision 2.

(c)(i) deleted text begin 13.72 deleted text end new text begin 16.72 new text end cents per taxable ton, less any amount distributed under paragraph
(e), shall be distributed to a group of school districts comprised of those school districts
which qualify as a tax relief area under section 273.134, paragraph (b), or in which there is
a qualifying municipality as defined by section 273.134, paragraph (a), in direct proportion
to school district indexes as follows: for each school district, its pupil units determined
under section 126C.05 for the prior school year shall be multiplied by the ratio of the
average adjusted net tax capacity per pupil unit for school districts receiving aid under
this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year
ending prior to distribution to the adjusted net tax capacity per pupil unit of the district.
Each district shall receive that portion of the distribution which its index bears to the sum
of the indices for all school districts that receive the distributions.

(ii) Notwithstanding clause (i), each school district that receives a distribution
under sections 298.018; 298.23 to 298.28, exclusive of any amount received under this
clause; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law imposing a tax on
severed mineral values after reduction for any portion distributed to cities and towns under
section 126C.48, subdivision 8, paragraph (5), that is less than the amount of its levy
reduction under section 126C.48, subdivision 8, for the second year prior to the year of the
distribution shall receive a distribution equal to the difference; the amount necessary to
make this payment shall be derived from proportionate reductions in the initial distribution
to other school districts under clause (i).

(d) Any school district described in paragraph (c) where a levy increase pursuant to
section 126C.17, subdivision 9, was authorized by referendum for taxes payable in 2001,
shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the
pupil units identified in section 126C.05, subdivision 1, enrolled in the second previous
year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent
times the district's taxable net tax capacity in the second previous year.

If the total amount provided by paragraph (d) is insufficient to make the payments
herein required then the entitlement of $175 per pupil unit shall be reduced uniformly
so as not to exceed the funds available. Any amounts received by a qualifying school
district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general
education aid which the district receives pursuant to section 126C.13 or the permissible
levies of the district. Any amount remaining after the payments provided in this paragraph
shall be paid to the commissioner of Iron Range resources and rehabilitation who shall
deposit the same in the taconite environmental protection fund and the Douglas J. Johnson
economic protection trust fund as provided in subdivision 11.

Each district receiving money according to this paragraph shall reserve the lesser of
the amount received under this paragraph or $25 times the number of pupil units served
in the district. It may use the money for early childhood programs or for outcome-based
learning programs that enhance the academic quality of the district's curriculum. The
outcome-based learning programs must be approved by the commissioner of education.

(e) There shall be distributed to any school district the amount which the school
district was entitled to receive under section 298.32 in 1975.

(f) Effective for the distribution in 2003 only, five percent of the distributions to
school districts under paragraphs (b), (c), and (e); subdivision 6, paragraph (c); subdivision
11; and section 298.225, shall be distributed to the general fund. The remainder less any
portion distributed to cities and towns under section 126C.48, subdivision 8, paragraph
(5), shall be distributed to the Douglas J. Johnson economic protection trust fund created
in section 298.292. Fifty percent of the amount distributed to the Douglas J. Johnson
economic protection trust fund shall be made available for expenditure under section
298.293 as governed by section 298.296. Effective in 2003 only, 100 percent of the
distributions to school districts under section 477A.15 less any portion distributed to
cities and towns under section 126C.48, subdivision 8, paragraph (5), shall be distributed
to the general fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions in 2008 and
thereafter.
new text end

Sec. 8.

Minnesota Statutes 2006, section 298.28, subdivision 5, is amended to read:

Subd. 5.

Counties.

(a) 26.05 cents per taxable ton is allocated to counties to be
distributed, based upon certification by the commissioner of revenue, under paragraphs
(b) to (d).

(b) deleted text begin 20.525 deleted text end new text begin 15.525 new text end cents per taxable ton shall be distributed to the county in which
the taconite is mined or quarried or in which the concentrate is produced deleted text begin , less any
amount which is to be distributed pursuant to paragraph (c) deleted text end . The apportionment formula
prescribed in subdivision 2 is the basis for the distribution.

(c) If an electric power plant owned by and providing the primary source of power
for a taxpayer mining and concentrating taconite is located in a county other than the
county in which the mining and the concentrating processes are conducted, one cent per
taxable ton of the tax distributed to the counties pursuant to paragraph (b) and imposed
on and collected from such taxpayer shall be paid to the county in which the power plant
is located.

(d) new text begin 10.525 new text end cents per taxable ton shall be paid to the county from which the
taconite was mined, quarried or concentrated to be deposited in the county road and
bridge fund. If the mining, quarrying and concentrating, or separate steps in any of those
processes are carried on in more than one county, the commissioner shall follow the
apportionment formula prescribed in subdivision 2.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions in 2008 and
thereafter.
new text end

Sec. 9.

Minnesota Statutes 2006, section 298.28, subdivision 10, is amended to read:

Subd. 10.

Increase.

(a) Except as provided in paragraph (b), beginning with
distributions in 2000, the amount determined under subdivision 9 shall be increased in
the same proportion as the increase in the implicit price deflator as provided in section
298.24, subdivision 1. Beginning with distributions in 2003, the amount determined under
subdivision 6, paragraph (a), shall be increased in the same proportion as the increase in
the implicit price deflator as provided in section 298.24, subdivision 1.

(b) For distributions in 2005 and subsequent years, an amount equal to the increased
tax proceeds attributable to the increase in the implicit price deflator as provided in
section 298.24, subdivision 1, for taxes paid in 2005, except for the amount of revenue
increases provided in subdivision 4, paragraph (d), is distributed to the grant and loan fund
established in section 298.2961, subdivision 4.

new text begin (c) For distributions in 2008 and subsequent years, if the amounts distributed under
paragraphs (a) and (b) exceed the increased tax proceeds attributable to the increase in
the implicit price deflator, less 3 cents per ton, they must be proportionately reduced so
that the sum of those amounts equals the amount of those increased tax proceeds less 3
cents per ton.
new text end

Sec. 10.

Minnesota Statutes 2006, section 298.292, subdivision 2, is amended to read:

Subd. 2.

Use of money.

Money in the Douglas J. Johnson economic protection trust
fund may be used for the following purposes:

(1) to provide loans, loan guarantees, interest buy-downs and other forms of
participation with private sources of financing, but a loan to a private enterprise shall be
for a principal amount not to exceed one-half of the cost of the project for which financing
is sought, and the rate of interest on a loan to a private enterprise shall be no less than the
lesser of eight percent or an interest rate three percentage points less than a full faith
and credit obligation of the United States government of comparable maturity, at the
time that the loan is approved;

(2) to fund reserve accounts established to secure the payment when due of the
principal of and interest on bonds issued pursuant to section 298.2211;

(3) to pay in periodic payments or in a lump sum payment any or all of the interest
on bonds issued pursuant to chapter 474 for the purpose of constructing, converting,
or retrofitting heating facilities in connection with district heating systems or systems
utilizing alternative energy sources; deleted text begin and
deleted text end

(4) to invest in a venture capital fund or enterprise that will provide capital to other
entities that are engaging in, or that will engage in, projects or programs that have the
purposes set forth in subdivision 1. No investments may be made in a venture capital fund
or enterprise unless at least two other unrelated investors make investments of at least
$500,000 in the venture capital fund or enterprise, and the investment by the Douglas
J. Johnson economic protection trust fund may not exceed the amount of the largest
investment by an unrelated investor in the venture capital fund or enterprise. For purposes
of this subdivision, an "unrelated investor" is a person or entity that is not related to
the entity in which the investment is made or to any individual who owns more than 40
percent of the value of the entity, in any of the following relationships: spouse, parent,
child, sibling, employee, or owner of an interest in the entity that exceeds ten percent of
the value of all interests in it. For purposes of determining the limitations under this
clause, the amount of investments made by an investor other than the Douglas J. Johnson
economic protection trust fund is the sum of all investments made in the venture capital
fund or enterprise during the period beginning one year before the date of the investment
by the Douglas J. Johnson economic protection trust fund new text begin ; and
new text end

new text begin (5) to purchase forest land in the taconite assistance area under section 273.1341 to
be held as a public trust for the benefit of the area for recreational uses and for economic
purposes, including timber sales and gravel removal new text end .

Money from the trust fund shall be expended only in or for the benefit of the taconite
assistance area defined in section 273.1341.

Sec. 11.

Minnesota Statutes 2006, section 298.2961, subdivision 4, is amended to read:

Subd. 4.

Grant and loan fund.

(a) A fund is established to receive distributions
under section 298.28, subdivision 9b, and to make grants or loans as provided in this
subdivision. Any grant or loan made under this subdivision must be approved by
a majority of the members of the Iron Range Resources and Rehabilitation Board,
established under section 298.22.

(b) Distributions received in calendar year 2005 are allocated to the city of Virginia
for improvements and repairs to the city's steam heating system.

(c) Distributions received in calendar year 2006 are allocated to a project of the
public utilities commissions of the cities of Hibbing and Virginia to convert their electrical
generating plants to the use of biomass products, such as wood.

(d) Distributions received in calendar year 2007 must be paid to the city of Tower to
be used for the East Two Rivers project in or near the city of Tower.

(e) For distributions received in 2008, the first $2,000,000 of the 2008 distribution
must be paid to St. Louis County for deposit in its county road and bridge fund to be used
for relocation of St. Louis County Road 715, commonly referred to as Pike River Road.
The remainder of the 2008 distribution new text begin must be paid to the city of Virginia for extension
and replacement of its water and sewer systems new text end and the full amount of the distributions in
2009 and subsequent years is allocated for projects under section 298.223, subdivision 1.

Sec. 12.

Minnesota Statutes 2006, section 298.2961, subdivision 5, is amended to read:

Subd. 5.

Public works and local economic development fund.

For distributions in
2007 only, a special fund is established to receive 38.4 cents per ton that otherwise would
be allocated under section 298.28, subdivision 6. The following amounts are allocated to
St. Louis County acting as the fiscal agent for the recipients for the specific purposes:

(1) 13.4 cents per ton for the Central Iron Range Sanitary Sewer District for
construction of a combined wastewater facility new text begin and notwithstanding section 298.28,
subdivision 11, paragraph (a), or any other law, interest accrued on this money while held
by St. Louis County shall also be distributed to the recipient new text end ;

(2) six cents per ton to the city of Eveleth to redesign and design and construct
improvements to renovate its water treatment facility;

(3) one cent per ton for the East Range Joint Powers Board to acquire land for and to
design a central wastewater collection and treatment system;

(4) 0.5 cents per ton to the city of Hoyt Lakes to repair Leeds Road;

(5) 0.7 cents per ton to the city of Virginia to extend Eighth Street South;

(6) 0.7 cents per ton to the city of Mountain Iron to repair Hoover Road;

(7) 0.9 cents per ton to the city of Gilbert for alley repairs between Michigan and
Indiana Avenues and for repayment of a loan to the Minnesota Department of Employment
and Economic Development;

(8) 0.4 cents per ton to the city of Keewatin for a new city well;

(9) 0.3 cents per ton to the city of Grand Rapids for planning for a fire and hazardous
materials center;

(10) 0.9 cents per ton to Aitkin County Growth for an economic development
project for peat harvesting;

(11) 0.4 cents per ton to the city of Nashwauk to develop a comprehensive city plan;

(12) 0.4 cents per ton to the city of Taconite for development of a city comprehensive
plan;

(13) 0.3 cents per ton to the city of Marble for water and sewer infrastructure;

(14) 0.8 cents per ton to Aitkin County for improvements to the Long Lake
Environmental Learning Center;

(15) 0.3 cents per ton to the city of Coleraine for the Coleraine Technology Center;

(16) 0.5 cents per ton to the Economic Development Authority of the city of Grand
Rapids for planning for the North Central Research and Technology Laboratory;

(17) 0.6 cents per ton to the city of Bovey for sewer and water extension;

(18) 0.3 cents per ton to the city of Calumet for infrastructure improvements; and

(19) ten cents per ton to deleted text begin an economic development authority in a city through which
State Highway 1 passes, or a city in Independent School District No. 2142 that has an
active mine, deleted text end new text begin the Iron Range Resources and Rehabilitation Board for deposit in a Highway
1 Corridor Account established by the board, to be distributed by the board to any of the
cities of Babbitt, Cook, Ely, or Tower, new text end for deleted text begin an deleted text end economic development deleted text begin project deleted text end new text begin projects new text end
approved by the Iron Range Resources and Rehabilitation Board new text begin ; notwithstanding section
298.28, subdivision 11, paragraph (a), or any other law, interest accrued on this money
while held by St. Louis County or the board shall also be distributed to the recipient new text end .

Sec. 13.

Minnesota Statutes 2006, section 298.75, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

Except as may otherwise be provided, the following
words, when used in this section, shall have the meanings herein ascribed to them.

deleted text begin (1) deleted text end new text begin (a) new text end "Aggregate material" deleted text begin shall mean deleted text end new text begin means:
new text end

new text begin (1) new text end nonmetallic natural mineral aggregate including, but not limited to sand, silica
sand, gravel, crushed rock, limestone, granite, and borrow, but only if the borrow is
transported on a public road, street, or highway deleted text begin . deleted text end new text begin , provided that nonmetallic new text end aggregate
material deleted text begin shall deleted text end new text begin does new text end not include dimension stone and dimension granite new text begin ; and
new text end

new text begin (2) taconite tailings, crushed rock, and architectural or dimension stone and
dimension granite removed from taconite mines new text end .

Aggregate material must be measured or weighed after it has been extracted from
the pit, quarry, or deposit.

deleted text begin (2) deleted text end new text begin (b) new text end "Person" deleted text begin shall mean deleted text end new text begin means new text end any individual, firm, partnership, corporation,
organization, trustee, association, or other entity.

deleted text begin (3) deleted text end new text begin (c) new text end "Operator" deleted text begin shall mean deleted text end new text begin means new text end any person engaged in the business of removing
aggregate material from the surface or subsurface of the soil, for the purpose of sale,
either directly or indirectly, through the use of the aggregate material in a marketable
product or service.

deleted text begin (4) deleted text end new text begin (d) new text end "Extraction site" deleted text begin shall mean deleted text end new text begin means new text end a pit, quarry, or deposit containing
aggregate material and any contiguous property to the pit, quarry, or deposit which is used
by the operator for stockpiling the aggregate material.

deleted text begin (5) deleted text end new text begin (e) new text end "Importer" deleted text begin shall mean deleted text end new text begin means new text end any person who buys aggregate material
produced from a county not listed in paragraph deleted text begin (6) deleted text end new text begin (f) new text end or another state and causes the
aggregate material to be imported into a county in this state which imposes a tax on
aggregate material.

deleted text begin (6) deleted text end new text begin (f) new text end "County" deleted text begin shall mean deleted text end new text begin means new text end the counties of Pope, Stearns, Benton, Sherburne,
Carver, Scott, Dakota, Le Sueur, Kittson, Marshall, Pennington, Red Lake, Polk, Norman,
Mahnomen, Clay, Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, Sibley,
Hennepin, Washington, Chisago, and Ramsey. County also means any other county whose
board has voted after a public hearing to impose the tax under this section and has notified
the commissioner of revenue of the imposition of the tax.

deleted text begin (7) deleted text end new text begin (g) new text end "Borrow" deleted text begin shall mean deleted text end new text begin means new text end granular borrow, consisting of durable particles
of gravel and sand, crushed quarry or mine rock, crushed gravel or stone, or any
combination thereof, the ratio of the portion passing the (#200) sieve divided by the
portion passing the (1 inch) sieve may not exceed 20 percent by mass.

Sec. 14.

Minnesota Statutes 2006, section 298.75, subdivision 3, is amended to read:

Subd. 3.

Report and remittance.

new text begin (a) new text end By the 14th day following the last day of each
calendar quarter, every operator or importer shall make and file with the county auditor of
the county in which the aggregate material is removed or imported, a correct report under
oath, in such form and containing such information as the auditor shall require relative to
the quantity of aggregate material removed or imported during the preceding calendar
quarter. The report shall be accompanied by a remittance of the amount of tax due.

new text begin (b) new text end If any of the proceeds of the tax is to be apportioned as provided in subdivision
2, the operator or importer shall also include on the report any relevant information
concerning the amount of aggregate material transported, the tax and the county of
destination. The county auditor shall notify the county treasurer of the amount of such
tax and the county to which it is due. The county treasurer shall remit the tax to the
appropriate county within 30 days new text begin , except as provided in paragraph (c) new text end .

new text begin (c) The proceeds of the tax on aggregate material as defined in subdivision 1,
paragraph (a), clause (2), must be remitted to the commissioner of iron range resources
and rehabilitation to be deposited in the taconite area environmental protection fund under
section 298.223, and used for the purposes of that fund.
new text end

Sec. 15.

Minnesota Statutes 2006, section 298.75, subdivision 7, is amended to read:

Subd. 7.

Proceeds of taxes.

All money collected as taxes under this section new text begin on
aggregate material as defined in subdivision 1, paragraph (a), clause (1), new text end shall be deposited
in the county treasury and credited as follows, for expenditure by the county board:

(a) Sixty percent to the county road and bridge fund for expenditure for the
maintenance, construction and reconstruction of roads, highways and bridges;

(b) Thirty percent to the road and bridge fund of those towns as determined by the
county board and to the general fund or other designated fund of those cities as determined
by the county board, to be expended for maintenance, construction and reconstruction of
roads, highways and bridges; and

(c) Ten percent to a special reserve fund which is hereby established, for expenditure
for the restoration of abandoned pits, quarries, or deposits located upon public and tax
forfeited lands within the county.

If there are no abandoned pits, quarries or deposits located upon public or tax
forfeited lands within the county, this portion of the tax shall be deposited in the county
road and bridge fund for expenditure for the maintenance, construction and reconstruction
of roads, highways and bridges.

Sec. 16.

Minnesota Statutes 2006, section 298.75, is amended by adding a subdivision
to read:

new text begin Subd. 11. new text end

new text begin Tax may be imposed; Otter Tail County. new text end

new text begin (a) If Otter Tail County
does not impose a tax under this section and approves imposition of the tax under this
subdivision, the town of Scambler in Otter Tail County may impose the aggregate
materials tax under this section.
new text end

new text begin (b) For purposes of exercising the powers contained in this section, the "town" is
deemed to be the "county."
new text end

new text begin (c) All provisions in this section apply to the town of Scambler, except that all
proceeds of the tax must be retained by the town and used for the purposes described in
subdivision 7.
new text end

new text begin (d) If Otter Tail County imposes an aggregate materials tax under this section, the
tax imposed by the town of Scambler under this subdivision is repealed on the effective
date of the Otter Tail County tax.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body
of the town of Scambler and its chief clerical officer comply with section 645.021,
subdivisions 2 and 3.
new text end

Sec. 17. new text begin IRON RANGE MEMORIAL FOREST.
new text end

new text begin Notwithstanding Minnesota Statutes, section 298.293, the Iron Range Resources and
Rehabilitation Board under Minnesota Statutes, section 298.22, may expend funds from
the principal of the Douglas J. Johnson economic protection trust fund under Minnesota
Statutes, sections 298.291 to 298.294, to purchase forest lands. All forest lands purchased
under this section must be held in trust for the benefit of the citizens of the taconite
assistance area under Minnesota Statutes, section 273.1341, as the Iron Range Miners'
Memorial Forest for the benefit of the area as provided under Minnesota Statutes, section
298.22, subdivision 5a.
new text end

Sec. 18. new text begin APPROPRIATIONS; DEPARTMENT OF EDUCATION.
new text end

new text begin Subdivision 1. new text end

new text begin Department of Education. new text end

new text begin The sums indicated in this section are
appropriated from the general fund to the Department of Education. These appropriations
are added to any appropriations for the same purpose in 2007 S.F. No. 2095 for the fiscal
years indicated.
new text end

new text begin Subd. 2. new text end

new text begin General education aid. new text end

new text begin For general education aid under Minnesota
Statutes, section 126C.13, subdivision 4:
new text end

new text begin $ new text end

new text begin 1,041,000 new text end

new text begin ..... new text end

new text begin 2009 new text end

new text begin The 2009 appropriation includes $1,041,000 for fiscal year 2008 and $0 for fiscal
year 2009.
new text end

Sec. 19. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 126C.21, subdivision 4, new text end new text begin is repealed.
new text end

ARTICLE 8

LOCAL DEVELOPMENT

Section 1.

Minnesota Statutes 2006, section 272.02, is amended by adding a
subdivision to read:

new text begin Subd. 85. new text end

new text begin Tax-free renaissance zones. new text end

new text begin (a) Property located in a tax-free renaissance
zone designated under section 469.342 is exempt from ad valorem taxes levied under
chapter 275.
new text end

new text begin (b) The exemption applies to each assessment year beginning during the duration
of the zone or subzone. For the final three assessment years of the zone or subzone
duration limit, the exemption applies to the following percentages of estimated market
value of the property:
new text end

new text begin (1) for the third to the last assessment year of the duration, 75 percent;
new text end

new text begin (2) for the second to the last assessment year of the duration, 50 percent; and
new text end

new text begin (3) for the last assessment year of the duration, 25 percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes levied in 2007,
payable in 2008, and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 290.01, subdivision 19b, as amended by Laws
2007, chapter 1, section 2, 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;

(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;

(4) income as provided under section 290.0802;

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

(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;

(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;

(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;

(9) 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;

(10) job opportunity building zone income as provided under section 469.316;

(11) 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
services performed exclusively for purposes of basic combat training, advanced individual
training, annual training, and periodic inactive duty training; special training periodically
made available to reserve members; and service performed in accordance with section
190.08, subdivision 3;

(12) 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;

(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;

(14) 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;

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

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

new text begin (17) income of a qualified business derived from operations in a tax-free renaissance
zone as provided under section 469.343 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, 2007.
new text end

Sec. 3.

Minnesota Statutes 2006, 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;

(ii) the dividends received deduction under section 290.21, subdivision 4;

(iii) the exemption for operating in a job opportunity building zone under section
469.317;

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

(v) the exemption for operating in an international economic development zone
under section 469.326 new text begin ; and
new text end

new text begin (vi) the exemption for operating in a tax-free renaissance zone under section 469.343 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, 2007.
new text end

Sec. 4.

Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 34. new text end

new text begin Tax-free renaissance zone; historic rehabilitation credit. new text end

new text begin (a) A
taxpayer who incurs costs that are eligible for a credit under section 47 of the Internal
Revenue Code for the rehabilitation of a property in a tax-free renaissance zone,
designated under section 469.342, is allowed a credit against the tax imposed under this
chapter, including the taxes under sections 290.091 and 290.0922, equal to 25 percent
of the federal credit for the taxable year.
new text end

new text begin (b) If the amount of the credit under this subdivision exceeds the tax liability under
this chapter for the year in which the cost is incurred, the amount that exceeds the tax
liability may be carried back to any of the three preceding taxable years or carried forward
to each of the ten taxable years succeeding the taxable year in which the expense was
incurred. The entire amount of the credit must be carried to the earliest taxable year to
which the amount may be carried. The unused portion of the credit must be carried to
the following 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, 2007.
new text end

Sec. 5.

Minnesota Statutes 2006, 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:

(i) the charitable contribution deduction under section 170 of the Internal Revenue
Code:

(A) for taxable years beginning before January 1, 2006, to the extent that the
deduction exceeds 1.0 percent of adjusted gross income;

(B) for taxable years beginning after December 31, 2005, to the full extent of the
deduction.

For purposes of this clause, "adjusted gross income" has the meaning given in
section 62 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) 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), (8), and (9);

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 (9) to deleted text begin (16) deleted text end new text begin (17) 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, 2007.
new text end

Sec. 6.

Minnesota Statutes 2006, 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 (16), is disallowed in determining
alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d,
clause (19), 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), (ii) the
amount of refunds of income, excise, or franchise taxes subtracted as provided in section
290.01, subdivision 19d, clause (10), or (iii) the amount of royalties, fees or other like
income subtracted as provided in section 290.01, subdivision 19d, clause (11).

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

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

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

new text begin (17) Alternative minimum taxable income excludes the income from operating in a
tax-free renaissance zone as provided under section 469.343.
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, 2007.
new text end

Sec. 7.

Minnesota Statutes 2006, section 290.0922, subdivision 2, is amended to read:

Subd. 2.

Exemptions.

The following entities are exempt from the tax imposed
by this section:

(1) corporations exempt from tax under section 290.05;

(2) real estate investment trusts;

(3) regulated investment companies or a fund thereof; and

(4) entities having a valid election in effect under section 860D(b) of the Internal
Revenue Code;

(5) town and farmers' mutual insurance companies;

(6) cooperatives organized under chapter 308A or 308B that provide housing
exclusively to persons age 55 and over and are classified as homesteads under section
273.124, subdivision 3;

(7) an entity, if for the taxable year all of its property is located in a job opportunity
building zone designated under section 469.314 and all of its payroll is a job opportunity
building zone payroll under section 469.310; deleted text begin and
deleted text end

(8) an entity, if for the taxable year all of its property is located in an international
economic development zone designated under section 469.322, and all of its payroll is
international economic development zone payroll under section 469.321. The exemption
under this clause applies to taxable years beginning during the duration of the international
economic development zone new text begin ; and
new text end

new text begin (9) an entity, if for the taxable year all of its property is located in a tax-free
renaissance zone designated under section 469.342 and all of its payroll and its zone
payroll as defined under section 469.343 new text end .

Entities not specifically exempted by this subdivision are subject to tax under this
section, notwithstanding section 290.05.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 8.

Minnesota Statutes 2006, section 297A.71, is amended by adding a subdivision
to read:

new text begin Subd. 40. new text end

new text begin Legal reference and data center facility. new text end

new text begin (a) Materials and supplies used
or consumed in the construction, improvement, or expansion of a legal reference office
and data center facility are exempt, if:
new text end

new text begin (1) the facility is used for the development or provision of print or online versions of
legal reference products and services or consultative services; and
new text end

new text begin (2) the total capital investment made at the facility is at least $100,000,000.
new text end

new text begin (b) The tax must be imposed and collected as if the rate under section 297A.62,
subdivision 1, applied, and refunded in the manner provided in section 297A.75, only
after the following criteria have been met:
new text end

new text begin (1) a refund may not be issued until the owner of the legal reference and data center
facility has certified to the Department of Employment and Economic Development that
the legal reference and data center employs no fewer than 8,600 full-time equivalent
workers at the facility;
new text end

new text begin (2) for each year that the owner of the legal reference and data center facility certifies
to the Department of Employment and Economic Development that no fewer than 8,600
full-time equivalent workers residents are employed at the facility, the refund may be
issued at a rate of 25 percent of the total allowable refund payable to date. Provided that
the Department of Employment and Economic Development continues to certify that no
fewer than 8,600 Minnesota full-time equivalent workers are employed at the facility, the
commissioner of revenue may make annual payments of the remaining refund until all
of the refund has been paid; and
new text end

new text begin (3) the first certification must occur within one year from the completion date of
construction of the expansion of the legal reference and data center facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2006, and before January 1, 2012.
new text end

Sec. 9.

Minnesota Statutes 2006, section 297A.71, is amended by adding a subdivision
to read:

new text begin Subd. 41. new text end

new text begin Biobusiness center. new text end

new text begin Materials and supplies used or consumed in the
initial construction of a biobusiness center building in the city of Rochester for which the
city received funding for the related infrastructure under Laws 2006, chapter 258, section
21, subdivision 7, are exempt. Materials and supplies used to construct a parking ramp
or related infrastructure are not exempt. The tax must be imposed and collected as if
the rate under section 297A.62, subdivision 1, applied and then refunded in the manner
provided in section 297A.75.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2007, and before December 30, 2009.
new text end

Sec. 10.

Minnesota Statutes 2006, section 298.22, subdivision 7, is amended to read:

Subd. 7.

Project area development authority.

(a) In addition to the other powers
granted in this section and other law and notwithstanding any limitations contained in
subdivision 5, the commissioner, for purposes of fostering economic development and
tourism within the Giants Ridge Recreation Area or the Ironworld Discovery Center area,
may spend any money made available to the agency under section 298.28 to acquire real
or personal property or interests therein by gift, purchase, or lease and may convey by
lease, sale, or other means of conveyance or commitment any or all property interests
owned or administered by the commissioner within such areas.

(b) In furtherance of development of the Giants Ridge Recreation Area or the
Ironworld Discovery Center area, the commissioner may establish and participate in
charitable foundations and nonprofit corporations, including a corporation within the
meaning of section 317A.011, subdivision 6.

(c) The term "Giants Ridge recreation area" refers to an economic development
project area established by the commissioner in furtherance of the powers delegated in this
section within St. Louis County in the deleted text begin western deleted text end new text begin following new text end portions of the town of White
and deleted text begin in the eastern portion of the westerly, adjacent, unorganized township deleted text end new text begin the city of
Biwabik: Township 59 North, Range 15 West, Sections 7, 8, 17-20 and 29-32; Township
59 North, Range 16 West, Sections 6, 13, 24, 25 and 36; Township 58 North, Range 16
West, Section 1; and Township 58 North, Range 15 West, Sections 5 and 6 new text end .

(d) The term "Ironworld Discovery Center area" refers to an economic development
and tourism promotion project area established by the commissioner in furtherance
of the powers delegated in this section within St. Louis County in the south portion of
the town of Balkan.

Sec. 11.

Minnesota Statutes 2006, section 298.221, is amended to read:

298.221 RECEIPTS FROM CONTRACTS; APPROPRIATION.

(a) Except as provided in paragraph (c), all money paid to the state of Minnesota
pursuant to the terms of any contract entered into by the state under authority of section
298.22 and any fees which may, in the discretion of the commissioner of Iron Range
resources and rehabilitation, be charged in connection with any project pursuant to that
section as amended, shall be deposited in the state treasury to the credit of the Iron Range
Resources and Rehabilitation Board account in the special revenue fund and are hereby
appropriated for the purposes of section 298.22.

(b) Notwithstanding section 16A.013, merchandise may be accepted by the
commissioner of the Iron Range Resources and Rehabilitation Board for payment of
advertising contracts if the commissioner determines that the merchandise can be used
for special event prizes or mementos at facilities operated by the board. Nothing in this
paragraph authorizes the commissioner or a member of the board to receive merchandise
for personal use.

(c) All fees charged by the commissioner in connection with public use of the
state-owned ski and golf facilities at the Giants Ridge Recreation Area and all other
revenues derived by the commissioner from the operation or lease of those facilities
and from the lease, sale, or other disposition of undeveloped lands at the Giants Ridge
Recreation Area must be deposited into an Iron Range Resources and Rehabilitation
Board account that is created within the state enterprise fund. All funds deposited in the
enterprise fund account are appropriated to the commissioner to be expended, subject to
approval of a majority of the board, as follows:

(1) to pay costs associated with the new text begin acquisition, development, or improvement of
lands or the new text end construction, equipping, operation, repair, or improvement of new text begin facilities within
new text end the Giants Ridge Recreation Area deleted text begin facilities or lands deleted text end ;

(2) to pay principal, interest and associated bond issuance, reserve, and servicing
costs associated with the financing of the deleted text begin facilities deleted text end new text begin acquisition, development, or
improvement of lands or the construction, equipping, operation, repair, or improvement
of facilities within the Giants Ridge Recreation Area new text end ; and

(3) to pay the costs of any other project new text begin or program within the Giants Ridge
Recreation Area new text end authorized under section 298.22.

Sec. 12.

Minnesota Statutes 2006, section 298.2211, subdivision 1, is amended to read:

Subdivision 1.

Purpose; grant of authority.

In order to accomplish the legislative
purposes specified in sections 469.142 to 469.165 and chapter 462C, within the taconite
assistance area as defined in section 273.1341, the commissioner of Iron Range resources
and rehabilitation may exercise the following powers: (1) all powers conferred upon a
rural development financing authority under sections 469.142 to 469.149; (2) all powers
conferred upon a city under chapter 462C; (3) all powers conferred upon a municipality or
a redevelopment agency under sections new text begin 469.090 to 469.1082 and new text end 469.152 to 469.165; (4)
new text begin all powers conferred upon municipalities under sections 412.491, 450.31, and 471.15; (5)
new text end all powers provided by sections 469.142 to 469.151 to further any of the purposes and
objectives of chapter 462C and sections 469.152 to 469.165; deleted text begin (5) deleted text end new text begin (6) new text end apply for, borrow,
receive, and expend grant and loan money made available from federal sources and from
federally funded programs; and deleted text begin (6) deleted text end new text begin (7) new text end all powers conferred upon a municipality or an
authority under sections 469.174 to 469.177, 469.178, except subdivision 2 thereof, and
469.179, subject to compliance with the provisions of section 469.175, subdivisions 1, 2,
and 3; provided that any tax increments derived by the commissioner from the exercise of
this authority may be used only to finance or pay premiums or fees for insurance, letters of
credit, or other contracts guaranteeing the payment when due of net rentals under a project
lease or the payment of principal and interest due on or repurchase of bonds issued to
finance a project or program, to accumulate and maintain reserves securing the payment
when due on bonds issued to finance a project or program, or to provide an interest rate
reduction program pursuant to section 469.012, subdivision 7 new text begin , or as provided in section
298.221, paragraph (c), clauses (1) to (3) new text end . Tax increments and earnings thereon remaining
in any bond reserve account after payment or discharge of any bonds secured thereby shall
be used within one year thereafter in furtherance of this section or returned to the county
auditor of the county in which the tax increment financing district is located. If returned
to the county auditor, the county auditor shall immediately allocate the amount among
all government units which would have shared therein had the amount been received as
part of the other ad valorem taxes on property in the district most recently paid, in the
same proportions as other taxes were distributed, and shall immediately distribute it to
the government units in accordance with the allocation.

Sec. 13.

Minnesota Statutes 2006, section 298.2211, is amended by adding a
subdivision to read:

new text begin Subd. 7. new text end

new text begin Tax increment financing district; special rules. new text end

new text begin (a) Upon adoption of
the development program for a project and a tax increment financing plan for a district
or districts described in this section, the rules provided under this section apply to the
project and district. For purposes of this subdivision, "project" means a project as
defined in section 469.174, subdivision 8, to be established by the commissioner, that
has boundaries that are coterminous with the Giants Ridge Recreation Area as defined
in section 298.22, subdivision 7. For purposes of this subdivision, "district" means an
economic development tax increment financing district established by the commissioner
within the Giants Ridge Recreation Area.
new text end

new text begin (b) Each parcel within a project shall be deemed eligible for inclusion in an
economic development tax increment financing district.
new text end

new text begin (c) Original net tax capacity means the total net tax capacities for taxes payable in
2007, of (i) all land within the district, except for the parcels known as the Lodge at
Giants Ridge, the Villas at Giants Ridge, and the Woodlands; and (ii) the net tax capacities
of the structures located on these parcels.
new text end

new text begin (d) Certification of the original net tax capacity under section 469.177, subdivision
1, does not apply.
new text end

new text begin (e) Captured net tax capacity means the total net tax capacities of (1) any structures
located within the district, except for the parcels described in paragraph (c), and (2) the
increased net tax capacities of the structures on these parcels after taxes payable year 2007.
new text end

new text begin (f) The certified original local tax rate for the district under section 469.177,
subdivision 1a, does not apply.
new text end

new text begin (g) No tax increment may be paid to the commissioner after 12 years after receipt by
the commissioner of the first tax increment.
new text end

new text begin (h) The five-year rule under section 469.1763, subdivision 3, does not apply.
new text end

new text begin (i) The limitations on spending increment outside of the district under section
469.1763, subdivision 2, do not apply, but increments may only be expended within the
Giants Ridge Recreation Area.
new text end

new text begin (j) The authority to approve a tax increment financing plan to establish a district or
districts under this section expires on December 31, 2023.
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. 14.

Minnesota Statutes 2006, section 469.169, is amended by adding a subdivision
to read:

new text begin Subd. 18. new text end

new text begin Additional border city allocations; 2007. new text end

new text begin (a) In addition to tax
reductions authorized in subdivisions 7 to 17, the commissioner shall allocate $750,000
for tax reductions to border city enterprise zones in cities located on the western border
of the state. The commissioner shall make allocations to zones in cities on the western
border on a per capita basis. Allocations made under this subdivision may be used for
tax reductions as provided in section 469.171, or for other offsets of taxes imposed on
or remitted by businesses located in the enterprise zone, but only if the municipality
determines that the granting of the tax reduction or offset is necessary in order to retain a
business within or attract a business to the zone. The city alternatively may elect to use
any portion of the allocation provided in this paragraph for tax reductions under section
469.1732 or 469.1734.
new text end

new text begin (b) The commissioner shall allocate $750,000 for tax reductions under section
469.1732 or 469.1734 to cities with border city enterprise zones located on the western
border of the state. The commissioner shall allocate this amount among the cities on a per
capita basis. The city alternatively may elect to use any portion of the allocation provided
in this paragraph for tax reductions as provided in section 469.171.
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 2006, section 469.312, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Termination of designation of qualified business. new text end

new text begin No person will be
deemed to be a qualified business eligible for the benefits provided in sections 469.310
to 469.320 unless the person has entered into a business subsidy agreement with a local
government unit as provided in section 469.310, subdivision 11, prior to May 1, 2007.
new text end

Sec. 16.

new text begin [469.342] TAX-FREE RENAISSANCE ZONE; FERGUS FALLS.
new text end

new text begin Subdivision 1. new text end

new text begin Designation of zone. new text end

new text begin The area of the campus of the former state
regional treatment center in the city of Fergus Falls is designated a tax-free renaissance
zone. The zone includes the five buildings and associated land that were acquired by
the city prior to January 1, 2007.
new text end

new text begin Subd. 2. new text end

new text begin Duration limit. new text end

new text begin Designation of the zone is effective for 15 calendar years
beginning on the date specified, by resolution, by the governing body of the city of Fergus
Falls. The city may divide the area of the zone into subzones. If the city divides the
zone into separate subzones, the duration of each subzone begins on the date specified
by the resolution establishing the subzone. Each subzone has a duration of 15 calendar
years, unless the authorizing resolution specifies a shorter limit. No subzone duration may
begin later than January 1, 2013.
new text end

new text begin Subd. 3. new text end

new text begin Tax incentives available in the zone. new text end

new text begin Individuals that reside in the zone,
qualified businesses that operate in the zone, and property located in the zone qualify for
the following tax exemptions and incentives:
new text end

new text begin (1) exemption for business income from the individual income and corporate
franchise taxes as provided under section 469.343;
new text end

new text begin (2) exemption from the property tax as provided in section 272.02, subdivision
85; and
new text end

new text begin (3) the historic preservation tax credit under section 290.06, subdivision 34.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance by the governing
body of the city of Fergus Falls with section 645.021.
new text end

Sec. 17.

new text begin [469.343] BUSINESS INCOME TAX EXEMPTION.
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 and section 469.342, the
following terms have the meanings given them.
new text end

new text begin (b) A "qualified business" is a person carrying on a trade or business at a place of
business located within the zone that has entered into a business subsidy agreement, as
defined in section 116J.994, with the city of Fergus Falls before the first day of the taxable
year or the taxes payable year for purposes of the property tax exemption.
new text end

new text begin (c) "Zone" is the tax-free renaissance zone designated under section 469.342.
new text end

new text begin (d) "Zone payroll" is that portion of the payroll factor under section 290.191 that
represents:
new text end

new text begin (1) wages or salaries paid to an individual for services performed in the zone; or
new text end

new text begin (2) wages or salaries paid to individuals working from offices within a zone if their
employment requires them to work outside the zone and the work is incidental to the work
performed by the individual within the zone.
new text end

new text begin (e) "Zone percentage" means the following fraction reduced to a percentage:
new text end

new text begin (1) the numerator of the fraction is: (i) the ratio of the taxpayer's property factor
under section 290.191 located in the zone for the taxable year over the property factor
numerator determined under section 290.191, plus (ii) the ratio of the taxpayer's zone
payroll factor over the payroll factor numerator determined under section 290.191; and
new text end

new text begin (2) the denominator of the fraction is two.
new text end

new text begin When calculating the zone percentage for a business that is part of a unitary business
as defined under section 290.17, subdivision 4, the denominator of the payroll and
property factors is the Minnesota payroll and property of the unitary business as reported
on the combined report under section 290.17, subdivision 4, paragraph (j).
new text end

new text begin Subd. 2. new text end

new text begin Tax exemption. new text end

new text begin (a) A qualified business is exempt from taxation under
sections 290.01, 290.02, the alternative minimum tax under section 290.0921, and
the minimum fee under section 290.0922, on the portion of its income attributable to
operations within the zone, designated under section 469.342.
new text end

new text begin (b) This exemption is determined as follows:
new text end

new text begin (1) for purposes of the individual income tax imposed under sections 290.01 and
290.091, the taxpayer may subtract an amount equal to the total income included in
federal taxable income attributable to operation of a trade or business, multiplied by
the zone percentage;
new text end

new text begin (2) for purposes of the tax imposed under section 290.02, by multiplying its taxable
net income by its zone percentage and subtracting the result in determining taxable income;
new text end

new text begin (3) for purposes of the alternative minimum tax under section 290.0921, by
multiplying its alternative minimum taxable income by its zone percentage and reducing
alternative minimum taxable income by this amount; and
new text end

new text begin (4) for purposes of the minimum fee under section 290.0922, by excluding property
and payroll in the zone from the computations of the fee or by exempting the entity under
section 290.0922, subdivision 2, clause (9).
new text end

new text begin Subd. 3. new text end

new text begin Application period. new text end

new text begin (a) This section applies only to taxable years
beginning during the duration of the tax-free renaissance zone or subzone.
new text end

new text begin (b) For the final three years of the duration of the zone or subzone, the deductions or
exemptions under this section must be multiplied by the following percentages:
new text end

new text begin (1) for taxable years beginning during the third to the last calendar year of the
duration, 75 percent;
new text end

new text begin (2) for taxable years beginning during the second to the last calendar year of the
duration, 50 percent; and
new text end

new text begin (3) for taxable years beginning the last calendar year of the duration limit, 25 percent.
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, 2007.
new text end

Sec. 18.

new text begin [469.344] LIMIT ON TAX REDUCTIONS; APPLICATIONS
REQUIRED.
new text end

new text begin Subdivision 1. new text end

new text begin Businesses must apply. new text end

new text begin To claim a tax credit under section 290.06,
subdivision 34, or an exemption under section 469.343, a business must apply to the city
for a tax benefit certificate. As a condition of its application, the business must agree to
furnish information to the city that is sufficient to verify the eligibility for any credits or
other tax reductions claimed. The total amount of the state tax reductions allowed for the
specified period may not exceed the amount of the tax credit certificates provided by
the city to the business. The city must verify the amount of tax reduction or credits for
which each business is eligible.
new text end

new text begin Subd. 2. new text end

new text begin City limitations. new text end

new text begin (a) The city may provide tax benefit certificates to
businesses that apply and meet the requirements for the tax credit and exemption. The
certificates that the city may provide for the period covered by this section is limited to
the amount specified in this subdivision.
new text end

new text begin (b) The maximum amount of tax credit certificates the city may issue over the
duration of the program is $1,000,000.
new text end

new text begin Subd. 3. new text end

new text begin Appropriation; waivers. new text end

new text begin An amount sufficient to fund any tax reductions
under section 469.343, is appropriated to the commissioner of revenue from the general
fund.
new text end

Sec. 19.

Minnesota Statutes 2006, section 473F.08, is amended by adding a subdivision
to read:

new text begin Subd. 3c. new text end

new text begin Bloomington phase II computation. new text end

new text begin Effective for property taxes payable
in 2009 and thereafter, after the Hennepin County auditor has computed the areawide
portion of the levy for the city of Bloomington pursuant to subdivision 3, clause (a),
the auditor shall annually add a dollar amount to the city of Bloomington's areawide
portion of the levy equal to the amount which has been certified by the auditor as the
amount of the levy generated by the property included in phase II of the Mall of America
project. The total areawide portion of the levy for the city of Bloomington, including the
additional amount related to phase II of the Mall of America project certified pursuant to
this subdivision shall be certified by the Hennepin County auditor to the administrative
auditor pursuant to subdivision 5. The Hennepin County auditor shall distribute to the
city of Bloomington the additional areawide portion of the levy computed pursuant to
this subdivision at the same time that payments are made to the other counties pursuant
to subdivision 7a. The additional distribution to the city of Bloomington under this
subdivision terminates effective for the first taxes payable year after the cost of the parking
facility for the phase II of the Mall of America project has been paid.
new text end

Sec. 20.

Minnesota Statutes 2006, section 473F.08, subdivision 5, is amended to read:

Subd. 5.

Areawide tax rate.

On or before August 25 of each year, the county
auditor shall certify to the administrative auditor that portion of the levy of each
governmental unit determined under subdivisions 3, clause (a), 3a, deleted text begin and deleted text end 3b new text begin , and 3c new text end . The
administrative auditor shall then determine the areawide tax rate sufficient to yield an
amount equal to the sum of such levies from the areawide net tax capacity. On or before
September 1 of each year, the administrative auditor shall certify the areawide tax rate to
each of the county auditors.

Sec. 21.

Laws 1995, chapter 264, article 5, section 44, subdivision 4, as amended by
Laws 1996, chapter 471, article 7, section 21, and Laws 1997, chapter 231, article 10,
section 12, is amended to read:

Subd. 4.

Authority.

For housing replacement projects in the city of Crystal,
"authority" means the Crystal economic development authority. For housing replacement
projects in the city of Fridley, "authority" means the housing and redevelopment authority
in and for the city of Fridley or a successor in interest. For housing replacement
projects in the city of Minneapolis, "authority" means the Minneapolis community
development agency new text begin or its successors and assigns new text end . For housing replacement projects
in the city of St. Paul, "authority" means the St. Paul housing and redevelopment
authority. For housing replacement projects in the city of Duluth, "authority" means the
Duluth economic development authority. For housing replacement projects in the city of
Richfield, "authority" is the authority as defined in Minnesota Statutes, section 469.174,
subdivision 2, that is designated by the governing body of the city of Richfield. For
housing replacement projects in the city of Columbia Heights, "authority" is the authority
as defined in Minnesota Statutes, section 469.174, subdivision 2, that is designated by the
governing body of the city of Columbia Heights.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and upon compliance by the governing body of the city of Minneapolis with Minnesota
Statutes, section 645.021, subdivision 3.
new text end

Sec. 22.

Laws 1995, chapter 264, article 5, section 45, subdivision 1, as amended by
Laws 1996, chapter 471, article 7, section 22, and Laws 1997, chapter 231, article 10,
section 13, and Laws 2002, chapter 377, article 7, section 6, is amended to read:

Subdivision 1.

Creation of projects.

(a) An authority may create a housing
replacement project under sections 44 to 47, as provided in this section.

(b) For the cities of Crystal, Fridley, Richfield, and Columbia Heights, the authority
may designate up to 50 parcels in the city to be included in a housing replacement
district. No more than ten parcels may be included in year one of the district, with up
to ten additional parcels added to the district in each of the following nine years. For
the cities of deleted text begin Minneapolis, deleted text end St. Paul deleted text begin , deleted text end and Duluth, each authority may designate not more
than 200 parcels in the city to be included in a housing replacement district over the life
of the district. new text begin For the city of Minneapolis, the authority may designate not more than
400 parcels in the city to be included in a housing replacement district over the life of
the district. new text end The only parcels that may be included in a district are (1) vacant sites, (2)
parcels containing vacant houses, or (3) parcels containing houses that are structurally
substandard, as defined in Minnesota Statutes, section 469.174, subdivision 10.

(c) The city in which the authority is located must pay at least 25 percent of the
housing replacement project costs from its general fund, a property tax levy, or other
unrestricted money, not including tax increments.

(d) The housing replacement district plan must have as its sole object the acquisition
of parcels for the purpose of preparing the site to be sold for market rate housing. As
used in this section, "market rate housing" means housing that has a market value that
does not exceed 150 percent of the average market value of single-family housing in that
municipality.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and upon compliance by the governing body of the city of Minneapolis with Minnesota
Statutes, section 645.021, subdivision 3.
new text end

Sec. 23.

Laws 1996, chapter 464, article 1, section 8, subdivision 3, is amended to read:

Subd. 3.

Special rules.

(a) Tax increment may not be captured by the port authority
from the tax increment financing district on the met center property after December 31 of
the year in which tax increments, assessments, and other revenues from the district and
the accumulated increments from the district consisting of the Kelly property exceed
the permitted expenditures under paragraph (d). The provisions of this paragraph apply
beginning with the first calendar year after the conditions precedent in subdivision 2
are satisfied and construction has begun on improvements on the met center site. No
increments may, in any event, be collected from the tax increment financing district on the
met center site after December 31, deleted text begin 2018 deleted text end new text begin 2025 new text end .

(b) The provisions of Minnesota Statutes, section 273.1399, do not apply to the tax
increment financing district on the met center property.

(c) The governing body of the city of Bloomington must elect the method of
computation of tax increment specified in Minnesota Statutes, section 469.177, subdivision
3, paragraph (b), in the tax increment financing district on the met center property.

(d) Tax increments, assessments, and other revenues derived from the tax increment
district on the met center property and any accumulated tax increments from the tax
increment financing district on the Kelly property may be used to finance only the
following:

(1) amounts that the city or port authority must pay to reimburse or otherwise
pay the developer for public improvements because of counted value resulting from
investment in property at the met center site under section 9.2(05) of the restated contract
for purchase and private redevelopment of land, by and among the city of Bloomington,
the port authority of the city of Bloomington, and the Mall of America Company, dated
May 31, 1988;

(2) interest and other financing costs the city or port authority pays or incurs on, but
that are not included in, the amounts under clause (1);

(3) interest and principal on qualified bonds to the extent that other available
revenues and increments from other sources that are pledged to pay the bonds are
insufficient. In determining whether other available revenues or increments are
insufficient, spending of these revenues for only the following items reduce available
revenues (all other revenues are deemed to be available):

(A) payment of debt service on bonds and obligations issued and sold before March
31, 1996;

(B) payments under binding written contracts in effect on March 31, 1996, to which
the increments or other revenues are pledged; and

(C) reasonable administrative expenses, subject to the limits under Minnesota
Statutes, section 469.176, subdivision 3; and

(4) reasonable administrative expenses as provided under Minnesota Statutes,
sections 469.174 to 469.178. The amounts permitted under clauses (1) and (2) must be
used to determine the limit or administrative expenses under Minnesota Statutes, section
469.176, subdivision 3.

For the purposes of paragraph (d), "qualified bonds" means:

(i) bonds or other obligations issued and sold before March 31, 1996, to which
increments from the tax increment financing district consisting of the Kelly property are
pledged; and

(ii) bonds or other obligations that refund bonds described in (i), if the refunding
bonds do not increase the present value of the debt service payments secured by the
increments and are secured by a pledge of the same increments and other revenues as
secured by the bonds to be refunded.

For purposes of determining the qualifying ratio percent for counted value under
the formula in section 9.2(05) of the restated contract under clause (1), investment in
property at the met center site is deemed to be after or in addition to all the investment at
other sites covered by the restated contract.

Sec. 24.

Laws 2005, First Special Session chapter 3, article 10, section 23, is amended
to read:

Sec. 23. GRANTS TO QUALIFYING BUSINESSES.

$750,000 is appropriated in fiscal year 2006 from the general fund to the
commissioner of employment and economic development to be distributed to the
foreign trade zone authority to provide grants to qualified businesses as determined
by the authority, subject to Minnesota Statutes, sections 116J.993 to 116J.995, to
provide incentives for the businesses to locate their operations in an international
economic development zone. new text begin Of this appropriation, up to $250,000 may be used by the
commissioner for a study to determine the economic viability of business plans for
international economic development zones. new text end If the money is not distributed during fiscal
year 2006, it remains available for distribution under this section during fiscal year 2007.

new text begin EFFECTIVE DATE. new text end

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

Sec. 25. new text begin CITY OF BLOOMINGTON; TAX INCREMENT FINANCING
DISTRICT; PROJECT REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Addition of parcels to Tax Increment District No. 1-G.
new text end

new text begin Notwithstanding the provisions of Minnesota Statutes, section 469.175, subdivision 4,
or any other law to the contrary, the governing bodies of the Port Authority of the city
of Bloomington and the city of Bloomington may elect to eliminate certain real property
from Tax Increment District No. 1-C within Industrial Development District No. 1 Airport
South in the city of Bloomington, Minnesota, and expand the boundaries of Tax Increment
District No. 1-G to include real property, which is described as follows:
new text end

new text begin (1) PARCEL A: Outlot A, MALL OF AMERICA 5TH ADDITION, according to
the recorded plat thereof, Hennepin County, Minnesota;
new text end

new text begin (2) PARCEL B: Lots 1 and 2, Block 1, MALL OF AMERICA 6TH ADDITION,
according to the recorded plat thereof, Hennepin County, Minnesota;
new text end

new text begin (3) PARCEL C: That part of Lindau Lane lying westerly of 24th Avenue South and
lying easterly of State Highway No. 77;
new text end

new text begin (4) PARCEL D: Those parts of Lots 1, 2, and 3, Block 1, MALL OF AMERICA
3RD ADDITION, according to the recorded plat thereof, Hennepin County, Minnesota,
which lie northerly of a line described as commencing at the most westerly northwest
corner of said Lot 1; thence on an assumed bearing of South 4 degrees 10 minutes 55
seconds West, along the west line of said Lot 1, a distance of 58.60 feet to the point of
beginning of the line to be described; thence South 89 degrees 59 minutes 29 seconds East
a distance of 205.48 feet; thence South 62 degrees 16 minutes 23 seconds East a distance
of 169.47 feet; thence North 445 degrees 01 minute 28 seconds East a distance of 249.76
feet; thence South 89 degrees 59 minutes 39 seconds East a distance of 88.47 feet; thence
South 45 degrees 09 minutes 10 seconds East a distance of 225.13 feet; thence South 89
degrees 59 minutes 52 seconds East a distance of 303.62 feet; thence South 0 degrees 00
minutes 08 seconds West a distance of 10.00 feet; thence North 89 degrees 57 minutes
47 seconds East a distance of 55.90 feet; thence North 0 degrees 06 minutes 52 seconds
West a distance of 10.01 feet; thence North 89 degrees 59 minutes 04 seconds East a
distance of 332.04 feet; thence North 44 degrees 57 minutes 59 seconds East a distance of
251.28 feet; thence South 45 degrees 05 minutes 41 seconds East a distance of 267.55
feet; thence North 73 degrees 11 minutes 28 seconds East a distance of 145.63 feet; thence
South 89 degrees 59 minutes 38 seconds East a distance of 217.21 feet to the east line of
said Lot 1 and said line there terminating;
new text end

new text begin (5) PARCEL E: That part of Lot 1, Block 1, MALL OF AMERICA 3RD
ADDITION, according to the recorded plat thereof, Hennepin County, Minnesota,
described as commencing at the most southerly southwest corner of said Lot 1; thence
on an assumed bearing of South 88 degrees 03 minutes 50 seconds East, along the south
line of said Lot 1, a distance of 847.28 feet to the point of beginning of the parcel to be
described; thence North 0 degrees 01 minutes 05 seconds West a distance of 307.69 feet;
thence North 89 degrees 59 minutes 32 seconds East a distance of 163.77 feet; thence
North 0 degrees 00 minutes 36 seconds East a distance of 10.17 feet; thence South 89
degrees 59 minutes 24 seconds East a distance 55.93 feet; thence South 0 degrees 02
minutes 42 seconds West a distance of 10.21 feet; thence South 89 degrees 59 minutes 24
seconds East a distance of 242.25 feet; thence South 0 degrees 00 minutes 36 seconds
West a distance of 54.87 feet; thence South 62 degrees 14 minutes 23 seconds East a
distance of 22.55 feet; thence South 45 degrees 05 minutes 26 seconds East a distance
of 263.33 feet; thence South 0 degrees 12 minutes 39 seconds East a distance of 62.13
feet to said south line of Lot 1; thence westerly along said south line of Lot 1, a distance
of 668.64 feet to the point of beginning;
new text end

new text begin (6) PARCEL F: That part of Lot 1, Block 1, MALL OF AMERICA 3RD
ADDITION, according to the recorded plat thereof, Hennepin County, Minnesota,
described as beginning at the most westerly southwest corner of said Lot 1; thence on an
assumed bearing of North 4 degrees 10 minutes 55 seconds East, along the west line of
said Lot 1, a distance of 490.00 feet; thence South 89 degrees 59 minutes 26 seconds East
a distance of 69.49 feet; thence South 0 degrees 00 minutes 34 seconds West a distance of
488.70 feet; thence North 89 degrees 59 minutes 26 seconds West a distance of 105.14
feet to the point of beginning;
new text end

new text begin (7) PARCEL G: That part of Lot 1, Block 1, MALL OF AMERICA 3RD
ADDITION, according to the recorded plat thereof, Hennepin County, Minnesota,
described as commencing at the most westerly southwest corner of said Lot 1; thence on
an assumed bearing of North 4 degrees 10 minutes 55 seconds East, along the west line
of said Lot 1, a distance of 873.70 feet; thence South 89 degrees 58 minutes 59 seconds
East a distance of 273.87 feet to the point of beginning of the parcel to be described;
thence continuing South 89 degrees 58 minutes 59 seconds East a distance of 130.00 feet;
thence South 0 degrees 01 minute 01 second West a distance of 216.53 feet; thence South
85 degrees 23 minutes 04 seconds East a distance of 1.70 feet; thence South 0 degrees
01 minute 01 second West a distance of 87.63 feet; thence South 83 degrees 20 minutes
10 seconds West a distance of 1.68 feet; thence South 0 degrees 01 minute 49 seconds
East a distance of 216.46 feet; thence North 89 degrees 58 minutes 59 seconds West a
distance of 130.21 feet; thence North 0 degrees 01 minute 01 second East a distance of
520.95 feet to the point of beginning, which lies above an elevation of 894.2 feet, Mean
Sea Level Datum NGVD 1929 adjustment;
new text end

new text begin (8) PARCEL H: That part of Lot 1, Block 1, MALL OF AMERICA 3RD
ADDITION, according to the recorded plat thereof, Hennepin County, Minnesota,
described as commencing at the most westerly southwest corner of said Lot 1; thence on
an assumed bearing of North 4 degrees 10 minutes 55 seconds East, along the west line of
said Lot 1, a distance of 873.70 feet; thence South 89 degrees 58 minutes 59 seconds East a
distance of 403.87 feet; thence North 89 degrees 56 minutes 58 seconds East a distance of
61.26 feet to the point of beginning of the parcel to be described; thence South 89 degrees
56 minutes 58 seconds West a distance of 61.26 feet; thence South 0 degrees 01 minute 01
second West a distance of 216.53 feet; thence South 85 degrees 23 minutes 04 seconds
East a distance of 1.70 feet; thence South 0 degrees 01 minute 01 second West a distance
of 87.63 feet; thence South 83 degrees 20 minutes 10 seconds West a distance of 1.68 feet;
thence South 0 degrees 01 minute 49 seconds East a distance of 216.46 feet; thence North
89 degrees 56 minutes 58 seconds East a distance of 61.15 feet to a line bearing South 0
degrees 00 minutes 24 seconds West from the point of beginning; thence North 0 degrees
00 minutes 24 seconds East a distance of 520.95 feet to the point of beginning;
new text end

new text begin (9) PARCEL I: That part of Lot 1, Block 1, MALL OF AMERICA 3RD ADDITION,
according to the recorded plat thereof, Hennepin County, Minnesota, described as
commencing at the most westerly southwest corner of said Lot 1; thence on an assumed
bearing of North 4 degrees 10 minutes 55 seconds East, along the west line of said Lot 1, a
distance of 873.70 feet; thence South 89 degrees 58 minutes 59 seconds East a distance
of 403.87 feet; thence North 89 degrees 56 minutes 58 seconds East a distance of 61.26
feet; thence South 0 degrees 00 minutes 24 seconds West a distance of 5.54 feet to the
point of beginning of the parcel to be described; thence continuing South 0 degrees 00
minutes 24 seconds West a distance of 300.00 feet; thence South 89 degrees 59 minutes 36
seconds East a distance of 123.79 feet; thence North 0 degrees 00 minutes 24 seconds East
a distance of 299.98 feet; thence North 89 degrees 58 minutes 55 seconds West a distance
of 123.79 feet to the point of beginning, which lies above an elevation of 877.6 feet, Mean
Sea Level Datum NGVD 1929 adjustment;
new text end

new text begin (10) PARCEL J: That part of Lot 4, Block 1, MALL OF AMERICA 3RD
ADDITION, according to the recorded plat thereof, Hennepin County, Minnesota, which
lies above an elevation of 878.0 feet, Mean Sea Level Datum NGVD 1929 adjustment; and
new text end

new text begin (11) PARCEL K: That part of Lot 1, Block 1, MALL OF AMERICA 3RD
ADDITION, according to the recorded plat thereof, Hennepin County, Minnesota,
described as beginning at the most southerly southeast corner of said Lot 1; thence on an
assumed bearing of North 86 degrees 49 minutes 30 seconds West, along the south line of
said Lot 1, a distance of 117.87 feet; thence North 0 degrees 01 minute 27 seconds East a
distance of 293.98 feet; thence North 89 degrees 59 minutes 41 seconds East a distance of
213.38 feet to the east line of said Lot 1; thence southerly and westerly along said east and
south lines of Lot 1, a distance of 357.03 feet to the point of beginning.
new text end

new text begin Subd. 2. new text end

new text begin Original tax capacity of Tax Increment District No. 1-G. new text end

new text begin Upon
inclusion of the real property described above in the Tax Increment District No. 1-G,
the Hennepin County auditor must increase the original tax capacity of Tax Increment
District No. 1-G by $10,490.
new text end

new text begin Subd. 3. new text end

new text begin Use of increments. new text end

new text begin All tax increments from Tax Increment District No.
1-G must be used for infrastructure costs.
new text end

new text begin Subd. 4. new text end

new text begin Public hearing on district modification. new text end

new text begin When the governing bodies of
the port authority or the city elect to exercise the authority provided in subdivision 1 to
modify the districts, they must conduct a public hearing after published notice on the
issue, with the meeting beginning between 6:00 p.m. and 7:00 p.m. on a weeknight.
Modification of the district must be approved by a unanimous vote of all members of the
governing body who are present at the meeting.
new text end

new text begin Subd. 5. new text end

new text begin Construction of Mall of America phase II. new text end

new text begin The governing body of the
city of Bloomington and the Bloomington port authority, as a condition of providing tax
increments for infrastructure costs of the Mall of America phase II, must enter into an
agreement with the developers of the project that ensures that the facility be, to the greatest
extent practicable, constructed of American-made steel.
new text end

new text begin Subd. 6. new text end

new text begin No strikes; lockouts. new text end

new text begin The city or the port authority, together with the
developer of the project, must negotiate a public sector project labor agreement or other
agreement to prevent strikes and lockouts that would halt, delay, or impede construction
of the facility.
new text end

new text begin Subd. 7. new text end

new text begin No work stoppages; hospitality operations. new text end

new text begin (a) As a result of tax
increment financing the city of Bloomington has a financial or proprietary interest at risk
in the Mall of American phase II development project, which is anticipated to include
hospitality operations. This subdivision is intended to protect the city's proprietary and
financial interests by requiring agreements that prevent disruption of hospitality operations
due to work stoppages.
new text end

new text begin (b) For purposes of this subdivision, the following terms have the meanings given
them:
new text end

new text begin (1) "contract" means:
new text end

new text begin (i) any development agreement, contract, lease, license, or other agreement pursuant
to which the developer, contractor, or subcontractors receives financing for the project
from the city directly or indirectly, including tax increment financing for infrastructure; or
new text end

new text begin (ii) any subcontract, sublease, sublicense or other transfer or assignment of any
right, title, or interest received from the city pursuant to any such development agreement,
contract, lease, or license; and
new text end

new text begin (2) "hospitality operations" means hotels or motels providing lodging and other guest
accommodations and restaurants, bars, clubs, cafeterias, food, and beverage operations.
new text end

new text begin (c) To protect its proprietary and financial interests, the city of Bloomington shall
require that each and every contractor and employer of employees hired to staff hospitality
operations be or become signatory to valid collective bargaining agreements or other
contracts under United States Code, title 29, section 185, with any labor organization
seeking to represent hospitality workers employed in the contractor's and/or employer's
hospitality operations in the Mall of America phase II development project as a condition
precedent to its contract with the city of Bloomington. Each collective bargaining
agreement or contract must contain a provision prohibiting the labor organization and its
members, and in the case of a collective bargaining agreement, all employees covered
by the agreement, from engaging in any picketing, work stoppages, boycotts or any
other economic interference with the hospitality operations of contractor or any persons
under contract to it for the duration of the time required for the repayment of the city's
indebtedness incurred to finance the acquisition or development of such project, or for
the duration of contractor's contract or contracts with the city for the operation of such
development project, whichever period of time is more extensive. Each agreement must
provide that during this time period, all disputes relating to employment conditions or the
negotiation thereof shall be submitted to final and binding arbitration. Each and every
contractor and employer of employees hired to staff hospitality operations shall require
that any work under its contract or contracts with the city to be done by the contractor's
or employer's contractors, subcontractors, tenants, or subtenants shall be done under
collective bargaining agreements or other contracts under United States Code, title 29,
section 185, containing the same provisions as specified above.
new text end

new text begin Subd. 8. new text end

new text begin Living wage. new text end

new text begin Any agreement to provide financial assistance to phase II
of the Mall of America project must include a provision that requires payment of wages
that meet the requirements of section 469.310, subdivision 11, paragraph (g), to persons
employed on a full-time basis at the facility.
new text end

new text begin Subd. 9. new text end

new text begin Affordable access. new text end

new text begin To the extent determined by the governing body of
the city or the port authority, any agreement to provide financial assistance to phase II
of the Mall of America project must provide for affordable access to the amusement
areas of the facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance with Minnesota
Statutes, section 645.021, subdivision 3.
new text end

Sec. 26. new text begin CITY OF BLOOMINGTON; LOCAL TAXING AUTHORITY.
new text end

new text begin Subdivision 1. new text end

new text begin Additional taxes authorized; use of proceeds. new text end

new text begin Notwithstanding
Minnesota Statutes, section 477A.016, or any other law, ordinance, or charter provision
to the contrary, the governing body of the city of Bloomington may impose any or all of
the taxes described in this section. The proceeds of any taxes imposed under this section,
less refunds and the cost of collection, must be used to provide financing for a parking
facility for the Mall of America phase II.
new text end

new text begin Subd. 2. new text end

new text begin Sales tax. new text end

new text begin The city may impose by ordinance a sales and use tax of up
to one percent within a special taxing district that includes the geographic area included
within Tax Increment Districts No. 1-C and No. 1-G in the city of Bloomington. The
provisions of Minnesota Statutes, section 297A.99, except for subdivisions 2 and 3,
govern the imposition, administration, collection, and enforcement of the tax authorized
in this subdivision.
new text end

new text begin Subd. 3. new text end

new text begin Lodging tax. new text end

new text begin The city may impose, by ordinance, a tax of up to one percent
on the gross receipts subject to the lodging tax under Minnesota Statutes, section 469.190.
This tax is in addition to any tax imposed under Minnesota Statutes, section 469.190.
new text end

new text begin Subd. 4. new text end

new text begin Admissions and recreation tax. new text end

new text begin The city may impose, by ordinance, a
tax of up to one percent on admissions to entertainment and recreational facilities and
rental of recreation equipment at sites within Tax Increment Districts No. 1-C and No.
1-G in the city of Bloomington.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Bloomington with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 27. new text begin BURNSVILLE; NORTHWEST QUADRANT TAX INCREMENT
FINANCING.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the words and
phrases defined have the meanings given them in this subdivision.
new text end

new text begin (b) "City" means the city of Burnsville.
new text end

new text begin (c) "Project area" means the area in the city bounded on the south, southeast, and
southwest by the southerly right-of-way line of Minnesota Trunk Highway 13; on the east
by the easterly right-of-way line of Interstate Highway I-35W; on the north and northwest
by the Minnesota River; and on the west by the westerly corporate limits of the city,
together with a single parcel to the east of said Interstate Highway I-35W described as
the North 1370 feet of the West 1075 feet of the NW Quarter of Section 34 Township 27
Range 24 in the city of Burnsville, Dakota County, except the North 50 feet thereof;
provided that the project area includes the rights-of-way for all present and future highway
interchanges abutting the area described in this paragraph.
new text end

new text begin (d) "Soil deficiency district" means a type of tax increment financing district
consisting of a portion of the project area in which the city finds by resolution that the
following conditions exist:
new text end

new text begin (1) unusual terrain or soil deficiencies for 80 percent of the acreage in the district
require substantial filling, grading, or other physical preparation for use; and
new text end

new text begin (2) the estimated cost of the physical preparation under clause (1), but excluding
costs directly related to roads as defined in Minnesota Statutes, section 160.01, and
local improvements as described in Minnesota Statutes, sections 429.021, subdivision 1,
clauses (1) to (7), (11), and (12), and 430.01, exceeds the fair market value of the land
before completion of the preparation.
new text end

new text begin Subd. 2. new text end

new text begin Special rules. new text end

new text begin (a) If the city elects, upon the adoption of the tax increment
financing plan for a district, the rules under this section apply to a redevelopment district,
renewal and renovation district, soil condition district, or a soil deficiency district
established by the city or a development authority of the city in the project area.
new text end

new text begin (b) The five-year rule under Minnesota Statutes, section 469.1763, subdivisions 3
and 4, is extended to ten years for any district.
new text end

new text begin (c) The limitations on spending tax increment outside of the district under Minnesota
Statutes, section 469.1763, subdivision 2, do not apply, but increments may only be
expended on improvements or activities within the project area.
new text end

new text begin (d) For a soil deficiency district:
new text end

new text begin (1) increments may be collected through 20 years after the receipt by the authority of
the first increment from the district; and
new text end

new text begin (2) except as otherwise provided in this subdivision, increments may be used only to:
new text end

new text begin (i) acquire parcels on which the improvements described in clause (ii) will occur;
new text end

new text begin (ii) pay for the cost of correcting the unusual terrain or soil deficiencies and the
additional cost of installing public improvements directly caused by the deficiencies; and
new text end

new text begin (iii) pay for the administrative expenses of the authority allocable to the district.
new text end

new text begin (e) Increments spent for any infrastructure costs, whether inside a district or outside
a district but within the project area, are deemed to satisfy the requirements of paragraph
(d) and Minnesota Statutes, section 469.176, subdivisions 4b and 4j.
new text end

new text begin (f) The authority to approve tax increment financing plans to establish tax increment
financing districts under this section expires on December 31, 2017.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance with Minnesota
Statutes, section 645.021, subdivision 3.
new text end

Sec. 28. new text begin COLUMBIA HEIGHTS; TAX INCREMENT FINANCING DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) "Housing revitalization district" means a single tax
increment financing district established by the city of Columbia Heights and the Columbia
Heights Economic Development Authority consisting of all the property included in the
boundaries of tax increment financing district A3/C7.
new text end

new text begin (b) "Home rehabilitation program" means a program to provide grants or loans to
finance costs of rehabilitation of single family and duplex dwellings located anywhere
in the city that are:
new text end

new text begin (1) classified as homestead under Minnesota Statutes, chapter 273; and
new text end

new text begin (2) occupied by persons or families whose income is less than or equal to the income
requirements for qualified mortgage revenue bond projects under section 143(f) of the
Internal Revenue Code.
new text end

new text begin (c) "Home replacement program" means a program to pay eligible replacement
costs associated with removal of substandard housing located anywhere in the city and
the development of replacement housing.
new text end

new text begin (d) "Eligible replacement costs" means acquisition of substandard housing through
voluntary purchase from willing sellers, relocation expenses, demolition, and site
improvements related to construction of replacement housing.
new text end

new text begin (e) "Replacement housing" means residential developments containing fewer than
five units.
new text end

new text begin (f) "Substandard housing" means residential property containing fewer than
five units, whether or not classified as homestead, that is characterized by inadequate
maintenance, dilapidation, physical damage, unsanitary conditions, or abandonment.
new text end

new text begin (g) "Downtown dump remediation" means removal or remediation, as those terms
are defined in Minnesota Statutes, section 469.174, subdivision 18, of the property within
the housing revitalization district described as follows: the South 180 feet of the North
330 feet of Block 4, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills,
except the East 165 feet thereof, according to the recorded plat thereof, and situated in
Anoka County, Minnesota; and Block 4, Walton's Rearrangement of Lots 33 and 34, Block
6, Reservoir Hills, excepting therefrom however, the two following described tracts: Tract
1, the North 330 feet thereof; Tract 2, commencing at the southwest corner of Block 4,
Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills; thence northerly
along the west line of said Block 4, 100 feet; thence easterly parallel with the south line of
said Block 4, 183 feet; thence southerly parallel with the west line of said Block 4, 100
feet to a point within said south boundary line; thence westerly along the south line of
said Block 4, 183 feet to the point of beginning, according to the plat thereof on file or
of record in the office of the County Recorder, Anoka County, Minnesota; and that part
of Block numbered 4, of Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir
Hills, described as follows: commencing at the southwest corner of Block 4, Walton's
Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills; thence northerly along the
west line of said Block 4, 100 feet; thence easterly parallel with the south line of said
Block 4, 183 feet; thence southerly parallel with the west line of said Block 4, 100 feet to a
point within said south boundary line; thence westerly along the south line of said Block
4, 183 feet to the point of beginning, Anoka County, Minnesota.
new text end

new text begin Subd. 2. new text end

new text begin Establishment of housing revitalization district. new text end

new text begin The city and authority
may establish the housing revitalization district notwithstanding the inclusion of that
property in tax increment financing district A3/C7 at the time of approval of the tax
increment financing plan. To establish the housing revitalization district, the city and
authority shall adopt a tax increment financing plan and otherwise comply with the
requirements of Minnesota Statutes, section 469.175, except that the determinations set
forth in Minnesota Statutes, section 469.175, subdivision 3, paragraph (b), clauses (1)
and (2), item (ii), are not required.
new text end

new text begin Subd. 3. new text end

new text begin Special rules. new text end

new text begin (a) The housing revitalization district is subject to the
provisions of Minnesota Statutes, sections 469.174 to 469.1799, except as otherwise
provided in this section.
new text end

new text begin (b) The original net tax capacity of the housing revitalization district is the same
as the original net tax capacity of the A3/C7 district as of the date of approval of the tax
increment financing plan for the housing revitalization district, subject thereafter to all
adjustments pursuant to Minnesota Statutes, section 469.177, subdivisions 1 and 7, but not
subject to the adjustments under Minnesota Statutes, section 469.177, subdivision 4.
new text end

new text begin (c) For the purposes of Minnesota Statutes, section 469.177, subdivision 1a, the
original local tax rate is the rate in effect for taxes payable in 2010.
new text end

new text begin (d) The city may elect the method of computation under Minnesota Statutes, section
469.177, subdivision 3, paragraph (a) or (b), and all other provisions of Minnesota
Statutes, section 469.177, subdivision 3, apply, except that the first calculation and
payment of tax increment from the housing revitalization district shall be based on the
net capacity assessed in 2009 for taxes payable in 2010.
new text end

new text begin (e) Increments from the housing revitalization district may be expended only to pay
or reimburse the costs of a home rehabilitation program, a home replacement program,
and downtown dump remediation, whether such costs are incurred before or after the
establishment of the district.
new text end

new text begin (f) Minnesota Statutes, section 469.1763, does not apply to the housing revitalization
district.
new text end

new text begin (g) No tax increment from the housing revitalization district shall be paid to the city
or authority after 25 years from the date of receipt by the authority of the first increment in
accordance with paragraph (d).
new text end

new text begin (h) Minnesota Statutes, section 469.176, subdivision 6, does not apply to the housing
revitalization district.
new text end

new text begin (i) If tax increments from the housing revitalization district are expended to pay
downtown dump remediation costs, then notwithstanding the city of Columbia Heights
ordinance 1490, city code chapter 9, land use article 1, zoning and land development
section 9.110, the only permitted uses on parcels where tax increments are spent are those
set forth in the following provisions of that section: subsection (F)(2)(a), (e), (i), (n), (q),
(s), (t), but only if the occupant has no liquor license other than a class B license, (u), (y),
(z), (aa), unless it is a consignment sale facility as described in section 9.107, subsection
(c)(12), (bb), or (ee), and permitted accessory uses set forth in subsection (F)(4).
new text end

new text begin Subd. 4. new text end

new text begin Expiration. new text end

new text begin The authority to approve a tax increment financing plan to
establish the housing revitalization district under this section expires on December 31,
2008.
new text end

new text begin Subd. 5. new text end

new text begin Applicability of other laws. new text end

new text begin (a) References in Minnesota Statutes to
tax increment financing districts created and tax increment generated under Minnesota
Statutes, sections 469.174 to 469.1799, include the housing revitalization district subject
to this section.
new text end

new text begin (b) For the purposes of Minnesota Statutes, section 469.1782, this section does not
extend the duration of an existing district or allow establishment of a new district with a
longer duration limit than that permitted by general law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance by the city of
Columbia Heights with Minnesota Statutes, section 645.021.
new text end

Sec. 29. new text begin TAX INCREMENT FINANCING; CITY OF DAYTON.
new text end

new text begin Subdivision 1. new text end

new text begin Authority. new text end

new text begin The city of Dayton may establish an economic
development tax increment financing district under the authority provided in this
section. The city may include area with the jurisdiction of the town of Hassan to the
extent authorized by a joint powers agreement with the town. This district must be
established within the area defined in subdivision 2 and is subject to the special rules
under subdivision 3.
new text end

new text begin Subd. 2. new text end

new text begin Defined area. new text end

new text begin The district must be established within the area defined as
the southwestern corner of the city of Dayton bounded by Brockton Lane (also known
as Hennepin County Road 101) to the west, 109th Avenue North to the south, Hennepin
County Highway 81 diagonally to the north and east from 109th Avenue northwesterly
to a line 120 feet east of the extension of York Avenue northerly to a line 120 feet north
of Gay Wood Drive and then west to Brockton Lane (Hennepin County Road 101). The
area within the jurisdiction of the town of Hassan that may be included in the district is
limited to and defined as all the land within the town of Hassan north of 109th Avenue
North, east of Fletcher Lane (also know as Hennepin County Road 116), south of I-94
and west of Brockton Lane (Hennepin County Road 101).
new text end

new text begin Subd. 3. new text end

new text begin Special rules. new text end

new text begin The district is subject to the rules under Minnesota Statutes,
sections 469.174 to 469.1799, with the following exceptions:
new text end

new text begin (1) the city need not make the findings required by Minnesota Statutes, section
469.174, subdivision 12;
new text end

new text begin (2) the restrictions on the expenditures of increments under Minnesota Statutes,
section 469.176, subdivision 4c, do not apply;
new text end

new text begin (3) the provisions of Minnesota Statutes, section 469.176, subdivision 5, do not
apply to the district;
new text end

new text begin (4) the provisions of section 469.176, subdivision 7, do not apply to the district;
new text end

new text begin (5) the district's tax increments must be used only to pay for the costs related to
the Brockton interchange project, including land acquisition, public infrastructure, and
administrative costs, whether paid directly or to reimburse for payment of those costs or to
repay bonds or other obligations issued and sold to pay those costs initially; and
new text end

new text begin (6) for purposes of any joint powers agreement authorized by this section, the town
of Hassan is deemed to have all the powers of an authority, as defined in Minnesota
Statutes, section 469.174, subdivision 2.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance by the governing
body of the city of Dayton and by the board of supervisors of the town of Hassan with
Minnesota Statutes, section 645.021.
new text end

Sec. 30. new text begin CITY OF EAGAN; TAX INCREMENT FINANCING DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization; location. new text end

new text begin The city of Eagan may establish within
the corporate boundaries of the city one or more economic development tax increment
financing districts subject to the special rules under subdivision 2. The districts must be
located within the "area" defined for purposes of this section as Section 13, Township
27, Range 23, Dakota County, Minnesota.
new text end

new text begin Subd. 2. new text end

new text begin Special rules. new text end

new text begin (a) If the city elects upon adoption of the tax increment
financing plan for the district, the rules under this subdivision apply to the district.
new text end

new text begin (b) The limitations in Minnesota Statutes, section 469.176, subdivision 4c, on
spending increment for developments more than 15 percent of the square footage of which
is used for purposes other than those listed in that subdivision, do not apply.
new text end

new text begin (c) Increments may be expended on surface parking, sanitary sewer, storm sewer,
water, and street improvements inside and outside the area whether or not included in a tax
increment financing district, and without regard to any limitations in Minnesota Statutes,
section 469.1763, subdivision 2, if the improvements are related to development within
the area and on administrative expenses.
new text end

new text begin Subd. 3. new text end

new text begin Expiration of authority. new text end

new text begin The authority to approve tax increment financing
plans to establish tax increment financing districts under this section expires on December
31, 2008.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance by the city of
Eagan with Minnesota Statutes, section 645.021.
new text end

Sec. 31. new text begin CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX
INCREMENT FINANCING DISTRICTS.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization. new text end

new text begin Notwithstanding the mileage limitation in Minnesota
Statutes, section 469.174, subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco
are deemed to be small cities for purposes of Minnesota Statutes, section 469.174 to
469.1799, as long as they do not exceed the population limit in that section.
new text end

new text begin Subd. 2. new text end

new text begin Local approval. new text end

new text begin This section is effective for each of the cities of Elgin,
Eyota, Byron, and Oronoco upon approval of that city's governing body and compliance
with Minnesota Statutes, section 645.021, subdivisions 2 and 3.
new text end

Sec. 32. new text begin CITY OF FARIBAULT; TAX INCREMENT FINANCING
EXPENDITURES.
new text end

new text begin Notwithstanding the provisions of Minnesota Statutes, section 469.1764, or any
other law, the city of Faribault is authorized to expend revenues derived from the city of
Faribault's Original 1981 Tax Increment District (1 West, 2 North, 3 Central, and 4 East)
for the costs of sidewalk, streetscape (surface treatment and lighting), water, sanitary
sewer, and storm sewer utility improvements, and parking improvement related expenses
in the city of Faribault's downtown improvement district, an area defined and bounded as
follows: beginning at the corner of the intersection of the Western Railroad Properties
Inc. (formerly Chicago, Rock Island, and Pacific Railroad Company) railroad right of way
and West Division Street; from such intersection travel on West Division Street to the
intersection of West Division Street and 1st Avenue NW; travel on 1st Avenue NW to 2nd
Street NW; travel on Second Street NW to 2nd Avenue NW; travel on 2nd Avenue NW
to 5th Street NW; travel on 5th Street NW to 1st Avenue NW; travel on 1st Avenue NW
to 6th Street NW; travel on 6th Street NW to its intersection with the Western Railroad
Properties Inc. (formerly Chicago, Rock Island, and Pacific Railroad Company) railroad
right of way; travel on the Western Railroad Properties Inc. (formerly Chicago, Rock
Island, and Pacific Railroad Company) railroad right of way to its intersection with West
Division Street, all in the city of Faribault.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon approval by the governing
body of the city of Faribault and compliance with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 33. new text begin CITY OF FRIDLEY; TAX INCREMENT FINANCING DISTRICT;
SPECIAL RULES.
new text end

new text begin (a) If the city elects upon the adoption of a tax increment financing plan for a district,
the rules under this section apply to a redevelopment tax increment financing district
established by the city of Fridley or the housing and redevelopment authority of the city.
The redevelopment tax increment district includes the following parcels and adjacent
railroad property and shall be referred to as the Northstar Transit Station District: parcel
numbers 223024120010, 223024120009, 223024120017, 223024120016, 223024120018,
223024120012, 223024120011, 223024120005, 223024120004, 223024120003,
223024120013, 223024120008, 223024120007, 223024120006, 223024130005,
223024130010, 223024130011, 223024130003, 153024440039, 153024440037,
153024440041, 153024440042, 223024110013, 223024110016, 223024110017,
223024140008, 223024130002, 223024420004, 223024410002, 223024410003,
223024110008, 223024110007, 223024110019, 223024110018, 223024110003,
223024140003, 223024140009, 223024140002, 223024140010, and 223024410007.
new text end

new text begin (b) The requirements for qualifying a redevelopment tax increment district under
Minnesota Statutes, section 469.174, subdivision 10, do not apply to the parcels located
within the Northstar Transit Station District, which are deemed eligible for inclusion
in a redevelopment tax increment district.
new text end

new text begin (c) In addition to the costs permitted by Minnesota Statutes, section 469.176,
subdivision 4j, eligible expenditures within the Northstar Transit Station District include
those costs necessary to provide for the construction and land acquisition for a tunnel
under the Burlington Northern Santa Fe railroad tracks.
new text end

new text begin (d) Notwithstanding the provisions of Minnesota Statutes, section 469.1763,
subdivision 2, the city of Fridley may expend increments generated from its tax increment
financing districts Nos. 11, 12, and 13 for costs permitted by paragraph (c) and Minnesota
Statutes, section 469.176, subdivision 4j, outside the boundaries of tax increment financing
districts Nos. 11, 12, and 13, but only within the Northstar Transit Station District.
new text end

new text begin (e) The five-year rule under Minnesota Statutes, section 469.1763, subdivision 3,
does not apply to the Northstar Transit Station District or to tax increment financing
districts Nos. 11, 12, and 13.
new text end

new text begin (f) The use of revenues for decertification under Minnesota Statutes, section
469.1763, subdivision 4, does not apply to tax increment financing districts Nos. 11,
12, and 13.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon approval by the governing body
of the city of Fridley and upon compliance by the city with Minnesota Statutes, section
645.021, subdivision 3.
new text end

Sec. 34. new text begin CITY OF NEW BRIGHTON; TAX INCREMENT FINANCING;
EXPENDITURES OUTSIDE DISTRICT.
new text end

new text begin Notwithstanding the provisions of Minnesota Statutes, section 469.1763, subdivision
2, the city of New Brighton may expend increments generated from its tax increment
financing district No. 26 to facilitate eligible activities as permitted by Minnesota Statutes,
section 469.176, subdivision 4e, outside the boundaries of tax increment financing district
No. 26, but only within the area described in Laws 1998, chapter 389, article 11, section
24, subdivision 1, and commonly referred to as the Northwest Quadrant. Minnesota
Statutes, section 469.1763, subdivisions 3 and 4, do not apply to expenditures permitted
by this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon approval by the governing
body of the city of New Brighton and compliance by the city with Minnesota Statutes,
section 645.021, subdivision 3.
new text end

Sec. 35. new text begin NORTH ST. PAUL; TRANSFER OF TAX INCREMENTS.
new text end

new text begin (a) Notwithstanding any limitations under Minnesota Statutes, section 469.1763,
subdivision 2, the city of North St. Paul may expend available increments from Tax
Increment Financing Districts Nos. 3-1, 1, 4-2, 4-3, and 4-4 for eligible activities
among the districts and for any district outside of those districts but within the defined
redevelopment project area.
new text end

new text begin (b) For the purposes of Minnesota Statutes, section 469.1763, subdivision 3,
expenditures within Tax Increment Financing Districts Nos. 3-1, 1, 4-2, 4-3, and 4-4 are
considered to have been expended on an activity within the districts if a qualifying action
occurs within 12 years after certification of the respective district.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon local approval by the governing
body of the city of North St. Paul and compliance with Minnesota Statutes, section
645.021, subdivision 3.
new text end

Sec. 36. new text begin USE OF APPROPRIATION.
new text end

new text begin To the extent that money appropriated to the commissioner of administration in Laws
2006, chapter 258, section 18, for redevelopment, reuse, or demolition of Department of
Human Services campuses, is unencumbered, the commissioner of administration must
distribute $1,000,000 of that money on June 1, 2007, to the city of Fergus Falls for use
by the city to provide security, heat, and utility service to the site of the Fergus Falls
Regional Treatment Center.
new text end

Sec. 37. new text begin REPEALER.
new text end

new text begin Laws 1998, chapter 389, article 11, section 18, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance with Minnesota
Statutes, section 645.021, subdivision 3, by the governing body of the city of Burnsville.
The balance of tax increments derived from tax increment financing district No. 2-1 as
of the effective date of this section must be returned to the county for distribution in
accordance with Minnesota Statutes, section 469.176, subdivision 2.
new text end

ARTICLE 9

PUBLIC FINANCE

Section 1.

Minnesota Statutes 2006, section 118A.03, subdivision 3, is amended to read:

Subd. 3.

Amount.

The total amount of the collateral computed at its market value
shall be at least ten percent more than the amount on deposit deleted text begin plus accrued interest deleted text end at
the close of the financial institution's banking day, except that where the collateral is
irrevocable standby letters of credit issued by Federal Home Loan Banks, the amount of
collateral shall be at least equal to the amount on deposit deleted text begin plus accrued interest deleted text end at the close
of the financial institution's banking day. The financial institution may furnish both a
surety bond and collateral aggregating the required amount.

Sec. 2.

Minnesota Statutes 2006, section 123B.61, is amended to read:

123B.61 PURCHASE OF CERTAIN EQUIPMENT.

The board of a district may issue general obligation certificates of indebtedness
or capital notes subject to the district debt limits to: (a) purchase vehicles, computers,
telephone systems, cable equipment, photocopy and office equipment, technological
equipment for instruction, and other capital equipment having an expected useful life at
least as long as the terms of the certificates or notes; (b) purchase computer hardware and
software, without regard to its expected useful life, whether bundled with machinery or
equipment or unbundled, together with application development services and training
related to the use of the computer; and (c) prepay special assessments. The certificates or
notes must be payable in not more than deleted text begin five deleted text end new text begin ten new text end years and must be issued on the terms
and in the manner determined by the board, except that certificates or notes issued to
prepay special assessments must be payable in not more than 20 years. The certificates
or notes may be issued by resolution and without the requirement for an election. The
certificates or notes are general obligation bonds for purposes of section 126C.55. A tax
levy must be made for the payment of the principal and interest on the certificates or
notes, in accordance with section 475.61, as in the case of bonds. The sum of the tax
levies under this section and section 123B.62 for each year must not exceed the lesser
of the amount of the district's total operating capital revenue or the sum of the district's
levy in the general and community service funds excluding the adjustments under this
section for the year preceding the year the initial debt service levies are certified. The
district's general fund levy for each year must be reduced by the sum of (1) the amount
of the tax levies for debt service certified for each year for payment of the principal and
interest on the certificates or notes issued under this section as required by section 475.61,
(2) the amount of the tax levies for debt service certified for each year for payment of the
principal and interest on bonds issued under section 123B.62, and (3) any excess amount
in the debt redemption fund used to retire bonds, certificates, or notes issued under this
section or section 123B.62 after April 1, 1997, other than amounts used to pay capitalized
interest. If the district's general fund levy is less than the amount of the reduction, the
balance shall be deducted first from the district's community service fund levy, and next
from the district's general fund or community service fund levies for the following year. A
district using an excess amount in the debt redemption fund to retire the certificates or
notes shall report the amount used for this purpose to the commissioner by July 15 of the
following fiscal year. A district having an outstanding capital loan under section 126C.69
or an outstanding debt service loan under section 126C.68 must not use an excess amount
in the debt redemption fund to retire the certificates or notes.

Sec. 3.

Minnesota Statutes 2006, section 331A.05, subdivision 2, is amended to read:

Subd. 2.

Time of notice.

Unless otherwise specified by deleted text begin a particular statute deleted text end new text begin law new text end , or
by order of a court, publication of a public notice shall be as follows:

(a) the notice shall be published once;

(b) if the notice is intended to inform the public about a future event, the last
publication shall occur not more than deleted text begin 14 deleted text end new text begin 30 new text end days and not less than seven days before
the event;

(c) if the notice is intended to inform the public about a past action or event, the last
publication shall occur not more than 45 days after occurrence of the action or event.

Sec. 4.

Minnesota Statutes 2006, section 365A.02, is amended to read:

365A.02 deleted text begin DEFINITION deleted text end new text begin DEFINITIONS new text end .

new text begin Subdivision 1. new text end

new text begin Subordinate service district. new text end

"Subordinate service district" means a
defined area within the town in which deleted text begin one or more governmental services or additions to
townwide deleted text end new text begin special new text end services are provided deleted text begin by the town specially for the area and financed
from revenues from the area deleted text end . The boundaries of a single subordinate service district
may not embrace an entire town.

new text begin Subd. 2. new text end

new text begin Special services. new text end

new text begin "Special services" means one or more governmental
services or additions to townwide services provided by the town specially for the area
and financed from revenues from the area.
new text end

Sec. 5.

Minnesota Statutes 2006, section 365A.04, is amended to read:

365A.04 CREATION deleted text begin BY PETITION deleted text end .

Subdivision 1.

Petition.

A petition signed by at least 50 percent of the property
owners in the part of the town proposed for the subordinate service district may be
submitted to the town board requesting the establishment of a subordinate service district
to provide a service that the town is otherwise authorized by law to provide. The petition
must include the territorial boundaries of the proposed district and specify the kinds of
services to be provided within the district.

new text begin Subd. 1a. new text end

new text begin Creation by town board. new text end

new text begin The town board may establish a subordinate
service district in a portion of the town by adoption of a resolution, subject to the
requirements of subdivision 2.
new text end

Subd. 2.

Public hearing.

Upon receipt of the petition, and the verification of the
signatures by the town clerk new text begin or prior to adoption of the resolution specified in subdivision
1a new text end , the town board shall, within 30 days following verification new text begin or prior to adoption of the
resolution specified in subdivision 1a new text end , hold a public hearing on the question of whether or
not the requested district shall be established. new text begin The notice of public hearing must specify
the special services to be provided within the subordinate service district and must specify
the territorial boundaries of the requested district. The notice of public hearing must be
published once in a newspaper of general circulation in the town at least 14 days prior
to the date of the public hearing.
new text end

Subd. 3.

Approval; disapproval.

Within 30 days after the public hearing, the
town board by resolution shall approve or disapprove the establishment of the requested
district. new text begin An approving resolution must specify the special services to be provided within
the subordinate service district and must specify the territorial boundaries of the district.
new text end A resolution approving the establishment of the district may contain amendments or
modifications of the district's boundaries or functions as set forth in the petition new text begin or the
resolution specified in subdivision 1a new text end .

Sec. 6.

Minnesota Statutes 2006, section 365A.08, is amended to read:

365A.08 FINANCING.

new text begin Subdivision 1. new text end

new text begin Budget. new text end

new text begin (a) new text end Upon adoption of the next annual budget following
the creation of a subordinate service district the town board shall include in the budget
appropriate provisions for the operation of the district including either a property tax
levied only on property of the users of the service within the boundaries of the district
or a levy of a service charge against the users of the service within the district, or a
combination of a property tax and a service charge on the users of the service.

new text begin (b) new text end A tax or service charge or a combination of them may be imposed to finance a
function or service in the district that the town ordinarily provides throughout the town
only to the extent that there is an increase in the level of the function or service provided
in the service district over that provided throughout the town. In that case, in addition
to the townwide tax levy, an amount necessary to pay for the increase in the level of the
function or service may be imposed in the district.

new text begin Subd. 2. new text end

new text begin Bonds. new text end

new text begin At any time after the requirements of section 356A.06 have been
met and the subordinate service district created, the town board may issue obligations
in an amount it deems necessary to defray in whole or in part the expense incurred
and estimated to be incurred in making capital improvements necessary to operate the
subordinate service district and provide the special services in the district, including every
item of cost from inception to completion and all fees and expenses incurred in connection
with the capital improvements or the financing. The obligations are payable primarily
out of the proceeds of the taxes and service charges imposed under subdivision 1, net
revenues as described in section 444.075, and special assessments under chapter 429. The
town board may by resolution pledge the full faith credit and taxing power of the town
to ensure payment of the principal and interest on the obligations if the proceeds of the
taxes and service charges are insufficient to pay the principal and interest. Obligations
must be issued in accordance with chapter 475, except that an election is not required, and
the amount of the obligations is not included in determining the net indebtedness of the
town under the provisions of any law limiting indebtedness.
new text end

new text begin Subd. 3. new text end

new text begin Covenants to secure obligations. new text end

new text begin In resolutions authorizing the issuance
of general or special obligations and pledging taxes and service charges imposed under
subdivision 1, net revenues, or special assessments to their payment, the town board
may make covenants for the protection of holders of the obligations and taxpayers of the
town as it deems necessary, including a covenant that the town will impose and collect
charges of the nature authorized by this chapter at the time and in the amounts required to
produce, together with any taxes or special assessments designated as a primary source
of payment of the obligations, funds adequate to pay all principal and interest when due
on the obligations, and to create and maintain reserves securing the payments as may be
provided in the resolutions.
new text end

Sec. 7.

Minnesota Statutes 2006, section 365A.095, is amended to read:

365A.095 PETITION FOR REMOVAL OF DISTRICT; PROCEDURE.

new text begin Subdivision 1. new text end

new text begin Petition. new text end

A petition signed by at least 75 percent of the property
owners in the territory of the subordinate service district requesting the removal of the
district may be presented to the town board. Within 30 days after the town board receives
the petition, the town clerk shall determine the validity of the signatures on the petition. If
the requisite number of signatures are certified as valid, the town board must hold a public
hearing on the petitioned matter. Within 30 days after the end of the hearing, the town
board must decide whether to discontinue the subordinate service district, continue as it is,
or take some other action with respect to it.

new text begin Subd. 2. new text end

new text begin Bonds. new text end

new text begin If obligations have been issued for the benefit of the subordinate
service district, the rates, charges, and tax levies, if any, shall continue until the obligations
and any obligations issued to refund them have been paid in full.
new text end

Sec. 8.

Minnesota Statutes 2006, section 373.01, subdivision 3, is amended to read:

Subd. 3.

Capital notes.

(a) A county board may, by resolution and without
referendum, issue capital notes subject to the county debt limit to purchase capital
equipment useful for county purposes that has an expected useful life at least equal to the
term of the notes. The notes shall be payable in not more than ten years and shall be
issued on terms and in a manner the board determines. A tax levy shall be made for
payment of the principal and interest on the notes, in accordance with section 475.61,
as in the case of bonds.

(b) For purposes of this subdivision, "capital equipment" means:

(1) public safety, ambulance, road construction or maintenance, and medical
equipment; and

(2) computer hardware and software, whether bundled with machinery or equipment
or unbundled. deleted text begin The authority to issue capital notes for software expires on July 1, 2007.
deleted text end

Sec. 9.

Minnesota Statutes 2006, section 375B.09, is amended to read:

375B.09 FINANCING.

new text begin Subdivision 1. new text end

new text begin Budget. new text end

new text begin (a) new text end Upon adoption of the next annual budget following the
creation of a subordinate service district the county board shall include in the budget
appropriate provisions for the operation of the district including, as appropriate, either a
property tax levied only on property within the boundaries of the district or a levy of a
service charge against the users of the service within the district, or any combination of a
property tax and a service charge.

new text begin (b) new text end A tax or service charge or a combination thereof shall not be imposed to finance a
function or service in the new text begin subordinate new text end service district which the county generally provides
throughout the county unless an increase in the level of the service is to be supplied in the
new text begin subordinate new text end service district in which case, in addition to the countywide tax levy, only an
amount necessary to pay for the increased level of service may be imposed.

new text begin Subd. 2. new text end

new text begin Bonds. new text end

new text begin At any time after the requirements of section 375B.07 have been
met and the subordinate service district created, the county board may issue obligations
in an amount it deems necessary to defray in whole or in part the expense incurred
and estimated to be incurred in making capital improvements necessary to operate the
subordinate service district and provide the special services in the district, including every
item of cost from inception to completion and all fees and expenses incurred in connection
with the capital improvements or the financing. The obligations shall be payable primarily
out of the proceeds of the taxes and service charges imposed pursuant to subdivision 1, net
revenues as described in section 444.075, and special assessments under chapter 429. The
county board may by resolution pledge the full faith credit and taxing power of the county
to ensure payment of the principal and interest on the obligations if the proceeds of the
taxes and service charges are insufficient to pay the principal and interest. Obligations
must be issued in accordance with chapter 475, except that an election is not required, and
the amount of the obligations is not included in determining the net indebtedness of the
county under the provisions of any law limiting indebtedness.
new text end

new text begin Subd. 3. new text end

new text begin Covenants to secure obligations. new text end

new text begin In resolutions authorizing the issuance
of general or special obligations and pledging taxes and service charges imposed under
subdivision 1, net revenues, or special assessments to their payment, the county board
may make covenants for the protection of holders of the obligations and taxpayers of the
county as it deems necessary, including a covenant that the county will impose and collect
charges of the nature authorized by this chapter at the time and in the amounts required to
produce, together with any taxes or special assessments designated as a primary source
of payment of the obligations, funds adequate to pay all principal and interest when due
on the obligations and to create and maintain reserves securing the payments as may be
provided in the resolutions.
new text end

new text begin Subd. 4. new text end

new text begin Continuance in the event of withdrawal. new text end

new text begin If obligations have been issued
for the benefit of the subordinate service district, and the district is withdrawn or removed
pursuant to either section 375B.10 or 375B.11, the rates, charges, and tax levies, if any, in
the withdrawn or removed district must continue until the obligations and any obligations
issued to refund them have been paid in full.
new text end

Sec. 10.

Minnesota Statutes 2006, section 383B.117, subdivision 2, is amended to read:

Subd. 2.

Equipment acquisition; capital notes.

The board may, by resolution and
without public referendum, issue capital notes within existing debt limits for the purpose
of purchasing ambulance and other medical equipment, road construction or maintenance
equipment, public safety equipment and other capital equipment having an expected
useful life at least equal to the term of the notes issued. The notes shall be payable in
not more than deleted text begin five deleted text end new text begin ten new text end years and shall be issued on terms and in a manner as the board
determines. The total principal amount of the notes issued for any fiscal year shall not
exceed one percent of the total annual budget for that year and shall be issued solely for
the purchases authorized in this subdivision. A tax levy shall be made for the payment
of the principal and interest on such notes as in the case of bonds. new text begin For purposes of this
subdivision, "equipment" includes computer hardware and software, whether bundled with
machinery or equipment or unbundled. new text end For purposes of this subdivision, the term "medical
equipment" includes computer hardware and software and other intellectual property for
use in medical diagnosis, medical procedures, research, record keeping, billing, and other
hospital applications, together with application development services and training related
to the use of the computer hardware and software and other intellectual property, all
without regard to their useful life. For purposes of determining the amount of capital notes
which the county may issue in any year, the budget of the county and Hennepin Healthcare
System, Inc. shall be combined and the notes issuable under this subdivision shall be in
addition to obligations issuable under section 373.01, subdivision 3.

Sec. 11.

Minnesota Statutes 2006, section 410.32, is amended to read:

410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.

(a) Notwithstanding any contrary provision of other law or charter, a home rule
charter city may, by resolution and without public referendum, issue capital notes subject
to the city debt limit to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road
construction and maintenance equipment, and other capital equipment; and

(2) computer hardware and software, whether bundled with machinery or equipment
or unbundled.

(c) The equipment or software must have an expected useful life at least as long as the
term of the notes. deleted text begin The authority to issue capital notes for software expires on July 1, 2007.
deleted text end

(d) The notes shall be payable in not more than ten years and be issued on terms and
in the manner the city determines. The total principal amount of the capital notes issued
in a fiscal year shall not exceed 0.03 percent of the market value of taxable property
in the city for that year.

(e) A tax levy shall be made for the payment of the principal and interest on the
notes, in accordance with section 475.61, as in the case of bonds.

(f) Notes issued under this section shall require an affirmative vote of two-thirds of
the governing body of the city.

(g) Notwithstanding a contrary provision of other law or charter, a home rule charter
city may also issue capital notes subject to its debt limit in the manner and subject to the
limitations applicable to statutory cities pursuant to section 412.301.

Sec. 12.

Minnesota Statutes 2006, section 412.301, is amended to read:

412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.

(a) The council may issue certificates of indebtedness or capital notes subject to the
city debt limits to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road
construction and maintenance equipment, and other capital equipment; and

(2) computer hardware and software, whether bundled with machinery or equipment
or unbundled.

(c) The equipment or software must have an expected useful life at least as long as
the terms of the certificates or notes. deleted text begin The authority to issue capital notes for software
expires on July 1, 2007.
deleted text end

(d) Such certificates or notes shall be payable in not more than ten years and shall be
issued on such terms and in such manner as the council may determine.

(e) If the amount of the certificates or notes to be issued to finance any such purchase
exceeds 0.25 percent of the market value of taxable property in the city, they shall not
be issued for at least ten days after publication in the official newspaper of a council
resolution determining to issue them; and if before the end of that time, a petition asking
for an election on the proposition signed by voters equal to ten percent of the number of
voters at the last regular municipal election is filed with the clerk, such certificates or notes
shall not be issued until the proposition of their issuance has been approved by a majority
of the votes cast on the question at a regular or special election.

(f) A tax levy shall be made for the payment of the principal and interest on such
certificates or notes, in accordance with section 475.61, as in the case of bonds.

Sec. 13.

Minnesota Statutes 2006, section 453A.02, subdivision 3, is amended to read:

Subd. 3.

City.

"City" means a city organized and existing under the laws of
Minnesota or a city charter adopted pursuant thereto, and authorized by such laws or
charter to engage in the local distribution and sale of gas, provided that any city so
engaged on January 1, 1979 is authorized to continue such distribution and sale, and every
city now or hereafter so authorized may exercise, either individually or as a member of a
municipal gas agency, all of the powers granted in sections 453A.01 to 453A.12.

new text begin "City" also includes a city organized and existing under the laws of another state
or a city charter adopted pursuant thereto which participates in a municipal gas agency
with Minnesota cities.
new text end

Sec. 14.

new text begin [471.6175] TRUST FOR POSTEMPLOYMENT BENEFITS.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization; establishment. new text end

new text begin A political subdivision or other
public entity that creates or has created an actuarial liability to pay postemployment
benefits to employees or officers after their termination of service may establish a trust to
pay those benefits. For purposes of this section, the term "postemployment benefits" means
benefits giving rise to a liability under Statement No. 45 of the Governmental Accounting
Standards Board and the term "trust" means a trust, a trust account, or a custodial account
or contract authorized under section 401(f) of the Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Purpose of trust. new text end

new text begin The trust established under this section may only be
used to pay postemployment benefits and may be either revocable or irrevocable.
new text end

new text begin Subd. 3. new text end

new text begin Trust administrator. new text end

new text begin The trust administrator of a trust established under
this section shall be either:
new text end

new text begin (1) the Public Employees Retirement Association;
new text end

new text begin (2) a bank or banking association incorporated under the laws of the United States or
of any state and authorized by the laws under which it is organized to exercise corporate
trust powers; or
new text end

new text begin (3) an insurance company or agency qualified to do business in Minnesota which has
at least five years' experience in investment products and services for group retirement
benefits and which has a specialized department dedicated to services for retirement
investment products.
new text end

new text begin A political subdivision or public entity may, in its discretion and in compliance
with any applicable trust document, change trust administrators and transfer trust assets
accordingly.
new text end

new text begin Subd. 4. new text end

new text begin Account maintenance. new text end

new text begin A political subdivision or other public entity may
establish a trust account to be held under the supervision of the trust administrator for the
purposes of this section. A trust administrator shall establish a separate account for each
participating political subdivision or public entity. The trust administrator may charge
participating political subdivisions and public entities fees for reasonable administrative
costs. A trust administrator may establish other reasonable terms and conditions for
creation and maintenance of these accounts. The trust administrator must report to the
political subdivision or other public entity on the investment returns of invested trust
assets and on all investment fees or costs incurred by the trust. The annual rates of return,
along with investment and administrative fees and costs for the trust, must be disclosed in
the political subdivision's or public entity's annual financial audit in a manner prescribed
by the state auditor.
new text end

new text begin Subd. 5. new text end

new text begin Investment. new text end

new text begin (a) The assets of a trust or trust account shall be invested and
held as stipulated in paragraphs (b) to (e).
new text end

new text begin (b) The Public Employees Retirement Association must certify all money in the trust
accounts for which it is trust administrator to the State Board of Investment for investment
created under section 11A.14, subject to the policies and procedures established by the
State Board of Investment. Investment earnings must be credited to the trust account of
the individual political subdivision or public entity.
new text end

new text begin (c) A trust administrator, other than the Public Employees Retirement Association,
must ensure that all money in the trust accounts for which it is trust administrator is
invested by a registered investment adviser, a bank investment trust department or an
insurance company or agency retirement investment department. Investment earnings
must be credited to the trust account of the individual political subdivision or public entity.
new text end

new text begin (d) For trust assets invested by the State Board of Investment, the investment
restrictions shall be the same as those generally applicable to the State Board of
Investment. For trust assets invested by a trust administrator other than the Public
Employees Retirement Association, the assets may only be invested in investments
authorized under chapter 118A or section 356A.06, subdivision 7, in the manner specified
in the applicable trust document.
new text end

new text begin (e) A political subdivision or public entity may provide investment direction to a
trust administrator in compliance with any applicable trust document.
new text end

new text begin Subd. 6. new text end

new text begin Limit on deposit. new text end

new text begin A political subdivision or public entity may not
deposit money in a trust or trust account created pursuant to this section if the total
amount invested by that political subdivision or public entity would exceed the political
subdivision's or public entity's actuarially determined liabilities for postemployment
benefits due to officers and employees, as determined under the applicable standards of the
Governmental Accounting Standards Board.
new text end

new text begin Subd. 7. new text end

new text begin Withdrawal of funds and termination of account. new text end

new text begin (a) For a revocable
account, a political subdivision or public entity may withdraw some or all of its money
or terminate the trust account. Money and accrued investment earnings withdrawn
from a revocable account must be deposited in a fund separate and distinct from any
other funds of the political subdivision or public entity. This money, with accrued
investment earnings, must be used to pay legally enforceable postemployment benefits
to former officers and employees, unless (i) there has been a change in state or federal
law affecting that political subdivision's or public entity's liabilities for postemployment
benefits, or (ii) there has been a change in the demographic composition of that political
subdivision's or public entity's employees eligible for postemployment benefits, or (iii)
there has been a change in the provisions or terms of the postemployment benefits in that
political subdivision or public entity including, but not limited to, the portion of the costs
eligible employees must pay to receive the benefits, or (iv) other factors exist that have
a material effect on that political subdivision's or public entity's actuarially determined
liabilities for postemployment benefits, in which event any amount in excess of 100
percent of that political subdivision's or public entity's actuarially determined liabilities for
postemployment benefits, as determined under standards of the Government Accounting
Standards Board, may be withdrawn and used for any purpose.
new text end

new text begin (b) For an irrevocable account, a political subdivision or public entity may withdraw
money only:
new text end

new text begin (1) as needed to pay postemployment benefits owed to former officers and employees
of the political subdivision or public entity; or
new text end

new text begin (2) when all postemployment benefit liability owed to former officers or employees
of the political subdivision or public entity has been satisfied or otherwise defeased.
new text end

new text begin (c) A political subdivision or public entity requesting withdrawal of money from
an account created under this section must do so at a time and in the manner required by
the executive director of the Public Employees Retirement Association or specified in an
applicable trust document. The political subdivision or public entity that created the trust
must ensure that withdrawals comply with the requirements of this section.
new text end

new text begin (d) The legislature may not divert funds in these trusts or trust accounts for use
for another purpose.
new text end

new text begin Subd. 8. new text end

new text begin Status of irrevocable trust. new text end

new text begin (a) All money in an irrevocable trust or
trust account created in this section is held in trust for the exclusive benefit of former
officers and employees of the participating political subdivision or public entity, and are
not subject to claims by creditors of the state, the participating political subdivision or
public entity, the current or former officers and employees of the political subdivision
or public entity, or the trust administrator.
new text end

new text begin (b) An irrevocable trust fund or trust account created in this section shall be deemed
an arrangement equivalent to a trust for all legal purposes.
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 2006, section 473.39, is amended by adding a subdivision
to read:

new text begin Subd. 1m. new text end

new text begin Obligations. new text end

new text begin After July 1, 2007, in addition to other authority in this
section, the council may issue certificates of indebtedness, bonds, or other obligations
under this section in an amount not exceeding $44,000,000 for capital expenditures as
prescribed in the council's regional transit master plan and transit capital improvement
program and for related costs, including the costs of issuance and sale of the obligations.
new text end

Sec. 16.

Minnesota Statutes 2006, section 475.52, subdivision 6, is amended to read:

Subd. 6.

Certain purposes.

Any municipality may issue bonds for paying
judgments against it; for refunding outstanding bonds; for funding floating indebtedness; new text begin
for funding actuarial liabilities to pay postemployment benefits to employees or officers
after their termination of service; new text end or for funding all or part of the municipality's current
and future unfunded liability for a pension or retirement fund or plan referred to in
section 356.20, subdivision 2, as those liabilities are most recently computed pursuant
to sections 356.215 and 356.216. The board of trustees or directors of a pension fund or
relief association referred to in section 69.77 or chapter 422A must consent and must
be a party to any contract made under this section with respect to the fund held by it
for the benefit of and in trust for its members. new text begin For purposes of this section, the term
"postemployment benefits" means benefits giving rise to a liability under Statement No.
45 of the Governmental Accounting Standards Board.
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. 17.

Minnesota Statutes 2006, section 475.58, subdivision 1, is amended to read:

Subdivision 1.

Approval by electors; exceptions.

Obligations authorized by law or
charter may be issued by any municipality upon obtaining the approval of a majority of
the electors voting on the question of issuing the obligations, but an election shall not be
required to authorize obligations issued:

(1) to pay any unpaid judgment against the municipality;

(2) for refunding obligations;

(3) for an improvement or improvement program, which obligation is payable wholly
or partly from the proceeds of special assessments levied upon property specially benefited
by the improvement or by an improvement within the improvement program, or from tax
increments, as defined in section 469.174, subdivision 25, including obligations which are
the general obligations of the municipality, if the municipality is entitled to reimbursement
in whole or in part from the proceeds of such special assessments or tax increments and
not less than 20 percent of the cost of the improvement or the improvement program is to
be assessed against benefited property or is to be paid from the proceeds of federal grant
funds or a combination thereof, or is estimated to be received from tax increments;

(4) payable wholly from the income of revenue producing conveniences;

(5) under the provisions of a home rule charter which permits the issuance of
obligations of the municipality without election;

(6) under the provisions of a law which permits the issuance of obligations of a
municipality without an election;

(7) to fund pension or retirement fund new text begin or postemployment benefit new text end liabilities pursuant
to section 475.52, subdivision 6;

(8) under a capital improvement plan under section 373.40; and

(9) under sections 469.1813 to 469.1815 (property tax abatement authority bonds), if
the proceeds of the bonds are not used for a purpose prohibited under section 469.176,
subdivision 4g, paragraph (b).

new text begin EFFECTIVE DATE. new text end

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

Sec. 18.

Minnesota Statutes 2006, section 475.58, subdivision 3b, is amended to read:

Subd. 3b.

Street reconstruction.

(a) A municipality may, without regard to
the election requirement under subdivision 1, issue and sell obligations for street
reconstruction, if the following conditions are met:

(1) the streets are reconstructed under a street reconstruction plan that describes the
deleted text begin streets to be reconstructed deleted text end new text begin street reconstruction to be financed new text end , the estimated costs, and
any planned reconstruction of other streets in the municipality over the next five years,
and the plan and issuance of the obligations has been approved by a new text begin unanimous new text end vote deleted text begin of all deleted text end
of the members of the governing body new text begin who are present at the meeting new text end following a public
hearing for which notice has been published in the official newspaper at least ten days but
not more than 28 days prior to the hearing; and

(2) if a petition requesting a vote on the issuance is signed by voters equal to
five percent of the votes cast in the last municipal general election and is filed with the
municipal clerk within 30 days of the public hearing, the municipality may issue the bonds
only after obtaining the approval of a majority of the voters voting on the question of
the issuance of the obligations.

(b) Obligations issued under this subdivision are subject to the debt limit of the
municipality and are not excluded from net debt under section 475.51, subdivision 4.

(c) For purposes of this subdivision, street reconstruction includes utility
replacement and relocation and other activities incidental to the street reconstruction, turn
lanes and other improvements having a substantial public safety function, realignments,
other modifications to intersect with state and county roads, and the local share of state
and county road projects.

(d) Except in the case of turn lanes, safety improvements, realignments, intersection
modifications, and the local share of state and county road projects, street reconstruction
does not include the portion of project cost allocable to widening a street or adding curbs
and gutters where none previously existed.

Sec. 19. new text begin VALIDATION.
new text end

new text begin Any trust or trust account or other custodial account or contract authorized under
section 401(f) of the Internal Revenue Code, created prior to June 6, 2006, to pay
postemployment benefits to employees or officers after termination of service, is hereby
validated, may continue in full force and effect, and shall have continuing authority
to accept new funds; however, this section does not validate or correct defects in any
previously created trust document. Any funds held by a validated trust or account
under this section may be invested as provided in section 471.6175, subdivision 5. A
validated trust or account shall have until January 1, 2008, to bring its trust documents
and procedures into compliance with section 471.6175.
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. 20. new text begin TOWN OF CRANE LAKE, CERTIFICATES OF INDEBTEDNESS.
new text end

new text begin Notwithstanding Minnesota Statutes, section 366.095, the town board of the town of
Crane Lake in St. Louis County may issue one or more certificates of indebtedness in a
total amount not to exceed $225,000, which are not subject to the debt limits of the town.
The proceeds of the certificates must be used to acquire property and pay other costs
related to a land exchange with the United States Forest Service. The certificates shall be
payable in not more than 30 years and be issued on the terms and in the manner as the
board may determine. Minnesota Statutes, sections 475.54, subdivision 1, and 475.56,
paragraph (c), do not apply to the certificates issued under this section. A tax levy shall be
made to pay the principal and interest on the certificates as in the case of bonds.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the Crane Lake Town
Board and its chief clerical officer timely complete their compliance with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.
new text end

Sec. 21. new text begin CITY OF WINSTED; BONDING AUTHORITY.
new text end

new text begin (a) The city of Winsted may issue general obligation bonds under Minnesota
Statutes, chapter 475, to finance the acquisition and betterment of a facility consisting of
a city hall, community center, and police station; park improvements, including trails
and an amphitheater; related public improvements; and substantial landscaping for the
improvements.
new text end

new text begin (b) The bonds may be issued as general obligations of the city without an election to
approve the bonds under Minnesota Statutes, section 475.58.
new text end

new text begin (c) The bonds are not included in computing any debt limitation applicable to the
city, including, but not limited to, the net debt limits under Minnesota Statutes, section
475.53, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of
and interest on the bonds is not subject to any levy limitation.
new text end

new text begin (d) The aggregate principal amount of bonds used to pay costs of the acquisition and
betterment of the facility consisting of a city hall, community center, and police station;
park improvements, including trails and an amphitheater; related public improvements;
and substantial landscaping for the improvements may not exceed $4,900,000, plus an
amount equal to the costs related to issuance of the bonds and capitalized interest.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance by the governing
body of the city of Winsted with Minnesota Statutes, section 645.021, subdivision 3.
new text end

ARTICLE 10

SPECIAL TAXES

Section 1.

Minnesota Statutes 2006, section 297I.15, is amended by adding a
subdivision to read:

new text begin Subd. 11. new text end

new text begin Premiums paid to certain foreign insurance companies. new text end

new text begin With respect
to the state employees group insurance program established under sections 43A.23 to
43A.31, premiums paid for life insurance and accidental death and dismemberment
insurance for eligible employees and dependents, including premiums paid by employees
or dependents for optional coverage, are exempt from the taxes imposed under this chapter
to the extent the premiums are paid to a foreign insurance company domiciled in a state
that exempts its state employee group life insurance program from premium taxes.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for premiums paid after December
31, 2006.
new text end

Sec. 2.

Minnesota Statutes 2006, section 383A.80, subdivision 4, is amended to read:

Subd. 4.

Expiration.

The authority to impose the tax under this section expires
January 1, deleted text begin 2008 deleted text end new text begin 2013 new text end .

Sec. 3.

Minnesota Statutes 2006, section 383B.80, subdivision 4, is amended to read:

Subd. 4.

Expiration.

The authority to impose the tax under this section expires
January 1, deleted text begin 2008 deleted text end new text begin 2013 new text end .

Sec. 4.

new text begin [383C.798] COUNTY DEED AND MORTGAGE TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Authority to impose; rate. new text end

new text begin (a) The governing body of St. Louis
County may impose a mortgage registry and deed tax.
new text end

new text begin (b) The rate of the mortgage registry tax equals .0001 of the principal.
new text end

new text begin (c) The rate of the deed tax equals .0001 of the amount.
new text end

new text begin Subd. 2. new text end

new text begin General law provisions apply. new text end

new text begin The taxes under this section apply to
the same base and must be imposed, collected, administered, and enforced in the same
manner as provided under chapter 287 for the state mortgage registry and deed taxes.
All the provisions of chapter 287 apply to these taxes, except the rate is as specified in
subdivision 1, the term "St. Louis County" must be substituted for "the state," and the
revenue must be deposited as provided in subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Deposit of revenues. new text end

new text begin All revenues from the tax are for the use of the
St. Louis County Board of Commissioners and must be deposited in the county's
environmental response fund under section 383C.799.
new text end

new text begin Subd. 4. new text end

new text begin Expiration. new text end

new text begin The authority to impose the tax under this section expires
January 1, 2013.
new text end

Sec. 5.

new text begin [383C.799] ENVIRONMENTAL RESPONSE FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Creation. new text end

new text begin An environmental response fund is created for the
purposes specified in this section. The taxes imposed under section 383C.798 must be
deposited in the fund. The Board of County Commissioners shall administer the fund
either as a county board or a housing and redevelopment authority.
new text end

new text begin Subd. 2. new text end

new text begin Uses of fund. new text end

new text begin The fund created in subdivision 1 must be used for the
following purposes:
new text end

new text begin (1) acquisition through purchase or condemnation of lands or property which are
polluted or contaminated with hazardous substances;
new text end

new text begin (2) paying the costs associated with indemnifying or holding harmless the
entity taking title to lands or property from any liability arising out of the ownership,
remediation, or use of the land or property;
new text end

new text begin (3) paying for the costs of remediating the acquired land or property; or
new text end

new text begin (4) paying the costs associated with remediating lands or property which are polluted
or contaminated with hazardous substances.
new text end

new text begin Subd. 3. new text end

new text begin Matching funds. new text end

new text begin In expending funds under this section, the county shall
seek matching funds from contamination cleanup funds administered by the commissioner
of the Department of Employment and Economic Development, the federal government,
the private sector, and any other source.
new text end

new text begin Subd. 4. new text end

new text begin Bonds. new text end

new text begin The county may pledge the proceeds from the taxes imposed by
section 383C.798 to bonds issued under this section and chapters 462, 469, and 475.
new text end

new text begin Subd. 5. new text end

new text begin Land sales. new text end

new text begin Land or property acquired under this section may be resold
at fair market value. Proceeds from the sale of the land must be deposited in the
environmental response fund.
new text end

Sec. 6.

new text begin [383D.75] COUNTY DEED AND MORTGAGE TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Authority to impose; rate. new text end

new text begin (a) The governing body of Dakota
County may impose a mortgage registry and deed tax.
new text end

new text begin (b) The rate of the mortgage registry tax equals .0001 of the principal.
new text end

new text begin (c) The rate of the deed tax equals .0001 of the amount.
new text end

new text begin Subd. 2. new text end

new text begin General law provisions apply. new text end

new text begin The taxes under this section apply to
the same base and must be imposed, collected, administered, and enforced in the same
manner as provided under chapter 287 for the state mortgage registry and deed taxes.
All the provisions of chapter 287 apply to these taxes, except the rate is as specified in
subdivision 1, the term "Dakota County" must be substituted for "the state," and the
revenue must be deposited as provided in subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Deposit of revenues. new text end

new text begin All revenues from the tax are for the use of
the Dakota County Board of Commissioners and must be deposited in the county's
environmental response fund under section new text end

new text begin Subd. 4. new text end

new text begin Expiration. new text end

new text begin The authority to impose the tax under this section expires
January 1, 2013.
new text end

Sec. 7.

new text begin [383D.76] ENVIRONMENTAL RESPONSE FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Creation. new text end

new text begin An environmental response fund is created for the
purposes specified in this section. The taxes imposed under section 383D.75 must be
deposited in the fund. The Board of County Commissioners shall administer the fund
either as a county board or a housing and redevelopment authority.
new text end

new text begin Subd. 2. new text end

new text begin Uses of fund. new text end

new text begin The fund created in subdivision 1 must be used for the
following purposes:
new text end

new text begin (1) acquisition through purchase or condemnation of lands or property which are
polluted or contaminated with hazardous substances;
new text end

new text begin (2) paying the costs associated with indemnifying or holding harmless the
entity taking title to lands or property from any liability arising out of the ownership,
remediation, or use of the land or property;
new text end

new text begin (3) paying for the costs of remediating the acquired land or property; or
new text end

new text begin (4) paying the costs associated with remediating lands or property which are polluted
or contaminated with hazardous substances.
new text end

new text begin Subd. 3. new text end

new text begin Matching funds. new text end

new text begin In expending funds under this section, the county shall
seek matching funds from contamination cleanup funds administered by the commissioner
of the Department of Employment and Economic Development, the Metropolitan Council,
the federal government, the private sector, and any other source.
new text end

new text begin Subd. 4. new text end

new text begin Bonds. new text end

new text begin The county may pledge the proceeds from the taxes imposed by
section to bonds issued under this chapter and chapters 462, 469, and 475.
new text end

new text begin Subd. 5. new text end

new text begin Land sales. new text end

new text begin Land or property acquired under this section may be resold
at fair market value. Proceeds from the sale of the land must be deposited in the
environmental response fund.
new text end

Sec. 8.

new text begin [383E.235] COUNTY DEED AND MORTGAGE TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Authority to impose; rate. new text end

new text begin (a) The governing body of Anoka
County may impose a mortgage registry and deed tax.
new text end

new text begin (b) The rate of the mortgage registry tax equals .0001 of the principal.
new text end

new text begin (c) The rate of the deed tax equals .0001 of the amount.
new text end

new text begin Subd. 2. new text end

new text begin General law provisions apply. new text end

new text begin The taxes under this section apply to
the same base and must be imposed, collected, administered, and enforced in the same
manner as provided under chapter 287 for the state mortgage registry and deed taxes.
All the provisions of chapter 287 apply to these taxes, except the rate is as specified
in subdivision 1, the term "Anoka County" must be substituted for "the state," and the
revenue must be deposited as provided in subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Deposit of revenues. new text end

new text begin All revenues from the tax are for the use of the Anoka
County Board of Commissioners and must be deposited in the county's environmental
response fund under section 383E.236.
new text end

new text begin Subd. 4. new text end

new text begin Expiration. new text end

new text begin The authority to impose the tax under this section expires
January 1, 2013.
new text end

Sec. 9.

new text begin [383E.236] ENVIRONMENTAL RESPONSE FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Creation. new text end

new text begin An environmental response fund is created for the
purposes specified in this section. The taxes imposed under section 383E.235 must be
deposited in the fund. The Board of County Commissioners shall administer the fund
either as a county board or a housing and redevelopment authority.
new text end

new text begin Subd. 2. new text end

new text begin Uses of fund. new text end

new text begin The fund created in subdivision 1 must be used for the
following purposes:
new text end

new text begin (1) acquisition through purchase or condemnation of lands or property which are
polluted or contaminated with hazardous substances;
new text end

new text begin (2) paying the costs associated with indemnifying or holding harmless the
entity taking title to lands or property from any liability arising out of the ownership,
remediation, or use of the land or property;
new text end

new text begin (3) paying for the costs of remediating the acquired land or property; or
new text end

new text begin (4) paying the costs associated with remediating lands or property which are polluted
or contaminated with hazardous substances.
new text end

new text begin Subd. 3. new text end

new text begin Matching funds. new text end

new text begin In expending funds under this section, the county shall
seek matching funds from contamination cleanup funds administered by the commissioner
of the Department of Employment and Economic Development, the Metropolitan Council,
the federal government, the private sector, and any other source.
new text end

new text begin Subd. 4. new text end

new text begin Bonds. new text end

new text begin The county may pledge the proceeds from the taxes imposed by
section 383E.235 to bonds issued under this section and chapters 462, 469, and 475.
new text end

new text begin Subd. 5. new text end

new text begin Land sales. new text end

new text begin Land or property acquired under this section may be resold
at fair market value. Proceeds from the sale of the land must be deposited in the
environmental response fund.
new text end

new text begin Subd. 6. new text end

new text begin DOT assistance. new text end

new text begin The commissioner of transportation shall collaborate with
the county and any affected municipality by providing technical assistance and support in
cleaning up a contaminated site related to a trunk highway or railroad improvement.
new text end

Sec. 10.

Laws 2003, chapter 128, article 1, section 172, as amended by Laws 2005,
First Special Session chapter 1, article 4, section 118, is amended to read:

Sec. 172. TEMPORARY PETROFUND FEE EXEMPTION FOR
MINNESOTA COMMERCIAL AIRLINES.

(a) A commercial airline providing regularly scheduled jet service and with its
corporate headquarters in Minnesota is exempt from the fee established in Minnesota
Statutes, section 115C.08, subdivision 3, until July 1, deleted text begin 2007 deleted text end new text begin 2009 new text end , provided the airline
develops a plan approved by the commissioner of commerce demonstrating that the
savings from this exemption will go towards minimizing job losses in Minnesota, and to
support the airline's efforts to deleted text begin avoid filing for deleted text end new text begin resolve new text end federal bankruptcy deleted text begin protections deleted text end new text begin
proceedings new text end .

(b) A commercial airline exempted from the fee is ineligible to receive
reimbursement under Minnesota Statutes, chapter 115C, until July 1, deleted text begin 2007 deleted text end new text begin 2009 new text end . A
commercial airline that has a release during the fee exemption period is ineligible to
receive reimbursement under Minnesota Statutes, chapter 115C, for the costs incurred in
response to that release.

ARTICLE 11

DEPARTMENT INCOME AND FRANCHISE TAXES

Section 1.

Minnesota Statutes 2006, section 270A.03, subdivision 5, is amended to
read:

Subd. 5.

Debt.

new text begin (a) new text end "Debt" means a legal obligation of a natural person to pay a fixed
and certain amount of money, which equals or exceeds $25 and which is due and payable
to a claimant agency. The term includes criminal fines imposed under section 609.10 or
609.125, fines imposed for petty misdemeanors as defined in section 609.02, subdivision
4a, and restitution. The term also includes the co-payment for the appointment of a district
public defender imposed under section 611.17, paragraph (c). A debt may arise under a
contractual or statutory obligation, a court order, or other legal obligation, but need not
have been reduced to judgment.

A debt includes any legal obligation of a current recipient of assistance which is
based on overpayment of an assistance grant where that payment is based on a client
waiver or an administrative or judicial finding of an intentional program violation;
or where the debt is owed to a program wherein the debtor is not a client at the time
notification is provided to initiate recovery under this chapter and the debtor is not a
current recipient of food support, transitional child care, or transitional medical assistance.

new text begin (b) new text end A debt does not include any legal obligation to pay a claimant agency for medical
care, including hospitalization if the income of the debtor at the time when the medical
care was rendered does not exceed the following amount:

(1) for an unmarried debtor, an income of $8,800 or less;

(2) for a debtor with one dependent, an income of $11,270 or less;

(3) for a debtor with two dependents, an income of $13,330 or less;

(4) for a debtor with three dependents, an income of $15,120 or less;

(5) for a debtor with four dependents, an income of $15,950 or less; and

(6) for a debtor with five or more dependents, an income of $16,630 or less.

deleted text begin The income amounts in this subdivision shall be adjusted for inflation for debts
incurred in calendar years 2001 and thereafter. The dollar amount of each income level
that applied to debts incurred in the prior year shall be increased in the same manner
as provided in section 1(f) of the Internal Revenue Code of 1986, as amended through
December 31, 2000, except that for the purposes of this subdivision the percentage
increase shall be determined from the year starting September 1, 1999, and ending August
31, 2000, as the base year for adjusting for inflation for debts incurred after December
31, 2000. deleted text end new text begin (c) The commissioner shall adjust the income amounts in paragraph (b) 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 "1999" shall be substituted for the word
"1992." For 2001, the commissioner shall then determine the percent change from the 12
months ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in
each subsequent year, from the 12 months ending on August 31, 1999, 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. The income
amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in
$5, the amount is rounded up to the nearest $10 amount.
new text end

new text begin (d) new text end Debt also includes an agreement to pay a MinnesotaCare premium, regardless of
the dollar amount of the premium authorized under section 256L.15, subdivision 1a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for debts incurred after December
31, 2006.
new text end

Sec. 2.

Minnesota Statutes 2006, section 289A.08, subdivision 11, is amended to read:

Subd. 11.

Information included in income tax return.

new text begin (a) new text end The return must state new text begin :
new text end

new text begin (1) new text end the name of the taxpayer, or taxpayers, if the return is a joint return, and the
address of the taxpayer in the same name or names and same address as the taxpayer has
used in making the taxpayer's income tax return to the United States deleted text begin , and must state deleted text end new text begin ;
new text end

new text begin (2) the date or dates of birth of the taxpayer or taxpayers;
new text end

new text begin (3) new text end the Social Security number of the taxpayer, or taxpayers, if a Social Security
number has been issued by the United States with respect to the taxpayers deleted text begin , and must
state deleted text end new text begin ; and
new text end

new text begin (4) new text end the amount of the taxable income of the taxpayer as it appears on the federal
return for the taxable year to which the Minnesota state return applies.

new text begin (b) new text end The taxpayer must attach to the taxpayer's Minnesota state income tax return
a copy of the federal income tax return that the taxpayer has filed or is about to file for
the period, unless the taxpayer is eligible to telefile the federal return and does file the
Minnesota return by telefiling.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2006.
new text end

Sec. 3.

Minnesota Statutes 2006, section 289A.09, subdivision 2, is amended to read:

Subd. 2.

Withholding statement to employee or payee and to commissioner.

(a)
A person required to deduct and withhold from an employee a tax under section 290.92,
subdivision 2a or 3, or 290.923, subdivision 2, or who would have been required to
deduct and withhold a tax under section 290.92, subdivision 2a or 3, or persons required
to withhold tax under section 290.923, subdivision 2, determined without regard to
section 290.92, subdivision 19, if the employee or payee had claimed no more than one
withholding exemption, or who paid wages or made payments not subject to withholding
under section 290.92, subdivision 2a or 3, or 290.923, subdivision 2, to an employee or
person receiving royalty payments in excess of $600, or who has entered into a voluntary
withholding agreement with a payee under section 290.92, subdivision 20, must give
every employee or person receiving royalty payments in respect to the remuneration paid
by the person to the employee or person receiving royalty payments during the calendar
year, on or before January 31 of the succeeding year, or, if employment is terminated
before the close of the calendar year, within 30 days after the date of receipt of a written
request from the employee if the 30-day period ends before January 31, a written statement
showing the following:

(1) name of the person;

(2) the name of the employee or payee and the employee's or payee's Social Security
account number;

(3) the total amount of wages as that term is defined in section 290.92, subdivision
1, paragraph (1); the total amount of remuneration subject to withholding under section
290.92, subdivision 20; the amount of sick pay as required under section 6051(f) of the
Internal Revenue Code; and the amount of royalties subject to withholding under section
290.923, subdivision 2; and

(4) the total amount deducted and withheld as tax under section 290.92, subdivision
2a or 3, or 290.923, subdivision 2.

(b) The statement required to be furnished by deleted text begin this deleted text end paragraph new text begin (a) new text end with respect to any
remuneration must be furnished at those times, must contain the information required, and
must be in the form the commissioner prescribes.

(c) The commissioner may prescribe rules providing for reasonable extensions of
time, not in excess of 30 days, to employers or payers required to give the statements to
their employees or payees under this subdivision.

(d) A duplicate of any statement made under this subdivision and in accordance
with rules prescribed by the commissioner, along with a reconciliation in the form the
commissioner prescribes of the statements for the calendar year, including a reconciliation
of the quarterly returns required to be filed under subdivision 1, must be filed with the
commissioner on or before February 28 of the year after the payments were made.

(e) If an employer cancels the employer's Minnesota withholding account number
required by section 290.92, subdivision 24, the information required by paragraph (d),
must be filed with the commissioner within 30 days of the end of the quarter in which
the employer cancels its account number.

(f) The employer must submit the statements required to be sent to the commissioner
deleted text begin on magnetic media, if the magnetic media was deleted text end new text begin in the same manner new text end required to satisfy the
federal reporting requirements of section 6011(e) of the Internal Revenue Code and the
regulations issued under it. new text begin For wages paid in calendar year 2007, an employer must
submit statements to the commissioner required by this section by electronic means if the
employer is required to send more than 100 statements to the commissioner, even though
the employer is not required to submit the returns federally by electronic means. For
calendar year 2008, the 100 statements threshold is reduced to 50, and for calendar year
2009, the threshold is reduced to 25, and for 2010 and after, the threshold is reduced to ten.
new text end

(g) A "third-party bulk filer" as defined in section 290.92, subdivision 30, paragraph
(a), clause (2), must submit the returns required by this subdivision and subdivision 1,
paragraph (a), with the commissioner by electronic means.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for wages paid after December 31,
2006.
new text end

Sec. 4.

Minnesota Statutes 2006, section 289A.12, subdivision 14, is amended to read:

Subd. 14.

Regulated investment companies; reporting exempt-interest
dividends.

(a) A regulated investment company paying $10 or more in exempt-interest
dividends to an individual who is a resident of Minnesota must make a return indicating
the amount of the exempt-interest dividends, the name, address, and Social Security
number of the recipient, and any other information that the commissioner specifies. The
return must be provided to the shareholder no later than 30 days after the close of the
taxable year. The return provided to the shareholder must include a clear statement, in the
form prescribed by the commissioner, that the exempt-interest dividends must be included
in the computation of Minnesota taxable income. The deleted text begin commissioner may by notice and
demand require the deleted text end regulated investment company new text begin is required in a manner prescribed by
the commissioner new text end to file a copy of the return with the commissioner.

(b) This subdivision applies to regulated investment companies required to register
under chapter 80A.

(c) For purposes of this subdivision, the following definitions apply.

(1) "Exempt-interest dividends" mean exempt-interest dividends as defined in
section 852(b)(5) of the Internal Revenue Code, but does not include the portion of
exempt-interest dividends that are not required to be added to federal taxable income
under section 290.01, subdivision 19a, clause (1)(ii).

(2) "Regulated investment company" means regulated investment company as
defined in section 851(a) of the Internal Revenue Code or a fund of the regulated
investment company as defined in section 851(g) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2006.
new text end

Sec. 5.

Minnesota Statutes 2006, section 289A.18, subdivision 1, is amended to read:

Subdivision 1.

Individual income, fiduciary income, corporate franchise, and
entertainment taxes; partnership and S corporation returns; information returns;
mining company returns.

The returns required to be made under sections 289A.08 and
289A.12 must be filed at the following times:

(1) returns made on the basis of the calendar year must be filed on April 15 following
the close of the calendar year, except that returns of corporations must be filed on March
15 following the close of the calendar year;

(2) returns made on the basis of the fiscal year must be filed on the 15th day of the
fourth month following the close of the fiscal year, except that returns of corporations
must be filed on the 15th day of the third month following the close of the fiscal year;

(3) returns for a fractional part of a year must be filed on the 15th day of the fourth
month following the end of the month in which falls the last day of the period for which
the return is made, except that the returns of corporations must be filed on the 15th day of
the third month following the end of the tax year of the unitary group in which falls the
last day of the period for which the return is made;

(4) in the case of a final return of a decedent for a fractional part of a year, the return
must be filed on the 15th day of the fourth month following the close of the 12-month
period that began with the first day of that fractional part of a year;

(5) in the case of the return of a cooperative association, returns must be filed on or
before the 15th day of the ninth month following the close of the taxable year;

(6) if a corporation has been divested from a unitary group and files a return for
a fractional part of a year in which it was a member of a unitary business that files a
combined report under section 290.34, subdivision 2, the divested corporation's return
must be filed on the 15th day of the third month following the close of the common
accounting period that includes the fractional year;

(7) returns of entertainment entities must be filed on April 15 following the close of
the calendar year;

(8) returns required to be filed under section 289A.08, subdivision 4, must be filed
on the 15th day of the fifth month following the close of the taxable year;

(9) returns of mining companies must be filed on May 1 following the close of the
calendar year; and

(10) returns required to be filed with the commissioner under section 289A.12,
subdivision 2 deleted text begin , deleted text end new text begin or new text end 4 to 10, deleted text begin or 14, deleted text end must be filed within 30 days after being demanded by
the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2006.
new text end

Sec. 6.

Minnesota Statutes 2006, section 289A.60, subdivision 8, is amended to read:

Subd. 8.

deleted text begin Penalty for deleted text end new text begin Penalties; new text end failure to file informational return new text begin ; incorrect
taxpayer identification number new text end .

new text begin (a) new text end In the case of a failure to file an informational return
required by section 289A.12 with the commissioner on the date prescribed (determined
with regard to any extension of time for filing), the person failing to file the return shall pay
a penalty of $50 for each failure or in the case of a partnership, S corporation, or fiduciary
return, $50 for each partner, shareholder, or beneficiary; but the total amount imposed on
the delinquent person for all failures during any calendar year must not exceed $25,000. If
a failure to file a return is due to intentional disregard of the filing requirement, then the
penalty imposed under the preceding sentence must not be less than an amount equal to:

(1) in the case of a return not described in clause (2) or (3), ten percent of the
aggregate amount of the items required to be reported;

(2) in the case of a return required to be filed under section 289A.12, subdivision 5,
five percent of the gross proceeds required to be reported; and

(3) in the case of a return required to be filed under section 289A.12, subdivision 9,
relating to direct sales, $100 for each failure; however, the total amount imposed on the
delinquent person for intentional failures during a calendar year must not exceed $50,000.
The penalty must be collected in the same manner as a delinquent income tax.

new text begin (b) If a partnership or S corporation files a partnership or S corporation return with
an incorrect tax identification number used for a partner or shareholder after being notified
by the commissioner that the identification number is incorrect, the partnership or S
corporation must pay a penalty of $50 for each such incorrect number.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns filed after December
31, 2007.
new text end

Sec. 7.

Minnesota Statutes 2006, section 289A.60, subdivision 12, is amended to read:

Subd. 12.

Penalties relating to property tax refunds.

(a) If it is determined that a
property tax refund claim is excessive and was negligently prepared, new text begin a claimant is liable
for a penalty of new text end ten percent of the deleted text begin corrected claim must be deleted text end disallowed new text begin claim new text end . If the claim
has been paid, the amount disallowed must be recovered by assessment and collection.

(b) An owner who without reasonable cause fails to give a certificate of rent
constituting property tax to a renter, as required by section 290A.19, paragraph (a), is
liable to the commissioner for a penalty of $100 for each failure.

(c) If the owner or managing agent knowingly gives rent certificates that report total
rent constituting property taxes in excess of the amount of actual rent constituting property
taxes paid on the rented part of a property, the owner or managing agent is liable for a
penalty equal to the greater of (1) $100 or (2) 50 percent of the excess that is reported. An
overstatement of rent constituting property taxes is presumed to be knowingly made if it
exceeds by ten percent or more the actual rent constituting property taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refund claims filed
on or after July 1, 2007.
new text end

Sec. 8.

Minnesota Statutes 2006, section 289A.60, subdivision 27, is amended to read:

Subd. 27.

Reportable transaction understatement.

(a) If a taxpayer has a
reportable transaction understatement for any taxable year, an amount equal to 20 percent
of the amount of the reportable transaction understatement must be added to the tax.

(b)(1) For purposes of this subdivision, "reportable transaction understatement"
means the product of:

(i) the amount of the increase, if any, in taxable income that results from a difference
between the proper tax treatment of an item to which this section applies and the taxpayer's
treatment of that item as shown on the taxpayer's tax return; and

(ii) the highest rate of tax imposed on the taxpayer under section 290.06 determined
without regard to the understatement.

(2) For purposes of clause (1)(i), any reduction of the excess of deductions allowed
for the taxable year over gross income for that year, and any reduction in the amount of
capital losses which would, without regard to section 1211 of the Internal Revenue Code,
be allowed for that year, must be treated as an increase in taxable income.

(c) This subdivision applies to any item that is attributable to:

(1) any listed transaction under section 289A.121; and

(2) any reportable transaction, other than a listed transaction, if a significant purpose
of that transaction is the avoidance or evasion of federal income tax liability.

(d) Paragraph (a) applies by substituting "30 percent" for "20 percent" with respect
to the portion of any reportable transaction understatement with respect to which the
disclosure requirements of section 289A.121, subdivision 5, and section 6664(d)(2)(A)
of the Internal Revenue Code are not met.

(e)(1) No penalty applies under this subdivision with respect to any portion of a
reportable transaction understatement if the taxpayer shows that there was reasonable
cause for the portion and that the taxpayer acted in good faith with respect to the portion.
This paragraph applies only if:

(i) the relevant facts affecting the tax treatment of the item are adequately disclosed
as required under section 289A.121;

(ii) there is or was substantial authority for the treatment; and

(iii) the taxpayer reasonably believed that the treatment was more likely than not
the proper treatment.

(2) A taxpayer who did not adequately disclose under section 289A.121 meets
the requirements of clause (1)(i), if the commissioner abates the penalty new text begin imposed by
subdivision 26, paragraph (d), new text end under deleted text begin section 270C.34 deleted text end new text begin subdivision 26, paragraph (g) new text end .

(3) For purposes of clause (1)(iii), a taxpayer is treated as having a reasonable belief
with respect to the tax treatment of an item only if the belief:

(i) is based on the facts and law that exist when the return of tax which includes the
tax treatment is filed; and

(ii) relates solely to the taxpayer's chances of success on the merits of the treatment
and does not take into account the possibility that a return will not be audited, the
treatment will not be raised on audit, or the treatment will be resolved through settlement
if it is raised.

(4) An opinion of a tax advisor may not be relied upon to establish the reasonable
belief of a taxpayer if:

(i) the tax advisor:

(A) is a material advisor, as defined in section 289A.121, and participates in the
organization, management, promotion, or sale of the transaction or is related (within the
meaning of section 267(b) or 707(b)(1) of the Internal Revenue Code) to any person
who so participates;

(B) is compensated directly or indirectly by a material advisor with respect to the
transaction;

(C) has a fee arrangement with respect to the transaction which is contingent on all
or part of the intended tax benefits from the transaction being sustained; or

(D) has a disqualifying financial interest with respect to the transaction, as
determined under United States Treasury regulations prescribed to implement the
provisions of section 6664(d)(3)(B)(ii)(IV) of the Internal Revenue Code; or

(ii) the opinion:

(A) is based on unreasonable factual or legal assumptions, including assumptions
as to future events;

(B) unreasonably relies on representations, statements, findings, or agreements of
the taxpayer or any other person;

(C) does not identify and consider all relevant facts; or

(D) fails to meet any other requirement as the Secretary of the Treasury may
prescribe under federal law.

(f) The penalty imposed by this subdivision applies in lieu of the penalty imposed
under subdivision 4.

new text begin EFFECTIVE DATE. new text end

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

Sec. 9.

Minnesota Statutes 2006, section 289A.60, is amended by adding a subdivision
to read:

new text begin Subd. 28. new text end

new text begin Preparer identification number. new text end

new text begin Any Minnesota individual income tax
return or claim for refund prepared by a "tax refund or return preparer" as defined in
subdivision 13, paragraph (f), shall bear the identification number the preparer is required
to use federally under section 6109(a)(4) of the Internal Revenue Code. A tax refund
or return preparer who prepares a Minnesota individual income tax return or claim for
refund and fails to include the required number on the return or claim is subject to a
penalty of $50 for each failure.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns prepared for tax years
beginning after December 31, 2006.
new text end

Sec. 10.

Minnesota Statutes 2006, section 290.01, subdivision 19c, 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) deleted text begin 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;
deleted text end

deleted text begin (11) deleted text end the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g);

deleted text begin (12) deleted text end new text begin (11) new text end 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;

deleted text begin (13) deleted text end new text begin (12) new text end the amount of net income excluded under section 114 of the Internal
Revenue Code;

deleted text begin (14) deleted text end new text begin (13) new text end 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 section 103 of Public Law 109-222;

deleted text begin (15) deleted text end new text begin (14) new text end 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;

deleted text begin (16) deleted text end new text begin (15) 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;

deleted text begin (17) deleted text end new text begin (16) new text end to the extent deducted in computing federal taxable income, the amount of
the deduction allowable under section 199 of the Internal Revenue Code; and

deleted text begin (18) deleted text end new text begin (17) new text end the exclusion allowed under section 139A of the Internal Revenue Code
for federal subsidies for prescription drug plans.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2006.
new text end

Sec. 11.

Minnesota Statutes 2006, section 290.01, subdivision 19d, 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 deleted text begin federal jobs deleted text end new text begin work opportunity new text end 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 deleted text begin (11) deleted text end new text begin (9) new text end , 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) deleted text begin 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;
deleted text end

deleted text begin (9) deleted text end 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) deleted text end new text begin (9) new text end 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;

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) the amount of any refund of environmental taxes paid under section 59A of the
Internal Revenue Code;
deleted text end

deleted text begin (16) 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 (17) 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 (18) 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 section deleted text begin 614 deleted text end new text begin 103 new text end of Public Law deleted text begin 107-147 deleted text end new text begin 109-222 new text end ;

deleted text begin (19) 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 deleted text begin (15) deleted text end new text begin (14) new text end , 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 deleted text begin (15) deleted text end new text begin (14) new text end . The
resulting delayed depreciation cannot be less than zero; and

deleted text begin (20) 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 deleted text begin (16) deleted text end new text begin (15) new text end , an amount equal to one-fifth
of the amount of the addition.

new text begin EFFECTIVE DATE. new text end

new text begin The amendment to clause (2) is effective the day following
final enactment. The rest of this section is effective for taxable years beginning after
December 31, 2006.
new text end

Sec. 12.

Minnesota Statutes 2006, section 290.06, subdivision 33, is amended to read:

Subd. 33.

Bovine testing credit.

(a) An owner of cattle in Minnesota may take a
credit against the tax due under this chapter for an amount equal to one-half the expenses
incurred during the taxable year to conduct tuberculosis testing on those cattle.

(b) If the amount of credit which the taxpayer is eligible to receive under this
subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
revenue shall refund the excess to the taxpayer.

(c) The amount necessary to pay claims for the refund provided in this subdivision is
appropriated from the general fund to the commissioner of revenue.

new text begin (d) Expenses incurred in a calendar year in which tuberculosis testing of cattle in
Minnesota is not federally required are not allowed in claiming the credit under paragraph
(a).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2007.
new text end

Sec. 13.

Minnesota Statutes 2006, section 290.067, subdivision 2b, is amended to read:

Subd. 2b.

Inflation adjustment.

new text begin The commissioner shall adjust new text end the dollar amount
of the income threshold at which the maximum credit begins to be reduced under
subdivision 2 deleted text begin must be adjusted for inflation. The commissioner shall make the inflation
adjustments in accordance with section 1(f) of the Internal Revenue Code except that for
the purposes of this subdivision the percentage increase must be determined from the year
starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting
for inflation for the tax year beginning after December 31, 2000. The determination of
the commissioner under this subdivision is not a rule under the Administrative Procedure
Act. deleted text end new text begin 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 "1999" shall be substituted for
the word "1992." For 2001, the commissioner shall then determine the percent change
from the 12 months ending on August 31, 1999, to the 12 months ending on August 31,
2000, and in each subsequent year, from the 12 months ending on August 31, 1999, to the
12 months ending on August 31 of the year preceding the taxable year. The determination
of the commissioner pursuant to this subdivision must not be considered a "rule" and is
not subject to the Administrative Procedure Act contained in chapter 14. The threshold
amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in
$5, the amount is rounded up to the nearest $10 amount.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2006.
new text end

Sec. 14.

Minnesota Statutes 2006, section 290.0671, subdivision 7, is amended to read:

Subd. 7.

Inflation adjustment.

The earned income amounts used to calculate the
credit and the income thresholds at which the maximum credit begins to be reduced in
subdivision 1 must be adjusted for inflation. The commissioner shall deleted text begin make the inflation
adjustments in accordance with section 1(f) of the Internal Revenue Code except that for
the purposes of this subdivision the percentage increase shall be determined from the year
starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting for
inflation for the tax year beginning after December 31, 2000. deleted text end new text begin adjust 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 "1999" shall be substituted for the word "1992." For
2001, the commissioner shall then determine the percent change from the 12 months
ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in each
subsequent year, from the 12 months ending on August 31, 1999, to the 12 months ending
on August 31 of the year preceding the taxable year. The earned income thresholds as
adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends
in $5, the amount is rounded up to the nearest $10 amount. new text end The determination of the
commissioner under this subdivision is not a rule under the Administrative Procedure Act.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2006.
new text end

Sec. 15.

Minnesota Statutes 2006, section 290.091, subdivision 3, is amended to read:

Subd. 3.

Exemption amount.

(a) For purposes of computing the alternative
minimum tax, the exemption amount is deleted text begin :
deleted text end

deleted text begin (1) for taxable years beginning before January 1, 2006, the exemption determined
under section 55(d) of the Internal Revenue Code, as amended through December 31,
1992; and
deleted text end

deleted text begin (2) deleted text end new text begin , new text end for taxable years beginning after December 31, 2005, $60,000 for married
couples filing joint returns, $30,000 for married individuals filing separate returns, estates,
and trusts, and $45,000 for unmarried individuals.

(b) The exemption amount determined under this subdivision is subject to the phase
out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum
taxable income as determined under this section must be substituted in the computation of
the phase out.

(c) For taxable years beginning after December 31, 2006, the exemption amount
under paragraph (a), clause (2), must be adjusted for inflation. deleted text begin The commissioner shall
make the inflation adjustments in accordance with section 1(f) of the Internal Revenue
Code except that for the purposes of this subdivision the percentage increase must be
determined from the year starting September 1, 2005, and ending August 31, 2006, as the
base year for adjusting for inflation for the tax year beginning after December 31, 2006. deleted text end
new text begin The commissioner shall adjust the exemption amount 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 "2005" shall be substituted for the word "1992." For 2007,
the commissioner shall then determine the percent change from the 12 months ending on
August 31, 2005, to the 12 months ending on August 31, 2006, and in each subsequent
year, from the 12 months ending on August 31, 2005, to the 12 months ending on August
31 of the year preceding the taxable year. The exemption amount as adjusted must be
rounded to the nearest $10. If the amount ends in $5, it must be rounded up to the nearest
$10 amount. new text end The determination of the commissioner under this subdivision is not a rule
under the Administrative Procedure Act.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2006.
new text end

Sec. 16.

Minnesota Statutes 2006, section 290.191, subdivision 8, is amended to read:

Subd. 8.

Deposit; definition.

(a) "Deposit," as used in subdivision deleted text begin 7 deleted text end new text begin 6, paragraph
(n) new text end , has the meanings in this subdivision.

(b) "Deposit" means the unpaid balance of money or its equivalent received or
held by a financial institution in the usual course of business and for which it has given
or is obligated to give credit, either conditionally or unconditionally, to a commercial,
checking, savings, time, or thrift account whether or not advance notice is required to
withdraw the credited funds, or which is evidenced by its certificate of deposit, thrift
certificate, investment certificate, or certificate of indebtedness, or other similar name, or a
check or draft drawn against a deposit account and certified by the financial institution,
or a letter of credit or a traveler's check on which the financial institution is primarily
liable. However, without limiting the generality of the term "money or its equivalent," any
such account or instrument must be regarded as evidencing the receipt of the equivalent
of money when credited or issued in exchange for checks or drafts or for a promissory
note upon which the person obtaining the credit or instrument is primarily or secondarily
liable, or for a charge against a deposit account, or in settlement of checks, drafts, or other
instruments forwarded to the bank for collection.

(c) "Deposit" means trust funds received or held by the financial institution, whether
held in the trust department or held or deposited in any other department of the financial
institution.

(d) "Deposit" means money received or held by a financial institution, or the credit
given for money or its equivalent received or held by a financial institution, in the usual
course of business for a special or specific purpose, regardless of the legal relationship so
established. Under this paragraph, "deposit" includes, but is not limited to, escrow funds,
funds held as security for an obligation due to the financial institution or others, including
funds held as dealers reserves, or for securities loaned by the financial institution, funds
deposited by a debtor to meet maturing obligations, funds deposited as advance payment
on subscriptions to United States government securities, funds held for distribution or
purchase of securities, funds held to meet its acceptances or letters of credit, and withheld
taxes. It does not include funds received by the financial institution for immediate
application to the reduction of an indebtedness to the receiving financial institution, or
under condition that the receipt of the funds immediately reduces or extinguishes the
indebtedness.

(e) "Deposit" means outstanding drafts, including advice or another such institution,
cashier's checks, money orders, or other officer's checks issued in the usual course
of business for any purpose, but not including those issued in payment for services,
dividends, or purchases or other costs or expenses of the financial institution itself.

(f) "Deposit" means money or its equivalent held as a credit balance by a financial
institution on behalf of its customer if the entity is engaged in soliciting and holding such
balances in the regular course of its business.

(g) Interinstitution fund transfers are not deposits.

new text begin EFFECTIVE DATE. new text end

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

Sec. 17.

Minnesota Statutes 2006, section 290A.03, subdivision 7, is amended to read:

Subd. 7.

Dependent.

"Dependent" means any person who is considered a
dependent under sections 151 and 152 of the Internal Revenue Code. deleted text begin In the case of a son,
stepson, daughter, or stepdaughter of the claimant, amounts received as a Minnesota
family investment program grant, allowance to or on behalf of the child, surplus food, or
other relief in kind supplied by a governmental agency must not be taken into account
in determining whether the child received more than half of the child's support from
the claimant.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on
rents paid after December 31, 2006, and property taxes payable after December 31, 2007.
new text end

Sec. 18.

Minnesota Statutes 2006, section 291.215, subdivision 1, is amended to read:

Subdivision 1.

Determination.

All property includable in the Minnesota gross
estate of a decedent shall be valued in accordance with the provisions of sections 2031 or
2032 and, if applicable, 2032A, of the Internal Revenue Code and any elections made in
valuing the federal gross estate shall be applicable in valuing the Minnesota gross estate.
deleted text begin Values for purposes of the estate tax on both probate and nonprobate assets shall be the
same as those finally determined for purposes of the federal estate tax on a decedent's
estate. deleted text end new text begin Except as otherwise provided in section 291.075, the value of all property
includable in the Minnesota gross estate of a decedent may be independently determined
under those sections for Minnesota estate tax purposes.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2005.
new text end

Sec. 19. new text begin TRANSITION; POLLUTION CONTROL FACILITIES
AMORTIZATION.
new text end

new text begin The amount of additions to federal taxable income pursuant to Minnesota Statutes,
section 290.01, subdivision 19c, clause (10), that are properly subtractable pursuant
to Minnesota Statutes, section 290.01, subdivision 19d, clause (8), for taxable years
beginning after December 31, 2006, and have not been subtracted pursuant to Minnesota
Statutes, section 290.01, subdivision 19d, clause (8), are subtractable in the taxpayer's first
taxable year beginning after December 31, 2006.
new text end

ARTICLE 12

DEPARTMENT SALES AND USE TAXES

Section 1.

Minnesota Statutes 2006, section 289A.40, subdivision 2, is amended to
read:

Subd. 2.

Bad debt loss.

If a claim relates to an overpayment because of a failure to
deduct a loss due to a bad debt or to a security becoming worthless, the claim is considered
timely if filed within seven years from the date prescribed for the filing of the return. A
claim relating to an overpayment of taxes under chapter 297A must be filed within 3-1/2
years from the date deleted text begin prescribed for filing the return, plus any extensions granted for filing
the return, but only if filed within the extended time deleted text end new text begin when the bad debt was (1) written off
as uncollectible in the taxpayer's books and records, and (2) either eligible to be deducted
for federal income tax purposes or would have been eligible for a bad debt deduction for
federal income tax purposes if the taxpayer were required to file a federal income tax
return, or within one year from the date the taxpayer's federal income tax return is timely
filed claiming the bad debt deduction, whichever period is later new text end . The refund or credit is
limited to the amount of overpayment attributable to the loss. "Bad debt" for purposes
of this subdivision, has the same meaning as that term is used in United States Code,
title 26, section 166, except that for a claim relating to an overpayment of taxes under
chapter 297A the following are excluded from the calculation of bad debt: financing
charges or interest; sales or use taxes charged on the purchase price; uncollectible amounts
on property that remain in the possession of the seller until the full purchase price is
paid; expenses incurred in attempting to collect any debt; and repossessed property. new text begin For
purposes of reporting a payment received on previously claimed bad debt under chapter
297A, any payments made on a debt or account are applied first proportionally to the
taxable price of the property or service and the sales tax on it, and secondly to interest,
service charges, and any other charges.
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 2006, section 289A.56, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Border city zone refunds. new text end

new text begin Notwithstanding subdivision 3, for refunds
payable under section 469.1734, subdivision 6, interest is computed from 90 days after the
refund claim is filed with the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims filed on or after
July 1, 2007.
new text end

Sec. 3.

Minnesota Statutes 2006, section 289A.60, subdivision 25, is amended to read:

Subd. 25.

Penalty for failure to properly complete sales new text begin and use new text end tax return.

A
person who fails to report local deleted text begin sales tax deleted text end new text begin taxes required to be reported new text end on a sales new text begin and use
new text end tax return or who fails to report local deleted text begin sales tax deleted text end new text begin taxes new text end on separate tax lines on the sales
new text begin and use new text end tax return is subject to a penalty of five percent of the amount of tax not properly
reported on the return. A person who files a consolidated tax return but fails to report
location information is subject to a $500 penalty for each return not containing location
information. In addition, the commissioner may revoke the privilege for a taxpayer to
file consolidated returns and may require the taxpayer to separately register each location
and to file a tax return for each location.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns filed after June 30, 2007.
new text end

Sec. 4.

Minnesota Statutes 2006, section 289A.60, is amended by adding a subdivision
to read:

new text begin Subd. 29. new text end

new text begin Penalty for failure to report liquor sales. new text end

new text begin In the case of a failure to file
an informational return required by section 297A.8155 with the commissioner on or before
the date prescribed, the person failing to file the report shall pay a penalty of $500 each
failure. If a failure to file a report is intentional, the penalty shall be $1,000 each failure.
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. 5.

Minnesota Statutes 2006, section 297A.61, subdivision 3, is amended to read:

Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase" include, but are not limited
to, each of the transactions listed in this subdivision.

(b) Sale and purchase include:

(1) any transfer of title or possession, or both, of tangible personal property, whether
absolutely or conditionally, for a consideration in money or by exchange or barter; and

(2) the leasing of or the granting of a license to use or consume, for a consideration
in money or by exchange or barter, tangible personal property, other than a manufactured
home used for residential purposes for a continuous period of 30 days or more.

(c) Sale and purchase include the production, fabrication, printing, or processing of
tangible personal property for a consideration for consumers who furnish either directly or
indirectly the materials used in the production, fabrication, printing, or processing.

(d) Sale and purchase include the preparing for a consideration of food.
Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
to, the following:

(1) prepared food sold by the retailer;

(2) soft drinks;

(3) candy;

(4) dietary supplements; and

(5) all food sold through vending machines.

(e) A sale and a purchase includes the furnishing for a consideration of electricity,
gas, water, or steam for use or consumption within this state.

(f) A sale and a purchase includes the transfer for a consideration of prewritten
computer software whether delivered electronically, by load and leave, or otherwise.

(g) A sale and a purchase includes the furnishing for a consideration of the following
services:

(1) the privilege of admission to places of amusement, recreational areas, or athletic
events, and the making available of amusement devices, tanning facilities, reducing
salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;

(2) lodging and related services by a hotel, rooming house, resort, campground,
motel, or trailer camp new text begin , including furnishing the guest of the facility with access to
telecommunication services, new text end and the granting of any similar license to use real property
in a specific facility, other than the renting or leasing of it for a continuous period of
30 days or more under an enforceable written agreement that may not be terminated
without prior notice;

(3) nonresidential parking services, whether on a contractual, hourly, or other
periodic basis, except for parking at a meter;

(4) the granting of membership in a club, association, or other organization if:

(i) the club, association, or other organization makes available for the use of its
members sports and athletic facilities, without regard to whether a separate charge is
assessed for use of the facilities; and

(ii) use of the sports and athletic facility is not made available to the general public
on the same basis as it is made available to members.

Granting of membership means both onetime initiation fees and periodic membership
dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
swimming pools; and other similar athletic or sports facilities;

(5) delivery of aggregate materials and concrete block by a third party if the delivery
would be subject to the sales tax if provided by the seller of the aggregate material or
concrete block; and

(6) services as provided in this clause:

(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
include services provided by coin operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services, including services
provided by coin operated facilities operated by the customer, and rustproofing,
undercoating, and towing of motor vehicles;

(iii) building and residential cleaning, maintenance, and disinfecting new text begin services and
pest control new text end and exterminating services;

(iv) detective, security, burglar, fire alarm, and armored car services; but not
including services performed within the jurisdiction they serve by off-duty licensed peace
officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
organization for monitoring and electronic surveillance of persons placed on in-home
detention pursuant to court order or under the direction of the Minnesota Department
of Corrections;

(v) pet grooming services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
public utility lines. Services performed under a construction contract for the installation of
shrubbery, plants, sod, trees, bushes, and similar items are not taxable;

(vii) massages, except when provided by a licensed health care facility or
professional or upon written referral from a licensed health care facility or professional for
treatment of illness, injury, or disease; and

(viii) the furnishing of lodging, board, and care services for animals in kennels and
other similar arrangements, but excluding veterinary and horse boarding services.

In applying the provisions of this chapter, the terms "tangible personal property"
and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
and the provision of these taxable services, unless specifically provided otherwise.
Services performed by an employee for an employer are not taxable. Services performed
by a partnership or association for another partnership or association are not taxable if
one of the entities owns or controls more than 80 percent of the voting power of the
equity interest in the other entity. Services performed between members of an affiliated
group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
group of corporations" means those entities that would be classified as members of an
affiliated group as defined under United States Code, title 26, section 1504, disregarding
the exclusions in section 1504(b).

(h) A sale and a purchase includes the furnishing for a consideration of tangible
personal property or taxable services by the United States or any of its agencies or
instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
subdivisions.

(i) A sale and a purchase includes the furnishing for a consideration
of telecommunications services, deleted text begin including deleted text end new text begin ancillary services associated with
telecommunication services, new text end cable television services deleted text begin and deleted text end new text begin , new text end direct satellite services new text begin , and
ring tones new text end . deleted text begin Telecommunications deleted text end new text begin Telecommunication services include, but are not limited
to, the following services, as defined in section 297A.669: air-to-ground radiotelephone
service, mobile telecommunication service, postpaid calling service, prepaid calling
service, prepaid wireless calling service, and private communication services. The new text end
services new text begin in this paragraph new text end are taxed to the extent allowed under federal law.

(j) A sale and a purchase includes the furnishing for a consideration of installation if
the installation charges would be subject to the sales tax if the installation were provided
by the seller of the item being installed.

(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
65B.29, subdivision 1, clause (1).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2007, except that the amendments to paragraphs (g), clause (2), and (i), are
effective for sales and purchases made on or after January 1, 2008.
new text end

Sec. 6.

Minnesota Statutes 2006, section 297A.61, subdivision 4, is amended to read:

Subd. 4.

Retail sale.

(a) A "retail sale" means any sale, lease, or rental for any
purpose, other than resale, sublease, or subrent of items by the purchaser in the normal
course of business as defined in subdivision 21.

(b) A sale of property used by the owner only by leasing it to others or by holding it
in an effort to lease it, and put to no use by the owner other than resale after the lease or
effort to lease, is a sale of property for resale.

(c) A sale of master computer software that is purchased and used to make copies for
sale or lease is a sale of property for resale.

(d) A sale of building materials, supplies, and equipment to owners, contractors,
subcontractors, or builders for the erection of buildings or the alteration, repair, or
improvement of real property is a retail sale in whatever quantity sold, whether the sale is
for purposes of resale in the form of real property or otherwise.

(e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
for installation of the floor covering is a retail sale and not a sale for resale since a sale
of floor covering which includes installation is a contract for the improvement of real
property.

(f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
for installation of the items is a retail sale and not a sale for resale since a sale of
shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
the improvement of real property.

(g) A sale of tangible personal property that is awarded as prizes is a retail sale and
is not considered a sale of property for resale.

(h) A sale of tangible personal property utilized or employed in the furnishing or
providing of services under subdivision 3, paragraph (g), clause (1), including, but not
limited to, property given as promotional items, is a retail sale and is not considered a
sale of property for resale.

(i) A sale of tangible personal property used in conducting lawful gambling under
chapter 349 or the State Lottery under chapter 349A, including, but not limited to,
property given as promotional items, is a retail sale and is not considered a sale of
property for resale.

(j) A sale of machines, equipment, or devices that are used to furnish, provide, or
dispense goods or services, including, but not limited to, coin-operated devices, is a retail
sale and is not considered a sale of property for resale.

(k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
payment becomes due under the terms of the agreement or the trade practices of the
lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01,
subdivision 5, but excluding vehicles with a manufacturer's gross vehicle weight rating
greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time
the lease is executed.

(l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
title or possession of the tangible personal property.

new text begin (m) A sale of a bundled transaction in which one or more of the products included
in the bundle is a taxable product is a retail sale, except that if one of the products
is a telecommunication service, ancillary service, Internet access, or audio or video
programming service, and the seller has maintained books and records identifying through
reasonable and verifiable standards the portions of the price that are attributable to the
distinct and separately identifiable products, then the products are not considered part of a
bundled transaction. For purposes of this paragraph:
new text end

new text begin (1) the books and records maintained by the seller must be maintained in the regular
course of business, and do not include books and records created and maintained by the
seller primarily for tax purposes;
new text end

new text begin (2) books and records maintained in the regular course of business include, but are
not limited to, financial statements, general ledgers, invoicing and billing systems and
reports, and reports for regulatory tariffs and other regulatory matters; and
new text end

new text begin (3) books and records are maintained primarily for tax purposes when the books
and records identify taxable and nontaxable portions of the price, but the seller maintains
other books and records that identify different prices attributable to the distinct products
included in the same bundled transaction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 7.

Minnesota Statutes 2006, section 297A.61, subdivision 7, is amended to read:

Subd. 7.

Sales price.

(a) "Sales price" means the measure subject to sales tax, and
means the total amount of consideration, including cash, credit, personal property, and
services, for which personal property or services are sold, leased, or rented, valued in
money, whether received in money or otherwise, without any deduction for the following:

(1) the seller's cost of the property sold;

(2) the cost of materials used, labor or service cost, interest, losses, all costs of
transportation to the seller, all taxes imposed on the seller, and any other expenses of
the seller;

(3) charges by the seller for any services necessary to complete the sale, other than
delivery and installation charges;

(4) delivery charges new text begin , except the percentage of the delivery charge allocated to
delivery of tax exempt property, when the delivery charge is allocated by using either (i) a
percentage based on the total sales price of the taxable property compared to the total sales
price of all property in the shipment, or (ii) a percentage based on the total weight of the
taxable property compared to the total weight of all property in the shipment new text end ; new text begin and
new text end

(5) installation charges deleted text begin ; and deleted text end new text begin .
new text end

deleted text begin (6) the value of exempt property given to the purchaser when taxable and exempt
personal property have been bundled together and sold by the seller as a single product
or piece of merchandise.
deleted text end

(b) Sales price does not include:

(1) discounts, including cash, terms, or coupons, that are not reimbursed by a third
party and that are allowed by the seller and taken by a purchaser on a sale;

(2) interest, financing, and carrying charges from credit extended on the sale of
personal property or services, if the amount is separately stated on the invoice, bill of sale,
or similar document given to the purchaser; and

(3) any taxes legally imposed directly on the consumer that are separately stated on
the invoice, bill of sale, or similar document given to the purchaser.

new text begin (c) Sales price includes consideration received by the seller from third parties if:
new text end

new text begin (1) the seller actually receives consideration from a party other than the purchaser
and the consideration is directly related to a price reduction or discount on the sale;
new text end

new text begin (2) the seller has an obligation to pass the price reduction or discount through to
the purchaser;
new text end

new text begin (3) the amount of the consideration attributable to the sale is fixed and determinable
by the seller at the time of the sale of the item to the purchaser; and
new text end

new text begin (4) one of the following criteria is met:
new text end

new text begin (i) the purchaser presents a coupon, certificate, or other documentation to the seller
to claim a price reduction or discount when the coupon, certificate, or documentation is
authorized, distributed, or granted by a third party with the understanding that the third
party will reimburse any seller to whom the coupon, certificate, or documentation is
presented;
new text end

new text begin (ii) the purchaser identifies himself or herself to the seller as a member of a group or
organization entitled to a price reduction or discount. A "preferred customer" card that is
available to any customer does not constitute membership in such a group; or
new text end

new text begin (iii) the price reduction or discount is identified as a third-party price reduction or
discount on the invoice received by the purchaser or on a coupon, certificate, or other
documentation presented by the purchaser.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on or
after January 1, 2008, except that the amendment to paragraph (a), clause (4), is effective
the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2006, section 297A.61, subdivision 10, is amended to read:

Subd. 10.

Tangible personal property.

(a) "Tangible personal property" means
personal property that can be seen, weighed, measured, felt, or touched, or that is in any
other manner perceptible to the senses. "Tangible personal property" includes, but is not
limited to, electricity, water, gas, steam, new text begin and new text end prewritten computer software deleted text begin , and prepaid
calling cards deleted text end .

(b) Tangible personal property does not include:

(1) large ponderous machinery and equipment used in a business or production
activity which at common law would be considered to be real property;

(2) property which is subject to an ad valorem property tax;

(3) property described in section 272.02, subdivision 9, clauses (a) to (d); and

(4) property described in section 272.03, subdivision 2, clauses (3) and (5).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 9.

Minnesota Statutes 2006, section 297A.61, subdivision 24, is amended to read:

Subd. 24.

Telecommunications services.

(a) "Telecommunications services" means
the new text begin electronic new text end transmission, conveyance, or routing of voice, data, audio, video, or any
other information or signals to a point, or between or among points deleted text begin , by or through any
electronic, satellite, optical, microwave, or other medium or method now in existence or
hereafter devised, regardless of the protocol used for such transmission, conveyance,
or routing deleted text end .

(b) Telecommunications services deleted text begin includes the furnishing for consideration of access
to telephone services by a hotel to its guests. deleted text end new text begin include transmission, conveyance, or routing
in which computer processing applications are used to act on the form, code, or protocol
of the content for purposes of transmission, conveyance, or routing, without regard to
whether the service is referred to as voice over Internet protocol services or is classified by
the Federal Communications Commission as enhanced or value added.
new text end

(c) Telecommunications services do not include:

deleted text begin (1) services purchased with a prepaid telephone calling card;
deleted text end

deleted text begin (2) private communication service purchased by an agent acting on behalf of the
State Lottery;
deleted text end

deleted text begin (3) information services; and
deleted text end

deleted text begin (4) purchases of telecommunications when the purchaser uses the purchased services
as a component part of or integrates such service into another telecommunications service
that is sold by the purchaser in the normal course of business.
deleted text end

deleted text begin (d) For purposes of this subdivision, "information services" means the offering of
the capability for generating, acquiring, storing, transforming, processing, retrieving,
utilizing, or making available information.
deleted text end

new text begin (1) data processing and information services that allow data to be generated,
acquired, stored, processed, or retrieved and delivered by an electronic transmission to
a purchaser when the purchaser's primary purpose for the underlying transaction is the
processed data or information;
new text end

new text begin (2) installation or maintenance of wiring or equipment on a customer's premises;
new text end

new text begin (3) tangible personal property;
new text end

new text begin (4) advertising, including, but not limited to, directory advertising;
new text end

new text begin (5) billing and collection services provided to third parties;
new text end

new text begin (6) Internet access service;
new text end

new text begin (7) radio and television audio and video programming services, regardless of the
medium, including the furnishing of transmission, conveyance, and routing of such
services by the programming service provider. Radio and television audio and video
programming services includes, but is not limited to, cable service as defined in United
States Code, title 47, section 522(6), and audio and video programming services delivered
by commercial mobile radio service providers, as defined in Code of Federal Regulations,
title 47, section 20.3;
new text end

new text begin (8) ancillary services; or
new text end

new text begin (9) digital products delivered electronically, including, but not limited to, software,
music, video, reading materials, or ring tones.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 10.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 38. new text end

new text begin Bundled transaction. new text end

new text begin (a) "Bundled transaction" means the retail sale
of two or more products when the products are otherwise distinct and identifiable, and
the products are sold for one nonitemized price. As used in this subdivision, "product"
includes tangible personal property, services, intangibles, and digital goods, but does not
include real property or services to real property. A bundled transaction does not include
the sale of any products in which the sales price varies, or is negotiable, based on the
selection by the purchaser of the products included in the transaction.
new text end

new text begin (b) For purposes of this subdivision, "distinct and identifiable" products does not
include:
new text end

new text begin (1) packaging and other materials, such as containers, boxes, sacks, bags, and
bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the
products and are incidental or immaterial to the retail sale. Examples of packaging that are
incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags,
and express delivery envelopes and boxes;
new text end

new text begin (2) a promotional product provided free of charge with the required purchase of
another product. A promotional product is provided free of charge if the sales price of
another product, which is required to be purchased in order to receive the promotional
product, does not vary depending on the inclusion of the promotional product; and
new text end

new text begin (3) items included in the definition of sales price.
new text end

new text begin (c) For purposes of this subdivision, the term "one nonitemized price" does not
include a price that is separately identified by product on binding sales or other supporting
sales-related documentation made available to the customer in paper or electronic form
including, but not limited to an invoice, bill of sale, receipt, contract, service agreement,
lease agreement, periodic notice of rates and services, rate card, or price list.
new text end

new text begin (d) A transaction that otherwise meets the definition of a bundled transaction is
not a bundled transaction if it is:
new text end

new text begin (1) the retail sale of tangible personal property and a service and the tangible
personal property is essential to the use of the service, and is provided exclusively in
connection with the service, and the true object of the transaction is the service;
new text end

new text begin (2) the retail sale of services if one service is provided that is essential to the use or
receipt of a second service and the first service is provided exclusively in connection with
the second service and the true object of the transaction is the second service;
new text end

new text begin (3) a transaction that includes taxable products and nontaxable products and the
purchase price or sales price of the taxable products is de minimis; or
new text end

new text begin (4) the retail sale of exempt tangible personal property and taxable tangible personal
property if:
new text end

new text begin (i) the transaction includes food and food ingredients, drugs, durable medical
equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices,
or medical supplies; and
new text end

new text begin (ii) the seller's purchase price or sales price of the taxable tangible personal property
is 50 percent or less of the total purchase price or sales price of the bundled tangible
personal property. Sellers must not use a combination of the purchase price and sales
price of the tangible personal property when making the 50 percent determination for
a transaction.
new text end

new text begin (e) For purposes of this subdivision, "purchase price" means the measure subject to
use tax on purchases made by the seller, and "de minimis" means that the seller's purchase
price or sales price of the taxable products is ten percent or less of the total purchase
price or sales price of the bundled products. Sellers shall use either the purchase price
or the sales price of the products to determine if the taxable products are de minimis.
Sellers must not use a combination of the purchase price and sales price of the products
to determine if the taxable products are de minimis. Sellers shall use the full term of a
service contract to determine if the taxable products are de minimis.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 11.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 39. new text end

new text begin Ancillary services. new text end

new text begin "Ancillary services" means services that are
associated with or incidental to the provision of telecommunications services, including,
but not limited to, conference bridging service, detailed telecommunications billing,
directory assistance, vertical service, and voice mail services.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 12.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 40. new text end

new text begin Conference bridging service. new text end

new text begin "Conference bridging service" means an
ancillary service that links two or more participants of an audio or video conference call
and may include the provision of a telephone number. Conference bridging service does
not include the telecommunications services used to reach the conference bridge.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 13.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 41. new text end

new text begin Detailed telecommunications billing service. new text end

new text begin "Detailed
telecommunications billing service" means an ancillary service of separately stating
information pertaining to individual calls on a customer's billing statement.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 14.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 42. new text end

new text begin Directory assistance. new text end

new text begin "Directory assistance" means an ancillary service
of providing telephone number information or address information, or both.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 15.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 43. new text end

new text begin Vertical service. new text end

new text begin "Vertical service" means an ancillary service that is
offered in connection with one or more telecommunications services and which offers
advanced calling features that allow customers to identify callers and to manage multiple
calls and call connections, including conference bridging services.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 16.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 44. new text end

new text begin Voice mail service. new text end

new text begin "Voice mail service" means an ancillary service that
enables the customer to store, send, or receive recorded messages. Voice mail service
does not include any vertical services that the customer may be required to have in order
to utilize the voice mail service.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 17.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 45. new text end

new text begin Ring tone. new text end

new text begin "Ring tone" means a digitized sound file that is downloaded
onto a device and that may be used to alert the customer of a telecommunication service
with respect to a communication.
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. 18.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 46. new text end

new text begin Fur clothing. new text end

new text begin "Fur clothing" means human wearing apparel that is
required by the Federal Fur Products Labeling Act, United States Code, title 15, section
69, to be labeled as a fur product, and the value of the fur components in the product
is more than three times the value of the next most valuable tangible component. For
purposes of this subdivision, "fur" means any animal skin or part of an animal skin with
hair, fleece, or fur fibers attached to it, either in its raw or processed state, but does not
include animal skins that have been converted into leather or suede, or from which the
hair, fleece, or fur fiber has been completely removed in processing the skins.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on or
after July 1, 2007.
new text end

Sec. 19.

Minnesota Statutes 2006, section 297A.63, subdivision 1, is amended to read:

Subdivision 1.

Use of tangible personal property or taxable services.

(a) For the
privilege of using, storing, distributing, or consuming in Minnesota tangible personal
property or taxable services purchased for use, storage, distribution, or consumption in
this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the
purchase price of retail sales of the tangible personal property or taxable services at the
rate of tax imposed under section 297A.62. A person that purchases property from a
Minnesota retailer and returns the tangible personal property to a point within Minnesota,
except in the course of interstate commerce, after it was delivered outside of Minnesota,
is subject to the use tax.

(b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
was paid on the sales price of the tangible personal property or taxable services.

(c) No tax is imposed under paragraph (a) if the purchase meets the requirements for
exemption under section 297A.67, subdivision 21.

new text begin (d) When a transaction otherwise meets the definition of a bundled transaction, but
is not a bundled transaction under section 297A.61, subdivision 38, paragraph (d), and
the seller's purchase price of the taxable product or taxable tangible personal property is
equal to or greater than $100, then use tax is imposed on the purchase price of the taxable
product or taxable personal property. For purposes of this paragraph, "purchase price"
means the measure subject to use tax on purchases made by the seller.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 20.

Minnesota Statutes 2006, section 297A.665, is amended to read:

297A.665 PRESUMPTION OF TAX; BURDEN OF PROOF.

(a) For the purpose of the proper administration of this chapter and to prevent
evasion of the tax, until the contrary is established, it is presumed that:

(1) all gross receipts are subject to the tax; and

(2) all retail sales for delivery in Minnesota are for storage, use, or other consumption
in Minnesota.

(b) The burden of proving that a sale is not a taxable retail sale is on the seller.
deleted text begin However, the seller may take from the purchaser at the time of the sale a fully completed
exemption certificate which conclusively relieves the seller from collecting and remitting
the tax. This deleted text end new text begin However, a seller is relieved of liability if:
new text end

new text begin (1) the seller obtains a fully completed exemption certificate or all the relevant
information required by section 297A.72, subdivision 2, at the time of the sale or within
90 days after the date of the sale; or
new text end

new text begin (2) if the seller has not obtained a fully completed exemption certificate or all the
relevant information required by section 297A.72, subdivision 2, within the time provided
in clause (1), within 120 days after a request for substantiation by the commissioner,
the seller either:
new text end

new text begin (i) obtains in good faith a fully completed exemption certificate or all the relevant
information required by section 297A.72, subdivision 2, from the purchaser; or
new text end

new text begin (ii) proves by other means that the transaction was not subject to tax.
new text end

new text begin (c) Notwithstanding paragraph (b), new text end relief from liability does not apply to a seller who new text begin : new text end

new text begin (1) new text end fraudulently fails to collect the tax new text begin ; new text end or

new text begin (2) new text end solicits purchasers to participate in the unlawful claim of an exemption. deleted text begin If a
seller claiming that certain sales are exempt is not in possession of the required exemption
certificates within 60 days after receiving written notice from the commissioner that the
certificates are required, deductions claimed by the seller that required delivery of the
certificates must be disallowed. If the certificates are delivered to the commissioner within
the 60-day period, the commissioner may verify the reason or basis for the exemption
claimed in the certificates before allowing any deductions. A deduction must not be
granted on the basis of certificates delivered to the commissioner after the 60-day period.
deleted text end

deleted text begin (c) deleted text end new text begin (d) new text end A purchaser of tangible personal property or any items listed in section
297A.63 that are shipped or brought to Minnesota by the purchaser has the burden
of proving that the property was not purchased from a retailer for storage, use, or
consumption in Minnesota.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 21.

Minnesota Statutes 2006, section 297A.669, subdivision 3, is amended to read:

Subd. 3.

Defined telecommunications services sourcing.

The sale of the following
telecommunication services shall be sourced to each level of taxing jurisdiction in
paragraphs (a) to (d).

(a) A sale of mobile telecommunications services, other than air-to-ground
radiotelephone service and prepaid calling service, is sourced to the customer's place of
primary use as required by the Mobile Telecommunications Sourcing Act.

(b) A sale of postpaid calling service is sourced to the origination point of the
telecommunications signal as first identified by either:

(1) the seller's telecommunications system; or

(2) information received by the seller from its service provider, where the system
used to transport such signals is not that of the seller.

(c) A sale of prepaid calling service new text begin or prepaid wireless calling service new text end is sourced in
accordance with section 297A.668, subdivision 2. However, in the case of a sale of deleted text begin mobile
telecommunications service that is deleted text end a prepaid deleted text begin telecommunications deleted text end new text begin wireless calling new text end service,
the rule provided in section 297A.668, subdivision 2, paragraph (f), shall include as an
option the location associated with the mobile telephone number.

(d) A sale of a private communication service is sourced as follows:

(1) service for a separate charge related to a customer channel termination point is
sourced to each level of jurisdiction in which the customer channel termination point
is located;

(2) service where all customer termination points are located entirely within one
jurisdiction or levels of jurisdiction is sourced in such jurisdiction in which the customer
channel termination points are located;

(3) service for segments of a channel between two customer channel termination
points located in different jurisdictions and which segment of channel are separately
charged is sourced 50 percent in each level of jurisdiction in which the customer channel
termination points are located; and

(4) service for segments of a channel located in more than one jurisdiction or
levels of jurisdiction and which segments are not separately billed is sourced in each
jurisdiction based on the percentage determined by dividing the number of customer
channel termination points in the jurisdiction by the total number of customer channel
termination points.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 22.

Minnesota Statutes 2006, section 297A.669, subdivision 13, is amended to
read:

Subd. 13.

Postpaid calling service.

"Postpaid calling service," for purposes of
this section, means the telecommunications service obtained by making a payment
on a call-by-call basis either through the use of a credit card or payment mechanism
such as a bank card, travel card, credit card, or debit card, or by a charge made to
a telephone number that is not associated with the origination or termination of the
telecommunications service. A postpaid calling service includes a telecommunications
service new text begin , except a prepaid wireless calling service, new text end that would be a prepaid calling service
except it is not exclusively a telecommunication service.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 23.

Minnesota Statutes 2006, section 297A.669, subdivision 14, is amended to
read:

Subd. 14.

Prepaid calling service.

"Prepaid calling service," for purposes of this
section, means new text begin a telecommunications service that:
new text end

new text begin (1) provides new text end the right to access exclusively telecommunications services deleted text begin , which deleted text end new text begin ; new text end

new text begin (2) new text end must be paid for in advance deleted text begin and which deleted text end new text begin ; new text end

new text begin (3) new text end enables the origination of calls using an access number or authorization code,
whether manually or electronically dialed deleted text begin , deleted text end new text begin ; new text end and deleted text begin that deleted text end

new text begin (4) new text end is sold in predetermined units or dollars of which the number declines with
use in a known amount.

new text begin EFFECTIVE DATE. new text end

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

Sec. 24.

Minnesota Statutes 2006, section 297A.669, is amended by adding a
subdivision to read:

new text begin Subd. 14a. new text end

new text begin Prepaid wireless calling service. new text end

new text begin "Prepaid wireless calling service," for
purposes of this section, means a telecommunications service that:
new text end

new text begin (1) provides the right to utilize mobile wireless service as well as other
nontelecommunications services, including the download of digital products delivered
electronically, content, and ancillary services;
new text end

new text begin (2) must be paid for in advance; and
new text end

new text begin (3) is sold in predetermined units or dollars of which the number declines with
use in a known amount.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 25.

Minnesota Statutes 2006, section 297A.669, is amended by adding a
subdivision to read:

new text begin Subd. 17. new text end

new text begin Ancillary service. new text end

new text begin The sale of an ancillary service is sourced to the
customer's place of primary use.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 26.

Minnesota Statutes 2006, section 297A.67, subdivision 8, is amended to read:

Subd. 8.

Clothing.

(a) Clothing is exempt. For purposes of this subdivision,
"clothing" means all human wearing apparel suitable for general use.

(b) Clothing includes, but is not limited to, aprons, household and shop; athletic
supporters; baby receiving blankets; bathing suits and caps; beach capes and coats; belts
and suspenders; boots; coats and jackets; costumes; children and adult diapers, including
disposable; ear muffs; footlets; formal wear; garters and garter belts; girdles; gloves and
mittens for general use; hats and caps; hosiery; insoles for shoes; lab coats; neckties;
overshoes; pantyhose; rainwear; rubber pants; sandals; scarves; shoes and shoe laces;
slippers; sneakers; socks and stockings; steel-toed boots; underwear; uniforms, athletic
and nonathletic; and wedding apparel.

(c) Clothing does not include the following:

(1) belt buckles sold separately;

(2) costume masks sold separately;

(3) patches and emblems sold separately;

(4) sewing equipment and supplies, including but not limited to, knitting needles,
patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles;

(5) sewing materials that become part of clothing, including but not limited to,
buttons, fabric, lace, thread, yarn, and zippers;

(6) clothing accessories or equipment;

(7) sports or recreational equipment; and

(8) protective equipment.

Clothing also does not include deleted text begin apparel made from fur if a uniform definition of "apparel
made from fur" is developed by the member states of the Streamlined Sales and Use Tax
Agreement deleted text end new text begin "fur clothing" as defined in section 297A.61, subdivision 46 new text end .

For purposes of this subdivision, "clothing accessories or equipment" means
incidental items worn on the person or in conjunction with clothing. Clothing accessories
and equipment include, but are not limited to, briefcases; cosmetics; hair notions, including
barrettes, hair bows, and hairnets; handbags; handkerchiefs; jewelry; nonprescription
sunglasses; umbrellas; wallets; watches; and wigs and hairpieces. "Sports or recreational
equipment" means items designed for human use and worn in conjunction with an athletic
or recreational activity that are not suitable for general use. Sports and recreational
equipment includes, but is not limited to, ballet and tap shoes; cleated or spiked athletic
shoes; gloves, including, but not limited to, baseball, bowling, boxing, hockey, and golf
gloves; goggles; hand and elbow guards; life preservers and vests; mouth guards; roller
and ice skates; shin guards; shoulder pads; ski boots; waders; and wetsuits and fins.
"Protective equipment" means items for human wear and designed as protection of the
wearer against injury or disease or as protection against damage or injury of other persons
or property but not suitable for general use. Protective equipment includes, but is not
limited to, breathing masks; clean room apparel and equipment; ear and hearing protectors;
face shields; finger guards; hard hats; helmets; paint or dust respirators; protective gloves;
safety glasses and goggles; safety belts; tool belts; and welders gloves and masks.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on or
after July 1, 2007.
new text end

Sec. 27.

Minnesota Statutes 2006, section 297A.67, subdivision 9, is amended to read:

Subd. 9.

Baby products.

new text begin Breast pumps, new text end baby bottles and nipples, pacifiers, teething
rings, and infant syringes are exempt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on or
after the day following final enactment.
new text end

Sec. 28.

Minnesota Statutes 2006, section 297A.68, subdivision 11, is amended to read:

Subd. 11.

Advertising materials.

Materials designed to advertise and promote the
sale of merchandise or services are exempt if these materials are mailed or transferred to a
person outside the state for use solely outside the state. Mailing and reply envelopes and
cards new text begin and other shipping materials including, but not limited to, boxes, labels, containers,
and banding, new text end used exclusively in connection with these advertising and promotional
materials are included in this exemption. The exemption applies regardless of where the
mailing occurs. The storage of these materials in the state for the purpose of subsequently
shipping or otherwise transferring the material out of state is also exempt if the other
conditions in this subdivision are met. new text begin For purposes of this subdivision, materials that have
a primary purpose other than advertising, such as fulfilling a legal obligation or furnishing
nonadvertising information, are not materials designed to advertise and promote the sale
of merchandise or services even if they do include advertising content.
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. 29.

Minnesota Statutes 2006, section 297A.68, subdivision 16, is amended to read:

Subd. 16.

Packing materials.

Packing materials used to pack and ship household
goods new text begin and that are provided to and remain with the customer of a for-hire carrier new text end are
exempt if the ultimate destination of the goods is outside Minnesota and if the deleted text begin goods deleted text end
new text begin packing materials new text end are not later returned to a point within Minnesota, except in the course
of interstate commerce. new text begin This exemption does not apply to tools, equipment, pads, or
accessories owned or leased by the for-hire carrier.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2007.
new text end

Sec. 30.

Minnesota Statutes 2006, section 297A.68, subdivision 35, is amended to read:

Subd. 35.

Telecommunications new text begin , cable television, and direct satellite new text end equipment.

(a) Telecommunications new text begin , cable television, or direct satellite new text end machinery and equipment
purchased or leased for use directly by a telecommunications new text begin , cable television, or
direct satellite new text end service provider primarily in the provision of telecommunications new text begin , cable
television, or direct satellite new text end services that are ultimately to be sold at retail are exempt,
regardless of whether purchased by the owner, a contractor, or a subcontractor.

(b) For purposes of this subdivision, "telecommunications new text begin , cable television, or direct
satellite new text end machinery and equipment" includes, but is not limited to:

(1) machinery, equipment, and fixtures utilized in receiving, initiating,
amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring
telecommunications new text begin , cable television, or direct satellite new text end services, such as computers,
transformers, amplifiers, routers, bridges, repeaters, multiplexers, and other items
performing comparable functions;

(2) machinery, equipment, and fixtures used in the transportation of
telecommunications new text begin , cable television, or direct satellite new text end services, radio transmitters and
receivers, satellite equipment, microwave equipment, and other transporting media, but
not wire, cable, fiber, poles, or conduit;

(3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or
enable the machinery in clauses (1) and (2) to accomplish its intended function, such as
auxiliary power supply, test equipment, towers, heating, ventilating, and air conditioning
equipment necessary to the operation of the telecommunications new text begin , cable television, or direct
satellite new text end equipment; and software necessary to the operation of the telecommunications new text begin ,
cable television, or direct satellite new text end equipment; and

(4) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to qualified machinery or equipment.

deleted text begin (c) For purposes of this subdivision, "telecommunications services" means
telecommunications services as defined in section deleted text begin 297A.61, subdivision 24 deleted text end , paragraphs
(a), (c), and (d).
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 31.

Minnesota Statutes 2006, section 297A.70, subdivision 7, is amended to read:

Subd. 7.

Hospitals and outpatient surgical centers.

(a) Sales, except for those
listed in paragraph (c), to a hospital are exempt, if the items purchased are used in
providing hospital services. For purposes of this subdivision, "hospital" means a hospital
organized and operated for charitable purposes within the meaning of section 501(c)(3) of
the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction,
and "hospital services" are services authorized or required to be performed by a "hospital"
under chapter 144.

(b) Sales, except for those listed in paragraph (c), to an outpatient surgical center
are exempt, if the items purchased are used in providing outpatient surgical services. For
purposes of this subdivision, "outpatient surgical center" means an outpatient surgical
center organized and operated for charitable purposes within the meaning of section
501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other
jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means:
(1) services authorized or required to be performed by an outpatient surgical center under
chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means
health services furnished to a person whose medical condition is sufficiently acute to
require treatment unavailable through, or inappropriate to be provided by, a clinic or
physician's office, but not so acute as to require treatment in a hospital emergency room.

(c) This exemption does not apply to the following products and services:

(1) purchases made by a clinic, physician's office, or any other medical facility not
operating as a hospital or outpatient surgical center, even though the clinic, office, or
facility may be owned and operated by a hospital or outpatient surgical center;

(2) sales under section 297A.61, subdivision 3, paragraph (g), clause (2), and
prepared food, candy, and soft drinks;

(3) building and construction materials used in constructing buildings or facilities
that will not be used principally by the hospital or outpatient surgical center;

(4) building, construction, or reconstruction materials purchased by a contractor
or a subcontractor as a part of a lump-sum contract or similar type of contract with a
guaranteed maximum price covering both labor and materials for use in the construction,
alteration, or repair of a hospital or outpatient surgical center; or

(5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 5.

(d) A limited liability company also qualifies for exemption under this subdivision if
(1) it consists of a sole member that would qualify for the exemption, and (2) the items
purchased qualify for the exemption.

new text begin (e) An entity that contains both a hospital and a nonprofit unit may claim this
exemption on purchases made for both the hospital and nonprofit unit provided that:
new text end

new text begin (1) the nonprofit unit would have qualified for exemption under subdivision 4; and
new text end

new text begin (2) the items purchased would have qualified for the exemption.
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. 32.

Minnesota Statutes 2006, section 297A.70, is amended by adding a
subdivision to read:

new text begin Subd. 17. new text end

new text begin Private communication service for State Lottery. new text end

new text begin Private
communication service, as defined in section 297A.61, subdivision 26, is exempt if the
service is purchased by an agent acting on behalf of the State Lottery.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2008.
new text end

Sec. 33.

Minnesota Statutes 2006, section 297A.72, is amended to read:

297A.72 EXEMPTION CERTIFICATES.

Subd. 2.

Content and form of exemption certificate.

An exemption certificate
must be substantially in the form prescribed by the commissioner deleted text begin and deleted text end new text begin . To be fully
completed, the exemption certificate must new text end :

(1) new text begin either new text end be signed by the purchaser new text begin if it is a paper form, new text end or meet the requirements
of section 270C.304 new text begin if in electronic form new text end ;

(2) bear the name and address of the purchaser; deleted text begin and
deleted text end

(3) indicate the deleted text begin sales tax account deleted text end new text begin identification new text end number deleted text begin , if any, deleted text end issued to the
purchaser deleted text begin . deleted text end new text begin as follows:
new text end

new text begin (i) the purchaser's Minnesota tax identification number;
new text end

new text begin (ii) if the purchaser does not have a Minnesota tax identification number, then the
purchaser's state tax identification number that is issued by a state other than Minnesota,
and the name of that state;
new text end

new text begin (iii) if the purchaser does not have an identification number described in either item
(i) or (ii), then the purchaser's federal Employer Identification Number; or
new text end

new text begin (iv) if the purchaser does not have an identification number described in item (i), (ii),
or (iii), then either the number of the purchaser's state-issued driver's license, if valid in
the state of issue, or if the purchaser does not have a driver's license, a valid state-issued
identification number, and the name of the state of issue;
new text end

new text begin (4) indicate the purchaser's type of business, using a business-type coding system
prescribed by the commissioner; and
new text end

new text begin (5) indicate the reason for the exemption, using an exemption reason coding system
prescribed by the commissioner.
new text end

new text begin Subd. 3. new text end

new text begin Purchaser requirement. new text end

new text begin A blanket exemption certificate is an exemption
certificate used for continuing future purchases. A purchaser using a blanket exemption
certificate must update it as needed to accurately reflect the information that is required
under subdivision 2.
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. 34.

new text begin [297A.8155] LIQUOR REPORTING REQUIREMENTS; PENALTY.
new text end

new text begin A person who sells liquor, as defined in section 295.75, subdivision 1, in Minnesota
to a retailer that sells liquor, shall file with the commissioner an annual informational
report, in the form and manner prescribed by the commissioner, indicating the volume of
liquor sold to each retailer in the previous calendar year. The report must be filed on or
before February 28 of each calendar year beginning in 2008. A person failing to file this
report is subject to the penalty imposed under Minnesota Statutes, section 289A.60.
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. 35.

Minnesota Statutes 2006, section 297A.90, subdivision 2, is amended to read:

Subd. 2.

Payment of tax.

(a) Persons who are registered as retailers may make
purchases in this state or import property into this state without payment of the sales or use
taxes imposed by this chapter at the time of purchase or importation, if the purchases or
importations come within the provisions of this section and are made in strict compliance
with the rules of the commissioner.

(b) A person described in subdivision 1 may elect to pay directly to the commissioner
any sales or use tax that may be due under this chapter for the acquisition of mobile
transportation equipment and parts and accessories attached or to be attached to such
equipment registered under section 168.187.

(c) The total cost of such equipment and parts and accessories attached or to be
attached to such equipment must be multiplied by a fraction. The numerator of the fraction
is the Minnesota mileage as reported on the current pro rata application provided for in
section 168.187 and the denominator of the fraction is the total mileage reported on the
current pro rata registration application. The amount so determined must be multiplied by
the tax rate to obtain the tax due.

In computing the tax under this section "sales price" does not include the amount of any
deleted text begin tax, except any manufacturer's or importer's excise tax, imposed by the United States
upon or with respect to retail sales, whether deleted text end new text begin taxes new text end imposed new text begin directly new text end on the deleted text begin retailer or the deleted text end
consumer new text begin that are separately stated on the invoice, bill of sale, or similar document given
to the purchaser new text end .

(d) A retailer covered by this section shall make a return and remit to the
commissioner the tax due for the preceding calendar month in accordance with sections
289A.11 and 289A.20, subdivision 4.

new text begin EFFECTIVE DATE. new text end

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

Sec. 36.

Minnesota Statutes 2006, section 297B.035, subdivision 1, is amended to read:

Subdivision 1.

Ordinary course of business.

Except as provided in this section,
motor vehicles purchased new text begin solely new text end for resale in the ordinary course of business by any motor
vehicle dealer, as defined in section 168.011, subdivision 21, who is licensed under section
168.27, subdivision 2 or 3, new text begin including vehicles new text end which bear dealer plates as authorized by
section 168.27, subdivision 16, shall be exempt from the provisions of this chapter.

new text begin EFFECTIVE DATE. new text end

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

Sec. 37.

Minnesota Statutes 2006, section 469.1734, subdivision 6, is amended to read:

Subd. 6.

Sales tax exemption; equipment; construction materials.

(a) The gross
receipts from the sale of machinery and equipment and repair parts are exempt from
taxation under chapter 297A, if the machinery and equipment:

(1) are used in connection with a trade or business;

(2) are placed in service in a city that is authorized to designate a zone under section
469.1731, regardless of whether the machinery and equipment are used in a zone; and

(3) have a useful life of 12 months or more.

(b) The gross receipts from the sale of construction materials are exempt, if they are
used to construct:

(1) a facility for use in a trade or business located in a city that is authorized to
designate a zone under section 469.1731, regardless of whether the facility is located in a
zone; or

(2) housing that is located in a zone.

The exemptions under this paragraph apply regardless of whether the purchase is made by
the owner, the user, or a contractor.

(c) A purchaser may claim an exemption under this subdivision for tax on the
purchases up to, but not exceeding:

(1) the amount of the tax credit certificates received from the city, less

(2) any tax credit certificates used under the provisions of subdivisions 4 and 5, and
section 469.1732, subdivision 2.

(d) The tax on sales of items exempted under this subdivision shall be imposed and
collected as if the applicable rate under section 297A.62 applied. Upon application by the
purchaser, on forms prescribed by the commissioner, a refund equal to the tax paid shall
be paid to the purchaser. The application must include sufficient information to permit
the commissioner to verify the sales tax paid and the eligibility of the claimant to receive
the credit. No more than two applications for refunds may be filed under this subdivision
in a calendar year. The provisions of section 289A.40 apply to the refunds payable
under this subdivision. There is annually appropriated to the commissioner of revenue
the amount required to make the refunds, which must be deducted from the amount of
the city's allocation under section 469.169, subdivision 12, that remains available and its
limitation under section 469.1735.

new text begin (e) new text end The amount to be refunded shall bear interest at the rate in section 270C.405
from deleted text begin the date deleted text end new text begin 90 days after new text end the refund claim is filed with the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims filed on or after
July 1, 2007.
new text end

Sec. 38. new text begin FUR TAX PAYMENTS.
new text end

new text begin (a) Furriers must file the annual return, required by Minnesota Statutes, section
295.60, subdivision 5, which otherwise would be due March 15, 2008, by September
15, 2007.
new text end

new text begin (b) If a furrier is required by Minnesota Statutes, section 295.60, subdivision 3, to
make installments of quarterly estimates, then the furrier shall make the last installment by
July 15, 2007.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Effective July 1, 2007, for sales and purchases made prior to
July 1, 2007.
new text end

Sec. 39. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2006, section 295.60, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2006, section 297A.61, subdivision 20, new text end new text begin is repealed.
new text end

new text begin (c) new text end new text begin Minnesota Statutes 2006, section 297A.668, subdivision 6, new text end new text begin is repealed.
new text end

new text begin (d) new text end new text begin Minnesota Statutes 2006, section 297A.67, subdivision 22, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective for sales and purchases made on
or after July 1, 2007; paragraph (b) is effective for sales and purchases made on or after
January 1, 2008; and paragraphs (c) and (d) are effective the day following final enactment.
new text end

ARTICLE 13

DEPARTMENT SPECIAL TAXES

Section 1.

Minnesota Statutes 2006, section 62I.06, subdivision 6, is amended to read:

Subd. 6.

deleted text begin Deficits deleted text end new text begin Deficit assessments new text end .

The association shall certify to the
commissioner the estimated amount of any deficit remaining after the stabilization reserve
fund has been exhausted and payment of the maximum final premium for all policyholders
of the association. Within 60 days after the certification, the commissioner shall authorize
the association to recover the members' respective shares of the deficit by assessing
all members an amount sufficient to fully fund the obligations of the association. The
assessment of each member shall be determined in the manner provided in section 62I.07.
An assessment made pursuant to this section shall be deductible by the member from deleted text begin past
or future deleted text end premium taxes due the state new text begin as provided in section 297I.20, subdivision 2 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax returns due on or after January
1, 2008.
new text end

Sec. 2.

Minnesota Statutes 2006, section 71A.04, subdivision 1, is amended to read:

Subdivision 1.

Premium tax.

The attorney-in-fact deleted text begin , in lieu of all taxes, state, county,
and municipal, deleted text end shall file with the commissioner of revenue all returns and pay to the
commissioner of revenue all amounts required under chapter 297I.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2006, section 287.22, is amended to read:

287.22 EXEMPTIONS.

The tax imposed by section 287.21 does not apply to:

(1) An executory contract for the sale of real property under which the purchaser is
entitled to or does take possession of the real property, or any assignment or cancellation
of the contract;

(2) A mortgage or an amendment, assignment, extension, partial release, or
satisfaction of a mortgage;

(3) A will;

(4) A plat;

(5) A lease, amendment of lease, assignment of lease, or memorandum of lease;

(6) A deed, instrument, or writing in which the United States or any agency or
instrumentality thereof is the grantor, assignor, transferor, conveyor, grantee, or assignee;

(7) A deed for a cemetery lot or lots;

(8) A deed of distribution by a personal representative;

(9) A deed to or from a co-owner partitioning their undivided interest in the same
piece of real property;

(10) A deed or other instrument of conveyance issued pursuant to a permanent
school fund land exchange under section 92.121 and related laws;

(11) A referee's or sheriff's certificate of sale in a mortgage or lien foreclosure sale;

(12) A referee's, sheriff's, or certificate holder's certificate of redemption from a
mortgage or lien foreclosure sale issued deleted text begin to the redeeming mortgagor or deleted text end deleted text begin lienee deleted text end new text begin pursuant to
section 580.23 or other statute applicable to redemption by an owner of real property new text end ;

(13) A deed, instrument, or writing which grants, creates, modifies, or terminates an
easement; and

(14) A decree of marriage dissolution, as defined in section 287.01, subdivision 4,
or a deed or other instrument between the parties to the dissolution made pursuant to
the terms of the decree.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2006, section 287.2205, is amended to read:

287.2205 TAX-FORFEITED LAND.

Before a state deed for tax-forfeited land may be issued, the deed tax must be paid
by the purchaser of tax-forfeited land whether the purchase is the result of a public
auction or private sale or a repurchase of tax-forfeited land. State agencies and local
units of government that acquire tax-forfeited land by purchase or any other means are
subject to this section. new text begin The deed tax is $1.65 for a conveyance of tax-forfeited lands to a
governmental subdivision for an authorized public use under section 282.01, subdivision
1a, or for redevelopment purposes under section 282.01, subdivision 1b.
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. 5.

Minnesota Statutes 2006, section 295.52, subdivision 4, is amended to read:

Subd. 4.

Use tax; prescription drugs.

(a) A person that receives prescription drugs
for resale or use in Minnesota, other than from a wholesale drug distributor that is subject
to tax under subdivision 3, is subject to a tax equal to the price paid to the wholesale drug
distributor multiplied by the tax percentage specified in this section. Liability for the tax is
incurred when prescription drugs are received or delivered in Minnesota by the person.

deleted text begin (b) A person that receives prescription drugs for use in Minnesota from a nonresident
pharmacy required to be registered under section is subject to a tax equal to
the price paid by the nonresident pharmacy to the wholesale drug distributor or the
price received by the nonresident pharmacy, whichever is lower, multiplied by the tax
percentage specified in this section. Liability for the tax is incurred when prescription
drugs are received in Minnesota by the person.
deleted text end

deleted text begin (c) deleted text end new text begin (b) new text end A tax imposed under this subdivision does not apply to purchases by an
individual for personal consumption.

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.

Minnesota Statutes 2006, section 295.52, subdivision 4a, is amended to read:

Subd. 4a.

Tax collection.

A wholesale drug distributor with nexus in Minnesota,
who is not subject to tax under subdivision 3, on all or a particular transaction deleted text begin or a
nonresident pharmacy with nexus in Minnesota, deleted text end is required to collect the tax imposed
under subdivision 4, from the purchaser of the drugs and give the purchaser a receipt
for the tax paid. The tax collected shall be remitted to the commissioner in the manner
prescribed by section 295.55, subdivision 3.

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.

Minnesota Statutes 2006, section 295.54, subdivision 2, is amended to read:

Subd. 2.

Pharmacy refund.

A pharmacy may claim an annual refund against the
total amount of tax, if any, the pharmacy owes during that calendar year under section
295.52, subdivision 2. The refund shall equal the amount paid by the pharmacy to a
wholesale drug distributor subject to tax under section 295.52, subdivision 3, for legend
drugs delivered by the pharmacy outside of Minnesota, multiplied by the tax percentage
specified in section 295.52. If the amount of the refund exceeds the tax liability of the
pharmacy under section 295.52, subdivision deleted text begin 1b deleted text end new text begin 2 new text end , the commissioner shall provide the
pharmacy with a refund equal to the excess amount. Each qualifying pharmacy must apply
for the refund on the annual return as provided under section 295.55, subdivision 5. The
refund must be claimed within one year of the due date of the return. Interest on refunds
paid under this subdivision will begin to accrue 60 days after the date a claim for refund is
filed. For purposes of this subdivision, the date a claim is filed is the due date of the return
or the date of the actual claim for refund, whichever is later.

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 2006, section 297I.06, subdivision 1, is amended to read:

Subdivision 1.

Insurance policies surcharge.

(a) Except as otherwise provided in
subdivision 2, each new text begin licensed new text end insurer engaged in writing policies of homeowner's insurance
authorized in section 60A.06, subdivision 1, clause (1)(c), or commercial fire policies or
commercial nonliability policies shall collect a surcharge equal to 0.65 percent of the
gross premiums and assessments, less return premiums, on direct business received by
the company, or by its agents for it, for homeowner's insurance policies, commercial fire
policies, and commercial nonliability insurance policies in this state.

(b) The surcharge amount collected under paragraph (a) new text begin or subdivision 2, paragraph
(b), new text end may not be considered premium for any other purpose. The surcharge amount
new text begin under paragraph (a) new text end must be separately stated on either a billing or policy declaration new text begin or
document containing similar information new text end sent to an insured.

(c) Amounts collected by the commissioner under this section must be deposited in
the fire safety account established pursuant to subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2007, and applies to policies
written or renewed on or after July 1, 2007.
new text end

Sec. 9.

Minnesota Statutes 2006, section 297I.06, subdivision 2, is amended to read:

Subd. 2.

Exemptions.

(a) This section does not apply to a farmers' mutual fire
insurance company or township mutual fire insurance company in Minnesota organized
under chapter 67A.

(b) An insurer described in section 297I.05, subdivisions 3 and 4, authorized to
transact business in Minnesota shall elect to remit to the Department of Revenue for
deposit in the fire safety account either (1) the surcharge amount deleted text begin collected deleted text end new text begin imposed new text end under
deleted text begin this section deleted text end new text begin subdivision 1 on all premiums subject to that surcharge new text end , or (2) a surcharge of
one-half of one percent on the gross fire premiums and assessments, less return premiums,
on all direct business received by the insurer or agents of the insurer in Minnesota, in
cash or otherwise, during the year.

new text begin (c) The election must be made prior to July 1, 2007, for policies written or renewed
between July 1, 2007, and December 31, 2007, and by December 31 of each year for
insurance for policies written or renewed in the succeeding calendar year. An insurer
who elects to remit the one-half of one percent surcharge on gross fire premiums and
assessments must not charge the insured the surcharge imposed under subdivision 1.
new text end

deleted text begin (c) deleted text end new text begin (d) new text end For purposes of this subdivision, "gross fire premiums and assessments"
includes premiums on policies covering fire risks only on automobiles, whether written or
under floater form or otherwise.

new text begin EFFECTIVE DATE. new text end

new text begin The requirement for certain insurers to make an election
before July 1, 2007, is effective the day following final enactment. The rest of this section
is effective July 1, 2007, and applies to insurance policies written or renewed on or after
that date.
new text end

Sec. 10.

Minnesota Statutes 2006, section 297I.20, subdivision 2, is amended to read:

Subd. 2.

Joint Underwriting Association offset.

An new text begin insurance company may offset
against its premium tax liability to this state any amount paid for an new text end assessment made
pursuant to section 62I.06, subdivision 6 deleted text begin , shall be deductible by the member from past
or future premium taxes due the state deleted text end . new text begin The offset against premium tax liability must be
claimed beginning with the taxable year that the assessment is paid. To the extent that the
allowable offset exceeds the tax liability, the remaining offset must be carried forward to
succeeding taxable years until the entire offset has been credited against the insurance
company's liability for premium tax under this chapter. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax returns due on or after January
1, 2008.
new text end

Sec. 11.

Minnesota Statutes 2006, section 297I.40, subdivision 5, is amended to read:

Subd. 5.

Definition of tax.

The term "tax" as used in this section means the tax
imposed by section 297I.05, subdivisions 1 to 6, new text begin 11, new text end and 12, paragraphs (a), clauses (1)
to (5), (b), and deleted text begin (e) deleted text end new text begin (d) new text end , deleted text begin without regard to the retaliatory provisions of section 297I.05,
subdivision 11, and the deleted text end new text begin less any new text end offset in section 297I.20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax returns due on or after January
1, 2008.
new text end

ARTICLE 14

DEPARTMENT PROPERTY TAXES AND AIDS

Section 1.

Minnesota Statutes 2006, section 163.051, subdivision 5, is amended to read:

Subd. 5.

Effect on road and bridge levy.

new text begin For taxes payable in the same year
that the county first receives tax revenues under this section, new text end the county auditor of each
metropolitan county shall reduce the amount of the property taxes levied pursuant to law
deleted text begin in 1973 for collection in 1974, deleted text end by the board of commissioners of such county for the
county road and bridge fund, by the deleted text begin following amount: Anoka County, $341,750; Carver
County, $86,725; Dakota County, $386,165; Hennepin County, $2,728,425; Ramsey
County, $1,276,815; Scott County, $104,805; Washington County, $227,220 deleted text end new text begin estimated
wheelage tax revenues to be received by the county through June 30 of that taxes payable
year new text end , and shall spread only the balance thereof on the tax rolls for collection deleted text begin in 1972 deleted text end . The
county auditor shall also reduce the amount of such taxes levied pursuant to law deleted text begin in 1972
and any subsequent year, deleted text end for collection in the respective ensuing years, by the amount
of wheelage taxes received by the county in the 12 months immediately preceding deleted text begin such
levy deleted text end new text begin July 1 of the year preceding the taxes payable year new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2007 and
thereafter, except that the estimated 2007 wheelage tax revenues for counties that receive
wheelage tax revenues in 2007 may reflect any reasonable time period determined by
the county.
new text end

Sec. 2.

Minnesota Statutes 2006, section 270.071, subdivision 7, is amended to read:

Subd. 7.

Flight property.

"Flight property" means all aircraft and flight equipment
used in connection therewith, including spare flight equipment. new text begin Flight property also
includes computers and computer software used in operating, controlling, or regulating
aircraft and flight equipment.
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. 3.

Minnesota Statutes 2006, section 270.072, subdivision 2, is amended to read:

Subd. 2.

Assessment of flight property.

deleted text begin The deleted text end Flight property deleted text begin of deleted text end new text begin that is owned by,
or is leased, loaned, or otherwise made available to new text end all airline companies operating in
Minnesota shall be assessed and appraised annually by the commissioner with reference
to its value on January 2 of the assessment year in the manner prescribed by sections
270.071 to 270.079. Aircraft with a gross weight of less than 30,000 pounds and used on
intermittent or irregularly timed flights shall be excluded from the provisions of sections
270.071 to 270.079.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2006, section 270.072, subdivision 3, is amended to read:

Subd. 3.

Report by airline company.

new text begin Each year, on or before July 1, new text end every airline
company engaged in air commerce in this state shall file with the commissioner deleted text begin on or
before the time fixed by the commissioner deleted text end a report under oath setting forth specifically
the information prescribed by the commissioner to enable the commissioner to make the
assessment required in sections 270.071 to 270.079, unless the commissioner determines
that the airline company or person should be excluded from filing because its activities do
not constitute air commerce as defined herein. deleted text begin A penalty of five percent of the tax being
assessed is imposed on a late filing of the annual report. If the report is not filed within
30 days, an additional penalty of five percent of the assessed tax is imposed for each
additional 30 days or fraction of 30 days until the return is filed. The penalty imposed
under this section must not exceed the lesser of $25,000 or 25 percent of the assessed tax. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning January 2, 2007, for taxes
payable in 2008 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2006, section 270.072, subdivision 6, is amended to read:

Subd. 6.

Airflight property tax lien.

The tax imposed under sections 270.071 to
270.079 is a lien on all real and personal property within this state of the airline company
in whose name the property is assessed. deleted text begin For purposes of sections 270C.62 and 270C.63,
the date of assessment for the tax imposed under sections 270.071 to 270.079 is deleted text end new text begin The lien
attaches on new text end January 2 of each year for the taxes payable in the following year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning January 2, 2007, for taxes
payable in 2008 and thereafter.
new text end

Sec. 6.

new text begin [270.0725] PENALTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Penalty for late filing. new text end

new text begin If an airline company does not file its annual
report by the date designated in section 270.072, subdivision 3, a penalty of five percent
of the tax being assessed is imposed on that company. On August 1, and on the first day
of each succeeding calendar month, an additional five percent penalty is imposed if the
report has not yet been filed. For each airline company, the penalties imposed under
this subdivision for any one year are limited to the lesser of $25,000 or 25 percent of
the assessed tax.
new text end

new text begin Subd. 2. new text end

new text begin Penalty for repeated instances of late filing. new text end

new text begin If there is a pattern of
repeated failures by an airline company to timely file the report required by this section, a
penalty of ten percent of the tax being assessed is imposed on that company.
new text end

new text begin Subd. 3. new text end

new text begin Penalty for frivolous report. new text end

new text begin If an airline company files a frivolous annual
report, a penalty of 25 percent of the tax being assessed is imposed on that company. A
frivolous report under this section is a report that would fulfill the criteria for a frivolous
return under section 289A.60, subdivision 7, notwithstanding the restriction in section
289A.01. In a proceeding involving the issue of whether or not an airline company is
liable for this penalty, the burden of proof is on the commissioner.
new text end

new text begin Subd. 4. new text end

new text begin Penalty for fraudulent report. new text end

new text begin If an airline company files a false or
fraudulent annual report with intent to evade or defeat the tax, a penalty equal to 50
percent of the tax being assessed is imposed on that company.
new text end

new text begin Subd. 5. new text end

new text begin Penalties added to tax. new text end

new text begin Penalties imposed under this section are added to
the tax and collected as a part of it.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for annual reports due on or after
July 1, 2007.
new text end

Sec. 7.

new text begin [270.0735] EXAMINATION; INVESTIGATIONS; SUBPOENAS.
new text end

new text begin In addition to the powers granted to the commissioner in this chapter, and in order to
determine net tax capacities and issue notices of net tax capacity and tax under sections
270.071 to 270.079, the commissioner has the powers contained in sections 270C.31 and
270C.32, for which purpose the word "taxpayer" as defined in section 270C.01 includes
an airline company.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning January 2, 2007, for taxes
payable in 2008 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2006, section 270.074, subdivision 3, is amended to read:

Subd. 3.

Tax capacity.

(a) new text begin The net tax capacity of new text end the flight property of every airline
company deleted text begin shall have a tax capacity of deleted text end new text begin is new text end 70 percent of the value thereof apportioned to this
state under subdivision 1, except that new text begin the net tax capacity of new text end quiet aircraft deleted text begin shall have a
tax capacity of deleted text end new text begin is new text end 40 percent of the value determined under subdivision 1. deleted text begin Quiet aircraft
shall include deleted text end new text begin "Quiet aircraft" means new text end turboprops and aircraft defined as stage III new text begin or IV new text end by
the Federal Aeronautics Administration. If, in the opinion of the commissioner, other
aircraft may be qualified as quiet aircraft, the commissioner may adopt rules providing
additional qualifications.

(b) The flight property of an airline company that owns or leases aircraft the majority
of which are turboprops, and which provides, during six months or more of the year that
taxes are levied, scheduled passenger service to three or more airports inside or outside of
this state that serve small or medium sized communities, shall be assessed at 50 percent of
the assessment percentage otherwise set by paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning January 2, 2007, for taxes
payable in 2008 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2006, section 270.076, subdivision 1, is amended to read:

Subdivision 1.

Appeal.

deleted text begin Any airline company against which a tax has been imposed
under sections 270.071 to 270.079 shall have the right to appeal within 60 days from the
date of notice of the levy of the tax deleted text end new text begin The notices of net tax capacity and of tax required
under section 270.075, subdivision 2, are orders of the commissioner. These orders must
be issued in conformance with section 270C.33, subdivisions 1 and 2, but are not subject
to administrative review under section 270C.35. These orders may be appealed new text end to the Tax
Court in the manner provided deleted text begin by law deleted text end new text begin in section 271.06 for appealing official orders of
the commissioner that do not deal with valuation, assessment, or taxation for property
tax purposes, and the provisions of section 273.125, subdivisions 4 and 5, and chapter
278 do not apply new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning January 2, 2007, for taxes
payable in 2008 and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2006, section 270.41, subdivision 1, is amended to read:

Subdivision 1.

Creation; purpose; powers.

A Board of Assessors is created.
The board shall deleted text begin establish, conduct, deleted text end review, supervise, coordinate, and approve courses
in assessment practices, and establish criteria for determining assessor's qualifications.
The board shall also consider other matters relating to assessment administration brought
before it by the commissioner of revenue. The board may grant, renew, suspend, or revoke
an assessor's license.

new text begin EFFECTIVE DATE. new text end

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

Sec. 11.

Minnesota Statutes 2006, section 270.41, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Definition. new text end

new text begin For purposes of sections 270.41 to 270.48, "board" means
the Board of Assessors.
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.

Minnesota Statutes 2006, section 270.41, subdivision 2, is amended to read:

Subd. 2.

Members.

The board shall consist of nine members, who shall be
appointed by the commissioner of revenue, in the manner provided herein. The members
shall include:

(1) two from the Department of Revenue;

(2) two county assessors;

(3) two assessors who are not county assessors, one of whom shall be a township
assessor;

(4) one from the private appraisal field holding a professional appraisal designation;
and

(5) two public members as defined by section 214.02.

The appointment provided in clauses (2) and (3) may be made from deleted text begin two lists deleted text end new text begin a list
new text end of not less than three names deleted text begin each, one deleted text end submitted to the commissioner of revenue by the
Minnesota Association of Assessing Officers or its successor organization containing
recommendations for the appointment of appointees described in deleted text begin clause deleted text end new text begin clauses new text end (2) deleted text begin ,
and one by the Minnesota Association of Assessors, Inc. or its successor organization
containing recommendations for the appointees described in clause (3) deleted text end new text begin and (3) new text end . The deleted text begin lists deleted text end
new text begin list new text end must be submitted 30 days before the commencement of the term. In the case of a
vacancy, a new list shall be furnished to the commissioner deleted text begin by the respective organization deleted text end
immediately. A member of the board who is no longer engaged in the capacity deleted text begin listed
above deleted text end new text begin that was the basis of appointment new text end is disqualified from membership in the board.

The board shall annually elect a chair and a deleted text begin secretary deleted text end new text begin vice-chair new text end of the board.

new text begin EFFECTIVE DATE. new text end

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

Sec. 13.

Minnesota Statutes 2006, section 270.41, subdivision 3, is amended to read:

Subd. 3.

Licenses; refusal or revocation.

The board may refuse to grant or renew,
or may suspend or revoke, a license of an applicant or licensee for any of the following
causes or acts:

(1) failure to complete required training;

(2) inefficiency or neglect of duty;

(3) deleted text begin "unprofessional conduct" which means knowingly neglecting to perform a duty
required by law, or violation of the laws of this state relating to the assessment of property
or unlawfully exempting property or knowingly and intentionally listing property on the
tax list at substantially less than its market value or the level required by law in order to
gain favor or benefit, or knowingly and intentionally misclassifying property in order to
gain favor or benefit deleted text end new text begin failure to comply with the Code of Conduct and Ethics for Licensed
Minnesota Assessors adopted by the board pursuant to Laws 2005, First Special Session
chapter 3, article 1, section 38 new text end ;

(4) conviction of a crime involving moral turpitude; or

(5) any other cause or act that in the board's opinion warrants a refusal to issue
or suspension or revocation of a license.

new text begin EFFECTIVE DATE. new text end

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

Sec. 14.

Minnesota Statutes 2006, section 270.41, subdivision 5, is amended to read:

Subd. 5.

Prohibited activity.

deleted text begin An assessor, deputy assessor, assistant assessor,
appraiser, deleted text end new text begin A licensed assessor new text end or other person employed by an assessment jurisdiction
or contracting with an assessment jurisdiction for the purpose of valuing or classifying
property for property tax purposes is prohibited from making appraisals or analyses,
accepting an appraisal assignment, or preparing an appraisal report as defined in section
82B.02, subdivisions 2 to 5, on any property within the assessment jurisdiction where the
individual is employed or performing the duties of the assessor under contract. Violation
of this prohibition shall result in immediate revocation of the individual's license to assess
property for property tax purposes. This prohibition must not be construed to prohibit an
individual from carrying out any duties required for the proper assessment of property
for property tax purposes. If a formal resolution has been adopted by the governing body
of a governmental unit, which specifies the purposes for which such work will be done,
this prohibition does not apply to appraisal activities undertaken on behalf of and at the
request of the governmental unit that has employed or contracted with the individual.
The resolution may only allow appraisal activities which are related to condemnations,
right-of-way acquisitions, or special assessments.

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 2006, section 270.44, is amended to read:

270.44 CHARGES FOR COURSES, EXAMINATIONS OR MATERIALS.

The board shall charge the following fees:

(1) $105 for a senior accredited Minnesota assessor license;

(2) $80 for an accredited Minnesota assessor license;

(3) $65 for a certified Minnesota assessor specialist license;

(4) $55 for a certified Minnesota assessor license;

deleted text begin (5) $50 for a course challenge examination;
deleted text end

deleted text begin (6) deleted text end new text begin (5) new text end $35 for grading a form appraisal;

deleted text begin (7) deleted text end new text begin (6) new text end $60 for grading a narrative appraisal;

deleted text begin (8) deleted text end new text begin (7) new text end $30 for a reinstatement fee;

deleted text begin (9) deleted text end new text begin (8) new text end $25 for a record retention fee; new text begin and
new text end

deleted text begin (10) deleted text end new text begin (9) new text end $20 for an educational transcript deleted text begin ; and deleted text end new text begin .
new text end

deleted text begin (11) $30 for all retests of board-sponsored educational courses.
deleted 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. 16.

Minnesota Statutes 2006, section 270.45, is amended to read:

270.45 DISPOSITION OF FEES.

All fees so established and collected shall be paid to the commissioner of finance for
deposit in the general fund. The expenses of carrying out the provisions of sections 270.41
to 270.53 shall be paid from appropriations made to the board deleted text begin of Assessors deleted 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. 17.

Minnesota Statutes 2006, section 270.46, is amended to read:

270.46 TRAINING COURSES, deleted text begin ESTABLISHMENT; OTHER COURSES, deleted text end
REGULATION.

The board shall deleted text begin establish deleted text end new text begin review and approve new text end training courses on assessment
practices deleted text begin and shall review and approve courses on assessment practices deleted text end new text begin , techniques of
assessment, and ethics new text end offered by schools, colleges deleted text begin and deleted text end new text begin , new text end universities deleted text begin as well as courses that
are offered by any units of government on techniques of assessment. Courses shall be
established in various places throughout the state and be offered on regular intervals deleted text end new text begin , units
of government, and other entities 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. 18.

Minnesota Statutes 2006, section 270.47, is amended to read:

270.47 RULES.

The board shall deleted text begin establish the deleted text end new text begin adopt new text end rules necessary to accomplish the purpose of
deleted text begin section deleted text end new text begin sections new text end 270.41 new text begin to 270.51 new text end , and shall establish criteria required of assessing officials
in the state. Separate criteria may be established depending upon the responsibilities of the
assessor. deleted text begin The board shall prepare and give examinations from time to time to determine
whether assessing officials possess the necessary qualifications for performing the
functions of the office. Such tests shall be given immediately upon completion of courses
required by the board, or to persons who already possess the requisite qualifications under
the rules of the board. deleted text end new text begin An action of the board in refusing to grant or renew a license or in
suspending or revoking a license is subject to review in accordance with chapter 14. 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. 19.

Minnesota Statutes 2006, section 270.48, is amended to read:

270.48 LICENSURE OF QUALIFIED PERSONS.

The board deleted text begin shall deleted text end new text begin may new text end license persons as possessing the necessary qualifications of an
assessing official. Different levels of licensure may be established as to classes of property
which assessors may be certified to assess at the discretion of the board. Every person,
except a local or county assessor, regularly employed by the assessor to assist in making
decisions regarding valuing and classifying property for assessment purposes deleted text begin shall be
required to deleted text end new text begin must new text end become licensed within three years of the date of employment. Licensure
shall be required for local and county assessors as deleted text begin otherwise deleted text end provided in deleted text begin sections 270.41
to 270.53 deleted text end new text begin section 273.061 and rules adopted by the board 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. 20.

Minnesota Statutes 2006, section 270.50, is amended to read:

270.50 EMPLOYMENT OF LICENSED ASSESSORS.

No assessor shall be employed who has not been licensed as qualified by the board,
provided the time to comply may be extended after application to the board upon a
showing that licensed assessors are not available for employment. The board may license
deleted text begin that deleted text end a county or local assessor who has not received the training, but possesses the
necessary qualifications for performing the functions of the office by the passage of an
approved examination or may waive the examination if such person has demonstrated
competence in performing the functions of the office for a period of time the board deems
reasonable. deleted text begin The county or local assessing district shall assume the cost of training of its
assessors in courses approved by the board for the purpose of obtaining the assessor's
license to the extent of course fees, mileage, meals and lodging, and recognized travel
expenses not paid by the state. If the governing body of any township or city fails to
employ an assessor as required by sections 270.41 to 270.53, the assessment shall be
made by the county assessor.
deleted text end

deleted text begin In the case of cities incorporated or townships organized after April 11, 1974, except
cities or towns located in Ramsey county or which have elected a county assessor system
in accordance with section 273.055, the board shall allow the city or town 90 days from
the date of incorporation or organization to employ a licensed assessor. deleted 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. 21.

Minnesota Statutes 2006, section 270C.306, is amended to read:

270C.306 COMMISSIONER MAY REQUIRE SOCIAL SECURITY OR
IDENTIFYING NUMBERS ON FORMS.

Notwithstanding the provisions of any other law new text begin except section 272.115 new text end , the
commissioner may require that a form required to be filed with the commissioner include
the Social Security number, federal employer identification number, or Minnesota
taxpayer identification number of the taxpayer or applicant.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2007.
new text end

Sec. 22.

Minnesota Statutes 2006, section 270C.34, subdivision 1, is amended to read:

Subdivision 1.

Authority.

(a) The commissioner may abate, reduce, or refund any
penalty or interest that is imposed by a law administered by the commissioner as a result
of the late payment of tax or late filing of a return, if the failure to timely pay the tax or
failure to timely file the return is due to reasonable cause, or if the taxpayer is located
in a presidentially declared disaster area.

(b) The commissioner shall abate any part of a penalty or additional tax charge
under section 289A.25, subdivision 2, or 289A.26, subdivision 4, attributable to erroneous
advice given to the taxpayer in writing by an employee of the department acting in
an official capacity, if the advice:

(1) was reasonably relied on and was in response to a specific written request of the
taxpayer; and

(2) was not the result of failure by the taxpayer to provide adequate or accurate
information.

new text begin (c) The commissioner may abate a penalty imposed under section 270.0725,
subdivision 1 or 2, if the failure to timely file is due to reasonable cause, or if the airline
company is located in a presidentially declared disaster area.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2007.
new text end

Sec. 23.

Minnesota Statutes 2006, section 272.02, subdivision 64, is amended to read:

Subd. 64.

Job opportunity building zone property.

(a) Improvements to real
property, and personal property, classified under section 273.13, subdivision 24, and
located within a job opportunity building zone, designated under section 469.314, are
exempt from ad valorem taxes levied under chapter 275.

(b) Improvements to real property, and tangible personal property, of an agricultural
production facility located within an agricultural processing facility zone, designated
under section 469.314, is exempt from ad valorem taxes levied under chapter 275.

(c) For property to qualify for exemption under paragraph (a), the occupant must be
a qualified business, as defined in section 469.310.

(d) The exemption applies beginning for the first assessment year after designation
of the job opportunity building zone by the commissioner of employment and economic
development. The exemption applies to each assessment year that begins during the
duration of the job opportunity building zone. To be exempt, the property must be
occupied by July 1 of the assessment year by a qualified business that has signed the
business subsidy agreement and relocation agreement, if required, by July 1 of the
assessment year. This exemption does not apply to:

(1) the levy under section 475.61 or similar levy provisions under any other law to
pay general obligation bonds; or

(2) a levy under section 126C.17, if the levy was approved by the voters before the
designation of the job opportunity building zone.

new text begin (e) Except for property of a business that was exempt under this subdivision for
taxes payable in 2007, a business must notify the county assessor in writing of eligibility
under this subdivision by July 1 in order to begin receiving the exemption under this
subdivision for taxes payable in the following year. The business need not annually notify
the county assessor of its continued exemption under this subdivision, but must notify the
county assessor immediately if the exemption no longer applies.
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. 24.

Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:

Subdivision 1.

Requirement.

Except as otherwise provided in subdivision 5,
whenever any real estate is sold for a consideration in excess of $1,000, whether by
warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor,
grantee or the legal agent of either shall file a certificate of value with the county auditor
in the county in which the property is located when the deed or other document is
presented for recording. Contract for deeds are subject to recording under section 507.235,
subdivision 1. Value shall, in the case of any deed not a gift, be the amount of the full
actual consideration thereof, paid or to be paid, including the amount of any lien or liens
assumed. The items and value of personal property transferred with the real property
must be listed and deducted from the sale price. The certificate of value shall include
the classification to which the property belongs for the purpose of determining the fair
market value of the property. The certificate shall include financing terms and conditions
of the sale which are necessary to determine the actual, present value of the sale price
for purposes of the sales ratio study. The commissioner of revenue shall promulgate
administrative rules specifying the financing terms and conditions which must be included
on the certificate. deleted text begin Pursuant to the authority of the commissioner of revenue in section
270C.306, deleted text end The certificate of value must include the Social Security number or the federal
employer identification number of the grantors and grantees. new text begin However, a married person
who is not an owner of record and who is signing a conveyance instrument along with
the person's spouse solely to release and convey their marital interest, if any, in the real
property being conveyed is not a grantor for the purpose of the preceding sentence. A
statement in the deed that is substantially in the following form is sufficient to allow the
county auditor to accept a certificate for filing without the Social Security number of the
named spouse: " (Name) claims no ownership interest in the real property being conveyed
and is executing this instrument solely to release and convey a marital interest, if any, in
that real property." new text end The identification numbers of the grantors and grantees are private
data on individuals or nonpublic data as defined in section 13.02, subdivisions 9 and 12,
but, notwithstanding that section, the private or nonpublic data may be disclosed to the
commissioner of revenue for purposes of tax administration. The information required to
be shown on the certificate of value is limited to the information required as of the date of
the acknowledgment on the deed or other document to be recorded.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certificates of value filed on or
after July 1, 2007.
new text end

Sec. 25.

Minnesota Statutes 2006, section 273.05, is amended by adding a subdivision
to read:

new text begin Subd. 3. new text end

new text begin Cities and townships; employment of licensed assessor. new text end

new text begin In the case
of cities or townships, except cities or towns located in Ramsey County or which have
elected a county assessor system in accordance with section 273.055, the commissioner
shall allow the city or town 90 days from the date of incorporation or organization to
employ a licensed assessor.
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. 26.

new text begin [273.0535] COUNTY OR LOCAL ASSESSING DISTRICT TO ASSUME
COST OF TRAINING.
new text end

new text begin The county or local assessing district must assume the cost of training its assessors
in courses approved by the board for the purpose of obtaining the assessor's license to
the extent of course fees, mileage, meals, and lodging, and recognized travel expenses
not paid by the state.
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. 27.

Minnesota Statutes 2006, section 273.111, subdivision 3, is amended to read:

Subd. 3.

Requirements.

(a) Real estate consisting of ten acres or more or a nursery
or greenhouse, and qualifying for classification as class 1b, 2a, or 2b under section 273.13,
shall be entitled to valuation and tax deferment under this section only if it is primarily
devoted to agricultural use, and meets the qualifications in subdivision 6, and either:

(1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the
owner or is real estate which is farmed with the real estate which contains the homestead
property; or

(2) has been in possession of the applicant, the applicant's spouse, parent, or sibling,
or any combination thereof, for a period of at least seven years prior to application for
benefits under the provisions of this section, or is real estate which is farmed with the
real estate which qualifies under this clause and is within four townships or cities or
combination thereof from the qualifying real estate; or

(3) is the homestead of a shareholder in a family farm corporation as defined in
section 500.24, notwithstanding the fact that legal title to the real estate may be held in the
name of the family farm corporation; or

(4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor,
partnership, or corporation which also owns the nursery or greenhouse operations on
the parcel or parcels.

(b) Valuation of real estate under this section is limited to parcels the ownership of
which is in noncorporate entities except for:

(1) family farm corporations organized pursuant to section 500.24; and

(2) corporations that derive 80 percent or more of their gross receipts from the
wholesale or retail sale of horticultural or nursery stock.

deleted text begin Corporate entities who previously qualified for tax deferment pursuant to this section
and who continue to otherwise qualify under subdivisions 3 and 6 for a period of at least
three years following the effective date of Laws 1983, chapter 222, section 8, will not be
required to make payment of the previously deferred taxes, notwithstanding the provisions
of subdivision 9. Special assessments are payable at the end of the three-year period
or at time of sale, whichever comes first.
deleted text end

deleted text begin (c) Land that previously qualified for tax deferment under this section and no longer
qualifies because it is not primarily used for agricultural purposes but would otherwise
qualify under subdivisions 3 and 6 for a period of at least three years will not be required
to make payment of the previously deferred taxes, notwithstanding the provisions of
subdivision 9. Sale of the land prior to the expiration of the three-year period requires
payment of deferred taxes as follows: sale in the year the land no longer qualifies
requires payment of the current year's deferred taxes plus payment of deferred taxes for
the two prior years; sale during the second year the land no longer qualifies requires
payment of the current year's deferred taxes plus payment of the deferred taxes for the
prior year; and sale during the third year the land no longer qualifies requires payment of
the current year's deferred taxes. Deferred taxes shall be paid even if the land qualifies
pursuant to subdivision 11a. When such property is sold or no longer qualifies under this
paragraph, or at the end of the three-year period, whichever comes first, all deferred
special assessments plus interest are payable in equal installments spread over the time
remaining until the last maturity date of the bonds issued to finance the improvement
for which the assessments were levied. If the bonds have matured, the deferred special
assessments plus interest are payable within 90 days. The provisions of section 429.061,
subdivision 2, apply to the collection of these installments. Penalties are not imposed on
any such special assessments if timely paid. deleted 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. 28.

Minnesota Statutes 2006, section 273.121, is amended to read:

273.121 VALUATION OF REAL PROPERTY, NOTICE.

Any county assessor or city assessor having the powers of a county assessor, valuing
or classifying taxable real property shall in each year notify those persons whose property
is to be included on the assessment roll that year if the person's address is known to the
assessor, otherwise the occupant of the property. The notice shall be in writing and shall be
sent by ordinary mail at least ten days before the meeting of the local board of appeal and
equalization under section 274.01 or the review process established under section 274.13,
subdivision 1c. new text begin Upon written request by the owner of the property, the assessor may send
the notice in electronic form or by electronic mail instead of on paper or by ordinary mail.
new text end It shall contain: (1) the market value for the current and prior assessment, (2) the limited
market value under section 273.11, subdivision 1a, for the current and prior assessment,
(3) the qualifying amount of any improvements under section 273.11, subdivision 16,
for the current assessment, (4) the market value subject to taxation after subtracting the
amount of any qualifying improvements for the current assessment, (5) the classification
of the property for the current and prior assessment, (6) a note that if the property is
homestead and at least 45 years old, improvements made to the property may be eligible
for a valuation exclusion under section 273.11, subdivision 16, (7) the assessor's office
address, and (8) the dates, places, and times set for the meetings of the local board of
appeal and equalization, the review process established under section 274.13, subdivision
1c, and the county board of appeal and equalization. The commissioner of revenue shall
specify the form of the notice. The assessor shall attach to the assessment roll a statement
that the notices required by this section have been mailed. Any assessor who is not
provided sufficient funds from the assessor's governing body to provide such notices,
may make application to the commissioner of revenue to finance such notices. The
commissioner of revenue shall conduct an investigation and, if satisfied that the assessor
does not have the necessary funds, issue a certification to the commissioner of finance
of the amount necessary to provide such notices. The commissioner of finance shall
issue a warrant for such amount and shall deduct such amount from any state payment
to such county or municipality. The necessary funds to make such payments are hereby
appropriated. Failure to receive the notice shall in no way affect the validity of the
assessment, the resulting tax, the procedures of any board of review or equalization, or
the enforcement of delinquent taxes by statutory means.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for notices required in 2007 and
thereafter.
new text end

Sec. 29.

Minnesota Statutes 2006, section 273.123, subdivision 2, is amended to read:

Subd. 2.

Reassessment of homestead property.

The county assessor shall reassess
all homestead property located within a disaster or emergency area which is physically
damaged by the disaster or emergency and shall adjust the valuation for taxes payable the
following year to reflect the loss in market value caused by the damage as follows: Subtract
the market value of the property as reassessed from the market value of the property as
assessed new text begin under section 273.01 new text end for deleted text begin January 1 of deleted text end the year in which the disaster or emergency
occurred; multiply the remainder by a fraction, the numerator of which is the number of
full months remaining in the year on the date the disaster or emergency occurred, and the
denominator of which is 12; subtract the product of the calculation from the market value
of the property as assessed for deleted text begin January 1 of deleted text end the year in which the disaster or emergency
occurred; the remainder is the estimated market value to be used for taxes payable the
following year. The assessor shall report to the county auditor the net tax capacity based
on the assessment deleted text begin of January 1 of deleted text end new text begin for new text end the year in which the disaster or emergency occurred
and the net tax capacity based on the reassessment made pursuant to this subdivision.

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 2006, section 273.123, subdivision 3, is amended to read:

Subd. 3.

Computation of local tax rates.

deleted text begin When computing deleted text end Local tax rates deleted text begin , deleted text end new text begin must
be computed by new text end the county auditor deleted text begin shall use deleted text end new text begin based upon new text end the valuation new text begin as of January 2 as
new text end reported by the assessor for the assessment deleted text begin made on January 1 of the deleted text end year in which the
disaster or emergency occurred new text begin , and as returned by the local, county, and state boards of
review and equalization and the commissioner of revenue 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. 31.

Minnesota Statutes 2006, section 273.124, subdivision 13, is amended to read:

Subd. 13.

Homestead application.

(a) A person who meets the homestead
requirements under subdivision 1 must file a homestead application with the county
assessor to initially obtain homestead classification.

(b) deleted text begin On or before January 2, 1993, each county assessor shall mail a homestead
application to the owner of each parcel of property within the county which was
classified as homestead for the 1992 assessment year. The format and contents of a
uniform homestead application shall be prescribed by the commissioner of revenue. The
commissioner shall consult with the chairs of the house and senate tax committees on the
contents of the homestead application form. The application must clearly inform the
taxpayer that this application must be signed by all owners who occupy the property or
by the qualifying relative and returned to the county assessor in order for the property
to continue receiving homestead treatment. The envelope containing the homestead
application shall clearly identify its contents and alert the taxpayer of its necessary
immediate response.
deleted text end

deleted text begin (c) deleted text end Every property owner applying for homestead classification must furnish to the
county assessor the Social Security number of each occupant who is listed as an owner
of the property on the deed of record, the name and address of each owner who does not
occupy the property, and the name and Social Security number of each owner's spouse who
occupies the property. The application must be signed by each owner who occupies the
property and by each owner's spouse who occupies the property, or, in the case of property
that qualifies as a homestead under subdivision 1, paragraph (c), by the qualifying relative.

If a property owner occupies a homestead, the property owner's spouse may not
claim another property as a homestead unless the property owner and the property owner's
spouse file with the assessor an affidavit or other proof required by the assessor stating that
the property qualifies as a homestead under subdivision 1, paragraph (e).

Owners or spouses occupying residences owned by their spouses and previously
occupied with the other spouse, either of whom fail to include the other spouse's name
and Social Security number on the homestead application or provide the affidavits or
other proof requested, will be deemed to have elected to receive only partial homestead
treatment of their residence. The remainder of the residence will be classified as
nonhomestead residential. When an owner or spouse's name and Social Security number
appear on homestead applications for two separate residences and only one application is
signed, the owner or spouse will be deemed to have elected to homestead the residence for
which the application was signed.

The Social Security numbers or affidavits or other proofs of the property owners
and spouses are private data on individuals as defined by section 13.02, subdivision 12,
but, notwithstanding that section, the private data may be disclosed to the commissioner
of revenue, or, for purposes of proceeding under the Revenue Recapture Act to recover
personal property taxes owing, to the county treasurer.

deleted text begin (d) deleted text end new text begin (c) new text end If residential real estate is occupied and used for purposes of a homestead by
a relative of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in
order for the property to receive homestead status, a homestead application must be filed
with the assessor. The Social Security number of each relative new text begin and spouse of a relative new text end
occupying the property deleted text begin and the Social Security number of each owner who is related to an
occupant of the property deleted text end shall be required on the homestead application filed under this
subdivision. If a different relative of the owner subsequently occupies the property, the
owner of the property must notify the assessor within 30 days of the change in occupancy.
The Social Security number of a relative new text begin or relative's spouse new text end occupying the property
is private data on individuals as defined by section 13.02, subdivision 12, but may be
disclosed to the commissioner of revenue new text begin , or, for the purposes of proceeding under the
Revenue Recapture Act to recover personal property taxes owing, to the county treasurer new text end .

deleted text begin (e) deleted text end new text begin (d) new text end The homestead application shall also notify the property owners that the
application filed under this section will not be mailed annually and that if the property
is granted homestead status for deleted text begin the 1993 assessment, or deleted text end any assessment year deleted text begin thereafter deleted text end ,
that same property shall remain classified as homestead until the property is sold or
transferred to another person, or the owners, the spouse of the owner, or the relatives no
longer use the property as their homestead. Upon the sale or transfer of the homestead
property, a certificate of value must be timely filed with the county auditor as provided
under section 272.115. Failure to notify the assessor within 30 days that the property has
been sold, transferred, or that the owner, the spouse of the owner, or the relative is no
longer occupying the property as a homestead, shall result in the penalty provided under
this subdivision and the property will lose its current homestead status.

deleted text begin (f) deleted text end new text begin (e) new text end If the homestead application is not returned within 30 days, the county
will send a second application to the present owners of record. The notice of proposed
property taxes prepared under section 275.065, subdivision 3, shall reflect the property's
classification. deleted text begin Beginning with assessment year 1993 for all properties, deleted text end If a homestead
application has not been filed with the county by December 15, the assessor shall classify
the property as nonhomestead for the current assessment year for taxes payable in
the following year, provided that the owner may be entitled to receive the homestead
classification by proper application under section 375.192.

deleted text begin (g) deleted text end new text begin (f) new text end At the request of the commissioner, each county must give the commissioner
a list that includes the name and Social Security number of each new text begin occupant of homestead
property who is the new text end property owner deleted text begin and the deleted text end new text begin , new text end property owner's spouse deleted text begin occupying the
property, or deleted text end new text begin , qualifying new text end relative of a property owner, deleted text begin applying for homestead classification
under this subdivision deleted text end new text begin or a spouse of a qualifying relative new text end . The commissioner shall use the
information provided on the lists as appropriate under the law, including for the detection
of improper claims by owners, or relatives of owners, under chapter 290A.

deleted text begin (h) deleted text end new text begin (g) new text end If the commissioner finds that a property owner may be claiming a
fraudulent homestead, the commissioner shall notify the appropriate counties. Within
90 days of the notification, the county assessor shall investigate to determine if the
homestead classification was properly claimed. If the property owner does not qualify,
the county assessor shall notify the county auditor who will determine the amount of
homestead benefits that had been improperly allowed. For the purpose of this section,
"homestead benefits" means the tax reduction resulting from the classification as a
homestead under section 273.13, the taconite homestead credit under section 273.135, the
residential homestead and agricultural homestead credits under section 273.1384, and the
supplemental homestead credit under section 273.1391.

The county auditor shall send a notice to the person who owned the affected property
at the time the homestead application related to the improper homestead was filed,
demanding reimbursement of the homestead benefits plus a penalty equal to 100 percent
of the homestead benefits. The person notified may appeal the county's determination
by serving copies of a petition for review with county officials as provided in section
278.01 and filing proof of service as provided in section 278.01 with the Minnesota Tax
Court within 60 days of the date of the notice from the county. Procedurally, the appeal
is governed by the provisions in chapter 271 which apply to the appeal of a property tax
assessment or levy, but without requiring any prepayment of the amount in controversy. If
the amount of homestead benefits and penalty is not paid within 60 days, and if no appeal
has been filed, the county auditor shall certify the amount of taxes and penalty to the county
treasurer. The county treasurer will add interest to the unpaid homestead benefits and
penalty amounts at the rate provided in section 279.03 for real property taxes becoming
delinquent in the calendar year during which the amount remains unpaid. Interest may be
assessed for the period beginning 60 days after demand for payment was made.

If the person notified is the current owner of the property, the treasurer may add the
total amount of homestead benefits, penalty, interest, and costs to the ad valorem taxes
otherwise payable on the property by including the amounts on the property tax statements
under section 276.04, subdivision 3. The amounts added under this paragraph to the ad
valorem taxes shall include interest accrued through December 31 of the year preceding
the taxes payable year for which the amounts are first added. These amounts, when added
to the property tax statement, become subject to all the laws for the enforcement of real or
personal property taxes for that year, and for any subsequent year.

If the person notified is not the current owner of the property, the treasurer may
collect the amounts due under the Revenue Recapture Act in chapter 270A, or use any of
the powers granted in sections 277.20 and 277.21 without exclusion, to enforce payment
of the homestead benefits, penalty, interest, and costs, as if those amounts were delinquent
tax obligations of the person who owned the property at the time the application related
to the improperly allowed homestead was filed. The treasurer may relieve a prior owner
of personal liability for the homestead benefits, penalty, interest, and costs, and instead
extend those amounts on the tax lists against the property as provided in this paragraph
to the extent that the current owner agrees in writing. On all demands, billings, property
tax statements, and related correspondence, the county must list and state separately the
amounts of homestead benefits, penalty, interest and costs being demanded, billed or
assessed.

deleted text begin (i) deleted text end new text begin (h) new text end Any amount of homestead benefits recovered by the county from the property
owner shall be distributed to the county, city or town, and school district where the
property is located in the same proportion that each taxing district's levy was to the total
of the three taxing districts' levy for the current year. Any amount recovered attributable
to taconite homestead credit shall be transmitted to the St. Louis County auditor to be
deposited in the taconite property tax relief account. Any amount recovered that is
attributable to supplemental homestead credit is to be transmitted to the commissioner of
revenue for deposit in the general fund of the state treasury. The total amount of penalty
collected must be deposited in the county general fund.

deleted text begin (j) deleted text end new text begin (i) new text end If a property owner has applied for more than one homestead and the county
assessors cannot determine which property should be classified as homestead, the county
assessors will refer the information to the commissioner. The commissioner shall make
the determination and notify the counties within 60 days.

deleted text begin (k) deleted text end new text begin (j) new text end In addition to lists of homestead properties, the commissioner may ask the
counties to furnish lists of all properties and the record owners. The Social Security
numbers and federal identification numbers that are maintained by a county or city
assessor for property tax administration purposes, and that may appear on the lists retain
their classification as private or nonpublic data; but may be viewed, accessed, and used by
the county auditor or treasurer of the same county for the limited purpose of assisting the
commissioner in the preparation of microdata samples under section 270C.12.

deleted text begin (l) deleted text end new text begin (k) new text end On or before April 30 each year beginning in 2007, each county must provide
the commissioner with the following data for each parcel of homestead property by
electronic means as defined in section 289A.02, subdivision 8:

(i) the property identification number assigned to the parcel for purposes of taxes
payable in the current year;

(ii) the name and Social Security number of each new text begin occupant of homestead property
who is the new text end property owner deleted text begin and deleted text end new text begin , new text end property owner's spouse, deleted text begin as shown on the tax rolls for the
current and the prior assessment year deleted text end new text begin qualifying relative of a property owner, or spouse
of a qualifying relative new text end ;

(iii) the classification of the property under section 273.13 for taxes payable in the
current year and in the prior year;

(iv) an indication of whether the property was classified as a homestead for taxes
payable in the current year deleted text begin or for taxes payable in the prior year deleted text end because of occupancy by
a relative of the owner or by a spouse of a relative;

(v) the property taxes payable as defined in section 290A.03, subdivision 13, for the
current year and the prior year;

(vi) the market value of improvements to the property first assessed for tax purposes
for taxes payable in the current year;

(vii) the assessor's estimated market value assigned to the property for taxes payable
in the current year and the prior year;

(viii) the taxable market value assigned to the property for taxes payable in the
current year and the prior year;

(ix) whether there are delinquent property taxes owing on the homestead;

(x) the unique taxing district in which the property is located; and

(xi) such other information as the commissioner decides is necessary.

The commissioner shall use the information provided on the lists as appropriate
under the law, including for the detection of improper claims by owners, or relatives
of owners, under chapter 290A.

new text begin EFFECTIVE DATE. new text end

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

Sec. 32.

Minnesota Statutes 2006, section 273.124, subdivision 14, is amended to read:

Subd. 14.

Agricultural homesteads; special provisions.

(a) Real estate of less than
ten acres that is the homestead of its owner must be classified as class 2a under section
273.13, subdivision 23, paragraph (a), if:

(1) the parcel on which the house is located is contiguous on at least two sides to (i)
agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
Service, or (iii) land administered by the Department of Natural Resources on which in
lieu taxes are paid under sections 477A.11 to 477A.14;

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least
20 acres;

(3) the noncontiguous land is located not farther than four townships or cities, or a
combination of townships or cities from the homestead; and

(4) the agricultural use value of the noncontiguous land and farm buildings is equal
to at least 50 percent of the market value of the house, garage, and one acre of land.

Homesteads initially classified as class 2a under the provisions of this paragraph shall
remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
properties, as long as the homestead remains under the same ownership, the owner owns a
noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
value qualifies under clause (4). Homestead classification under this paragraph is limited
to property that qualified under this paragraph for the 1998 assessment.

(b)(i) Agricultural property consisting of at least 40 acres shall be classified as the
owner's homestead, to the same extent as other agricultural homestead property, if all
of the following criteria are met:

(1) the owner, the owner's spouse, the son or daughter of the owner or owner's
spouse, or the grandson or granddaughter of the owner or the owner's spouse, is actively
farming the agricultural property, either on the person's own behalf as an individual or
on behalf of a partnership operating a family farm, family farm corporation, joint family
farm venture, or limited liability company of which the person is a partner, shareholder, or
member;

(2) both the owner of the agricultural property and the person who is actively
farming the agricultural property under clause (1), are Minnesota residents;

(3) neither the owner nor the spouse of the owner claims another agricultural
homestead in Minnesota; deleted text begin and
deleted text end

(4) neither the owner nor the person actively farming the property lives farther
than four townships or cities, or a combination of four townships or cities, from the
agricultural property, except that if the owner or the owner's spouse is required to live in
employer-provided housing, the owner or owner's spouse, whichever is actively farming
the agricultural property, may live more than four townships or cities, or combination of
four townships or cities from the agricultural property deleted text begin . deleted text end new text begin ; and
new text end

new text begin (5) the owner or the person actively farming the property is farming at least 40
acres of the property.
new text end

The relationship under this paragraph may be either by blood or marriage.

(ii) Real property held by a trustee under a trust is eligible for agricultural homestead
classification under this paragraph if the qualifications in clause (i) are met, except that
"owner" means the grantor of the trust.

(iii) Property containing the residence of an owner who owns qualified property
under clause (i) shall be classified as part of the owner's agricultural homestead, if that
property is also used for noncommercial storage or drying of agricultural crops.

(c) Noncontiguous land shall be included as part of a homestead under section
273.13, subdivision 23, paragraph (a), only if the homestead is classified as class 2a
and the detached land is located in the same township or city, or not farther than four
townships or cities or combination thereof from the homestead. Any taxpayer of these
noncontiguous lands must notify the county assessor that the noncontiguous land is part of
the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer
must also notify the assessor of the other county.

(d) Agricultural land used for purposes of a homestead and actively farmed by a
person holding a vested remainder interest in it must be classified as a homestead under
section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a,
any other dwellings on the land used for purposes of a homestead by persons holding
vested remainder interests who are actively engaged in farming the property, and up to
one acre of the land surrounding each homestead and reasonably necessary for the use of
the dwelling as a home, must also be assessed class 2a.

(e) Agricultural land and buildings that were class 2a homestead property under
section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain
classified as agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the April 1997 floods;

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman,
or Wilkin;

(3) the agricultural land and buildings remain under the same ownership for the
current assessment year as existed for the 1997 assessment year and continue to be used
for agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 30
miles of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 1997
floods, and the owner furnishes the assessor any information deemed necessary by the
assessor in verifying the change in dwelling. Further notifications to the assessor are not
required if the property continues to meet all the requirements in this paragraph and any
dwellings on the agricultural land remain uninhabited.

(f) Agricultural land and buildings that were class 2a homestead property under
section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain
classified agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by a March 29, 1998, tornado;

(2) the property is located in the county of Blue Earth, Brown, Cottonwood,
LeSueur, Nicollet, Nobles, or Rice;

(3) the agricultural land and buildings remain under the same ownership for the
current assessment year as existed for the 1998 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to a March 29,
1998, tornado, and the owner furnishes the assessor any information deemed necessary by
the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
owner must notify the assessor by December 1, 1998. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph
and any dwellings on the agricultural land remain uninhabited.

(g) Agricultural property consisting of at least 40 acres of a family farm corporation,
joint family farm venture, family farm limited liability company, or partnership operating
a family farm as described under subdivision 8 shall be classified homestead, to the same
extent as other agricultural homestead property, if all of the following criteria are met:

(1) a shareholder, member, or partner of that entity is actively farming the
agricultural property;

(2) that shareholder, member, or partner who is actively farming the agricultural
property is a Minnesota resident;

(3) neither that shareholder, member, or partner, nor the spouse of that shareholder,
member, or partner claims another agricultural homestead in Minnesota; deleted text begin and
deleted text end

(4) that shareholder, member, or partner does not live farther than four townships or
cities, or a combination of four townships or cities, from the agricultural property deleted text begin . deleted text end new text begin ; and
new text end

new text begin (5) the shareholder, member, or partner actively farming the property is farming
at least 40 acres of the property.
new text end

Homestead treatment applies under this paragraph for property leased to a family
farm corporation, joint farm venture, limited liability company, or partnership operating a
family farm if legal title to the property is in the name of an individual who is a member,
shareholder, or partner in the entity.

(h) To be eligible for the special agricultural homestead under this subdivision, an
initial full application must be submitted to the county assessor where the property is
located. Owners and the persons who are actively farming the property shall be required
to complete only a one-page abbreviated version of the application in each subsequent
year provided that none of the following items have changed since the initial application:

(1) the day-to-day operation, administration, and financial risks remain the same;

(2) the owners and the persons actively farming the property continue to live within
the four townships or city criteria and are Minnesota residents;

(3) the same operator of the agricultural property is listed with the Farm Service
Agency;

(4) a Schedule F or equivalent income tax form was filed for the most recent year;

(5) the property's acreage is unchanged; and

(6) none of the property's acres have been enrolled in a federal or state farm program
since the initial application.

The owners and any persons who are actively farming the property must include
the appropriate Social Security numbers, and sign and date the application. If any of the
specified information has changed since the full application was filed, the owner must
notify the assessor, and must complete a new application to determine if the property
continues to qualify for the special agricultural homestead. The commissioner of revenue
shall prepare a standard reapplication form for use by the assessors.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2008 and
thereafter.
new text end

Sec. 33.

Minnesota Statutes 2006, section 273.124, subdivision 21, is amended to read:

Subd. 21.

Trust property; homestead.

Real property held by a trustee under a trust
is eligible for classification as homestead property if:

(1) the grantor or surviving spouse of the grantor of the trust occupies and uses the
property as a homestead;

(2) a relative or surviving relative of the grantor who meets the requirements of
subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1,
paragraph (d), in the case of agricultural property, occupies and uses the property as
a homestead;

(3) a family farm corporation, joint farm venture, limited liability company, or
partnership operating a family farm rents the property held by a trustee under a trust, and
the grantor, the spouse new text begin or surviving spouse new text end of the grantor, or the deleted text begin son deleted text end new text begin child new text end or deleted text begin daughter deleted text end
new text begin grandchild new text end of the grantor, who is also a shareholder, member, or partner of the corporation,
joint farm venture, limited liability company, or partnership occupies and uses the property
as a homestead, or is actively farming the property on behalf of the corporation, joint farm
venture, limited liability company, or partnership new text begin such that the grantor, the spouse or
surviving spouse of the grantor, or the child or grandchild of the grantor actively farming
the property is farming at least 40 acres of the property new text end ; or

(4) a person who has received homestead classification for property taxes payable in
2000 on the basis of an unqualified legal right under the terms of the trust agreement to
occupy the property as that person's homestead and who continues to use the property as
a homestead or a person who received the homestead classification for taxes payable in
2005 under clause (3) who does not qualify under clause (3) for taxes payable in 2006
or thereafter but who continues to qualify under clause (3) as it existed for taxes payable
in 2005.

For purposes of this subdivision, "grantor" is defined as the person creating or
establishing a testamentary, inter Vivos, revocable or irrevocable trust by written
instrument or through the exercise of a power of appointment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
except that the requirement that at least 40 acres of the property be farmed by an eligible
person is effective for taxes payable in 2008 and thereafter.
new text end

Sec. 34.

Minnesota Statutes 2006, section 273.13, subdivision 22, is amended to read:

Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b)
and (c), real estate which is residential and used for homestead purposes is class 1a. In the
case of a duplex or triplex in which one of the units is used for homestead purposes, the
entire property is deemed to be used for homestead purposes. The market value of class 1a
property must be determined based upon the value of the house, garage, and land.

The first $500,000 of market value of class 1a property has a net class rate of
one percent of its market value; and the market value of class 1a property that exceeds
$500,000 has a class rate of 1.25 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured
homes used for the purposes of a homestead by

(1) any person who is blind as defined in section 256D.35, or the blind person and
the blind person's spouse; or

(2) any person, hereinafter referred to as "veteran," who:

(i) served in the active military or naval service of the United States; and

(ii) is entitled to compensation under the laws and regulations of the United States
for permanent and total service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both
lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or
a wheelchair; and

(iii) has acquired a special housing unit with special fixtures or movable facilities
made necessary by the nature of the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the special housing unit
as a homestead; or

(3) any person who is permanently and totally disabled.

Property is classified and assessed under clause (3) only if the government agency or
income-providing source certifies, upon the request of the homestead occupant, that the
homestead occupant satisfies the disability requirements of this paragraph.

Property is classified and assessed pursuant to clause (1) only if the commissioner of
revenue certifies to the assessor that the homestead occupant satisfies the requirements
of this paragraph new text begin or the county assessor has approved the occupant's declaration under
section 273.1315 new text end .

Permanently and totally disabled for the purpose of this subdivision means a
condition which is permanent in nature and totally incapacitates the person from working
at an occupation which brings the person an income. The first $32,000 market value of
class 1b property has a net class rate of .45 percent of its market value. The remaining
market value of class 1b property has a class rate using the rates for class 1a or class 2a
property, whichever is appropriate, of similar market value.

(c) Class 1c property is commercial use real new text begin and personal new text end property that abuts
deleted text begin a lakeshore line deleted text end new text begin public water as defined in section 103G.005, subdivision 15, new text end and is
devoted to temporary and seasonal residential occupancy for recreational purposes but
not devoted to commercial purposes for more than 250 days in the year preceding the
year of assessment, and that includes a portion used as a homestead by the owner, which
includes a dwelling occupied as a homestead by a shareholder of a corporation that owns
the resort, a partner in a partnership that owns the resort, or a member of a limited liability
company that owns the resort even if the title to the homestead is held by the corporation,
partnership, or limited liability company. For purposes of this clause, property is devoted
to a commercial purpose on a specific day if any portion of the property, excluding the
portion used exclusively as a homestead, is used for residential occupancy and a fee is
charged for residential occupancy. new text begin Class 1c property is composed of three or more rental
units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room,
or individual camping site equipped with water and electrical hookups for recreational
vehicles. Class 1c property must provide recreational activities such as the rental of ice
fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment;
provide marina services, launch services, or guide services; or sell bait and fishing tackle.
Any unit in which the right to use the property is transferred to an individual or entity
by deeded interest, or the sale of shares or stock, no longer qualifies for class 1c even
though it may remain available for rent. A camping pad offered for rent by a property
that otherwise qualifies for class 1c is also class 1c, regardless of the term of the rental
agreement, as long as the use of the camping pad does not exceed 250 days. new text end The portion of
the property used as a homestead is class 1a property under paragraph (a). The remainder
of the property is classified as follows: the first $500,000 of market value is tier I, the
next $1,700,000 of market value is tier II, and any remaining market value is tier III.
The class rates for class 1c are: tier I, 0.55 percent; tier II, 1.0 percent; and tier III, 1.25
percent. deleted text begin If a class 1c resort property has any market value in tier III, the entire property
must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for
class 1c treatment under this paragraph. deleted text end new text begin Owners of real and personal property devoted to
temporary and seasonal residential occupancy for recreation purposes in which all or a
portion of the property was devoted to commercial purposes for not more than 250 days in
the year preceding the year of assessment desiring classification as class 1c, must submit a
declaration to the assessor designating the cabins or units occupied for 250 days or less in
the year preceding the year of assessment by January 15 of the assessment year. Those
cabins or units and a proportionate share of the land on which they are located must be
designated as class 1c as otherwise provided. The remainder of the cabins or units and
a proportionate share of the land on which they are located must be designated as class
3a commercial. The owner of property desiring designation as class 1c property must
provide guest registers or other records demonstrating that the units for which class 1c
designation is sought were not occupied for more than 250 days in the year preceding the
assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar,
(3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility
operated on a commercial basis not directly related to temporary and seasonal residential
occupancy for recreation purposes does not qualify for class 1c.
new text end

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time
when they work on that farm, and the occupants are not charged rent for the privilege of
occupying the property, provided that use of the structure for storage of farm equipment
and produce does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the
appropriate season; and

(4) the structure is not salable as residential property because it does not comply
with local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same class rates as class 1a property
under paragraph (a).

new text begin EFFECTIVE DATE. new text end

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

Sec. 35.

Minnesota Statutes 2006, section 273.13, subdivision 25, is amended to read:

Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more
units and used or held for use by the owner or by the tenants or lessees of the owner
as a residence for rental periods of 30 days or more, excluding property qualifying for
class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
than hospitals exempt under section 272.02, and contiguous property used for hospital
purposes, without regard to whether the property has been platted or subdivided. The
market value of class 4a property has a class rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class
4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
farm classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

The market value of class 4b property has a class rate of 1.25 percent.

(c) Class 4bb includes:

(1) nonhomestead residential real estate containing one unit, other than seasonal
residential recreational property; and

(2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b).

Class 4bb property has the same class rates as class 1a property under subdivision 22.

Property that has been classified as seasonal residential recreational property at
any time during which it has been owned by the current owner or spouse of the current
owner does not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real new text begin and personal new text end property
devoted to temporary and seasonal residential occupancy for recreation purposes,
including real new text begin and personal new text end property devoted to temporary and seasonal residential
occupancy for recreation purposes and not devoted to commercial purposes for more
than 250 days in the year preceding the year of assessment. For purposes of this clause,
property is devoted to a commercial purpose on a specific day if any portion of the
property is used for residential occupancy, and a fee is charged for residential occupancy. new text begin
Class 4c property is composed of three or more rental units. A "rental unit" is defined as a
cabin, condominium, townhouse, sleeping room, or individual camping site equipped with
water and electrical hookups for recreational vehicles. Class 4c property must provide
recreational activities such as renting ice fishing houses, boats and motors, snowmobiles,
downhill or cross-country ski equipment; provide marina services, launch services, or
guide services; or sell bait and fishing tackle. A camping pad offered for rent by a property
that otherwise qualifies for class 4c is also class 4c regardless of the term of the rental
agreement, as long as the use of the camping pad does not exceed 250 days. new text end In order for
a property to be classified as class 4c, seasonal residential recreational for commercial
purposes, at least 40 percent of the annual gross lodging receipts related to the property
must be from business conducted during 90 consecutive days and either (i) at least 60
percent of all paid bookings by lodging guests during the year must be for periods of at
least two consecutive nights; or (ii) at least 20 percent of the annual gross receipts must
be from charges for rental of fish houses, boats and motors, snowmobiles, downhill or
cross-country ski equipment, or charges for marina services, launch services, and guide
services, or the sale of bait and fishing tackle. For purposes of this determination, a paid
booking of five or more nights shall be counted as two bookings. Class 4c also includes
commercial use real property used exclusively for recreational purposes in conjunction
with class 4c property devoted to temporary and seasonal residential occupancy for
recreational purposes, up to a total of two acres, provided the property is not devoted
to commercial recreational use for more than 250 days in the year preceding the year
of assessment and is located within two miles of the class 4c property with which it
is used. Owners of real new text begin and personal new text end property devoted to temporary and seasonal
residential occupancy for recreation purposes and all or a portion of which was devoted
to commercial purposes for not more than 250 days in the year preceding the year of
assessment desiring classification as class deleted text begin 1c or deleted text end 4c, must submit a declaration to the
assessor designating the cabins or units occupied for 250 days or less in the year preceding
the year of assessment by January 15 of the assessment year. Those cabins or units and a
proportionate share of the land on which they are located deleted text begin will deleted text end new text begin must new text end be designated new text begin as new text end class
deleted text begin 1c or deleted text end 4c as otherwise provided. The remainder of the cabins or units and a proportionate
share of the land on which they are located deleted text begin will deleted text end new text begin must new text end be designated as class 3a. The owner
of property desiring designation as class deleted text begin 1c or deleted text end 4c property must provide guest registers or
other records demonstrating that the units for which class deleted text begin 1c or deleted text end 4c designation is sought
were not occupied for more than 250 days in the year preceding the assessment if so
requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, deleted text begin and deleted text end
(4) new text begin conference center or meeting room, and (5) new text end other nonresidential facility operated on a
commercial basis not directly related to temporary and seasonal residential occupancy for
recreation purposes deleted text begin shall deleted text end new text begin does new text end not qualify for class deleted text begin 1c or deleted text end 4c;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or
dues, but a membership fee may not be required in order to use the property for golfing,
and its green fees for golfing must be comparable to green fees typically charged by
municipal courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
with the golf course is classified as class 3a property;

(3) real property up to a maximum of one acre of land owned by a nonprofit
community service oriented organization; provided that the property is not used for a
revenue-producing activity for more than six days in the calendar year preceding the year
of assessment and the property is not used for residential purposes on either a temporary
or permanent basis. For purposes of this clause, a "nonprofit community service oriented
organization" means any corporation, society, association, foundation, or institution
organized and operated exclusively for charitable, religious, fraternal, civic, or educational
purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3),
(10), or (19) of the Internal Revenue Code of 1986, as amended through December 31,
1990. For purposes of this clause, "revenue-producing activities" shall include but not be
limited to property or that portion of the property that is used as an on-sale intoxicating
liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant
open to the public, bowling alley, a retail store, gambling conducted by organizations
licensed under chapter 349, an insurance business, or office or other space leased or
rented to a lessee who conducts a for-profit enterprise on the premises. Any portion of
the property which is used for revenue-producing activities for more than six days in the
calendar year preceding the year of assessment shall be assessed as class 3a. The use of
the property for social events open exclusively to members and their guests for periods of
less than 24 hours, when an admission is not charged nor any revenues are received by the
organization shall not be considered a revenue-producing activity;

(4) postsecondary student housing of not more than one acre of land that is owned by
a nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;

(5) manufactured home parks as defined in section 327.14, subdivision 3;

(6) real property that is actively and exclusively devoted to indoor fitness, health,
social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
and is located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt
under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the
leased premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
be filed by the new owner with the assessor of the county where the property is located
within 60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed
agreement restricting the use of the premises, prohibiting commercial use or activity
performed at the hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead
purposes, and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods
of 14 or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated
in the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer
than seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22.

Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
parcel of seasonal residential recreational property not used for commercial purposes has
the same class rates as class 4bb property, (ii) manufactured home parks assessed under
clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal
residential recreational property has a class rate of one percent for the first $500,000 of
market value, and 1.25 percent for the remaining market value, (iv) the market value of
property described in clause (4) has a class rate of one percent, (v) the market value of
property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that
portion of the market value of property in clause (9) qualifying for class 4c property
has a class rate of 1.25 percent.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
of the units in the building qualify as low-income rental housing units as certified under
section 273.128, subdivision 3, only the proportion of qualifying units to the total number
of units in the building qualify for class 4d. The remaining portion of the building shall be
classified by the assessor based upon its use. Class 4d also includes the same proportion of
land as the qualifying low-income rental housing units are to the total units in the building.
For all properties qualifying as class 4d, the market value determined by the assessor must
be based on the normal approach to value using normal unrestricted rents.

Class 4d property has a class rate of 0.75 percent.

new text begin EFFECTIVE DATE. new text end

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

Sec. 36.

Minnesota Statutes 2006, section 273.1398, subdivision 4, is amended to read:

Subd. 4.

Disparity reduction credit.

(a) Beginning with taxes payable in 1989,
class 4a, class 3a, and class 3b property qualifies for a disparity reduction credit if: (1)
the property is located in a border city that has an enterprise zone designated pursuant
to section 469.168, subdivision 4; (2) the property is located in a city with a population
greater than 2,500 and less than 35,000 according to the 1980 decennial census; (3) the
city is adjacent to a city in another state or immediately adjacent to a city adjacent to a city
in another state; and (4) the adjacent city in the other state has a population of greater than
5,000 and less than 75,000 new text begin according to the 1980 decennial census new text end .

(b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a
property to 2.3 percent of the property's market value and (ii) the tax on class 3a and class
3b property to 2.3 percent of market value.

(c) The county auditor shall annually certify the costs of the credits to the
Department of Revenue. The department shall reimburse local governments for the
property taxes foregone as the result of the credits in proportion to their total levies.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxes payable in
2001 and thereafter.
new text end

Sec. 37.

Minnesota Statutes 2006, section 273.33, subdivision 2, is amended to read:

Subd. 2.

Listing and assessment by commissioner.

The personal property,
consisting of the pipeline system of mains, pipes, and equipment attached thereto, of
pipeline companies and others engaged in the operations or business of transporting
natural gas, gasoline, crude oil, or other petroleum products by pipelines, shall be listed
with and assessed by the commissioner of revenue new text begin and the values provided to the city
or county assessor by order new text end . This subdivision shall not apply to the assessment of
the products transported through the pipelines nor to the lines of local commercial gas
companies engaged primarily in the business of distributing gas to consumers at retail nor
to pipelines used by the owner thereof to supply natural gas or other petroleum products
exclusively for such owner's own consumption and not for resale to others. If more than
85 percent of the natural gas or other petroleum products actually transported over the
pipeline is used for the owner's own consumption and not for resale to others, then this
subdivision shall not apply; provided, however, that in that event, the pipeline shall be
assessed in proportion to the percentage of gas actually transported over such pipeline that
is not used for the owner's own consumption. On or before June 30, the commissioner
shall certify to the auditor of each county, the amount of such personal property assessment
against each company in each district in which such property is located.

new text begin EFFECTIVE DATE. new text end

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

Sec. 38.

Minnesota Statutes 2006, section 273.37, subdivision 2, is amended to read:

Subd. 2.

Listing and assessment by commissioner.

Transmission lines of less
than 69 kv, transmission lines of 69 kv and above located in an unorganized township,
and distribution lines, and equipment attached thereto, having a fixed situs outside the
corporate limits of cities except distribution lines taxed as provided in sections 273.40
and 273.41, shall be listed with and assessed by the commissioner of revenue in the
county where situated new text begin and the values provided to the city or county assessor by order new text end .
The commissioner shall assess such property at the percentage of market value fixed by
law; and, on or before June 30, shall certify to the auditor of each county in which such
property is located the amount of the assessment made against each company and person
owning such property.

new text begin EFFECTIVE DATE. new text end

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

Sec. 39.

Minnesota Statutes 2006, section 273.371, subdivision 1, is amended to read:

Subdivision 1.

Report required.

Every electric light, power, gas, water, express,
stage, and transportation company and pipeline doing business in Minnesota shall
annually file with the commissioner on or before March 31 a report under oath setting
forth the information prescribed by the commissioner to enable the commissioner to make
valuations, recommended valuations, and equalization required under sections 273.33,
273.35, 273.36, deleted text begin and deleted text end 273.37 new text begin , and 273.3711 new text end . If all the required information is not available
on March 31, the company or pipeline shall file the information that is available on or
before March 31, and the balance of the information as soon as it becomes available.

new text begin EFFECTIVE DATE. new text end

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

Sec. 40.

new text begin [273.3711] RECOMMENDED AND ORDERED VALUES.
new text end

new text begin For purposes of sections 273.33, 273.35, 273.36, 273.37, 273.371, and 273.372,
all values not required to be listed and assessed by the commissioner of revenue are
recommended values.
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. 41.

Minnesota Statutes 2006, section 274.01, subdivision 1, is amended to read:

Subdivision 1.

Ordinary board; meetings, deadlines, grievances.

(a) The town
board of a town, or the council or other governing body of a city, is the board of appeal
and equalization except (1) in cities whose charters provide for a board of equalization or
(2) in any city or town that has transferred its local board of review power and duties to
the county board as provided in subdivision 3. The county assessor shall fix a day and
time when the board or the board of equalization shall meet in the assessment districts
of the county. Notwithstanding any law or city charter to the contrary, a city board of
equalization shall be referred to as a board of appeal and equalization. On or before
February 15 of each year the assessor shall give written notice of the time to the city or
town clerk. Notwithstanding the provisions of any charter to the contrary, the meetings
must be held between April 1 and May 31 each year. The clerk shall give published and
posted notice of the meeting at least ten days before the date of the meeting.

The board shall meet at the office of the clerk to review the assessment and
classification of property in the town or city. No changes in valuation or classification
which are intended to correct errors in judgment by the county assessor may be made by
the county assessor after the board has adjourned in those cities or towns that hold a
local board of review; however, corrections of errors that are merely clerical in nature or
changes that extend homestead treatment to property are permitted after adjournment until
the tax extension date for that assessment year. The changes must be fully documented and
maintained in the assessor's office and must be available for review by any person. A copy
of the changes made during this period in those cities or towns that hold a local board of
review must be sent to the county board no later than December 31 of the assessment year.

(b) The board shall determine whether the taxable property in the town or city has
been properly placed on the list and properly valued by the assessor. If real or personal
property has been omitted, the board shall place it on the list with its market value, and
correct the assessment so that each tract or lot of real property, and each article, parcel,
or class of personal property, is entered on the assessment list at its market value. No
assessment of the property of any person may be raised unless the person has been
duly notified of the intent of the board to do so. On application of any person feeling
aggrieved, the board shall review the assessment or classification, or both, and correct
it as appears just. The board may not make an individual market value adjustment or
classification change that would benefit the property if the owner or other person having
control over the property has refused the assessor access to inspect the property and the
interior of any buildings or structures as provided in section 273.20. new text begin A board member
shall not participate in any actions of the board which result in market value adjustments
or classification changes to property owned by the board member, the spouse, parent,
stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew,
or niece of a board member, or property in which a board member has a financial interest.
The relationship may be by blood or marriage.
new text end

(c) A local board may reduce assessments upon petition of the taxpayer but the total
reductions must not reduce the aggregate assessment made by the county assessor by more
than one percent. If the total reductions would lower the aggregate assessments made by
the county assessor by more than one percent, none of the adjustments may be made. The
assessor shall correct any clerical errors or double assessments discovered by the board
without regard to the one percent limitation.

(d) A local board does not have authority to grant an exemption or to order property
removed from the tax rolls.

(e) A majority of the members may act at the meeting, and adjourn from day to day
until they finish hearing the cases presented. The assessor shall attend, with the assessment
books and papers, and take part in the proceedings, but must not vote. The county assessor,
or an assistant delegated by the county assessor shall attend the meetings. The board shall
list separately, on a form appended to the assessment book, all omitted property added
to the list by the board and all items of property increased or decreased, with the market
value of each item of property, added or changed by the board, placed opposite the item.
The county assessor shall enter all changes made by the board in the assessment book.

(f) Except as provided in subdivision 3, if a person fails to appear in person, by
counsel, or by written communication before the board after being duly notified of the
board's intent to raise the assessment of the property, or if a person feeling aggrieved by an
assessment or classification fails to apply for a review of the assessment or classification,
the person may not appear before the county board of appeal and equalization for a review
of the assessment or classification. This paragraph does not apply if an assessment was
made after the local board meeting, as provided in section 273.01, or if the person can
establish not having received notice of market value at least five days before the local
board meeting.

(g) The local board must complete its work and adjourn within 20 days from the
time of convening stated in the notice of the clerk, unless a longer period is approved by
the commissioner of revenue. No action taken after that date is valid. All complaints
about an assessment or classification made after the meeting of the board must be heard
and determined by the county board of equalization. A nonresident may, at any time,
before the meeting of the board file written objections to an assessment or classification
with the county assessor. The objections must be presented to the board at its meeting by
the county assessor for its consideration.

new text begin EFFECTIVE DATE. new text end

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

Sec. 42.

Minnesota Statutes 2006, section 274.13, subdivision 1, is amended to read:

Subdivision 1.

Members; meetings; rules for equalizing assessments.

The county
commissioners, or a majority of them, with the county auditor, or, if the auditor cannot be
present, the deputy county auditor, or, if there is no deputy, the court administrator of the
district court, shall form a board for the equalization of the assessment of the property
of the county, including the property of all cities whose charters provide for a board of
equalization. This board shall be referred to as the county board of appeal and equalization.
The board shall meet annually, on the date specified in section 274.14, at the office of the
auditor. Each member shall take an oath to fairly and impartially perform duties as a
member. new text begin Members shall not participate in any actions of the board which result in market
value adjustments or classification changes to property owned by the board member, the
spouse, parent, stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle,
aunt, nephew, or niece of a board member, or property in which a board member has a
financial interest. The relationship may be by blood or marriage. new text end The board shall examine
and compare the returns of the assessment of property of the towns or districts, and
equalize them so that each tract or lot of real property and each article or class of personal
property is entered on the assessment list at its market value, subject to the following rules:

(1) The board shall raise the valuation of each tract or lot of real property which
in its opinion is returned below its market value to the sum believed to be its market
value. The board must first give notice of intention to raise the valuation to the person in
whose name it is assessed, if the person is a resident of the county. The notice must fix
a time and place for a hearing.

(2) The board shall reduce the valuation of each tract or lot which in its opinion is
returned above its market value to the sum believed to be its market value.

(3) The board shall raise the valuation of each class of personal property which
in its opinion is returned below its market value to the sum believed to be its market
value. It shall raise the aggregate value of the personal property of individuals, firms, or
corporations, when it believes that the aggregate valuation, as returned, is less than the
market value of the taxable personal property possessed by the individuals, firms, or
corporations, to the sum it believes to be the market value. The board must first give notice
to the persons of intention to do so. The notice must set a time and place for a hearing.

(4) The board shall reduce the valuation of each class of personal property that
is returned above its market value to the sum it believes to be its market value. Upon
complaint of a party aggrieved, the board shall reduce the aggregate valuation of the
individual's personal property, or of any class of personal property for which the individual
is assessed, which in its opinion has been assessed at too large a sum, to the sum it believes
was the market value of the individual's personal property of that class.

(5) The board must not reduce the aggregate value of all the property of its county, as
submitted to the county board of equalization, with the additions made by the auditor under
this chapter, by more than one percent of its whole valuation. The board may raise the
aggregate valuation of real property, and of each class of personal property, of the county,
or of any town or district of the county, when it believes it is below the market value of the
property, or class of property, to the aggregate amount it believes to be its market value.

(6) The board shall change the classification of any property which in its opinion
is not properly classified.

(7) The board does not have the authority to grant an exemption or to order property
removed from the tax rolls.

new text begin EFFECTIVE DATE. new text end

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

Sec. 43.

new text begin [274.135] COUNTY BOARDS; APPEALS AND EQUALIZATION
COURSE AND MEETING REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Handbook for county boards. new text end

new text begin By no later than January 1, 2009, the
commissioner of revenue must develop a handbook detailing procedures, responsibilities,
and requirements for county boards of appeal and equalization. The handbook must
include, but need not be limited to, the role of the county board in the assessment process,
the legal and policy reasons for fair and impartial appeal and equalization hearings, county
board meeting procedures that foster fair and impartial assessment reviews and other best
practices recommendations, quorum requirements for county boards, and explanations
of alternate methods of appeal.
new text end

new text begin Subd. 2. new text end

new text begin Appeals and equalization course. new text end

new text begin Beginning in 2009, and each year
thereafter, there must be at least one member at each meeting of a county board of appeal
and equalization who has attended an appeals and equalization course developed or
approved by the commissioner within the last four years, as certified by the commissioner.
The course may be offered in conjunction with a meeting of the Minnesota Association
of Assessment Officers. The course content must include, but need not be limited to, a
review of the handbook developed by the commissioner under subdivision 1.
new text end

new text begin Subd. 3. new text end

new text begin Proof of compliance; transfer of duties. new text end

new text begin (a) Any county that
conducts county boards of appeal and equalization meetings must provide proof to the
commissioner by December 1, 2009, and each year thereafter, that it is in compliance
with the requirements of subdivision 2. Beginning in 2009, this notice must also verify
that there was a quorum of voting members at each meeting of the board of appeal and
equalization in the current year. A county that does not comply with these requirements
is deemed to have transferred its board of appeal and equalization powers to the special
board of equalization appointed pursuant to section 274.13, subdivision 2, beginning
with the following year's assessment and continuing unless the powers are reinstated
under paragraph (c). A county that does not comply with the requirements of subdivision
2 and has not appointed a special board of equalization shall appoint a special board of
equalization before the following year's assessment.
new text end

new text begin (b) The county shall notify the taxpayers when the board of appeal and equalization
for a county has been transferred to the special board of equalization under this subdivision
and, prior to the meeting time of the special board of equalization, the county shall make
available to those taxpayers a procedure for a review of the assessments, including, but
not limited to, open book meetings. This alternate review process must take place in
April and May.
new text end

new text begin (c) A county board whose powers are transferred to the special board of equalization
under this subdivision may be reinstated by resolution of the county board and upon proof
of compliance with the requirements of subdivision 2. The resolution and proofs must be
provided to the commissioner by December 1 in order to be effective for the following
year's assessment.
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. 44.

Minnesota Statutes 2006, section 275.065, subdivision 3, is amended to read:

Subd. 3.

Notice of proposed property taxes.

(a) The county auditor shall prepare
and the county treasurer shall deliver after November 10 and on or before November 24
each year, by first class mail to each taxpayer at the address listed on the county's current
year's assessment roll, a notice of proposed property taxes. new text begin Upon written request by
the taxpayer, the treasurer may send the notice in electronic form or by electronic mail
instead of on paper or by ordinary mail.
new text end

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes
each taxing authority proposes to collect for taxes payable the following year. In the case
of a town, or in the case of the state general tax, the final tax amount will be its proposed
tax. In the case of taxing authorities required to hold a public meeting under subdivision 6,
the notice must clearly state that each taxing authority, including regional library districts
established under section 134.201, and including the metropolitan taxing districts as
defined in paragraph (i), but excluding all other special taxing districts and towns, will
hold a public meeting to receive public testimony on the proposed budget and proposed or
final property tax levy, or, in case of a school district, on the current budget and proposed
property tax levy. It must clearly state the time and place of each taxing authority's
meeting, a telephone number for the taxing authority that taxpayers may call if they have
questions related to the notice, and an address where comments will be received by mail.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used
for computing property taxes payable in the following year and for taxes payable in the
current year as each appears in the records of the county assessor on November 1 of the
current year; and, in the case of residential property, whether the property is classified as
homestead or nonhomestead. The notice must clearly inform taxpayers of the years to
which the market values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state general
tax, net of the residential and agricultural homestead credit under section 273.1384, voter
approved school levy, other local school levy, and the sum of the special taxing districts,
and as a total of all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) includes an amount for a lake improvement
district as defined under sections 103B.501 to 103B.581, the amount attributable for that
purpose must be separately stated from the remaining county levy amount.

In the case of a town or the state general tax, the final tax shall also be its proposed
tax unless the town changes its levy at a special town meeting under section 365.52. If a
school district has certified under section 126C.17, subdivision 9, that a referendum will
be held in the school district at the November general election, the county auditor must
note next to the school district's proposed amount that a referendum is pending and that,
if approved by the voters, the tax amount may be higher than shown on the notice. In
the case of the city of Minneapolis, the levy for the Minneapolis Library Board and the
levy for Minneapolis Park and Recreation shall be listed separately from the remaining
amount of the city's levy. In the case of the city of St. Paul, the levy for the St. Paul
Library Agency must be listed separately from the remaining amount of the city's levy.
In the case of Ramsey County, any amount levied under section 134.07 may be listed
separately from the remaining amount of the county's levy. In the case of a parcel where
tax increment or the fiscal disparities areawide tax under chapter 276A or 473F applies,
the proposed tax levy on the captured value or the proposed tax levy on the tax capacity
subject to the areawide tax must each be stated separately and not included in the sum of
the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and
the total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under
the senior citizens' property tax deferral program under chapter 290B is the total amount
of property tax before subtraction of the deferred property tax amount.

(e) The notice must clearly state that the proposed or final taxes do not include
the following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified,
including bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first
Monday in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster
occurring after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become
final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value
reductions for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or
the county treasurer to deliver the notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as
nonhomestead, and satisfactory documentation is provided to the county assessor by the
applicable deadline, and the property qualifies for the homestead classification in that
assessment year, the assessor shall reclassify the property to homestead for taxes payable
in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental
periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant,
renter, or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within
three days of receipt of the notice, whichever is later. A taxpayer may notify the county
treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to
which the notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision, subdivisions 5a and 6, "metropolitan special
taxing districts" means the following taxing districts in the seven-county metropolitan area
that levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325,
473.446, 473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672;
and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the
county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
398A shall be included with the appropriate county's levy and shall be discussed at that
county's public hearing.

(j) The governing body of a county, city, or school district may, with the consent
of the county board, include supplemental information with the statement of proposed
property taxes about the impact of state aid increases or decreases on property tax
increases or decreases and on the level of services provided in the affected jurisdiction.
This supplemental information may include information for the following year, the current
year, and for as many consecutive preceding years as deemed appropriate by the governing
body of the county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and
local government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services
that the governing body of the county, city, or school district may deem appropriate to
include.

The information may be presented using tables, written narrative, and graphic
representations and may contain instruction toward further sources of information or
opportunity for comment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for notices required in 2007 and
thereafter, for taxes payable in 2008 and thereafter.
new text end

Sec. 45.

Minnesota Statutes 2006, section 275.065, subdivision 5a, is amended to read:

Subd. 5a.

Public advertisement.

(a) A city that has a population of more than
2,500, county, a metropolitan special taxing district as defined in subdivision 3, paragraph
(i), a regional library district established under section 134.201, or school district shall
advertise in a newspaper a notice of its intent to adopt a budget and property tax levy or,
in the case of a school district, to review its current budget and proposed property taxes
payable in the following year, at a public hearing, if a public hearing is required under
subdivision 6. The notice must be published not less than two business days nor more
than six business days before the hearing.

The advertisement must be at least one-eighth page in size of a standard-size or a
tabloid-size newspaper. The advertisement must not be placed in the part of the newspaper
where legal notices and classified advertisements appear. The advertisement must be
published in an official newspaper of general circulation in the taxing authority. The
newspaper selected must be one of general interest and readership in the community, and
not one of limited subject matter. The advertisement must appear in a newspaper that is
published at least once per week.

For purposes of this section, the metropolitan special taxing district's advertisement
must only be published in the Minneapolis Star and Tribune and the Saint Paul Pioneer
Press.

In addition to other requirements, a county and a city having a population of
more than 2,500 must show in the public advertisement required under this subdivision
the current local tax rate, the proposed local tax rate if no property tax levy increase
is adopted, and the proposed rate if the proposed levy is adopted. For purposes of this
subdivision, "local tax rate" means the city's or county's net tax capacity levy divided by
the city's or county's taxable net tax capacity.

(b) new text begin Subject to the provisions of paragraph (g), new text end the advertisement for school districts,
metropolitan special taxing districts, and regional library districts must be in the following
form, except that the notice for a school district may include references to the current
budget in regard to proposed property taxes.

"NOTICE OF

PROPOSED PROPERTY TAXES

(School District/Metropolitan

Special Taxing District/Regional

Library District) of .........

The governing body of ........ will soon hold budget hearings and vote on the property
taxes for (metropolitan special taxing district/regional library district services that will be
provided in (year)/school district services that will be provided in (year) and (year)).

NOTICE OF PUBLIC HEARING:

All concerned citizens are invited to attend a public hearing and express their opinions
on the proposed (school district/metropolitan special taxing district/regional library
district) budget and property taxes, or in the case of a school district, its current budget
and proposed property taxes, payable in the following year. The hearing will be held on
(Month/Day/Year) at (Time) at (Location, Address)."

(c) new text begin Subject to the provisions of paragraph (g), new text end the advertisement for cities and
counties must be in the following form.

"NOTICE OF PROPOSED

TOTAL BUDGET AND PROPERTY TAXES

The (city/county) governing body or board of commissioners will hold a public hearing to
discuss the budget and to vote on the amount of property taxes to collect for services the
(city/county) will provide in (year).

SPENDING: The total budget amounts below compare (city's/county's) (year) total actual
budget with the amount the (city/county) proposes to spend in (year).

(Year) Total Actual Budget		Proposed (Year) Budget		Change from (Year)-(Year)
$...........		$...........		.....%

TAXES: The property tax amounts below compare that portion of the current budget
levied in property taxes in (city/county) for (year) with the property taxes the (city/county)
proposes to collect in (year).

(Year) Property Taxes		Proposed (Year) Property Taxes		Change from (Year)-(Year)
$...........		$...........		.....%

LOCAL TAX RATE COMPARISON: The current local tax rate, the local tax rate if no tax
levy increase is adopted, and the proposed local tax rate if the proposed levy is adopted.

(Year) Tax Rate		(Year) Tax Rate if NO Levy Increase		(Year) Proposed Tax Rate
...........		...........		.....

ATTEND THE PUBLIC HEARING

All (city/county) residents are invited to attend the public hearing of the (city/county) to
express your opinions on the budget and the proposed amount of (year) property taxes.
The hearing will be held on:

(Month/Day/Year/Time)

(Location/Address)

If the discussion of the budget cannot be completed, a time and place for continuing the
discussion will be announced at the hearing. You are also invited to send your written
comments to:

(City/County)

(Location/Address)"

(d) For purposes of this subdivision, the budget amounts listed on the advertisement
mean:

(1) for cities, the total government fund expenditures, as defined by the state auditor
under section 471.6965, less any expenditures for improvements or services that are
specially assessed or charged under chapter 429, 430, 435, or the provisions of any other
law or charter; and

(2) for counties, the total government fund expenditures, as defined by the state
auditor under section 375.169, less any expenditures for direct payments to recipients or
providers for the human service aids listed below:

(i) Minnesota family investment program under chapters 256J and 256K;

(ii) medical assistance under sections 256B.041, subdivision 5, and 256B.19,
subdivision 1;

(iii) general assistance medical care under section 256D.03, subdivision 6;

(iv) general assistance under section 256D.03, subdivision 2;

(v) emergency assistance under section 256J.48;

(vi) Minnesota supplemental aid under section 256D.36, subdivision 1;

(vii) preadmission screening under section 256B.0911, and alternative care grants
under section 256B.0913;

(viii) general assistance medical care claims processing, medical transportation and
related costs under section 256D.03, subdivision 4;

(ix) medical transportation and related costs under section 256B.0625, subdivisions
17 to 18a;

(x) group residential housing under section 256I.05, subdivision 8, transferred from
programs in clauses (iv) and (vi); or

(xi) any successor programs to those listed in clauses (i) to (x).

(e) A city with a population of over 500 but not more than 2,500 that is required to
hold a public hearing under subdivision 6 must advertise by posted notice as defined in
section 645.12, subdivision 1. The advertisement must be posted at the time provided in
paragraph (a). It must be in the form required in paragraph (b).

(f) For purposes of this subdivision, the population of a city is the most recent
population as determined by the state demographer under section 4A.02.

(g) The commissioner of revenue deleted text begin , subject to the approval of the chairs of the house
and senate tax committees, deleted text end shall new text begin annually new text end prescribe the new text begin specific new text end form and format of the
advertisements required under this subdivision new text begin , including such details as font size and
style, and spacing for the required items. The commissioner may prescribe alternate and
additional language for the advertisement for a taxing authority or for groups of taxing
authorities. At least two weeks before November 29 each year, the commissioner shall
provide a copy of the prescribed advertisements to the chairs of the committees of the
house of representatives and the senate with jurisdiction over taxes new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for advertisements in 2007 and
thereafter, for proposed taxes payable in 2008 and thereafter.
new text end

Sec. 46.

Minnesota Statutes 2006, section 275.067, is amended to read:

275.067 SPECIAL TAXING DISTRICTS; ORGANIZATION DATE;
CERTIFICATION OF LEVY OR SPECIAL ASSESSMENTS.

Special taxing districts as defined in section 275.066 organized on or before July 1 in
deleted text begin a deleted text end new text begin the current new text end calendar year deleted text begin may deleted text end new text begin , and special taxing districts organized in a prior year that
have not previously certified a levy to the county auditor, are allowed to new text end certify a levy to
the county auditor in deleted text begin that same deleted text end new text begin the current new text end year for property taxes or special assessments
to be payable in the following calendar year to the extent that the special taxing district is
authorized by statute or special act to levy taxes or special assessments new text begin , but only if the
county auditor receives written notice from the district on or before July 1 of the current
year that the district may be certifying a levy in the current year, and the notice includes a
complete list or other description of the tax parcels in the district and a map showing the
boundaries of the district new text end . Special taxing districts organized after July 1 in a calendar year
may not certify a levy of property taxes or special assessments to the county auditor under
the powers granted to them by statute or special act new text begin and subject to the requirements of
this section new text end until the following calendar year. new text begin All special taxing districts must notify the
county auditor by July 1 in order for its boundaries for the levy to be certified that year
to be different than its boundaries for levies certified in prior years, and the notice must
include a complete list or other description of the tax parcels within the new boundaries
and a map showing the new boundaries of the district. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2008 and
thereafter.
new text end

Sec. 47.

Minnesota Statutes 2006, section 276.04, is amended by adding a subdivision
to read:

new text begin Subd. 5. new text end

new text begin Electronic tax statements. new text end

new text begin Upon written request by the owner of real
property located in the county, or by the owner's agent, a county may send tax statements
in electric form or by electronic means instead of on paper or by mailing. For the purposes
of the payment deadlines specified in section 279.01, the postmark date on the envelope
containing these property tax statements is the date the statements were sent by electronic
means.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax statements for taxes payable
in 2008 and thereafter.
new text end

Sec. 48.

Minnesota Statutes 2006, section 277.01, subdivision 2, is amended to read:

Subd. 2.

Partial payments.

The county treasurer may accept payments of more or
less than the exact amount of a tax installment due. new text begin Payments must be applied first to the
oldest installment that is due but which has not been fully paid. new text end If the accepted payment is
less than the amount due, deleted text begin payments must be deleted text end new text begin the payment is new text end applied first to the penalty
accrued for the year deleted text begin the payment is made deleted text end new text begin or the installment being paid new text end . Acceptance of
partial payment of tax does not constitute a waiver of the minimum payment required as a
condition for filing an appeal under section 278.03 or any other law, nor does it affect the
order of payment of delinquent taxes under section 280.39.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made on or after the
day following final enactment.
new text end

Sec. 49.

Minnesota Statutes 2006, section 279.01, subdivision 1, is amended to read:

Subdivision 1.

Due dates; penalties.

Except as provided in subdivision 3 or 4, on
May 16 or 21 days after the postmark date on the envelope containing the property tax
statement, whichever is later, a penalty deleted text begin shall accrue deleted text end new text begin accrues new text end and thereafter deleted text begin be deleted text end new text begin is new text end charged
upon all unpaid taxes on real estate on the current lists in the hands of the county treasurer.
The penalty deleted text begin shall be deleted text end new text begin is new text end at a rate of two percent on homestead property until May 31 and
four percent on June 1. The penalty on nonhomestead property deleted text begin shall be deleted text end new text begin is new text end at a rate of four
percent until May 31 and eight percent on June 1. This penalty deleted text begin shall deleted text end new text begin does new text end not accrue until
June 1 of each year, or 21 days after the postmark date on the envelope containing the
property tax statements, whichever is later, on commercial use real property used for
seasonal residential recreational purposes and classified as class 1c or 4c, and on other
commercial use real property classified as class 3a, provided that over 60 percent of the
gross income earned by the enterprise on the class 3a property is earned during the months
of May, June, July, and August. deleted text begin Any property owner of such class 3a property who pays deleted text end
new text begin In order for new text end the first half of the tax due on deleted text begin the deleted text end new text begin class 3a new text end property new text begin to be paid new text end after May 15
and before June 1, or 21 days after the postmark date on the envelope containing the
property tax statement, whichever is later, deleted text begin shall deleted text end new text begin without penalty, the owner of the property
must new text end attach an affidavit to the payment attesting to compliance with the income provision
of this subdivision. Thereafter, for both homestead and nonhomestead property, on the
first day of each month beginning July 1, up to and including October 1 following, an
additional penalty of one percent for each month deleted text begin shall accrue deleted text end new text begin accrues new text end and deleted text begin be deleted text end new text begin is new text end charged on
all such unpaid taxes provided that if the due date was extended beyond May 15 as the
result of any delay in mailing property tax statements no additional penalty shall accrue
if the tax is paid by the extended due date. If the tax is not paid by the extended due
date, then all penalties that would have accrued if the due date had been May 15 shall be
charged. When the taxes against any tract or lot exceed $50, one-half thereof may be paid
prior to May 16 or 21 days after the postmark date on the envelope containing the property
tax statement, whichever is later; and, if so paid, no penalty deleted text begin shall attach deleted text end new text begin attaches new text end ; the
remaining one-half deleted text begin shall deleted text end new text begin may new text end be paid at any time prior to October 16 following, without
penalty; but, if not so paid, then a penalty of two percent deleted text begin shall accrue deleted text end new text begin accrues new text end thereon for
homestead property and a penalty of four percent on nonhomestead property. Thereafter,
for homestead property, on the first day of November an additional penalty of four percent
deleted text begin shall accrue deleted text end new text begin accrues new text end and on the first day of December following, an additional penalty of
two percent deleted text begin shall accrue deleted text end new text begin accrues new text end and deleted text begin be deleted text end new text begin is new text end charged on all such unpaid taxes. Thereafter,
for nonhomestead property, on the first day of November and December following, an
additional penalty of four percent for each month deleted text begin shall accrue deleted text end new text begin accrues new text end and deleted text begin be deleted text end new text begin is new text end charged
on all such unpaid taxes. If one-half of such taxes deleted text begin shall deleted text end new text begin are new text end not deleted text begin be deleted text end paid prior to May 16 or
21 days after the postmark date on the envelope containing the property tax statement,
whichever is later, the same may be paid at any time prior to October 16, with accrued
penalties to the date of payment added, and thereupon no penalty deleted text begin shall attach deleted text end new text begin attaches new text end to
the remaining one-half until October 16 following.

This section applies to payment of personal property taxes assessed against
improvements to leased property, except as provided by section 277.01, subdivision 3.

A county may provide by resolution that in the case of a property owner that has
multiple tracts or parcels with aggregate taxes exceeding $50, payments may be made in
installments as provided in this subdivision.

The county treasurer may accept payments of more or less than the exact amount of
a tax installment due. new text begin Payments must be applied first to the oldest installment that is due
but which has not been fully paid. new text end If the accepted payment is less than the amount due,
payments must be applied first to the penalty accrued for the year deleted text begin the payment is made deleted text end new text begin
or the installment being paid new text end . Acceptance of partial payment of tax does not constitute
a waiver of the minimum payment required as a condition for filing an appeal under
section 278.03 or any other law, nor does it affect the order of payment of delinquent
taxes under section 280.39.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made on or after the
day following final enactment.
new text end

Sec. 50.

Minnesota Statutes 2006, section 290B.03, subdivision 2, is amended to read:

Subd. 2.

Qualifying homestead; defined.

Qualifying homestead property is defined
as the dwelling occupied as the homeowner's principal residence and so much of the land
surrounding it as is reasonably necessary for use of the dwelling as a home and any other
property used for purposes of a homestead as defined in section 273.13, subdivisions
22 and 23, but not to exceed one acre. The homestead may be part of a multidwelling
building and the land on which it is built. new text begin Property is not qualifying homestead property if
a person or entity other than the applicant or the applicant's spouse holds an interest in the
property as the vendor under a contract for deed or as a remainderperson.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications submitted on or
after January 1, 2007.
new text end

Sec. 51.

Minnesota Statutes 2006, section 290C.02, subdivision 3, is amended to read:

Subd. 3.

Claimant.

(a) "Claimant" means new text begin : new text end

new text begin (1) new text end a person, as that term is defined in section 290.01, subdivision 2, who owns
forest land in Minnesota and files an application authorized by the Sustainable Forest
Incentive Act deleted text begin . Claimant includes deleted text end new text begin ;
new text end

new text begin (2) new text end a purchaser or grantee if property enrolled in the program was sold or transferred
after the original application was filed and prior to the annual incentive payment being
made deleted text begin . deleted text end new text begin ; or
new text end

new text begin (3) an owner of land previously covered by an auxiliary forest contract that
automatically qualifies for inclusion in the Sustainable Forest Incentive Act program
pursuant to section 88.49, subdivision 9a, or 88.491, subdivision 2.
new text end

The purchaser or grantee must notify the commissioner in writing of the sale or
transfer of the property. new text begin Owners of land that qualifies for inclusion pursuant to section
88.49, subdivision 9a, or 88.491, subdivision 2, must notify the commissioner in writing
of the expiration of the auxiliary forest contract or land trade with a governmental unit and
submit an application to the commissioner by August 15 in order to be eligible to receive a
payment by October 1 of that same year. new text end For purposes of section 290C.11, claimant also
includes any person bound by the covenant required in section 290C.04.

(b) No more than one claimant is entitled to a payment under this chapter with
respect to any tract, parcel, or piece of land enrolled under this chapter that has been
assigned the same parcel identification number. When enrolled forest land is owned by
two or more persons, the owners must determine between them which person is eligible to
claim the payments provided under sections 290C.01 to 290C.11. In the case of property
sold or transferred, the former owner and the purchaser or grantee must determine between
them which person is eligible to claim the payments provided under sections 290C.01 to
290C.11. The owners, transferees, or grantees must notify the commissioner in writing
which person is eligible to claim the payments.

new text begin EFFECTIVE DATE. new text end

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

Sec. 52.

Minnesota Statutes 2006, section 290C.04, is amended to read:

290C.04 APPLICATIONS.

(a) A landowner may apply to enroll forest land for the sustainable forest incentive
program under this chapter. The claimant must complete, sign, and submit an application
to the commissioner by September 30 in order for the land to become eligible beginning
in the next year. The application shall be on a form prescribed by the commissioner and
must include the information the commissioner deems necessary. At a minimum, the
application must show the following information for the land and the claimant: (i) the
claimant's Social Security number or state or federal business tax registration number and
date of birth, (ii) the claimant's address, (iii) the claimant's signature, (iv) the county's
parcel identification numbers for the tax parcels that completely contain the claimant's
forest land that is sought to be enrolled, (v) the number of acres eligible for enrollment
in the program, (vi) the approved plan writer's signature and identification number, and
(vii) proof, in a form specified by the commissioner, that the claimant has executed and
acknowledged in the manner required by law for a deed, and recorded, a covenant that the
land is not and shall not be developed in a manner inconsistent with the requirements and
conditions of this chapter. The covenant shall state in writing that the covenant is binding
on the claimant and the claimant's successor or assignee, and that it runs with the land
for a period of not less than eight years. The commissioner shall specify the form of the
covenant and provide copies upon request. The covenant must include a legal description
that encompasses all the forest land that the claimant wishes to enroll under this section or
the certificate of title number for that land if it is registered land.

(b) In all cases, the commissioner shall notify the claimant within 90 days after
receipt of a completed application that either the land has or has not been approved for
enrollment. A claimant whose application is denied may appeal the denial as provided in
section deleted text begin 290C.11, paragraph (a) deleted text end new text begin 290C.13 new text end .

(c) Within 90 days after the denial of an application, or within 90 days after the
final resolution of any appeal related to the denial, the commissioner shall execute and
acknowledge a document releasing the land from the covenant required under this chapter.
The document must be mailed to the claimant and is entitled to be recorded.

(d) The Social Security numbers collected from individuals under this section are
private data as provided in section 13.355. The federal business tax registration number
and date of birth data collected under this section are also private data on individuals or
nonpublic data, as defined in section 13.02, subdivisions 9 and 12, but may be shared
with county assessors for purposes of tax administration and with county treasurers for
purposes of the revenue recapture under chapter 270A.

new text begin EFFECTIVE DATE. new text end

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

Sec. 53.

Minnesota Statutes 2006, section 290C.05, is amended to read:

290C.05 ANNUAL CERTIFICATION.

On or before July 1 of each year, beginning with the year after the new text begin original new text end claimant
has received an approved application, the commissioner shall send each claimant enrolled
under the sustainable forest incentive program a certification form. new text begin For purposes of this
section, the original claimant is the person that filed the first application under section
290C.04 to enroll the land in the program. new text end The claimant must sign the certification,
attesting that the requirements and conditions for continued enrollment in the program are
currently being met, and must return the signed certification form to the commissioner by
August 15 of that same year. If the claimant does not return an annual certification form
by the due date, the provisions in section 290C.11 apply.

new text begin EFFECTIVE DATE. new text end

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

Sec. 54.

Minnesota Statutes 2006, section 290C.11, is amended to read:

290C.11 PENALTIES FOR REMOVAL.

(a) If the commissioner determines that land enrolled in the sustainable forest
incentive program is in violation of the conditions for enrollment as specified in section
290C.03, the commissioner shall notify the claimant of the intent to remove all enrolled
land from the sustainable forest incentive program. The claimant has 60 days to appeal
this determination new text begin under the provisions of section 290C.13 new text end . deleted text begin The appeal must be made
in writing to the commissioner, who shall, within 60 days, notify the claimant as to the
outcome of the appeal. Within 60 days after the commissioner denies an appeal, or within
120 days after the commissioner received a written appeal if the commissioner has not
made a determination in that time, the owner may appeal to Tax Court under chapter 271
as if the appeal is from an order of the commissioner. deleted text end

(b) If the commissioner determines the land is to be removed from the sustainable
forest incentive program, the claimant is liable for payment to the commissioner in the
amount equal to the payments received under this chapter for the previous four-year
period, plus interest. The claimant has 90 days to satisfy the payment for removal of land
from the sustainable forest incentive program under this section. If the penalty is not paid
within the 90-day period under this paragraph, the commissioner shall certify the amount
to the county auditor for collection as a part of the general ad valorem real property taxes
on the land in the following taxes payable year.

new text begin EFFECTIVE DATE. new text end

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

Sec. 55.

new text begin [290C.13] APPEALS.
new text end

new text begin Subdivision 1. new text end

new text begin Claimant right to reconsideration. new text end

new text begin A claimant may obtain
reconsideration by the commissioner of a determination removing enrolled land from the
sustainable forest incentive program, a determination denying an application to enroll land
in the program, or a denial of part or all of an incentive payment by filing an administrative
appeal under subdivision 4. A claimant cannot obtain reconsideration under this section if
the action taken by the commissioner is the outcome of an administrative appeal.
new text end

new text begin Subd. 2. new text end

new text begin Appeal by claimant. new text end

new text begin A claimant who wishes to seek administrative review
must follow the procedures in subdivision 4.
new text end

new text begin Subd. 3. new text end

new text begin Notice date. new text end

new text begin For purposes of this section, the term "notice date" means
the date of the determination removing enrolled land or the date of the notice denying an
application to enroll land or denying part or all of an incentive payment.
new text end

new text begin Subd. 4. new text end

new text begin Time and content for administrative appeal. new text end

new text begin Within 60 days after the
notice date, the claimant must file a written appeal with the commissioner. The appeal
need not be in any particular form but must contain the following information:
new text end

new text begin (1) name and address of the claimant;
new text end

new text begin (2) if a corporation, the state of incorporation of the claimant, and the principal
place of business of the corporation;
new text end

new text begin (3) the Minnesota or federal business identification number or Social Security
number of the claimant;
new text end

new text begin (4) the date;
new text end

new text begin (5) the periods involved and the amount of payment involved for each year or period;
new text end

new text begin (6) the findings in the notice that the claimant disputes;
new text end

new text begin (7) a summary statement that the claimant relies on for each exception; and
new text end

new text begin (8) the claimant's signature or signature of the claimant's duly authorized agent.
new text end

new text begin Subd. 5. new text end

new text begin Extensions. new text end

new text begin When requested in writing and within the time allowed for
filing an administrative appeal, the commissioner may extend the time for filing an appeal
for a period not more than 30 days from the expiration of the 60 days from the notice date.
new text end

new text begin Subd. 6. new text end

new text begin Determination of appeal. new text end

new text begin On the basis of applicable law and available
information, the commissioner shall determine the validity, if any, in whole or in part,
of the appeal and notify the claimant of the decision. This notice must be in writing
and contain the basis for the determination.
new text end

new text begin Subd. 7. new text end

new text begin Agreement determining issues under appeal. new text end

new text begin When it appears to be in
the best interests of the state, the commissioner may settle the amount of any incentive
payments, payments owed by the claimant under section 290C.11, paragraph (b), penalties,
or interest that the commissioner has under consideration by virtue of an appeal filed
under this section. An agreement must be in writing and signed by the commissioner and
the claimant, or the claimant's representative authorized by the claimant to enter into an
agreement. The agreement is final and conclusive and, except upon a showing of fraud or
malfeasance, or misrepresentation of a material fact, the case must not be reopened as to
the matters agreed upon.
new text end

new text begin Subd. 8. new text end

new text begin Appeal to Tax Court. new text end

new text begin Within 60 days after the commissioner denies
an appeal, or within 120 days after the commissioner received a written appeal if the
commissioner has not made a determination in that time, the claimant may appeal to Tax
Court under chapter 271 as if the appeal is from an order of the commissioner.
new text end

new text begin Subd. 9. new text end

new text begin Exemption from Administrative Procedure Act. new text end

new text begin This section is not
subject to chapter 14.
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. 56. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2006, section 270.073, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2006, sections 270.41, subdivision 4; 270.43; 270.51; 270.52;
and 270.53, new text end new text begin are repealed.
new text end

new text begin (c) new text end new text begin Minnesota Statutes 2006, section 279.01, subdivision 2, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
except that paragraph (a) is effective beginning January 2, 2007, for taxes payable in
2008 and thereafter.
new text end

ARTICLE 15

DEPARTMENT MISCELLANEOUS

Section 1.

new text begin [270C.435] REFUNDS NOT SUBJECT TO ATTACHMENT OR
GARNISHMENT.
new text end

new text begin No amount of a tax refund or other payment payable by the commissioner to
a taxpayer is assignable or subject to execution, levy, attachment, garnishment, lien
foreclosure, or other legal process, except as specifically provided by law.
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 2006, section 270C.446, subdivision 2, is amended to read:

Subd. 2.

Required and excluded tax preparers.

(a) Subject to the limitations
of paragraph (b), the commissioner must publish lists of tax preparers new text begin as defined in
section 289A.60, subdivision 13, paragraph (f), new text end who have been convicted under section
289A.63 new text begin or assessed penalties in excess of $1,000 under section 289A.60, subdivision
13, paragraph (a) new text end .

(b) For the purposes of this section, tax preparers are not subject to publication if:

(1) an administrative or court action contesting the penalty has been filed or served
and is unresolved at the time when notice would be given under subdivision 3;

(2) an appeal period to contest the penalty has not expired; or

(3) the commissioner has been notified that the tax preparer is deceased.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for penalties on returns filed after
December 31, 2007.
new text end

Sec. 3.

Minnesota Statutes 2006, section 424A.10, subdivision 3, is amended to read:

Subd. 3.

State reimbursement.

(a) deleted text begin By February 15 of each year, the treasurer of
the relief association shall apply to the commissioner of revenue deleted text end new text begin Each year, to be eligible
new text end for state reimbursement of the amount of supplemental benefits paid under subdivision 2
during the preceding calendar year new text begin , the relief association must apply to the commissioner
of revenue by February 15 new text end . By March 15 the commissioner shall reimburse the relief
association for the amount of the supplemental benefits paid to qualified recipients.

(b) The commissioner of revenue shall prescribe the form of and supporting
information that must be supplied as part of the application for state reimbursement. new text begin
The commissioner of revenue shall reimburse the relief association by paying the
reimbursement amount to the treasurer of the municipality where the association is located.
Within 30 days after receipt, the municipal treasurer shall transmit the state reimbursement
to the treasurer of the association if the association has filed a financial report with the
municipality. If the relief association has not filed a financial report with the municipality,
the municipal treasurer shall delay transmission of the reimbursement payment to the
association until the complete financial report is filed. If the association has dissolved or
has been removed as a trustee of state aid, the treasurer shall deposit the money in a
special account in the municipal treasury, and the money may be disbursed only for the
purposes and in the manner provided in section 424A.08. When paid to the association, new text end

deleted text begin (c) deleted text end the reimbursement payment must be deposited in the special fund of the relief
association.

deleted text begin (d) deleted text end new text begin (c) new text end A sum sufficient to make the payments is appropriated from the general fund
to the commissioner of revenue.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007, and thereafter.
new text end

ARTICLE 16

MISCELLANEOUS

Section 1.

Minnesota Statutes 2006, section 3.987, subdivision 1, is amended to read:

Subdivision 1.

Local impact notes.

The commissioner of finance shall coordinate
the development of a local impact note for any proposed legislation introduced after June
30, 1997, deleted text begin or any rule proposed after December 31, 1999, deleted text end upon request of the chair or the
ranking minority member of either legislative Tax Committee. Upon receipt of a request
to prepare a local impact note, the commissioner must notify the authors of the proposed
legislation deleted text begin or, for an administrative rule, the head of the relevant executive agency or
department, deleted text end that the request has been made. The local impact note must be made available
to the public upon request. If the action is among the exceptions listed in section 3.988,
a local impact note need not be requested nor prepared. The commissioner shall make
a reasonable and timely estimate of the local fiscal impact on each type of political
subdivision that would result from the proposed legislation. The commissioner of finance
may require any political subdivision or the commissioner of an administrative agency
of the state to supply in a timely manner any information determined to be necessary to
determine local fiscal impact. The political subdivision, its representative association, or
commissioner shall convey the requested information to the commissioner of finance with
a signed statement to the effect that the information is accurate and complete to the best
of its ability. The political subdivision, its representative association, or commissioner,
when requested, shall update its determination of local fiscal impact based on actual
cost or revenue figures, improved estimates, or both. Upon completion of the note, the
commissioner must provide a copy to the authors of the proposed legislation deleted text begin or, for an
administrative rule, to the head of the relevant executive agency or department deleted text end .

Sec. 2.

Minnesota Statutes 2006, section 3.988, subdivision 3, is amended to read:

Subd. 3.

Miscellaneous exceptions.

A local impact note or an attachment as
provided in section 3.987, subdivision 2, need not be prepared for the cost of a mandated
action if the law deleted text begin , including a rulemaking, deleted text end containing the mandate:

(1) accommodates a specific local request;

(2) results in no new local government duties;

(3) leads to revenue losses from exemptions to taxes;

(4) provided only clarifying or conforming, nonsubstantive charges on local
government;

(5) imposes additional net local costs that are minor (an amount less than or equal
to one-half of one percent of the local revenue base as defined in section 477A.011,
subdivision 27, or $50,000, whichever is less for any single local government if the
mandate does not apply statewide or less than $1,000,000 if the mandate is statewide);

(6) is a law or executive order enacted before July 1, 1997, or a rule initially
implementing a law enacted before July 1, 1997;

(7) implements something other than a law or executive order, such as a federal,
court, or voter-approved mandate;

(8) results in savings that equal or exceed costs;

(9) requires the holding of elections;

(10) ensures due process or equal protection;

(11) provides for the notification and conduct of public meetings;

(12) establishes the procedures for administrative and judicial review of actions
taken by political subdivisions;

(13) protects the public from malfeasance, misfeasance, or nonfeasance by officials
of political subdivisions;

(14) relates directly to financial administration, including the levy, assessment,
and collection of taxes;

(15) relates directly to the preparation and submission of financial audits necessary
to the administration of state laws; or

(16) requires uniform standards to apply to public and private institutions without
differentiation.

Sec. 3.

Minnesota Statutes 2006, section 3.989, subdivision 2, is amended to read:

Subd. 2.

deleted text begin Report deleted text end new text begin Compilation of local impact notes new text end .

The commissioner of finance
shall prepare by deleted text begin September 1, 2000, and by deleted text end September 1 of each even-numbered year
deleted text begin thereafter, deleted text end a deleted text begin report deleted text end new text begin compilation new text end of deleted text begin the costs of deleted text end new text begin key new text end deleted text begin local mandates established after June
30, 1997 deleted text end new text begin impact notes requested by the legislature during the previous biennial session
as provided in section 3.987. The commissioner may consult with local government
representatives and legislative fiscal staff to determine which local impact notes were key new text end .

deleted text begin The commissioner shall include the statewide total of the statement of costs of local
mandates after June 30, 1997, as a notation in the state biennial budget.
deleted text end

Sec. 4.

Minnesota Statutes 2006, section 3.989, subdivision 3, is amended to read:

Subd. 3.

Certain political subdivisions; report.

The political subdivisions that
have opted to administer class B state mandates shall report to the commissioner of
finance by September 1, 1998, and by September 1 of each year thereafter, identifying
each instance when revenue for a class B state mandate has fallen below 85 percent of
the total cost of the program and the political subdivision intends to cease administration
of the program.

The commissioner shall forward a copy of the report to the chairs of the appropriate
funding committees of the senate and the house deleted text begin for proposed inclusion of the shortfall as a
line item appropriation in the state budget for the next fiscal year deleted text end .

The political subdivision may exercise its option to cease administration only if the
legislature has failed to include the shortfall as an appropriation in the state budget for
the next fiscal year.

Sec. 5.

Minnesota Statutes 2006, section 13.4965, subdivision 3, is amended to read:

Subd. 3.

Homestead applications.

The classification and disclosure of certain
information collected to determine homestead classification are governed by deleted text begin section deleted text end
new text begin sections new text end 273.124, subdivision 13 new text begin , and 273.1315, subdivision 2 new text end .

Sec. 6.

Minnesota Statutes 2006, section 16A.103, subdivision 2, is amended to read:

Subd. 2.

Local revenue.

In February and November of each year, the commissioner
of revenue shall prepare and deliver to the governor and the legislature forecasts of
revenue to be received by school districts as a group, counties as a group, and the group of
cities and towns that have a population of more than 2,500. The forecasts must assume
the continuation of current laws, projections of valuation changes in real property, and
reasonable estimates of projected growth in the national and state economies and affected
populations. Revenue must be estimated for property taxes, state and federal aids, local
sales taxes, if any, and a single projection for all other revenue for each group of affected
local governmental units. deleted text begin As part of the February forecast, the commissioner of revenue
shall report to the governor and legislature on which groups of local government units
exceeded the revenue targets of the governor and legislature in the most recent biennium.
deleted text end

Sec. 7.

Minnesota Statutes 2006, section 16A.152, subdivision 1a, is amended to read:

Subd. 1a.

Budget reserve.

A budget reserve account is created in the general fund
in the state treasury. The commissioner of finance shall transfer to the budget reserve
account on July 1 of each odd-numbered year any amounts specifically appropriated by
law to the budget reserve. new text begin Notwithstanding section 11A.12, net income attributable to
investment of $629,000,000 in the account, rounded to the nearest $1,000,000, must be
credited to the account.
new text end

Sec. 8.

Minnesota Statutes 2006, section 16A.152, subdivision 1b, is amended to read:

Subd. 1b.

Budget reserve increase.

On July 1, deleted text begin 2003 deleted text end new text begin 2007 new text end , the commissioner of
finance shall transfer deleted text begin $300,000,000 deleted text end new text begin $629,000,000 new text end to the budget reserve account in the
general fund. deleted text begin On July 1, 2004, the commissioner of finance shall transfer $296,000,000 to
the budget reserve account in the general fund. deleted text end The deleted text begin amounts deleted text end new text begin amount new text end necessary for this
purpose deleted text begin are deleted text end new text begin is new text end appropriated from the general fund.

Sec. 9.

Minnesota Statutes 2006, section 16A.152, subdivision 2, is amended to read:

Subd. 2.

Additional revenues; priority.

(a) If on the basis of a forecast of general
fund revenues and expenditures, the commissioner of finance determines that there will be
a positive unrestricted budgetary general fund balance at the close of the biennium, the
commissioner of finance must allocate money to the following accounts and purposes in
priority order:

(1) the cash flow account established in subdivision 1 until that account reaches
$350,000,000;

(2) the budget reserve account established in subdivision 1a until that account
reaches $653,000,000;

(3) the amount necessary to increase the aid payment schedule for school district
aids and credits payments in section 127A.45 to not more than 90 percent rounded to the
nearest tenth of a percent without exceeding the amount available and with any remaining
funds deposited in the budget reserve; and

(4) the amount necessary to restore all or a portion of the net aid reductions under
section 127A.441 and to reduce the property tax revenue recognition shift under section
123B.75, subdivision 5, paragraph (c), and Laws 2003, First Special Session chapter 9,
article 5, section 34, as amended by Laws 2003, First Special Session chapter 23, section
20, by the same amount.

(b) The amounts necessary to meet the requirements of this section are appropriated
from the general fund within two weeks after the forecast is released or, in the case of
transfers under paragraph (a), clauses (3) and (4), as necessary to meet the appropriations
schedules otherwise established in statute.

(c) deleted text begin To the extent that a positive unrestricted budgetary general fund balance is
projected, appropriations under this section must be made before section 16A.1522 takes
effect.
deleted text end

deleted text begin (d) deleted text end The commissioner of finance shall certify the total dollar amount of the
reductions under paragraph (a), clauses (3) and (4), to the commissioner of education. The
commissioner of education shall increase the aid payment percentage and reduce the
property tax shift percentage by these amounts and apply those reductions to the current
fiscal year and thereafter.

Sec. 10.

Minnesota Statutes 2006, section 16D.04, subdivision 1, is amended to read:

Subdivision 1.

Duties.

The commissioner shall provide services to the state and deleted text begin its deleted text end
new text begin referring new text end agencies to collect debts deleted text begin owed the state deleted text end new text begin referred for collection under this chapter new text end .
The commissioner is not a collection agency as defined by section 332.31, subdivision 3,
and is not licensed, bonded, or regulated by the commissioner of commerce under sections
332.31 to 332.35 or 332.38 to 332.45. The commissioner is subject to section 332.37,
except clause (9), (10), (12), or (19). Debts referred to the commissioner for collection
under section 256.9792 may in turn be referred by the commissioner to the enterprise.
An audited financial statement may not be required as a condition of debt placement with
a private agency if the private agency: (1) has errors and omissions coverage under a
professional liability policy in an amount of at least $1,000,000; or (2) has a fidelity bond
to cover actions of its employees, in an amount of at least $100,000. In cases of debts
referred under section 256.9792, the provisions of this chapter and section 256.9792 apply
to the extent they are not in conflict. If they are in conflict, the provisions of section
256.9792 control. For purposes of this chapter, the referring agency for such debts remains
the Department of Human Services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2008.
new text end

Sec. 11.

Minnesota Statutes 2006, section 16D.04, subdivision 2, is amended to read:

Subd. 2.

Agency participation.

(a) A referring agency deleted text begin may, at its option, deleted text end new text begin must new text end
refer new text begin , by electronic means, new text end debts to the commissioner for collection. deleted text begin The ultimate deleted text end
Responsibility for the debt, including the reporting of the debt to the commissioner of
finance and the decision with regard to the continuing collection and uncollectibility of the
debt, remains with the referring agency.

(b) new text begin Before a debt becomes 121 days past due, a referring agency may refer the
debt to the commissioner for collection at any time after a debt becomes delinquent and
uncontested and the debtor has no further administrative appeal of the amount of the
debt. new text end When a debt owed to a deleted text begin state deleted text end new text begin referring new text end agency becomes 121 days past due, the deleted text begin state deleted text end
new text begin referring new text end agency must refer the debt to the commissioner for collection. This requirement
does not apply if there is a dispute over the amount or validity of the debt, if the debt is the
subject of legal action or administrative proceedings, or the agency determines that the
debtor is adhering to acceptable payment arrangements. The commissioner deleted text begin , in consultation
with the commissioner of finance, deleted text end may provide that certain types of debt need not be
referred to the commissioner for collection under this paragraph. Methods and procedures
for referral must follow internal guidelines prepared by the commissioner deleted text begin of finance deleted text end .

(c) If the referring agency is a court, the court must furnish a debtor's Social Security
number to the commissioner when the court refers the debt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for debts referred on or after January
1, 2008.
new text end

Sec. 12.

Minnesota Statutes 2006, section 16D.11, subdivision 2, is amended to read:

Subd. 2.

Computation.

At the time a debt is referred, the amount of collection
costs is equal to deleted text begin 15 deleted text end new text begin 17 new text end percent of the debt deleted text begin , or 25 percent of the debt remaining unpaid if
the commissioner or private collection agency has to take enforced collection action
by serving a summons and complaint on or entering judgment against the debtor, or by
utilizing any of the remedies authorized under section 16D.08, subdivision 2, except for
the remedies in sections 270C.32 and 270C.65 or when referred by the commissioner for
additional collection activity by a private collection agency deleted text end . If, after referral of a debt to
a private collection agency, the debtor requests cancellation of collection costs under
subdivision 3, the debt must be returned to the commissioner for resolution of the request.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for debts referred on or after January
1, 2008.
new text end

Sec. 13.

Minnesota Statutes 2006, section 16D.11, subdivision 7, is amended to read:

Subd. 7.

Adjustment of rate.

By June 1 of each year, the commissioner deleted text begin of finance deleted text end
shall determine the rate of collection costs for debts referred to the enterprise during
the next fiscal year. The rate is a percentage of the debts in an amount that most nearly
equals the costs of the enterprise necessary to process and collect referred debts under this
chapter. In no event deleted text begin shall the rate of collection costs when a debt is first referred exceed
three-fifths of the maximum collection costs, and in no event deleted text end shall the rate of the deleted text begin maximum deleted text end
collection costs exceed 25 percent of the debt. Determination of the rate of collection costs
under this section is not subject to the fee setting requirements of section 16A.1285.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2008.
new text end

Sec. 14.

Minnesota Statutes 2006, section 270A.03, subdivision 2, is amended to read:

Subd. 2.

Claimant agency.

"Claimant agency" means any state agency, as
defined by section 14.02, subdivision 2, the regents of the University of Minnesota, any
district court of the state, any county, any statutory or home rule charter city deleted text begin presenting
a claim for a municipal hospital or a public library or a municipal ambulance service deleted text end , a
hospital district, a private nonprofit hospital that leases its building from the county in
which it is located, any public agency responsible for child support enforcement, any
public agency responsible for the collection of court-ordered restitution, and any public
agency established by general or special law that is responsible for the administration of
a low-income housing program, and the Minnesota collection enterprise as defined in
section 16D.02, subdivision 8, for the purpose of collecting the costs imposed under
section 16D.11. A county may act as a claimant agency on behalf of an ambulance service
licensed under chapter 144E if the ambulance service's primary service area is located at
least in part within the county, but more than one county may not act as a claimant agency
for a licensed ambulance service with respect to the same debt.

Sec. 15.

Minnesota Statutes 2006, section 270B.01, subdivision 8, is amended to read:

Subd. 8.

Minnesota tax laws.

For purposes of this chapter only, unless expressly
stated otherwise, "Minnesota tax laws" means:

(1) the taxes, refunds, and fees administered by or paid to the commissioner under
chapters 115B, 289A (except taxes imposed under sections 298.01, 298.015, and 298.24),
290, 290A, 291, 295, 297A, new text begin 297B, new text end and 297H, or any similar Indian tribal tax administered
by the commissioner pursuant to any tax agreement between the state and the Indian tribal
government, and includes any laws for the assessment, collection, and enforcement of
those taxes, refunds, and fees; and

(2) section 273.1315 new text begin , subdivision 1 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. 16.

Minnesota Statutes 2006, section 270B.02, subdivision 3, is amended to read:

Subd. 3.

Confidential data on individuals; protected nonpublic data.

(a) Except
as provided in paragraph (b), the name or existence of an informer, informer letters, and
other data, in whatever form, given to the Department of Revenue by a person, other than
the data subject, who informs that a specific person is not or may not be in compliance
with tax laws, or nontax laws administered by the Department of Revenue, including laws
deleted text begin other than those relating to property taxes deleted text end not listed in section 270B.01, subdivision 8, are
confidential data on individuals or protected nonpublic data as defined in section 13.02,
subdivisions 3 and 13. new text begin This paragraph does not apply to laws relating to property taxes. new text end

(b) Data under paragraph (a) may be disclosed with the consent of the informer
or upon a written finding by a court that the information provided by the informer was
false and that there is evidence that the information was provided in bad faith. This
subdivision does not alter disclosure responsibilities or obligations under the Rules of
Criminal Procedure.

new text begin EFFECTIVE DATE. new text end

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

Sec. 17.

Minnesota Statutes 2006, section 270B.085, is amended by adding a
subdivision to read:

new text begin Subd. 3. new text end

new text begin Collection of nontax debt. new text end

new text begin The commissioner may use return information
for the purpose of collecting debts referred to the commissioner under chapter 16D.
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. 18.

Minnesota Statutes 2006, section 270B.14, subdivision 3, is amended to read:

Subd. 3.

Administration of enterprise new text begin , job opportunity, and biotechnology
and health sciences industry new text end zone deleted text begin program deleted text end new text begin programs new text end .

The commissioner may
disclose return information relating to the taxes imposed by chapters 290 and 297A to
the Department of Employment and Economic Development or a municipality receiving
an enterprise zone designation under section 469.169 but only as necessary to administer
the funding limitations under section 469.169, subdivision 7 deleted text begin . deleted text end new text begin , or to the Department
of Employment and Economic Development and appropriate officials from the local
government units in which a qualified business is located but only as necessary to enforce
the job opportunity building zone benefits under section 469.315, or biotechnology and
health sciences industry zone benefits under section 469.336. 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. 19.

Minnesota Statutes 2006, section 270C.56, subdivision 1, is amended to read:

Subdivision 1.

Liability imposed.

A person who, either singly or jointly with
others, has the control of, supervision of, or responsibility for filing returns or reports,
paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or
a person who is liable under any other law, is liable for the payment of taxes, penalties,
and interest arising under chapters 295, 296A, 297A, 297F, and 297G, or sections 290.92
and 297E.02 new text begin , and, for the taxes listed in this subdivision, the applicable penalties for
nonpayment under section 289A.60 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for personal liability assessments
made on or after the day following final enactment.
new text end

Sec. 20.

Minnesota Statutes 2006, section 270C.63, subdivision 9, is amended to read:

Subd. 9.

Period of limitations.

The lien imposed by this section shall,
notwithstanding any other provision of law to the contrary, be enforceable from the time
the lien arises and for ten years from the date of filing the notice of lien, which must be
filed by the commissioner within five years after the date of assessment of the tax or final
administrative or judicial determination of the assessment. new text begin A notice of lien filed at the
Office of the Secretary of State may be transcribed to any county within ten years after the
date of its filing, but the transcription does not extend the period during which the lien is
enforceable. new text end A notice of lien filed in one county may be transcribed to the secretary of
state or to any other county within ten years after the date of its filing, but the transcription
shall not extend the period during which the lien is enforceable. A notice of lien may be
renewed by the commissioner before the expiration of the ten-year period for an additional
ten years. The taxpayer must receive written notice of the renewal.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for liens transcribed on or after the
day following final enactment.
new text end

Sec. 21.

Minnesota Statutes 2006, section 273.1315, is amended to read:

273.1315 CERTIFICATION OF new text begin CLASS new text end 1B PROPERTY.

new text begin Subdivision 1. new text end

new text begin Class 1b homestead declaration before 2008. new text end

Any property owner
seeking classification and assessment of the owner's homestead as class 1b property
pursuant to section 273.13, subdivision 22, paragraph (b), new text begin on or before October 1, 2007,
new text end shall file with the commissioner of revenue a 1b homestead declaration, on a form
prescribed by the commissioner. The declaration shall contain the following information:

(a) the information necessary to verify that on or before June 30 of the filing year,
the property owner or the owner's spouse satisfies the requirements of section 273.13,
subdivision 22, paragraph (b), for 1b classification; and

(b) any additional information prescribed by the commissioner.

The declaration must be filed on or before October 1 to be effective for property
taxes payable during the succeeding calendar year. The declaration and any supplementary
information received from the property owner pursuant to this deleted text begin section deleted text end new text begin subdivision new text end shall
be subject to chapter 270B. If approved by the commissioner, the declaration remains
in effect until the property no longer qualifies under section 273.13, subdivision 22,
paragraph (b). Failure to notify the commissioner within 30 days that the property no
longer qualifies under that paragraph because of a sale, change in occupancy, or change
in the status or condition of an occupant shall result in the penalty provided in section
273.124, subdivision 13, computed on the basis of the class 1b benefits for the property,
and the property shall lose its current class 1b classification.

The commissioner shall provide to the assessor on or before November 1 a listing
of the parcels of property qualifying for 1b classification.

new text begin Subd. 2. new text end

new text begin Class 1b homestead declaration 2008 and thereafter. new text end

new text begin Any property
owner seeking classification and assessment of the owner's homestead as class 1b property
pursuant to section 273.13, subdivision 22, paragraph (b), after October 1, 2007, shall file
with the county assessor a class 1b homestead declaration, on a form prescribed by the
commissioner of revenue. The declaration must contain the following information:
new text end

new text begin (1) the information necessary to verify that, on or before June 30 of the filing year,
the property owner or the owner's spouse satisfies the requirements of section 273.13,
subdivision 22, paragraph (b), for class 1b classification; and
new text end

new text begin (2) any additional information prescribed by the commissioner.
new text end

new text begin The declaration must be filed on or before October 1 to be effective for property
taxes payable during the succeeding calendar year. The Social Security numbers and
income and medical information received from the property owner pursuant to this
subdivision are private data on individuals as defined in section 13.02. If approved by
the assessor, the declaration remains in effect until the property no longer qualifies under
section 273.13, subdivision 22, paragraph (b). Failure to notify the assessor within 30
days that the property no longer qualifies under that paragraph because of a sale, change in
occupancy, or change in the status or condition of an occupant shall result in the penalty
provided in section 273.124, subdivision 13, computed on the basis of the class 1b benefits
for the property, and the property shall lose its current class 1b classification.
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. 22.

Minnesota Statutes 2006, section 291.215, subdivision 1, is amended to read:

Subdivision 1.

Determination.

All property includable in the Minnesota gross estate
of a decedent shall be valued in accordance with the provisions of sections 2031 or 2032
and, if applicable, 2032A, of the Internal Revenue Code and any elections made in valuing
the federal gross estate shall be applicable in valuing the Minnesota gross estate. deleted text begin Values
for purposes of the estate tax on both probate and nonprobate assets shall be the same as
those finally determined for purposes of the federal estate tax on a decedent's estate. deleted text end new text begin
Except as otherwise provided in section 291.215, the value of all property includable in
the Minnesota gross estate of a decedent may be independently determined under said
sections for Minnesota estate tax purposes, provided that, in cases where a federal estate
tax return is required to be filed and a federal tax of at least one dollar, values for probate
and nonprobate assets shall be as finally determined for federal estate tax purposes.
new text end

Sec. 23.

Minnesota Statutes 2006, section 297F.21, subdivision 3, is amended to read:

Subd. 3.

Inventory; judicial determination; appeal; disposition of seized
property.

(a) Within ten days after the seizure of any alleged contraband, the person
making the seizure shall serve by certified mail an inventory of the property seized on the
person from whom the seizure was made, if known, and on any person known or believed
to have any right, title, interest, or lien in the property, at the last known address, and file
a copy with the commissioner. The notice must include an explanation of the right to
demand a judicial forfeiture determination.

(b) Within 60 days after the date of service of the inventory, which is the date of
mailing, the person from whom the property was seized or any person claiming an interest
in the property may file a demand for a judicial determination of the question as to whether
the property was lawfully subject to seizure and forfeiture. The demand must be in the
form of a civil complaint and must be filed with the court administrator in the county in
which the seizure occurred, together with proof of service of a copy of the complaint
on the commissioner of revenue, and the standard filing fee for civil actions unless the
petitioner has the right to sue in forma pauperis under section 563.01. If the value of the
seized property is $7,500 or less, the claimant may file an action in conciliation court for
recovery of the property. If the value of the seized property is less than $500, the claimant
does not have to pay the conciliation court filing fee.

(c) The complaint must be captioned in the name of the claimant as plaintiff and
the seized property as defendant, and must state with specificity the grounds on which
the claimant alleges the property was improperly seized and the plaintiff's interest in the
property seized. No responsive pleading is required of the commissioner, and no court
fees may be charged for the commissioner's appearance in the matter. The proceedings
are governed by the Rules of Civil Procedure. Notwithstanding any law to the contrary,
an action for the return of property seized under this section may not be maintained by
or on behalf of any person who has been served with an inventory unless the person has
complied with this subdivision. The court shall decide whether the alleged contraband is
contraband, as defined in subdivision 1. The court shall hear the action without a jury and
shall try and determine the issues of fact and law involved.

(d) When a judgment of forfeiture is entered, deleted text begin the commissioner may, deleted text end unless the
judgment is stayed pending an appeal, deleted text begin either deleted text end new text begin the commissioner new text end :

(1) deleted text begin deliver the forfeited cigarette packages or tobacco products to the commissioner
of human services for use by patients in state institutions deleted text end new text begin may authorize the forfeited
property to be used for the purpose of enforcing a criminal provision of state or federal law new text end ;

(2) new text begin shall new text end cause deleted text begin the property in clause (1) deleted text end new text begin forfeited cigarette packages or tobacco
products not used under clause (1) new text end to be destroyed deleted text begin ; or deleted text end new text begin and products used under clause (1)
to be destroyed upon the completion of use; and
new text end

(3) new text begin may new text end cause the forfeited property new text begin , other than forfeited cigarette packages or
tobacco products, new text end to be sold at public auction as provided by law.

The person making a sale, after deducting the expense of keeping the property, the fee
for seizure, and the costs of the sale, shall pay all liens according to their priority, which
are established as being bona fide and as existing without the lienor having any notice
or knowledge that the property was being used or was intended to be used for or in
connection with the violation. The balance of the proceeds must be paid 75 percent to the
Department of Revenue for deposit as a supplement to its operating fund or similar fund
for official use, and 25 percent to the county attorney or other prosecuting agency that
handled the court proceeding, if there is one, for deposit as a supplement to its operating
fund or similar fund for prosecutorial purposes. If there is no prosecuting authority
involved in the forfeiture, the 25 percent of the proceeds otherwise designated for the
prosecuting authority must be deposited into the general fund.

(e) If no demand for judicial determination is made, the property seized is considered
forfeited to the state by operation of law and may be disposed of by the commissioner as
provided in the case of a judgment of forfeiture.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for forfeitures after June 30, 2007.
new text end

Sec. 24. new text begin JOINT LEGISLATIVE SUBCOMMITTEE ON SALES AND USE TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Creation. new text end

new text begin A legislative subcommittee on sales tax is created.
new text end

new text begin Subd. 2. new text end

new text begin Duties. new text end

new text begin The subcommittee must:
new text end

new text begin (1) examine the revenue productivity and equity implications of the current sales
and use tax base and alternative tax bases;
new text end

new text begin (2) examine the implications of demographic and economic trends for the future
revenue adequacy of the current sales and use tax base;
new text end

new text begin (3) examine the sales and use tax base, the exemptions, and the rate and recommend
to the legislature alternative tax structures to improve revenue stability and equity of
tax imposition;
new text end

new text begin (4) examine the tax burdens on individuals and businesses and recommend to the
legislature alternative structures that would improve the horizontal and vertical equity
of the tax burden;
new text end

new text begin (5) examine the administrative and compliance burden of the taxes;
new text end

new text begin (6) examine and report on broadening the sales and use tax base in conjunction with
a lower rate and exemption for business inputs on the vertical equity of the taxes; and
new text end

new text begin (7) file a report with the chairs and the ranking minority members of the committees
on taxes in the senate and the house of representatives no later than March 30, 2008.
new text end

new text begin Subd. 3. new text end

new text begin Membership. new text end

new text begin The subcommittee must consist of ten members of the
legislature as follows:
new text end

new text begin (1) four members of the senate, including at least one member of the minority party,
to be appointed by the chair of the senate committee on taxes;
new text end

new text begin (2) four members of the house of representatives, including one member of the
minority party, to be appointed by the chair of the house of representatives committee
on taxes;
new text end

new text begin (3) the chair of the senate committee on taxes; and
new text end

new text begin (4) the chair of the house of representatives committee on taxes.
new text end

new text begin Subd. 4. new text end

new text begin Assistance of other agencies. new text end

new text begin (a) The subcommittee may request
information from any state officer or agency to assist in carrying out its duties under
this section. The officer or agency must promptly provide the data requested to the
extent permitted by law.
new text end

new text begin (b) The commissioner of revenue shall prepare, maintain, and make available to the
commission data in the form and manner that the subcommittee determines will facilitate
in discharging its duties under this section.
new text end

Sec. 25. new text begin DATA UPDATE.
new text end

new text begin The commissioner of revenue must continue to maintain, update, and make available
the information required under Laws 1987, chapter 268, article 7, section 1, subdivision
6, paragraph (b). The commissioner must provide the most complete and current data
available, when requested, to the chairs of the senate and house of representatives
committees on taxes.
new text end

Sec. 26. new text begin BUDGET RESERVE TRANSFER.
new text end

new text begin If Senate File No. 2054 or another bill providing for a transfer of funds to the
budget reserve is enacted at the 2007 session of the legislature, section 8 of this article
is not enacted.
new text end

Sec. 27. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 16A.1522, new text end new text begin is repealed.
new text end