SF 1118

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to natural resources; modifying restrictions on vehicles hauling
unfinished forest products; modifying renewable energy objectives; modifying
apportionment of net income; defining wood products industry; modifying
certain tax exemptions; appropriating money; amending Minnesota Statutes
2006, sections 169.8261; 216B.1691, by adding a subdivision; 290.191,
subdivision 2; 297A.68, subdivision 5; 297A.69, subdivision 3.

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

Section 1.

Minnesota Statutes 2006, section 169.8261, is amended to read:

169.8261 GROSS WEIGHT LIMITATIONS; FOREST PRODUCTS.

(a) A vehicle or combination of vehicles hauling raw or unfinished forest products,
including wood chips, new text begin paper, pulp, oriented strandboard, laminated strand lumber,
hardboard, treated lumber, untreated lumber, or barrel staves, new text end by the most direct route to the
nearest highway that has been designated under section 169.832, subdivision 11, may be
operated on any highway with gross weights permitted under sections 169.822 to 169.829
without regard to load restrictions imposed on that highway, except that the vehicles must:

(1) comply with seasonal load restrictions in effect between the dates set by the
commissioner under section 169.87, subdivision 2;

(2) comply with bridge load limits posted under section 169.84;

(3) be equipped and operated with six axles and brakes;

(4) not exceed 90,000 pounds gross weight, or 98,000 pounds gross weight during
the time when seasonal increases are authorized under section 169.826;

(5) not be operated on interstate and defense highways;

(6) obtain an annual permit from the commissioner of transportation;

(7) obey all road postings; and

(8) not exceed 20,000 pounds gross weight on any single axle.

(b) A vehicle operated under this section may exceed the legal axle weight limits
listed in section 169.824 by not more than 12.5 percent; except that, the weight limits may
be exceeded by not more than 22.5 percent during the time when seasonal increases are
authorized under section 169.826, subdivision 1.

Sec. 2.

Minnesota Statutes 2006, section 216B.1691, is amended by adding a
subdivision to read:

new text begin Subd. 7. new text end

new text begin Allocation of costs. new text end

new text begin Electricity providers may not charge costs for meeting
the objectives in this section to any industry or industrial facility where the industry or
facility demonstrates that it is already meeting the objectives. Renewable energy as
defined in section 216B.2422 generated from renewable sources associated with an
industry's or industrial facility's own operation irrespective of ownership of the generating
facility shall be included in determining if the objectives are being met.
new text end

Sec. 3.

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. 4.

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

Subd. 5.

Capital equipment.

(a) Capital equipment is exempt deleted text begin . deleted text end new text begin as follows: new text end

new text begin (1) for sales and purchases of capital equipment by the wood products industry, the
tax is not imposed;
new text end

new text begin (2) for sales and purchases of capital equipment by a small business, the tax is
not imposed. For purposes of this subdivision, "small business" is as defined in section
645.445, subdivision 2; and
new text end

new text begin (3) for all other sales and purchases of capital equipment, new text end 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.

"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) new text begin "Wood products industry" means:
new text end

new text begin (i) manufacturers of pulp, paper, and paperboard;
new text end

new text begin (ii) sawmills and planing mills;
new text end

new text begin (iii) manufacturers of panelboard, including veneer, plywood, and reconstituted
wood products, such as particleboard, waferboard, and oriented strandboard;
new text end

new text begin (iv) manufacturers of fabricated wood millwork;
new text end

new text begin (v) manufacturers of structural wood members; and
new text end

new text begin (vi) manufacturers of prefabricated wood buildings and components.
new text end

new text begin (12) Wood products industry does not include:
new text end

new text begin (i) logging;
new text end

new text begin (ii) manufacturers of wood cabinets, furniture, office or store fixtures, toys and
playground equipment, caskets, or miscellaneous wood products;
new text end

new text begin (iii) manufacturers of wood containers;
new text end

new text begin (iv) businesses engaged in wood preserving;
new text end

new text begin (v) the operation of timber tracts or tree farms;
new text end

new text begin (vi) forest nurseries and the gathering of forest products; and
new text end

new text begin (vii) forestry services related to timber production.
new text end

new text begin (13) new text end 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. 5.

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

Subd. 3.

Repair and replacement parts.

Repair and replacement parts, except tires,
used for maintenance or repair of farm machinery, logging equipment, new text begin including skidder
tires, new 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.

Sec. 6. new text begin APPROPRIATIONS, DEPARTMENT OF NATURAL RESOURCES.
new text end

new text begin Subdivision 1. new text end

new text begin General fund appropriations. new text end

new text begin (a) $1,500,000 in fiscal year
2008 and $1,500,000 in fiscal year 2009 are appropriated from the general fund to the
commissioner of natural resources to support additional technical and cost-share assistance
to nonindustrial private forest landowners.
new text end

new text begin (b) $780,000 in fiscal year 2008 and $780,000 in fiscal year 2009 are appropriated
from the general fund to the commissioner of natural resources for implementation of the
Sustainable Forest Resources Act in Minnesota Statutes, chapter 89A.
new text end

new text begin (c) $200,000 in fiscal year 2008 is appropriated from the general fund to the
Minnesota Forest Resources Council under Minnesota Statutes, chapter 89A, to review
and provide recommendations to the legislature and the governor on policies to maintain
the productive forest land base.
new text end

new text begin (d) $200,000 in fiscal year 2008 is appropriated from the general fund to the
Minnesota Forest Resources Council under Minnesota Statutes, chapter 89A, for the
Forest Resources Research Advisory Committee under Minnesota Statutes, section
89A.08, to conduct research on topics recommended by the governor's task force on the
competitiveness of Minnesota's primary forest products industry.
new text end

new text begin (e) $480,000 in fiscal year 2008 is appropriated from the general fund to the
Forest Resources Interagency Information Cooperative under Minnesota Statutes,
section 89A.09, to implement technical assistance, technology development, and transfer
programs as recommended by the governor's task force on the competitiveness of
Minnesota's primary forest products industry.
new text end

new text begin Subd. 2. new text end

new text begin Forest management investment account appropriations. new text end

new text begin (a) $3,167,000
in fiscal year 2008 and $3,167,000 in fiscal year 2009 are appropriated from the forest
management investment account to the commissioner of natural resources to cover the
costs attributable to generating revenue to the forest management investment account.
new text end

new text begin (b) $750,000 in fiscal year 2008 and $750,000 in fiscal year 2009 are appropriated
from the forest management investment account to the commissioner of natural resources
to hire additional filed foresters to work on timber sales.
new text end

new text begin (c) $1,000,000 in fiscal year 2008 and $1,000,000 in fiscal year 2009 are appropriated
from the forest management investment account to the commissioner of natural resources
for forest improvement efforts, including precommercial and noncommercial thinning
and seedling protection.
new text end

new text begin (d) $1,100,000 in fiscal year 2008 and $1,100,000 in fiscal year 2009 are
appropriated from the forest management investment account to the commissioner of
natural resources for forest road maintenance.
new text end

new text begin (e) $400,000 in fiscal year 2008 and $400,000 in fiscal year 2009 are appropriated
from the forest management investment account to the commissioner of natural resources
to accelerate the continual reinventory of state-administered forest lands.
new text end