SF 1556

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             proposing an amendment to the Minnesota Constitution 
  1.3             by adding sections to article X; dedicating a portion 
  1.4             of the sales tax to property tax relief for property 
  1.5             taxpayers in cities and towns; limiting property taxes 
  1.6             levied for public schools; amending Minnesota Statutes 
  1.7             1994, sections 124A.23, subdivisions 1 and 2; 
  1.8             273.1398, subdivisions 6 and 8; 275.07, subdivisions 1 
  1.9             and 1a; 276.04, subdivision 2; 290A.01; 290A.07, 
  1.10            subdivision 3; 290A.23, subdivision 3; 297A.01, 
  1.11            subdivision 3; 297A.25, subdivisions 8 and 9; and 
  1.12            297A.44, subdivision 1; proposing coding for new law 
  1.13            in Minnesota Statutes, chapter 16A; repealing 
  1.14            Minnesota Statutes 1994, sections 273.1398, 
  1.15            subdivisions 2 and 2c; 273.166; 290A.04, subdivision 
  1.16            2h; 297A.01, subdivision 18; and 297A.25, subdivision 
  1.17            10. 
  1.18  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.19                             ARTICLE 1
  1.20                      CONSTITUTIONAL AMENDMENT
  1.21     Section 1.  [CONSTITUTIONAL AMENDMENT PROPOSED.] 
  1.22     An amendment to the Minnesota Constitution, adding sections 
  1.23  to article X, is proposed to the people. 
  1.24     If the amendment is adopted, the sections will read as 
  1.25  follows: 
  1.26     article X, section 9, will read: 
  1.27     Sec. 9.  A permanent property taxpayers' trust fund is 
  1.28  established in the state treasury.  The fund consists of the 
  1.29  revenues derived from: 
  1.30     (1) a sales and use tax at a rate of 1.25 percent on all 
  1.31  taxable sales, excluding motor vehicles; and 
  2.1      (2) penalties and interest paid with respect to the taxes 
  2.2   in clause (1). 
  2.3      Funds in the property taxpayers' trust fund shall be 
  2.4   appropriated in the manner prescribed by law solely for property 
  2.5   tax relief for property taxpayers.  Fifty percent of the fund 
  2.6   shall be distributed to cities through a program designed to 
  2.7   compensate for differences in revenue need and differences in 
  2.8   property wealth among cities, and 50 percent of the fund shall 
  2.9   be distributed through a program designed to provide property 
  2.10  tax relief directly to homeowners and renters. 
  2.11     article X, section 10, will read: 
  2.12     Sec. 10.  The legislature may levy a tax on all taxable 
  2.13  property to help meet its duty under article XIII, section 1, to 
  2.14  establish a general and uniform system of public schools.  The 
  2.15  annual state property tax levy for public schools shall not 
  2.16  exceed .75 percent of the market value of the total taxable 
  2.17  property in the state.  All other property tax levies for public 
  2.18  schools are prohibited, except for levies imposed by local 
  2.19  school districts with voter approval at a general election to 
  2.20  pay for capital construction and capital improvements of school 
  2.21  facilities and referendum levies already existing.  The 
  2.22  legislature by law shall provide for an equal amount for the 
  2.23  public education of each student in similar circumstances, 
  2.24  except the legislature may allow more funds for school districts 
  2.25  spending more at the adoption of this amendment until each 
  2.26  school district in Minnesota spends the same amount for each 
  2.27  student in similar circumstances. 
  2.28     Sec. 2.  [SUBMISSION TO VOTERS.] 
  2.29     The proposed amendment must be submitted to the people at 
  2.30  the 1996 general election.  The question submitted shall be: 
  2.31     "Shall the Minnesota Constitution be amended to limit state 
  2.32  and local property taxes for public education and dedicate 1.25 
  2.33  cents of the sales and use tax to a property taxpayers' trust 
  2.34  fund to be used for property tax relief for property taxpayers 
  2.35  of cities and towns? 
  2.36                                     Yes .......
  3.1                                      No ........"
  3.2                              ARTICLE 2 
  3.3                            IMPLEMENTATION
  3.4      Section 1.  [16A.715] [PROPERTY TAXPAYERS' TRUST FUND.] 
  3.5      Subdivision 1.  [DEPOSIT; USE OF FUND.] The commissioner 
  3.6   shall deposit to the credit of the property taxpayers' trust 
  3.7   fund all money available to the fund.  The amounts deposited in 
  3.8   the fund must be placed in separate accounts in the fund to be 
  3.9   used for the following purposes:  
  3.10     (1) one-half in a local government aid account to be used 
  3.11  as provided by law for increased funding for local government 
  3.12  aids under chapter 477A; and 
  3.13     (2) one-half in a homestead credit account to be used as 
  3.14  provided by law for increased funding for homestead credits and 
  3.15  renters' property tax refunds under chapter 290A.  
  3.16     Subd. 2.  [APPROPRIATION.] The money to be paid by law from 
  3.17  the property taxpayers' trust fund is annually appropriated from 
  3.18  the fund to the commissioner of revenue for the purposes in 
  3.19  subdivision 1. 
  3.20     Sec. 2.  Minnesota Statutes 1994, section 124A.23, 
  3.21  subdivision 1, is amended to read: 
  3.22     Subdivision 1.  [GENERAL EDUCATION TAX RATE.] The 
  3.23  commissioner shall establish the general education tax rate by 
  3.24  July 1 of each year for levies payable in the following year.  
  3.25  The general education tax capacity rate shall be a rate, rounded 
  3.26  up to the nearest tenth of a percent, that, when applied to the 
  3.27  adjusted net tax capacity for all districts, raises the amount 
  3.28  specified in this subdivision.  The general education tax rate 
  3.29  shall be the rate that raises $1,044,000,000 for fiscal year 
  3.30  1995 and, $1,054,000,000 for fiscal year 1996, and $871,719,623 
  3.31  for fiscal year 1997 and later fiscal years.  The general 
  3.32  education tax rate may not be changed due to changes or 
  3.33  corrections made to a district's adjusted net tax capacity after 
  3.34  the tax rate has been established.  
  3.35     Sec. 3.  Minnesota Statutes 1994, section 124A.23, 
  3.36  subdivision 2, is amended to read: 
  4.1      Subd. 2.  [STATE MANDATED GENERAL EDUCATION LEVY.] To 
  4.2   obtain general education revenue, excluding supplemental 
  4.3   revenue, a district may levy an amount not to exceed the general 
  4.4   education tax rate times the adjusted net tax capacity of the 
  4.5   district for the preceding year.  If the amount of the state 
  4.6   mandated general education levy would exceed the general 
  4.7   education revenue, excluding supplemental revenue, the state 
  4.8   mandated general education levy shall be determined according to 
  4.9   subdivision 3.  
  4.10     Sec. 4.  Minnesota Statutes 1994, section 273.1398, 
  4.11  subdivision 6, is amended to read: 
  4.12     Subd. 6.  [PAYMENT.] The commissioner shall certify the 
  4.13  aids provided in subdivisions 2, 2b, 3, and 5 before September 1 
  4.14  of the year preceding the distribution year to the county 
  4.15  auditor of the affected local government.  The aids provided in 
  4.16  subdivisions 2, 2b, 3, and 5 must be paid to local governments 
  4.17  other than school districts at the times provided in section 
  4.18  477A.015 for payment of local government aid to taxing 
  4.19  jurisdictions, except that the first one-half payment of 
  4.20  disparity reduction aid provided in subdivision 3 must be paid 
  4.21  on or before August 31.  The disparity reduction credit provided 
  4.22  in subdivision 4 must be paid to taxing jurisdictions other than 
  4.23  school districts at the time provided in section 473H.10, 
  4.24  subdivision 3.  Aids and credit reimbursements to school 
  4.25  districts must be certified to the commissioner of education and 
  4.26  paid under section 273.1392.  Except for education districts and 
  4.27  secondary cooperatives that receive revenue according to section 
  4.28  124.575, payment shall not be made to any taxing jurisdiction 
  4.29  that has ceased to levy a property tax.  
  4.30     Sec. 5.  Minnesota Statutes 1994, section 273.1398, 
  4.31  subdivision 8, is amended to read: 
  4.32     Subd. 8.  [APPROPRIATION.] An amount sufficient to pay the 
  4.33  aids and credits provided under this section for school 
  4.34  districts, intermediate school districts, or any group of school 
  4.35  districts levying as a single taxing entity, is annually 
  4.36  appropriated from the general fund to the commissioner of 
  5.1   education.  An amount sufficient to pay the aids and credits 
  5.2   provided under this section for counties, cities, and towns, and 
  5.3   special taxing districts is annually appropriated from the 
  5.4   general fund to the commissioner of revenue.  A jurisdiction's 
  5.5   aid amount may be increased or decreased based on any prior year 
  5.6   adjustments for homestead credit or other property tax credit or 
  5.7   aid programs. 
  5.8      Sec. 6.  Minnesota Statutes 1994, section 275.07, 
  5.9   subdivision 1, is amended to read: 
  5.10     Subdivision 1.  The taxes voted by cities, counties, school 
  5.11  districts, and special districts shall be certified by the 
  5.12  proper authorities to the county auditor on or before five 
  5.13  working days after December 20 in each year.  A town must 
  5.14  certify the levy adopted by the town board to the county auditor 
  5.15  by September 15 each year.  If the town board modifies the levy 
  5.16  at a special town meeting after September 15, the town board 
  5.17  must recertify its levy to the county auditor on or before five 
  5.18  working days after December 20.  The taxes certified shall not 
  5.19  be reduced by the aid received under sections section 273.1398, 
  5.20  subdivisions 2 and subdivision 3.  If a city, town, county, 
  5.21  school district, or special district fails to certify its levy 
  5.22  by that date, its levy shall be the amount levied by it for the 
  5.23  preceding year.  
  5.24     Sec. 7.  Minnesota Statutes 1994, section 275.07, 
  5.25  subdivision 1a, is amended to read: 
  5.26     Subd. 1a.  [APPLICATION OF LIMITATIONS.] Any limitation 
  5.27  upon the amount that may be levied by a local taxing 
  5.28  jurisdiction shall apply to the sum of the levy as certified 
  5.29  under subdivision 1 plus the certified homestead and 
  5.30  agricultural credit aid amount under section 273.1398, 
  5.31  subdivision 2, unless the commissioner of revenue certifies to 
  5.32  the county auditor that the limitation applies to the levy under 
  5.33  subdivision 1 only. 
  5.34     Sec. 8.  Minnesota Statutes 1994, section 276.04, 
  5.35  subdivision 2, is amended to read: 
  5.36     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
  6.1   shall provide for the printing of the tax statements.  The 
  6.2   commissioner of revenue shall prescribe the form of the property 
  6.3   tax statement and its contents.  The statement must contain a 
  6.4   tabulated statement of the dollar amount due to each taxing 
  6.5   authority from the parcel of real property for which a 
  6.6   particular tax statement is prepared.  The dollar amounts due 
  6.7   the county, township or municipality, the total of the 
  6.8   metropolitan special taxing districts as defined in section 
  6.9   275.065, subdivision 3, paragraph (i), school district excess 
  6.10  referenda levy, remaining school district levy, and the total of 
  6.11  other voter approved referenda levies based on market value 
  6.12  under section 275.61 must be separately stated.  The amounts due 
  6.13  all other special taxing districts, if any, may be aggregated.  
  6.14  For the purposes of this subdivision, "school district excess 
  6.15  referenda levy" means school district taxes for operating 
  6.16  purposes approved at referenda, including those taxes based on 
  6.17  market value.  "School district excess referenda levy" does not 
  6.18  include school district taxes for capital expenditures approved 
  6.19  at referendums or school district taxes to pay for the debt 
  6.20  service on bonds approved at referenda.  The amount of the tax 
  6.21  on contamination value imposed under sections 270.91 to 270.98, 
  6.22  if any, must also be separately stated.  The dollar amounts, 
  6.23  including the dollar amount of any special assessments, may be 
  6.24  rounded to the nearest even whole dollar.  For purposes of this 
  6.25  section whole odd-numbered dollars may be adjusted to the next 
  6.26  higher even-numbered dollar.  The amount of market value 
  6.27  excluded under section 273.11, subdivision 16, if any, must also 
  6.28  be listed on the tax statement.  The statement shall include the 
  6.29  following sentence, printed in upper case letters in boldface 
  6.30  print:  "THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY 
  6.31  TAX REVENUES.  THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX 
  6.32  BY PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF 
  6.33  GOVERNMENT."  
  6.34     (b) The property tax statements for manufactured homes and 
  6.35  sectional structures taxed as personal property shall contain 
  6.36  the same information that is required on the tax statements for 
  7.1   real property.  
  7.2      (c) Real and personal property tax statements must contain 
  7.3   the following information in the order given in this paragraph.  
  7.4   The information must contain the current year tax information in 
  7.5   the right column with the corresponding information for the 
  7.6   previous year in a column on the left: 
  7.7      (1) the property's estimated market value under section 
  7.8   273.11, subdivision 1; 
  7.9      (2) the property's taxable market value after reductions 
  7.10  under section 273.11, subdivisions 1a and 16; 
  7.11     (3) the property's gross tax, calculated by multiplying the 
  7.12  property's gross tax capacity times the total local tax rate and 
  7.13  adding to the result the sum of the aids enumerated in clause 
  7.14  (3); 
  7.15     (4) a total of the following aids: 
  7.16     (i) education aids payable under chapters 124 and 124A; 
  7.17     (ii) local government aids for cities, towns, and counties 
  7.18  under chapter 477A; and 
  7.19     (iii) disparity reduction aid under section 273.1398; 
  7.20     (5) for homestead residential and agricultural properties, 
  7.21  the homestead and agricultural credit aid apportioned to the 
  7.22  property.  This amount is obtained by multiplying the total 
  7.23  local tax rate by the difference between the property's gross 
  7.24  and net tax capacities under section 273.13.  This amount must 
  7.25  be separately stated and identified as "homestead and 
  7.26  agricultural credit."  For purposes of comparison with the 
  7.27  previous year's amount for the statement for taxes payable in 
  7.28  1990, the statement must show the homestead credit for taxes 
  7.29  payable in 1989 under section 273.13, and the agricultural 
  7.30  credit under section 273.132 for taxes payable in 1989; 
  7.31     (6) any credits received under sections 273.119; 273.123; 
  7.32  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
  7.33  473H.10, except that the amount of credit received under section 
  7.34  273.135 must be separately stated and identified as "taconite 
  7.35  tax relief"; and 
  7.36     (7) (6) the net tax payable in the manner required in 
  8.1   paragraph (a).  
  8.2      The commissioner of revenue shall certify to the county 
  8.3   auditor the actual or estimated aids enumerated in clauses (3) 
  8.4   and (4) that local governments will receive in the following 
  8.5   year.  In the case of a county containing a city of the first 
  8.6   class, for taxes levied in 1991, and for all counties for taxes 
  8.7   levied in 1992 and thereafter, the commissioner must certify 
  8.8   this amount by September 1.  
  8.9      Sec. 9.  Minnesota Statutes 1994, section 290A.01, is 
  8.10  amended to read: 
  8.11     290A.01 [CITATION.] 
  8.12     This chapter may be cited as the "state of Minnesota 
  8.13  homeowners' homestead credit and the renters' property tax 
  8.14  refund act." 
  8.15     Sec. 10.  Minnesota Statutes 1994, section 290A.07, 
  8.16  subdivision 3, is amended to read: 
  8.17     Subd. 3.  [PAYMENT OF HOMESTEAD CREDIT.] A claimant not 
  8.18  included in subdivision 2a shall receive full payment of the 
  8.19  homestead credit after September 15 and before September 30. 
  8.20     Sec. 11.  Minnesota Statutes 1994, section 290A.23, 
  8.21  subdivision 3, is amended to read: 
  8.22     Subd. 3.  [ANNUAL APPROPRIATION.] For payments made after 
  8.23  July 1, 1996, There is annually appropriated from the general 
  8.24  fund to the commissioner of revenue the amount necessary to make 
  8.25  the payments of homestead credit required under section 290A.04, 
  8.26  subdivisions subdivision 2 and 2h. 
  8.27     Sec. 12.  Minnesota Statutes 1994, section 297A.01, 
  8.28  subdivision 3, is amended to read: 
  8.29     Subd. 3.  A "sale" and a "purchase" includes, but is not 
  8.30  limited to, each of the following transactions: 
  8.31     (a) Any transfer of title or possession, or both, of 
  8.32  tangible personal property, whether absolutely or conditionally, 
  8.33  and the leasing of or the granting of a license to use or 
  8.34  consume tangible personal property other than manufactured homes 
  8.35  used for residential purposes for a continuous period of 30 days 
  8.36  or more, for a consideration in money or by exchange or barter; 
  9.1      (b) The production, fabrication, printing, or processing of 
  9.2   tangible personal property for a consideration for consumers who 
  9.3   furnish either directly or indirectly the materials used in the 
  9.4   production, fabrication, printing, or processing; 
  9.5      (c) The furnishing, preparing, or serving for a 
  9.6   consideration of food, meals, or drinks.  "Sale" does not 
  9.7   include: 
  9.8      (1) meals or drinks served to patients, inmates, or persons 
  9.9   residing at hospitals, sanitariums, nursing homes, senior 
  9.10  citizens homes, and correctional, detention, and detoxification 
  9.11  facilities; 
  9.12     (2) meals or drinks purchased for and served exclusively to 
  9.13  individuals who are 60 years of age or over and their spouses or 
  9.14  to the handicapped and their spouses by governmental agencies, 
  9.15  nonprofit organizations, agencies, or churches or pursuant to 
  9.16  any program funded in whole or part through 42 USCA sections 
  9.17  3001 through 3045, wherever delivered, prepared or served; or 
  9.18     (3) meals and lunches served at public and private schools, 
  9.19  universities, or colleges.  Notwithstanding section 297A.25, 
  9.20  subdivision 2, taxable food or meals include, but are not 
  9.21  limited to, the following:  
  9.22     (i) heated food or drinks; 
  9.23     (ii) sandwiches prepared by the retailer; 
  9.24     (iii) single sales of prepackaged ice cream or ice milk 
  9.25  novelties prepared by the retailer; 
  9.26     (iv) hand-prepared or dispensed ice cream or ice milk 
  9.27  products including cones, sundaes, and snow cones; 
  9.28     (v) soft drinks and other beverages prepared or served by 
  9.29  the retailer; 
  9.30     (vi) gum; 
  9.31     (vii) ice; 
  9.32     (viii) all food sold in vending machines; 
  9.33     (ix) party trays prepared by the retailers; and 
  9.34     (x) all meals and single servings of packaged snack food, 
  9.35  single cans or bottles of pop, sold in restaurants and bars; 
  9.36     (d) The granting of the privilege of admission to places of 
 10.1   amusement, recreational areas, or athletic events, except a 
 10.2   world championship football game sponsored by the national 
 10.3   football league, and the privilege of having access to and the 
 10.4   use of amusement devices, tanning facilities, reducing salons, 
 10.5   steam baths, turkish baths, health clubs, and spas or athletic 
 10.6   facilities; 
 10.7      (e) The furnishing for a consideration of lodging and 
 10.8   related services by a hotel, rooming house, tourist court, motel 
 10.9   or trailer camp and of the granting of any similar license to 
 10.10  use real property other than the renting or leasing thereof for 
 10.11  a continuous period of 30 days or more; 
 10.12     (f) The furnishing for a consideration of electricity, gas, 
 10.13  water, or steam for use or consumption within this state, or 
 10.14  local exchange telephone service, intrastate toll service, and 
 10.15  interstate toll service, if that service originates from and is 
 10.16  charged to a telephone located in this state.  Telephone service 
 10.17  includes paging services and private communication service, as 
 10.18  defined in United States Code, title 26, section 4252(d), except 
 10.19  for private communication service purchased by an agent acting 
 10.20  on behalf of the state lottery.  The furnishing for a 
 10.21  consideration of access to telephone services by a hotel to its 
 10.22  guests is a sale under this clause.  Sales by municipal 
 10.23  corporations in a proprietary capacity are included in the 
 10.24  provisions of this clause.  The furnishing of water and sewer 
 10.25  services for residential use shall not be considered a sale.  
 10.26  The sale of natural gas to be used as a fuel in vehicles 
 10.27  propelled by natural gas shall not be considered a sale for the 
 10.28  purposes of this section; 
 10.29     (g) The furnishing for a consideration of cable television 
 10.30  services, including charges for basic service, charges for 
 10.31  premium service, and any other charges for any other 
 10.32  pay-per-view, monthly, or similar television services; 
 10.33     (h) Notwithstanding section 297A.25, subdivisions 9 and 12, 
 10.34  the sales of racehorses including claiming sales and fees paid 
 10.35  for breeding racehorses or horses previously used for racing 
 10.36  shall be considered a "sale" and a "purchase."  "Racehorse" 
 11.1   means a horse that is or is intended to be used for racing and 
 11.2   whose birth has been recorded by the Jockey Club or the United 
 11.3   States Trotting Association or the American Quarter Horse 
 11.4   Association.  "Sale" does not include fees paid for breeding 
 11.5   horses that are not racehorses; 
 11.6      (i) The furnishing for a consideration of parking services, 
 11.7   whether on a contractual, hourly, or other periodic basis, 
 11.8   except for parking at a meter; 
 11.9      (j) The furnishing for a consideration of services listed 
 11.10  in this paragraph: 
 11.11     (i) laundry and dry cleaning services including cleaning, 
 11.12  pressing, repairing, altering, and storing clothes, linen 
 11.13  services and supply, cleaning and blocking hats, and carpet, 
 11.14  drapery, upholstery, and industrial cleaning.  Laundry and dry 
 11.15  cleaning services do not include services provided by coin 
 11.16  operated facilities operated by the customer; 
 11.17     (ii) motor vehicle washing, waxing, and cleaning services, 
 11.18  including services provided by coin-operated facilities operated 
 11.19  by the customer, and rustproofing, undercoating, and towing of 
 11.20  motor vehicles; 
 11.21     (iii) building and residential cleaning, maintenance, and 
 11.22  disinfecting and exterminating services; 
 11.23     (iv) services provided by detective agencies, security 
 11.24  services, burglar, fire alarm, and armored car services not 
 11.25  including services performed within the jurisdiction they serve 
 11.26  by off-duty licensed peace officers as defined in section 
 11.27  626.84, subdivision 1; 
 11.28     (v) pet grooming services; 
 11.29     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
 11.30  services; garden planting and maintenance; tree, bush, and shrub 
 11.31  pruning, bracing, spraying, and surgery; tree, bush, shrub and 
 11.32  stump removal; and tree trimming for public utility lines.  
 11.33  Services performed under a construction contract for the 
 11.34  installation of shrubbery, plants, sod, trees, bushes, and 
 11.35  similar items are not taxable; 
 11.36     (vii) solid waste collection and disposal services as 
 12.1   described in section 297A.45; 
 12.2      (viii) massages, except when provided by a licensed health 
 12.3   care facility or professional or upon written referral from a 
 12.4   licensed health care facility or professional for treatment of 
 12.5   illness, injury, or disease; and 
 12.6      (ix) the furnishing for consideration of lodging, board and 
 12.7   care services for animals in kennels and other similar 
 12.8   arrangements, but excluding veterinary and horse boarding 
 12.9   services.; 
 12.10     (x) personal services, including beauty and barber 
 12.11  services, shoe repair, and funeral services; 
 12.12     (xi) business services, including advertising services, 
 12.13  consumer credit reporting, mercantile reporting, adjustment and 
 12.14  collection services, and computer and data processing services; 
 12.15     (xii) legal services; 
 12.16     (xiii) engineering, architectural, and surveying services; 
 12.17     (xiv) accounting services; 
 12.18     (xv) research, development, and testing services; 
 12.19     (xvi) management and public relations services; and 
 12.20     (xvii) scientific consulting services. 
 12.21  The services listed in this paragraph are taxable under section 
 12.22  297A.02 if the service is performed wholly within Minnesota or 
 12.23  if the service is performed partly within and partly without 
 12.24  Minnesota and the greater proportion of the service is performed 
 12.25  in Minnesota, based on the cost of performance.  In applying the 
 12.26  provisions of this chapter, the terms "tangible personal 
 12.27  property" and "sales at retail" include taxable services and the 
 12.28  provision of taxable services, unless specifically provided 
 12.29  otherwise.  Services performed by an employee for an employer 
 12.30  are not taxable under this paragraph.  Services performed by a 
 12.31  partnership or association for another partnership or 
 12.32  association are not taxable under this paragraph if one of the 
 12.33  entities owns or controls more than 80 percent of the voting 
 12.34  power of the equity interest in the other entity.  Services 
 12.35  performed between members of an affiliated group of corporations 
 12.36  are not taxable.  For purposes of this section, "affiliated 
 13.1   group of corporations" includes those entities that would be 
 13.2   classified as a member of an affiliated group under United 
 13.3   States Code, title 26, section 1504, and who are eligible to 
 13.4   file a consolidated tax return for federal income tax purposes; 
 13.5      (k) A "sale" and a "purchase" includes the transfer of 
 13.6   computer software, meaning information and directions that 
 13.7   dictate the function performed by data processing equipment.  A 
 13.8   "sale" and a "purchase" does not include the design, 
 13.9   development, writing, translation, fabrication, lease, or 
 13.10  transfer for a consideration of title or possession of a custom 
 13.11  computer program; and 
 13.12     (l) The granting of membership in a club, association, or 
 13.13  other organization if: 
 13.14     (1) the club, association, or other organization makes 
 13.15  available for the use of its members sports and athletic 
 13.16  facilities (without regard to whether a separate charge is 
 13.17  assessed for use of the facilities); and 
 13.18     (2) use of the sports and athletic facilities is not made 
 13.19  available to the general public on the same basis as it is made 
 13.20  available to members.  
 13.21  Granting of membership includes both one-time initiation fees 
 13.22  and periodic membership dues.  Sports and athletic facilities 
 13.23  include golf courses, tennis, racquetball, handball and squash 
 13.24  courts, basketball and volleyball facilities, running tracks, 
 13.25  exercise equipment, swimming pools, and other similar athletic 
 13.26  or sports facilities.  The provisions of this paragraph do not 
 13.27  apply to camps or other recreation facilities owned and operated 
 13.28  by an exempt organization under section 501(c)(3) of the 
 13.29  Internal Revenue Code of 1986, as amended through December 31, 
 13.30  1992, for educational and social activities for young people 
 13.31  primarily age 18 and under.  
 13.32     Sec. 13.  Minnesota Statutes 1994, section 297A.25, 
 13.33  subdivision 8, is amended to read: 
 13.34     Subd. 8.  [CLOTHING.] The gross receipts from the sale 
 13.35  of an item of clothing and or wearing apparel with a sales price 
 13.36  of less than $50 are exempt, except the following: 
 14.1      (1) all articles commonly or commercially known as jewelry, 
 14.2   whether real or imitation; pearls, precious and semiprecious 
 14.3   stones, and imitations thereof; articles made of, or ornamented, 
 14.4   mounted or fitted with precious metals or imitations thereof; 
 14.5   watches; clocks; cases and movements for watches and clocks; 
 14.6   gold, gold-plated, silver, or sterling flatware or hollowware 
 14.7   and silver-plated hollowware; opera glasses; lorgnettes; marine 
 14.8   glasses; field glasses and binoculars; 
 14.9      (2) articles made of fur on the hide or pelt, and articles 
 14.10  of which such fur is the component material or chief value, but 
 14.11  only if such value is more than three times the value of the 
 14.12  next most valuable component material; 
 14.13     (3) perfume, essences, extracts, toilet waters, cosmetics, 
 14.14  petroleum jellies, hair oils, pomades, hair dressings, hair 
 14.15  restoratives, hair dyes, aromatic cachous and toilet powders.  
 14.16  The tax imposed by this chapter shall not apply to lotion, oil, 
 14.17  powder, or other articles intended to be used or applied only in 
 14.18  the case of babies; 
 14.19     (4) trunks, valises, traveling bags, suitcases, satchels, 
 14.20  overnight bags, hat boxes for use by travelers, beach bags, 
 14.21  bathing suit bags, brief cases made of leather or imitation 
 14.22  leather, salespeople's sample and display cases, purses, 
 14.23  handbags, pocketbooks, wallets, billfolds, card, pass, and key 
 14.24  cases and toilet cases. 
 14.25     Sec. 14.  Minnesota Statutes 1994, section 297A.25, 
 14.26  subdivision 9, is amended to read: 
 14.27     Subd. 9.  [MATERIALS CONSUMED IN PRODUCTION.] The gross 
 14.28  receipts from the sale of and the storage, use, or consumption 
 14.29  of all materials, including chemicals, fuels, petroleum 
 14.30  products, lubricants, packaging materials, including returnable 
 14.31  containers used in packaging food and beverage products, feeds, 
 14.32  seeds, fertilizers, electricity, gas and steam, used or consumed 
 14.33  in agricultural or industrial production of personal property 
 14.34  intended to be sold ultimately at retail, whether or not the 
 14.35  item so used becomes an ingredient or constituent part of the 
 14.36  property produced are exempt.  Seeds, trees, fertilizers, and 
 15.1   herbicides purchased for use by farmers in the Conservation 
 15.2   Reserve Program under United States Code, title 16, section 
 15.3   590h, the Integrated Farm Management Program under section 1627 
 15.4   of Public Law Number 101-624, the Wheat and Feed Grain Programs 
 15.5   under sections 301 to 305 and 401 to 405 of Public Law Number 
 15.6   101-624, and the conservation reserve program under sections 
 15.7   103F.505 to 103F.531, are included in this exemption.  Chemicals 
 15.8   used for cleaning food processing machinery and equipment are 
 15.9   included in this exemption.  Materials, including chemicals, 
 15.10  fuels, and electricity purchased by persons engaged in 
 15.11  agricultural or industrial production to treat waste generated 
 15.12  as a result of the production process are included in this 
 15.13  exemption.  Such production shall include, but is not limited 
 15.14  to, research, development, design or production of any tangible 
 15.15  personal property, manufacturing, processing (other than by 
 15.16  restaurants and consumers) of agricultural products whether 
 15.17  vegetable or animal, commercial fishing, refining, smelting, 
 15.18  reducing, brewing, distilling, printing, mining, quarrying, 
 15.19  lumbering, generating electricity and the production of road 
 15.20  building materials.  Such production shall not include painting, 
 15.21  cleaning, repairing or similar processing of property except as 
 15.22  part of the original manufacturing process.  Machinery, 
 15.23  equipment, implements, tools, accessories, appliances, 
 15.24  contrivances, furniture and fixtures, used in such production 
 15.25  and fuel, electricity, gas or steam used for space heating or 
 15.26  lighting, are not included within this exemption; however, 
 15.27  accessory tools, equipment and other short lived items, which 
 15.28  are separate detachable units used in producing a direct effect 
 15.29  upon the product, where such items have an ordinary useful life 
 15.30  of less than 12 months, are included within the exemption 
 15.31  provided herein.  Electricity used to make snow for outdoor use 
 15.32  for ski hills, ski slopes, or ski trails is included in this 
 15.33  exemption. 
 15.34     Sec. 15.  Minnesota Statutes 1994, section 297A.44, 
 15.35  subdivision 1, is amended to read: 
 15.36     Subdivision 1.  (a) Except as provided in paragraphs (b), 
 16.1   (c), and (d) to (e), all revenues, including interest and 
 16.2   penalties, derived from the excise and use taxes imposed by 
 16.3   sections 297A.01 to 297A.44 shall be deposited by the 
 16.4   commissioner in the state treasury and credited to the general 
 16.5   fund.  
 16.6      (b) All excise and use taxes derived from sales and use of 
 16.7   property and services purchased for the construction and 
 16.8   operation of an agricultural resource project, from and after 
 16.9   the date on which a conditional commitment for a loan guaranty 
 16.10  for the project is made pursuant to section 41A.04, subdivision 
 16.11  3, shall be deposited in the Minnesota agricultural and economic 
 16.12  account in the special revenue fund.  The commissioner of 
 16.13  finance shall certify to the commissioner the date on which the 
 16.14  project received the conditional commitment.  The amount 
 16.15  deposited in the loan guaranty account shall be reduced by any 
 16.16  refunds and by the costs incurred by the department of revenue 
 16.17  to administer and enforce the assessment and collection of the 
 16.18  taxes.  
 16.19     (c) All revenues, including interest and penalties, derived 
 16.20  from the excise and use taxes imposed on sales and purchases 
 16.21  included in section 297A.01, subdivision 3, paragraphs (d) and 
 16.22  (l), clauses (1) and (2), must be deposited by the commissioner 
 16.23  in the state treasury, and credited as follows: 
 16.24     (1) first to the general obligation special tax bond debt 
 16.25  service account in each fiscal year the amount required by 
 16.26  section 16A.661, subdivision 3, paragraph (b); and 
 16.27     (2) after the requirements of clause (1) have been met, the 
 16.28  balance must be credited to the general fund. 
 16.29     (d) The revenues, including interest and penalties, derived 
 16.30  from the taxes imposed on solid waste collection services as 
 16.31  described in section 297A.45, except for the tax imposed under 
 16.32  section 297A.021, shall be deposited by the commissioner in the 
 16.33  state treasury and credited to the general fund to be used for 
 16.34  funding solid waste reduction and recycling programs. 
 16.35     (e) The commissioner of revenue shall deposit revenues 
 16.36  derived from imposing a rate of 1.25 percent on all taxable 
 17.1   sales, including interest and penalties, under this chapter in 
 17.2   the property taxpayers' trust fund. 
 17.3      Sec. 16.  [SUNSET OF CERTAIN LEVIES.] 
 17.4      The following kindergarten through grade 12 education 
 17.5   levies are prohibited for taxes levied in 1997 and payable in 
 17.6   1998 and each year thereafter: 
 17.7      (1) special education, including, but not limited to, any 
 17.8   levies for adjustments, base proration, and appropriation cap 
 17.9   adjustments; 
 17.10     (2) district cooperation; 
 17.11     (3) cooperation and combination; 
 17.12     (4) desegregation; 
 17.13     (5) crime-related costs; 
 17.14     (6) consolidation; and 
 17.15     (7) supplemental. 
 17.16     The state shall pay in aid the amount that would have been 
 17.17  levied to the appropriate entity. 
 17.18     Sec. 17.  [REPORT.] 
 17.19     The state board of education shall report on the 
 17.20  implementation of the state mandated general education levy to 
 17.21  the education and tax committees of the legislature by February 
 17.22  15, 1996. 
 17.23     Sec. 18.  [REPEALER.] 
 17.24     Minnesota Statutes 1994, sections 273.1398, subdivisions 2 
 17.25  and 2c; 273.166; 290A.04, subdivision 2h; 297A.01, subdivision 
 17.26  18; and 297A.25, subdivision 10, are repealed. 
 17.27     Sec. 19.  [EFFECTIVE DATE.] 
 17.28     This article is effective only upon adoption by the people 
 17.29  of the constitutional amendment in article 1.