SF 1557

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

  1.1                          A bill for an act 
  1.2             relating to taxation; redirecting state-paid property 
  1.3             tax relief; reducing the class rate on certain 
  1.4             agricultural property; establishing an industrial 
  1.5             property tax credit; appropriating money; amending 
  1.6             Minnesota Statutes 1994, sections 273.13, subdivision 
  1.7             23; 273.1398, subdivisions 2, 8, and by adding a 
  1.8             subdivision; and 290A.01; proposing coding for new law 
  1.9             in Minnesota Statutes, chapter 273. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  [PROPERTY TAX REFORM ACT OF 1995; STATEMENT OF 
  1.12  PURPOSE.] 
  1.13     Subdivision 1.  [PURPOSE OF PROPERTY TAX RELIEF.] It is the 
  1.14  policy of the state to provide property tax relief that will: 
  1.15     (1) reduce disparities in property tax burdens that are due 
  1.16  to differences in taxable wealth, and thereby help to insure 
  1.17  that adequate levels of needed public services can be provided 
  1.18  in all communities; 
  1.19     (2) reduce the property tax burden on low and moderate 
  1.20  income homeowners and renters; and 
  1.21     (3) promote industrial development to increase the number 
  1.22  of manufacturing jobs.  
  1.23     The purpose of this act is to target property tax relief 
  1.24  programs more effectively in order to implement this policy. 
  1.25     Subd. 2.  [IMPLEMENTATION; PROGRAMS.] The state will 
  1.26  implement its property tax relief policy by means of the 
  1.27  following programs: 
  2.1      (1) education funding under Minnesota Statutes, chapter 
  2.2   124A, to reduce disparities in property tax burdens that are due 
  2.3   to differences in taxable wealth among school districts so that 
  2.4   basic education services can be provided in all school 
  2.5   districts; 
  2.6      (2) local government aid under Minnesota Statutes, chapter 
  2.7   477A, to reduce disparities in property tax burdens that are due 
  2.8   to differences in taxable wealth among cities so that basic city 
  2.9   services such as police, firefighting, street maintenance, 
  2.10  parks, and libraries can be provided in cities; 
  2.11     (3) a homestead and renters credit under Minnesota 
  2.12  Statutes, chapter 290A, to reduce property tax burdens on low 
  2.13  and moderate income homeowners and renters; and 
  2.14     (4) an industrial property tax credit under section 3 to 
  2.15  reduce property taxes on new industrial facilities. 
  2.16     Subd. 3.  [TRANSITION.] The legislation recognizes that the 
  2.17  current homestead and agricultural credit aid is not the most 
  2.18  effective means by which to effect the policy stated in 
  2.19  subdivision 1.  Therefore, this act transfers the money that 
  2.20  would have been paid as homestead and agricultural credit aid to 
  2.21  an enhanced property tax refund and rent credit program, to be 
  2.22  known as the homestead credit program, and to an industrial 
  2.23  property tax credit program to better accomplish those purposes. 
  2.24     Sec. 2.  Minnesota Statutes 1994, section 273.13, 
  2.25  subdivision 23, is amended to read: 
  2.26     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
  2.27  land including any improvements that is homesteaded.  The market 
  2.28  value of the house and garage and immediately surrounding one 
  2.29  acre of land has the same class rates as class 1a property under 
  2.30  subdivision 22.  The value of the remaining land including 
  2.31  improvements up to $115,000 has a net class rate of .45 percent 
  2.32  of market value and a gross class rate of 1.75 percent of market 
  2.33  value.  The remaining value of class 2a property over $115,000 
  2.34  of market value that does not exceed 320 acres has a net class 
  2.35  rate of one percent of market value, and a gross class rate of 
  2.36  2.25 percent of market value.  The remaining property over the 
  3.1   $115,000 market value in excess of 320 acres has a class rate of 
  3.2   1.5 percent of market value for taxes payable in 1996, 1.45 
  3.3   percent for taxes payable in 1997, 1.4 percent for taxes payable 
  3.4   in 1998, 1.35 percent for taxes payable in 1999, and 1.3 percent 
  3.5   for taxes payable in 2000 and thereafter, and a gross class rate 
  3.6   of 2.25 percent of market value.  
  3.7      (b) Class 2b property is (1) real estate, rural in 
  3.8   character and used exclusively for growing trees for timber, 
  3.9   lumber, and wood and wood products; (2) real estate that is not 
  3.10  improved with a structure and is used exclusively for growing 
  3.11  trees for timber, lumber, and wood and wood products, if the 
  3.12  owner has participated or is participating in a cost-sharing 
  3.13  program for afforestation, reforestation, or timber stand 
  3.14  improvement on that particular property, administered or 
  3.15  coordinated by the commissioner of natural resources; (3) real 
  3.16  estate that is nonhomestead agricultural land; or (4) a landing 
  3.17  area or public access area of a privately owned public use 
  3.18  airport.  Class 2b property has a net class rate of 1.5 percent 
  3.19  of market value for taxes payable in 1996, 1.45 percent for 
  3.20  taxes payable in 1997, 1.4 percent for taxes payable in 1998, 
  3.21  1.35 percent for taxes payable in 1999, and 1.3 percent for 
  3.22  taxes payable in 2000 and thereafter, and a gross class rate of 
  3.23  2.25 percent of market value.  
  3.24     (c) Agricultural land as used in this section means 
  3.25  contiguous acreage of ten acres or more, primarily used during 
  3.26  the preceding year for agricultural purposes.  Agricultural use 
  3.27  may include pasture, timber, waste, unusable wild land, and land 
  3.28  included in state or federal farm programs.  "Agricultural 
  3.29  purposes" as used in this section means the raising or 
  3.30  cultivation of agricultural products.  
  3.31     (d) Real estate of less than ten acres used principally for 
  3.32  raising or cultivating agricultural products, shall be 
  3.33  considered as agricultural land, if it is not used primarily for 
  3.34  residential purposes.  
  3.35     (e) The term "agricultural products" as used in this 
  3.36  subdivision includes:  
  4.1      (1) livestock, dairy animals, dairy products, poultry and 
  4.2   poultry products, fur-bearing animals, horticultural and nursery 
  4.3   stock described in sections 18.44 to 18.61, fruit of all kinds, 
  4.4   vegetables, forage, grains, bees, and apiary products by the 
  4.5   owner; 
  4.6      (2) fish bred for sale and consumption if the fish breeding 
  4.7   occurs on land zoned for agricultural use; 
  4.8      (3) the commercial boarding of horses if the boarding is 
  4.9   done in conjunction with raising or cultivating agricultural 
  4.10  products as defined in clause (1); 
  4.11     (4) property which is owned and operated by nonprofit 
  4.12  organizations used for equestrian activities, excluding racing; 
  4.13  and 
  4.14     (5) game birds and waterfowl bred and raised for use on a 
  4.15  shooting preserve licensed under section 97A.115.  
  4.16     (f) If a parcel used for agricultural purposes is also used 
  4.17  for commercial or industrial purposes, including but not limited 
  4.18  to:  
  4.19     (1) wholesale and retail sales; 
  4.20     (2) processing of raw agricultural products or other goods; 
  4.21     (3) warehousing or storage of processed goods; and 
  4.22     (4) office facilities for the support of the activities 
  4.23  enumerated in clauses (1), (2), and (3), 
  4.24  the assessor shall classify the part of the parcel used for 
  4.25  agricultural purposes as class 1b, 2a, or 2b, whichever is 
  4.26  appropriate, and the remainder in the class appropriate to its 
  4.27  use.  The grading, sorting, and packaging of raw agricultural 
  4.28  products for first sale is considered an agricultural purpose.  
  4.29  A greenhouse or other building where horticultural or nursery 
  4.30  products are grown that is also used for the conduct of retail 
  4.31  sales must be classified as agricultural if it is primarily used 
  4.32  for the growing of horticultural or nursery products from seed, 
  4.33  cuttings, or roots and occasionally as a showroom for the retail 
  4.34  sale of those products.  Use of a greenhouse or building only 
  4.35  for the display of already grown horticultural or nursery 
  4.36  products does not qualify as an agricultural purpose.  
  5.1      The assessor shall determine and list separately on the 
  5.2   records the market value of the homestead dwelling and the one 
  5.3   acre of land on which that dwelling is located.  If any farm 
  5.4   buildings or structures are located on this homesteaded acre of 
  5.5   land, their market value shall not be included in this separate 
  5.6   determination.  
  5.7      (g) To qualify for classification under paragraph (b), 
  5.8   clause (4), a privately owned public use airport must be 
  5.9   licensed as a public airport under section 360.018.  For 
  5.10  purposes of paragraph (b), clause (4), "landing area" means that 
  5.11  part of a privately owned public use airport properly cleared, 
  5.12  regularly maintained, and made available to the public for use 
  5.13  by aircraft and includes runways, taxiways, aprons, and sites 
  5.14  upon which are situated landing or navigational aids.  A landing 
  5.15  area also includes land underlying both the primary surface and 
  5.16  the approach surfaces that comply with all of the following:  
  5.17     (i) the land is properly cleared and regularly maintained 
  5.18  for the primary purposes of the landing, taking off, and taxiing 
  5.19  of aircraft; but that portion of the land that contains 
  5.20  facilities for servicing, repair, or maintenance of aircraft is 
  5.21  not included as a landing area; 
  5.22     (ii) the land is part of the airport property; and 
  5.23     (iii) the land is not used for commercial or residential 
  5.24  purposes. 
  5.25  The land contained in a landing area under paragraph (b), clause 
  5.26  (4), must be described and certified by the commissioner of 
  5.27  transportation.  The certification is effective until it is 
  5.28  modified, or until the airport or landing area no longer meets 
  5.29  the requirements of paragraph (b), clause (4).  For purposes of 
  5.30  paragraph (b), clause (4), "public access area" means property 
  5.31  used as an aircraft parking ramp, apron, or storage hangar, or 
  5.32  an arrival and departure building in connection with the airport.
  5.33     Sec. 3.  [273.1319] [INDUSTRIAL PROPERTY TAX CREDIT.] 
  5.34     Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
  5.35  the terms defined in this subdivision have the meanings given 
  5.36  them. 
  6.1      (b) "Qualified industrial property" means real property, 
  6.2   other than land, that is used for manufacturing, fabricating, or 
  6.3   refining tangible personal property to be sold ultimately at 
  6.4   retail.  Qualified industrial property includes both new 
  6.5   construction and rehabilitation and additions to existing 
  6.6   structures, provided that the rehabilitation or additions result 
  6.7   in (1) at least a 25 percent increase in the value of the 
  6.8   structure and (2) at least a 25 percent increase in the 
  6.9   production capacity of the facility. 
  6.10     (c) "Property tax payable" means the property tax exclusive 
  6.11  of special assessments, penalties, and interest payable on the 
  6.12  qualified industrial property, after deductions made under 
  6.13  section 273.42, subdivision 2, and any other state-paid property 
  6.14  tax credits in any calendar year. 
  6.15     Subd. 2.  [AMOUNT OF CREDIT.] A credit shall be paid to the 
  6.16  owner of qualified industrial property as provided in this 
  6.17  section.  Subject to subdivision 4, the amount of the credit 
  6.18  shall be determined by subtracting an amount equal to four 
  6.19  percent of the market value of the qualified industrial property 
  6.20  as determined by the assessor for the most recent assessment 
  6.21  from the property tax payable on that property for that taxable 
  6.22  year.  The maximum credit under this section for any qualified 
  6.23  industrial property is $50,000. 
  6.24     Subd. 3.  [REFUND PROCESS.] The credit shall be provided to 
  6.25  owners of qualified industrial property as a refund.  The owner 
  6.26  of the property shall apply for the refund to the commissioner 
  6.27  of revenue on a form provided by the commissioner by July 15 of 
  6.28  the year in which the taxes are payable.  Payment shall be made 
  6.29  after August 15 and before August 30. 
  6.30     Subd. 4.  [CREDIT AMOUNT ADJUSTMENT.] By December 1 of 1997 
  6.31  and each subsequent year, the commissioner shall estimate the 
  6.32  cost of paying the refunds provided under this section for taxes 
  6.33  payable in the following year.  If the estimated total refund 
  6.34  claims for the following year exceed the amount estimated to be 
  6.35  available in the industrial property tax relief account for that 
  6.36  purpose, the commissioner shall increase the four percent amount 
  7.1   in subdivision 2 so that the estimated total refund claims do 
  7.2   not exceed the amount in the account.  The determinations of the 
  7.3   revised percentage by the commissioner are not rules subject to 
  7.4   chapter 14. 
  7.5      Subd. 5.  [APPROPRIATION.] The amount required to pay the 
  7.6   refunds under this section is appropriated annually from the 
  7.7   industrial property tax credit account in the state treasury to 
  7.8   the commissioner of revenue. 
  7.9      Sec. 4.  Minnesota Statutes 1994, section 273.1398, 
  7.10  subdivision 2, is amended to read: 
  7.11     Subd. 2.  [HOMESTEAD AND AGRICULTURAL CREDIT AID.] 
  7.12  Homestead and agricultural credit aid for each unique taxing 
  7.13  jurisdiction equals the product of (1) the homestead and 
  7.14  agricultural credit aid base, and (2) the growth adjustment 
  7.15  factor, plus the net tax capacity adjustment and the fiscal 
  7.16  disparity adjustment.  For aid payable in 1997 and thereafter, 
  7.17  homestead and agricultural credit aid is not paid to special 
  7.18  taxing districts.  For aid payable in 1998 and each year 
  7.19  thereafter, the amount of aid payable to each county, city, 
  7.20  town, and school district is reduced by one percent of net tax 
  7.21  capacity.  Each year's reduction is permanent and cumulative. 
  7.22     Sec. 5.  Minnesota Statutes 1994, section 273.1398, 
  7.23  subdivision 8, is amended to read: 
  7.24     Subd. 8.  [APPROPRIATION.] An amount sufficient to pay the 
  7.25  aids and credits provided under this section for school 
  7.26  districts, intermediate school districts, or any group of school 
  7.27  districts levying as a single taxing entity, is annually 
  7.28  appropriated from the general fund to the commissioner of 
  7.29  education.  An amount sufficient to pay the aids and credits 
  7.30  provided under this section for counties, cities, and towns, and 
  7.31  special taxing districts is annually appropriated from the 
  7.32  general fund to the commissioner of revenue.  A jurisdiction's 
  7.33  aid amount may be increased or decreased based on any prior year 
  7.34  adjustments for homestead credit or other property tax credit or 
  7.35  aid programs. 
  7.36     Sec. 6.  Minnesota Statutes 1994, section 273.1398, is 
  8.1   amended by adding a subdivision to read: 
  8.2      Subd. 9.  [APPROPRIATION; PROCEEDS OF REDUCED AID 
  8.3   EXPENDITURES.] The commissioner shall annually determine the 
  8.4   amount of the reduction of appropriations under subdivision 8 
  8.5   that is attributable to section 4.  The amount determined must 
  8.6   be placed in separate accounts in the state treasury as follows: 
  8.7      (1) one-third to an industrial property tax credit account 
  8.8   in the state treasury to be appropriated as provided in section 
  8.9   3; and 
  8.10     (2) two-thirds to a homestead credit account in the state 
  8.11  treasury to provide increased funding for the appropriation 
  8.12  under section 290A.23 for payments to homeowners and renters 
  8.13  under the homestead credit program. 
  8.14     Sec. 7.  Minnesota Statutes 1994, section 290A.01, is 
  8.15  amended to read: 
  8.16     290A.01 [CITATION.] 
  8.17     This chapter may be cited as the "state of Minnesota 
  8.18  property tax refund homestead credit act." 
  8.19     Sec. 8.  [INSTRUCTION TO REVISOR.] 
  8.20     The revisor of statutes shall change the term "property tax 
  8.21  refund" whenever it appears in Minnesota Statutes to "homestead 
  8.22  credit" in Minnesota Statutes 1996 and subsequent editions of 
  8.23  the statutes. 
  8.24     Sec. 9.  [EFFECTIVE DATE.] 
  8.25     Section 3 is effective for taxes payable in 1998 and 
  8.26  thereafter.  Section 5 is effective for aids payable in 1997 and 
  8.27  thereafter.