SF 2206

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to financing and operation of government in this state; providing for
allocation of additional general fund revenues; modifying income tax rates
and providing an income tax credit; modifying taxation of certain trusts;
modifying taxation of certain compensation paid to nonresidents; providing
for taxation of foreign operating corporations; changing and providing certain
sales and use tax exemptions; modifying and authorizing certain local sales
taxes; modifying certain levies; changing and providing property tax exemptions
and value exclusions; modifying the state general levy and providing for
deposit of revenues; providing for aids to local governments; providing for
an international economic development zone; conveying certain powers and
providing tax incentives in the zone; clarifying the effect of certain statements
of taxpayer rights by commissioner of revenue; limiting agricultural processing
zone property tax exemption in certain circumstances; defining term "tax";
extending a petrofund fee exemption; extending fiscal disparity computation
for city of Bloomington; conveying powers and authority to and imposing
duties and requirements on certain local governments and authorities for certain
purposes; providing tax shelter and compliance initiatives; providing for a
property tax freeze; providing for certain payments to certain cities and counties;
requiring studies; reducing appropriations; appropriating money; amending
Minnesota Statutes 2004, sections 16A.152, subdivision 2; 123B.53, subdivision
5; 126C.01, by adding a subdivision; 127A.48, by adding a subdivision;
254B.02, subdivision 3; 270.0603, subdivision 3; 270.0682, subdivision 1;
272.02, subdivisions 53, 64, by adding subdivisions; 272.0211, subdivisions
1, 2; 273.11, subdivision 1a; 275.025, subdivision 1; 275.065, subdivision 3;
289A.38, by adding a subdivision; 289A.60, by adding a subdivision; 290.01,
subdivisions 6b, 7b, 19a, as amended, if enacted, 19d; 290.06, subdivisions
2c, 2d, by adding subdivisions; 290.17, subdivisions 2, 4; 297A.61, by adding
a subdivision; 297A.67, subdivisions 6, 7, 8, 29; 297A.68, subdivision 28,
by adding a subdivision; 297A.71, subdivision 12, by adding a subdivision;
429.021, subdivision 1; 469.015, subdivision 4; 469.033, subdivision 6; 469.175,
subdivision 2; 473F.08, subdivision 3a; 477A.011, subdivisions 34, 36, as
amended; 477A.0124, subdivision 4; 477A.013, subdivisions 8, 9; 477A.03,
subdivisions 2a, 2b; 645.44, by adding a subdivision; Laws 1993, chapter 375,
article 9, section 46, subdivision 2, as amended; Laws 1994, chapter 587, article
9, section 8, subdivision 1; Laws 2001, First Special Session chapter 5, article
12, section 44, the effective date; Laws 2003, chapter 128, article 1, section
172; 2005 S.F. No. 467, section 1, if enacted; proposing coding for new law in
Minnesota Statutes, chapters 289A; 469; 477A.

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

ARTICLE 1

INDIVIDUAL INCOME TAX

Section 1.

Minnesota Statutes 2004, 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; deleted text begin and
deleted text end

(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 new text begin ;
new text end

new text begin (5) the amount necessary to eliminate requirements for accelerated payments of June
tax liabilities under sections 287.12; 287.29; 289A.20, subdivision 4; 297F.09, subdivision
10, and 297G.09, subdivision 9;
new text end

new text begin (6) the amount necessary to provide that interest is payable on claims for refunds
of the sales tax paid on exempt capital equipment from the date the claim is filed with
the commissioner and on other exempt items as provided in Minnesota Statutes 2002,
section 297A.75, subdivision 4; and
new text end

new text begin (7) the amount necessary to make payments of local government aids and taconite
aid reimbursements in four installments in each of the months of March, July, September,
and November as provided in Minnesota Statutes 1980, section 477A.01 new text end .

(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) To the extent that a positive unrestricted budgetary general fund balance is
projected, appropriations under this section must be made before any transfer is made
under section 16A.1522.

(d) 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. 2.

Minnesota Statutes 2004, section 290.01, subdivision 7b, is amended to read:

Subd. 7b.

Resident trust.

new text begin (a) new text end Resident trust means a trust, except a grantor type
trust, which either (1) was created by a will of a decedent who at death was domiciled in
this state or (2) is an irrevocable trust, the grantor of which was domiciled in this state
at the time the trust became irrevocable. For the purpose of this subdivision, a trust is
considered irrevocable to the extent the grantor is not treated as the owner thereof under
sections 671 to 678 of the Internal Revenue Code. The term "grantor type trust" means a
trust where the income or gains of the trust are taxable to the grantor or others treated as
substantial owners under sections 671 to 678 of the Internal Revenue Code.

new text begin (b)(1) A trust, other than a grantor type trust, that became irrevocable before January
1, 1996, or that was administered in Minnesota before January 1, 1996, is a resident trust
only if two or more of the following conditions are satisfied:
new text end

new text begin (i) a majority of the discretionary decisions of the trustees relative to the investment
of trust assets are made in Minnesota;
new text end

new text begin (ii) a majority of the discretionary decisions of the trustees relative to the
distributions of trust income and principal are made in Minnesota;
new text end

new text begin (iii) the official books and records of the trust, consisting of the original minutes of
trustee meetings and the original trust instruments, are located in Minnesota.
new text end

new text begin (2) For purposes of this paragraph, if the trustees delegate decisions and actions to an
agent or custodian, the actions and decisions of the agent or custodian must not be taken
into account in determining whether the trust is administered in Minnesota, if:
new text end

new text begin (i) the delegation was permitted under the trust agreement;
new text end

new text begin (ii) the trustees retain the power to revoke the delegation on reasonable notice; and
new text end

new text begin (iii) the trustees monitor and evaluate the performance of the agent or custodian on a
regular basis as is reasonably determined by the trustees.
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 2004, section 290.01, subdivision 19a, as amended by 2005
S.F. No. 1683, article 2, section 3, if enacted, 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 income 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 of 1986, as amended through June 15, 2003. 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 income taxes 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;

(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; and

(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;

(10) deleted text begin to the extent deducted in computing federal taxable income, the amount by
which the standard deduction allowed under section 63(c) of the Internal Revenue Code
exceeds the standard deduction allowable under section 63(c) of the Internal Revenue
Code of 1986, as amended through December 31, 2003;
deleted text end

deleted text begin (11) deleted text end the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans; and

deleted text begin (12) deleted text end new text begin (11) new text end the deduction or exclusion allowed under section 223 of the Internal
Revenue Code for contributions to health savings accounts.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2004.
new text end

Sec. 4.

Minnesota Statutes 2004, section 290.06, subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income
taxes imposed by this chapter upon married individuals filing joint returns and surviving
spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
applying to their taxable net income the following schedule of rates:

(1) On the first deleted text begin $25,680 deleted text end new text begin $29,070 new text end , 5.35 percent;

(2) On all over deleted text begin $25,680 deleted text end new text begin $29,070 new text end , but not over deleted text begin $102,030 deleted text end new text begin $115,510 new text end , 7.05 percent;

(3) On all over deleted text begin $102,030 deleted text end new text begin $115,510, but not over $250,000 new text end , 7.85 percent new text begin ; and
new text end

new text begin (4) On all over $250,000, 10.65 percent for taxable years beginning after December
31, 2004, and before the fourth bracket termination year as defined in paragraph (f). For
the fourth bracket termination year and subsequent taxable years, the income included in
this clause will be subject to the rate in clause (3) new text end .

Married individuals filing separate returns, estates, and trusts must compute their
income tax by applying the above rates to their taxable income, except that the income
brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first deleted text begin $17,570 deleted text end new text begin $19,890 new text end , 5.35 percent;

(2) On all over deleted text begin $17,570 deleted text end new text begin $19,890 new text end , but not over deleted text begin $57,710 deleted text end new text begin $65,330 new text end , 7.05 percent;

(3) On all over deleted text begin $57,710 deleted text end new text begin $65,330, but not over $166,665 new text end , 7.85 percent new text begin ; and
new text end

new text begin (4) On all over $166,665, 10.65 percent for taxable years beginning after December
31, 2004, and before the fourth bracket termination year as defined in paragraph (f). For
the fourth bracket termination year and subsequent taxable years, the income included in
this clause will be subject to the rate in clause (3) new text end .

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying
as a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first deleted text begin $21,630 deleted text end new text begin $24,490 new text end , 5.35 percent;

(2) On all over deleted text begin $21,630 deleted text end new text begin $24,490 new text end , but not over deleted text begin $86,910 deleted text end new text begin $98,390 new text end , 7.05 percent;

(3) On all over deleted text begin $86,910 deleted text end new text begin $98,390, but not over $208,330 new text end , 7.85 percent new text begin ; and
new text end

new text begin (4) On all over $208,330, 10.65 percent for taxable years beginning after December
31, 2004, and before the fourth bracket termination year as defined in paragraph (f). For
the fourth bracket termination year and subsequent taxable years, the income included in
this clause will be subject to the rate in clause (3) new text end .

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the
tax of any individual taxpayer whose taxable net income for the taxable year is less than
an amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not
more than $100. The amount of tax for each bracket shall be computed at the rates set
forth in this subdivision, provided that the commissioner may disregard a fractional part of
a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute
the individual's Minnesota income tax as provided in this subdivision. After the
application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income
as defined in section 62 of the Internal Revenue Code and increased by the additions
required under section 290.01, subdivision 19a, clauses (1), (5), and (6), and reduced by
the subtraction under section 290.01, subdivision 19b, clause (11), and the Minnesota
assignable portion of the subtraction for United States government interest under section
290.01, subdivision 19b, clause (1), after applying the allocation and assignability
provisions of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), and (6), and reduced by the amounts
specified in section 290.01, subdivision 19b, clauses (1) and (11).

new text begin (f) In this subdivision, the fourth bracket termination year is the first taxable year
beginning after the commissioner of finance has determined that there will be a positive
unrestricted budgeting general fund balance at the close of the biennium that is sufficient
to complete the allocations required under section 16A.152, 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, 2004.
new text end

Sec. 5.

Minnesota Statutes 2004, section 290.06, subdivision 2d, is amended to read:

Subd. 2d.

Inflation adjustment of brackets.

(a) For taxable years beginning after
December 31, deleted text begin 2000 deleted text end new text begin 2005 new text end , the minimum and maximum dollar amounts for each rate
bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
percentage determined under paragraph (b). For the purpose of making the adjustment as
provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
rate brackets as they existed for taxable years beginning after December 31, deleted text begin 1999 deleted text end new text begin 2004 new text end ,
and before January 1, deleted text begin 2001 deleted text end new text begin 2006 new text end . The rate applicable to any rate bracket must not be
changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.

(b) The commissioner shall adjust the rate brackets and 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 " deleted text begin 1999 deleted text end new text begin 2004 new text end " shall be substituted for the word "1992." For
deleted text begin 2001 deleted text end new text begin 2006 new text end , the commissioner shall then determine the percent change from the 12 months
ending on August 31, deleted text begin 1999 deleted text end new text begin 2004 new text end , to the 12 months ending on August 31, deleted text begin 2000 deleted text end new text begin 2005 new text end , and
in each subsequent year, from the 12 months ending on August 31, deleted text begin 1999 deleted text end new text begin 2004 new text end , 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.

No later than December 15 of each year, the commissioner shall announce the
specific percentage that will be used to adjust the tax rate brackets.

Sec. 6.

Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 32. new text end

new text begin Dairy investment credit. new text end

new text begin (a) A dairy investment credit is allowed against
the tax computed under this chapter equal to the credit amount in the table, based on the
amount paid or incurred by the taxpayer in the tax year and certified by the commissioner
of agriculture under paragraph (f), for qualifying expenditures:
new text end

new text begin Amount of qualifying expenditures new text end new text begin Credit amount
new text end

new text begin up to $500,000 new text end new text begin ten percent of qualifying expenditures
new text end

new text begin over $500,000, but not new text end new text begin $50,000, plus nine percent more than $600,000 new text end new text begin of the amount
of qualified expenditures in excess of $500,000
new text end

new text begin over $600,000, but not new text end new text begin $59,000, plus seven percent more than $700,000 new text end new text begin of the
amount of qualified expenditures in excess of $600,000
new text end

new text begin over $700,000, but not new text end new text begin $66,000, plus five percent more than $800,000 new text end new text begin of the amount
of qualified expenditures in excess of $700,000
new text end

new text begin over $800,000, but not new text end new text begin $71,000, plus three percent more than $900,000 new text end new text begin of the
amount of qualified expenditures in excess of $800,000
new text end

new text begin over $900,000, but not new text end new text begin $74,000, plus one percent more than $1,000,000 new text end new text begin of the
amount of qualified expenditures in excess of $900,000
new text end

new text begin $1,000,000 or more new text end new text begin $75,000
new text end

new text begin (b) "Qualifying expenditures," for purposes of this subdivision, means the expenses
incurred for dairy animals for the construction or improvement of buildings or facilities,
or the acquisition of equipment, for dairy animal housing, confinement, animal feeding,
milk production, and waste management, including, but not limited to, the following:
new text end

new text begin (1) freestall barns;
new text end

new text begin (2) fences;
new text end

new text begin (3) watering facilities;
new text end

new text begin (4) feed storage and handling equipment;
new text end

new text begin (5) milking parlors;
new text end

new text begin (6) robotic equipment;
new text end

new text begin (7) scales;
new text end

new text begin (8) milk storage and cooling facilities;
new text end

new text begin (9) bulk tanks;
new text end

new text begin (10) manure handling equipment and storage facilities;
new text end

new text begin (11) digesters;
new text end

new text begin (12) equipment used to produce energy; and
new text end

new text begin (13) on-farm processing.
new text end

new text begin Qualifying expenditures only include amounts that are capitalized and deducted under
either section 167 or 179 of the Internal Revenue Code in computing federal taxable
income.
new text end

new text begin (c) The credit is limited to the liability for tax, as computed under this section for
the taxable year for which the credit certificate is issued. If the amount of the credit
determined under this section for any taxable year exceeds this limitation, the excess is a
dairy investment credit carryover to each of the 15 succeeding taxable years. The entire
amount of the excess unused credit for the taxable year is 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 which may be added under
this paragraph shall not exceed the taxpayer's liability for tax less the dairy investment
credit for the taxable year.
new text end

new text begin (d) For a partnership or S corporation, the maximum amount of the credit applies to
the entity, not the individual partner or shareholder.
new text end

new text begin (e) To be eligible for the dairy investment credit in this subdivision, a taxpayer must
apply to the commissioner of agriculture for a tax credit certificate. The application must
be made on forms prescribed by the commissioner of agriculture and must include a
statement of the qualifying expenditures by the taxpayer.
new text end

new text begin (f) The commissioner of agriculture shall certify credits in the order the forms
required under paragraph (e) are received and approved by the commissioner of
agriculture, until the maximum credit amount for the taxable year has been reached.
The maximum credit amount is $900,000 for tax years beginning after December 31,
2004, and before January 1, 2006; $2,000,000 for tax years beginning after December 31,
2005, and before January 1, 2007; $3,500,000 for tax years beginning after December
31, 2006, and before January 1, 2008; and $4,000,000 per year for tax years beginning
after December 31, 2007.
new text end

new text begin Any eligible applications for which certificates are not issued in a tax year because
the commissioner of agriculture has issued certificates totaling the maximum credit
amount for that tax year remain eligible for a credit certificate in subsequent tax years, in
the order in which the forms were received by the commissioner of agriculture.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assets placed in service in taxable
years beginning after December 31, 2004.
new text end

Sec. 7.

Minnesota Statutes 2004, 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 tax years beginning after
December 31, 2005.
new text end

ARTICLE 2

CORPORATE FRANCHISE TAX

Section 1.

Minnesota Statutes 2004, 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; and

(3) either (i) the average of the percentages of its property and payrolls assigned
to locations deleted text begin inside deleted text end new text begin outside new text end the United States deleted text begin and the District of Columbia, excluding the
commonwealth of Puerto Rico and possessions of the United States, deleted text end as determined under
section 290.191 or 290.20, is deleted text begin 20 deleted text end new text begin 80 new text end percent or deleted text begin less deleted text end new text begin greater and it has at least $2,000,000 of
property and $1,000,000 of payroll as determined under section 290.191 or 290.20 new text end ; or (ii)
it has in effect a valid election under section 936 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, 2004.
new text end

Sec. 2.

Minnesota Statutes 2004, 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) deleted text begin 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 end

deleted text begin (11) deleted 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 handicap 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) deleted text end new text begin (14) new text end the amount of any refund of environmental taxes paid under section 59A of
the Internal Revenue Code;

deleted text begin (16) deleted text end new text begin (15) 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 (16) 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 (17) 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 614 of Public Law 107-147; and

deleted text begin (19) 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 (16), 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 (16). The
resulting delayed depreciation cannot be less than zero.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2004.
new text end

Sec. 3.

Minnesota Statutes 2004, section 290.17, subdivision 4, is amended to read:

Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly
within this state or partly within and partly without this state is part of a unitary business,
the entire income of the unitary business is subject to apportionment pursuant to section
290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source and none may be allocated
to a particular place except as provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to business income subject to subdivision 5,
income of an insurance company, or income of an investment company determined under
section 290.36.

(b) The term "unitary business" means business activities or operations which
result in a flow of value between them. The term may be applied within a single legal
entity or between multiple entities and without regard to whether each entity is a sole
proprietorship, a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use,
evidenced by centralized management or executive force, centralized purchasing,
advertising, accounting, or other controlled interaction, but the absence of these
centralized activities will not necessarily evidence a nonunitary business. Unity is also
presumed when business activities or operations are of mutual benefit, dependent upon or
contributory to one another, either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business
entity that carries on business activity outside the state different in kind from that
conducted within this state, and the other business is conducted entirely outside the state, it
is presumed that the two business operations are unitary in nature, interrelated, connected,
and interdependent unless it can be shown to the contrary.

(e) Unity of ownership is not deemed to exist when a corporation is involved unless
that corporation is a member of a group of two or more business entities and more than 50
percent of the voting stock of each member of the group is directly or indirectly owned
by a common owner or by common owners, either corporate or noncorporate, or by one
or more of the member corporations of the group. For this purpose, the term "voting
stock" shall include membership interests of mutual insurance holding companies formed
under section 60A.077.

(f) The net income and apportionment factors under section 290.191 or 290.20 of
foreign corporations and other foreign entities which are part of a unitary business shall
not be included in the net income or the apportionment factors of the unitary business.
A foreign corporation or other foreign entity which is required to file a return under this
chapter shall file on a separate return basis. The net income and apportionment factors
under section 290.191 or 290.20 of foreign operating corporations shall not be included in
the net income or the apportionment factors of the unitary business except as provided in
paragraph (g).

(g) The adjusted net income of a foreign operating corporation shall be deemed to
be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
proportion to each shareholder's ownership, with which such corporation is engaged in
a unitary business. Such deemed dividend shall be treated as a dividend under section
290.21, subdivision 4. new text begin The dividends-received deduction must not be allowed on
dividends, interest, royalties, or capital gains received by the foreign operating corporation
included in the deemed dividend.
new text end

Dividends actually paid by a foreign operating corporation to a corporate shareholder
which is a member of the same unitary business as the foreign operating corporation shall
be eliminated from the net income of the unitary business in preparing a combined report
for the unitary business. The adjusted net income of a foreign operating corporation
shall be its net income adjusted as follows:

(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
Rico, or a United States possession or political subdivision of any of the foregoing shall
be a deduction; and

(2) the subtraction from federal taxable income for payments received from foreign
corporations or foreign operating corporations under section 290.01, subdivision 19d,
clause (10), shall not be allowed.

If a foreign operating corporation incurs a net loss, neither income nor deduction
from that corporation shall be included in determining the net income of the unitary
business.

(h) For purposes of determining the net income of a unitary business and the factors
to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
must be included only the income and apportionment factors of domestic corporations or
other domestic entities other than foreign operating corporations that are determined to
be part of the unitary business pursuant to this subdivision, notwithstanding that foreign
corporations or other foreign entities might be included in the unitary business.

(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter
that are connected with or allocable against dividends, deemed dividends described
in paragraph (g), or royalties, fees, or other like income described in section 290.01,
subdivision 19d, clause (10), shall not be disallowed.

(j) Each corporation or other entity, except a sole proprietorship, that is part of a
unitary business must file combined reports as the commissioner determines. On the
reports, all intercompany transactions between entities included pursuant to paragraph
(h) must be eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using each entity's
Minnesota factors for apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all entities included pursuant
to paragraph (h) in the denominators of the apportionment formula.

(k) If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part
of the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must
be prorated or accounted for separately.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2004.
new text end

ARTICLE 3

SALES TAX

Section 1.

Minnesota Statutes 2004, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 37. new text end

new text begin Event souvenir clothing. new text end

new text begin "Event souvenir clothing" is clothing
that is sold at a state-subsidized facility and that bears a name, image, or logo of the
entertainer, athlete, or team that performs at the facility. As used in this subdivision, a
"state-subsidized facility" means the Metrodome financed under section 473.581, the
basketball arena that receives payments from the Amateur Sports Commission under
section 473.556, subdivision 16, the hockey arena that received a loan of state funds under
Laws 1998, chapter 404, section 23, subdivision 6, and the entertainment and convention
center that received a grant under Laws 1998, chapter 404, section 23, subdivision 9.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales after June 30, 2005.
new text end

Sec. 2.

Minnesota Statutes 2004, section 297A.67, subdivision 6, is amended to read:

Subd. 6.

Other exempt meals.

new text begin (a) new text end Meals or drinks purchased for and served
exclusively to individuals who are 60 years of age or over and their spouses or to
handicapped persons and their spouses by governmental agencies, nonprofit organizations,
or churches, or pursuant to any program funded in whole or in part through United States
Code, title 42, sections 3001 through 3045, wherever delivered, prepared, or served,
are exempt.

new text begin (b) Meals or drinks purchased for and served exclusively to children who are less
than 14 years of age or disabled children who are less than 16 years of age and who are
attending a child care or early childhood education program, are exempt if they are:
new text end

new text begin (1) purchased by a nonprofit child care facility that is exempt under section 297A.70,
subdivision 4, and that primarily serves families with income of 250 percent or less of
federal poverty guidelines; and
new text end

new text begin (2) prepared at the site of the child care facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales after December 31, 1997.
new text end

Sec. 3.

Minnesota Statutes 2004, section 297A.67, subdivision 7, is amended to read:

Subd. 7.

deleted text begin medicines deleted text end new text begin drugs new text end ; medical devices.

(a) deleted text begin Prescribed deleted text end new text begin Sales of the following
drugs and medical devices are exempt:
new text end

new text begin (1) new text end drugs deleted text begin and medicine, and insulin, intended deleted text end for deleted text begin internal or external use, in the
cure, mitigation, treatment, or prevention of illness or disease in deleted text end human deleted text begin beings are
exempt. "Prescribed drugs and medicine" includes deleted text end new text begin use, including new text end over-the-counter drugs
deleted text begin or medicine prescribed by a licensed health care professional.
deleted text end

deleted text begin (b) Nonprescription medicines consisting principally (determined by the weight
of all ingredients) of analgesics that are approved by the United States Food and Drug
Administration for internal use by human beings are exempt. For purposes of this
subdivision, "principally" means greater than 50 percent analgesics by weight.
deleted text end

deleted text begin (c) Prescription glasses, hospital beds, fever thermometers, reusable deleted text end new text begin ;
new text end

new text begin (2) single-use new text end finger-pricking devices for the extraction of blood deleted text begin , blood glucose
monitoring machines, deleted text end and other new text begin single-use devices and single-use new text end diagnostic agents used
in diagnosing, monitoring, or treating diabetes deleted text begin , and therapeutic and deleted text end new text begin ;
new text end

new text begin (3) insulin and medical oxygen for human use, regardless of whether prescribed
or sold over the counter;
new text end

new text begin (4) new text end prosthetic devices deleted text begin are exempt. "Therapeutic devices" means devices that are
attached or applied to the human body to cure, heal, or alleviate injury, illness, or disease,
either directly or by administering a curative agent. "Prosthetic devices" means devices
that replace injured, diseased, or missing parts of the human body, either temporarily or
permanently deleted text end new text begin ;
new text end

new text begin (5) durable medical equipment for home use only;
new text end

new text begin (6) mobility enhancing equipment; and
new text end

new text begin (7) prescription corrective eyeglasses new text end .

new text begin (b) For purposes of this subdivision:
new text end

new text begin (1) "Drug" means a compound, substance, or preparation, and any component of
a compound, substance, or preparation, other than food and food ingredients, dietary
supplements, or alcoholic beverages that is:
new text end

new text begin (i) recognized in the official United States Pharmacopoeia, official Homeopathic
Pharmacopoeia of the United States, or official National Formulary, and supplement
to any of them;
new text end

new text begin (ii) intended for use in the diagnosis, cure, mitigation, treatment, or prevention
of disease; or
new text end

new text begin (iii) intended to affect the structure or any function of the body.
new text end

new text begin (2) "Durable medical equipment" means equipment, including repair and
replacement parts, but not including mobility enhancing equipment, that:
new text end

new text begin (i) can withstand repeated use;
new text end

new text begin (ii) is primarily and customarily used to serve a medical purpose;
new text end

new text begin (iii) generally is not useful to a person in the absence of illness or injury; and
new text end

new text begin (iv) is not worn in or on the body.
new text end

new text begin (3) "Mobility enhancing equipment" means equipment, including repair and
replacement parts, but not including durable medical equipment, that:
new text end

new text begin (i) is primarily and customarily used to provide or increase the ability to move from
one place to another and that is appropriate for use either in a home or a motor vehicle;
new text end

new text begin (ii) is not generally used by persons with normal mobility; and
new text end

new text begin (iii) does not include any motor vehicle or equipment on a motor vehicle normally
provided by a motor vehicle manufacturer.
new text end

new text begin (4) "Over-the-counter drug" means a drug that contains a label that identifies the
product as a drug as required by Code of Federal Regulations, title 21, section 201.66. The
label must include a "drug facts" panel or a statement of the active ingredients with a list of
those ingredients contained in the compound, substance, or preparation. Over-the-counter
drugs do not include grooming and hygiene products, regardless of whether they otherwise
meet the definition. "Grooming and hygiene products" are soaps, cleaning solutions,
shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and sunscreens.
new text end

new text begin (5) "Prescribed" and "prescription" means a direction in the form of an order,
formula, or recipe issued in any form of oral, written, electronic, or other means of
transmission by a duly licensed health care professional.
new text end

new text begin (6) "Prosthetic device" means a replacement, corrective, or supportive device,
including repair and replacement parts, worn on or in the body to:
new text end

new text begin (i) artificially replace a missing portion of the body;
new text end

new text begin (ii) prevent or correct physical deformity or malfunction; or
new text end

new text begin (iii) support a weak or deformed portion of the body.
new text end

new text begin Prosthetic device does not include corrective eyeglasses.
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, 2005.
new text end

Sec. 4.

Minnesota Statutes 2004, 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; deleted text begin and
deleted text end

(8) protective equipment new text begin ; and
new text end

new text begin (9) event souvenir clothing new text end .

Clothing also does not include 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.

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 after June 30, 2005.
new text end

Sec. 5.

Minnesota Statutes 2004, section 297A.67, subdivision 29, is amended to read:

Subd. 29.

new text begin solar new text end energy deleted text begin efficient deleted text end products.

deleted text begin (a) A residential lighting fixture or a
compact fluorescent bulb is exempt if it has an energy star label.
deleted text end

deleted text begin (b) The following products are exempt if they have an energyguide label that
indicates that the product meets or exceeds the standards listed below:
deleted text end

deleted text begin (1) an electric heat pump hot water heater with an energy factor of at least 1.9;
deleted text end

deleted text begin (2) a natural gas water heater with an energy factor of at least 0.62;
deleted text end

deleted text begin (3) a propane gas or fuel oil water heater with an energy factor of at least 0.62;
deleted text end

deleted text begin (4) a natural gas furnace with an annual fuel utilization efficiency greater than 92
percent; and
deleted text end

deleted text begin (5) a propane gas or fuel oil furnace with an annual fuel utilization efficiency
greater than 92 percent.
deleted text end

deleted text begin (c) deleted text end A deleted text begin photovoltaic device deleted text end new text begin solar energy system, as defined in section 216C.06,
subdivision 17, new text end is exempt. deleted text begin For purposes of this subdivision, "photovoltaic device" means
a solid-state electrical device, such as a solar module, that converts light directly into
direct current electricity of voltage-current characteristics that are a function of the
characteristics of the light source and the materials in and design of the device. A "solar
module" is a photovoltaic device that produces a specified power output under defined test
conditions, usually composed of groups of solar cells connected in series, in parallel, or
in series-parallel combinations.
deleted text end

deleted text begin (d) For purposes of this subdivision, "energy star label" means the label granted
to certain products that meet United States Environmental Protection Agency and
United States Department of Energy criteria for energy efficiency. For purposes of this
subdivision, "energyguide label" means the label that the United States Federal Trade
Commissioner requires manufacturers to apply to certain appliances under United States
Code, title 16, part 305.
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 August 1, 2005.
new text end

Sec. 6.

Minnesota Statutes 2004, section 297A.68, subdivision 28, is amended to read:

Subd. 28.

Medical supplies.

Medical supplies purchased by a licensed health care
facility or licensed health care professional to provide medical treatment to residents or
patients are exempt. The exemption does not apply to new text begin durable new text end medical equipment or
components of new text begin durable new text end medical equipment, laboratory supplies, radiological supplies, and
other items used in providing medical services. For purposes of this subdivision, "medical
supplies" means adhesive and nonadhesive bandages, gauze pads and strips, cotton
applicators, antiseptics, deleted text begin nonprescription drugs, deleted text end eye solution, and other similar supplies
used directly on the resident or patient in providing medical services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2005.
new text end

Sec. 7.

Minnesota Statutes 2004, section 297A.71, subdivision 12, is amended to read:

Subd. 12.

Chair lifts, ramps, elevators.

deleted text begin Chair lifts, ramps, and deleted text end Elevators and
building materials used to install or construct deleted text begin them deleted text end new text begin chair lifts, ramps, and elevators new text end are
exempt, if they are authorized by a physician and installed in or attached to the owner's
homestead. 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 begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2005.
new text end

Sec. 8.

Minnesota Statutes 2004, section 297A.71, is amended by adding a subdivision
to read:

new text begin Subd. 33. new text end

new text begin Hydroelectric generating facility. new text end

new text begin Materials and supplies used or
consumed in the construction of a hydroelectric generating facility that meets the
requirements of this subdivision are exempt. To qualify for the exemption under this
subdivision, a hydroelectric generating facility must:
new text end

new text begin (1) utilize two turbine generators at a dam site existing on March 31, 1994;
new text end

new text begin (2) be located on land within 1,500 feet of a 13.8 kilovolt distribution circuit; and
new text end

new text begin (3) be eligible to receive a renewable energy production incentive payment under
section 216C.41.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales made after December 31,
2004, and on or before December 31, 2007.
new text end

Sec. 9.

Laws 1993, chapter 375, article 9, section 46, subdivision 2, as amended by
Laws 1997, chapter 231, article 7, section 40, and Laws 1998, chapter 389, article 8,
section 30, and Laws 2003 First Special Session chapter 21, article 8, section 13, is
amended to read:

Subd. 2.

Use of revenues.

Revenues received from the tax authorized by
subdivision 1 may only be used by the city to pay the cost of collecting the tax, and to pay
for the following projects or to secure or pay any principal, premium, or interest on bonds
issued in accordance with subdivision 3 for the following projects.

(a) To pay all or a portion of the capital expenses of construction, equipment and
acquisition costs for the expansion and remodeling of the St. Paul Civic Center complex,
including the demolition of the existing arena and the construction and equipping of a
new arena.

(b) The remainder of the funds must be spent for:

(1) capital projects to further residential, cultural, commercial, and economic
development in both downtown St. Paul and St. Paul neighborhoods ; and

(2) capital and operating expenses of cultural organizations in the city, provided
that the amount spent under this clause must equal ten percent of the total amount spent
under this paragraph in any year.

(c) The amount apportioned under paragraph (b) shall be no less than 60 percent
of the revenues derived from the tax each year, except to the extent that a portion of that
amount is required to pay debt service on (1) bonds issued for the purposes of paragraph (a)
prior to March 1, 1998; or (2) bonds issued for the purposes of paragraph (a) after March 1,
1998, but only if the city council determines that 40 percent of the revenues derived from
the tax together with other revenues pledged to the payment of the bonds, including the
proceeds of definitive bonds, is expected to exceed the annual debt service on the bonds.

(d) If in any year more than 40 percent of the revenue derived from the tax authorized
by subdivision 1 is used to pay debt service on the bonds issued for the purposes of
paragraph (a) and to fund a reserve for the bonds, the amount of the debt service payment
that exceeds 40 percent of the revenue must be determined for that year. In any year when
40 percent of the revenue produced by the sales tax exceeds the amount required to pay
debt service on the bonds and to fund a reserve for the bonds under paragraph (a), the
amount of the excess must be made available for capital projects to further residential,
cultural, commercial, and economic development in the neighborhoods and downtown
until the cumulative amounts determined for all years under the preceding sentence have
been made available under this sentence. The amount made available as reimbursement in
the preceding sentence is not included in the 60 percent determined under paragraph (c).

new text begin (e) No revenues from the tax authorized by subdivision 1 may be used to pay
principal, premium, or interest on any bonds or other obligations except the bonds issued
under subdivision 3.
new text end

deleted text begin (e) deleted text end new text begin (f) new text end By January 15 of each odd-numbered year, the mayor and the city council
must report to the legislature on the use of sales tax revenues during the preceding
two-year period.

new text begin EFFECTIVE DATE. new text end

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

Sec. 10.

Laws 2001, First Special Session chapter 5, article 12, section 44, the effective
date, is amended to read:

new text begin EFFECTIVE DATE. new text end

This section is effective for sales and purchases made after
July 31, 2001 deleted text begin , and before August 1, 2005 deleted text end .

Sec. 11. new text begin COUNTY OF MOWER; 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 or ordinance, the county of Mower may,
by resolution, impose a sales and use tax of up to one-half 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 Use of revenues. new text end

new text begin The proceeds of the tax imposed under this section
must be solely used to pay for costs associated with a Criminal Justice Center for Mower
County. Government functions to be located in the facility for which proceeds of the tax
may be used include, but are not limited to, jail, law enforcement, dispatch, courts, court
administration, correctional services, and county attorney.
new text end

new text begin Authorized expenses include, but are not limited to, site acquisition, infrastructure,
construction, and professional fees related to the project.
new text end

new text begin Subd. 3. new text end

new text begin Bonding authority. new text end

new text begin (a) The county may issue bonds under Minnesota
Statutes, chapter 475, to finance the capital expenditures and improvements authorized by
the referendum under subdivision 4. An election to approve the bonds under Minnesota
Statutes, section 475.58, is not required.
new text end

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

new text begin Subd. 4. new text end

new text begin Referendum. new text end

new text begin If the county of Mower proposes to impose the tax
authorized by this section, the question of imposing the tax must be submitted to the voters
at either a special election held before January 1, 2006, or at the next general election.
new text end

new text begin Subd. 5. new text end

new text begin Termination of taxes. new text end

new text begin The tax imposed under this section expires when
the county board first determines that the amount of revenues raised to pay for the
Criminal Justice Center project under subdivision 2 meet or exceed approved project
costs. Any funds remaining after completion of the projects may be placed in the general
funds of the county. The county may rescind the tax imposed under this section at an
earlier time 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 county of Mower with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 12. new text begin CITY OF WORTHINGTON; 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, at the next general election, the
city of Worthington may impose by ordinance a sales and use tax of up to one-half of one
percent for the purpose 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 Worthington
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 and administering the
taxes and to pay for the costs of a multipurpose city facility to include meeting rooms,
a swimming pool, and a senior citizen center, and to make renovations to the Memorial
Auditorium. 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) If the tax authorized under subdivision 1 is
approved by the voters, 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 $7,800,000. 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, 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) ten years, or (2) when the city council determines that the
amount of revenue received from the taxes to pay for the projects under subdivision 3
equals or exceeds $7,800,000 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 shall
be placed in a capital project 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 Worthington and its chief clerical officer timely comply with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.
new text end

ARTICLE 4

PROPERTY TAX AND AIDS

Section 1.

Minnesota Statutes 2004, 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 2006.
new text end

Sec. 2.

Minnesota Statutes 2004, 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 127A.48, 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 2006.
new text end

Sec. 3.

Minnesota Statutes 2004, 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 2006.
new text end

Sec. 4.

Minnesota Statutes 2004, section 254B.02, subdivision 3, is amended to read:

Subd. 3.

Reserve account.

The commissioner shall allocate money from the
reserve account to counties that, during the current fiscal year, have met or exceeded the
base level of expenditures for eligible chemical dependency services from local money.
The commissioner shall establish the base level for fiscal year 1988 as the amount of local
money used for eligible services in calendar year 1986. In later years, the base level must
be increased in the same proportion as state appropriations to implement Laws 1986,
chapter 394, sections 8 to 20, are increased new text begin , except the base level shall not exceed 55
percent of the county allocation provided in subdivision 1 for fiscal year 2006; 50 percent
in fiscal year 2007; 45 percent in fiscal year 2008; and 40 percent in fiscal year 2009.
Thereafter the maximum base level shall decrease by five percent each year until the
maximum county match is 15 percent new text end . The base level must be decreased if the fund balance
from which allocations are made under section 254B.02, subdivision 1, is decreased in
later years. The local match rate for the reserve account is the same rate as applied to the
initial allocation. Reserve account payments must not be included when calculating the
county adjustments made according to subdivision 2. For counties providing medical
assistance or general assistance medical care through managed care plans on January 1,
1996, the base year is fiscal year 1995. For counties beginning provision of managed
care after January 1, 1996, the base year is the most recent fiscal year before enrollment
in managed care begins. For counties providing managed care, the base level will be
increased or decreased in proportion to changes in the fund balance from which allocations
are made under subdivision 2, but will be additionally increased or decreased in proportion
to the change in county adjusted population made in subdivision 1, paragraphs (b) and (c).
Effective July 1, 2001, at the end of each biennium, any funds deposited in the reserve
account funds in excess of those needed to meet obligations incurred under this section
and sections 254B.06 and 254B.09 shall cancel to the general fund.

Sec. 5.

Minnesota Statutes 2004, section 272.02, subdivision 53, is amended to read:

Subd. 53.

Electric generation facility; personal property.

Notwithstanding
subdivision 9, clause (a), attached machinery and other personal property which is part
of a 3.2 megawatt run-of-the-river hydroelectric generation facility and that meets the
requirements of this subdivision is exempt. At the time of construction, the facility must:

(1) utilize two turbine generators at a dam site existing on March 31, 1994;

(2) be located on deleted text begin publicly owned deleted text end land deleted text begin and deleted text end within 1,500 feet of a 13.8 kilovolt
distribution substation; and

(3) be eligible to receive a renewable energy production incentive payment under
section 216C.41.

Construction of the facility must be commenced after deleted text begin January 1, 2002 deleted text end new text begin December
31, 2004 new text end , and before January 1, deleted text begin 2005 deleted text end new text begin 2007 new text end . 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 begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2005, payable
in 2006, and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 68. 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
either a simple-cycle, combustion-turbine electric generation facility, or a combined-cycle,
combustion-turbine electric generation facility that does not exceed 325 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 either a simple-cycle or a combined-cycle combustion-turbine generator
fueled by natural gas;
new text end

new text begin (2) be connected to an existing 115-kilovolt high-voltage electric transmission line
that is within two miles of the facility;
new text end

new text begin (3) be located on an underground natural gas storage aquifer;
new text end

new text begin (4) be designed as either a peaking or intermediate load facility; and
new text end

new text begin (5) have received, by resolution, the approval from the governing body of the county
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, 2006, and
before January 1, 2008. 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 assessment year 2005, taxes
payable in 2006, and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2004, section 272.0211, subdivision 1, is amended to read:

Subdivision 1.

Efficiency determination and certification.

An owner or operator
of a new or existing electric power generation facility, excluding wind energy conversion
systems, may apply to the commissioner of revenue for a market value exclusion on the
property as provided for in this section. This exclusion shall apply only to the market
value of the equipment of the facility, and shall not apply to the structures and the land
upon which the facility is located. The commissioner of revenue shall prescribe the forms
and procedures for this application. Upon receiving the application, the commissioner
of revenue shall request the commissioner of commerce to make a determination of the
efficiency of the applicant's electric power generation facility. deleted text begin In calculating the efficiency
of a facility, deleted text end The commissioner of commerce shall deleted text begin use a definition of deleted text end new text begin calculate new text end efficiency
deleted text begin which calculates efficiency as the sum of:
deleted text end

deleted text begin (1) the useful electrical power output; plus
deleted text end

deleted text begin (2) the useful thermal energy output; plus
deleted text end

deleted text begin (3) the fuel energy of the useful chemical products,
deleted text end

deleted text begin all divided by the total energy input to the facility, expressed as a percentage deleted text end new text begin as the
ratio of useful energy outputs to energy inputs, expressed as a percentage, based on
the performance of the facility's equipment during normal full load operation new text end . The
commissioner must include in this formula the energy used in any on-site preparation of
materials necessary to convert the materials into the fuel used to generate electricity,
such as a process to gasify petroleum coke. The commissioner shall use the deleted text begin high heating
value deleted text end new text begin Higher Heating Value (HHV) new text end for all substances in the commissioner's efficiency
calculations, except for wood for fuel in a biomass-eligible project under section
216B.2424; for these instances, the commissioner shall adjust the heating value to allow
for energy consumed for evaporation of the moisture in the wood. The applicant shall
provide the commissioner of commerce with whatever information the commissioner
deems necessary to make the determination. Within 30 days of the receipt of the necessary
information, the commissioner of commerce shall certify the findings of the efficiency
determination to the commissioner of revenue and to the applicant. deleted text begin The commissioner
of commerce shall determine the efficiency of the facility and certify the findings of
that determination to the commissioner of revenue every two years thereafter from the
date of the original certification.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2005 and
thereafter, for taxes payable in 2006 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2004, section 272.0211, subdivision 2, is amended to read:

Subd. 2.

Sliding scale exclusion.

Based upon the efficiency determination provided
by the commissioner of commerce as described in subdivision 1, the commissioner of
revenue shall subtract deleted text begin five deleted text end new text begin eight new text end percent of the taxable market value of the qualifying
property for each percentage point that the efficiency of the specific facility, as determined
by the commissioner of commerce, is above deleted text begin 35 deleted text end new text begin 40 new text end percent. The reduction in taxable
market value shall be reflected in the taxable market value of the facility beginning
with the assessment year immediately following the determination. For a facility that is
assessed by the county in which the facility is located, the commissioner of revenue
shall certify to the assessor of that county the percentage of the taxable market value of
the facility to be excluded.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2005 and
thereafter, for taxes payable in 2006 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2004, 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,
or noncommercial seasonal residential recreational, the assessor shall compare the value
with the taxable portion of the value determined in the preceding assessment.

For assessment year 2002, the amount of the increase shall not exceed the greater of
(1) ten percent of the value in the preceding assessment, or (2) 15 percent of the difference
between the current assessment and the preceding assessment.

For assessment year 2003, the amount of the increase shall not exceed the greater of
(1) 12 percent of the value in the preceding assessment, or (2) 20 percent of the difference
between the current assessment and the preceding assessment.

For assessment year 2004, 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.

For assessment year 2005, 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 2006, 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 2006
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 the day following final enactment for
computing taxes payable in 2006.
new text end

Sec. 10.

Minnesota Statutes 2004, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

new text begin (a) new text end The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levy base amount is $592,000,000 for taxes payable in
2002. For taxes payable in subsequent years new text begin on seasonal residential recreational property new text end ,
the levy base amount is increased each year by multiplying the levy base amount for new text begin that
class of property for new text end 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. new text begin For taxes payable in 2006 and subsequent years
on commercial-industrial property, the tax is imposed under this subdivision at the rate
of the tax imposed under this subdivision for taxes payable in 2002. new 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.

new text begin (b) Beginning with taxes payable in 2008, and in each year thereafter, the
commissioner of finance shall deposit in the education reserve account established in 2005
S.F. No. 1683, article 4, section 73, if enacted, the increased amount of the state general
levy for that year over the state general levy base amount for taxes payable in 2002.
new text end

new text begin (c) new text end 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:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(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 275.29 that was not reported on the abstracts of assessment submitted under
section 270.11, subdivision 2, for the same year.

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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2006 and
subsequent years.
new text end

Sec. 11.

Minnesota Statutes 2004, 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.

(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 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.

new text begin (j) The governing body of a county, city, or school district may, with the consent
of the county auditor, 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:
new text end

new text begin (1) the impact of inflation as measured by the implicit price deflator for state and
local government purchases;
new text end

new text begin (2) population growth and decline;
new text end

new text begin (3) state or federal government action; and
new text end

new text begin (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.
new text end

new text begin 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 end

Sec. 12.

Minnesota Statutes 2004, section 469.033, subdivision 6, is amended to read:

Subd. 6.

Operation area as taxing district, special tax.

All of the territory
included within the area of operation of any authority shall constitute a taxing district for
the purpose of levying and collecting special benefit taxes as provided in this subdivision.
All of the taxable property, both real and personal, within that taxing district shall be
deemed to be benefited by projects to the extent of the special taxes levied under this
subdivision. Subject to the consent by resolution of the governing body of the city in and
for which it was created, an authority may levy a tax upon all taxable property within that
taxing district. The tax shall be extended, spread, and included with and as a part of
the general taxes for state, county, and municipal purposes by the county auditor, to be
collected and enforced therewith, together with the penalty, interest, and costs. As the tax,
including any penalties, interest, and costs, is collected by the county treasurer it shall be
accumulated and kept in a separate fund to be known as the "housing and redevelopment
project fund." The money in the fund shall be turned over to the authority at the same time
and in the same manner that the tax collections for the city are turned over to the city, and
shall be expended only for the purposes of sections 469.001 to 469.047. It shall be paid
out upon vouchers signed by the chair of the authority or an authorized representative.
The amount of the levy shall be an amount approved by the governing body of the city,
but shall not exceed 0.0144 percent of taxable market value new text begin for the current levy year,
notwithstanding section 273.032 new text end . The authority shall each year formulate and file a budget
in accordance with the budget procedure of the city in the same manner as required of
executive departments of the city or, if no budgets are required to be filed, by August 1.
The amount of the tax levy for the following year shall be based on that budget.

Sec. 13.

Minnesota Statutes 2004, section 473F.08, subdivision 3a, is amended to read:

Subd. 3a.

Bloomington computation.

Beginning in 1987 and each subsequent year
through 1998, the city of Bloomington shall determine the interest payments for that year
for the bonds which have been sold for the highway improvements pursuant to Laws
1986, chapter 391, section 2, paragraph (g). Effective for property taxes payable in 1988
through property taxes payable in 1999, 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 to the auditor
by the city of Bloomington for the interest payments for that year for the bonds which
were sold for highway improvements. The total areawide portion of the levy for the city
of Bloomington including the additional amount for interest repayment 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. For property taxes payable from the year deleted text begin 2006 deleted text end new text begin 2014 new text end through deleted text begin 2015 deleted text end new text begin 2023 new text end ,
the Hennepin County auditor shall adjust Bloomington's contribution to the areawide
gross tax capacity upward each year by a value equal to ten percent of the total additional
areawide levy distributed to Bloomington under this subdivision from 1988 to 1999,
divided by the areawide tax rate for taxes payable in the previous 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. 14.

Minnesota Statutes 2004, section 477A.011, subdivision 34, is amended to
read:

Subd. 34.

City revenue need.

(a) For a city with a population equal to or greater
than 2,500, "city revenue need" is the sum of (1) 5.0734098 times the pre-1940 housing
percentage; plus (2) 19.141678 times the population decline percentage; plus (3)
2504.06334 times the road accidents factor; plus (4) 355.0547; minus (5) the metropolitan
area factor; minus (6) 49.10638 times the household size.

(b) For a city with a population less than 2,500, "city revenue need" is the sum of
(1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times the commercial
industrial percentage; plus (3) 3.16042 times the population decline percentage; plus (4)
1.206 times the transformed population; minus (5) 62.772.

(c) The city revenue need cannot be less than zero.

(d) For calendar year 2005 and subsequent years, the city revenue need for a city, as
determined in paragraphs (a) to (c), is multiplied by the ratio of the deleted text begin annual deleted text end new text begin most recently
available first quarter new text end implicit price deflator for government consumption expenditures
and gross investment for state and local governments as prepared by the United States
Department of Commerce, deleted text begin for the most recently available year deleted text end to the deleted text begin 2003 deleted text end new text begin first quarter
2002 new text end implicit price deflator for state and local government purchases.

new text begin (e) For a city with a population of 2,500 or more and a population in one of the most
recently available five years that was less than 2,500, "city revenue need" is the sum of (1)
its city revenue need calculated under paragraph (a) multiplied by its transition factor;
plus (2) its city revenue need calculated under the formula in paragraph (b) multiplied
by the difference between one and its transition factor. For purposes of this paragraph, a
city's "transition factor" is equal to 0.2 multiplied by the number of years that the city's
population estimate has been 2,500 or more. This provision only applies for aids payable
in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500. It
applies to any city for aids payable in 2009 and thereafter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2006 and
thereafter.
new text end

Sec. 15.

Minnesota Statutes 2004, section 477A.011, subdivision 36, as amended by
Laws 2005, chapter 38, section 1, is amended to read:

Subd. 36.

City aid base.

(a) Except as otherwise provided in this subdivision,
"city aid base" is zero.

(b) 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 477A.013, subdivision 9, paragraph (c), is also
increased by $40,000 for aids payable in calendar year 1995 only, provided that:

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

(ii) the city portion of the tax capacity rate exceeds 100 percent; and

(iii) its city aid base is less than $60 per capita.

(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 477A.013, subdivision 9,
paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:

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

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

(iii) the city's net tax capacity used in calculating its 1996 aid under section
477A.013 is less than $400 per capita; and

(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.

(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 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:

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

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

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

(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 477A.013, subdivision 9,
paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:

(i) the city had a population in 1996 of at least 50,000;

(ii) its population had increased by at least 40 percent in the ten-year period ending
in 1996; and

(iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.

(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 477A.013,
subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only,
provided that:

(1) the city has a population that is greater than 1,000 and less than 2,500;

(2) its commercial and industrial percentage for aids payable in 1999 is greater
than 45 percent; and

(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.

(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 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:

(1) the city had a population in 1997 of 2,500 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section
477A.013 is less than $650 per capita;

(3) the pre-1940 housing percentage of the city used in calculating 1999 aid under
section 477A.013 is greater than 12 percent;

(4) the 1999 local government aid of the city under section 477A.013 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

(5) the city aid base of the city used in calculating aid under section 477A.013
is less than $7 per capita.

(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 477A.013, subdivision 9,
paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:

(1) the city has a population in 1997 of 2,000 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section
477A.013 is less than $455 per capita;

(3) the net levy of the city used in calculating 1999 aid under section 477A.013 is
greater than $195 per capita; and

(4) the 1999 local government aid of the city under section 477A.013 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.

(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 477A.013, subdivision 9,
paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:

(1) the city has a population in 1998 that is greater than 200 but less than 500;

(2) the city's revenue need used in calculating aids payable in 2000 was greater
than $200 per capita;

(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;

(4) the city aid base of the city used in calculating aid under section 477A.013
is less than $65 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

(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 477A.013, subdivision 9,
paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:

(1) the city had a population in 1998 that is greater than 200 but less than 500;

(2) the city's commercial industrial percentage used in calculating aids payable in
2000 was less than ten percent;

(3) more than 25 percent of the city's population was 60 years old or older according
to the 1990 census;

(4) the city aid base of the city used in calculating aid under section 477A.013
is less than $15 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

(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 477A.013, subdivision 9, paragraph (c), is also
increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002
only, provided that:

(1) the net tax capacity of the city used in calculating its 2000 aid under section
477A.013 is less than $810 per capita;

(2) the population of the city declined more than two percent between 1988 and 1998;

(3) the net levy of the city used in calculating 2000 aid under section 477A.013 is
greater than $240 per capita; and

(4) the city received less than $36 per capita in aid under section 477A.013,
subdivision 9, for aids payable in 2000.

new text begin The city aid base for a city described in this paragraph is also increased by $250,000 in
calendar year 2006 and the maximum amount of total aid it may receive under section
477A.013, subdivision 9, paragraph (c), is also increased by $250,000 in calendar year
2006 only.
new text end

(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 477A.013, subdivision 9,
paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to
the lesser of:

(1)(i) the total population of the city, deleted text begin as determined by the United States Bureau of
the Census, in the 2000 census, deleted text end (ii) minus 5,000, (iii) times 60; or

(2) $2,500,000.

(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 477A.013, subdivision 9,
paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:

(1) the city is located in the seven-county metropolitan area;

(2) its population in 2000 is between 10,000 and 20,000; and

(3) its commercial industrial percentage, as calculated for city aid payable in 2001,
was greater than 25 percent.

(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 477A.013,
subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2002 only,
provided that:

(1) the city had a population of at least 3,000 but no more than 4,000 in 1999;

(2) its home county is located within the seven-county metropolitan area;

(3) its pre-1940 housing percentage is less than 15 percent; and

(4) its city net tax capacity per capita for taxes payable in 2000 is less than $900
per capita.

(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 477A.013,
subdivision 9, 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.

(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 477A.013, subdivision 9, is
also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear
dry cask storage facility.

(q) 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.

new text begin (r) The city aid base for a city is increased by $25,000 in 2006 only and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $25,000 in 2006 only, if the city (1) received no aid under section 477A.013 in 2004;
(2) had a population in 2002 greater than 20,000 and less than 50,000; and (3) had an
adjusted net tax capacity of less than $750 per capita for aids payable in 2004.
new text end

new text begin (s) The city aid base for a city is increased by $500,000 in calendar year 2006 and
thereafter, and the maximum amount of total aid the city may receive under section
477A.013, subdivision 9, paragraph (c), is also increased by $500,000 in calendar year
2006 only, provided that:
new text end

new text begin (1) the city is located outside of the seven-county metropolitan area;
new text end

new text begin (2) the city's 2000 population is between 10,000 and 20,000;
new text end

new text begin (3) the net levy of the city used in calculating 2005 aid under section 477A.013 is
greater than $350 per capita; and
new text end

new text begin (4) the city's commercial industrial percentage under subdivision 32, for aids
payable in 2005, was at least 20 percent.
new text end

new text begin (t) The city aid base for a city is increased by $25,000 in 2006 only and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $25,000 in calendar year 2006 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.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with aids payable in 2006,
except that the striking of paragraph (f) is effective beginning with aids payable in 2004.
new text end

Sec. 16.

Minnesota Statutes 2004, section 477A.0124, subdivision 4, is amended to
read:

Subd. 4.

County tax-base equalization aid.

(a) For deleted text begin 2005 deleted text end new text begin 2006 new text end and subsequent
years, the money appropriated to county tax-base equalization aid each calendar year new text begin , after
the payment under paragraph (f), new text end 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)
$185 times the county's population, exceeds (ii) 9.45 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.

new text begin (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).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2006 and
thereafter.
new text end

Sec. 17.

Minnesota Statutes 2004, section 477A.013, subdivision 8, is amended to read:

Subd. 8.

City formula aid.

In calendar year 2004 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) deleted text begin the sum of deleted text end the city's net
tax capacity multiplied by the tax effort rate deleted text begin , and the taconite aids under sections 298.28
and 298.282, 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 .

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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2006 and
thereafter.
new text end

Sec. 18.

Minnesota Statutes 2004, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year 2002 and thereafter, each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base.

(b) deleted text begin The aid for a city in calendar year 2004 shall not exceed the amount of its aid in
calendar year 2003 after the reductions under Laws 2003, First Special Session chapter 21,
article 5.
deleted text end

deleted text begin (c) deleted text end For aids payable in 2005 and thereafter, the total aid for any city shall not exceed
the sum of (1) deleted text begin ten deleted text end new text begin 50 new text end percent of the city's net levy for the year prior to the aid distribution
plus (2) its total aid in the previous year. For aids payable in 2005 and thereafter, the total
aid for any city with a population of 2,500 or more may not decrease from its total aid
under this section in the previous year by an amount greater than ten percent of its net
levy in the year prior to the aid distribution.

deleted text begin (d) deleted text end new text begin (c) new text end 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 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.

new text begin (d) For aids payable in 2006 only, the total aid for a city with a population less than
1,000 must not be less than 105 percent of the amount it was certified to receive in 2005.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2006 and
thereafter.
new text end

Sec. 19.

new text begin [477A.0133] COUNTY CRIMINAL JUSTICE AID.
new text end

new text begin Subdivision 1. new text end

new text begin Purpose. new text end

new text begin County criminal justice aid is provided for the sole
purpose of reducing the reliance of county criminal justice and corrections programs and
associated costs on local property taxes.
new text end

new text begin County criminal justice aids must be used to pay expenses associated with criminal
justice activities, specifically probation and supervised release caseload reductions,
chemical dependency treatment, mental health programs, and assistance to crime victims.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the following definitions
apply:
new text end

new text begin (1) "population" means the population according to the most recent federal census,
or according to the state demographer's most recent estimate if it has been issued
subsequent to the most recent federal census; and
new text end

new text begin (2) "Part I crimes" means the three-year average annual number of Part I crimes
reported for each county by the Department of Public Safety for the most recent years
available. By July 1 of each year, the commissioner of public safety shall certify to the
commissioner of revenue the number of Part I crimes reported for each county for the
three most recent calendar years available.
new text end

new text begin Subd. 3. new text end

new text begin Formula. new text end

new text begin Each calendar year, the commissioner of revenue shall distribute
county criminal justice aid to each county in an amount determined according to the
following formula:
new text end

new text begin (1) one-half shall be distributed to each county in the same proportion that the
county's population is to the population of all counties in the state; and
new text end

new text begin (2) one-half shall be distributed to each county in the same proportion that the
county's Part I crimes are to the total Part I crimes for all counties in the state.
new text end

new text begin Subd. 4. new text end

new text begin Payment dates. new text end

new text begin The aid amounts for each calendar year shall be paid
as provided in section 477A.015.
new text end

new text begin Subd. 5. new text end

new text begin Report. new text end

new text begin By March 15 of each year following the year in which criminal
justice aids are received, each county must file a report with the commissioner of revenue
describing how criminal justice aids were spent, and demonstrating that they were used
for criminal justice purposes.
new text end

new text begin Subd. 6. new text end

new text begin Annual appropriation. new text end

new text begin Aid payments to counties under this section are
limited to $15,000,000 in 2006 and 2007 only.
new text end

Sec. 20.

Minnesota Statutes 2004, 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. deleted text end For aids payable in deleted text begin 2005 and
thereafter deleted text end new text begin 2006 new text end , the total aids paid under section 477A.013, subdivision 9, are increased
to deleted text begin $437,052,000 deleted text end new text begin $523,052,000. For aids payable in 2007 and subsequent years, the total
aids paid under section 477A.013, subdivision 9, are increased by one plus the percentage
increase in the implicit price deflator for government consumption expenditures and gross
investment for state and local governments prepared by the Bureau of Economic Analysis
of the United States Department of Commerce for the 12-month period ending March 31
of the previous year. The percentage increase used in this subdivision shall be no less than
2.5 percent and no greater than 5.0 percent. The total aids paid under section 477A.013,
subdivision 9, shall not exceed the amount required for the need increase percentage to
equal one. It is the intention of the legislature that the increased aid provided to cities
be used to pay for public safety functions.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2006 and
thereafter.
new text end

Sec. 21.

Minnesota Statutes 2004, section 477A.03, subdivision 2b, is amended to read:

Subd. 2b.

Counties.

(a) For aids payable in calendar year 2005 and thereafter,
the total aids paid to counties under section 477A.0124, subdivision 3, are limited to
$100,500,000. 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 and deleted text begin thereafter deleted text end new text begin 2006 new text end , the total aids under section
477A.0124, subdivision 4, are limited to $105,000,000. new text begin For aids payable in 2007
and thereafter, the total aid under section 477A.0124, subdivision 4, is limited to
$105,132,923. 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2007 and
thereafter.
new text end

Sec. 22.

Laws 1994, chapter 587, article 9, section 8, subdivision 1, is amended to read:

Subdivision 1.

Tax levies.

Notwithstanding Minnesota Statutes, section 471.24,
each of the following cities or towns is authorized to levy a tax and make an appropriation
not to exceed deleted text begin $15,000 deleted text end new text begin $25,000 new text end annually to the Lakeview Cemetery Association, operated
by the town of Iron Range, for cemetery purposes: the city of Coleraine, the city of Bovey,
and each town which is a member of the cemetery association.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2005, payable
in 2006, and thereafter.
new text end

Sec. 23. 2005 S.F. No. 467, section 1, the effective date, if enacted, is amended to
read:

new text begin EFFECTIVE DATE. new text end

This section is effective for taxes levied in deleted text begin 2005 deleted text end new text begin 2004 new text end ,
payable in deleted text begin 2006 deleted text end new text begin 2005 new text end , and thereafter.

Sec. 24. new text begin COURT AID ADJUSTMENT.
new text end

new text begin For aids payable in 2005 only, the amount of court aid paid to Anoka County under
Minnesota Statutes, section 273.1398, subdivision 4, is increased by $36,630 for aids
payable in 2005 only and the amount paid to Washington County under Minnesota Statutes,
section 273.1398, subdivision 4, is increased by $29,832 for aids payable in 2005 only.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2005 only.
new text end

Sec. 25. new text begin SUPREME COURT BUDGET.
new text end

new text begin The district courts general fund appropriation is reduced by $66,462 in fiscal year
2006 and $132,923 beginning in fiscal year 2007 to fund the amount transferred to
county tax base equalization aid to fund the payments under Minnesota Statutes, section
477A.0124, subdivision 4, paragraph (f), and section 20.
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 CROW WING COUNTY SEWER DISTRICT; PILOT PROJECT.
new text end

new text begin Subdivision 1. new text end

new text begin Powers. new text end

new text begin In addition to the powers granted in Minnesota Statutes,
chapter 116A, the county board for Crow Wing County, by resolution, may grant the
following powers to a sewer district created by the county board under Minnesota
Statutes, chapter 116A:
new text end

new text begin (1) provide that an authorized representative of the district, after presentation of
credentials, may enter at reasonable times any premise to inspect or maintain an individual
sewage treatment system, as defined in Minnesota Statutes, section 115.55, subdivision 1,
paragraph (g);
new text end

new text begin (2) include areas of the county within the sewer district that are not contiguous and
establish different systems for wastewater treatment in specific areas of the county;
new text end

new text begin (3) provide that each special service area that is managed by the sewer system or
combination thereof constitutes a system under Minnesota Statutes, chapter 116A;
new text end

new text begin (4) delegate to the sewer district, by resolution, all or a portion of its administrative
and enforcement obligations with respect to individual sewage treatment systems under
Minnesota Statutes, chapter 115, and rules adopted by the Pollution Control Agency;
new text end

new text begin (5) modify any individual sewage treatment system to provide reasonable access
to it for inspection and maintenance; and
new text end

new text begin (6) neither the approval nor the waiver of the county board, nor confirmation by
order of the district court, shall be required for the sewer commission to exercise the
powers set forth in Minnesota Statutes, section 116A.24.
new text end

new text begin Subd. 2. new text end

new text begin Report. new text end

new text begin If the Crow Wing County Board exercises the additional powers
granted under subdivision 1, the county shall provide a report by January 15, 2009, to the
senate and house committees with jurisdiction over environmental policy and taxes on the
establishment and operation of the sewer district. The report must include:
new text end

new text begin (1) a description of the implementation of the additional powers granted under
subdivision 1;
new text end

new text begin (2) available information on the effectiveness of the additional powers to control
pollution in the county; and
new text end

new text begin (3) any recommendations for changes to Minnesota Statutes, chapter 116A, to
broaden the authority for sewer districts to include any of the additional powers granted
under subdivision 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following compliance with
Minnesota Statutes, section 645.021, subdivision 2.
new text end

Sec. 27. new text begin DEVELOPMENT AUTHORIZED.
new text end

new text begin Dakota County Regional Railroad Authority may exercise the powers conferred
by Minnesota Statutes, section 398A.04, to plan, establish, acquire, develop, construct,
purchase, enlarge, extend, improve, maintain, equip, operate, regulate, and protect a bus
rapid transit system located within the Cedar Avenue transitway corridor within Dakota
County. The authority may levy for this purpose under Minnesota Statutes, section
398A.04, subdivision 8, to the extent the levy authority under that subdivision is not
required to be used for that levy year for railroad purposes.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Pursuant to Minnesota Statutes, section 645.023, subdivision
1, paragraph (a), this section is effective without local approval the day following final
enactment.
new text end

Sec. 28. new text begin CITY OF WHITE BEAR LAKE.
new text end

new text begin Subdivision 1. new text end

new text begin Payment required. new text end

new text begin The commissioner of revenue must make
payments of $52,482 on each of July 20, 2005, and December 26, 2005, to the city of
White Bear Lake.
new text end

new text begin Subd. 2. new text end

new text begin Appropriation. new text end

new text begin $104,964 is appropriated from the general fund to the
commissioner of revenue to make the payments required in this section.
new text end

Sec. 29. new text begin APPROPRIATION.
new text end

new text begin $1,287,000 in fiscal year 2006 and $1,933,000 in fiscal year 2007 is appropriated
from the general fund to the commissioner of human services for the consolidated
chemical dependency treatment fund.
new text end

ARTICLE 5

INTERNATIONAL ECONOMIC DEVELOPMENT ZONE

Section 1.

Minnesota Statutes 2004, section 272.02, is amended by adding a
subdivision to read:

new text begin Subd. 69. new text end

new text begin International economic development zone property. new text end

new text begin (a) Improvements
to real property, and personal property, classified under section 273.13, subdivision 24,
and located within an international economic development zone designated under section
469.322, are exempt from ad valorem taxes levied under chapter 275, if the occupant of
the property is a qualified business, as defined in section 469.321.
new text end

new text begin (b) The exemption applies beginning for the first assessment year after designation of
the international economic development zone. The exemption applies to each assessment
year that begins during the duration of the international economic development zone
and to property occupied by July 1 of the assessment year by a qualified business. This
exemption does not apply to:
new text end

new text begin (1) the levy under section 475.61 or similar levy provisions under any other law to
pay general obligation bonds; or
new text end

new text begin (2) a levy under section 126C.17, if the levy was approved by the voters before the
designation of the zone.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning for property taxes assessed
in 2006, payable in 2007.
new text end

Sec. 2.

Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 33. new text end

new text begin International economic development zone job credit. new text end

new text begin A taxpayer that
is a qualified business, as defined in section 469.321, subdivision 6, is allowed a credit as
determined under section 469.327 against the tax imposed by this chapter.
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, 2005.
new text end

Sec. 3.

Minnesota Statutes 2004, section 297A.68, is amended by adding a subdivision
to read:

new text begin Subd. 40. new text end

new text begin International economic development zones. new text end

new text begin (a) Purchases of tangible
personal property or taxable services by a qualified business, as defined in section 469.321,
are exempt if the property or services are primarily used or consumed in an international
economic development zone designated under section 469.322.
new text end

new text begin (b) Purchase and use of construction materials and supplies for construction of
improvements to real property in an international economic development zone are exempt
if the improvements after completion of construction are to be used in the conduct of a
qualified business, as defined in section 469.321. This exemption applies regardless of
whether the purchases are made by the business or a contractor.
new text end

new text begin (c) The exemptions under this subdivision apply to a local sales and use tax,
regardless of whether the local tax is imposed on sales taxable under this chapter or in
another law, ordinance, or charter provision.
new text end

new text begin (d) This subdivision applies to sales, if the purchase was made and delivery received
during the period provided under section 469.324, subdivision 2.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales made after December 31,
2005.
new text end

Sec. 4.

new text begin [469.321] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of sections 469.321 to 469.326, the following
terms have the meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Foreign trade zone. new text end

new text begin "Foreign trade zone" means a foreign trade zone
designated pursuant to United States Code, title 19, section 81b, for the right to use
the powers provided in United States Code, title 19, sections 81a to 81u, or a subzone
authorized by the foreign trade zone.
new text end

new text begin Subd. 3. new text end

new text begin Foreign trade zone authority. new text end

new text begin "Foreign trade zone authority" means
the Greater Metropolitan Foreign Trade Zone Commission number 119, a joint powers
authority created by the county of Hennepin, the cities of Minneapolis and Bloomington,
and the Metropolitan Airports Commission, under the authority of section 469.059,
469.101, or 471.59, which includes any other political subdivisions that enter into the
authority after its creation.
new text end

new text begin Subd. 4. new text end

new text begin International economic development zone. new text end

new text begin An "international economic
development zone" or "zone" is a zone so designated under section 469.322.
new text end

new text begin Subd. 5. new text end

new text begin Person. new text end

new text begin "Person" includes an individual, corporation, partnership, limited
liability company, association, or any other entity.
new text end

new text begin Subd. 6. new text end

new text begin Qualified business. new text end

new text begin (a) "Qualified business" means a person carrying
on a trade or business at a place of business located within an international economic
development zone that is:
new text end

new text begin (1) engaged in the furtherance of international export or import of goods; and
new text end

new text begin (2) certified by the foreign trade zone authority as a trade or business that furthers
the purpose of developing international distribution capacity and capability.
new text end

new text begin (b) A person that relocates a trade or business from within Minnesota but outside an
international economic development zone into an international economic development
zone is not a qualified business, unless the business:
new text end

new text begin (1)(i) increases full-time employment in the first full year of operation within the
international economic development zone by at least 20 percent measured relative to the
operations that were relocated and maintains the required level of employment for each
year that tax incentives under section 469.324 are claimed; or
new text end

new text begin (ii) makes a capital investment in the property located within a zone equal to at least
ten percent of the gross revenues of the operations that were relocated in the immediately
proceeding taxable year; and
new text end

new text begin (2) enters a binding written agreement with the foreign trade zone authority that:
new text end

new text begin (i) pledges that the business will meet the requirements of clause (1);
new text end

new text begin (ii) provides for repayment of all tax benefits enumerated under section 469.324 to
the business under the procedures in section 469.328, if the requirements of clause (1) are
not met for the taxable year or for taxes payable during a year in which the requirements
were not met; and
new text end

new text begin (iii) contains any other terms the foreign trade zone authority determines appropriate.
new text end

new text begin Clause (1) of this paragraph does not apply to a freight forwarder.
new text end

new text begin (c) A qualified business must pay each employee total compensation, including
benefits not mandated by law, that on an annualized basis is equal to at least 110 percent of
the federal poverty guidelines for a family of four.
new text end

new text begin Subd. 7. new text end

new text begin Regional distribution center. new text end

new text begin A "regional distribution center" is a
distribution center developed within a foreign trade zone. The regional distribution center
must have as its primary purpose to facilitate gathering of freight for the purpose of
centralizing the functions necessary for the shipment of freight in international commerce,
including, but not limited to, security and customs functions.
new text end

new text begin Subd. 8. new text end

new text begin Relocate. new text end

new text begin (a) "Relocate" means that a trade or business:
new text end

new text begin (1) ceases one or more operations or functions at another location in Minnesota
and begins performing substantially the same operations or functions at a location in an
international economic development zone; or
new text end

new text begin (2) reduces employment at another location in Minnesota during a period starting
one year before and ending one year after it begins operations in an international economic
development zone and its employees in the international economic development zone are
engaged in the same line of business as the employees at the location where it reduced
employment.
new text end

new text begin (b) "Relocate" does not include an expansion by a business that establishes a new
facility that does not replace or supplant an existing operation or employment, in whole
or in part.
new text end

new text begin (c) "Trade or business" includes any business entity that is substantially similar in
operation or ownership to the business entity seeking to be a qualified business under
this section.
new text end

new text begin Subd. 9. new text end

new text begin Freight forwarder. new text end

new text begin "Freight forwarder" is a business that, for
compensation, ensures that goods produced or sold by another business move from point
of origin to point of destination.
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.

new text begin [469.322] DESIGNATION OF INTERNATIONAL ECONOMIC
DEVELOPMENT ZONE.
new text end

new text begin (a) An area designated as a foreign trade zone may be designated by the foreign
trade zone authority as an international economic development zone if within the zone
a regional distribution center is being developed pursuant to section 469.323. The zone
must be not less than 500 acres and not more than 1,000 acres in size.
new text end

new text begin (b) In making the designation, the foreign trade zone authority, in consultation with
the Minnesota Department of Transportation and the Metropolitan Council, shall consider
access to major transportation routes, consistency with current state transportation and
air cargo planning, adequacy of the size of the site, access to airport facilities, present
and future capacity at the designated airport, the capability to meet integrated present
and future air cargo, security, and inspection services, and access to other infrastructure
and financial incentives. The border of the international economic development zone
must be no more than 60 miles distant or 90 minutes drive time from the border of the
Minneapolis-St. Paul International Airport. The county in which the zone is located must
be a member of the foreign trade zone authority.
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. 6.

new text begin [469.323] FOREIGN TRADE ZONE AUTHORITY POWERS.
new text end

new text begin Subdivision 1. new text end

new text begin Development of regional distribution center. new text end

new text begin The foreign trade
zone authority is responsible for creating a development plan for the regional distribution
center. The regional distribution center must be developed with the purpose of expanding,
on a regional basis, international distribution capacity and capability. The foreign trade
zone authority shall consult with municipalities that have indicated to the authority an
interest in locating the international economic development zone within their boundaries
and a willingness to establish a tax increment financing district coterminous with
the boundaries of the zone, as well as interested businesses, potential financiers, and
appropriate state and federal agencies.
new text end

new text begin Subd. 2. new text end

new text begin Business plan. new text end

new text begin Before designation of an international economic
development zone under section 469.322, the governing body of the foreign trade zone
authority shall prepare a business plan. The plan must include an analysis of the economic
feasibility of the regional distribution center once it becomes operational and of the
operations of freight forwarders and other businesses that choose to locate within the
boundaries of the zone. The analysis must provide profitability models that:
new text end

new text begin (1) include the benefits of the incentives;
new text end

new text begin (2) estimate the amount of time needed to achieve profitability; and
new text end

new text begin (3) analyze the length of time incentives will be necessary to the economic viability
of the regional distribution center.
new text end

new text begin If the governing body of the foreign trade authority determines that the models do
not establish the economic feasibility of the project, the regional distribution center does
not meet the development requirements of this section and section 469.322.
new text end

new text begin Subd. 3. new text end

new text begin Port authority powers. new text end

new text begin The governing body of the foreign trade zone
authority may establish a port authority that has the same powers as a port authority
established under section 469.049. If the foreign trade zone authority establishes a port
authority, the governing body of the foreign trade zone authority may exercise all powers
granted to a city by sections 469.048 to 469.068 within the area of the international
economic development zone, except it may not impose or request imposition of a property
tax levy under section 469.053 by any city.
new text end

new text begin Subd. 4. new text end

new text begin Business subsidy law. new text end

new text begin Tax exemptions, job credits, and tax increment
financing provided under this section are business subsidies for the purpose of sections
116J.993 to 116J.995.
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. 7.

new text begin [469.324] TAX INCENTIVES IN INTERNATIONAL ECONOMIC
DEVELOPMENT ZONE.
new text end

new text begin Subdivision 1. new text end

new text begin Availability. new text end

new text begin Qualified businesses that operate in an international
economic development zone, individuals who invest in a regional distribution center, or
qualified businesses that operate in an international economic development zone qualify
for:
new text end

new text begin (1) exemption from the property tax as provided in section 272.02, subdivision 69;
new text end

new text begin (2) exemption from the state sales and use tax and any local sales and use taxes on
qualifying purchases as provided in section 297A.68, subdivision 40;
new text end

new text begin (3) the jobs credit allowed under section 469.327; and
new text end

new text begin (4) tax increment financing as provided in this chapter.
new text end

new text begin Subd. 2. new text end

new text begin Duration. new text end

new text begin (a) Except as provided in paragraph (b), the tax incentives
described in subdivision 1, clauses (1) and (3), are available for no more than 12
consecutive taxable years for any taxpayer that claims them. The tax incentives described
in subdivision 1, clause (2), are available for each taxpayer that claims them for taxes
otherwise payable on transactions during a period of 12 years from the date when the first
exemption is claimed by that taxpayer under each exemption. No exemptions described in
subdivision 1, clauses (1) to (4), are available after December 31, 2020.
new text end

new text begin (b) For taxpayers that are freight forwarders, the durations provided under paragraph
(a) are reduced to six years.
new text end

new text begin Subd. 3. new text end

new text begin Qualification. new text end

new text begin To receive the tax incentives under this section, a qualified
business must, by December 31 of each year, certify to the commissioner of revenue the
percentage of its business activity within the zone that constitutes international business
activity for the year, measured by value or volume of activity. If the percentage is less than
100 percent, the amount of the tax benefits provided under sections 290.06, subdivision
33, and 469.327 are reduced in proportion to the percentage of business activity that is
not international business activity. The commissioner of revenue may audit the business
activities of a qualifying business to determine its eligibility for tax benefits under this
section.
new text end

Sec. 8.

new text begin [469.325] JOBS CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin A qualified business is allowed a credit against the
taxes imposed under chapter 290. The credit equals seven percent of the:
new text end

new text begin (1) lesser of:
new text end

new text begin (i) zone payroll for the taxable year, less the zone payroll for the base year; or
new text end

new text begin (ii) total Minnesota payroll for the taxable year, less total Minnesota payroll for
the base year; minus
new text end

new text begin (2) $30,000 multiplied by the number of full-time equivalent employees that the
qualified business employs in the international economic development zone for the taxable
year, minus the number of full-time equivalent employees the business employed in the
zone in the base year, but not less than zero.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Base year" means the taxable year beginning during the calendar year prior to
the calendar year in which the zone designation took effect.
new text end

new text begin (c) "Full-time equivalent employees" means the equivalent of annualized expected
hours of work equal to 2,080 hours.
new text end

new text begin (d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under
section 290.191, subdivision 12, for the qualified business or the unitary business of which
the qualified business is a part, whichever is greater.
new text end

new text begin (e) "Zone payroll" means wages or salaries used to determine the zone payroll
factor for the qualified business, less the amount of compensation attributable to any
employee that exceeds $70,000.
new text end

new text begin Subd. 3. new text end

new text begin Inflation adjustment. new text end

new text begin For taxable years beginning after December 31,
2006, the dollar amounts in subdivision 1, clause (2), and subdivision 2, paragraph (e), are
annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by
the percentage determined under section 290.06, subdivision 2d, for the taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Refundable. new text end

new text begin If the amount of the credit exceeds the liability for tax under
chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds authorized 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 taxable years beginning after
December 31, 2005.
new text end

Sec. 9.

new text begin [469.326] REPAYMENT OF TAX BENEFITS.
new text end

new text begin Subdivision 1. new text end

new text begin Repayment obligation. new text end

new text begin A person must repay the amount of the tax
reduction received under section 469.324, subdivision 1, clauses (2) and (3), and refund
received under section 469.327, during the two years immediately before it ceased to
operate in the zone, if the person ceased to operate its facility located within the zone or
otherwise ceases to be or is not a qualified business.
new text end

new text begin Subd. 2. new text end

new text begin Disposition of repayment. new text end

new text begin The repayment must be paid to the state to the
extent it represents a state tax reduction. Any amount repaid to the state must be deposited
in the general fund. Any repayment of local sales or use taxes must be repaid to the
jurisdiction imposing the local sales or use tax.
new text end

new text begin Subd. 3. new text end

new text begin Repayment procedures. new text end

new text begin (a) For the repayment of taxes imposed under
chapter 290 or 297A or local taxes collected pursuant to section 297A.99, a person must
file an amended return with the commissioner of revenue and pay any taxes required to be
repaid within 30 days after ceasing to be a qualified business. The amount required to be
repaid is determined by calculating the tax for the period for which repayment is required
without regard to the tax reductions allowed under section 469.324.
new text end

new text begin (b) The provisions of chapters 270 and 289A relating to the commissioner of
revenue's authority to audit, assess, and collect the tax and to hear appeals are applicable
to the repayment required under paragraph (a). The commissioner may impose civil
penalties as provided in chapter 289A, and the additional tax and penalties are subject to
interest at the rate provided in section 270.75, from 30 days after ceasing to do business
in the zone until the date the tax is paid.
new text end

new text begin (c) For determining the tax required to be repaid, a tax reduction is deemed to have
been received on the date that the tax would have been due if the person had not been
entitled to the tax reduction.
new text end

new text begin (d) The commissioner of revenue may assess the repayment of taxes under paragraph
(b) at any time within two years after the person ceases to be a qualified business,
or within any period of limitations for the assessment of tax under section 289A.38,
whichever is later.
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. 10.

new text begin [469.327] ADDITIONAL BENEFITS CONTINGENT ON JOBZ
DETERMINATIONS.
new text end

new text begin Notwithstanding section 469.312, subdivision 3, the governor may designate the
international economic development zone as a job opportunity building zone if the
governor reports to the tax committees of the senate and the house of representatives
the following information:
new text end

new text begin (1) the estimated cost of providing the additional tax incentives provided under
sections 469.310 to 469.320 to the international economic development zone; and
new text end

new text begin (2) the estimated cost of tax expenditures projected to have been obligated for all job
opportunity building zone projects that have been approved before June 1, 2005.
new text end

Sec. 11. new text begin DEPARTMENT OF EMPLOYMENT AND ECONOMIC
DEVELOPMENT STUDY; INTERNATIONAL AIR FREIGHT.
new text end

new text begin The commissioner of employment and economic development must study and
analyze the issue of whether the state would benefit from more than one international
economic development zone as defined in Minnesota Statutes, section 469.321. The
commissioner shall solicit input on the issue from businesses, communities, and economic
development organizations. The commissioner must report the results of the study
and analysis to the committees of the legislature having jurisdiction over economic
development issues by December 1, 2005, along with any legislative recommendations.
new text end

ARTICLE 6

MISCELLANEOUS

Section 1.

Minnesota Statutes 2004, section 270.0603, subdivision 3, is amended to
read:

Subd. 3.

Distribution.

The appropriate statement prepared in accordance with
subdivisions 1 and 2 must be distributed by the commissioner to all taxpayers contacted
with respect to the determination or collection of a tax, other than the providing of tax
forms. Failure to receive the statement does not invalidate the determination or collection
action new text begin , nor does it affect, modify, or alter any statutory time limits applicable to the
determination or collection action, including the time limit for filing a claim for refund 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 for claims for refund, it is effective for claims filed after August 31, 2005.
new text end

Sec. 2.

Minnesota Statutes 2004, section 270.0682, subdivision 1, is amended to read:

Subdivision 1.

Biennial report.

The commissioner of revenue shall report to the
legislature by March 1 of each odd-numbered year on the overall incidence of deleted text begin the income
tax, sales and excise taxes, and property tax deleted text end new text begin taxes as defined in section 645.44, subdivision
19 new text end . The report shall present information on the distribution of the tax burden (1) for the
overall income distribution, using a systemwide incidence measure such as the Suits
index or other appropriate measures of equality and inequality, (2) by income classes,
including at a minimum deciles of the income distribution, and (3) by other appropriate
taxpayer characteristics.

Sec. 3.

Minnesota Statutes 2004, 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 and to property occupied by July 1 of the
assessment year by a qualified business. 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) This subdivision does not apply to captured net tax capacity in a tax increment
financing district to the extent necessary to meet the debt repayment obligations of the
authority if the property is also located within an agricultural processing zone.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2005 and
thereafter.
new text end

Sec. 4.

Minnesota Statutes 2004, section 429.021, subdivision 1, is amended to read:

Subdivision 1.

Improvements authorized.

The council of a municipality shall have
power to make the following improvements:

(1) To acquire, open, and widen any street, and to improve the same by constructing,
reconstructing, and maintaining sidewalks, pavement, gutters, curbs, and vehicle parking
strips of any material, or by grading, graveling, oiling, or otherwise improving the same,
including the beautification thereof and including storm sewers or other street drainage
and connections from sewer, water, or similar mains to curb lines.

(2) To acquire, develop, construct, reconstruct, extend, and maintain storm and
sanitary sewers and systems, including outlets, holding areas and ponds, treatment plants,
pumps, lift stations, service connections, and other appurtenances of a sewer system,
within and without the corporate limits.

(3) To construct, reconstruct, extend, and maintain steam heating mains.

(4) To install, replace, extend, and maintain street lights and street lighting systems
and special lighting systems.

(5) To acquire, improve, construct, reconstruct, extend, and maintain water works
systems, including mains, valves, hydrants, service connections, wells, pumps, reservoirs,
tanks, treatment plants, and other appurtenances of a water works system, within and
without the corporate limits.

(6) To acquire, improve and equip parks, open space areas, playgrounds, and
recreational facilities within or without the corporate limits.

(7) To plant trees on streets and provide for their trimming, care, and removal.

(8) To abate nuisances and to drain swamps, marshes, and ponds on public or private
property and to fill the same.

(9) To construct, reconstruct, extend, and maintain dikes and other flood control
works.

(10) To construct, reconstruct, extend, and maintain retaining walls and area walls.

(11) To acquire, construct, reconstruct, improve, alter, extend, operate, maintain, and
promote a pedestrian skyway system. Such improvement may be made upon a petition
pursuant to section 429.031, subdivision 3.

(12) To acquire, construct, reconstruct, extend, operate, maintain, and promote
underground pedestrian concourses.

(13) To acquire, construct, improve, alter, extend, operate, maintain, and promote
public malls, plazas or courtyards.

(14) To construct, reconstruct, extend, and maintain district heating systems.

(15) To construct, reconstruct, alter, extend, operate, maintain, and promote fire
protection systems in existing buildings, but only upon a petition pursuant to section
429.031, subdivision 3.

(16) To acquire, construct, reconstruct, improve, alter, extend, and maintain highway
sound barriers.

(17) To improve, construct, reconstruct, extend, and maintain gas and electric
distribution facilities owned by a municipal gas or electric utility.

(18) To purchase, install, and maintain signs, posts, and other markers for addressing
related to the operation of enhanced 911 telephone service.

(19) To improve, construct, extend, and maintain facilities for Internet access and
other communications purposes, if the council finds that:

(i) the facilities are necessary to make available Internet access or other
communications services that are not and will not be available through other providers or
the private market in the reasonably foreseeable future; and

(ii) the service to be provided by the facilities will not compete with service provided
by private entities.

new text begin (20) To assess affected property owners for all or a portion of the costs agreed to
with an electric utility, telecommunications carrier, or cable system operator to bury or
alter a new or existing distribution system within the public right-of-way that exceeds the
utility's design and construction standards, or those set by law, tariff, or franchise, but only
upon petition under section 429.031, subdivision 3.
new text end

Sec. 5.

Minnesota Statutes 2004, section 469.015, subdivision 4, is amended to read:

Subd. 4.

Exceptions.

(a) An authority need not require competitive bidding in the
following circumstances:

(1) in the case of a contract for the acquisition of a low-rent housing project:

(i) for which financial assistance is provided by the federal government;

(ii) which does not require any direct loan or grant of money from the municipality
as a condition of the federal financial assistance; and

(iii) for which the contract provides for the construction of the project upon land that
is either owned by the authority for redevelopment purposes or not owned by the authority
at the time of the contract but the contract provides for the conveyance or lease to the
authority of the project or improvements upon completion of construction;

(2) with respect to a structured parking facility:

(i) constructed in conjunction with, and directly above or below, a development; and

(ii) financed with the proceeds of tax increment or parking ramp general obligation
or revenue bonds; deleted text begin and
deleted text end

(3) new text begin until August 1, 2009, with respect to a facility built for the purpose of facilitating
the operation of public transit or encouraging its use:
new text end

new text begin (i) constructed in conjunction with, and directly above or below, a development; and
new text end

new text begin (ii) financed with the proceeds of parking ramp general obligation or revenue bonds
or with at least 60 percent of the construction cost being financed with funding provided
by the federal government; and
new text end

new text begin (4) new text end in the case of any building in which at least 75 percent of the usable square
footage constitutes a housing development project if:

(i) the project is financed with the proceeds of bonds issued under section 469.034 or
from nongovernmental sources;

(ii) the project is either located on land that is owned or is being acquired by the
authority only for development purposes, or is not owned by the authority at the time the
contract is entered into but the contract provides for conveyance or lease to the authority
of the project or improvements upon completion of construction; and

(iii) the authority finds and determines that elimination of the public bidding
requirements is necessary in order for the housing development project to be economical
and feasible.

(b) An authority need not require a performance bond for the following projects:

(1) a contract described in paragraph (a), clause (1);

(2) a construction change order for a housing project in which 30 percent of the
construction has been completed;

(3) a construction contract for a single-family housing project in which the authority
acts as the general construction contractor; or

(4) a services or materials contract for a housing project.

For purposes of this paragraph, "services or materials contract" does not include
construction contracts.

Sec. 6.

Minnesota Statutes 2004, section 469.175, subdivision 2, is amended to read:

Subd. 2.

Consultations; comment and filing.

new text begin (a) new text end Before formation of a tax
increment financing district, the authority shall provide the county auditor and clerk of
the school board with the proposed tax increment financing plan for the district and the
authority's estimate of the fiscal and economic implications of the proposed tax increment
financing district. The authority must provide the proposed tax increment financing plan
and the information on the fiscal and economic implications of the plan to the county
auditor and the clerk of the school district board at least 30 days before the public hearing
required by subdivision 3. The information on the fiscal and economic implications may
be included in or as part of the tax increment financing plan. The county auditor and
clerk of the school board shall provide copies to the members of the boards, as directed
by their respective boards. The 30-day requirement is waived if the boards of the county
and school district submit written comments on the proposal and any modification of the
proposal to the authority after receipt of the information.

new text begin (b) For purposes of this subdivision, "fiscal and economic implications of the
proposed tax increment financing district" includes:
new text end

new text begin (1) an estimate of the total amount of tax increment that will be generated over the
life of the district;
new text end

new text begin (2) a description of the probable impact of the district on city-provided services
such as police and fire protection, public infrastructure, and borrowing costs attributable
to the district;
new text end

new text begin (3) the estimated amount of tax increments over the life of the district that would
be attributable to school district levies, assuming the school district's share of the total
local tax rate for all taxing jurisdictions remained the same;
new text end

new text begin (4) the estimated amount of tax increments over the life of the district that would be
attributable to county levies, assuming the county's share of the total local tax rate for all
taxing jurisdictions remained the same; and
new text end

new text begin (5) any additional information requested by the county or the school district that
would enable it to determine additional costs that will accrue to it due to the development
proposed for the district.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all districts for which certification
is requested after December 31, 2005.
new text end

Sec. 7.

Minnesota Statutes 2004, section 645.44, is amended by adding a subdivision
to read:

new text begin Subd. 19. new text end

new text begin Fee and tax. new text end

new text begin (a) "Tax" means any fee, charge, surcharge, or assessment
imposed by a governmental entity on an individual, person, entity, transaction, good,
service, or other thing. It excludes:
new text end

new text begin (1) a price that an individual or entity chooses voluntarily to pay in return for receipt
of goods or services provided by the governmental entity; and
new text end

new text begin (2) a fine or penalty imposed for violation of a state or local law or ordinance.
new text end

new text begin A government good or service does not include access to or the authority to engage in
private market transactions with a nongovernmental party, such as licenses to engage in a
trade, profession, or business or to improve private property.
new text end

new text begin (b) For purposes of applying the laws of this state, a "fee," "charge," or other similar
term that satisfies the functional requirements of paragraph (a) must be treated as a tax
for all purposes, regardless of whether the statute or law names or describes it as a tax.
The provisions of this subdivision do not preempt or supersede limitations under law
that apply to fees, charges, or assessments.
new text end

new text begin (c) This subdivision is not intended to extend or limit the application of article 4,
section 18, of the Constitution of Minnesota.
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. 8.

Laws 2003, chapter 128, article 1, section 172, is amended to read:

Sec. 172 new text begin TEMPORARY PETROFUND FEE EXEMPTION FOR MINNESOTA
COMMERCIAL AIRLINES.
new text end

(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 2005 deleted text end new text begin 2007 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 avoid filing for federal bankruptcy protections.

(b) A commercial airline exempted from the fee is ineligible to receive
reimbursement under Minnesota Statutes, chapter 115C, until July 1, deleted text begin 2005 deleted text end new text begin 2007 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.

Sec. 9. new text begin CITY OF ROSEMOUNT; TAX INCREMENT FINANCING.
new text end

new text begin The city of Rosemount or a development authority of the city may spend increment
from its Downtown - Brockway Tax Increment Financing (TIF) District to acquire
parcels of property that the Department of Transportation or Dakota County acquired in
connection with the realignment of marked Trunk Highway 3, notwithstanding the limits
under Minnesota Statutes, section 469.1763, on the amount of increments that may be
spent outside of the district or Minnesota Statutes, section 469.176, subdivision 4j, on the
purposes for which increments may be spent.
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 Rosemount under Minnesota Statutes, section 645.021.
new text end

Sec. 10. new text begin APPROPRIATION.
new text end

new text begin (a) $125,000 in fiscal year 2006, $125,000 in fiscal year 2007, and $200,000 in each
fiscal year thereafter, 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" mean 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 to provide personal representation before the Department of Revenue and Internal
Revenue Service.
new text end

Sec. 11. new text begin APPROPRIATION.
new text end

new text begin $320,000 is appropriated from the general fund in fiscal year 2006 only to the
commissioner of employment and economic development to be distributed to the city of
Duluth to be used by the city for grants to enterprises related to environmental cleanup
of Lake Superior and long-term community health care.
new text end

Sec. 12. new text begin APPROPRIATION.
new text end

new text begin The following amounts are appropriated from the general fund to the commissioner
of finance for transfer to the clean water legacy account in the environmental fund:
new text end

new text begin (1) $31,500,000 in fiscal year 2006;
new text end

new text begin (2) $3,000,000 in fiscal year 2007; and
new text end

new text begin (3) $40,000,000 in fiscal year 2008 and $80,000,000 in fiscal year 2009 and
subsequent years, but only after at least 50 percent of the Minnesota Total Maximum Daily
Loads (TMDLs) have been established and approved by the Environmental Protection
Agency under the federal Clean Water Act.
new text end

Sec. 13. new text begin APPROPRIATION; AID PAYMENT SHIFTS.
new text end

new text begin In fiscal year 2008, $25,000,000 is appropriated from the general fund to the
commissioner of finance to be used to buy back the aid payment shift provided in
Minnesota Statutes, section 16A.152, subdivision 2, clause (3).
new text end

Sec. 14. new text begin DEFERRED MAINTENANCE AID.
new text end

new text begin For fiscal years 2006 and 2007 only, a district's deferred maintenance aid is equal
to $13.25 multiplied times its adjusted average daily membership for that year. Aid
received under this section must be used for deferred maintenance, to make accessibility
improvements, or to make fire, safety, or health repairs.
new text end

Sec. 15. new text begin APPROPRIATIONS.
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 for the fiscal years
designated.
new text end

new text begin Subd. 2. new text end

new text begin Deferred maintenance aid. new text end

new text begin For deferred maintenance revenue under
section 14, $10,574,000 in fiscal year 2006 and $10,416,000 in fiscal year 2007.
new text end

Sec. 16. new text begin APPROPRIATION.
new text end

new text begin $2,000,000 is appropriated from the general fund on a onetime basis to the Higher
Education Services Office. The appropriation must be deposited into the Rochester higher
education development account. With the approval of the Higher Education Services
Office, money in this account may be used to provide initial funding for academic program
development for upperclass and graduate students. This appropriation is intended to be
expended when matched by tax-deductible contributions from individuals and corporate
taxpayers.
new text end

ARTICLE 7

TAX SHELTER AND VOLUNTARY COMPLIANCE INITIATIVES

Section 1.

new text begin [289A.121] REGISTRATION OF TAX SHELTERS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the following terms
have the meanings given.
new text end

new text begin (a) "Abusive tax avoidance transaction" means a Minnesota tax shelter or a
reportable transaction.
new text end

new text begin (b) "Material advisor" has the meaning given in section 111(b)(1) of the Internal
Revenue Code, and must be interpreted in accordance with any regulations or rulings
adopted or issued by the Internal Revenue Service that govern that section.
new text end

new text begin (c) "Minnesota tax shelter" means a transaction which is not a reportable transaction,
which substantially reduces a tax imposed under chapter 290 and has one or more of the
following characteristics:
new text end

new text begin (1) it is offered to the taxpayer under conditions of confidentiality, as that term is
defined in Treas. Reg. section 1.6011-4(3)(ii), and for which the taxpayer has paid a fee;
new text end

new text begin (2) the terms of the transaction offer the taxpayer or a related party the right to a full
or partial refund of fees if all or part of the intended tax consequences of the transaction
are not realized, or if fees are contingent upon the taxpayer realizing tax benefits;
new text end

new text begin (3) it is a transaction or a series of related transactions that result in a corporation or
a partnership with only corporate partners claiming a reduction in net income in excess of
$10,000,000 in any combination of tax years;
new text end

new text begin (4) it is a transaction or a series of related transactions that result in an individual,
a partnership with one or more noncorporate partners, S corporation, or trust claiming a
reduction in net income in excess of $4,000,000 in any combination of taxable years,
whether or not any losses flow through to one or more shareholders or beneficiaries; or
new text end

new text begin (5) it is a transaction or series of related transactions, identified as a Minnesota
tax shelter in a rule promulgated by the commissioner of revenue, entered into after the
date the rule becomes effective.
new text end

new text begin (d) "Reportable transaction" has the meaning given in Treas. Reg. section 1.6011-4
between February 29, 2000, and January 1, 2006.
new text end

new text begin Subd. 2. new text end

new text begin Reports by material advisors. new text end

new text begin (a) On the first day that a material advisor
sells a Minnesota tax shelter or reportable transaction, the material advisor must file with
the commissioner a copy of any federal tax shelter registration information relating to
reportable transactions if that registration is applicable to any person subject to taxation
under chapter 290.
new text end

new text begin (b) On or before April 15, 2006, material advisors must report to the commissioner
all federal tax shelters used by a person subject to tax under chapter 290 that the material
advisor offered for sale between February 28, 2000, and January 1, 2006, which were
reportable transactions.
new text end

new text begin (c) On or before April 15, 2006, material advisors must report to the commissioner
all Minnesota tax shelters that the material advisor offered for sale between February 28,
2000, and January 1, 2006, if the transactions would have had to be disclosed under
subdivision 3 had it been in effect at that time.
new text end

new text begin (d) In addition to the requirements set forth in paragraphs (a), (b), and (c), a material
advisor must report to the commissioner any transactions entered into on or after April 15,
2006, that become listed as reportable transactions or a Minnesota tax shelter.
new text end

new text begin Subd. 3. new text end

new text begin Maintaining participant lists. new text end

new text begin Any person organizing or selling
Minnesota tax shelters or reportable transactions must maintain a list of participants that
are subject to a tax imposed by chapter 290.
new text end

new text begin Subd. 4. new text end

new text begin Reporting. new text end

new text begin All persons, including material advisors who organize
or sell Minnesota tax shelters or reportable transactions, must provide the following
information to the commissioner within 20 days from receiving a written request from the
commissioner to provide the information:
new text end

new text begin (1) legal name of the taxpayer;
new text end

new text begin (2) Minnesota tax identification number;
new text end

new text begin (3) federal tax identification number; and
new text end

new text begin (4) description of the Minnesota tax shelter or reportable transaction.
new text end

new text begin Subd. 5. new text end

new text begin Disclosure statements by taxpayers. new text end

new text begin Every person subject to taxation
under chapter 290 who has participated in a reportable transaction or a Minnesota tax
shelter which resulted in a tax decrease must file a disclosure statement on a form
prescribed by the commissioner. The form must be filed with the tax return.
new text end

Sec. 2.

Minnesota Statutes 2004, section 289A.38, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Voluntary compliance initiative. new text end

new text begin Notwithstanding other limitations in
the subdivision, an amount of tax related to a reportable transaction or a Minnesota tax
shelter that is not reported in the voluntary compliance initiative described in section 4
may be assessed within eight and one-half years after the date the return is filed.
new text end

Sec. 3.

Minnesota Statutes 2004, section 289A.60, is amended by adding a subdivision
to read:

new text begin Subd. 26. new text end

new text begin Penalty for failure to report a tax shelter. new text end

new text begin (a) A penalty of $15,000 is
imposed on a person who fails to register a tax shelter as required under section 289A.121
on or before the date prescribed.
new text end

new text begin (b) A penalty of $10,000 is imposed on a person who fails to report to the
commissioner a Minnesota tax shelter or a reportable transaction within 20 days of the
date prescribed under section 289A.121. For each day after the 20th day that the person
organizing or selling the Minnesota tax shelter or reportable transaction failed to make the
information required in section 289A.121, subdivision 2, available to the commissioner
after the commissioner made a written request for the list, an additional $10,000 penalty is
imposed on that person.
new text end

new text begin (c) A penalty is imposed on a person who fails to make a report required by section
289A.121, subdivision 2, on or before the date prescribed. The penalty is the greater of:
new text end

new text begin (1) $100,000; or
new text end

new text begin (2) 50 percent of the gross income that the person derived from the activity.
new text end

new text begin (d) A penalty is imposed on a person who intentionally disregards the requirement
to maintain and provide information required in section 289A.121. The penalty is the
greater of:
new text end

new text begin (1) $100,000; or
new text end

new text begin (2) 75 percent of the gross income that the person derived from the activity.
new text end

new text begin (e) A penalty of $15,000 is imposed on a person who fails to provide a list required
under section 289A.121, subdivision 4, which does not contain all the information
required in that section.
new text end

Sec. 4. new text begin TAX SHELTER VOLUNTARY COMPLIANCE INITIATIVE.
new text end

new text begin Subdivision 1. new text end

new text begin Commissioner to initiate. new text end

new text begin The commissioner of revenue shall
develop and administer a Minnesota tax shelter voluntary compliance initiative for
taxpayers subject to Minnesota Statutes, section 289A.60, subdivision 26, as provided
in this chapter.
new text end

new text begin Subd. 2. new text end

new text begin Term; application. new text end

new text begin The Minnesota tax shelter voluntary compliance
initiative shall be conducted from July 1, 2005, to December 31, 2005, pursuant to
Minnesota Statutes, section 270.07. The Minnesota tax shelter voluntary compliance
initiative shall apply to tax liabilities and penalties attributable to Minnesota tax shelters
and reportable transactions for tax years beginning before January 1, 2005. An abusive tax
avoidance transaction means a Minnesota tax shelter or a reportable transaction as defined
in Minnesota Statutes, section 289A.121, subdivision 1.
new text end

new text begin Subd. 3. new text end

new text begin Implementation. new text end

new text begin The commissioner of revenue may issue forms and
instructions and take other actions necessary, including the use of agreements pursuant
to Minnesota Statutes, section 270.67, to implement the Minnesota tax shelter voluntary
compliance initiative.
new text end

new text begin Subd. 4. new text end

new text begin Persons not eligible to participate. new text end

new text begin (a) Any person is not eligible for
participation in the Minnesota tax shelter voluntary compliance initiative, if:
new text end

new text begin (1) the taxpayer was convicted of a crime in connection with an abusive tax
avoidance transaction or transactions;
new text end

new text begin (2) a criminal complaint was filed against the taxpayer in connection with an abusive
tax avoidance transaction or transactions;
new text end

new text begin (3) the taxpayer is the subject of a criminal investigation in connection with an
abusive tax avoidance transaction or transactions; or
new text end

new text begin (4) the taxpayer was eligible to participate in the Internal Revenue Service's
Offshore Voluntary Compliance Initiative, as set forth in Revenue Procedure 2003-11.
new text end

new text begin Subd. 5. new text end

new text begin Eligible participants. new text end

new text begin (a) Any person who is not ineligible to participate in
the Minnesota tax shelter voluntary compliance initiative under subdivision 4, is eligible
to participate in the Minnesota tax shelter voluntary compliance initiative.
new text end

new text begin (b) A person participating in the Minnesota tax shelter voluntary compliance
initiative waiving the right to an administrative appeal, a claim for refund, or an action in
district court must do both of the following:
new text end

new text begin (1) the participating person must file an amended return for each taxable year for
which the taxpayer has filed a tax return using an abusive tax avoidance transaction to
underreport the taxpayer's tax liability for that tax year. Each amended return shall report
all income from all sources, without regard to the abusive tax avoidance transaction; and
new text end

new text begin (2) the participating person must pay taxes and interest due in full, except that the
commissioner of revenue may enter into an installment payment agreement pursuant to
Minnesota Statutes, section 270.67, prior to taxpayer filing an amended return.
new text end

new text begin (c) The commissioner of revenue shall abate all penalties imposed under Minnesota
Statutes, chapter 289A, which could have been assessed in connection with the use of an
abusive tax avoidance transaction, for each taxable year for which the taxpayer elects to
participate in the Minnesota tax shelter voluntary compliance initiative, to the extent those
penalties are a result of underreporting of tax liabilities attributable to the use of abusive
tax avoidance transactions, for which a participating person files an amended return in
compliance with paragraph (b).
new text end

new text begin (d) No criminal action shall be brought against a taxpayer for the taxable years
reported under the Minnesota tax shelter voluntary compliance initiative with respect to
the issues for which a taxpayer voluntarily complies under this chapter.
new text end

new text begin (e) A person filing an amended return under this paragraph of the Minnesota tax
shelter voluntary compliance initiative may not file a claim for refund, an administrative
appeal, or an action in district court in regard to the amount of taxes or interest paid
with the amended return.
new text end

new text begin (f) A person participating in the Minnesota tax shelter voluntary compliance
initiative not waiving the right to an administrative appeal, a claim for refund, or an action
in district court must do both of the following:
new text end

new text begin (1) the participating person must file an amended return for each taxable year for
which the taxpayer has filed a tax return using an abusive tax avoidance transaction to
underreport the taxpayer's tax liability for that tax year. Each amended return shall report
all income from all sources, without regard to the abusive tax avoidance transactions; and
new text end

new text begin (2) the participating person must pay taxes and interest due in full, except that the
commissioner of revenue may enter into an installment payment agreement pursuant to
Minnesota Statutes, section 270.67, prior to taxpayer filing an amended return.
new text end

new text begin (g) The commissioner of revenue shall abate all penalties imposed under Minnesota
Statutes, chapter 289A, except for the penalty for intentional disregard of law or rules
imposed under Minnesota Statutes, section 289A.60, subdivision 5, which could have
been assessed in connection with the use of an abusive tax avoidance transaction, for each
taxable year for which the taxpayer elects to participate in the Minnesota tax shelter
voluntary compliance initiative, to the extent those penalties are a result of underreporting
of tax liabilities attributable to the use of abusive tax avoidance transactions, for which a
participating person files an amended return in compliance with paragraph (b).
new text end

new text begin (h) No criminal action shall be brought against a taxpayer for the taxable years
reported under the Minnesota tax shelter voluntary compliance initiative with respect to
the issues for which a taxpayer voluntarily complies under this chapter.
new text end

Sec. 5. new text begin COMMISSIONER ORDERS AND PENALTIES.
new text end

new text begin After December 31, 2005, the commissioner of revenue may issue an order of
assessment within the time period permitted under Minnesota Statutes, section 289A.38,
upon an amended return filed under this chapter for an underreported amount of tax, may
impose penalties on an underreported amount of tax on an amended return filed under
this chapter, or initiate a criminal action against any person based on any underreported
amount of tax on an amended return filed under this chapter.
new text end

new text begin A penalty is imposed upon any person who:
new text end

new text begin (1) is not ineligible to file an amended return pursuant to this chapter;
new text end

new text begin (2) has engaged in abusive tax shelter transactions; and
new text end

new text begin (3) fails to voluntarily amend their tax returns for each taxable year for which an
amended return may be filed and the person underreported income attributable to an
abusive tax shelter transaction.
new text end

new text begin The penalty is equal to 200 percent of the underreported tax that is attributable to the
abusive tax shelter transaction.
new text end

ARTICLE 8

PROPERTY TAX FREEZE

Section 1. new text begin CITATION.
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new text begin This article may be cited as the "Truth and Fairness in Taxation Act" (TAFTA) or
the "State/Local Fiscal Relations: Truth in Taxation Act."
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Sec. 2. new text begin STATEMENT OF PURPOSE.
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new text begin The legislature finds that the state of Minnesota is continuing to experience a
persistent budget deficit and that reductions in state spending have resulted in increased
burdens on school districts, counties, cities, and other units of local government. In order
to maintain stability in state and local fiscal relations, the purpose of this act is to prevent
property tax rate increases and to illuminate the impact of reductions in revenue to school
districts, counties, cities, and other units of local government.
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Sec. 3. new text begin BENEFIT RATIO FOR RURAL SERVICE DISTRICTS.
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new text begin Notwithstanding Minnesota Statutes, section 272.67, subdivision 6, the benefit
ratio used for apportioning levies to a rural service district for taxes payable in 2006 and
any subsequent year prior to the freeze termination year must not be greater than that in
effect for taxes payable in 2005.
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Sec. 4. new text begin PROHIBITION AGAINST INCURRING NEW DEBT.
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new text begin Subdivision 1. new text end

new text begin Actions prohibited. new text end

new text begin After May 31, 2006, no municipality as
defined in Minnesota Statutes, section 475.51, or any special taxing district as defined in
Minnesota Statutes, section 275.066, may sell obligations, certificates of indebtedness,
or capital notes under Minnesota Statutes, section 412.301, chapter 475, or any other
law authorizing obligations, certificates of indebtedness, capital notes, or other debt
instruments, or enter into installment purchase contracts or lease purchase agreements
under Minnesota Statutes, section 465.71, or any other law authorizing installment
purchase contracts or lease purchase agreements, if issuing those debt instruments or
entering into those contracts would require a levy first becoming payable in 2007 or any
subsequent year prior to the freeze termination year.
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new text begin Subd. 2. new text end

new text begin Exceptions. new text end

new text begin This prohibition does not apply to:
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new text begin (1) refunding bonds sold to refund bonds originally sold before June 1, 2006;
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new text begin (2) obligations for which the amount of the levy first becoming due in 2007 would
not exceed the amount by which the municipality's total debt service levy for taxes
payable in 2007 prior to issuance of those obligations is less than the municipality's total
debt service levy for taxes payable in 2006; or
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new text begin (3) obligations with respect to which the municipality makes a finding at the time
of the issuance of the obligations that no levy will be required for taxes payable in 2007
or any subsequent year prior to the freeze termination year or to pay the debt service
on the obligations because sufficient funds are available from nonproperty tax sources
to pay the debt service.
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new text begin As used in clauses (2) and (3), "obligations" includes certificates of indebtedness,
capital notes, or other debt instruments or installment purchase contracts or lease purchase
agreements.
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new text begin Subd. 3. new text end

new text begin Date when bonds are deemed sold. new text end

new text begin For purposes of this section, bonds
will be deemed to have been sold before June 1, 2006, if:
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new text begin (1) an agreement has been entered into between the municipality and a purchaser or
underwriter for the sale of the bonds by that date;
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new text begin (2) the issuing municipality is a party to a contract or letter of understanding
entered into before June 1, 2006, with the federal government or the state government
that requires the municipality to pay for a project, and the project will be funded with the
proceeds of the bonds; or
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new text begin (3) the proceeds of the bonds will be used to fund a project or acquisition with
respect to which the municipality has entered into a contract with a builder or supplier
before June 1, 2006.
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Sec. 5. new text begin LEVY LIMITATION FOR TAXES PAYABLE IN 2007 AND
SUBSEQUENT YEARS.
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new text begin Subdivision 1. new text end

new text begin Proposed levy. new text end

new text begin Notwithstanding any other law to the contrary, for
purposes of the certification required by Minnesota Statutes, section 275.065, subdivision
1, in 2006 and any subsequent year prior to the freeze termination year, no taxing authority,
other than a school district, shall certify to the county auditor a proposed property tax levy
or, in the case of a township, a final property tax levy, greater than the levy certified to the
county auditor pursuant to Minnesota Statutes, section 275.07, subdivision 1, in the prior
year, except as provided in this section.
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new text begin Subd. 2. new text end

new text begin Final levy. new text end

new text begin Notwithstanding any other law to the contrary, for purposes of
the certification required by Minnesota Statutes, section 275.07, subdivision 1, in 2006
and any subsequent year prior to the freeze termination year, no taxing authority, other
than a school district, shall certify to the county auditor a property tax levy greater than
the amount certified to the county auditor pursuant to Minnesota Statutes, section 275.07,
subdivision 1, in the prior year, except as provided in this section.
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new text begin Subd. 3. new text end

new text begin Debt service exception. new text end

new text begin If a levy for taxes payable in 2007 or any
subsequent year prior to the freeze termination year, for debt service on obligations,
certificates of indebtedness, capital notes, or other debt instruments sold prior to June 1,
2006, or to make payments on installment purchase contracts or lease purchase agreements
entered into prior to June 1, 2006, exceeds the levy a taxing authority certified pursuant to
Minnesota Statutes, section 275.07, subdivision 1, for taxes payable in 2006 for the same
purpose, the excess may be levied notwithstanding the limitations of subdivisions 1 and 2.
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new text begin Subd. 4. new text end

new text begin Annexation exception. new text end

new text begin The city tax rate for taxes payable in 2007 or
any subsequent year prior to the freeze termination year on any property annexed under
Minnesota Statutes, chapter 414, may not be increased over the city or township tax rate
in effect on the property for taxes payable in 2006, notwithstanding any law, municipal
board order, or ordinance to the contrary. The limit on the annexing city's levy under
subdivisions 1 and 2 may be increased in excess of that limit by an amount equal to the net
tax capacity of the property annexed times the city or township tax rate in effect on that
property for taxes payable in 2006. The levy limit of the city or township from which the
property was annexed shall be reduced by the same amount.
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new text begin Subd. 5. new text end

new text begin School district exceptions. new text end

new text begin (a) For taxes payable in 2007 and subsequent
years prior to the freeze termination year, no school district shall certify to the county
auditor a property tax levy that exceeds the maximum levy that may be imposed by that
district under 2005 S.F. No. 2267, if enacted, except as provided in paragraph (b).
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new text begin (b) A school district that is in statutory operating debt under Minnesota Statutes,
section 123B.81, and has an approved plan under Minnesota Statutes, section 123B.83,
that includes an increase to its referendum allowance under Minnesota Statutes, section
126C.17, is exempt from the levy freeze on referenda according to this section.
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Sec. 6. new text begin FREEZE ON LOCAL MATCH REQUIREMENTS.
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new text begin Notwithstanding any other law to the contrary, the local funding or local match
required from any city, town, or county for any state grant or program shall not be
increased for calendar year 2007 or any subsequent year prior to the freeze termination
year above the dollar amount of the local funding or local match required for the same
grant or program in 2006, regardless of the level of state funding provided. Any local
match or local funding requirement that first becomes effective after December 31, 2006,
for new or changed state grants or programs shall not be effective until the freeze has been
terminated for that taxing jurisdiction under section 14. Nothing in this section shall
affect the eligibility of a city, town, or county for the receipt of state grants or program
funds in 2007 or any subsequent year prior to the freeze termination year, or reduce the
amount of state funding a city, town, or county would otherwise receive in 2007 or any
subsequent year prior to the freeze termination year if the local match requirements of the
state grant or program were met in 2006.
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Sec. 7. new text begin SUSPENSION OF SALARY AND BUDGET APPEAL
AUTHORIZATION.
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new text begin After March 1, 2006, no county sheriff may exercise the authority granted under
Minnesota Statutes, section 387.20, subdivision 7, and no county attorney may exercise
the authority granted under Minnesota Statutes, section 388.18, subdivision 6, to the
extent that the salary or budget increase sought in the appeal would result in an increase
in county expenditures in calendar year 2007 or any subsequent year prior to the freeze
termination year.
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Sec. 8. new text begin SUSPENSION OF PUBLICATION AND HEARING REQUIREMENTS.
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new text begin A local taxing authority is not required to comply with the public advertisement
notice of Minnesota Statutes, section 275.065, subdivision 5a, or the public hearing
requirement of Minnesota Statutes, section 275.065, subdivision 6, with respect to taxes
payable in 2007 and any subsequent year prior to the freeze termination year.
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Sec. 9. new text begin TAX RATE FREEZE; REDUCTION OF LEVY.
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new text begin If in the course of determining local tax rates for taxes payable in 2007 or any
subsequent year prior to the freeze termination year after reductions for disparity reduction
aid under Minnesota Statutes, section 275.08, subdivisions 1c and 1d, the county auditor
finds the local tax rate exceeds that in effect for taxes payable in 2006, the county auditor
shall reduce the local government's levy so that the local tax rate does not exceed that in
effect for taxes payable in 2006, adjusted as provided in section 5.
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Sec. 10. new text begin PENSION LIABILITIES.
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new text begin Notwithstanding any other law or charter provision to the contrary, no levy for
taxes payable in 2007 or any subsequent year prior to the freeze termination year for a
local police and fire relief association for the purpose of amortizing an unfunded pension
liability may exceed the levy for that purpose for taxes payable in 2006.
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Sec. 11. new text begin DUTIES OF TOWNSHIP BOARD OF SUPERVISORS.
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new text begin Notwithstanding Minnesota Statutes, section 365.10, in 2006 the township board of
supervisors shall adjust the levy and in any subsequent year prior to the freeze termination
year, the township board of supervisors may adjust the expenditures of a township below
the level authorized by the electors to adjust for any reduction in the previously authorized
levy of the township pursuant to section 5.
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Sec. 12. new text begin PROHIBITION ON NEW OR INCREASED FEES.
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new text begin After March 1, 2006, no municipality as defined in Minnesota Statutes, section
475.51, or special taxing district as defined in Minnesota Statutes, section 275.066, and no
executive branch state agency may impose a new fee or increase the rate or amount of an
existing fee. As used in this section, a fee is any charge for goods, services, regulations, or
licensure, and includes charges for admission to or for use of public facilities.
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Sec. 13. new text begin SAVINGS CLAUSE.
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new text begin Notwithstanding any provision in this article, nothing in this article constitutes an
impairment of any obligations, certificates of indebtedness, capital notes, or other debt
instruments, including installment purchase contracts or lease purchase agreements, issued
before the date of final enactment of this act, by a municipality as defined in Minnesota
Statutes, section 469.174, subdivision 6; a school district; or a special taxing district as
defined in Minnesota Statutes, section 275.066.
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Sec. 14. new text begin EFFECTIVE DATE; TERMINATION.
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new text begin (a) This article is effective the day following final enactment and applies to taxes
payable in 2007 and subsequent years prior to the termination date provided in paragraph
(b), (c), (d), or (e) for the taxing jurisdiction described in each of those paragraphs.
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new text begin (b) For cities and towns, the termination date is the taxes payable year that is the
calendar year when local government aids payable to cities under Minnesota Statutes,
section 477A.013, are sufficient to fully fund the formula without any reduction due to the
limitation in Minnesota Statutes, section 477A.03.
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new text begin (c) For counties, the termination date is the taxes payable year when the total amount
to be paid to all counties under Minnesota Statutes, section 477A.0124, exceeds the
amount paid to all counties under Minnesota Statutes 2002, sections 273.138; 273.1398,
subdivision 2, minus the amount certified under Minnesota Statutes, section 273.1398,
subdivision 4a, paragraph (b), for counties in Judicial Districts One, Three, Six, and Ten,
and by 25 percent of the amount certified under Minnesota Statutes, section 273.1398,
subdivision 4a, paragraph (b), for counties located in Judicial Districts Two and Four;
273.166; 477A.0121; and 477A.0122, increased by the rate of increase in the annual
implicit price deflator for government consumption expenditures from 2003 to the current
year.
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new text begin (d) For school districts, the termination date is the taxes payable year that is the
year in which the state provides a real state aid inflationary increase to the basic formula
allowance under Minnesota Statutes, section 126C.10, subdivision 2, over the amount
paid in the prior year.
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new text begin (e) For special taxing districts, the termination date is the 2009 taxes payable year.
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