Minnesota Legislature
SF 2233
as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
Current Version - as introduced
1.1 A bill for an act 1.2 relating to taxation; providing a sales tax rebate; 1.3 reducing individual income tax rates; increasing the 1.4 working family credit; conforming with changes in 1.5 federal income tax provisions; providing for property 1.6 tax reform; altering the corporate income 1.7 apportionment formula; exempting certain insurance 1.8 companies from the franchise tax; providing a direct 1.9 exemption from sales tax for purchases of capital 1.10 equipment; imposing the sales tax on purchases of 1.11 certain personal services; reducing the rates of 1.12 certain health care provider taxes; defining terms; 1.13 appropriating money; amending Minnesota Statutes 2000, 1.14 sections 16A.1522, subdivisions 2, 5; 126C.01, by 1.15 adding subdivisions; 126C.13, subdivisions 1, 2, 4; 1.16 126C.17, subdivisions 5, 6, 7, 8, 9, 10; 127A.48, 1.17 subdivision 1; 270A.03, subdivision 7; 272.02, 1.18 subdivisions 7, 10; 273.061, subdivisions 1, 2, 8; 1.19 273.11, subdivision 1a; 273.121; 273.124, subdivision 1.20 13; 273.13, subdivisions 22, 23, 24, 25, 31, by adding 1.21 subdivisions; 273.1392; 273.1393; 273.1398, 1.22 subdivisions 1, 8, by adding a subdivision; 273.166, 1.23 subdivisions 2, 3, 5; 273.42, by adding a subdivision; 1.24 274.01, subdivision 1; 274.13, subdivision 1; 275.011, 1.25 by adding a subdivision; 275.02; 275.065, subdivisions 1.26 3, 5a, 6; 275.08, subdivisions 1, 1a, 1b; 275.28, 1.27 subdivision 1; 275.61; 276.04, subdivision 2; 276A.06, 1.28 subdivision 3; 282.01, subdivisions 1a, 1b; 282.08; 1.29 289A.02, subdivision 7; 290.01, subdivisions 19, 31, 1.30 by adding a subdivision; 290.05, subdivision 1; 1.31 290.06, subdivision 2c; 290.0671, subdivision 1; 1.32 290.091, subdivisions 1, 6; 290.0922, subdivision 2; 1.33 290.191, subdivisions 2, 3, 5, by adding a 1.34 subdivision; 290.92, subdivisions 3, 28, 29; 290A.03, 1.35 subdivisions 13, 15; 290A.04, subdivisions 2, 2a, 2h, 1.36 4; 291.005, subdivision 1; 295.52, subdivisions 1, 1a, 1.37 2, 3; 297A.61, subdivision 16, by adding a 1.38 subdivision; 297A.68, subdivision 5; 297A.75; 1.39 469.1763, subdivision 6; 469.177, subdivisions 1a, 11; 1.40 473.446, subdivision 1; 473F.08, subdivision 3; 1.41 473H.10, subdivision 3; 477A.011, subdivisions 3, 34, 1.42 by adding subdivisions; 477A.013, subdivisions 1, 8, 1.43 9; 477A.015; 477A.03, subdivision 2; 477A.065, 1.44 subdivision 1; proposing coding for new law in 1.45 Minnesota Statutes, chapter 126C; 273; 275; 469; 1.46 proposing coding for new law as Minnesota Statutes, 2.1 chapter 290C; repealing Minnesota Statutes 2000, 2.2 sections 126C.13, subdivision 1; 126C.18, subdivision 2.3 1; 270.31; 270.32; 270.33; 270.34; 270.35; 270.36; 2.4 270.37; 270.38; 270.39; 273.13, subdivisions 21b, 24a; 2.5 273.138; 273.1382; 273.1399; 275.065, subdivision 3a; 2.6 275.078; 275.08, subdivision 1e; 282.01, subdivisions 2.7 1c, 1d, 1e; 290.191, subdivision 4; 290.35, 2.8 subdivisions 3, 4, 5; 477A.011, subdivisions 30, 31, 2.9 32, 33, 36, 37; 477A.03, subdivision 4. 2.10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.11 ARTICLE 1 2.12 REBATE 2.13 Section 1. Minnesota Statutes 2000, section 16A.1522, 2.14 subdivision 2, is amended to read: 2.15 Subd. 2. [PLAN.] (a) If the commissioner designates an 2.16 amount for rebate in either forecast, the governor shall present 2.17 a plan to the legislature for rebating that amount. The plan 2.18 must provide for payments to begin no later than August 15 of 2.19 the odd-numbered year. ByApril 15May 23 of each odd-numbered 2.20 year, the legislature shall enact, modify, or reject the plan 2.21 presented by the governor. 2.22 (b) If the legislature fails to enact a plan under 2.23 paragraph (a) and if the commissioner certifies an amount under 2.24 subdivision 3 that exceeds one-half of one percent of the total 2.25 general fund biennial revenues, the commissioner of revenue 2.26 shall pay a rebate to taxpayers using the rebate schedule under 2.27 which a rebate was most recently paid by the state. The 2.28 schedule and formula must be applied using data from the most 2.29 recent tax year for which reliable data is available to permit 2.30 the commissioner of revenue to administer the rebate. The 2.31 commissioner of revenue shall proportionately adjust the dollar 2.32 amounts and percentages under the rebate schedule and formula so 2.33 that the total amount to be rebated equals the amount certified 2.34 by the commissioner under subdivision 3. 2.35 [EFFECTIVE DATE.] This section is effective the day 2.36 following final enactment. 2.37 Sec. 2. Minnesota Statutes 2000, section 16A.1522, 2.38 subdivision 5, is amended to read: 2.39 Subd. 5. [APPROPRIATION.] A sum sufficient to pay any 2.40 rebate due under the plan enacted or implemented under 3.1 subdivision 2 is appropriated from the general fund to the 3.2 commissioner of revenue. 3.3 [EFFECTIVE DATE.] This section is effective the day 3.4 following final enactment. 3.5 Sec. 3. [STATEMENT OF PURPOSE.] 3.6 (a) The state of Minnesota derives revenues from a variety 3.7 of taxes, fees, and other sources, including the state sales tax. 3.8 (b) It is fair and reasonable to refund the existing state 3.9 budget surplus in the form of a rebate of nonbusiness consumer 3.10 sales taxes paid by individuals in calendar year 1999. 3.11 (c) Information concerning the amount of sales tax paid at 3.12 various income levels is contained in the Minnesota tax 3.13 incidence report, which is written by the commissioner of 3.14 revenue and presented to the legislature according to Minnesota 3.15 Statutes, section 270.0682. 3.16 (d) It is fair and reasonable to use information contained 3.17 in the Minnesota tax incidence report, updated to calendar year 3.18 1999, to determine the proportionate share of the sales tax 3.19 rebate due each eligible taxpayer since no effective or 3.20 practical mechanism exists for determining the amount of actual 3.21 sales tax paid by each eligible individual. 3.22 Sec. 4. [SALES TAX REBATE.] 3.23 (a) An individual who was a resident of Minnesota for any 3.24 part of 1999, and filed a 1999 Minnesota income tax return on or 3.25 before November 30, 2001, and had a tax liability before 3.26 refundable credits on that return of at least $1 and who was not 3.27 allowed to be claimed as a dependent on a 1999 federal income 3.28 tax return filed by another person shall receive a sales tax 3.29 rebate. 3.30 (b) The sales tax rebate for taxpayers who qualify under 3.31 paragraph (a) as married filing joint or head of household must 3.32 be computed according to the following schedule: 3.33 Income Sales Tax Rebate 3.34 less than $2,500 $223 3.35 at least $2,500 but less than $5,000 $289 3.36 at least $5,000 but less than $10,000 $308 4.1 at least $10,000 but less than $15,000 $337 4.2 at least $15,000 but less than $20,000 $366 4.3 at least $20,000 but less than $25,000 $398 4.4 at least $25,000 but less than $30,000 $415 4.5 at least $30,000 but less than $35,000 $450 4.6 at least $35,000 but less than $40,000 $493 4.7 at least $40,000 but less than $45,000 $527 4.8 at least $45,000 but less than $50,000 $556 4.9 at least $50,000 but less than $60,000 $592 4.10 at least $60,000 but less than $70,000 $634 4.11 at least $70,000 but less than $80,000 $698 4.12 at least $80,000 but less than $90,000 $749 4.13 at least $90,000 but less than $100,000 $826 4.14 at least $100,000 but less than $120,000 $895 4.15 at least $120,000 but less than $140,000 $980 4.16 at least $140,000 but less than $160,000 $1,060 4.17 at least $160,000 but less than $180,000 $1,135 4.18 at least $180,000 but less than $200,000 $1,205 4.19 at least $200,000 but less than $400,000 $1,542 4.20 at least $400,000 but less than $600,000 $2,029 4.21 at least $600,000 but less than $800,000 $2,434 4.22 at least $800,000 but less than $1,000,000 $2,791 4.23 $1,000,000 and over $3,500 4.24 (c) The sales tax rebate for individuals who qualify under 4.25 paragraph (a) as single or married filing separately must be 4.26 computed according to the following schedule: 4.27 Income Sales Tax Rebate 4.28 less than $2,500 $127 4.29 at least $2,500 but less than $5,000 $155 4.30 at least $5,000 but less than $10,000 $182 4.31 at least $10,000 but less than $15,000 $245 4.32 at least $15,000 but less than $20,000 $280 4.33 at least $20,000 but less than $25,000 $304 4.34 at least $25,000 but less than $30,000 $317 4.35 at least $30,000 but less than $40,000 $346 4.36 at least $40,000 but less than $50,000 $387 5.1 at least $50,000 but less than $70,000 $456 5.2 at least $70,000 but less than $100,000 $579 5.3 at least $100,000 but less than $140,000 $698 5.4 at least $140,000 but less than $200,000 $843 5.5 at least $200,000 but less than $400,000 $1,143 5.6 at least $400,000 but less than $600,000 $1,504 5.7 $600,000 and over $1,750 5.8 (d) Individuals who were not residents of Minnesota for any 5.9 part of 1999 and who paid more than $10 in Minnesota sales tax 5.10 under Minnesota Statutes, chapters 297A and 297B, on nonbusiness 5.11 consumer purchases in that year qualify for a rebate under this 5.12 paragraph only. Qualifying nonresidents must file a claim for 5.13 rebate on a form prescribed by the commissioner by November 30, 5.14 2001. The claim must include receipts showing the Minnesota 5.15 sales tax paid and the date of the sale. Taxes paid on 5.16 purchases allowed in the computation of federal taxable income 5.17 or reimbursed by an employer are not eligible for the rebate. 5.18 The commissioner shall determine the qualifying taxes paid and 5.19 rebate the lesser of: 5.20 (1) 39.6 percent of that amount; or 5.21 (2) the maximum amount for which the claimant would have 5.22 been eligible as determined under paragraph (b) if the taxpayer 5.23 filed the 1999 federal income tax return as a married taxpayer 5.24 filing jointly or head of household, or as determined under 5.25 paragraph (c) for other taxpayers. 5.26 (e) "Income," for purposes of this section other than 5.27 paragraph (d), is taxable income as defined in section 63 of the 5.28 Internal Revenue Code of 1986, as amended through December 31, 5.29 1998, plus the sum of any additions to federal taxable income 5.30 for the taxpayer under Minnesota Statutes, section 290.01, 5.31 subdivision 19a, and reported on the original 1999 income tax 5.32 return, including subsequent adjustments to that return made 5.33 within the time limits specified in paragraph (l). For an 5.34 individual who was a resident of Minnesota for less than the 5.35 entire year, the sales tax rebate equals the sales tax rebate 5.36 calculated under paragraph (b) or (c) multiplied by the 6.1 percentage determined pursuant to Minnesota Statutes, section 6.2 290.06, subdivision 2c, paragraph (e), as calculated on the 6.3 original 1999 income tax return, including subsequent 6.4 adjustments to that return made within the time limits specified 6.5 in paragraph (l). For purposes of paragraph (d), income is 6.6 taxable income as defined in section 63 of the Internal Revenue 6.7 Code of 1986, as amended through December 31, 1998, and reported 6.8 on the taxpayer's original federal tax return for the first 6.9 taxable year beginning after December 31, 1998. 6.10 (f) Individuals who were residents of Minnesota for all of 6.11 1999, were not eligible for a rebate under paragraph (a), 6.12 attained the age of 18 on or before December 31, 1999, and 6.13 received in 1999 social security benefits as defined in section 6.14 86(d)(1) of the Internal Revenue Code of 1986, as amended 6.15 through December 31, 2000, are entitled to a rebate of $112. If 6.16 the Social Security Administration or Railroad Retirement Board 6.17 is paying benefits to a recipient by electronic funds transfers 6.18 in 2001, the rebate under this paragraph may be paid by the 6.19 commissioner through electronic funds transfer to the same 6.20 financial institution and into the same account into which the 6.21 Social Security Administration or Railroad Retirement Board 6.22 transfers social security benefits in calendar year 2001. 6.23 (g) An individual who: 6.24 (1) was allowed to be claimed as a dependent on a 1999 6.25 federal income tax return filed by another person; 6.26 (2) would have otherwise been eligible for a rebate under 6.27 clause (a); and 6.28 (3) reported earned income as defined in section 6.29 32(c)(2)(A)(i) of the Internal Revenue Code, 6.30 is eligible for a rebate under this paragraph only. The rebate 6.31 under this paragraph equals 35 percent of the amount allowed 6.32 under the schedule in paragraph (c) based on the individual's 6.33 income. For an individual who was a resident of Minnesota for 6.34 less than the entire year, the sales tax rebate equals the 6.35 rebate calculated under this paragraph multiplied by the 6.36 percentage determined pursuant to Minnesota Statutes, section 7.1 290.06, subdivision 2c, paragraph (e), as calculated on the 7.2 original 1999 income tax return. 7.3 (h) An individual who: 7.4 (1) was a resident of Minnesota for any part of 1999; 7.5 (2) was not eligible for a rebate under paragraph (a) or 7.6 (f); 7.7 (3) was not allowed to be claimed as a dependent on a 1999 7.8 federal income tax return by another person; and 7.9 (4) filed and received a property tax refund under 7.10 Minnesota Statutes, chapter 290A, for property taxes paid in 7.11 2000 or rent constituting property taxes paid in 1999; or 7.12 (5) filed a 1999 Minnesota income tax return before 7.13 November 30, 2001, in order to: 7.14 (i) claim a credit under section 290.067, 290.0671, or 7.15 290.0674; 7.16 (ii) claim a refund of withheld taxes; or 7.17 (iii) claim a refund of estimated taxes, 7.18 is eligible for a rebate under this paragraph only. For married 7.19 couples filing joint Minnesota income tax returns and 7.20 individuals filing Minnesota income tax returns with head of 7.21 household status, the rebate equals the minimum amount in 7.22 paragraph (b). For single filers and married individuals filing 7.23 separate Minnesota income tax returns, the rebate equals the 7.24 minimum amount in paragraph (c). For individuals who qualify 7.25 for a rebate under clause (4), the rebate equals the minimum 7.26 amount in paragraph (c) unless the property tax refund return is 7.27 a joint return and neither of the joint filers qualifies for a 7.28 rebate under any of the other rebate criteria in which case the 7.29 rebate equals the minimum amount in paragraph (b). For an 7.30 individual who was a resident of Minnesota for less than the 7.31 entire year, the sales tax rebate equals the rebate calculated 7.32 under this paragraph multiplied by the percentage determined 7.33 pursuant to Minnesota Statutes, section 290.06, subdivision 2c, 7.34 paragraph (e), as calculated on the original 1999 income tax 7.35 return. 7.36 (i) For a fiscal year taxpayer, the dates in paragraphs (a) 8.1 through (d) are extended one month for each month in calendar 8.2 year 1999 that occurred prior to the start of the individual's 8.3 1999 fiscal tax year. 8.4 (j) Before payment, the commissioner of revenue shall 8.5 adjust the rebate as follows: 8.6 the rebates calculated in paragraphs (b), (c), (d), (f), 8.7 (g), and (h) must be proportionately reduced to account for (i) 8.8 rebates under paragraphs (g) and (h) and (ii) 1999 income tax 8.9 returns that are filed on or after January 1, 2001, but before 8.10 June 1, 2001, so that the estimated amount of sales tax rebates 8.11 payable under paragraphs (b), (c), (d), (f), (g), and (h) on the 8.12 date the rebate is processed does not exceed $856,280,000. The 8.13 adjustment under this paragraph is not a rule subject to 8.14 Minnesota Statutes, chapter 14. 8.15 (k) The commissioner of revenue may begin making sales tax 8.16 rebates by July 1, 2001. Sales tax rebates not paid by January 8.17 1, 2002, bear interest at the rate specified in Minnesota 8.18 Statutes, section 270.75. 8.19 (l) A sales tax rebate shall not be adjusted based on 8.20 changes to a 1999 income tax return that are made by order of 8.21 assessment after the date the rebate is processed, or made by 8.22 the taxpayer that are filed with the commissioner of revenue 8.23 after that date. 8.24 (m) Individuals who filed a joint income tax return for 8.25 1999 shall receive a joint sales tax rebate. After the sales 8.26 tax rebate has been issued, but before the check has been 8.27 cashed, either joint claimant may request a separate check for 8.28 one-half of the joint sales tax rebate. Notwithstanding 8.29 anything in this section to the contrary, if prior to payment, 8.30 the commissioner has been notified that persons who filed a 8.31 joint 1999 income tax return or joint 1999 property tax refund 8.32 are living at separate addresses, as indicated on their 2000 8.33 income tax return or otherwise, the commissioner may issue 8.34 separate checks to each person. The amount payable to each 8.35 person is one-half of the total joint rebate. 8.36 (n) If a rebate is received by the estate of a deceased 9.1 individual after the probate estate has been closed, and if the 9.2 original rebate check is returned to the commissioner with a 9.3 copy of the decree of descent or final account of the estate, 9.4 social security numbers, and addresses of the beneficiaries, the 9.5 commissioner may issue separate checks in proportion to their 9.6 share in the residuary estate in the names of the residuary 9.7 beneficiaries of the estate. 9.8 (o) The sales tax rebate is a "Minnesota tax law" for 9.9 purposes of Minnesota Statutes, section 270B.01, subdivision 8. 9.10 (p) The sales tax rebate is "an overpayment of any tax 9.11 collected by the commissioner" for purposes of Minnesota 9.12 Statutes, section 270.07, subdivision 5. For purposes of this 9.13 paragraph, a joint sales tax rebate is payable to each spouse 9.14 equally. 9.15 (q) If the commissioner of revenue cannot locate an 9.16 individual entitled to a sales tax rebate by July 1, 2002, or if 9.17 an individual to whom a sales tax rebate was issued has not 9.18 cashed the check by July 1, 2002, the right to the sales tax 9.19 rebate lapses and the check must be deposited in the general 9.20 fund. 9.21 (r) Individuals entitled to a sales tax rebate pursuant to 9.22 paragraph (a), (f), (g), or (h) but who did not receive one, and 9.23 individuals who receive a sales tax rebate that was not 9.24 correctly computed, must file a claim with the commissioner 9.25 before July 1, 2002, in a form prescribed by the commissioner. 9.26 These claims must be treated as if they are a claim for refund 9.27 under Minnesota Statutes, section 289A.50, subdivisions 4 and 7. 9.28 (s) The sales tax rebate is a refund subject to revenue 9.29 recapture under Minnesota Statutes, chapter 270A. The 9.30 commissioner of revenue shall remit the entire refund to the 9.31 claimant agency, which shall, upon the request of the spouse who 9.32 does not owe the debt, refund one-half of the joint sales tax 9.33 rebate to the spouse who does not owe the debt. 9.34 (t) The rebate is a reduction of fiscal year 2001 sales tax 9.35 revenues. The amount necessary to make the sales tax rebates 9.36 and interest provided in this section is appropriated from the 10.1 general fund to the commissioner of revenue in fiscal year 2001 10.2 and is available until June 30, 2003. 10.3 (u) If a sales tax rebate check is cashed by someone other 10.4 than the payee or payees of the check, and the commissioner of 10.5 revenue determines that the check has been forged or improperly 10.6 endorsed or the commissioner determines that a rebate was 10.7 overstated or erroneously issued, the commissioner may issue an 10.8 order of assessment for the amount of the check or the amount 10.9 the check is overstated against the person or persons cashing 10.10 it. The assessment must be made within two years after the 10.11 check is cashed, but if cashing the check constitutes theft 10.12 under Minnesota Statutes, section 609.52, or forgery under 10.13 Minnesota Statutes, section 609.631, the assessment can be made 10.14 at any time. The assessment may be appealed administratively 10.15 and judicially. The commissioner may take action to collect the 10.16 assessment in the same manner as provided by Minnesota Statutes, 10.17 chapter 289A, for any other order of the commissioner assessing 10.18 tax. 10.19 (v) Notwithstanding Minnesota Statutes, sections 9.031, 10.20 16A.40, 16B.49, 16B.50, and any other law to the contrary, the 10.21 commissioner of revenue may take whatever actions the 10.22 commissioner deems necessary to pay the rebates required by this 10.23 section, and may, in consultation with the commissioner of 10.24 finance and the state treasurer, contract with a private vendor 10.25 or vendors to process, print, and mail the rebate checks or 10.26 warrants required under this section and receive and disburse 10.27 state funds to pay those checks or warrants. 10.28 (w) The commissioner may pay rebates required by this 10.29 section by electronic funds transfer to individuals who 10.30 requested that their 2000 individual income tax refund be paid 10.31 through electronic funds transfer. The commissioner may make 10.32 the electronic funds transfer payments to the same financial 10.33 institution and into the same account as the 2000 individual 10.34 income tax refund. 10.35 [EFFECTIVE DATE.] This section is effective the day 10.36 following final enactment. 11.1 Sec. 5. [APPROPRIATIONS.] 11.2 (a) $500,000 in fiscal year 2001 and $1,231,600 in fiscal 11.3 year 2002 are appropriated from the general fund to the 11.4 commissioner of revenue to administer the sales tax rebates in 11.5 this article. Any unencumbered balance remaining on June 30, 11.6 2001, does not cancel but is available for expenditure by the 11.7 commissioner of revenue until June 30, 2002. Notwithstanding 11.8 Minnesota Statutes, section 16A.285, and except as provided in 11.9 paragraph (b), the commissioner of revenue may not use this 11.10 appropriation for any purpose other than administering the 2001 11.11 sales tax rebates. This is a one-time appropriation and may not 11.12 be added to the agency's budget base. 11.13 (b) $278,000 in fiscal year 2002 is appropriated from the 11.14 general fund to the state treasurer to pay the cost of clearing 11.15 sales tax rebate checks through commercial banks. 11.16 [EFFECTIVE DATE.] This section is effective the day 11.17 following final enactment. 11.18 ARTICLE 2 11.19 INDIVIDUAL INCOME TAX 11.20 Section 1. Minnesota Statutes 2000, section 290.06, 11.21 subdivision 2c, is amended to read: 11.22 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 11.23 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 11.24 married individuals filing joint returns and surviving spouses 11.25 as defined in section 2(a) of the Internal Revenue Code must be 11.26 computed by applying to their taxable net income the following 11.27 schedule of rates: 11.28 (1) On the first $25,680,5.355.0825 percent; 11.29 (2) On all over $25,680, but not over $102,030,7.056.6975 11.30 percent; 11.31 (3) On all over $102,030,7.857.4575 percent. 11.32 Married individuals filing separate returns, estates, and 11.33 trusts must compute their income tax by applying the above rates 11.34 to their taxable income, except that the income brackets will be 11.35 one-half of the above amounts. 11.36 (b) The income taxes imposed by this chapter upon unmarried 12.1 individuals must be computed by applying to taxable net income 12.2 the following schedule of rates: 12.3 (1) On the first $17,570,5.355.0825 percent; 12.4 (2) On all over $17,570, but not over $57,710,7.056.6975 12.5 percent; 12.6 (3) On all over $57,710,7.857.4575 percent. 12.7 (c) The income taxes imposed by this chapter upon unmarried 12.8 individuals qualifying as a head of household as defined in 12.9 section 2(b) of the Internal Revenue Code must be computed by 12.10 applying to taxable net income the following schedule of rates: 12.11 (1) On the first $21,630,5.355.0825 percent; 12.12 (2) On all over $21,630, but not over $86,910,7.056.6975 12.13 percent; 12.14 (3) On all over $86,910,7.857.4575 percent. 12.15 (d) In lieu of a tax computed according to the rates set 12.16 forth in this subdivision, the tax of any individual taxpayer 12.17 whose taxable net income for the taxable year is less than an 12.18 amount determined by the commissioner must be computed in 12.19 accordance with tables prepared and issued by the commissioner 12.20 of revenue based on income brackets of not more than $100. The 12.21 amount of tax for each bracket shall be computed at the rates 12.22 set forth in this subdivision, provided that the commissioner 12.23 may disregard a fractional part of a dollar unless it amounts to 12.24 50 cents or more, in which case it may be increased to $1. 12.25 (e) An individual who is not a Minnesota resident for the 12.26 entire year must compute the individual's Minnesota income tax 12.27 as provided in this subdivision. After the application of the 12.28 nonrefundable credits provided in this chapter, the tax 12.29 liability must then be multiplied by a fraction in which: 12.30 (1) the numerator is the individual's Minnesota source 12.31 federal adjusted gross income as defined in section 62 of the 12.32 Internal Revenue Code and increased by the additions required 12.33 under section 290.01, subdivision 19a, clauses (1) and (6), 12.34 after applying the allocation and assignability provisions of 12.35 section 290.081, clause (a), or 290.17; and 12.36 (2) the denominator is the individual's federal adjusted 13.1 gross income as defined in section 62 of the Internal Revenue 13.2 Code of 1986, increased by the amounts specified in section 13.3 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 13.4 amounts specified in section 290.01, subdivision 19b, clause (1). 13.5 Sec. 2. Minnesota Statutes 2000, section 290.0671, 13.6 subdivision 1, is amended to read: 13.7 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 13.8 allowed a credit against the tax imposed by this chapter equal 13.9 to a percentage of earned income. To receive a credit, a 13.10 taxpayer must be eligible for a credit under section 32 of the 13.11 Internal Revenue Code. 13.12 (b) For individuals with no qualifying children, the credit 13.13 equals1.91252.85 percent of the first $4,460 of earned income. 13.14 The credit is reduced by1.91252.85 percent of earned income or 13.15 modified adjusted gross income, whichever is greater, in excess 13.16 of $5,570, but in no case is the credit less than zero. 13.17 (c) For individuals with one qualifying child, the credit 13.18 equals8.512.75 percent of the first $6,680 of earned income 13.19 and 8.5 percent of earned income over $11,650 but less than 13.20 $12,990. The credit is reduced by5.738.11 percent of earned 13.21 income or modified adjusted gross income, whichever is greater, 13.22 in excess of $14,560, but in no case is the credit less than 13.23 zero. 13.24 (d) For individuals with two or more qualifying children, 13.25 the credit equalsten15 percent of the first $9,390 of earned 13.26 income and 20 percent of earned income over $14,350 but less 13.27 than $16,230. The credit is reduced by10.313.92 percent of 13.28 earned income or modified adjusted gross income, whichever is 13.29 greater, in excess of $17,280, but in no case is the credit less 13.30 than zero. 13.31 (e) For tax years beginning after December 31, 2000, and 13.32 before January 1, 2003, individuals who qualify for a credit of 13.33 at least $1 under paragraph (c), the credit is increased by 13.34 $100. For tax years beginning after December 31, 2002, for 13.35 individuals who qualify for a credit of at least $1 under 13.36 paragraph (c), the credit is increased by $200. 14.1 (f) For tax years beginning after December 31, 2000, and 14.2 before January 1, 2003, individuals who qualify for a credit of 14.3 at least $1 under paragraph (d), the credit is increased by 14.4 $200. For tax years beginning after December 31, 2002, 14.5 individuals who qualify for a credit of at least $1 under 14.6 paragraph (d), the credit is increased by $400. 14.7 (g) For a nonresident or part-year resident, the credit 14.8 must be allocated based on the percentage calculated under 14.9 section 290.06, subdivision 2c, paragraph (e). 14.10(f)(h) For a person who was a resident for the entire tax 14.11 year and has earned income not subject to tax under this 14.12 chapter, the credit must be allocated based on the ratio of 14.13 federal adjusted gross income reduced by the earned income not 14.14 subject to tax under this chapter over federal adjusted gross 14.15 income. 14.16(g)(i) The commissioner shall construct tables showing the 14.17 amount of the credit at various income levels and make them 14.18 available to taxpayers. The tables shall follow the schedule 14.19 contained in this subdivision, except that the commissioner may 14.20 graduate the transition between income brackets. 14.21 [EFFECTIVE DATE.] This section is effective for tax years 14.22 beginning after December 31, 2000, except the changes in 14.23 paragraphs (b), (c), and (d) are effective for tax years 14.24 beginning after December 31, 2002. 14.25 Sec. 3. Minnesota Statutes 2000, section 290.091, 14.26 subdivision 1, is amended to read: 14.27 Subdivision 1. [IMPOSITION OF TAX.] In addition to all 14.28 other taxes imposed by this chapter a tax is imposed on 14.29 individuals, estates, and trusts equal to the excess (if any) of 14.30 (a) an amount equal to6.46.08 percent of alternative 14.31 minimum taxable income after subtracting the exemption amount, 14.32 over 14.33 (b) the regular tax for the taxable year. 14.34 [EFFECTIVE DATE.] This section is effective for tax years 14.35 beginning after December 31, 2000. 14.36 Sec. 4. Minnesota Statutes 2000, section 290.091, 15.1 subdivision 6, is amended to read: 15.2 Subd. 6. [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 15.3 is allowed against the tax imposed by this chapter on 15.4 individuals, trusts, and estates equal to the minimum tax credit 15.5 for the taxable year. The minimum tax credit equals the 15.6 adjusted net minimum tax for taxable years beginning after 15.7 December 31, 1988, reduced by the minimum tax credits allowed in 15.8 a prior taxable year. The credit may not exceed the excess (if 15.9 any) for the taxable year of 15.10 (1) the regular tax, over 15.11 (2) the greater of (i) the tentative alternative minimum 15.12 tax, or (ii) zero. 15.13 (b) The adjusted net minimum tax for a taxable year equals 15.14 the lesser of the net minimum tax or the excess (if any) of 15.15 (1) the tentative minimum tax, over 15.16 (2)6.46.08 percent of the sum of 15.17 (i) adjusted gross income as defined in section 62 of the 15.18 Internal Revenue Code, 15.19 (ii) interest income as defined in section 290.01, 15.20 subdivision 19a, clause (1), 15.21 (iii) interest on specified private activity bonds, as 15.22 defined in section 57(a)(5) of the Internal Revenue Code, to the 15.23 extent not included under clause (ii), 15.24 (iv) depletion as defined in section 57(a)(1), determined 15.25 without regard to the last sentence of paragraph (1), of the 15.26 Internal Revenue Code, less 15.27 (v) the deductions allowed in computing alternative minimum 15.28 taxable income provided in subdivision 2, paragraph (a), clause 15.29 (2) of the first series of clauses and clauses (1), (2), and (3) 15.30 of the second series of clauses, and 15.31 (vi) the exemption amount determined under subdivision 3. 15.32 In the case of an individual who is not a Minnesota 15.33 resident for the entire year, adjusted net minimum tax must be 15.34 multiplied by the fraction defined in section 290.06, 15.35 subdivision 2c, paragraph (e). In the case of a trust or 15.36 estate, adjusted net minimum tax must be multiplied by the 16.1 fraction defined under subdivision 4, paragraph (b). 16.2 [EFFECTIVE DATE.] This section is effective for tax years 16.3 beginning after December 31, 2000. 16.4 Sec. 5. Minnesota Statutes 2000, section 290.92, 16.5 subdivision 3, is amended to read: 16.6 Subd. 3. [WITHHOLDING, IRREGULAR PERIOD.] If payment of 16.7 wages is made to an employee by an employer 16.8 (a) With respect to a payroll period or other period, any 16.9 part of which is included in a payroll period or other period 16.10 with respect to which wages are also paid to such employees by 16.11 such employer, or 16.12 (b) Without regard to any payroll period or other period, 16.13 but on or prior to the expiration of a payroll period or other 16.14 period with respect to which wages are also paid to such 16.15 employee by such employer, or 16.16 (c) With respect to a period beginning in one and ending in 16.17 another calendar year, or 16.18 (d) Through an agent, fiduciary, or other person who also 16.19 has the control, receipt, custody, or disposal of or pays, the 16.20 wages payable by another employer to such employee. 16.21 The manner of withholding and the amount to be deducted and 16.22 withheld under subdivision 2a shall be determined in accordance 16.23 with rules prescribed by the commissioner under which the 16.24 withholding exemption allowed to the employee in any calendar 16.25 year shall approximate the withholding exemption allowable with 16.26 respect to an annual payroll period, except that if supplemental 16.27 wages are not paid concurrent with a payroll period the employer 16.28 shall withhold tax on the supplemental payment at the rate of 16.296.255.94 percent as if no exemption had been claimed. 16.30 [EFFECTIVE DATE.] This section is effective for wages paid 16.31 after July 1, 2001. 16.32 Sec. 6. Minnesota Statutes 2000, section 290.92, 16.33 subdivision 28, is amended to read: 16.34 Subd. 28. [PAYMENTS TO HORSE RACING LICENSE HOLDERS.] 16.35 Effective with payments made after April 1, 1988, any holder of 16.36 a license issued by the Minnesota racing commission who makes a 17.1 payment for personal or professional services to a holder of a 17.2 class C license issued by the commission, except an amount paid 17.3 as a purse, shall deduct from the payment and withhold6.255.94 17.4 percent of the amount as Minnesota withholding tax when the 17.5 amount paid to that individual by the same person during the 17.6 calendar year exceeds $600. For purposes of the provisions of 17.7 this section, a payment to any person which is subject to 17.8 withholding under this subdivision must be treated as if the 17.9 payment was a wage paid by an employer to an employee. Every 17.10 individual who is to receive a payment which is subject to 17.11 withholding under this subdivision shall furnish the license 17.12 holder with a statement, made under the penalties of perjury, 17.13 containing the name, address, and social security account number 17.14 of the person receiving the payment. No withholding is required 17.15 if the individual presents a signed certificate from the 17.16 individual's employer which states that the individual is an 17.17 employee of that employer. A nonresident individual who holds a 17.18 class C license must be treated as an athlete for purposes of 17.19 applying the provisions of sections 290.17, subdivision 17.20 2(1)(b)(ii) and 290.92, subdivision 4a. 17.21 [EFFECTIVE DATE.] This section is effective for payments 17.22 made after July 1, 2001. 17.23 Sec. 7. Minnesota Statutes 2000, section 290.92, 17.24 subdivision 29, is amended to read: 17.25 Subd. 29. [LOTTERY PRIZES.]7.256.89 percent of the 17.26 payment of Minnesota state lottery winnings which are subject to 17.27 withholding must be withheld as Minnesota withholding tax. For 17.28 purposes of this subdivision, the term "winnings which are 17.29 subject to withholding" has the meaning given in section 17.30 3402(q)(3) of the Internal Revenue Code. For purposes of the 17.31 provisions of this section, a payment to any person of winnings 17.32 which are subject to withholding must be treated as if the 17.33 payment was a wage paid by an employer to an employee. Every 17.34 individual who is to receive a payment of winnings which are 17.35 subject to withholding shall furnish the state lottery with a 17.36 statement, made under the penalties of perjury, containing the 18.1 name, address, and social security account number of the person 18.2 receiving the payment. The Minnesota state lottery is liable 18.3 for the payment of the tax required to be withheld under this 18.4 subdivision but is not liable to any person for the amount of 18.5 the payment. 18.6 [EFFECTIVE DATE.] This section is effective for winnings 18.7 paid after July 1, 2001. 18.8 ARTICLE 3 18.9 FEDERAL UPDATE 18.10 Section 1. Minnesota Statutes 2000, section 289A.02, 18.11 subdivision 7, is amended to read: 18.12 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 18.13 defined otherwise, "Internal Revenue Code" means the Internal 18.14 Revenue Code of 1986, as amended through December 31,19992000. 18.15 [EFFECTIVE DATE.] This section is effective the day 18.16 following final enactment. 18.17 Sec. 2. Minnesota Statutes 2000, section 290.01, 18.18 subdivision 19, is amended to read: 18.19 Subd. 19. [NET INCOME.] The term "net income" means the 18.20 federal taxable income, as defined in section 63 of the Internal 18.21 Revenue Code of 1986, as amended through the date named in this 18.22 subdivision, incorporating any elections made by the taxpayer in 18.23 accordance with the Internal Revenue Code in determining federal 18.24 taxable income for federal income tax purposes, and with the 18.25 modifications provided in subdivisions 19a to 19f. 18.26 In the case of a regulated investment company or a fund 18.27 thereof, as defined in section 851(a) or 851(g) of the Internal 18.28 Revenue Code, federal taxable income means investment company 18.29 taxable income as defined in section 852(b)(2) of the Internal 18.30 Revenue Code, except that: 18.31 (1) the exclusion of net capital gain provided in section 18.32 852(b)(2)(A) of the Internal Revenue Code does not apply; 18.33 (2) the deduction for dividends paid under section 18.34 852(b)(2)(D) of the Internal Revenue Code must be applied by 18.35 allowing a deduction for capital gain dividends and 18.36 exempt-interest dividends as defined in sections 852(b)(3)(C) 19.1 and 852(b)(5) of the Internal Revenue Code; and 19.2 (3) the deduction for dividends paid must also be applied 19.3 in the amount of any undistributed capital gains which the 19.4 regulated investment company elects to have treated as provided 19.5 in section 852(b)(3)(D) of the Internal Revenue Code. 19.6 The net income of a real estate investment trust as defined 19.7 and limited by section 856(a), (b), and (c) of the Internal 19.8 Revenue Code means the real estate investment trust taxable 19.9 income as defined in section 857(b)(2) of the Internal Revenue 19.10 Code. 19.11 The net income of a designated settlement fund as defined 19.12 in section 468B(d) of the Internal Revenue Code means the gross 19.13 income as defined in section 468B(b) of the Internal Revenue 19.14 Code. 19.15 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 19.16 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 19.17 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 19.18 Protection Act, Public Law Number 104-188, the provisions of 19.19 Public Law Number 104-117, the provisions of sections 313(a) and 19.20 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 19.21 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 19.22 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 19.23 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 19.24 Public Law Number 105-34, the provisions of section 6010 of the 19.25 Internal Revenue Service Restructuring and Reform Act of 1998, 19.26 Public Law Number 105-206, and the provisions of section 4003 of 19.27 the Omnibus Consolidated and Emergency Supplemental 19.28 Appropriations Act, 1999, Public Law Number 105-277, and the 19.29 provisions of section 318 of the Consolidated Appropriation Act 19.30 of 2001, Public Law Number 106-554, shall become effective at 19.31 the time they become effective for federal purposes. 19.32 The Internal Revenue Code of 1986, as amended through 19.33 December 31, 1996, shall be in effect for taxable years 19.34 beginning after December 31, 1996. 19.35 The provisions of sections 202(a) and (b), 221(a), 225, 19.36 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 20.1 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 20.2 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 20.3 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 20.4 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 20.5 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 20.6 7002, and 7003 of the Internal Revenue Service Restructuring and 20.7 Reform Act of 1998, Public Law Number 105-206, the provisions of 20.8 section 3001 of the Omnibus Consolidated and Emergency 20.9 Supplemental Appropriations Act, 1999, Public Law Number 20.10 105-277, and the provisions of section 3001 of the Miscellaneous 20.11 Trade and Technical Corrections Act of 1999, Public Law Number 20.12 106-36, and the provisions of section 316 of the Consolidated 20.13 Appropriation Act of 2001, Public Law Number 106-554, shall 20.14 become effective at the time they become effective for federal 20.15 purposes. 20.16 The Internal Revenue Code of 1986, as amended through 20.17 December 31, 1997, shall be in effect for taxable years 20.18 beginning after December 31, 1997. 20.19 The provisions of sections 5002, 6009, 6011, and 7001 of 20.20 the Internal Revenue Service Restructuring and Reform Act of 20.21 1998, Public Law Number 105-206, the provisions of section 9010 20.22 of the Transportation Equity Act for the 21st Century, Public 20.23 Law Number 105-178, the provisions of sections 1004, 4002, and 20.24 5301 of the Omnibus Consolidation and Emergency Supplemental 20.25 Appropriations Act, 1999, Public Law Number 105-277, the 20.26 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 20.27 Act of 1998, Public Law Number 105-369,andthe provisions of 20.28 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 20.29 Work Incentives Improvement Act of 1999, Public Law Number 20.30 106-170, the provisions of the Installment Tax Correction Act of 20.31 2000, Public Law Number 106-573, and the provisions of section 20.32 309 of the Consolidated Appropriation Act of 2001, Public Law 20.33 Number 106-554, shall become effective at the time they become 20.34 effective for federal purposes. 20.35 The Internal Revenue Code of 1986, as amended through 20.36 December 31, 1998, shall be in effect for taxable years 21.1 beginning after December 31, 1998. 21.2 The provisions of the FSC Repeal and Extraterritorial 21.3 Income Exclusion Act of 2000, Public Law Number 106-519, shall 21.4 become effective at the time it became effective for federal 21.5 purposes. 21.6 The Internal Revenue Code of 1986, as amended through 21.7 December 31, 1999, shall be in effect for taxable years 21.8 beginning after December 31, 1999. The provisions of sections 21.9 306 and 401 of the Consolidated Appropriation Act of 2001, 21.10 Public Law Number 106-554, shall become effective at the same 21.11 time it became effective for federal purposes. 21.12 The Internal Revenue Code of 1986, as amended through 21.13 December 31, 2000, shall be in effect for taxable years 21.14 beginning after December 31, 2000. 21.15 Except as otherwise provided, references to the Internal 21.16 Revenue Code in subdivisions 19a to 19g mean the code in effect 21.17 for purposes of determining net income for the applicable year. 21.18 [EFFECTIVE DATE.] This section is effective the day 21.19 following final enactment. 21.20 Sec. 3. Minnesota Statutes 2000, section 290.01, 21.21 subdivision 31, is amended to read: 21.22 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 21.23 defined otherwise, "Internal Revenue Code" means the Internal 21.24 Revenue Code of 1986, as amended through December 31,19992000. 21.25 [EFFECTIVE DATE.] This section is effective at the same 21.26 time and in the same manner as the federal changes made by the 21.27 FSC Repeal and Extraterritorial Income Exclusion Act of 2000, 21.28 Public Law Number 106-519, and the Consolidated Appropriation 21.29 Act of 2001, Public Law Number 106-554, becomes effective. 21.30 Sec. 4. Minnesota Statutes 2000, section 290.191, 21.31 subdivision 5, is amended to read: 21.32 Subd. 5. [DETERMINATION OF SALES FACTOR.] For purposes of 21.33 this section, the following rules apply in determining the sales 21.34 factor. 21.35 (a) The sales factor includes all sales, gross earnings, or 21.36 receipts received in the ordinary course of the business, except 22.1 that the following types of income are not included in the sales 22.2 factor: 22.3 (1) interest; 22.4 (2) dividends; 22.5 (3) sales of capital assets as defined in section 1221 of 22.6 the Internal Revenue Code; 22.7 (4) sales of property used in the trade or business, except 22.8 sales of leased property of a type which is regularly sold as 22.9 well as leased; 22.10 (5) sales of debt instruments as defined in section 22.11 1275(a)(1) of the Internal Revenue Code or sales of stock;and22.12 (6) royalties, fees, or other like income of a type which 22.13 qualify for a subtraction from federal taxable income under 22.14 section 290.01, subdivision 19(d)(11); and 22.15 (7) all sales, gross earnings, or receipts used to generate 22.16 income excluded under section 114 of the Internal Revenue Code. 22.17 (b) Sales of tangible personal property are made within 22.18 this state if the property is received by a purchaser at a point 22.19 within this state, and the taxpayer is taxable in this state, 22.20 regardless of the f.o.b. point, other conditions of the sale, or 22.21 the ultimate destination of the property. 22.22 (c) Tangible personal property delivered to a common or 22.23 contract carrier or foreign vessel for delivery to a purchaser 22.24 in another state or nation is a sale in that state or nation, 22.25 regardless of f.o.b. point or other conditions of the sale. 22.26 (d) Notwithstanding paragraphs (b) and (c), when 22.27 intoxicating liquor, wine, fermented malt beverages, cigarettes, 22.28 or tobacco products are sold to a purchaser who is licensed by a 22.29 state or political subdivision to resell this property only 22.30 within the state of ultimate destination, the sale is made in 22.31 that state. 22.32 (e) Sales made by or through a corporation that is 22.33 qualified as a domestic international sales corporation under 22.34 section 992 of the Internal Revenue Code are not considered to 22.35 have been made within this state. 22.36 (f) Sales, rents, royalties, and other income in connection 23.1 with real property is attributed to the state in which the 23.2 property is located. 23.3 (g) Receipts from the lease or rental of tangible personal 23.4 property, including finance leases and true leases, must be 23.5 attributed to this state if the property is located in this 23.6 state and to other states if the property is not located in this 23.7 state. Receipts from the lease or rental of moving property 23.8 including, but not limited to, motor vehicles, rolling stock, 23.9 aircraft, vessels, or mobile equipment are included in the 23.10 numerator of the receipts factor to the extent that the property 23.11 is used in this state. The extent of the use of moving property 23.12 is determined as follows: 23.13 (1) A motor vehicle is used wholly in the state in which it 23.14 is registered. 23.15 (2) The extent that rolling stock is used in this state is 23.16 determined by multiplying the receipts from the lease or rental 23.17 of the rolling stock by a fraction, the numerator of which is 23.18 the miles traveled within this state by the leased or rented 23.19 rolling stock and the denominator of which is the total miles 23.20 traveled by the leased or rented rolling stock. 23.21 (3) The extent that an aircraft is used in this state is 23.22 determined by multiplying the receipts from the lease or rental 23.23 of the aircraft by a fraction, the numerator of which is the 23.24 number of landings of the aircraft in this state and the 23.25 denominator of which is the total number of landings of the 23.26 aircraft. 23.27 (4) The extent that a vessel, mobile equipment, or other 23.28 mobile property is used in the state is determined by 23.29 multiplying the receipts from the lease or rental of the 23.30 property by a fraction, the numerator of which is the number of 23.31 days during the taxable year the property was in this state and 23.32 the denominator of which is the total days in the taxable year. 23.33 (h) Royalties and other income not described in paragraph 23.34 (a), clause (6), received for the use of or for the privilege of 23.35 using intangible property, including patents, know-how, 23.36 formulas, designs, processes, patterns, copyrights, trade names, 24.1 service names, franchises, licenses, contracts, customer lists, 24.2 or similar items, must be attributed to the state in which the 24.3 property is used by the purchaser. If the property is used in 24.4 more than one state, the royalties or other income must be 24.5 apportioned to this state pro rata according to the portion of 24.6 use in this state. If the portion of use in this state cannot 24.7 be determined, the royalties or other income must be excluded 24.8 from both the numerator and the denominator. Intangible 24.9 property is used in this state if the purchaser uses the 24.10 intangible property or the rights therein in the regular course 24.11 of its business operations in this state, regardless of the 24.12 location of the purchaser's customers. 24.13 (i) Sales of intangible property are made within the state 24.14 in which the property is used by the purchaser. If the property 24.15 is used in more than one state, the sales must be apportioned to 24.16 this state pro rata according to the portion of use in this 24.17 state. If the portion of use in this state cannot be 24.18 determined, the sale must be excluded from both the numerator 24.19 and the denominator of the sales factor. Intangible property is 24.20 used in this state if the purchaser used the intangible property 24.21 in the regular course of its business operations in this state. 24.22 (j) Receipts from the performance of services must be 24.23 attributed to the state where the services are received. For 24.24 the purposes of this section, receipts from the performance of 24.25 services provided to a corporation, partnership, or trust may 24.26 only be attributed to a state where it has a fixed place of 24.27 doing business. If the state where the services are received is 24.28 not readily determinable or is a state where the corporation, 24.29 partnership, or trust receiving the service does not have a 24.30 fixed place of doing business, the services shall be deemed to 24.31 be received at the location of the office of the customer from 24.32 which the services were ordered in the regular course of the 24.33 customer's trade or business. If the ordering office cannot be 24.34 determined, the services shall be deemed to be received at the 24.35 office of the customer to which the services are billed. 24.36 [EFFECTIVE DATE.] This section is effective for 25.1 transactions after September 30, 2000. 25.2 Sec. 5. Minnesota Statutes 2000, section 290A.03, 25.3 subdivision 15, is amended to read: 25.4 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 25.5 means the Internal Revenue Code of 1986, as amended through 25.6 December 31,19992000. 25.7 [EFFECTIVE DATE.] This section is effective the day 25.8 following final enactment. 25.9 Sec. 6. Minnesota Statutes 2000, section 291.005, 25.10 subdivision 1, is amended to read: 25.11 Subdivision 1. Unless the context otherwise clearly 25.12 requires, the following terms used in this chapter shall have 25.13 the following meanings: 25.14 (1) "Federal gross estate" means the gross estate of a 25.15 decedent as valued and otherwise determined for federal estate 25.16 tax purposes by federal taxing authorities pursuant to the 25.17 provisions of the Internal Revenue Code. 25.18 (2) "Minnesota gross estate" means the federal gross estate 25.19 of a decedent after (a) excluding therefrom any property 25.20 included therein which has its situs outside Minnesota and (b) 25.21 including therein any property omitted from the federal gross 25.22 estate which is includable therein, has its situs in Minnesota, 25.23 and was not disclosed to federal taxing authorities. 25.24 (3) "Personal representative" means the executor, 25.25 administrator or other person appointed by the court to 25.26 administer and dispose of the property of the decedent. If 25.27 there is no executor, administrator or other person appointed, 25.28 qualified, and acting within this state, then any person in 25.29 actual or constructive possession of any property having a situs 25.30 in this state which is included in the federal gross estate of 25.31 the decedent shall be deemed to be a personal representative to 25.32 the extent of the property and the Minnesota estate tax due with 25.33 respect to the property. 25.34 (4) "Resident decedent" means an individual whose domicile 25.35 at the time of death was in Minnesota. 25.36 (5) "Nonresident decedent" means an individual whose 26.1 domicile at the time of death was not in Minnesota. 26.2 (6) "Situs of property" means, with respect to real 26.3 property, the state or country in which it is located; with 26.4 respect to tangible personal property, the state or country in 26.5 which it was normally kept or located at the time of the 26.6 decedent's death; and with respect to intangible personal 26.7 property, the state or country in which the decedent was 26.8 domiciled at death. 26.9 (7) "Commissioner" means the commissioner of revenue or any 26.10 person to whom the commissioner has delegated functions under 26.11 this chapter. 26.12 (8) "Internal Revenue Code" means the United States 26.13 Internal Revenue Code of 1986, as amended through December 31, 26.1419992000. 26.15 [EFFECTIVE DATE.] This section is effective the day 26.16 following final enactment. 26.17 ARTICLE 4 26.18 PROPERTY TAX REFORM 26.19 Section 1. Minnesota Statutes 2000, section 126C.01, is 26.20 amended by adding a subdivision to read: 26.21 Subd. 12. [RESIDENTIAL ASSESSED VALUE.] "Residential 26.22 assessed value" means the assessed value of the following 26.23 taxable properties located within the district, as defined in 26.24 section 273.13: class 1a, 1b, and 1c properties, the house, 26.25 garage, and immediately surrounding one acre of land of class 2a 26.26 properties, class 4a properties, class 4b(1) properties, class 26.27 4b(3) properties, class 4bb properties, and class 4d properties. 26.28 [EFFECTIVE DATE.] This section is effective for taxes 26.29 payable in 2002 and thereafter. 26.30 Sec. 2. Minnesota Statutes 2000, section 126C.01, is 26.31 amended by adding a subdivision to read: 26.32 Subd. 13. [ADJUSTED RESIDENTIAL ASSESSED VALUE.] "Adjusted 26.33 residential assessed value" means the residential assessed value 26.34 of property located within the district as adjusted by the 26.35 commissioner of revenue under section 127A.48. The adjusted 26.36 residential assessed value for a particular assessment year must 27.1 be used to compute referendum levy limitations under section 27.2 126C.17 for levies certified in the succeeding calendar year and 27.3 referendum aid for the school year beginning in the second 27.4 succeeding calendar year. 27.5 [EFFECTIVE DATE.] This section is effective for levies 27.6 certified in 2001 and aids payable for school years beginning in 27.7 2002, and thereafter. 27.8 Sec. 3. Minnesota Statutes 2000, section 126C.01, is 27.9 amended by adding a subdivision to read: 27.10 Subd. 14. [ADJUSTED ASSESSED VALUE.] "Adjusted assessed 27.11 value" means the assessed value of property located within the 27.12 district as adjusted by the commissioner of revenue under 27.13 section 127A.48. The adjusted assessed value for a particular 27.14 assessment year must be used to compute levy limitations for 27.15 levies certified in the succeeding calendar year and aid for the 27.16 school year beginning in the second succeeding calendar year. 27.17 [EFFECTIVE DATE.] This section is effective for levies 27.18 certified in 2001 and aid payable for school years beginning in 27.19 2002, and thereafter. 27.20 Sec. 4. [126C.02] [SCHOOL DISTRICT LEVY ADJUSTMENTS.] 27.21 Subdivision 1. [TRANSITION ADJUSTMENTS.] For taxes payable 27.22 in 2002 and thereafter, the commissioner of children, families, 27.23 and learning shall, in consultation with the commissioner of 27.24 revenue, make the adjustments required by this section. 27.25 Subd. 2. [REVENUE CONVERSION.] Each school district's 27.26 revenue authority that is established as a rate times net tax 27.27 capacity or adjusted net tax capacity under this chapter shall 27.28 be adjusted by multiplying each revenue amount by the ratio of 27.29 the statewide net tax capacity as calculated using the class 27.30 rates in effect for assessment year 2001 to the statewide 27.31 assessed value using the class rates for the assessment year 27.32 related to the taxes payable year for which the revenue 27.33 authority is being determined. 27.34 Subd. 3. [TAX RATE ADJUSTMENT.] Each tax rate established 27.35 under chapters 123B and 124D shall be adjusted by multiplying 27.36 the rate by the ratio of the statewide tax capacity as 28.1 calculated using the class rates in effect for assessment year 28.2 2001 to the statewide assessed value using the class rates for 28.3 the assessment year related to the taxes payable year for which 28.4 the rate is being determined. 28.5 Subd. 4. [EQUALIZING FACTORS.] Each equalizing factor 28.6 established under this chapter and chapters 123B, 124D, 28.7 excluding sections 123B.53, subdivision 5, 126C.10, subdivision 28.8 21, and 126C.17, subdivision 6, shall be adjusted by dividing 28.9 the equalizing factor by the ratio of the statewide tax capacity 28.10 as calculated using the class rates in effect for assessment 28.11 year 2001 to the statewide assessed value using the class rates 28.12 for the assessment year related to the taxes payable year for 28.13 which the factor is being determined. 28.14 [EFFECTIVE DATE.] This section is effective for taxes 28.15 payable in 2002 and thereafter. 28.16 Sec. 5. Minnesota Statutes 2000, section 126C.13, 28.17 subdivision 1, is amended to read: 28.18 Subdivision 1. [GENERAL EDUCATION TAX RATE.] The 28.19 commissioner must establish the general education tax rate by 28.20 July 1 of each year for levies payable in the following year. 28.21 The general education tax capacity rate must be a rate, rounded 28.22 up to the nearest hundredth of a percent, that, when applied to 28.23 the adjusted net tax capacity for all districts, raises the 28.24 amount specified in this subdivision. The general education tax 28.25 rate must be the rate that raises $1,330,000,000 for fiscal year 28.26 2001 and fiscal year 2002, and zero for later fiscal years. The 28.27 general education tax rate may not be changed due to changes or 28.28 corrections made to a district's adjusted net tax capacity after 28.29 the tax rate has been established. 28.30 [EFFECTIVE DATE.] This section is effective the day 28.31 following final enactment. 28.32 Sec. 6. Minnesota Statutes 2000, section 126C.13, 28.33 subdivision 2, is amended to read: 28.34 Subd. 2. [GENERAL EDUCATION LEVY.] To obtain general 28.35 education revenue, excluding transition revenue and supplemental 28.36 revenue, a district may levy an amount not to exceed the general 29.1 education tax rate times the adjusted net tax capacity of the 29.2 district for the preceding year. If the amount of the general 29.3 education levy would exceed the general education revenue, 29.4 excluding transition revenue and supplemental revenue, the 29.5 general education levy must be determined according to 29.6 subdivision 3. For taxes payable in 2002 and thereafter, the 29.7 general education levy amount authorized by this subdivision for 29.8 all districts is zero. 29.9 [EFFECTIVE DATE.] This section is effective for taxes 29.10 payable in 2002 and thereafter. 29.11 Sec. 7. Minnesota Statutes 2000, section 126C.13, 29.12 subdivision 4, is amended to read: 29.13 Subd. 4. [GENERAL EDUCATION AID.] (a) For fiscal year 29.14 2002, a district's general education aid is the sum of the 29.15 following amounts: 29.16 (1) the product of (i) the difference between the general 29.17 education revenue, excluding transition revenue and supplemental 29.18 revenue, and the general education levy, times (ii) the ratio of 29.19 the actual amount levied to the permitted levy; 29.20 (2) transition aid according to section 126C.10, 29.21 subdivision 22; 29.22 (3) supplemental aid according to section127A.49126C.10, 29.23 subdivision 11; 29.24 (4) shared time aid according to section 126C.01, 29.25 subdivision 7; and 29.26 (5) referendum aid according to section 126C.17. 29.27 (b) For fiscal year 2003 and later, a district's general 29.28 education aid is the sum of the following amounts: 29.29 (1) the general education revenue according to section 29.30 126C.10, subdivision 1, excluding transition revenue; 29.31 (2) transition aid according to section 126C.10, 29.32 subdivision 22; 29.33 (3) shared time aid according to section 126C.01, 29.34 subdivision 7; and 29.35 (4) referendum aid according to section 126C.17. 29.36 [EFFECTIVE DATE.] This section is effective July 1, 2001, 30.1 and thereafter. 30.2 Sec. 8. Minnesota Statutes 2000, section 126C.17, 30.3 subdivision 5, is amended to read: 30.4 Subd. 5. [REFERENDUM EQUALIZATION REVENUE.] (a) For fiscal 30.5 year 2002, a district's referendum equalization revenue equals 30.6 thereferendum equalization allowancelesser of the district's 30.7 referendum allowance under subdivision 1 or $415 times the 30.8 district's resident marginal cost pupil units for that 30.9 year. For fiscal year 2003 and later, a district's referendum 30.10 equalization revenue equals the sum of the first tier referendum 30.11 equalization revenue and the second tier referendum equalization 30.12 revenue. 30.13 (b)TheA district's first tier referendum equalization 30.14 revenue equals the district's first tier referendum equalization 30.15 allowance times the district's resident marginal cost pupil 30.16 units for that year. 30.17 (c) A district's first tier referendum equalization 30.18 allowance equals$350 for fiscal year 2000 and $415 for fiscal30.19year 2001 and later.30.20(c) Referendum equalization revenue must not exceed a30.21district's total referendum revenue for that year.the lesser of 30.22 the district's referendum allowance under subdivision 1 or $600. 30.23 (d) A district's second tier referendum equalization 30.24 allowance equals the lesser of the district's referendum 30.25 allowance under subdivision 1 or 25 percent of the formula 30.26 allowance, minus the district's first tier referendum 30.27 equalization allowance. 30.28 (e) Notwithstanding paragraph (d), the second tier 30.29 referendum equalization allowance for a district qualifying for 30.30 secondary sparsity revenue under section 126C.10, subdivision 7, 30.31 or elementary sparsity revenue under section 126C.10, 30.32 subdivision 8, equals the district's referendum allowance under 30.33 subdivision 1, minus the district's first tier referendum 30.34 equalization allowance. 30.35 [EFFECTIVE DATE.] This section is effective for fiscal year 30.36 2002 and thereafter. 31.1 Sec. 9. Minnesota Statutes 2000, section 126C.17, 31.2 subdivision 6, is amended to read: 31.3 Subd. 6. [REFERENDUM EQUALIZATION LEVY.] (a) A district's 31.4 referendum equalization levy for areferendum levied against the31.5referendum market value of all taxable property as defined in31.6section 126C.01, subdivision 3fiscal year 2002, equals the 31.7 district's referendum equalization revenue times the lesser of 31.8 one or the ratio of the district's referendum market value per 31.9 resident marginal cost pupil unit to $476,000. 31.10 (b) For fiscal year 2003 and later, a district's referendum 31.11 equalization levyfor a referendum levied against the net tax31.12capacity of all taxable property equals the district's31.13referendum equalization revenue times the lesser of one or the31.14ratio of the district's adjusted net tax capacity per resident31.15marginal cost pupil unit to $8,404equals the sum of the first 31.16 tier referendum equalization levy and the second tier referendum 31.17 equalization levy. 31.18 (c) A district's first tier referendum equalization levy 31.19 equals the district's first tier referendum equalization revenue 31.20 times the lesser of one or the ratio of the district's adjusted 31.21 residential assessed value per resident marginal cost pupil unit 31.22 to $6,400. 31.23 (d) A district's second tier referendum equalization levy 31.24 equals the district's second tier revenue times the lesser of 31.25 one or the ratio of the district's adjusted residential assessed 31.26 value per resident marginal cost pupil unit to $4,265. 31.27 [EFFECTIVE DATE.] This section is effective for fiscal year 31.28 2002 and thereafter. 31.29 Sec. 10. Minnesota Statutes 2000, section 126C.17, 31.30 subdivision 7, is amended to read: 31.31 Subd. 7. [REFERENDUM EQUALIZATION AID.] (a) A district's 31.32 referendum equalization aid equals the difference between its 31.33 referendum equalization revenue and levy. 31.34 (b) If a district's actual levy for first or second tier 31.35 referendum equalization revenue is less than its maximum levy 31.36 limit for that tier, aid for that tier shall be proportionately 32.1 reduced. 32.2 [EFFECTIVE DATE.] This section is effective for fiscal year 32.3 2003 and thereafter. 32.4 Sec. 11. Minnesota Statutes 2000, section 126C.17, 32.5 subdivision 8, is amended to read: 32.6 Subd. 8. [UNEQUALIZED REFERENDUM LEVY.] Each year, a 32.7 district may levy an amount equal to the difference between its 32.8 total referendum revenue according to subdivision54 and its 32.9equalized referendum aid and levy according to subdivisions 632.10and 7referendum equalization revenue according to subdivision 5. 32.11 [EFFECTIVE DATE.] This section is effective for taxes 32.12 payable in 2002 and thereafter. 32.13 Sec. 12. Minnesota Statutes 2000, section 126C.17, 32.14 subdivision 9, is amended to read: 32.15 Subd. 9. [REFERENDUM REVENUE.] (a) The revenue authorized 32.16 by section 126C.10, subdivision 1, may be increased in the 32.17 amount approved by the voters of the district at a referendum 32.18 called for the purpose. The referendum may be called by the 32.19 board or shall be called by the board upon written petition of 32.20 qualified voters of the district. The referendum must be 32.21 conducted one or two calendar years before the increased levy 32.22 authority, if approved, first becomes payable. Only one 32.23 election to approve an increase may be held in a calendar year. 32.24 Unless the referendum is conducted by mail under paragraph (g), 32.25 the referendum must be held on the first Tuesday after the first 32.26 Monday in November. The ballot must state the maximum amount of 32.27 the increased revenue per resident marginal cost pupil unit, the 32.28 estimated referendum tax mill rateas a percentage of referendum32.29market valuein the first year it is to be levied, and that the 32.30 revenue must be used to finance school operations. The ballot 32.31 may state a schedule, determined by the board, of increased 32.32 revenue per resident marginal cost pupil unit that differs from 32.33 year to year over the number of years for which the increased 32.34 revenue is authorized. If the ballot contains a schedule 32.35 showing different amounts, it must also indicate the estimated 32.36 referendum tax mill rateas a percent of referendum market value33.1 for the amount specified for the first year and for the maximum 33.2 amount specified in the schedule. The ballot may state that 33.3 existing referendum levy authority is expiring. In this case, 33.4 the ballot may also compare the proposed levy authority to the 33.5 existing expiring levy authority, and express the proposed 33.6 increase as the amount, if any, over the expiring referendum 33.7 levy authority. The ballot must designate the specific number 33.8 of years, not to exceed ten, for which the referendum 33.9 authorization applies. The notice required under section 275.60 33.10 may be modified to read, in cases of renewing existing levies: 33.11 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 33.12 FOR A PROPERTY TAX INCREASE." 33.13 The ballot may contain a textual portion with the 33.14 information required in this subdivision and a question stating 33.15 substantially the following: 33.16 "Shall the increase in the revenue proposed by (petition 33.17 to) the board of ........., School District No. .., be approved?" 33.18 If approved, an amount equal to the approved revenue per 33.19 resident marginal cost pupil unit times the resident marginal 33.20 cost pupil units for the school year beginning in the year after 33.21 the levy is certified shall be authorized for certification for 33.22 the number of years approved, if applicable, or until revoked or 33.23 reduced by the voters of the district at a subsequent referendum. 33.24 (b) The board must prepare and deliver by first class mail 33.25 at least 15 days but no more than 30 days before the day of the 33.26 referendum to each taxpayer a notice of the referendum and the 33.27 proposed revenue increase. The board need not mail more than 33.28 one notice to any taxpayer. For the purpose of giving mailed 33.29 notice under this subdivision, owners must be those shown to be 33.30 owners on the records of the county auditor or, in any county 33.31 where tax statements are mailed by the county treasurer, on the 33.32 records of the county treasurer. Every property owner whose 33.33 name does not appear on the records of the county auditor or the 33.34 county treasurer is deemed to have waived this mailed notice 33.35 unless the owner has requested in writing that the county 33.36 auditor or county treasurer, as the case may be, include the 34.1 name on the records for this purpose. The notice must project 34.2 the anticipated amount of tax increase in annual dollars and 34.3 annualpercentagemill rates for typical residential homesteads, 34.4 agricultural homesteads, and apartments, and34.5commercial-industrial propertywithin the school district. 34.6 The notice for a referendum may state that an existing 34.7 referendum levy is expiring and project the anticipated amount 34.8 of increase over the existing referendum levy in the first year, 34.9 if any, in annual dollars and annualpercentagemill rates for 34.10 typical residential homesteads, agricultural homesteads, and 34.11 apartments, and commercial-industrial propertywithin the 34.12 district. 34.13 The notice must include the following statement: "Passage 34.14 of this referendum will result in an increase in your property 34.15 taxes." However, in cases of renewing existing levies, the 34.16 notice may include the following statement: "Passage of this 34.17 referendum may result in an increase in your property taxes." 34.18 (c) A referendum on the question of revoking or reducing 34.19 the increased revenue amount authorized pursuant to paragraph 34.20 (a) may be called by the board and shall be called by the board 34.21 upon the written petition of qualified voters of the district. 34.22 A referendum to revoke or reduce the levy amount must be based 34.23 upon the dollaramount, local tax rate, oramount per resident 34.24 marginal cost pupil unit, that was stated to be the basis for 34.25 the initial authorization. Revenue approved by the voters of 34.26 the district pursuant to paragraph (a) must be received at least 34.27 once before it is subject to a referendum on its revocation or 34.28 reduction for subsequent years. Only one revocation or 34.29 reduction referendum may be held to revoke or reduce referendum 34.30 revenue for any specific year and for years thereafter. 34.31 (d) A petition authorized by paragraph (a) or (c) is 34.32 effective if signed by a number of qualified voters in excess of 34.33 15 percent of the registered voters of the district on the day 34.34 the petition is filed with the board. A referendum invoked by 34.35 petition must be held on the date specified in paragraph (a). 34.36 (e) The approval of 50 percent plus one of those voting on 35.1 the question is required to pass a referendum authorized by this 35.2 subdivision. 35.3 (f) At least 15 days before the day of the referendum, the 35.4 district must submit a copy of the notice required under 35.5 paragraph (b) to the commissioner and to the county auditor of 35.6 each county in which the district is located. Within 15 days 35.7 after the results of the referendum have been certified by the 35.8 board, or in the case of a recount, the certification of the 35.9 results of the recount by the canvassing board, the district 35.10 must notify the commissioner of the results of the referendum. 35.11 (g) Except for a referendum held under subdivision 11, any 35.12 referendum under this section held on a day other than the first 35.13 Tuesday after the first Monday in November must be conducted by 35.14 mail in accordance with section 204B.46. Notwithstanding 35.15 paragraph (b) to the contrary, in the case of a referendum 35.16 conducted by mail under this paragraph, the notice required by 35.17 paragraph (b) must be prepared and delivered by first class mail 35.18 at least 20 days before the referendum. 35.19 [EFFECTIVE DATE.] This section is effective the day 35.20 following final enactment. 35.21 Sec. 13. Minnesota Statutes 2000, section 126C.17, 35.22 subdivision 10, is amended to read: 35.23 Subd. 10. [SCHOOL REFERENDUM LEVY;MARKETRESIDENTIAL 35.24 ASSESSED VALUE.] Notwithstanding the provisions of subdivision 35.25 9, a school referendum levyapproved after November 1, 1992,for 35.26 taxes payable in19932002 and thereafter, must be levied 35.27 against thereferendum market valueresidential assessed value 35.28 ofalltaxable property as defined in section 126C.01, 35.29 subdivision312. Any referendum levy amount subject to the 35.30 requirements of this subdivision must be certified separately to 35.31 the county auditor under section 275.07. 35.32 All other provisions of subdivision 9 that do not conflict 35.33 with this subdivision apply to referendum levies under this 35.34 subdivision. 35.35 [EFFECTIVE DATE.] This section is effective the day 35.36 following final enactment. 36.1 Sec. 14. Minnesota Statutes 2000, section 127A.48, 36.2 subdivision 1, is amended to read: 36.3 Subdivision 1. [COMPUTATION.] The department of revenue 36.4 must annually conduct an assessment/sales ratio study of the 36.5 taxable property in each school district in accordance with the 36.6 procedures in subdivisions 2 and 3. Based upon the results of 36.7 this assessment/sales ratio study, the department of revenue 36.8 must determine an aggregate equalizednet tax capacityassessed 36.9 value for the various classes of taxable property in each 36.10 district, whichtax capacityassessed value shall be designated 36.11 as the adjustednet tax capacityassessed value. The 36.12 adjustednet tax capacitiesassessed values shall be determined 36.13 using thenet tax capacity percentagesclass rates in effect for 36.14 the assessment year following the assessment year of the study. 36.15 The department of revenue must make whatever estimates are 36.16 necessary to account for changes in the classification system. 36.17 The department of revenue may incur the expense necessary to 36.18 make the determinations. The commissioner of revenue may 36.19 reimburse any county or governmental official for requested 36.20 services performed in ascertaining the adjustednet tax capacity36.21 assessed value. On or before March 15 annually, the department 36.22 of revenue shall file with the chair of the tax committee of the 36.23 house of representatives and the chair of the committee on taxes 36.24 and tax laws of the senate a report of adjustednet tax36.25capacitiesassessed values. On or before June 15 annually, the 36.26 department of revenue shall file its final report on the 36.27 adjustednet tax capacitiesassessed values established by the 36.28 previous year's assessments and the current year'snet tax36.29capacity percentagesclass rates with the commissioner of 36.30 children, families, and learning and each county auditor for 36.31 those districts for which the auditor has the responsibility for 36.32 determination of local tax rates. A copy of the report so filed 36.33 shall be mailed to the clerk of each district involved and to 36.34 the county assessor or supervisor of assessments of the county 36.35 or counties in which each district is located. 36.36 [EFFECTIVE DATE.] This section is effective the day 37.1 following final enactment. 37.2 Sec. 15. Minnesota Statutes 2000, section 270A.03, 37.3 subdivision 7, is amended to read: 37.4 Subd. 7. [REFUND.] "Refund" means an individual income tax 37.5 refund or political contribution refund,pursuant to chapter 37.6 290,ora property tax credit or refund,pursuant to chapter 37.7 290A, or a sustainable forest tax refund pursuant to chapter 37.8 290C. 37.9 For purposes of this chapter, lottery prizes, as set forth 37.10 in section 349A.08, subdivision 8, and amounts granted to 37.11 persons by the legislature on the recommendation of the joint 37.12 senate-house of representatives subcommittee on claims shall be 37.13 treated as refunds. 37.14 In the case of a joint property tax refund payable to 37.15 spouses under chapter 290A, the refund shall be considered as 37.16 belonging to each spouse in the proportion of the total refund 37.17 that equals each spouse's proportion of the total income 37.18 determined under section 290A.03, subdivision 3. In the case of 37.19 a joint income tax refund under chapter 289A, the refund shall 37.20 be considered as belonging to each spouse in the proportion of 37.21 the total refund that equals each spouse's proportion of the 37.22 total taxable income determined under section 290.01, 37.23 subdivision 29. The commissioner shall remit the entire refund 37.24 to the claimant agency, which shall, upon the request of the 37.25 spouse who does not owe the debt, determine the amount of the 37.26 refund belonging to that spouse and refund the amount to that 37.27 spouse. For court fines, fees, and surcharges and court-ordered 37.28 restitution under section 611A.04, subdivision 2, the notice 37.29 provided by the commissioner of revenue under section 270A.07, 37.30 subdivision 2, paragraph (b), serves as the appropriate legal 37.31 notice to the spouse who does not owe the debt. 37.32 [EFFECTIVE DATE.] This section is effective the day 37.33 following final enactment. 37.34 Sec. 16. Minnesota Statutes 2000, section 272.02, 37.35 subdivision 7, is amended to read: 37.36 Subd. 7. [INSTITUTIONS OF PUBLIC CHARITY.] 38.1InstitutionsProperty of an institution of purely public charity 38.2are, or property that would be listed for taxation in the name 38.3 of an institution of purely public charity under section 272.01, 38.4 subdivision 2, or 273.19, and that is used for the charitable 38.5 purposes of such institution, is exemptexcept parcels of38.6property containing structures and the. However, land and 38.7 structuresdescribed in sectionthat qualify, or that could 38.8 qualify under sections 273.13, subdivision 25, paragraph 38.9 (e), and 462A.071, other than those that qualify for exemption 38.10 under subdivision 26, are not exempt. 38.11 [EFFECTIVE DATE.] This section is effective for taxes 38.12 payable in 2002 and thereafter. 38.13 Sec. 17. Minnesota Statutes 2000, section 272.02, 38.14 subdivision 10, is amended to read: 38.15 Subd. 10. [PERSONAL PROPERTY USED FOR POLLUTION CONTROL.] 38.16 Personal property used primarily for the abatement and control 38.17 of air, water, or land pollution is exempt to the extent that it 38.18 is so used, and real property is exempt if it is used primarily 38.19 for abatement and control of air, water, or land pollution as 38.20 part of an agricultural operation, as a part of a centralized 38.21 treatment and recovery facility operating under a permit issued 38.22 by the Minnesota pollution control agency pursuant to chapters 38.23 115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 38.24 and 7045.0020 to 7045.1260, as a wastewater treatment facility 38.25 and for the treatment, recovery, and stabilization of metals, 38.26 oils, chemicals, water, sludges, or inorganic materials from 38.27 hazardous industrial wastes, or as part of an electric 38.28 generation system. For purposes of this subdivision, personal 38.29 property includes ponderous machinery and equipment used in a 38.30 business or production activity that at common law is considered 38.31 real property. 38.32 Any taxpayer requesting exemption of all or a portion of 38.33 any real property or any equipment or device, or part thereof, 38.34 operated primarily for the control or abatement of airor, 38.35 water, or land pollution shall file an application with the 38.36 commissioner of revenue.The equipment or device shall meet39.1standards, rules, or criteria prescribed by the Minnesota39.2pollution control agency, and must be installed or operated in39.3accordance with a permit or order issued by that agency.The 39.4 Minnesota pollution control agency shall upon request of the 39.5 commissioner furnish informationorand advice to the 39.6 commissioner. 39.7 The information and advice furnished by the Minnesota 39.8 pollution control agency must include statements as to whether 39.9 the equipment, device, or real property meets a standard, rule, 39.10 criteria, guideline, policy, or order of the Minnesota pollution 39.11 control agency, and whether the equipment, device, or real 39.12 property is installed or operated in accordance with it. On 39.13 determining that property qualifies for exemption, the 39.14 commissioner shall issue an order exempting the property from 39.15 taxation. The equipmentor, device, or real property shall 39.16 continue to be exempt from taxation as long as thepermitorder 39.17 issued by theMinnesota pollution control agencycommissioner 39.18 remains in effect. 39.19 [EFFECTIVE DATE.] This section is effective for exemption 39.20 applications received on or after July 1, 2001. 39.21 Sec. 18. Minnesota Statutes 2000, section 273.061, 39.22 subdivision 1, is amended to read: 39.23 Subdivision 1. [OFFICE CREATED; APPOINTMENT, 39.24 QUALIFICATIONS.] Every county in this state shall have a county 39.25 assessor. The county assessor shall be appointed by the board 39.26 of county commissioners. The assessor shall be selected and 39.27 appointed because of knowledge and training in the field of 39.28 property taxation and appointment shall be approved by the 39.29 commissioner of revenue before the same shall become effective. 39.30 Upon receipt by the county commissioners of the commissioner of 39.31 revenue's refusal to approve an appointment, the term of the 39.32 appointee shall terminate at the end of that day. 39.33 The commissioner of revenue may grant approval on a 39.34 probationary basis for a period of two years. The commissioner 39.35 must base the decision to impose a probationary period on 39.36 objective and consistent criteria. At the end of the two-year 40.1 probationary period, the commissioner may either refuse to 40.2 approve the person's appointment for the remainder of the 40.3 person's four-year term, approve the person's appointment but 40.4 only for another two-year probationary period, or 40.5 unconditionally approve the person's appointment for the 40.6 remainder of the four-year term for which the person was 40.7 originally appointed by the county board. The criteria shall 40.8 not be considered rules and are not subject to the 40.9 Administrative Procedure Act. 40.10 Notwithstanding any law to the contrary, a county assessor 40.11 must have senior accreditation from the state board of assessors 40.12 by January 1, 1992, or within two years of the assessor's first 40.13 appointment under this section, whichever is later. 40.14 [EFFECTIVE DATE.] This section is effective the day 40.15 following final enactment. 40.16 Sec. 19. Minnesota Statutes 2000, section 273.061, 40.17 subdivision 2, is amended to read: 40.18 Subd. 2. [TERM; VACANCY.] (a) The terms of county 40.19 assessors appointed under this section shall be four years. A 40.20 new term shall begin on January 1 of every fourth year after 40.21 1973. When any vacancy in the office occurs, the board of 40.22 county commissioners, within3090 days thereafter, shall fill 40.23 the same by appointment for the remainder of the term, following 40.24 the procedure prescribed in subdivision 1. The term of the 40.25 county assessor may be terminated by the board of county 40.26 commissioners at any time, on charges ofinefficiency or neglect40.27of dutymalfeasance, misfeasance, or nonfeasance by the 40.28 commissioner of revenue. If the board of county commissioners 40.29 does not intend to reappoint a county assessor who has been 40.30 certified by the state board of assessors, the board shall 40.31 present written notice to the county assessor not later than 90 40.32 days prior to the termination of the assessor's term, that it 40.33 does not intend to reappoint the assessor. If written notice is 40.34 not timely made, the county assessor will automatically be 40.35 reappointed by the board of county commissioners. 40.36 The commissioner of revenue may recommend to the state 41.1 board of assessors the nonrenewal, suspension, or revocation of 41.2 an assessor's license as provided in sections 270.41 to 270.53. 41.3 (b) In the event of a vacancy in the office of county 41.4 assessor, through death, resignation or other reasons, the 41.5 deputy (or chief deputy, if more than one) shall perform the 41.6 functions of the office. If there is no deputy, the county 41.7 auditor shall designate a person to perform the duties of the 41.8 office until an appointment is made as provided in clause (a). 41.9 Such person shall perform the duties of the office for a period 41.10 not exceeding3090 days during which the county board must 41.11 appoint a county assessor. Such30-day90-day period may, 41.12 however, be extended by written approval of the commissioner of 41.13 revenue. 41.14 (c) In the case of the first appointment under paragraph 41.15 (a) of a county assessor who is accredited but who does not have 41.16 senior accreditation, an approval of the appointment by the 41.17 commissioner shall be provisional, provided that a county 41.18 assessor appointed to a provisional term under this paragraph 41.19 must reapply to the commissioner at the end of the provisional 41.20 term. A provisional term may not exceed two years. The 41.21 commissioner shall not approve the appointment for the remainder 41.22 of the four-year term unless the assessor has obtained senior 41.23 accreditation. 41.24 [EFFECTIVE DATE.] This section is effective the day 41.25 following final enactment. 41.26 Sec. 20. Minnesota Statutes 2000, section 273.061, 41.27 subdivision 8, is amended to read: 41.28 Subd. 8. [POWERS AND DUTIES.] The county assessor shall 41.29 have the following powers and duties: 41.30 (1) To call upon and confer with the township and city 41.31 assessors in the county, and advise and give them the necessary 41.32 instructions and directions as to their duties under the laws of 41.33 this state, to the end that a uniform assessment of all real 41.34 property in the county will be attained. 41.35 (2) To assist and instruct the local assessors in the 41.36 preparation and proper use of land maps and record cards, in the 42.1 property classification of real and personal property, and in 42.2 the determination of proper standards of value. 42.3 (3) To keep the local assessors in the county advised of 42.4 all changes in assessment laws and all instructions which the 42.5 assessor receives from the commissioner of revenue relating to 42.6 their duties. 42.7 (4) Tohave authority torequire the attendance of groups 42.8 of local assessors at sectional meetings called by the assessor 42.9 for the purpose of giving them further assistance and 42.10 instruction as to their duties. 42.11 (5) To require the attendance of all licensed assessors 42.12 working in that county at instructional meetings attended by the 42.13 department of revenue regional representative to provide 42.14 assistance and instruction as to their duties under the law and 42.15 the proper implementation of assessment procedures. 42.16 (6) To immediately commence the preparation of a large 42.17 scale topographical land map of the county, in such form as may 42.18 be prescribed by the commissioner of revenue, showing thereon 42.19 the location of all railroads, highways and roads, bridges, 42.20 rivers and lakes, swamp areas, wooded tracts, stony ridges and 42.21 other features which might affect the value of the land. 42.22 Appropriate symbols shall be used to indicate the best, the 42.23 fair, and the poor land of the county. For use in connection 42.24 with the topographical land map, the assessor shall prepare and 42.25 keep available in the assessor's office tables showing fair 42.26 average minimum and maximum market values per acre of 42.27 cultivated, meadow, pasture, cutover, timber and waste lands of 42.28 each township. The assessor shall keep the map and tables 42.29 available in the office for the guidance of town assessors, 42.30 boards of review, and the county board of equalization. 42.31(6)(7) To also prepare and keep available in the office 42.32 for the guidance of town assessors, boards of review and the 42.33 county board of equalization, a land valuation map of the 42.34 county, in such form as may be prescribed by the commissioner of 42.35 revenue. This map, which shall include the bordering tier of 42.36 townships of each county adjoining, shall show the average 43.1 market value per acre, both with and without improvements, as 43.2 finally equalized in the last assessment of real estate, of all 43.3 land in each town or unorganized township which lies outside the 43.4 corporate limits of cities. 43.5(7)(8) To regularly examine all conveyances of land 43.6 outside the corporate limits of cities of the first and second 43.7 class, filed with the county recorder of the county, and keep a 43.8 file, by descriptions, of the considerations shown thereon. 43.9 From the information obtained by comparing the considerations 43.10 shown with the market values assessed, the assessor shall make 43.11 recommendations to the county board of equalization of necessary 43.12 changes in individual assessments or aggregate valuations. 43.13(8)(9) To become familiar with the values of the different 43.14 items of personal property so as to be in a position when called 43.15 upon to advise the boards of review and the county board of 43.16 equalization concerning property, market values thereof. 43.17(9)(10) While the county board of equalization is in 43.18 session, to give it every possible assistance to enable it to 43.19 perform its duties. The assessor shall furnish the board with 43.20 all necessary charts, tables, comparisons, and data which it 43.21 requires in its deliberations, and shall make whatever 43.22 investigations the board may desire. 43.23(10)(11) At the request of either the board of county 43.24 commissioners or the commissioner of revenue, to investigate 43.25 applications for reductions of valuation and abatements and 43.26 settlements of taxes, examine the real or personal property 43.27 involved, and submit written reports and recommendations with 43.28 respect to the applications, in such form as may be prescribed 43.29 by the board of county commissioners and commissioner of revenue. 43.30(11)(12) To make diligent search each year for real and 43.31 personal property which has been omitted from assessment in the 43.32 county, and report all such omissions to the county auditor. 43.33(12)(13) To regularly confer with county assessors in all 43.34 adjacent counties about the assessment of property in order to 43.35 uniformly assess and equalize the value of similar properties 43.36 and classes of property located in adjacent counties. The 44.1 conference shall emphasize the assessment of agricultural and 44.2 commercial and industrial property or other properties that may 44.3 have an inadequate number of sales in a single county. 44.4(13)(14) To render such other services pertaining to the 44.5 assessment of real and personal property in the county as are 44.6 not inconsistent with the duties set forth in this section, and 44.7 as may be required by the board of county commissioners or by 44.8 the commissioner of revenue. 44.9(14)(15) To maintain a record, in conjunction with other 44.10 county offices, of all transfers of property to assist in 44.11 determining the proper classification of property, including but 44.12 not limited to, transferring homestead property and name changes 44.13 on homestead property. 44.14(15)(16) To determine if a homestead application is 44.15 required due to the transfer of homestead property or an owner's 44.16 name change on homestead property. 44.17 [EFFECTIVE DATE.] This section is effective July 1, 2001, 44.18 and thereafter. 44.19 Sec. 21. [273.0755] [TRAINING AND EDUCATION OF PROPERTY 44.20 TAX PERSONNEL.] 44.21 (a) Beginning with the four-year period starting on July 1, 44.22 2000, every person licensed by the state board of assessors at 44.23 the Accredited Minnesota Assessor level or higher, shall 44.24 successfully complete a week-long Minnesota laws course 44.25 sponsored by the department of revenue at least once in every 44.26 four-year period. An assessor need not attend the course if 44.27 they successfully pass the test for the course. 44.28 (b) The commissioner of revenue may require that each 44.29 county, and each city for which the city assessor performs the 44.30 duties of county assessor, have (i) a person on the assessor's 44.31 staff who is certified by the department of revenue in sales 44.32 ratio calculations, (ii) an officer or employee who is certified 44.33 by the department of revenue in tax calculations, and (iii) an 44.34 officer or employee who is certified by the department of 44.35 revenue in the proper preparation of abstracts of assessment. 44.36 The commissioner of revenue may require that each county have an 45.1 officer or employee who is certified by the department of 45.2 revenue in the proper preparation of abstracts of tax lists. 45.3 [EFFECTIVE DATE.] This section is effective July 1, 2001, 45.4 and thereafter. 45.5 Sec. 22. Minnesota Statutes 2000, section 273.11, 45.6 subdivision 1a, is amended to read: 45.7 Subd. 1a. [LIMITED MARKET VALUE.] (a) In the case of all 45.8 property classified as agricultural homestead or nonhomestead, 45.9 residential homestead or nonhomestead, or noncommercial seasonal 45.10 recreational residential, the assessor shall compare the value 45.11 with that determined in the preceding assessment. The amount of 45.12 the increase entered in the current assessment shall not exceed 45.13 the greater of (1) 8.5 percent of the value in the preceding 45.14 assessment, or (2) 15 percent of the difference between the 45.15 current assessment and the preceding assessment. This 45.16 limitation shall not apply to increases in value due to 45.17 improvements. For purposes of thissubdivisionparagraph, the 45.18 term "assessment" means the value prior to any exclusion under 45.19 subdivision 16. 45.20 The provisions of thissubdivisionparagraph shall be in 45.21 effect only through assessment year 2001. 45.22 (b) For purposes of the assessment/sales ratio study 45.23 conducted under section 127A.48, and the computation of state 45.24 aids paid under chapters 122A, 123A, 123B, 124D, 125A, 126C, 45.25 127A, and 477A, market values andnet tax capacitiesassessed 45.26 values determined under this subdivision and subdivision 16, 45.27 shall be used. 45.28 (c) In each of the assessment years 2002, 2003, and 2004, 45.29 the assessor shall enter the sum of the following amounts for 45.30 the properties described in paragraph (a): (i) the value 45.31 entered for the preceding assessment; (ii) the entire amount of 45.32 the increase between the amount determined for the prior 45.33 assessment and the amount determined for the current assessment; 45.34 plus (iii) one-third of the difference between the value entered 45.35 for the 2001 assessment and the value determined for the 2001 45.36 assessment. This limitation does not apply to increases in 46.1 value due to new improvements. For purposes of this paragraph, 46.2 the term "assessment" means the value prior to any exclusions 46.3 under subdivision 16. 46.4 [EFFECTIVE DATE.] This section is effective the day 46.5 following final enactment. 46.6 Sec. 23. Minnesota Statutes 2000, section 273.121, is 46.7 amended to read: 46.8 273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 46.9 Any county assessor or city assessor having the powers of a 46.10 county assessor, valuing or classifying taxable real property 46.11 shall in each year notify those persons whose property is to be 46.12assessed or reclassifiedincluded on the assessment roll that 46.13 year if the person's address is known to the assessor, otherwise 46.14 the occupant of the property. The notice shall be in writing 46.15 and shall be sent by ordinary mail at least ten days before the 46.16 meeting of the local board of review or equalization under 46.17 section 274.01 or the review process established under section 46.18 274.13, subdivision 1c. The notice may not be mailed within 46.19 five working days of the mailing of the tax statements, unless 46.20 this restriction conflicts with the mailing dates in the 46.21 preceding sentence or in section 276.04 and the approval of the 46.22 commissioner of revenue is obtained for a mailing within the 46.23 five-day period. It shall contain: (1) the market value for 46.24 the current and the prior assessment, (2) the limited market 46.25 value under section 273.11, subdivision 1a for the current and 46.26 the prior assessment, (3) the qualifying amount of any 46.27 improvements under section 273.11, subdivision 16 for the 46.28 current assessment, (4) the market value subject to taxation 46.29 after subtracting the amount of any qualifying improvements for 46.30 the current assessment, (5) thenewclassification of the 46.31 property for the current and prior assessment, (6) a note that 46.32 if the property is homestead and at least 35 years old, 46.33 improvements made to the property may be eligible for a 46.34 valuation exclusion under section 273.11, subdivision 16, (7) 46.35 the assessor's office address, and (8) the dates, places, and 46.36 times set for the meetings of the local board of review or 47.1 equalization, the review process established under section 47.2 274.13, subdivision 1c, and the county board of appeal and 47.3 equalization.If the assessment roll is not complete, the47.4notice shall be sent by ordinary mail at least ten days prior to47.5the date on which the board of review has adjournedThe 47.6 commissioner of revenue shall specify the form of the notice. 47.7 The assessor shall attach to the assessment roll a statement 47.8 that the notices required by this section have been mailed. Any 47.9 assessor who is not provided sufficient funds from the 47.10 assessor's governing body to provide such notices, may make 47.11 application to the commissioner of revenue to finance such 47.12 notices. The commissioner of revenue shall conduct an 47.13 investigation and, if satisfied that the assessor does not have 47.14 the necessary funds, issue a certification to the commissioner 47.15 of finance of the amount necessary to provide such notices. The 47.16 commissioner of finance shall issue a warrant for such amount 47.17 and shall deduct such amount from any state payment to such 47.18 county or municipality. The necessary funds to make such 47.19 payments are hereby appropriated. Failure to receive the notice 47.20 shall in no way affect the validity of the assessment, the 47.21 resulting tax, the procedures of any board of review or 47.22 equalization, or the enforcement of delinquent taxes by 47.23 statutory means. 47.24 [EFFECTIVE DATE.] This section is effective for notices 47.25 required to be mailed in 2002 and thereafter. 47.26 Sec. 24. Minnesota Statutes 2000, section 273.124, 47.27 subdivision 13, is amended to read: 47.28 Subd. 13. [HOMESTEAD APPLICATION.] (a) A person who meets 47.29 the homestead requirements under subdivision 1 must file a 47.30 homestead application with the county assessor to initially 47.31 obtain homestead classification. 47.32 (b) On or before January 2, 1993, each county assessor 47.33 shall mail a homestead application to the owner of each parcel 47.34 of property within the county which was classified as homestead 47.35 for the 1992 assessment year. The format and contents of a 47.36 uniform homestead application shall be prescribed by the 48.1 commissioner of revenue. The commissioner shall consult with 48.2 the chairs of the house and senate tax committees on the 48.3 contents of the homestead application form. The application 48.4 must clearly inform the taxpayer that this application must be 48.5 signed by all owners who occupy the property or by the 48.6 qualifying relative and returned to the county assessor in order 48.7 for the property to continue receiving homestead treatment. The 48.8 envelope containing the homestead application shall clearly 48.9 identify its contents and alert the taxpayer of its necessary 48.10 immediate response. 48.11 (c) Every property owner applying for homestead 48.12 classification must furnish to the county assessor the social 48.13 security number of each occupant who is listed as an owner of 48.14 the property on the deed of record, the name and address of each 48.15 owner who does not occupy the property, and the name and social 48.16 security number of each owner's spouse who occupies the 48.17 property. The application must be signed by each owner who 48.18 occupies the property and by each owner's spouse who occupies 48.19 the property, or, in the case of property that qualifies as a 48.20 homestead under subdivision 1, paragraph (c), by the qualifying 48.21 relative. 48.22 If a property owner occupies a homestead, the property 48.23 owner's spouse may not claim another property as a homestead 48.24 unless the property owner and the property owner's spouse file 48.25 with the assessor an affidavit or other proof required by the 48.26 assessor stating that the property qualifies as a homestead 48.27 under subdivision 1, paragraph (e). 48.28 Owners or spouses occupying residences owned by their 48.29 spouses and previously occupied with the other spouse, either of 48.30 whom fail to include the other spouse's name and social security 48.31 number on the homestead application or provide the affidavits or 48.32 other proof requested, will be deemed to have elected to receive 48.33 only partial homestead treatment of their residence. The 48.34 remainder of the residence will be classified as nonhomestead 48.35 residential. When an owner or spouse's name and social security 48.36 number appear on homestead applications for two separate 49.1 residences and only one application is signed, the owner or 49.2 spouse will be deemed to have elected to homestead the residence 49.3 for which the application was signed. 49.4 The social security numbers or affidavits or other proofs 49.5 of the property owners and spouses are private data on 49.6 individuals as defined by section 13.02, subdivision 12, but, 49.7 notwithstanding that section, the private data may be disclosed 49.8 to the commissioner of revenue, or, for purposes of proceeding 49.9 under the Revenue Recapture Act to recover personal property 49.10 taxes owing, to the county treasurer. 49.11 (d) If residential real estate is occupied and used for 49.12 purposes of a homestead by a relative of the owner and qualifies 49.13 for a homestead under subdivision 1, paragraph (c), in order for 49.14 the property to receive homestead status, a homestead 49.15 application must be filed with the assessor. The social 49.16 security number of each relative occupying the property and the 49.17 social security number of each owner who is related to an 49.18 occupant of the property shall be required on the homestead 49.19 application filed under this subdivision. If a different 49.20 relative of the owner subsequently occupies the property, the 49.21 owner of the property must notify the assessor within 30 days of 49.22 the change in occupancy. The social security number of a 49.23 relative occupying the property is private data on individuals 49.24 as defined by section 13.02, subdivision 12, but may be 49.25 disclosed to the commissioner of revenue. 49.26 (e) The homestead application shall also notify the 49.27 property owners that the application filed under this section 49.28 will not be mailed annually and that if the property is granted 49.29 homestead status for the 1993 assessment, or any assessment year 49.30 thereafter, that same property shall remain classified as 49.31 homestead until the property is sold or transferred to another 49.32 person, or the owners, the spouse of the owner, or the relatives 49.33 no longer use the property as their homestead. Upon the sale or 49.34 transfer of the homestead property, a certificate of value must 49.35 be timely filed with the county auditor as provided under 49.36 section 272.115. Failure to notify the assessor within 30 days 50.1 that the property has been sold, transferred, or that the owner, 50.2 the spouse of the owner, or the relative is no longer occupying 50.3 the property as a homestead, shall result in the penalty 50.4 provided under this subdivision and the property will lose its 50.5 current homestead status. 50.6 (f) If the homestead application is not returned within 30 50.7 days, the county will send a second application to the present 50.8 owners of record. The notice of proposed property taxes 50.9 prepared under section 275.065, subdivision 3, shall reflect the 50.10 property's classification. Beginning with assessment year 1993 50.11 for all properties, if a homestead application has not been 50.12 filed with the county by December 15, the assessor shall 50.13 classify the property as nonhomestead for the current assessment 50.14 year for taxes payable in the following year, provided that the 50.15 owner may be entitled to receive the homestead classification by 50.16 proper application under section 375.192. 50.17 (g) At the request of the commissioner, each county must 50.18 give the commissioner a list that includes the name and social 50.19 security number of each property owner and the property owner's 50.20 spouse occupying the property, or relative of a property owner, 50.21 applying for homestead classification under this subdivision. 50.22 The commissioner shall use the information provided on the lists 50.23 as appropriate under the law, including for the detection of 50.24 improper claims by owners, or relatives of owners, under chapter 50.25 290A. 50.26 (h) If the commissioner finds that a property owner may be 50.27 claiming a fraudulent homestead, the commissioner shall notify 50.28 the appropriate counties. Within 90 days of the notification, 50.29 the county assessor shall investigate to determine if the 50.30 homestead classification was properly claimed. If the property 50.31 owner does not qualify, the county assessor shall notify the 50.32 county auditor who will determine the amount of homestead 50.33 benefits that had been improperly allowed. For the purpose of 50.34 this section, "homestead benefits" means the tax reduction 50.35 resulting from the classification as a homestead under section 50.36 273.13, the taconite homestead credit under section 273.135, the 51.1 residential homestead and agricultural homestead credits under 51.2 section 273.1384, and the supplemental homestead credit under 51.3 section 273.1391. 51.4 The county auditor shall send a notice to the person who 51.5 owned the affected property at the time the homestead 51.6 application related to the improper homestead was filed, 51.7 demanding reimbursement of the homestead benefits plus a penalty 51.8 equal to 100 percent of the homestead benefits. The person 51.9 notified may appeal the county's determination by serving copies 51.10 of a petition for review with county officials as provided in 51.11 section 278.01 and filing proof of service as provided in 51.12 section 278.01 with the Minnesota tax court within 60 days of 51.13 the date of the notice from the county. Procedurally, the 51.14 appeal is governed by the provisions in chapter 271 which apply 51.15 to the appeal of a property tax assessment or levy, but without 51.16 requiring any prepayment of the amount in controversy. If the 51.17 amount of homestead benefits and penalty is not paid within 60 51.18 days, and if no appeal has been filed, the county auditor shall 51.19 certify the amount of taxes and penalty to the county 51.20 treasurer. The county treasurer will add interest to the unpaid 51.21 homestead benefits and penalty amounts at the rate provided in 51.22 section 279.03 for real property taxes becoming delinquent in 51.23 the calendar year during which the amount remains unpaid. 51.24 Interest may be assessed for the period beginning 60 days after 51.25 demand for payment was made. 51.26 If the person notified is the current owner of the 51.27 property, the treasurer may add the total amount of homestead 51.28 benefits, penalty, interest, and costs to the ad valorem taxes 51.29 otherwise payable on the property by including the amounts on 51.30 the property tax statements under section 276.04, subdivision 51.31 3. The amounts added under this paragraph to the ad valorem 51.32 taxes shall include interest accrued through December 31 of the 51.33 year preceding the taxes payable year for which the amounts are 51.34 first added. These amounts, when added to the property tax 51.35 statement, become subject to all the laws for the enforcement of 51.36 real or personal property taxes for that year, and for any 52.1 subsequent year. 52.2 If the person notified is not the current owner of the 52.3 property, the treasurer may collect the amounts due under the 52.4 Revenue Recapture Act in chapter 270A, or use any of the powers 52.5 granted in sections 277.20 and 277.21 without exclusion, to 52.6 enforce payment of the homestead benefits, penalty, interest, 52.7 and costs, as if those amounts were delinquent tax obligations 52.8 of the person who owned the property at the time the application 52.9 related to the improperly allowed homestead was filed. The 52.10 treasurer may relieve a prior owner of personal liability for 52.11 the homestead benefits, penalty, interest, and costs, and 52.12 instead extend those amounts on the tax lists against the 52.13 property as provided in this paragraph to the extent that the 52.14 current owner agrees in writing. On all demands, billings, 52.15 property tax statements, and related correspondence, the county 52.16 must list and state separately the amounts of homestead 52.17 benefits, penalty, interest and costs being demanded, billed or 52.18 assessed. 52.19 (i) Any amount of homestead benefits recovered by the 52.20 county from the property owner shall be distributed to the 52.21 county, city or town, and school district where the property is 52.22 located in the same proportion that each taxing district's levy 52.23 was to the total of the three taxing districts' levy for the 52.24 current year. Any amount recovered attributable to taconite 52.25 homestead credit shall be transmitted to the St. Louis county 52.26 auditor to be deposited in the taconite property tax relief 52.27 account. Any amount recovered that is attributable to 52.28 supplemental homestead credit is to be transmitted to the 52.29 commissioner of revenue for deposit in the general fund of the 52.30 state treasury. The total amount of penalty collected must be 52.31 deposited in the county general fund. 52.32 (j) If a property owner has applied for more than one 52.33 homestead and the county assessors cannot determine which 52.34 property should be classified as homestead, the county assessors 52.35 will refer the information to the commissioner. The 52.36 commissioner shall make the determination and notify the 53.1 counties within 60 days. 53.2 (k) In addition to lists of homestead properties, the 53.3 commissioner may ask the counties to furnish lists of all 53.4 properties and the record owners. The social security numbers 53.5 and federal identification numbers that are maintained by a 53.6 county or city assessor for property tax administration 53.7 purposes, and that may appear on the lists retain their 53.8 classification as private or nonpublic data; but may be viewed, 53.9 accessed, and used by the county auditor or treasurer of the 53.10 same county for the limited purpose of assisting the 53.11 commissioner in the preparation of microdata samples under 53.12 section 270.0681. 53.13 [EFFECTIVE DATE.] This section is effective for homestead 53.14 applications submitted on or after the day following final 53.15 enactment. 53.16 Sec. 25. Minnesota Statutes 2000, section 273.13, is 53.17 amended by adding a subdivision to read: 53.18 Subd. 21c. [ASSESSED VALUE.] "Assessed value" means the 53.19 product of the appropriate class rates in this section and 53.20 market values. 53.21 [EFFECTIVE DATE.] This section is effective for taxes 53.22 payable in 2002 and thereafter. 53.23 Sec. 26. Minnesota Statutes 2000, section 273.13, 53.24 subdivision 22, is amended to read: 53.25 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 53.26 23 and in paragraphs (b) and (c), real estate which is 53.27 residential and used for homestead purposes is class11a. The 53.28 market value of class 1a property must be determined based upon 53.29 the value of the house, garage, and land. 53.30 The first$76,000$200,000 of market value of class 1a 53.31 property has anetclass rate ofone percent of its market value53.32 0.50; and the market value of class 1a property that 53.33 exceeds$76,000$200,000 has a class rate of1.65 percent of its53.34market value0.75. 53.35 (b) Class 1b property includes homestead real estate or 53.36 homestead manufactured homes used for the purposes of a 54.1 homestead by 54.2 (1) any blind person, or the blind person and the blind 54.3 person's spouse; or 54.4 (2) any person, hereinafter referred to as "veteran," who: 54.5 (i) served in the active military or naval service of the 54.6 United States; and 54.7 (ii) is entitled to compensation under the laws and 54.8 regulations of the United States for permanent and total 54.9 service-connected disability due to the loss, or loss of use, by 54.10 reason of amputation, ankylosis, progressive muscular 54.11 dystrophies, or paralysis, of both lower extremities, such as to 54.12 preclude motion without the aid of braces, crutches, canes, or a 54.13 wheelchair; and 54.14 (iii) has acquired a special housing unit with special 54.15 fixtures or movable facilities made necessary by the nature of 54.16 the veteran's disability, or the surviving spouse of the 54.17 deceased veteran for as long as the surviving spouse retains the 54.18 special housing unit as a homestead; or 54.19 (3) any person who: 54.20 (i) is permanently and totally disabled and 54.21 (ii) receives 90 percent or more of total household income, 54.22 as defined in section 290A.03, subdivision 5, from 54.23 (A) aid from any state as a result of that disability; or 54.24 (B) supplemental security income for the disabled; or 54.25 (C) workers' compensation based on a finding of total and 54.26 permanent disability; or 54.27 (D) social security disability, including the amount of a 54.28 disability insurance benefit which is converted to an old age 54.29 insurance benefit and any subsequent cost of living increases; 54.30 or 54.31 (E) aid under the federal Railroad Retirement Act of 1937, 54.32 United States Code Annotated, title 45, section 228b(a)5; or 54.33 (F) a pension from any local government retirement fund 54.34 located in the state of Minnesota as a result of that 54.35 disability; or 54.36 (G) pension, annuity, or other income paid as a result of 55.1 that disability from a private pension or disability plan, 55.2 including employer, employee, union, and insurance plans and 55.3 (iii) has household income as defined in section 290A.03, 55.4 subdivision 5, of $50,000 or less; or 55.5 (4) any person who is permanently and totally disabled and 55.6 whose household income as defined in section 290A.03, 55.7 subdivision 5, is 275 percent or less of the federal poverty 55.8 level. 55.9 Property is classified and assessed under clause (4) only 55.10 if the government agency or income-providing source certifies, 55.11 upon the request of the homestead occupant, that the homestead 55.12 occupant satisfies the disability requirements of this paragraph. 55.13 Property is classified and assessed pursuant to clause (1) 55.14 only if the commissioner of economic security certifies to the 55.15 assessor that the homestead occupant satisfies the requirements 55.16 of this paragraph. 55.17 Permanently and totally disabled for the purpose of this 55.18 subdivision means a condition which is permanent in nature and 55.19 totally incapacitates the person from working at an occupation 55.20 which brings the person an income. The first $32,000 market 55.21 value of class 1b property has anetclass rate of.45 percent55.22of its market value0.225. The remaining market value of class 55.23 1b property has anetclass rate using the rates for class11a 55.24 or class 2a property, whichever is appropriate, of similar 55.25 market value. 55.26 (c) Class 1c property is commercial use real property that 55.27 abuts a lakeshore line and is devoted to temporary and seasonal 55.28 residential occupancy for recreational purposes but not devoted 55.29 to commercial purposes for more than 250 days in the year 55.30 preceding the year of assessment, and that includes a portion 55.31 used as a homestead by the owner, which includes a dwelling 55.32 occupied as a homestead by a shareholder of a corporation that 55.33 owns the resort or a partner in a partnership that owns the 55.34 resort, even if the title to the homestead is held by the 55.35 corporation or partnership. For purposes of this clause, 55.36 property is devoted to a commercial purpose on a specific day if 56.1 any portion of the property, excluding the portion used 56.2 exclusively as a homestead, is used for residential occupancy 56.3 and a fee is charged for residential occupancy. The first 56.4 $200,000 of market value of class 1c property has a class rate 56.5 ofone percent of total0.50, and the remaining market value of 56.6 class 1c property has a class rate of 0.75, with the following 56.7 limitation: the area of the property must not exceed 100 feet 56.8 of lakeshore footage for each cabin or campsite located on the 56.9 property up to a total of 800 feet and 500 feet in depth, 56.10 measured away from the lakeshore. If any portion of the class 56.11 1c resort property is classified as class 4c under subdivision 56.12 25, the entire property must meet the requirements of 56.13 subdivision 25, paragraph (d), clause (1), to qualify for class 56.14 1c treatment under this paragraph. 56.15 (d) Class 1d property includes structures that meet all of 56.16 the following criteria: 56.17 (1) the structure is located on property that is classified 56.18 as agricultural property under section 273.13, subdivision 23; 56.19 (2) the structure is occupied exclusively by seasonal farm 56.20 workers during the time when they work on that farm, and the 56.21 occupants are not charged rent for the privilege of occupying 56.22 the property, provided that use of the structure for storage of 56.23 farm equipment and produce does not disqualify the property from 56.24 classification under this paragraph; 56.25 (3) the structure meets all applicable health and safety 56.26 requirements for the appropriate season; and 56.27 (4) the structure is not salable as residential property 56.28 because it does not comply with local ordinances relating to 56.29 location in relation to streets or roads. 56.30 The market value of class 1d property has the same class 56.31 rates as class 1a property under paragraph (a). 56.32 [EFFECTIVE DATE.] This section is effective for taxes 56.33 payable in 2002 and thereafter. 56.34 Sec. 27. Minnesota Statutes 2000, section 273.13, 56.35 subdivision 23, is amended to read: 56.36 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 57.1 land including any improvements that is homesteaded. The market 57.2 value of the house and garage and immediately surrounding one 57.3 acre of land has the same class rates as class 1a property under 57.4 subdivision 22. The market value of the remaining land 57.5 including improvements up to$115,000$600,000 has anetclass 57.6 rate of0.35 percent of market value0.30. The market value of 57.7 class 2a property over$115,000 of market value up to and57.8including$600,000market valuehas anetclass rate of0.857.9percent of market value0.50.The remaining property over57.10$600,000 market value has a class rate of 1.20 percent of market57.11value.57.12 (b) Class 2b property is (1) real estate, rural in 57.13 character and used exclusively for growing trees for timber, 57.14 lumber, and wood and wood products; (2) real estate that is (i) 57.15 not improved with a structure and is used exclusively for 57.16 growing trees for timber, lumber, and wood and wood products, if 57.17 the owner has participated or is participating in a cost-sharing 57.18 program for afforestation, reforestation, or timber stand 57.19 improvement on that particular property, administered or 57.20 coordinated by the commissioner of natural resources, or (ii) 57.21 forest land, as defined in section 290C.02; (3) real estate that 57.22 is nonhomestead agricultural land; or (4) a landing area or 57.23 public access area of a privately owned public use airport. The 57.24 market value of class 2b property has anetclass rate of1.2057.25percent of market value0.50. 57.26 (c) Agricultural land as used in this section means 57.27 contiguous acreage of ten acres or more, used during the 57.28 preceding year for agricultural purposes. "Agricultural 57.29 purposes" as used in this section means the raising or 57.30 cultivation of agricultural products or enrollment in the 57.31 Reinvest in Minnesota program under sections 103F.501 to 57.32 103F.535 or the federal Conservation Reserve Program as 57.33 contained in Public Law Number 99-198. Contiguous acreage on 57.34 the same parcel, or contiguous acreage on an immediately 57.35 adjacent parcel under the same ownership, may also qualify as 57.36 agricultural land, but only if it is pasture, timber, waste, 58.1 unusable wild land, or land included in state or federal farm 58.2 programs. Agricultural classification for property shall be 58.3 determined excluding the house, garage, and immediately 58.4 surrounding one acre of land, and shall not be based upon the 58.5 market value of any residential structures on the parcel or 58.6 contiguous parcels under the same ownership. 58.7 (d) Real estate, excluding the house, garage, and 58.8 immediately surrounding one acre of land, of less than ten acres 58.9 which is exclusively and intensively used for raising or 58.10 cultivating agricultural products, shall be considered as 58.11 agricultural land. 58.12 Land shall be classified as agricultural even if all or a 58.13 portion of the agricultural use of that property is the leasing 58.14 to, or use by another person for agricultural purposes. 58.15 Classification under this subdivision is not determinative 58.16 for qualifying under section 273.111. 58.17 The property classification under this section supersedes, 58.18 for property tax purposes only, any locally administered 58.19 agricultural policies or land use restrictions that define 58.20 minimum or maximum farm acreage. 58.21 (e) The term "agricultural products" as used in this 58.22 subdivision includes production for sale of: 58.23 (1) livestock, dairy animals, dairy products, poultry and 58.24 poultry products, fur-bearing animals, horticultural and nursery 58.25 stock described in sections 18.44 to 18.61, fruit of all kinds, 58.26 vegetables, forage, grains, bees, and apiary products by the 58.27 owner; 58.28 (2) fish bred for sale and consumption if the fish breeding 58.29 occurs on land zoned for agricultural use; 58.30 (3) the commercial boarding of horses if the boarding is 58.31 done in conjunction with raising or cultivating agricultural 58.32 products as defined in clause (1); 58.33 (4) property which is owned and operated by nonprofit 58.34 organizations used for equestrian activities, excluding racing; 58.35 (5) game birds and waterfowl bred and raised for use on a 58.36 shooting preserve licensed under section 97A.115; 59.1 (6) insects primarily bred to be used as food for animals; 59.2 and 59.3 (7) trees, grown for sale as a crop, and not sold for 59.4 timber, lumber, wood, or wood products. 59.5 (f) If a parcel used for agricultural purposes is also used 59.6 for commercial or industrial purposes, including but not limited 59.7 to: 59.8 (1) wholesale and retail sales; 59.9 (2) processing of raw agricultural products or other goods; 59.10 (3) warehousing or storage of processed goods; and 59.11 (4) office facilities for the support of the activities 59.12 enumerated in clauses (1), (2), and (3), 59.13 the assessor shall classify the part of the parcel used for 59.14 agricultural purposes as class 1b, 2a, or 2b, whichever is 59.15 appropriate, and the remainder in the class appropriate to its 59.16 use. The grading, sorting, and packaging of raw agricultural 59.17 products for first sale is considered an agricultural purpose. 59.18 A greenhouse or other building where horticultural or nursery 59.19 products are grown that is also used for the conduct of retail 59.20 sales must be classified as agricultural if it is primarily used 59.21 for the growing of horticultural or nursery products from seed, 59.22 cuttings, or roots and occasionally as a showroom for the retail 59.23 sale of those products. Use of a greenhouse or building only 59.24 for the display of already grown horticultural or nursery 59.25 products does not qualify as an agricultural purpose. 59.26 The assessor shall determine and list separately on the 59.27 records the market value of the homestead dwelling and the one 59.28 acre of land on which that dwelling is located. If any farm 59.29 buildings or structures are located on this homesteaded acre of 59.30 land, their market value shall not be included in this separate 59.31 determination. 59.32 (g) To qualify for classification under paragraph (b), 59.33 clause (4), a privately owned public use airport must be 59.34 licensed as a public airport under section 360.018. For 59.35 purposes of paragraph (b), clause (4), "landing area" means that 59.36 part of a privately owned public use airport properly cleared, 60.1 regularly maintained, and made available to the public for use 60.2 by aircraft and includes runways, taxiways, aprons, and sites 60.3 upon which are situated landing or navigational aids. A landing 60.4 area also includes land underlying both the primary surface and 60.5 the approach surfaces that comply with all of the following: 60.6 (i) the land is properly cleared and regularly maintained 60.7 for the primary purposes of the landing, taking off, and taxiing 60.8 of aircraft; but that portion of the land that contains 60.9 facilities for servicing, repair, or maintenance of aircraft is 60.10 not included as a landing area; 60.11 (ii) the land is part of the airport property; and 60.12 (iii) the land is not used for commercial or residential 60.13 purposes. 60.14 The land contained in a landing area under paragraph (b), clause 60.15 (4), must be described and certified by the commissioner of 60.16 transportation. The certification is effective until it is 60.17 modified, or until the airport or landing area no longer meets 60.18 the requirements of paragraph (b), clause (4). For purposes of 60.19 paragraph (b), clause (4), "public access area" means property 60.20 used as an aircraft parking ramp, apron, or storage hangar, or 60.21 an arrival and departure building in connection with the airport. 60.22 [EFFECTIVE DATE.] This section is effective for taxes 60.23 payable in 2002 and thereafter, except that the classification 60.24 of property under paragraph (b), clause (2), item (ii), is 60.25 effective for taxes payable in 2003 and thereafter. 60.26 Sec. 28. Minnesota Statutes 2000, section 273.13, 60.27 subdivision 24, is amended to read: 60.28 Subd. 24. [CLASS 3.] (a) Commercial and industrial 60.29 property and utility real and personal property is class 3a. 60.30 (1) Except as otherwise provided, each parcel of 60.31 commercial, industrial, or utility real property has a class 60.32 rate of2.4 percent of0.75 for the first tier of market value, 60.33 and3.4 percent of1.0 for the remaining market value. In the 60.34 case of contiguous parcels of property owned by the same person 60.35 or entity, only the value equal to the first-tier value of the 60.36 contiguous parcels qualifies for the reduced class rate, except 61.1 that contiguous parcels owned by the same person or entity shall 61.2 be eligible for the first-tier value class rate on each separate 61.3 business operated by the owner of the property, provided the 61.4 business is housed in a separate structure. For the purposes of 61.5 this subdivision, the first tier means the 61.6 first$150,000$200,000 of market value. Real property owned in 61.7 fee by a utility for transmission line right-of-way shall be 61.8 classified at the class rate for the higher tier. 61.9 For purposes of this subdivision, parcels are considered to 61.10 be contiguous even if they are separated from each other by a 61.11 road, street, waterway, or other similar intervening type of 61.12 property. Connections between parcels that consist of power 61.13 lines or pipelines do not cause the parcels to be contiguous. 61.14 Property owners who have contiguous parcels of property that 61.15 constitute separate businesses that may qualify for the 61.16 first-tier class rate shall notify the assessor by July 1, for 61.17 treatment beginning in the following taxes payable year. 61.18 (2) Notwithstanding clauses (1) and (3), all railroad 61.19 operating property and all personal property that is: (i) part 61.20 of an electric generation, transmission, or distribution system; 61.21 or (ii) part of a pipeline system transporting or distributing 61.22 water, gas, crude oil, or petroleum products; and (iii) not 61.23 described in clause (3), has a class rateas provided under61.24clause (1) for the first tierof 0.75 for the first $200,000 of 61.25 market value and a class rate of 1.0 for the remaining market 61.26 value. In the case of multiple parcels in one county that are 61.27 owned by one person or entity, only one first tier amount is 61.28 eligible for the reduced rate. 61.29 (3) The entire market value of personal property that is: 61.30 (i) tools, implements, and machinery of an electric generation, 61.31 transmission, or distribution system; (ii) tools, implements, 61.32 and machinery of a pipeline system transporting or distributing 61.33 water, gas, crude oil, or petroleum products; or (iii) the mains 61.34 and pipes used in the distribution of steam or hot or chilled 61.35 water for heating or cooling buildings, has a class rate as 61.36 provided under clause (1) for the remaining market value in 62.1 excess of the first tier. 62.2 (b) Employment property defined in section 469.166, during 62.3 the period provided in section 469.170, shall constitute class 62.4 3b. The class rates for class 3b property are determined under 62.5 paragraph (a). 62.6(c)(1) Subject to the limitations of clause (2), structures62.7which are (i) located on property classified as class 3a, (ii)62.8constructed under an initial building permit issued after62.9January 2, 1996, (iii) located in a transit zone as defined62.10under section 473.3915, subdivision 3, (iv) located within the62.11boundaries of a school district, and (v) not primarily used for62.12retail or transient lodging purposes, shall have a class rate62.13equal to the lesser of 2.975 percent or the class rate of the62.14second tier of the commercial property rate under paragraph (a)62.15on any portion of the market value that does not qualify for the62.16first tier class rate under paragraph (a). As used in item (v),62.17a structure is primarily used for retail or transient lodging62.18purposes if over 50 percent of its square footage is used for62.19those purposes. A class rate equal to the lesser of 2.97562.20percent or the class rate of the second tier of the commercial62.21property class rate under paragraph (a) shall also apply to62.22improvements to existing structures that meet the requirements62.23of items (i) to (v) if the improvements are constructed under an62.24initial building permit issued after January 2, 1996, even if62.25the remainder of the structure was constructed prior to January62.262, 1996. For the purposes of this paragraph, a structure shall62.27be considered to be located in a transit zone if any portion of62.28the structure lies within the zone. If any property once62.29eligible for treatment under this paragraph ceases to remain62.30eligible due to revisions in transit zone boundaries, the62.31property shall continue to receive treatment under this62.32paragraph for a period of three years.62.33(2) This clause applies to any structure qualifying for the62.34transit zone reduced class rate under clause (1) on January 2,62.351999, or any structure meeting any of the qualification criteria62.36in item (i) and otherwise qualifying for the transit zone63.1reduced class rate under clause (1). Such a structure continues63.2to receive the transit zone reduced class rate until the63.3occurrence of one of the events in item (ii). Property63.4qualifying under item (i)(D), that is located outside of a city63.5of the first class, qualifies for the transit zone reduced class63.6rate as provided in that item. Property qualifying under item63.7(i)(E) qualifies for the transit zone reduced class rate as63.8provided in that item.63.9(i) A structure qualifies for the rate in this clause if it63.10is:63.11(A) property for which a building permit was issued before63.12December 31, 1998; or63.13(B) property for which a building permit was issued before63.14June 30, 2001, if:63.15(I) at least 50 percent of the land on which the structure63.16is to be built has been acquired or is the subject of signed63.17purchase agreements or signed options as of March 15, 1998, by63.18the entity that proposes construction of the project or an63.19affiliate of the entity;63.20(II) signed agreements have been entered into with one63.21entity or with affiliated entities to lease for the account of63.22the entity or affiliated entities at least 50 percent of the63.23square footage of the structure or the owner of the structure63.24will occupy at least 50 percent of the square footage of the63.25structure; and63.26(III) one of the following requirements is met:63.27the project proposer has submitted the completed data63.28portions of an environmental assessment worksheet by December63.2931, 1998; or63.30a notice of determination of adequacy of an environmental63.31impact statement has been published by April 1, 1999; or63.32an alternative urban areawide review has been completed by63.33April 1, 1999; or63.34(C) property for which a building permit is issued before63.35July 30, 1999, if:63.36(I) at least 50 percent of the land on which the structure64.1is to be built has been acquired or is the subject of signed64.2purchase agreements as of March 31, 1998, by the entity that64.3proposes construction of the project or an affiliate of the64.4entity;64.5(II) a signed agreement has been entered into between the64.6building developer and a tenant to lease for its own account at64.7least 200,000 square feet of space in the building;64.8(III) a signed letter of intent is entered into by July 1,64.91998, between the building developer and the tenant to lease the64.10space for its own account; and64.11(IV) the environmental review process required by state law64.12was commenced by December 31, 1998;64.13(D) property for which an irrevocable letter of credit with64.14a housing and redevelopment authority was signed before December64.1531, 1998. The structure shall receive the transit zone reduced64.16class rate during construction and for the duration of time that64.17the original tenants remain in the building. Any unoccupied net64.18leasable square footage that is not leased within 36 months64.19after the certificate of occupancy has been issued for the64.20building shall not be eligible to receive the reduced class64.21rate. This reduced class rate applies only if a qualifying64.22entity continues to own the property;64.23(E) property, located in a city of the first class, and for64.24which the building permits for the excavation, the parking ramp,64.25and the office tower were issued prior to April 1, 1999, shall64.26receive the reduced class rate during construction and for the64.27first five assessment years immediately following its initial64.28occupancy provided that, when completed, at least 25 percent of64.29the net leasable square footage must be occupied by a qualifying64.30entity each year during this time period. In order to receive64.31the reduced class rate on the structure in any subsequent64.32assessment years, at least 50 percent of the rentable square64.33footage must be occupied by a qualifying entity. This reduced64.34class rate applies only if a qualifying entity continues to own64.35the property.64.36(ii) A structure specified by this clause, other than a65.1structure qualifying under clause (i)(D) or (E), shall continue65.2to receive the transit zone reduced class rate until the65.3occurrence of one of the following events:65.4(A) if the structure upon initial occupancy will be owner65.5occupied by the entity initially constructing the structure or65.6an affiliated entity, the structure receives the reduced class65.7rate until the structure ceases to be at least 50 percent65.8occupied by the entity or an affiliated entity, provided, if the65.9portion of the structure occupied by that entity or an affiliate65.10of the entity is less than 85 percent, the transit zone class65.11rate reduction for the portion of structure not so occupied65.12terminates upon the leasing of such space to any nonaffiliated65.13entity; or65.14(B) if the structure is leased by a single entity or65.15affiliated entity at the time of initial occupancy, the65.16structure shall receive the reduced class rate until the65.17structure ceases to be at least 50 percent occupied by the65.18entity or an affiliated entity, provided, if the portion of the65.19structure occupied by that entity or an affiliate of the entity65.20is less than 85 percent, the transit zone class rate reduction65.21for the portion of structure not so occupied shall terminate65.22upon the leasing of such space to any nonaffiliated entity; or65.23(C) if the structure meets the criteria in item (i)(C), the65.24structure shall receive the reduced class rate until the65.25expiration of the initial lease term of the applicable tenants.65.26Percentages occupied or leased shall be determined based65.27upon net leasable square footage in the structure. The assessor65.28shall allocate the value of the structure in the same fashion as65.29provided in the general law for portions of any structure65.30receiving and not receiving the transit tax class reduction as a65.31result of this clause.65.32(3) For purposes of paragraph (c), "qualifying entity"65.33means the entity owning the property on September 1, 2000, or an65.34affiliate of an entity that owned the property on September 1,65.352000.65.36 [EFFECTIVE DATE.] This section is effective for taxes 66.1 payable in 2002 and thereafter. 66.2 Sec. 29. Minnesota Statutes 2000, section 273.13, 66.3 subdivision 25, is amended to read: 66.4 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 66.5 estate containing four or more units and used or held for use by 66.6 the owner or by the tenants or lessees of the owner as a 66.7 residence for rental periods of 30 days or more. Class 4a also 66.8 includes hospitals licensed under sections 144.50 to 144.56, 66.9 other than hospitals exempt under section 272.02, and contiguous 66.10 property used for hospital purposes, without regard to whether 66.11 the property has been platted or subdivided. The market value 66.12 of class 4a propertyin a city with a population of 5,000 or66.13less, that is (1) located outside of the metropolitan area, as66.14defined in section 473.121, subdivision 2, or outside any county66.15contiguous to the metropolitan area, and (2) whose city boundary66.16is at least 15 miles from the boundary of any city with a66.17population greater than 5,000 has a class rate of 2.15 percent66.18of market value. All other class 4a propertyhas a class rate 66.19 of2.4 percent of market value. For purposes of this paragraph,66.20population has the same meaning given in section 477A.011,66.21subdivision 30.75. 66.22 (b) Class 4b includes: 66.23 (1) residential real estate containing less than four units 66.24 that does not qualify as class 4bb, other than seasonal 66.25 residential, and recreational; 66.26 (2) manufactured homes not classified under any other 66.27 provision; 66.28 (3) a dwelling, garage, and surrounding one acre of 66.29 property on a nonhomestead farm classified under subdivision 23, 66.30 paragraph (b) containing two or three units; 66.31 (4) unimproved property that is classified residential as 66.32 determined under subdivision 33. 66.33 The market value of class 4b property has a class rate of 66.341.65 percent of market value0.75. 66.35 (c) Class 4bb includes: 66.36 (1) nonhomestead residential real estate containing one 67.1 unit, other than seasonal residential, and recreational; and 67.2 (2) a single family dwelling, garage, and surrounding one 67.3 acre of property on a nonhomestead farm classified under 67.4 subdivision 23, paragraph (b). 67.5 Class 4bb has a class rate of1.2 percent0.50 on the first 67.6$76,000$200,000 of market value and a class rate of1.6567.7percentof 0.75 for that portion of its market value that 67.8 exceeds$76,000$200,000. 67.9 Property that has been classified as seasonal recreational 67.10 residential property at any time during which it has been owned 67.11 by the current owner or spouse of the current owner does not 67.12 qualify for class 4bb. 67.13 (d) Class 4c property includes: 67.14 (1) except as provided in subdivision 22, paragraph (c), 67.15 real property devoted to temporary and seasonal residential 67.16 occupancy for recreation purposes, including real property 67.17 devoted to temporary and seasonal residential occupancy for 67.18 recreation purposes and not devoted to commercial purposes for 67.19 more than 250 days in the year preceding the year of 67.20 assessment. For purposes of this clause, property is devoted to 67.21 a commercial purpose on a specific day if any portion of the 67.22 property is used for residential occupancy, and a fee is charged 67.23 for residential occupancy. In order for a property to be 67.24 classified as class 4c, seasonal recreational residential for 67.25 commercial purposes, at least 40 percent of the annual gross 67.26 lodging receipts related to the property must be from business 67.27 conducted during 90 consecutive days and either (i) at least 60 67.28 percent of all paid bookings by lodging guests during the year 67.29 must be for periods of at least two consecutive nights; or (ii) 67.30 at least 20 percent of the annual gross receipts must be from 67.31 charges for rental of fish houses, boats and motors, 67.32 snowmobiles, downhill or cross-country ski equipment, or charges 67.33 for marina services, launch services, and guide services, or the 67.34 sale of bait and fishing tackle. For purposes of this 67.35 determination, a paid booking of five or more nights shall be 67.36 counted as two bookings. Class 4c also includes commercial use 68.1 real property used exclusively for recreational purposes in 68.2 conjunction with class 4c property devoted to temporary and 68.3 seasonal residential occupancy for recreational purposes, up to 68.4 a total of two acres, provided the property is not devoted to 68.5 commercial recreational use for more than 250 days in the year 68.6 preceding the year of assessment and is located within two miles 68.7 of the class 4c property with which it is used. Class 4c 68.8 property classified in this clause also includes the remainder 68.9 of class 1c resorts provided that the entire property including 68.10 that portion of the property classified as class 1c also meets 68.11 the requirements for class 4c under this clause; otherwise the 68.12 entire property is classified as class 3. Owners of real 68.13 property devoted to temporary and seasonal residential occupancy 68.14 for recreation purposes and all or a portion of which was 68.15 devoted to commercial purposes for not more than 250 days in the 68.16 year preceding the year of assessment desiring classification as 68.17 class 1c or 4c, must submit a declaration to the assessor 68.18 designating the cabins or units occupied for 250 days or less in 68.19 the year preceding the year of assessment by January 15 of the 68.20 assessment year. Those cabins or units and a proportionate 68.21 share of the land on which they are located will be designated 68.22 class 1c or 4c as otherwise provided. The remainder of the 68.23 cabins or units and a proportionate share of the land on which 68.24 they are located will be designated as class 3a. The owner of 68.25 property desiring designation as class 1c or 4c property must 68.26 provide guest registers or other records demonstrating that the 68.27 units for which class 1c or 4c designation is sought were not 68.28 occupied for more than 250 days in the year preceding the 68.29 assessment if so requested. The portion of a property operated 68.30 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 68.31 nonresidential facility operated on a commercial basis not 68.32 directly related to temporary and seasonal residential occupancy 68.33 for recreation purposes shall not qualify for class 1c or 4c; 68.34 (2) qualified property used as a golf course if: 68.35 (i) it is open to the public on a daily fee basis. It may 68.36 charge membership fees or dues, but a membership fee may not be 69.1 required in order to use the property for golfing, and its green 69.2 fees for golfing must be comparable to green fees typically 69.3 charged by municipal courses; and 69.4 (ii) it meets the requirements of section 273.112, 69.5 subdivision 3, paragraph (d). 69.6 A structure used as a clubhouse, restaurant, or place of 69.7 refreshment in conjunction with the golf course is classified as 69.8 class 3a property; 69.9 (3) real property up to a maximum of one acre of land owned 69.10 by a nonprofit community service oriented organization; provided 69.11 that the property is not used for a revenue-producing activity 69.12 for more than six days in the calendar year preceding the year 69.13 of assessment and the property is not used for residential 69.14 purposes on either a temporary or permanent basis. For purposes 69.15 of this clause, a "nonprofit community service oriented 69.16 organization" means any corporation, society, association, 69.17 foundation, or institution organized and operated exclusively 69.18 for charitable, religious, fraternal, civic, or educational 69.19 purposes, and which is exempt from federal income taxation 69.20 pursuant to section 501(c)(3), (10), or (19) of the Internal 69.21 Revenue Code of 1986, as amended through December 31, 1990. For 69.22 purposes of this clause, "revenue-producing activities" shall 69.23 include but not be limited to property or that portion of the 69.24 property that is used as an on-sale intoxicating liquor or 3.2 69.25 percent malt liquor establishment licensed under chapter 340A, a 69.26 restaurant open to the public, bowling alley, a retail store, 69.27 gambling conducted by organizations licensed under chapter 349, 69.28 an insurance business, or office or other space leased or rented 69.29 to a lessee who conducts a for-profit enterprise on the 69.30 premises. Any portion of the property which is used for 69.31 revenue-producing activities for more than six days in the 69.32 calendar year preceding the year of assessment shall be assessed 69.33 as class 3a. The use of the property for social events open 69.34 exclusively to members and their guests for periods of less than 69.35 24 hours, when an admission is not charged nor any revenues are 69.36 received by the organization shall not be considered a 70.1 revenue-producing activity; 70.2 (4) post-secondary student housing of not more than one 70.3 acre of land that is owned by a nonprofit corporation organized 70.4 under chapter 317A and is used exclusively by a student 70.5 cooperative, sorority, or fraternity for on-campus housing or 70.6 housing located within two miles of the border of a college 70.7 campus; 70.8 (5) manufactured home parks as defined in section 327.14, 70.9 subdivision 3; 70.10 (6) real property that is actively and exclusively devoted 70.11 to indoor fitness, health, social, recreational, and related 70.12 uses, is owned and operated by a not-for-profit corporation, and 70.13 is located within the metropolitan area as defined in section 70.14 473.121, subdivision 2; and 70.15 (7) a leased or privately owned noncommercial aircraft 70.16 storage hangar not exempt under section 272.01, subdivision 2, 70.17 and the land on which it is located, provided that: 70.18 (i) the land is on an airport owned or operated by a city, 70.19 town, county, metropolitan airports commission, or group 70.20 thereof; and 70.21 (ii) the land lease, or any ordinance or signed agreement 70.22 restricting the use of the leased premise, prohibits commercial 70.23 activity performed at the hangar. 70.24 If a hangar classified under this clause is sold after June 70.25 30, 2000, a bill of sale must be filed by the new owner with the 70.26 assessor of the county where the property is located within 60 70.27 days of the sale. 70.28 The market value of class 4c property has a class rate of 70.291.65 percent of market value0.75, except that (i)each parcel70.30ofseasonal residential recreational property not used for 70.31 commercial purposes has the same class rates as class 4bb 70.32 property, (ii)manufactured home parks assessed under clause (5)70.33have the same class rate as class 4b property, and (iii)70.34property described in paragraph (d), clause (4), has the same70.35class rate as the rate applicable to the first tier of class 4bb70.36nonhomestead residential real estate under paragraph (c)the 71.1 market value of commercial-use seasonal residential recreational 71.2 property has a class rate of 0.50, and (iii) the market value of 71.3 property described in clauses (2) and (6) has a class rate of 71.4 0.50. 71.5 (e) Class 4d property is qualifying low-income rental 71.6 housing certified to the assessor by the housing finance agency 71.7 under sections 273.126 and 462A.071. Class 4d includes land in 71.8 proportion to the total market value of the building that is 71.9 qualifying low-income rental housing. For all properties 71.10 qualifying as class 4d, the market value determined by the 71.11 assessor must be based on the normal approach to value using 71.12 normal unrestricted rents. 71.13 The market value of class 4d property has a class rate of 71.14one percent of market value0.40. 71.15 [EFFECTIVE DATE.] This section is effective for taxes 71.16 payable in 2002 and thereafter. 71.17 Sec. 30. Minnesota Statutes 2000, section 273.13, 71.18 subdivision 31, is amended to read: 71.19 Subd. 31. [CLASS 5.] Class 5 property includes: 71.20 (1) unmined iron ore and low-grade iron-bearing formations 71.21 as defined in section 273.14; and 71.22 (2) all other property not otherwise classified. 71.23 The market value of class 5 property has a class rate of 71.243.4 percent of market value1.0. 71.25 [EFFECTIVE DATE.] This section is effective for taxes 71.26 payable in 2002 and thereafter. 71.27 Sec. 31. Minnesota Statutes 2000, section 273.13, is 71.28 amended by adding a subdivision to read: 71.29 Subd. 34. [INFLATION ADJUSTMENT.] Beginning with the year 71.30 2002 assessment, for taxes payable in 2003, the commissioner of 71.31 revenue shall annually adjust the valuation limits specified in 71.32 subdivisions 22, 23, 24, and 25 for inflation. The commissioner 71.33 shall make the adjustments in accordance with section 290.06, 71.34 subdivision 2d, except that for the purposes of this subdivision 71.35 the percentage increase shall be determined from the year ending 71.36 on August 31, 2000, to the year ending on August 31 of the year 72.1 preceding the assessment year. The commissioner shall round the 72.2 valuation limits to the nearest $1,000. The commissioner shall 72.3 annually announce the valuation limits at the time specified in 72.4 section 290.06 for the succeeding assessment year. The 72.5 determination of the commissioner under this subdivision is not 72.6 a rule under the Administrative Procedure Act. 72.7 [EFFECTIVE DATE.] This section is effective July 1, 2001, 72.8 and thereafter. 72.9 Sec. 32. [273.1384] [MARKET VALUE HOMESTEAD CREDITS.] 72.10 Subdivision 1. [RESIDENTIAL HOMESTEAD MARKET VALUE 72.11 CREDIT.] Each county auditor shall determine a residential 72.12 homestead market value credit for each class 1a, 1b, 1c, and 2a 72.13 homestead property within the county. The credit is equal to 72.14 0.5 percent of the market value of the property. The amount of 72.15 homestead credit for a homestead may not exceed the lesser of 72.16 $330 or an amount that would reduce the tax on the parcel to an 72.17 amount equal to 0.85 percent of the parcel's market value. In 72.18 the case of an agricultural or resort homestead, only the market 72.19 value of the house, garage, and immediately surrounding one acre 72.20 of land is eligible in determining the property's residential 72.21 homestead market value credit. 72.22 Subd. 2. [AGRICULTURAL HOMESTEAD MARKET VALUE 72.23 CREDIT.] Except as provided in subdivision 1, property 72.24 classified as class 2a agricultural homestead is eligible for an 72.25 agricultural market value credit. The credit is equal to 0.25 72.26 percent of the property's market value. The credit under this 72.27 subdivision is limited to $288 for each homestead. 72.28 Subd. 3. [CREDIT REIMBURSEMENTS.] The county auditor shall 72.29 determine the tax reductions allowed under this section within 72.30 the county for each taxes payable year and shall certify that 72.31 amount to the commissioner of revenue as a part of the abstracts 72.32 of tax lists submitted by the county auditors under section 72.33 275.29. Any prior year adjustments shall also be certified on 72.34 the abstracts of tax lists. The commissioner shall review the 72.35 certifications for accuracy, and may make such changes as are 72.36 deemed necessary, or return the certification to the county 73.1 auditor for correction. 73.2 Subd. 4. [PAYMENT.] (a) The commissioner of revenue shall 73.3 reimburse each local taxing jurisdiction, other than school 73.4 districts, for the tax reductions granted under this section in 73.5 two equal installments on August 31 and December 15 of the taxes 73.6 payable year for which the reductions are granted, including in 73.7 each payment the prior year adjustments certified on the 73.8 abstracts for that taxes payable year. 73.9 (b) The commissioner of revenue shall certify the total of 73.10 the tax reductions granted under this section for each taxes 73.11 payable year within each school district to the commissioner of 73.12 the department of children, families, and learning and the 73.13 commissioner of children, families, and learning shall pay the 73.14 reimbursement amounts to each school district under the 73.15 provisions of section 273.1392. 73.16 Subd. 5. [APPROPRIATION.] An amount sufficient to make the 73.17 payments required by this section to taxing jurisdictions other 73.18 than school districts is annually appropriated from the general 73.19 fund to the commissioner of revenue. An amount sufficient to 73.20 make the payments required by this section for school districts 73.21 is annually appropriated from the general fund to the 73.22 commissioner of children, families, and learning. 73.23 [EFFECTIVE DATE.] This section is effective for taxes, 73.24 credits, and reimbursements payable in 2002, and thereafter. 73.25 Sec. 33. Minnesota Statutes 2000, section 273.1392, is 73.26 amended to read: 73.27 273.1392 [PAYMENT; SCHOOL DISTRICTS.] 73.28 The amounts of conservation tax credits under section 73.29 273.119; disaster or emergency reimbursement under section 73.30 273.123;attached machinery aid under section 273.138; homestead73.31credit under section 273.13market value homestead credits under 73.32 section 273.1384; aids and credits under section 273.1398; 73.33 wetlands reimbursement under section 275.295; enterprise zone 73.34 property credit payments under section 469.171; and metropolitan 73.35 agricultural preserve reduction under section 473H.10 for school 73.36 districts, shall be certified to the department of children, 74.1 families, and learning by the department of revenue. The 74.2 amounts so certified shall be paid according to section 127A.45, 74.3 subdivisions 9 and 13. 74.4 [EFFECTIVE DATE.] This section is effective for aids and 74.5 credits payable in 2002 and thereafter. 74.6 Sec. 34. Minnesota Statutes 2000, section 273.1393, is 74.7 amended to read: 74.8 273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 74.9 Notwithstanding any other provisions to the contrary, "net" 74.10 property taxes are determined by subtracting the credits in the 74.11 order listed from the gross tax: 74.12 (1) disaster credit as provided in section 273.123; 74.13 (2) powerline credit as provided in section 273.42; 74.14 (3) agricultural preserves credit as provided in section 74.15 473H.10; 74.16 (4) enterprise zone credit as provided in section 469.171; 74.17 (5) disparity reduction credit; 74.18 (6) conservation tax credit as provided in section 273.119; 74.19 (7)educationresidential homestead market value credit and 74.20 agricultural market value credit as provided in section273.138274.21 273.1384; 74.22 (8) taconite homestead credit as provided in section 74.23 273.135; and 74.24 (9) supplemental homestead credit as provided in section 74.25 273.1391. 74.26 The combination of all property tax credits must not exceed 74.27 the gross tax amount. 74.28 [EFFECTIVE DATE.] This section is effective for taxes 74.29 payable in 2002 and thereafter. 74.30 Sec. 35. Minnesota Statutes 2000, section 273.1398, 74.31 subdivision 1, is amended to read: 74.32 Subdivision 1. [DEFINITIONS.] (a) In this section, the 74.33 terms defined in this subdivision have the meanings given them. 74.34 (b) "Unique taxing jurisdiction" means the geographic area 74.35 subject to the same set of local tax rates. 74.36 (c) "Previous net tax capacity" means the product of the 75.1 appropriate net class rates for the year previous to the year in 75.2 which the aid is payable, and estimated market values for the 75.3 assessment two years prior to that in which aid is payable. 75.4 "Total previous net tax capacity" means the previous net tax 75.5 capacities for all property within the unique taxing 75.6 jurisdiction. The total previous net tax capacity shall be 75.7 reduced by the sum of (1) the unique taxing jurisdiction's 75.8 previous net tax capacity of commercial-industrial property as 75.9 defined in section 473F.02, subdivision 3, or 276A.01, 75.10 subdivision 3, multiplied by the ratio determined pursuant to 75.11 section 473F.08, subdivision 6, or 276A.06, subdivision 7, for 75.12 the municipality, as defined in section 473F.02, subdivision 8, 75.13 or 276A.01, subdivision 8, in which the unique taxing 75.14 jurisdiction is located, (2) the previous net tax capacity of 75.15 the captured value of tax increment financing districts as 75.16 defined in section 469.177, subdivision 2, and (3) the previous 75.17 net tax capacity of transmission lines deducted from a local 75.18 government's total net tax capacity under section 273.425. 75.19 Previous net tax capacity cannot be less than zero. 75.20 (d) "Equalized market values" are market values that have 75.21 been equalized by dividing the assessor's estimated market value 75.22 for the second year prior to that in which the aid is payable by 75.23 the assessment sales ratios determined by class in the 75.24 assessment sales ratio study conducted by the department of 75.25 revenue pursuant to section 127A.48 in the second year prior to 75.26 that in which the aid is payable. The equalized market values 75.27 shall equal the unequalized market values divided by the 75.28 assessment sales ratio. 75.29 (e) "Equalized school levies" means the amounts levied for: 75.30 (1) general education under section 126C.13, subdivision 2; 75.31 (2) supplemental revenue under section 126C.10, subdivision 75.32 10; 75.33 (3) transition revenue under section 126C.10, subdivision 75.34 20; and 75.35 (4) referendum revenue under section 126C.17. 75.36 (f) "Current local tax rate" means the quotient derived by 76.1 dividing the taxes levied within a unique taxing jurisdiction 76.2 for taxes payable in the year prior to that for which aids are 76.3 being calculated by the total previous net tax capacity of the 76.4 unique taxing jurisdiction. 76.5 (g) For purposes of calculating and allocating homestead 76.6 and agricultural credit aid authorized pursuant to subdivision 2 76.7 and the disparity reduction aid authorized in subdivision 3, 76.8 "gross taxes levied on all properties," "gross taxes," or "taxes 76.9 levied" means the total net tax capacity based taxes levied on 76.10 all properties except that levied on the captured value of tax 76.11 increment districts as defined in section 469.177, subdivision 76.12 2, and that levied on the portion of commercial industrial 76.13 properties' assessed value or gross tax capacity, as defined in 76.14 section 473F.02, subdivision 3, subject to the areawide tax as 76.15 provided in section 473F.08, subdivision 6, in a unique taxing 76.16 jurisdiction. "Gross taxes" are before any reduction for 76.17 disparity reduction aid but "taxes levied" are after any 76.18 reduction for disparity reduction aid. Gross taxes levied or 76.19 taxes levied cannot be less than zero. 76.20 "Taxes levied" excludes equalized school levies. 76.21 (h) "Household adjustment factor" means the number of 76.22 households, for the year most recently determined as ofJuly76.23 June 1 in the aid calculation year, divided by the number of 76.24 households for the year immediately preceding the year for which 76.25 the number of households has most recently been determined as of 76.26JulyJune 1. The household adjustment factor cannot be less 76.27 than one. 76.28 (i) "Growth adjustment factor" means the household 76.29 adjustment factor in the case of counties. In the case of 76.30 cities, towns, school districts, and special taxing districts, 76.31 the growth adjustment factor equals one. The growth adjustment 76.32 factor cannot be less than one. 76.33 (j) "Homestead and agricultural credit base" means the 76.34 previous year's certified homestead and agricultural credit aid 76.35 determined under subdivision 2 less any permanent aid reduction 76.36 in the previous year to homestead and agricultural credit aid. 77.1 (k) "Net tax capacity adjustment" means (1) the tax base 77.2 differential defined in subdivision 1a, multiplied by (2) the 77.3 unique taxing jurisdiction's current local tax rate. The net 77.4 tax capacity adjustment cannot be less than zero. 77.5 (l) "Fiscal disparity adjustment" means a taxing 77.6 jurisdiction's fiscal disparity distribution levy under section 77.7 473F.08, subdivision 3, clause (a), or 276A.06, subdivision 3, 77.8 clause (a), for taxes payable in the year prior to that for 77.9 which aids are being calculated, multiplied by the ratio of the 77.10 tax base differential percent referenced in subdivision 1a for 77.11 the highest class rate for class 3 property for taxes payable in 77.12 the year prior to that for which aids are being calculated to 77.13 the highest class rate for class 3 property for taxes payable in 77.14 the second prior year to that for which aids are being 77.15 calculated. In the case of school districts, the fiscal 77.16 disparity distribution levy shall exclude that part of the levy 77.17 attributable to equalized school levies. 77.18 [EFFECTIVE DATE.] This section is effective the day 77.19 following final enactment. 77.20 Sec. 36. Minnesota Statutes 2000, section 273.1398, is 77.21 amended by adding a subdivision to read: 77.22 Subd. 4b. [CREDIT AID CHANGES.] (a) For aid payable in 77.23 2002, each county shall have its aid under subdivision 2, after 77.24 adjustment under subdivision 4a, permanently reduced. The 77.25 amount of the reduction for each county is the sum of the 77.26 following amounts: 77.27 (1) for counties in the first through fourth, sixth, and 77.28 tenth judicial districts, the estimated costs submitted by the 77.29 court administrators for the calendar year 2001 budget requests 77.30 of such counties for guardians ad litem, court interpreters, 77.31 Rule 20 and civil commitment examinations and hearings, and in 77.32 forma pauperis costs, as confirmed and reported by the Minnesota 77.33 Supreme Court to the commissioner of revenue on or before July 77.34 1, 2001; 77.35 (2) the 1999 nonfederal expenditures for child family 77.36 foster care as reported by the county during calendar year 2000 78.1 to the department of human services under section 256E.08, 78.2 subdivision 8; and 78.3 (3) the additional amount of aid the county receives in 78.4 2002 under section 477A.03, subdivision 2, paragraph (c), clause 78.5 (ii), excluding increases due to inflation. 78.6 (b) For aid payable in 2002 and thereafter, no aid shall be 78.7 computed or paid pursuant to subdivision 2 for statutory or home 78.8 rule cities, towns, school districts, and special taxing 78.9 districts. 78.10 [EFFECTIVE DATE.] This section is effective for aid payable 78.11 in 2002 and thereafter. 78.12 Sec. 37. Minnesota Statutes 2000, section 273.1398, 78.13 subdivision 8, is amended to read: 78.14 Subd. 8. [APPROPRIATION.] (a) An amount sufficient to pay 78.15 the aids and credits provided under this section for school 78.16 districts, intermediate school districts, or any group of school 78.17 districts levying as a single taxing entity, is annually 78.18 appropriated from the general fund to the commissioner of 78.19 children, families, and learning. An amount sufficient to pay 78.20 the aids and credits provided under this section for counties, 78.21 cities, towns, and special taxing districts is annually 78.22 appropriated from the general fund to the commissioner of 78.23 revenue. A jurisdiction's aid amount may be increased or 78.24 decreased based on any prior year adjustments for homestead 78.25 credit or other property tax credit or aid programs. 78.26 (b) The commissioner of finance shall bill the commissioner 78.27 of revenue for the cost of preparation of local impact notes as 78.28 required by section 3.987 only to the extent to which those 78.29 costs exceed those costs incurred in fiscal year 1997 and for 78.30 any other new costs attributable to the local impact note 78.31 function required by section 3.987, not to exceed $100,000 in 78.32 fiscal years 1998 and 1999 and $200,000 in fiscal year 2000 and 78.33 thereafter. 78.34 The commissioner of revenue shall deduct the amount billed 78.35 under this paragraph from aid payments to be made tocities and78.36 counties under subdivision 2 on a pro rata basis. The amount 79.1 deducted under this paragraph is appropriated to the 79.2 commissioner of finance for the preparation of local impact 79.3 notes. 79.4 [EFFECTIVE DATE.] This section is effective January 1, 79.5 2002, and thereafter. 79.6 Sec. 38. Minnesota Statutes 2000, section 273.166, 79.7 subdivision 2, is amended to read: 79.8 Subd. 2. [MANUFACTURED HOME HOMESTEAD AND AGRICULTURAL 79.9 CREDIT AID.]ForIn calendar year 2002, and each calendar year 79.10 thereafter,themanufactured home homestead and agricultural 79.11 credit aidfor each taxing jurisdiction equals the taxing79.12jurisdiction'sshall be paid to each county under this section 79.13 in an amount equal to the county's manufactured home homestead 79.14 and agricultural credit aid determined under this subdivision 79.15 for the preceding aid payable year times the growth adjustment 79.16 factor for thejurisdiction plus the net tax capacity adjustment79.17for the jurisdictioncounty. Payment will not be made to 79.18 anytaxing jurisdictioncounty that has ceased to levy a 79.19 property tax. 79.20 [EFFECTIVE DATE.] This section is effective for aid paid in 79.21 2002 and thereafter. 79.22 Sec. 39. Minnesota Statutes 2000, section 273.166, 79.23 subdivision 3, is amended to read: 79.24 Subd. 3. [AID CALCULATION.] The commissioner of revenue 79.25 shall make the calculation required in subdivision 2 and 79.26 annually pay manufactured home homestead and agricultural credit 79.27 aid tothe local governmentscounties at the times provided in 79.28 section 473H.10 for local governments other than school 79.29 districts.Aid payments to the school districts must be79.30certified to the commissioner of children, families, and79.31learning and paid under section 273.1392.79.32 [EFFECTIVE DATE.] This section is effective for aid paid in 79.33 2002 and thereafter. 79.34 Sec. 40. Minnesota Statutes 2000, section 273.166, 79.35 subdivision 5, is amended to read: 79.36 Subd. 5. [APPROPRIATION.]There is annually appropriated80.1from the general fund to the commissioner of children, families,80.2and learning a sum sufficient to pay the aids provided under80.3this section for school districts, intermediate school80.4districts, or any group of school districts levying as a single80.5taxing entity.There is annually appropriated from the general 80.6 fund to the commissioner of revenue a sum sufficient to pay the 80.7 aids provided under this section to counties, cities, towns, and80.8special taxing districts. 80.9 [EFFECTIVE DATE.] This section is effective for fiscal year 80.10 2003 and thereafter. 80.11 Sec. 41. Minnesota Statutes 2000, section 273.42, is 80.12 amended by adding a subdivision to read: 80.13 Subd. 3. [STATE TAX ON TRANSMISSION AND DISTRIBUTION 80.14 LINES.] Notwithstanding section 273.425, the entire assessed 80.15 value of property taxed at the average local tax rate under 80.16 subdivision 1 is subject to the state tax rate provided in 80.17 section 275.02. Notwithstanding subdivisions 1 and 2, the 80.18 entire proceeds of the state tax levy for each such property 80.19 must be distributed to the state under the procedures provided 80.20 in chapter 276. No portion of the proceeds from the state levy 80.21 on such property is distributed within the county under 80.22 subdivision 1 or 2. 80.23 [EFFECTIVE DATE.] This section is effective for taxes 80.24 payable in 2002 and thereafter. 80.25 Sec. 42. Minnesota Statutes 2000, section 274.01, 80.26 subdivision 1, is amended to read: 80.27 Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES, 80.28 GRIEVANCES.] (a) The town board of a town, or the council or 80.29 other governing body of a city, is the board ofreviewappeal 80.30 and equalization except (1) in cities whose charters provide for 80.31 a board of equalization or (2) in any city or town that has 80.32 transferred its local board of review power and duties to the 80.33 county board as provided in subdivision 3. The county assessor 80.34 shall fix a day and time when the board or the board of 80.35 equalization shall meet in the assessment districts of the 80.36 county. Notwithstanding any law or city charter to the 81.1 contrary, a city board of equalization shall be referred to as a 81.2 board of appeal and equalization. On or before February 15 of 81.3 each year the assessor shall give written notice of the time to 81.4 the city or town clerk. Notwithstanding the provisions of any 81.5 charter to the contrary, the meetings must be held between April 81.6 1 and May 31 each year. The clerk shall give published and 81.7 posted notice of the meeting at least ten days before the date 81.8 of the meeting. 81.9If in any county, at least 25 percent of the total net tax81.10capacity of a city or town is noncommercial seasonal residential81.11recreational property classified under section 273.13,81.12subdivision 25, the county must hold two countywide81.13informational meetings on Saturdays. The meetings will allow81.14noncommercial seasonal residential recreational taxpayers to81.15discuss their property valuation with the appropriate assessment81.16staff. These Saturday informational meetings must be scheduled81.17to allow the owner of the noncommercial seasonal residential81.18recreational property the opportunity to attend one of the81.19meetings prior to the scheduled board of review for their city81.20or town. The Saturday meeting dates must be contained on the81.21notice of valuation of real property under section 273.121.81.22 The board shall meet at the office of the clerk to review 81.23 the assessment and classification of property in the town or 81.24 city. No changes in valuation or classification which are 81.25 intended to correct errors in judgment by the county assessor 81.26 may be made by the county assessor after the boardof reviewhas 81.27 adjourned in those cities or towns that hold a local board of 81.28 review; however, corrections of errors that are merely clerical 81.29 in nature or changes that extend homestead treatment to property 81.30 are permitted after adjournment until the tax extension date for 81.31 that assessment year. The changes must be fully documented and 81.32 maintained in the assessor's office and must be available for 81.33 review by any person. A copy of the changes made during this 81.34 period in those cities or towns that hold a local board of 81.35 review must be sent to the county board no later than December 81.36 31 of the assessment year. 82.1 (b) The board shall determine whether the taxable property 82.2 in the town or city has been properly placed on the list and 82.3 properly valued by the assessor. If real or personal property 82.4 has been omitted, the board shall place it on the list with its 82.5 market value, and correct the assessment so that each tract or 82.6 lot of real property, and each article, parcel, or class of 82.7 personal property, is entered on the assessment list at its 82.8 market value. No assessment of the property of any person may 82.9 be raised unless the person has been duly notified of the intent 82.10 of the board to do so. On application of any person feeling 82.11 aggrieved, the board shall review the assessment or 82.12 classification, or both, and correct it as appears just. The 82.13 board may not make an individual market value adjustment or 82.14 classification change that would benefit the property in cases 82.15 where the owner or other person having control over the property 82.16 will not permit the assessor to inspect the property and the 82.17 interior of any buildings or structures. 82.18 (c) A local boardof reviewmay reduce assessments upon 82.19 petition of the taxpayer but the total reductions must not 82.20 reduce the aggregate assessment made by the county assessor by 82.21 more than one percent. If the total reductions would lower the 82.22 aggregate assessments made by the county assessor by more than 82.23 one percent, none of the adjustments may be made. The assessor 82.24 shall correct any clerical errors or double assessments 82.25 discovered by the boardof reviewwithout regard to the one 82.26 percent limitation. 82.27 (d) A majority of the members may act at the meeting, and 82.28 adjourn from day to day until they finish hearing the cases 82.29 presented. The assessor shall attend, with the assessment books 82.30 and papers, and take part in the proceedings, but must not 82.31 vote. The county assessor, or an assistant delegated by the 82.32 county assessor shall attend the meetings. The board shall list 82.33 separately, on a form appended to the assessment book, all 82.34 omitted property added to the list by the board and all items of 82.35 property increased or decreased, with the market value of each 82.36 item of property, added or changed by the board, placed opposite 83.1 the item. The county assessor shall enter all changes made by 83.2 the board in the assessment book. 83.3 (e) Except as provided in subdivision 3, if a person fails 83.4 to appear in person, by counsel, or by written communication 83.5 before the board after being duly notified of the board's intent 83.6 to raise the assessment of the property, or if a person feeling 83.7 aggrieved by an assessment or classification fails to apply for 83.8 a review of the assessment or classification, the person may not 83.9 appear before the county board of appeal and equalization for a 83.10 review of the assessment or classification. This paragraph does 83.11 not apply if an assessment was made after the local board 83.12 meeting, as provided in section 273.01, or if the person can 83.13 establish not having received notice of market value at least 83.14 five days before the local boardof reviewmeeting. 83.15 (f) The local boardof review or the board of equalization83.16 must complete its work and adjourn within 20 days from the time 83.17 of convening stated in the notice of the clerk, unless a longer 83.18 period is approved by the commissioner of revenue. No action 83.19 taken after that date is valid. All complaints about an 83.20 assessment or classification made after the meeting of the board 83.21 must be heard and determined by the county board of 83.22 equalization. A nonresident may, at any time, before the 83.23 meeting of the boardof reviewfile written objections to an 83.24 assessment or classification with the county assessor. The 83.25 objections must be presented to the boardof reviewat its 83.26 meeting by the county assessor for its consideration. 83.27 [EFFECTIVE DATE.] This section is effective January 1, 83.28 2002, and thereafter. 83.29 Sec. 43. Minnesota Statutes 2000, section 274.13, 83.30 subdivision 1, is amended to read: 83.31 Subdivision 1. [MEMBERS; MEETINGS; RULES FOR EQUALIZING 83.32 ASSESSMENTS.] The county commissioners, or a majority of them, 83.33 with the county auditor, or, if the auditor cannot be present, 83.34 the deputy county auditor, or, if there is no deputy, the court 83.35 administrator of the district court, shall form a board for the 83.36 equalization of the assessment of the property of the county, 84.1 including the property of all cities whose charters provide for 84.2 a board of equalization. This board shall be referred to as the 84.3 county board of appeal and equalization. The board shall meet 84.4 annually, on the date specified in section 274.14, at the office 84.5 of the auditor. Each member shall take an oath to fairly and 84.6 impartially perform duties as a member. The board shall examine 84.7 and compare the returns of the assessment of property of the 84.8 towns or districts, and equalize them so that each tract or lot 84.9 of real property and each article or class of personal property 84.10 is entered on the assessment list at its market value, subject 84.11 to the following rules: 84.12 (1) The board shall raise the valuation of each tract or 84.13 lot of real property which in its opinion is returned below its 84.14 market value to the sum believed to be its market value. The 84.15 board must first give notice of intention to raise the valuation 84.16 to the person in whose name it is assessed, if the person is a 84.17 resident of the county. The notice must fix a time and place 84.18 for a hearing. 84.19 (2) The board shall reduce the valuation of each tract or 84.20 lot which in its opinion is returned above its market value to 84.21 the sum believed to be its market value. 84.22 (3) The board shall raise the valuation of each class of 84.23 personal property which in its opinion is returned below its 84.24 market value to the sum believed to be its market value. It 84.25 shall raise the aggregate value of the personal property of 84.26 individuals, firms, or corporations, when it believes that the 84.27 aggregate valuation, as returned, is less than the market value 84.28 of the taxable personal property possessed by the individuals, 84.29 firms, or corporations, to the sum it believes to be the market 84.30 value. The board must first give notice to the persons of 84.31 intention to do so. The notice must set a time and place for a 84.32 hearing. 84.33 (4) The board shall reduce the valuation of each class of 84.34 personal property that is returned above its market value to the 84.35 sum it believes to be its market value. Upon complaint of a 84.36 party aggrieved, the board shall reduce the aggregate valuation 85.1 of the individual's personal property, or of any class of 85.2 personal property for which the individual is assessed, which in 85.3 its opinion has been assessed at too large a sum, to the sum it 85.4 believes was the market value of the individual's personal 85.5 property of that class. 85.6 (5) The board must not reduce the aggregate value of all 85.7 the property of its county, as submitted to the county board of 85.8 equalization, with the additions made by the auditor under this 85.9 chapter, by more than one percent of its whole valuation. The 85.10 board may raise the aggregate valuation of real property, and of 85.11 each class of personal property, of the county, or of any town 85.12 or district of the county, when it believes it is below the 85.13 market value of the property, or class of property, to the 85.14 aggregate amount it believes to be its market value. 85.15 (6) The board shall change the classification of any 85.16 property which in its opinion is not properly classified. 85.17 [EFFECTIVE DATE.] This section is effective January 1, 85.18 2002, and thereafter. 85.19 Sec. 44. Minnesota Statutes 2000, section 275.011, is 85.20 amended by adding a subdivision to read: 85.21 Subd. 4. [CONVERSION OF NET TAX CAPACITY RATE LEVY LIMIT.] 85.22 (a) Except as provided in section 126C.02, for purposes of 85.23 determining the mill rate limits applicable to a levy authority 85.24 or limitation expressed in law as a net tax capacity rate limit, 85.25 the commissioner of revenue shall prescribe the conversion 85.26 factors and methodology for use by all county auditors. 85.27 (b) If the conversion from net tax capacities to assessed 85.28 values or from net tax capacity tax rates to mill rates, as 85.29 provided in this article, causes a provision of law related to 85.30 the administration of the property tax to be unadministrable, 85.31 the commissioner of revenue may prescribe an adjustment or 85.32 conversion factor or method to preserve the purpose of that law. 85.33 (c) The prescription of a conversion or adjustment factor 85.34 or method by the commissioner of revenue under this subdivision 85.35 shall not be considered a "rule" and is not subject to the 85.36 Administrative Procedure Act. 86.1 [EFFECTIVE DATE.] This section is effective for taxes 86.2 payable in 2002 and thereafter. 86.3 Sec. 45. Minnesota Statutes 2000, section 275.02, is 86.4 amended to read: 86.5 275.02 [STATE LEVY, EXCEPTIONS; CERTIFICATION OF TAX RATE.] 86.6The(a) For taxes payable in 2002 and subsequent years, a 86.7 state tax shall be levied on all class 3, other than attached 86.8 machinery located at an electric generating station that is part 86.9 of an electric generating system, class 4c(1), class 4c(2), and 86.10 class 5(1) taxable property in the state as defined in section 86.11 273.13. For noncommercial class 4c(1) property, 50 percent of 86.12 the assessed value of the property, up to a maximum of $20,000, 86.13 is exempt from the state levy. The rate of the tax shall be 86.14 certified by thestate auditorcommissioner of revenue to each 86.15 county auditor on or before November151 annually. 86.16 For taxes payable in 2002, the commissioner shall compute 86.17 and certify a tax rate necessary to raise $470,400,000. For 86.18 taxes payable in years after 2002, the amount to be raised is 86.19 increased each year by multiplying the amount for the prior year 86.20 by the sum of one plus the rate of increase, if any, in the 86.21 implicit price deflator for government consumption expenditures 86.22 and gross investment for state and local governments prepared by 86.23 the Bureau of Economic Analysts of the United States Department 86.24 of Commerce for the 12-month period ending March 31 of the year 86.25 prior to the year the taxes are payable. It shall take a 86.26 two-thirds vote of the legislature to increase the state tax 86.27 levy by a greater amount. 86.28 (b) The state levy under paragraph (a) is in addition to 86.29 any state levy certified by the state auditor under article XI 86.30 of the Minnesota Constitution. A levy certified by the state 86.31 auditor under article XI shall be certified by the state auditor 86.32 to each county auditor by November 1 for taxes payable in the 86.33 following year, and shall be applied against the assessed value 86.34 of all taxable property in the state. 86.35 [EFFECTIVE DATE.] This section is effective for taxes 86.36 payable in 2002 and thereafter. 87.1 Sec. 46. Minnesota Statutes 2000, section 275.065, 87.2 subdivision 3, is amended to read: 87.3 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 87.4 county auditor shall prepare and the county treasurer shall 87.5 deliver after November 10 and on or before November 24 each 87.6 year, by first class mail to each taxpayer at the address listed 87.7 on the county's current year's assessment roll, a notice of 87.8 proposed property taxes. 87.9 (b) The commissioner of revenue shall prescribe the form of 87.10 the notice. 87.11 (c) The notice must inform taxpayers that it contains the 87.12 amount of property taxes each taxing authority proposes to 87.13 collect for taxes payable the following year. In the case of a 87.14 town,or in the case of the state determined portion of the87.15school district levy,the final tax amount will be its proposed 87.16 tax. In the case of taxing authorities required to hold a 87.17 public meeting under subdivision 6, the notice must clearly 87.18 state that each taxing authority, including regional library 87.19 districts established under section 134.201, and including the 87.20 metropolitan taxing districts as defined in paragraph (i), but 87.21 excluding all other special taxing districts and towns, will 87.22 hold a public meeting to receive public testimony on the 87.23 proposed budget and proposed or final property tax levy, or, in 87.24 case of a school district, on the current budget and proposed 87.25 property tax levy. It must clearly state the time and place of 87.26 each taxing authority's meeting, a phone number for the taxing 87.27 jurisdiction where taxpayers may call if they have questions 87.28 related to the notice, and an address where comments will be 87.29 received by mail. 87.30 (d) The notice must state for each parcel: 87.31 (1) the market value of the property as determined under 87.32 section 273.11, and used for computing property taxes payable in 87.33 the following year and for taxes payable in the current year as 87.34 each appears in the records of the county assessor on November 1 87.35 of the current year; and, in the case of residential property, 87.36 whether the property is classified as homestead or 88.1 nonhomestead. The notice must clearly inform taxpayers of the 88.2 years to which the market values apply and that the values are 88.3 final values; 88.4 (2) the items listed below, shown separately by county, 88.5 city or town, statedetermined schooltaxnet of the education88.6homestead creditunder section273.1382275.02, voter approved 88.7 school levy, other local school levy, and the sum of the special 88.8 taxing districts, and as a total of all taxing authorities: 88.9 (i) the actual tax for taxes payable in the current 88.10 year; and 88.11 (ii)the tax change due to spending factors, defined as the88.12proposed tax minus the constant spending tax amount;88.13(iii) the tax change due to other factors, defined as the88.14constant spending tax amount minus the actual current year tax;88.15and88.16(iv)the proposed tax amount net of credits. 88.17 In the case of a town or the statedetermined schooltax, 88.18 the final tax shall also be its proposed tax unless the town 88.19 changes its levy at a special town meeting under section 88.20 365.52. If a school district has certified under section 88.21 126C.17, subdivision 9, that a referendum will be held in the 88.22 school district at the November general election, the county 88.23 auditor must note next to the school district's proposed amount 88.24 that a referendum is pending and that, if approved by the 88.25 voters, the tax amount may be higher than shown on the notice. 88.26 In the case of the city of Minneapolis, the levy for the 88.27 Minneapolis library board and the levy for Minneapolis park and 88.28 recreation shall be listed separately from the remaining amount 88.29 of the city's levy. In the case of a parcel where tax increment 88.30 or the fiscal disparities areawide tax under chapter 276A or 88.31 473F applies, the proposed tax levy on the captured value or the 88.32 proposed tax levy on the tax capacity subject to the areawide 88.33 tax must each be stated separately and not included in the sum 88.34 of the special taxing districts; and 88.35 (3) the increase or decrease between the total taxes 88.36 payable in the current year and the total proposed taxes, 89.1 expressed as a percentage. 89.2 For purposes of this section, the amount of the tax on 89.3 homesteads qualifying under the senior citizens' property tax 89.4 deferral program under chapter 290B is the total amount of 89.5 property tax before subtraction of the deferred property tax 89.6 amount. 89.7 (e) The notice must clearly state that the proposed or 89.8 final taxes do not include the following: 89.9 (1) special assessments; 89.10 (2) levies approved by the voters after the date the 89.11 proposed taxes are certified, including bond referenda, school 89.12 district levy referenda, and levy limit increase referenda; 89.13 (3) amounts necessary to pay cleanup or other costs due to 89.14 a natural disaster occurring after the date the proposed taxes 89.15 are certified; 89.16 (4) amounts necessary to pay tort judgments against the 89.17 taxing authority that become final after the date the proposed 89.18 taxes are certified; and 89.19 (5) the contamination tax imposed on properties which 89.20 received market value reductions for contamination. 89.21 (f) Except as provided in subdivision 7, failure of the 89.22 county auditor to prepare or the county treasurer to deliver the 89.23 notice as required in this section does not invalidate the 89.24 proposed or final tax levy or the taxes payable pursuant to the 89.25 tax levy. 89.26 (g) If the notice the taxpayer receives under this section 89.27 lists the property as nonhomestead, and satisfactory 89.28 documentation is provided to the county assessor by the 89.29 applicable deadline, and the property qualifies for the 89.30 homestead classification in that assessment year, the assessor 89.31 shall reclassify the property to homestead for taxes payable in 89.32 the following year. 89.33 (h) In the case of class 4 residential property used as a 89.34 residence for lease or rental periods of 30 days or more, the 89.35 taxpayer must either: 89.36 (1) mail or deliver a copy of the notice of proposed 90.1 property taxes to each tenant, renter, or lessee; or 90.2 (2) post a copy of the notice in a conspicuous place on the 90.3 premises of the property. 90.4 The notice must be mailed or posted by the taxpayer by 90.5 November 27 or within three days of receipt of the notice, 90.6 whichever is later. A taxpayer may notify the county treasurer 90.7 of the address of the taxpayer, agent, caretaker, or manager of 90.8 the premises to which the notice must be mailed in order to 90.9 fulfill the requirements of this paragraph. 90.10 (i) For purposes of this subdivision, subdivisions 5a and 90.11 6, "metropolitan special taxing districts" means the following 90.12 taxing districts in the seven-county metropolitan area that levy 90.13 a property tax for any of the specified purposes listed below: 90.14 (1) metropolitan council under section 473.132, 473.167, 90.15 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 90.16 (2) metropolitan airports commission under section 473.667, 90.17 473.671, or 473.672; and 90.18 (3) metropolitan mosquito control commission under section 90.19 473.711. 90.20 For purposes of this section, any levies made by the 90.21 regional rail authorities in the county of Anoka, Carver, 90.22 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 90.23 398A shall be included with the appropriate county's levy and 90.24 shall be discussed at that county's public hearing. 90.25 (j) If a statutory or home rule charter city or a town has 90.26 exercised the local levy option provided by section 473.388, 90.27 subdivision 7, it may include in the notice of its proposed 90.28 taxes the amount of its proposed taxes attributable to its 90.29 exercise of the option. In the first year of the city or town's 90.30 exercise of this option, the statement shall include an estimate 90.31 of the reduction of the metropolitan council's tax on the parcel 90.32 due to exercise of that option. The metropolitan council's levy 90.33 shall be adjusted accordingly. 90.34 [EFFECTIVE DATE.] This section is effective for notices of 90.35 proposed property taxes required in 2001 for taxes payable in 90.36 2002, and thereafter. 91.1 Sec. 47. Minnesota Statutes 2000, section 275.065, 91.2 subdivision 5a, is amended to read: 91.3 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 91.4 population of more than 2,500, county, a metropolitan special 91.5 taxing district as defined in subdivision 3, paragraph (i), a 91.6 regional library district established under section 134.201, or 91.7 school district shall advertise in a newspaper a notice of its 91.8 intent to adopt a budget and property tax levy or, in the case 91.9 of a school district, to review its current budget and proposed 91.10 property taxes payable in the following year, at a public 91.11 hearing, if a public hearing is required under subdivision 6. 91.12 The notice must be published not less than two business days nor 91.13 more than six business days before the hearing. 91.14 The advertisement must be at least one-eighth page in size 91.15 of a standard-size or a tabloid-size newspaper. The 91.16 advertisement must not be placed in the part of the newspaper 91.17 where legal notices and classified advertisements appear. The 91.18 advertisement must be published in an official newspaper of 91.19 general circulation in the taxing authority. The newspaper 91.20 selected must be one of general interest and readership in the 91.21 community, and not one of limited subject matter. The 91.22 advertisement must appear in a newspaper that is published at 91.23 least once per week. 91.24 For purposes of this section, the metropolitan special 91.25 taxing district's advertisement must only be published in the 91.26 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 91.27 (b) The advertisement for school districts, metropolitan 91.28 special taxing districts, and regional library districts must be 91.29 in the following form, except that the notice for a school 91.30 district may include references to the current budget in regard 91.31 to proposed property taxes. 91.32 "NOTICE OF 91.33 PROPOSED PROPERTY TAXES 91.34 (School District/Metropolitan 91.35 Special Taxing District/Regional 91.36 Library District) of ......... 92.1 The governing body of ........ will soon hold budget hearings 92.2 and vote on the property taxes for (metropolitan special taxing 92.3 district/regional library district services that will be 92.4 provided in (year)/school district services that will be 92.5 provided in (year) and (year)). 92.6 NOTICE OF PUBLIC HEARING: 92.7 All concerned citizens are invited to attend a public hearing 92.8 and express their opinions on the proposed (school 92.9 district/metropolitan special taxing district/regional library 92.10 district) budget and property taxes, or in the case of a school 92.11 district, its current budget and proposed property taxes, 92.12 payable in the following year. The hearing will be held on 92.13 (Month/Day/Year) at (Time) at (Location, Address)." 92.14 (c) The advertisement for cities and counties must be in 92.15 the following form. 92.16 "NOTICE OF PROPOSED 92.17 TOTAL BUDGET AND PROPERTY TAXES 92.18 The (city/county) governing body or board of commissioners will 92.19 hold a public hearing to discuss the budget and to vote on the 92.20 amount of property taxes to collect for services the 92.21 (city/county) will provide in (year). 92.22 92.23 SPENDING: The total budget amounts below compare 92.24 (city's/county's) (year) total actual budget with the amount the 92.25 (city/county) proposes to spend in (year). 92.26 92.27 (Year) Total Proposed (Year) Change from 92.28 Actual Budget Budget (Year)-(Year) 92.29 92.30 $....... $....... ...% 92.31 92.32 TAXES: The property tax amounts below compare that portion of 92.33 the current budget levied in property taxes in (city/county) for 92.34 (year) with the property taxes the (city/county) proposes to 92.35 collect in (year). 92.36 93.1 (Year) Property Proposed (Year) Change from 93.2 Taxes Property Taxes (Year)-(Year) 93.3 93.4 $....... $....... ...% 93.5 93.6 ATTEND THE PUBLIC HEARING 93.7 All (city/county) residents are invited to attend the public 93.8 hearing of the (city/county) to express your opinions on the 93.9 budget and the proposed amount of (year) property taxes. The 93.10 hearing will be held on: 93.11 (Month/Day/Year/Time) 93.12 (Location/Address) 93.13 If the discussion of the budget cannot be completed, a time and 93.14 place for continuing the discussion will be announced at the 93.15 hearing. You are also invited to send your written comments to: 93.16 (City/County) 93.17 (Location/Address)" 93.18 (d) For purposes of this subdivision, the budget amounts 93.19 listed on the advertisement mean: 93.20 (1) for cities, the total government fund expenditures, as 93.21 defined by the state auditor under section 471.6965, less any 93.22 expenditures for improvements or services that are specially 93.23 assessed or charged under chapter 429, 430, 435, or the 93.24 provisions of any other law or charter; and 93.25 (2) for counties, the total government fund expenditures, 93.26 as defined by the state auditor under section 375.169, less any 93.27 expenditures for direct payments to recipients or providers for 93.28 the human service aids listed below: 93.29 (i) Minnesota family investment program under chapters 256J 93.30 and 256K; 93.31 (ii) medical assistance under sections 256B.041, 93.32 subdivision 5, and 256B.19, subdivision 1; 93.33 (iii) general assistance medical care under section 93.34 256D.03, subdivision 6; 93.35 (iv) general assistance under section 256D.03, subdivision 93.36 2; 94.1 (v) emergency assistance under section 256J.48; 94.2 (vi) Minnesota supplemental aid under section 256D.36, 94.3 subdivision 1; 94.4 (vii) preadmission screening under section 256B.0911, and 94.5 alternative care grants under section 256B.0913; 94.6 (viii) general assistance medical care claims processing, 94.7 medical transportation and related costs under section 256D.03, 94.8 subdivision 4; 94.9 (ix) medical transportation and related costs under section 94.10 256B.0625, subdivisions 17 to 18a; 94.11 (x) group residential housing under section 256I.05, 94.12 subdivision 8, transferred from programs in clauses (iv) and 94.13 (vi); or 94.14 (xi) any successor programs to those listed in clauses (i) 94.15 to (x). 94.16 (e) A city with a population of over 500 but not more than 94.17 2,500 that is required to hold a public hearing under 94.18 subdivision 6 must advertise by posted notice as defined in 94.19 section 645.12, subdivision 1. The advertisement must be posted 94.20 at the time provided in paragraph (a). It must be in the form 94.21 required in paragraph (b). 94.22 (f) For purposes of this subdivision, the population of a 94.23 city is the most recent population as determined by the state 94.24 demographer under section 4A.02. 94.25 (g) The commissioner of revenue, subject to the approval of 94.26 the chairs of the house and senate tax committees, shall 94.27 prescribe the form and format of theadvertisement94.28 advertisements required under this subdivision. 94.29 [EFFECTIVE DATE.] This section is effective for public 94.30 advertisements required in 2001 for taxes payable in 2002, and 94.31 thereafter. 94.32 Sec. 48. Minnesota Statutes 2000, section 275.065, 94.33 subdivision 6, is amended to read: 94.34 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 94.35 (a) For purposes of this section, the following terms shall have 94.36 the meanings given: 95.1 (1) "Initial hearing" means the first and primary hearing 95.2 held to discuss the taxing authority's proposed budget and 95.3 proposed property tax levy for taxes payable in the following 95.4 year, or, for school districts, the current budget and the 95.5 proposed property tax levy for taxes payable in the following 95.6 year. 95.7 (2) "Continuation hearing" means a hearing held to complete 95.8 the initial hearing, if the initial hearing is not completed on 95.9 its scheduled date. 95.10 (3) "Subsequent hearing" means the hearing held to adopt 95.11 the taxing authority's final property tax levy, and, in the case 95.12 of taxing authorities other than school districts, the final 95.13 budget, for taxes payable in the following year. 95.14 (b) Between November 29 and December 20, the governing 95.15 bodies of a city that has a population over 500, county, 95.16 metropolitan special taxing districts as defined in subdivision 95.17 3, paragraph (i), and regional library districts shall each hold 95.18 an initial public hearing to discuss and seek public comment on 95.19 its final budget and property tax levy for taxes payable in the 95.20 following year, and the governing body of the school district 95.21 shall hold an initial public hearing to review its current 95.22 budget and proposed property tax levy for taxes payable in the 95.23 following year. The metropolitan special taxing districts shall 95.24 be required to hold only a single joint initial public hearing, 95.25 the location of which will be determined by the affected 95.26 metropolitan agencies. A city, county, metropolitan special 95.27 taxing district as defined in subdivision 3, paragraph (i), 95.28 regional library district established under section 134.201, or 95.29 school district is not required to hold a public hearing under 95.30 this subdivision unless its proposed property tax levy for taxes 95.31 payable in the following year, as certified under subdivision 1, 95.32 has increased over its final property tax levy for taxes payable 95.33 in the current year by a percentage that is greater than the 95.34 percentage increase in the implicit price deflator for 95.35 government consumption expenditures and gross investment for 95.36 state and local governments prepared by the Bureau of Economic 96.1 Analysts of the United States Department of Commerce for the 96.2 12-month period ending March 31 of the current year. 96.3 (c) The initial hearing must be held after 5:00 p.m. if 96.4 scheduled on a day other than Saturday. No initial hearing may 96.5 be held on a Sunday. 96.6 (d) At the initial hearing under this subdivision, the 96.7 percentage increase in property taxes proposed by the taxing 96.8 authority, if any, and the specific purposes for which property 96.9 tax revenues are being increased must be discussed. During the 96.10 discussion, the governing body shall hear comments regarding a 96.11 proposed increase and explain the reasons for the proposed 96.12 increase. The public shall be allowed to speak and to ask 96.13 questions. At the public hearing, the school district must also 96.14 provide and discuss information on the distribution of its 96.15 revenues by revenue source, and the distribution of its spending 96.16 by program area. 96.17 (e) If the initial hearing is not completed on its 96.18 scheduled date, the taxing authority must announce, prior to 96.19 adjournment of the hearing, the date, time, and place for the 96.20 continuation of the hearing. The continuation hearing must be 96.21 held at least five business days but no more than 14 business 96.22 days after the initial hearing. A continuation hearing may not 96.23 be held later than December 20 except as provided in paragraphs 96.24 (f) and (g). A continuation hearing must be held after 5:00 96.25 p.m. if scheduled on a day other than Saturday. No continuation 96.26 hearing may be held on a Sunday. 96.27 (f) The governing body of a county shall hold its initial 96.28 hearing on the first Thursday in December each year, and may 96.29 hold additional initial hearings on other dates before December 96.30 20 if necessary for the convenience of county residents. If the 96.31 county needs a continuation of its hearing, the continuation 96.32 hearing shall be held on the third Tuesday in December. If the 96.33 third Tuesday in December falls on December 21, the county's 96.34 continuation hearing shall be held on Monday, December 20. 96.35 (g) The metropolitan special taxing districts shall hold a 96.36 joint initial public hearing on the first Wednesday of 97.1 December. A continuation hearing, if necessary, shall be held 97.2 on the second Wednesday of December even if that second 97.3 Wednesday is after December 10. 97.4 (h) The county auditor shall provide for the coordination 97.5 of initial and continuation hearing dates for all school 97.6 districts and cities within the county to prevent conflicts 97.7 under clauses (i) and (j). 97.8 (i) By August 10, each school board and the board of the 97.9 regional library district shall certify to the county auditors 97.10 of the counties in which the school district or regional library 97.11 district is located the dates on which it elects to hold its 97.12 initial hearing and any continuation hearing. If a school board 97.13 or regional library district does not certify these dates by 97.14 August 10, the auditor will assign the initial and continuation 97.15 hearing dates. The dates elected or assigned must not conflict 97.16 with the initial and continuation hearing dates of the county or 97.17 the metropolitan special taxing districts. 97.18 (j) By August 20, the county auditor shall notify the 97.19 clerks of the cities within the county of the dates on which 97.20 school districts and regional library districts have elected to 97.21 hold their initial and continuation hearings. At the time a 97.22 city certifies its proposed levy under subdivision 1 it shall 97.23 certify the dates on which it elects to hold its initial hearing 97.24 and any continuation hearing. Until September 15, the first and 97.25 second Mondays of December are reserved for the use of the 97.26 cities. If a city does not certify its hearing dates by 97.27 September 15, the auditor shall assign the initial and 97.28 continuation hearing dates. The dates elected or assigned for 97.29 the initial hearing must not conflict with the initial hearing 97.30 dates of the county, metropolitan special taxing districts, 97.31 regional library districts, or school districts within which the 97.32 city is located. To the extent possible, the dates of the 97.33 city's continuation hearing should not conflict with the 97.34 continuation hearing dates of the county, metropolitan special 97.35 taxing districts, regional library districts, or school 97.36 districts within which the city is located. This paragraph does 98.1 not apply to cities of 500 population or less. 98.2 (k) The county initial hearing date and the city, 98.3 metropolitan special taxing district, regional library district, 98.4 and school district initial hearing dates must be designated on 98.5 the notices required under subdivision 3. The continuation 98.6 hearing dates need not be stated on the notices. 98.7 (l) At a subsequent hearing, each county, school district, 98.8 city over 500 population, and metropolitan special taxing 98.9 district may amend its proposed property tax levy and must adopt 98.10 a final property tax levy. Each county, city over 500 98.11 population, and metropolitan special taxing district may also 98.12 amend its proposed budget and must adopt a final budget at the 98.13 subsequent hearing. The final property tax levy must be adopted 98.14 prior to adopting the final budget. A school district is not 98.15 required to adopt its final budget at the subsequent hearing. 98.16 The subsequent hearing of a taxing authority must be held on a 98.17 date subsequent to the date of the taxing authority's initial 98.18 public hearing. If a continuation hearing is held, the 98.19 subsequent hearing must be held either immediately following the 98.20 continuation hearing or on a date subsequent to the continuation 98.21 hearing. The subsequent hearing may be held at a regularly 98.22 scheduled board or council meeting or at a special meeting 98.23 scheduled for the purposes of the subsequent hearing. The 98.24 subsequent hearing of a taxing authority does not have to be 98.25 coordinated by the county auditor to prevent a conflict with an 98.26 initial hearing, a continuation hearing, or a subsequent hearing 98.27 of any other taxing authority. All subsequent hearings must be 98.28 held prior to five working days after December 20 of the levy 98.29 year. The date, time, and place of the subsequent hearing must 98.30 be announced at the initial public hearing or at the 98.31 continuation hearing. 98.32 (m) The property tax levy certified under section 275.07 by 98.33 a city of any population, county, metropolitan special taxing 98.34 district, regional library district, or school district must not 98.35 exceed the proposed levy determined under subdivision 1, except 98.36 by an amount up to the sum of the following amounts: 99.1 (1) the amount of a school district levy whose voters 99.2 approved a referendum to increase taxes under section 123B.63, 99.3 subdivision 3, or 126C.17, subdivision 9, after the proposed 99.4 levy was certified; 99.5 (2) the amount of a city or county levy approved by the 99.6 voters after the proposed levy was certified; 99.7 (3) the amount of a levy to pay principal and interest on 99.8 bonds approved by the voters under section 475.58 after the 99.9 proposed levy was certified; 99.10 (4) the amount of a levy to pay costs due to a natural 99.11 disaster occurring after the proposed levy was certified, if 99.12 that amount is approved by the commissioner of revenue under 99.13 subdivision 6a; 99.14 (5) the amount of a levy to pay tort judgments against a 99.15 taxing authority that become final after the proposed levy was 99.16 certified, if the amount is approved by the commissioner of 99.17 revenue under subdivision 6a; 99.18 (6) the amount of an increase in levy limits certified to 99.19 the taxing authority by the commissioner of children, families, 99.20 and learning or the commissioner of revenue after the proposed 99.21 levy was certified; and 99.22 (7) the amount required under section 126C.55. 99.23 (n) This subdivision does not apply to towns and special 99.24 taxing districts other than regional library districts and 99.25 metropolitan special taxing districts. 99.26 (o) Notwithstanding the requirements of this section, the 99.27 employer is required to meet and negotiate over employee 99.28 compensation as provided for in chapter 179A. 99.29 [EFFECTIVE DATE.] This section is effective for hearings 99.30 required in 2001 for taxes payable in 2002, and thereafter. 99.31 Sec. 49. Minnesota Statutes 2000, section 275.08, 99.32 subdivision 1, is amended to read: 99.33 Subdivision 1. [GENERALLY.] The mill ratepercentof all 99.34 taxes, except the state tax and taxes the rate of which may be 99.35 fixed by law, shall be calculated and fixed by the county 99.36 auditor according to the limitations in this chapter hereinafter 100.1 prescribed; provided, that if any county, city, town, or school 100.2 district shall return a greater amount than its limit or than 100.3 the prescribed rates will raise, the auditor shall extend only 100.4 such amount of tax as allowed by the limit or that the limited 100.5 rate will produce. 100.6 [EFFECTIVE DATE.] This section is effective for taxes 100.7 payable in 2002 and thereafter. 100.8 Sec. 50. Minnesota Statutes 2000, section 275.08, 100.9 subdivision 1a, is amended to read: 100.10 Subd. 1a. [COMPUTATION OFTAX CAPACITYASSESSED VALUE.] 100.11 For taxes payable in19892002 and subsequent years, the county 100.12 auditor shall compute thegross tax capacityassessed value for 100.13 each parcel according to the class rates specified in section 100.14 273.13. Thegross tax capacity will beassessed value is the 100.15 appropriate class rate multiplied by the parcel's market value. 100.16For taxes payable in 1990 and subsequent years, the county100.17auditor shall compute the net tax capacity for each parcel100.18according to the class rates specified in section 273.13. The100.19net tax capacity will be the appropriate class rate multiplied100.20by the parcel's market value.100.21 [EFFECTIVE DATE.] This section is effective for taxes 100.22 payable in 2002 and thereafter. 100.23 Sec. 51. Minnesota Statutes 2000, section 275.08, 100.24 subdivision 1b, is amended to read: 100.25 Subd. 1b. [COMPUTATION OF TAX RATES.] The amounts 100.26 certified to be levied againstnet tax capacityassessed value 100.27 under section 275.07 by an individual local government unit 100.28 shall be divided by the totalnet tax capacityassessed value of 100.29 all taxable properties within the local government unit's taxing 100.30 jurisdiction, excluding the assessed value of properties taxed 100.31 under section 275.083. The resulting ratio,is expressed as a 100.32 mill rate, where one mill equals one-tenth of a percent. The 100.33 mill rate shall be the local government's local tax rate,. The 100.34 mill rate multiplied by each property'snet tax capacity shall100.35beassessed value produces each property'snet tax capacitytax 100.36 for that local government unit before reduction by any credits. 101.1Any amount certified to the county auditor to be levied101.2against market value shall be divided by the total referendum101.3market value of all taxable properties within the taxing101.4district. The resulting ratio, the taxing district's new101.5referendum tax rate, multiplied by each property's referendum101.6market value shall be each property's new referendum tax before101.7reduction by any credits. For the purposes of this subdivision,101.8"referendum market value" means the market value as defined in101.9section 126C.01, subdivision 3.101.10 [EFFECTIVE DATE.] This section is effective for taxes 101.11 payable in 2002 and thereafter. 101.12 Sec. 52. [275.084] [TRANSPORTATION UTILITY FEE.] 101.13 Subdivision 1. [DEFINITIONS.] For the purposes of this 101.14 section, the following terms in this subdivision have the 101.15 meanings given: 101.16 (1) "Municipality" means a home rule charter or statutory 101.17 city. 101.18 (2) "Governing body" means the city council of a 101.19 municipality. 101.20 (3) "Reconstruction" means paving, grading, curbs and 101.21 gutters, bridge repair, overlays, drainage, base work, subgrade 101.22 corrections, and boulevard restoration. 101.23 (4) "Facility upgrade" means traffic signals, turn lanes, 101.24 medians, street approaches, alleys, rights-of-way, sidewalks, 101.25 retaining walls, fence installation, and additional traffic 101.26 lanes. 101.27 (5) "Maintenance" means striping, seal coating, crack 101.28 sealing, sidewalk maintenance, signal maintenance, street light 101.29 maintenance, and signage. 101.30 Subd. 2. [AUTHORIZATION.] A municipality may impose the 101.31 transportation utility fee provided in this section against land 101.32 located within its boundaries except for public property used 101.33 for public purposes. 101.34 Subd. 3. [PROCEDURES FOR ADOPTION.] A municipality may 101.35 impose the transportation utility fee provided in this section 101.36 by ordinance adopted by a two-thirds vote of its governing 102.1 body. The resolution must not be voted on or adopted until 102.2 after a public hearing has been held on the question. A notice 102.3 of the time, place, and purpose of the hearing must be published 102.4 at least once in each week for two successive weeks in the 102.5 official newspaper of the municipality, or in a newspaper of 102.6 general content and circulation within the municipality, and the 102.7 last notice must be published at least seven days prior to the 102.8 hearing. The municipality, if adopted, must file the ordinance 102.9 of record with the county recorder, and the municipality must 102.10 provide a copy to the county auditor. 102.11 Subd. 4. [COLLECTION.] The ordinance adopted under this 102.12 section must provide for the billing and payment of the fee on a 102.13 monthly, quarterly, or other basis as the governing body by 102.14 resolution shall direct. Fees that, as of October 15 each 102.15 calendar year, have remained unpaid for at least 30 days must be 102.16 certified to the county auditor for collection as a special 102.17 assessment payable in the following calendar year against the 102.18 affected property. 102.19 Subd. 5. [MASTER PLAN REQUIREMENT.] A municipality may not 102.20 impose the fee provided in this section unless it has prepared 102.21 and adopted a master plan that includes information on the 102.22 proposed reconstruction, facility upgrade, and maintenance for 102.23 the following five years. A capital improvement plan, public 102.24 facility plan, or comparable information qualifies as a master 102.25 plan. The master plan must include information on the proposed 102.26 funding sources for all projects required to be included in the 102.27 plan. The master plan must be adopted by resolution of the 102.28 governing body following a hearing and publication of notice of 102.29 the hearing, as provided in subdivision 3. 102.30 Subd. 6. [USE OF PROCEEDS.] Revenues from the fee 102.31 authorized in this section may only be used for specific 102.32 projects listed in the master plan and are limited to projected 102.33 costs of the needs approved in the master plan. The 102.34 municipality may not accumulate revenues from the fee beyond the 102.35 estimated costs for reconstructions, facility upgrades, and 102.36 maintenance that are described in the master plan. 103.1 Subd. 7. [TRIP GENERATION DATA.] The fee imposed must be 103.2 calculated based on the relationship of the revenues the 103.3 municipality proposes to generate and a city determined trip 103.4 generation rate for each type of land use. 103.5 Subd. 8. [APPEALS.] A property owner may administratively 103.6 appeal the amount of the fee or the trip generation rate to the 103.7 governing body within 60 days after notice of the amount of fee 103.8 due has been mailed to the property owner. The appeal must be 103.9 in writing, signed, and dated by the property owner, and must 103.10 state the reasons why the amount of the fee or the trip 103.11 generation rate is incorrect. The decision of the governing 103.12 body may be appealed to district court in the same manner as a 103.13 civil action. If the governing body does not make a decision 103.14 within six months after the filing of an administrative appeal, 103.15 the property owner may elect to appeal to court. The appeal 103.16 procedures in this subdivision are in lieu of any appeal 103.17 procedures relating to special assessments provided for in 103.18 chapter 429. 103.19 Subd. 9. [SPECIAL ASSESSMENTS; BONDS; PROPERTY TAX 103.20 LEVIES.] The use of the transportation utility fee by a 103.21 municipality does not restrict the municipality from imposing 103.22 special assessments, issuing bond debt, or levying property 103.23 taxes to pay the costs of local street reconstruction, facility 103.24 upgrades, or maintenance. 103.25 [EFFECTIVE DATE.] This section is effective for fees 103.26 payable in 2002 and thereafter. 103.27 Sec. 53. Minnesota Statutes 2000, section 275.28, 103.28 subdivision 1, is amended to read: 103.29 Subdivision 1. [AUDITOR TO MAKE.] The county auditor shall 103.30 make out the tax lists according to the prescribed form, and to 103.31 correspond with the assessment districts. The mill ratepercent103.32 necessary to raise the required amount of the various taxes 103.33 shall be calculated on thenet tax capacityassessed value of 103.34 property as determined by the state board of equalization, but, 103.35 in calculating such rates, no rate shall be usedresulting in a103.36fraction other than a decimal fraction, orless than agross104.1 local tax rate of.01 percent or a net local tax rate of .01104.2percent1/1,000 of a mill; and, in extending any tax, whenever 104.3 it amounts to the fractional part of a cent, it shall be made 104.4 one cent. The tax lists shall also be made out to correspond 104.5 with the assessment books in reference to ownership and 104.6 description of property, with columns for the valuation and for 104.7 the various items of tax included in the total amount of all 104.8 taxes set down opposite each description. The auditor shall 104.9 enter both the state tax determined under section 275.02, and 104.10 the local taxes determined under section 275.08 on the tax lists. 104.11 The total ad valorem property tax for each description of 104.12 property before credits is the sum of the amounts of the various 104.13 local taxes that apply to the parcel plus the amount of any 104.14 applicable state tax under section 275.02. Opposite each 104.15 description which has been sold for taxes, and which is subject 104.16 to redemption, but not redeemed, shall be placed the words "sold 104.17 for taxes." The amount of all special taxes shall be entered in 104.18 the proper columns, but the general taxes may be shown by 104.19 entering the mill ratepercentof each tax at the head of the 104.20 proper columns, without extending the same, in which case a 104.21 schedule of the mill ratespercentof such taxes shall be made 104.22 on the first page of each tax list. If the auditor fails to 104.23 enter on any such list before its delivery to the treasurer any 104.24 tax levied, the tax may be subsequently entered. The tax lists 104.25 shall be deemed completed, and all taxes extended thereon, as of 104.26 January 1 annually. 104.27 [EFFECTIVE DATE.] This section is effective for taxes 104.28 payable in 2002 and thereafter. 104.29 Sec. 54. Minnesota Statutes 2000, section 275.61, is 104.30 amended to read: 104.31 275.61 [VOTER APPROVED LEVY;MARKETASSESSED VALUE.] 104.32 For local governmental subdivisions other than school 104.33 districts, any levy, including the issuance of debt obligations 104.34 payable in whole or in part from property taxes, required to be 104.35 approved and approved by the voters at a general or special 104.36 electionfor taxes payable in 1993 and thereafter,shall be 105.1 levied against thereferendum marketassessed value of all 105.2 taxable property within the governmental subdivision, as defined105.3in section 126C.01, subdivision 3. Any levy amount subject to 105.4 the requirements of this section shall be certified separately 105.5 to the county auditor under section 275.07. 105.6 The ballot shall state the maximum amount of the increased 105.7 levy as a percentage ofmarketassessed value and the amount 105.8 that will be raised by the new referendum tax rate in the first 105.9 year it is to be levied. 105.10 [EFFECTIVE DATE.] This section is effective for taxes 105.11 payable in 2002 and thereafter. 105.12 Sec. 55. Minnesota Statutes 2000, section 276.04, 105.13 subdivision 2, is amended to read: 105.14 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 105.15 shall provide for the printing of the tax statements. The 105.16 commissioner of revenue shall prescribe the form of the property 105.17 tax statement and its contents. The statement must contain a 105.18 tabulated statement of the dollar amount due to each taxing 105.19 authority and the amount of the statedetermined schooltax from 105.20 the parcel of real property for which a particular tax statement 105.21 is prepared. The dollar amounts attributable to the county, the 105.22 statedetermined schooltax, the voter approved school tax, the 105.23 other local school tax, the township or municipality, and the 105.24 total of the metropolitan special taxing districts as defined in 105.25 section 275.065, subdivision 3, paragraph (i), must be 105.26 separately stated. The amounts due all other special taxing 105.27 districts, if any, may be aggregated. The amount of the tax on 105.28 homesteads qualifying under the senior citizens' property tax 105.29 deferral program under chapter 290B is the total amount of 105.30 property tax before subtraction of the deferred property tax 105.31 amount. The amount of the tax on contamination value imposed 105.32 under sections 270.91 to 270.98, if any, must also be separately 105.33 stated. The dollar amounts, including the dollar amount of any 105.34 special assessments, may be rounded to the nearest even whole 105.35 dollar. For purposes of this section whole odd-numbered dollars 105.36 may be adjusted to the next higher even-numbered dollar. The 106.1 amount of market value excluded under section 273.11, 106.2 subdivision 16, if any, must also be listed on the tax 106.3 statement.The statement shall include the following sentences,106.4printed in upper case letters in boldface print: "EVEN THOUGH106.5THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX106.6REVENUES, IT SETS THE AMOUNT OF THE STATE-DETERMINED SCHOOL TAX106.7LEVY. THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY106.8PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."106.9 (b) The property tax statements for manufactured homes and 106.10 sectional structures taxed as personal property shall contain 106.11 the same information that is required on the tax statements for 106.12 real property. 106.13 (c) Real and personal property tax statements must contain 106.14 the following information in the order given in this paragraph. 106.15 The information must contain the current year tax information in 106.16 the right column with the corresponding information for the 106.17 previous year in a column on the left: 106.18 (1) the property's estimated market value under section 106.19 273.11, subdivision 1; 106.20 (2) the property's taxable market value after reductions 106.21 under section 273.11, subdivisions 1a and 16; 106.22 (3) the property's gross tax, calculated by adding the 106.23 property's total property tax to the sum of the aids enumerated 106.24 in clause (4); 106.25 (4) a total of the following aids: 106.26 (i) education aids payable under chapters 122A, 123A, 123B, 106.27 124D, 125A, 126C, and 127A; 106.28 (ii) local government aids for cities, towns, and counties 106.29 under chapter 477A; 106.30 (iii) disparity reduction aid under section 273.1398; and 106.31 (iv) homestead and agricultural credit aid under section 106.32 273.1398; 106.33 (5) for homesteadresidential and agriculturalproperties, 106.34 theeducationmarket value homesteadcreditcredits under 106.35 section273.1382273.1384; 106.36 (6) any credits received under sections 273.119; 273.123; 107.1 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 107.2 473H.10, except that the amount of credit received under section 107.3 273.135 must be separately stated and identified as "taconite 107.4 tax relief"; and 107.5 (7) the net tax payable in the manner required in paragraph 107.6 (a). 107.7 (d) If the county uses envelopes for mailing property tax 107.8 statements and if the county agrees, a taxing district may 107.9 include a notice with the property tax statement notifying 107.10 taxpayers when the taxing district will begin its budget 107.11 deliberations for the current year, and encouraging taxpayers to 107.12 attend the hearings. If the county allows notices to be 107.13 included in the envelope containing the property tax statement, 107.14 and if more than one taxing district relative to a given 107.15 property decides to include a notice with the tax statement, the 107.16 county treasurer or auditor must coordinate the process and may 107.17 combine the information on a single announcement. 107.18 The commissioner of revenue shall certify to the county 107.19 auditor the actual or estimated aids enumerated in clause (4) 107.20 that local governments will receive in the following year. The 107.21 commissioner must certify this amount by January 1 of each year. 107.22 [EFFECTIVE DATE.] This section is effective July 1, 2001 107.23 and thereafter, for statements required in 2002 and thereafter. 107.24 Sec. 56. Minnesota Statutes 2000, section 276A.06, 107.25 subdivision 3, is amended to read: 107.26 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 107.27 apportion the levy of each governmental unit in the county in 107.28 the manner prescribed by this subdivision. The auditor shall: 107.29 (a) by August 20 of 1997 and each subsequent year, 107.30 determine the areawide portion of the levy for each governmental 107.31 unit by multiplying the local tax rate of the governmental unit 107.32 for the preceding levy year times the distribution value set 107.33 forth in subdivision 2, clause (b);and107.34 (b) by September 5 of 1997 and each subsequent year, 107.35 determine the local portion of the current year's levy by 107.36 subtracting the resulting amount from clause (a) from the 108.1 governmental unit's current year's levy.; and 108.2 (c) for determinations made under paragraph (a) in the case 108.3 of school districts, in 2001 and thereafter, for taxes payable 108.4 in 2002 and thereafter, exclude the general education tax rate 108.5 from the local tax rate for the preceding levy year. 108.6 [EFFECTIVE DATE.] This section is effective the day 108.7 following final enactment. 108.8 Sec. 57. Minnesota Statutes 2000, section 282.01, 108.9 subdivision 1a, is amended to read: 108.10 Subd. 1a. [CONVEYANCE; GENERALLY.] Tax-forfeited lands may 108.11 be sold by the county board to an organized or incorporated 108.12 governmental subdivision of the state for any public purpose for 108.13 which the subdivision is authorized to acquire property or may 108.14 be released from the trust in favor of the taxing districts on 108.15 application of a state agency for an authorized use at not less 108.16 than their value as determined by the county board.The108.17commissioner of revenue may convey by deed in the name of the108.18state a tract of tax-forfeited land held in trust in favor of108.19the taxing districts to a governmental subdivision for an108.20authorized public use, if an application is submitted to the108.21commissioner which includes a statement of facts as to the use108.22to be made of the tract and the need therefor and the108.23recommendation of the county board.108.24 [EFFECTIVE DATE.] This section is effective for deeds 108.25 issued on or after July 1, 2001. 108.26 Sec. 58. Minnesota Statutes 2000, section 282.01, 108.27 subdivision 1b, is amended to read: 108.28 Subd. 1b. [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 108.29 Notwithstanding subdivision 1a, in the case of tax-forfeited 108.30 lands located in a targeted neighborhood, as defined in section 108.31 469.201, subdivision 10,outside the metropolitan area, as108.32defined inand section 473.121, subdivision 2, the commissioner 108.33 of revenuemayshall convey by deed in the name of the state any 108.34 tract of tax-forfeited land held in trust in favor of the taxing 108.35 districts, to a political subdivision that submits an 108.36 application to the commissioner of revenue and the 109.1 recommendation of the county board. 109.2 (b)Notwithstanding subdivision 1a, in the case of109.3tax-forfeited lands located in a targeted neighborhood, as109.4defined in section 469.201, subdivision 10, in a county in the109.5metropolitan area, as defined in section 473.121, subdivision 2,109.6the commissioner of revenue shall convey by deed in the name of109.7the state any tract of tax-forfeited land held in trust in favor109.8of the taxing districts, to a political subdivision that submits109.9an application to the commissioner of revenue and the county109.10board.109.11(c)The application under paragraph (a)or (b)must include 109.12 a statement of facts as to the use to be made of the tract, the 109.13 need therefor, and a resolution, adopted by the governing body 109.14 of the political subdivision, finding that the conveyance of a 109.15 tract of tax-forfeited land to the political subdivision is 109.16 necessary to provide for the redevelopment of land as productive 109.17 taxable property. Deeds of conveyance issued under paragraph 109.18 (a) are not conditioned on continued use of the property for the 109.19 use stated in the application. 109.20 [EFFECTIVE DATE.] This section is effective for deeds 109.21 issued on or after July 1, 2001. 109.22 Sec. 59. Minnesota Statutes 2000, section 282.08, is 109.23 amended to read: 109.24 282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.] 109.25 The net proceeds from the sale or rental of any parcel of 109.26 forfeited land, or from the sale of products from the forfeited 109.27 land, must be apportioned by the county auditor to the taxing 109.28 districts interested in the land, as follows: 109.29 (1) the portion required to pay any amounts included in the 109.30 appraised value under section 282.01, subdivision 3, as 109.31 representing increased value due to any public improvement made 109.32 after forfeiture of the parcel to the state, but not exceeding 109.33 the amount certified by the clerk of the municipality must be 109.34 apportioned to the municipal subdivision entitled to it; 109.35 (2) the portion required to pay any amount included in the 109.36 appraised value under section 282.019, subdivision 5, 110.1 representing increased value due to response actions taken after 110.2 forfeiture of the parcel to the state, but not exceeding the 110.3 amount of expenses certified by the pollution control agency or 110.4 the commissioner of agriculture, must be apportioned to the 110.5 agency or the commissioner of agriculture and deposited in the 110.6 fund from which the expenses were paid; 110.7 (3) the portion of the remainder required to discharge any 110.8 special assessment chargeable against the parcel for drainage or 110.9 other purpose whether due or deferred at the time of forfeiture, 110.10 must be apportioned to the municipal subdivision entitled to it; 110.11and110.12 (4) the portion of the remainder equal to unpaid state tax 110.13 levies against the property for the years the property was on 110.14 the tax lists prior to forfeiture, not including the associated 110.15 penalty and interest amounts; and 110.16 (5) any balance must be apportioned as follows: 110.17 (i) The county board may annually by resolution set aside 110.18 no more than 30 percent of the receipts remaining to be used for 110.19 timber development on tax-forfeited land and dedicated memorial 110.20 forests, to be expended under the supervision of the county 110.21 board. It must be expended only on projects approved by the 110.22 commissioner of natural resources. 110.23 (ii) The county board may annually by resolution set aside 110.24 no more than 20 percent of the receipts remaining to be used for 110.25 the acquisition and maintenance of county parks or recreational 110.26 areas as defined in sections 398.31 to 398.36, to be expended 110.27 under the supervision of the county board. 110.28 (iii) Any balance remaining must be apportioned as 110.29 follows: county, 40 percent; town or city, 20 percent; and 110.30 school district, 40 percent, provided, however, that in 110.31 unorganized territory that portion which would have accrued to 110.32 the township must be administered by the county board of 110.33 commissioners. 110.34 [EFFECTIVE DATE.] This section is effective July 1, 2001, 110.35 and thereafter. 110.36 Sec. 60. Minnesota Statutes 2000, section 290A.03, 111.1 subdivision 13, is amended to read: 111.2 Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes 111.3 payable" means the property tax exclusive of special 111.4 assessments, penalties, and interest payable on a claimant's 111.5 homestead after deductions made under sections 273.135, 111.6 273.1382, 273.1391, 273.42, subdivision 2, and any other state 111.7 paid property tax credits in any calendar year, and after any 111.8 refund claimed and allowable under section 290A.04, subdivision 111.9 2h, that is first payable in the year that the property taxes 111.10 are payable. In the case of a claimant who makes ground lease 111.11 payments, "property taxes payable" includes the amount of the 111.12 payments directly attributable to the property taxes assessed 111.13 against the parcel on which the house is located. No 111.14 apportionment or reduction of the "property taxes payable" shall 111.15 be required for the use of a portion of the claimant's homestead 111.16 for a business purpose if the claimant does not deduct any 111.17 business depreciation expenses for the use of a portion of the 111.18 homestead in the determination of federal adjusted gross 111.19 income. For homesteads which are manufactured homes as defined 111.20 in section 273.125, subdivision 8, and for homesteads which are 111.21 park trailers taxed as manufactured homes under section 168.012, 111.22 subdivision 9, "property taxes payable" shall also include 19 111.23 percent of the gross rent paid in the preceding year for the 111.24 site on which the homestead is located. When a homestead is 111.25 owned by two or more persons as joint tenants or tenants in 111.26 common, such tenants shall determine between them which tenant 111.27 may claim the property taxes payable on the homestead. If they 111.28 are unable to agree, the matter shall be referred to the 111.29 commissioner of revenue whose decision shall be final. Property 111.30 taxes are considered payable in the year prescribed by law for 111.31 payment of the taxes. 111.32 In the case of a claim relating to "property taxes 111.33 payable," the claimant must have owned and occupied the 111.34 homestead on January 2 of the year in which the tax is payable 111.35 and (i) the property must have been classified as homestead 111.36 property pursuant to section 273.124, on or before December 15 112.1 of the assessment year to which the "property taxes payable" 112.2 relate; or (ii) the claimant must provide documentation from the 112.3 local assessor that application for homestead classification has 112.4 been made on or before December 15 of the year in which the 112.5 "property taxes payable" were payable and that the assessor has 112.6 approved the application. 112.7 [EFFECTIVE DATE.] This section is effective beginning with 112.8 refunds based on property taxes payable in 2002. 112.9 Sec. 61. Minnesota Statutes 2000, section 290A.04, 112.10 subdivision 2, is amended to read: 112.11 Subd. 2. [HOMEOWNERS.] A claimant whose property taxes 112.12 payable are in excess of the percentage of the household income 112.13 stated below shall pay an amount equal to the percent of income 112.14 shown for the appropriate household income level along with the 112.15 percent to be paid by the claimant of the remaining amount of 112.16 property taxes payable. The state refund equals the amount of 112.17 property taxes payable that remain, up to the state refund 112.18 amount shown below. 112.19 Percent Percent Maximum 112.20 Household Income of Income Paid by State 112.21 Claimant Refund 112.22$0 to 1,029112.23 $0 to 1,189 1.2 percent 18 percent$440$1,190 112.241,030 to 2,059112.25 1,190 to 2,389 1.3 percent 18 percent$440$1,190 112.262,060 to 3,099112.27 2,390 to 3,589 1.4 percent 20 percent$440$1,190 112.283,100 to 4,129112.29 3,590 to 4,779 1.6 percent 20 percent$440$1,190 112.304,130 to 5,159112.31 4,780 to 5,969 1.7 percent 20 percent$440$1,190 112.325,160 to 7,229112.33 5,970 to 8,369 1.9 percent 25 percent$440$1,190 112.347,230 to 8,259112.35 8,370 to 9,559 2.1 percent 25 percent$440$1,190 112.368,260 to 9,289112.37 9,560 to 10,759 2.2 percent 25 percent$440$1,190 112.389,290 to 10,319112.39 10,760 to 11,949 2.3 percent 30 percent$440$1,190 112.4010,320 to 11,349112.41 11,950 to 13,139 2.4 percent 30 percent$440$1,190 112.4211,350 to 12,389112.43 13,140 to 14,349 2.5 percent 30 percent$440$1,190 112.4412,390 to 14,449112.45 14,350 to 16,729 2.6 percent 30 percent$440$1,190 112.4614,450 to 15,479112.47 16,730 to 17,919 2.8 percent 35 percent$440$1,190 112.4815,480 to 16,509112.49 17,920 to 19,119 3.0 percent 35 percent$440$1,190 112.5016,510 to 17,549112.51 19,120 to 20,319 3.2 percent 40 percent$440$1,190 112.5217,550 to 21,669112.53 20,320 to 25,089 3.3 percent 40 percent$440$1,190 113.121,670 to 24,769113.2 25,090 to 28,679 3.4 percent 45 percent$440$1,190 113.324,770 to 30,959113.4 28,680 to 41,819 3.5 percent 45 percent$440$1,190 113.530,960 to 36,1193.5 percent45 percent$440113.636,120 to 41,279113.7 41,820 to 47,789 3.7 percent 50 percent$440$1,190 113.841,280 to 58,829113.9 47,790 to 63,329 4.0 percent 50 percent$440$1,190 113.10 63,330 to 64,519 4.0 percent 50 percent $1,080 113.11 64,520 to 65,719 4.0 percent 50 percent $ 960 113.12 65,720 to 66,909 4.0 percent 50 percent $ 830 113.13 66,910 to 68,109 4.0 percent 50 percent $ 720 113.1458,830 to 59,859113.15 68,110 to 69,309 4.0 percent 50 percent$310$600 113.1659,860 to 60,889113.17 69,310 to 70,499 4.0 percent 50 percent$210$360 113.1860,890 to 61,929113.19 70,500 to 71,699 4.0 percent 50 percent$100$120 113.20 The payment made to a claimant shall be the amount of the 113.21 state refund calculated under this subdivision. No payment is 113.22 allowed if the claimant's household income is$61,930$71,700 or 113.23 more. 113.24 [EFFECTIVE DATE.] This section is effective beginning with 113.25 refunds based on property taxes payable in 2002. 113.26 Sec. 62. Minnesota Statutes 2000, section 290A.04, 113.27 subdivision 2a, is amended to read: 113.28 Subd. 2a. [RENTERS.] A claimant whose rent constituting 113.29 property taxes exceeds the percentage of the household income 113.30 stated below must pay an amount equal to the percent of income 113.31 shown for the appropriate household income level along with the 113.32 percent to be paid by the claimant of the remaining amount of 113.33 rent constituting property taxes. The state refund equals the 113.34 amount of rent constituting property taxes that remain, up to 113.35 the maximum state refund amount shown below. 113.36 Percent Percent Maximum 113.37 Household Income of Income Paid by State 113.38 Claimant Refund 113.39 $0 to 3,099113.40 0 to 3,589 1.0 percent 5 percent$1,030$1,190 113.413,100 to 4,129113.42 3,590 to 4,779 1.0 percent 10 percent$1,030$1,190 113.434,130 to 5,159113.44 4,780 to 5,969 1.1 percent 10 percent$1,030$1,190 113.455,160 to 7,229113.46 5,970 to 8,369 1.2 percent 10 percent$1,030$1,190 113.477,230 to 9,289113.48 8,370 to 10,759 1.3 percent 15 percent$1,030$1,190 113.499,290 to 10,319113.50 10,760 to 11,949 1.4 percent 15 percent$1,030$1,190 113.5110,320 to 11,349113.52 11,950 to 13,139 1.4 percent 20 percent$1,030$1,190 113.5311,350 to 13,419113.54 13,140 to 15,539 1.5 percent 20 percent$1,030$1,190 114.113,420 to 14,449114.2 15,540 to 16,729 1.6 percent 20 percent$1,030$1,190 114.314,450 to 15,479114.4 16,730 to 17,919 1.7 percent 25 percent$1,030$1,190 114.515,480 to 17,549114.6 17,920 to 20,319 1.8 percent 25 percent$1,030$1,190 114.717,550 to 18,579114.8 20,320 to 21,509 1.9 percent 30 percent$1,030$1,190 114.918,580 to 19,609114.10 21,510 to 22,699 2.0 percent 30 percent$1,030$1,190 114.1119,610 to 20,639114.12 22,700 to 23,899 2.2 percent 30 percent$1,030$1,190 114.1320,640 to 21,669114.14 23,900 to 25,089 2.4 percent 30 percent$1,030$1,190 114.1521,670 to 22,709114.16 25,090 to 26,289 2.6 percent 35 percent$1,030$1,190 114.1722,710 to 23,739114.18 26,290 to 27,489 2.7 percent 35 percent$1,030$1,190 114.1923,740 to 24,769114.20 27,490 to 28,679 2.8 percent 35 percent$1,030$1,190 114.2124,770 to 25,799114.22 28,680 to 29,869 2.9 percent 40 percent$1,030$1,190 114.2325,800 to 26,839114.24 29,870 to 31,079 3.0 percent 40 percent$1,030$1,190 114.2526,840 to 27,869114.26 31,080 to 32,269 3.1 percent 40 percent$1,030$1,190 114.2727,870 to 28,899114.28 32,270 to 33,459 3.2 percent 40 percent$1,030$1,190 114.2928,900 to 29,929114.30 33,460 to 34,649 3.3 percent 45 percent$ 930$1,080 114.3129,930 to 30,959114.32 34,650 to 35,849 3.4 percent 45 percent$ 830$ 960 114.3330,960 to 31,999114.34 35,850 to 37,049 3.5 percent 45 percent$ 720$ 830 114.3532,000 to 33,029114.36 37,050 to 38,239 3.5 percent 50 percent$ 620$ 720 114.3733,030 to 34,059114.38 38,240 to 39,439 3.5 percent 50 percent$ 520$ 600 114.3934,060 to 35,089114.40 39,440 to 40,629 3.5 percent 50 percent$ 310$ 360 114.4135,090 to 36,119114.42 40,630 to 41,819 3.5 percent 50 percent$ 100$ 120 114.43 The payment made to a claimant is the amount of the state 114.44 refund calculated under this subdivision. No payment is allowed 114.45 if the claimant's household income is$36,120$41,820 or more. 114.46 [EFFECTIVE DATE.] This section is effective beginning with 114.47 refunds based on rent constituting property taxes paid in 2001. 114.48 Sec. 63. Minnesota Statutes 2000, section 290A.04, 114.49 subdivision 2h, is amended to read: 114.50 Subd. 2h. [ADDITIONAL REFUND.] (a) If the gross property 114.51 taxes payable on a homestead increase more than 12 percent over 114.52 thenetproperty taxes payable in the prior year on the same 114.53 property that is owned and occupied by the same owner on January 114.54 2 of both years, and the amount of that increase is $100 or 114.55 more, a claimant who is a homeowner shall be allowed an 114.56 additional refund equal to 60 percent of the amount of the 115.1 increase over the greater of 12 percent of the prior year's net 115.2 property taxes payable or $100. This subdivision shall not 115.3 apply to any increase in the gross property taxes payable 115.4 attributable to improvements made to the homestead after the 115.5 assessment date for the prior year's taxes. This subdivision 115.6 shall not apply to any increase in the gross property taxes 115.7 payable attributable to the termination of valuation exclusions 115.8 under section 273.11, subdivision 16. 115.9 The maximum refund allowed under this subdivision is $1,000. 115.10 (b) For purposes of this subdivision,the following terms115.11have the meanings given:115.12(1) "Net property taxes payable" means property taxes115.13payable minus refund amounts for which the claimant qualifies115.14pursuant to subdivision 2 and this subdivision.115.15(2)"gross property taxes payable" meansnetproperty taxes 115.16 payable determined without regard to the refund allowed under 115.17 this subdivision. 115.18 (c) In addition to the other proofs required by this 115.19 chapter, each claimant under this subdivision shall file with 115.20 the property tax refund return a copy of the property tax 115.21 statement for taxes payable in the preceding year or other 115.22 documents required by the commissioner. 115.23 (d) Upon request, the appropriate county official shall 115.24 make available the names and addresses of the property taxpayers 115.25 who may be eligible for the additional property tax refund under 115.26 this section. The information shall be provided on a magnetic 115.27 computer disk. The county may recover its costs by charging the 115.28 person requesting the information the reasonable cost for 115.29 preparing the data. The information may not be used for any 115.30 purpose other than for notifying the homeowner of potential 115.31 eligibility and assisting the homeowner, without charge, in 115.32 preparing a refund claim. 115.33 [EFFECTIVE DATE.] This section is effective beginning with 115.34 refunds based on gross property taxes payable in 2002. 115.35 Sec. 64. Minnesota Statutes 2000, section 290A.04, 115.36 subdivision 4, is amended to read: 116.1 Subd. 4. [INFLATION ADJUSTMENT.] Beginning for property 116.2 tax refunds payable in calendar year19962002, the commissioner 116.3 shall annually adjust the dollar amounts of the income 116.4 thresholds and the maximum refunds under subdivisions 2 and 2a 116.5 for inflation. The commissioner shall make the inflation 116.6 adjustments in accordance with section290.06, subdivision 2d1f 116.7 of the Internal Revenue Code, except that for purposes of this 116.8 subdivision the percentage increase shall be determined from the 116.9 year ending on June 30,19942000, to the year ending on June 30 116.10 of the year preceding that in which the refund is payable. The 116.11 commissioner shall use the appropriate percentage increase to 116.12 annually adjust the income thresholds and maximum refunds under 116.13 subdivisions 2 and 2a for inflation without regard to whether or 116.14 not the income tax brackets are adjusted for inflation in that 116.15 year. The commissioner shall round the thresholds and the 116.16 maximum amounts, as adjusted to the nearest $10 amount. If the 116.17 amount ends in $5, the commissioner shall round it up to the 116.18 next $10 amount. 116.19 The commissioner shall annually announce the adjusted 116.20 refund schedule at the same time provided under section 290.06. 116.21 The determination of the commissioner under this subdivision is 116.22 not a rule under the Administrative Procedure Act. 116.23 [EFFECTIVE DATE.] This section is effective the day 116.24 following final enactment. 116.25 Sec. 65. [290C.01] [PURPOSE.] 116.26 It is the policy of this state to promote sustainable 116.27 forest resource management on the state's public and private 116.28 lands. Recognizing that private forests comprise approximately 116.29 one-half of the state's forest land resources, and that healthy 116.30 and robust state forest land resources provide significant 116.31 benefits to the citizens of the state, and that ad valorem 116.32 property taxes represent a significant annual cost that can 116.33 discourage long-term forest management investments, sections 116.34 290C.01 to 290C.12, which may be referred to as the Sustainable 116.35 Forest Tax Refund Act, are enacted to encourage the state's 116.36 private forest landowners to make long-term commitments to 117.1 sustainable forest management of lands within the state. 117.2 Sec. 66. [290C.02] [DEFINITIONS.] 117.3 Subdivision 1. [APPLICATION.] When used in sections 117.4 290C.01 to 290C.12, the following words and terms have the 117.5 meanings given in this section. 117.6 Subd. 2. [APPROVED PLAN WRITERS.] "Approved plan writers" 117.7 are natural resource professionals who are employed by private 117.8 sector companies or individuals, nonprofit organizations, local 117.9 units of government, or public agencies, and who are approved by 117.10 the commissioner of natural resources. Persons determined to be 117.11 certified foresters by the Society of American Foresters shall 117.12 be deemed to meet the standards required under this 117.13 subdivision. The commissioner of natural resources shall issue 117.14 a unique identification number to each approved planner. 117.15 Subd. 3. [CLAIMANT.] "Claimant" means a person, as that 117.16 term is defined in section 290.01, subdivision 2, who owns 117.17 forest land in Minnesota and files an application authorized by 117.18 the Sustainable Forest Tax Refund Act. No more than one 117.19 claimant is entitled to relief under this act with respect to 117.20 any tract, parcel, or piece of land enrolled under this act. 117.21 When enrolled forest land is owned by two or more persons, the 117.22 owners must determine between them which person may claim the 117.23 refunds provided under sections 290C.01 to 290C.12. 117.24 Subd. 4. [COMMISSIONER.] "Commissioner" means the 117.25 commissioner of the department of revenue. 117.26 Subd. 5. [CURRENT USE VALUE TAX.] "Current use value tax" 117.27 means (i) 90 percent of the product of the most recent 117.28 countywide weighted average annual net timber growth rate per 117.29 acre for the county published by the United States Department of 117.30 Agriculture's Forest Service North Central Research Station as 117.31 of June 1 of the taxes payable year times the most recent 117.32 countywide weighted average stumpage value per acre for the 117.33 county published by the department of natural resources as of 117.34 June 1 of the taxes payable year, divided by (ii) a statewide 117.35 capitalization rate for timber resource investments in the prior 117.36 year as determined by the commissioner on or before June 1 of 118.1 the taxes payable year, times (iii) the average local tax rate 118.2 in towns in the county as computed by the commissioner from the 118.3 information certified by the county auditor on the abstract of 118.4 tax lists submitted under section 275.29 for the taxes payable 118.5 year, times (iv) the number of acres of the claimant's land in 118.6 the county classified under section 273.13, subdivision 23, 118.7 paragraph (b), clause (2), item (ii), and approved for 118.8 sustainable forest tax refunds. 118.9 Subd. 6. [FOREST LAND.] "Forest land" means land 118.10 containing a minimum of 20 contiguous acres for which the owner 118.11 has implemented a forest management plan that was prepared or 118.12 updated within the past ten years by an approved plan writer. 118.13 At least 50 percent of the contiguous acreage must meet the 118.14 definition of forest land in section 88.01, subdivision 7. For 118.15 the purposes of sections 290C.01 to 209C.12, forest land does 118.16 not include (i) land used for residential purposes, agricultural 118.17 purposes, or commercial purposes other than the growing of 118.18 timber, (ii) land enrolled in the reinvest in Minnesota program, 118.19 a state or federal conservation reserve or easement reserve 118.20 program, the Minnesota agricultural property tax law, or land 118.21 subject to agricultural land preservation controls or 118.22 restrictions as defined in section 40A.02, or under the 118.23 Metropolitan Agricultural Preserves Act, or (iii) land improved 118.24 with a structure, pavement, road, sewer, or campsite. 118.25 Subd. 7. [FOREST MANAGEMENT PLAN.] "Forest management plan" 118.26 means a written document providing a framework for a 118.27 site-specific healthy, productive, and sustainable forest 118.28 ecosystem. A forest management plan must include at least the 118.29 following: (i) owner specific long-term and short-term forest 118.30 management goals for the property including, when available, 118.31 goals for individual cover types; (ii) a map of the vegetation 118.32 on the property; (iii) a reliable field inventory of the 118.33 individual cover types, their age, and density; (iv) an analysis 118.34 of the soil type and quality; (v) an aerial photo of the land 118.35 clearly indicating the boundaries of the property and of the 118.36 forest land; (vi) the proposed future character of the cover 119.1 types on the property; and (vii) prescriptions to meet proposed 119.2 future cover type character on the property and a timetable for 119.3 implementing the prescribed activities. All management 119.4 activities prescribed in a plan must be in accordance with the 119.5 recommended forest management guidelines adopted in 1999 by the 119.6 Minnesota forest resources council. The commissioner of natural 119.7 resources shall provide a framework for updating and revising 119.8 plans. 119.9 Subd. 8. [NET PROPERTY TAX.] "Net property tax" means the 119.10 product of (i) the average market value per acre of taxable 119.11 forested lands in the county, including those described in 119.12 subdivision 6, for the taxes payable year as determined by the 119.13 county assessor, times (ii) the class rate specified in section 119.14 273.13 for class 2b timberlands, times (iii) the average local 119.15 tax rate in the towns in the county as computed by the 119.16 commissioner from the information certified by the county 119.17 auditor on the abstract of tax lists submitted under section 119.18 275.29 for the taxes payable year, times (iv) the number of 119.19 acres of land in the county owned by the claimant that have been 119.20 classified under section 273.13, subdivision 23, paragraph (b), 119.21 clause (2), item (ii), and approved for sustainable forest tax 119.22 refunds. 119.23 Sec. 67. [290C.03] [SUSTAINABLE FOREST TAX REFUNDS.] 119.24 Each claimant shall be allowed a refund for taxes payable 119.25 in the current year in an amount that is the greater of (1) 119.26 two-thirds of the net property tax computed for land owned by 119.27 the claimant that has been classified under section 273.13, 119.28 subdivision 23, paragraph (b), clause (2), item (ii), and 119.29 approved for sustainable forest tax refunds, or (2) the amount 119.30 by which the total property tax before special assessments, as 119.31 shown on the property tax statements for the parcels that 119.32 completely contain the claimant's approved land, exceeds the 119.33 current use value tax for the claimant's approved land. The 119.34 refund for a claimant may not exceed the lesser of (i) the total 119.35 property tax before special assessments on the property tax 119.36 statements for the parcels that completely contain the 120.1 claimant's approved land, or (ii) the product of $20 times the 120.2 number of acres of approved land for the claimant. 120.3 Sec. 68. [290C.04] [APPLICATIONS.] 120.4 (a) A landowner may apply to enroll land that is classified 120.5 under section 273.13, subdivision 23, paragraph (b), clause (2), 120.6 item (ii), for sustainable forest tax refunds. The owner must 120.7 complete, sign, and submit an application to the commissioner by 120.8 September 30 in order for the land to become eligible beginning 120.9 with the refunds payable in the next year. The application 120.10 shall be on a form prescribed by the commissioner and must 120.11 include the information the commissioner deems necessary. At a 120.12 minimum, the application must show the following information for 120.13 the land and the claimant: (i) the claimant's social security 120.14 number or state or federal business tax registration number and 120.15 date of birth, (ii) a copy of the property tax statement or 120.16 statements for taxes payable in the current year for the tax 120.17 parcels that completely contain the land to be enrolled, (iii) 120.18 the claimant's address, (iv) the claimant's signature, (v) the 120.19 county's parcel identification numbers for the tax parcels that 120.20 completely contain the claimant's forest land that is sought to 120.21 be enrolled, if those identification numbers are not shown on 120.22 the submitted copy of the related property tax statements, and 120.23 (vi) proof, in a form specified by the commissioner, that the 120.24 claimant has executed and acknowledged in the manner required by 120.25 law for a deed, and recorded, a covenant that the land is not 120.26 and shall not be developed with a structure, pavement, road, 120.27 sewer, or campsite, and that it will be used in a manner 120.28 consistent with the requirements and conditions of the 120.29 Sustainable Forest Tax Refund Act. The covenant shall be, and 120.30 shall state that it is, binding on the owner and the owner's 120.31 successor or assignee, and that it shall run with the land for a 120.32 period of not less than ten years. The commissioner shall 120.33 specify the form of the covenant and provide copies on request. 120.34 The covenant must include a legal description that encompasses 120.35 all the forest land that the claimant wishes to enroll under the 120.36 Sustainable Forest Tax Refund Act, or the certificate of title 121.1 number for that land if it is registered land. 121.2 (b) The commissioner shall notify the owner within 90 days 121.3 after receipt of a completed application whether the land has 121.4 been approved for enrollment. The owner of land for which the 121.5 application is denied may, within 60 days of receipt of a notice 121.6 of denial, appeal the denial to the commissioner. 121.7 Sec. 69. [290C.05] [REPORTS.] 121.8 By September 30 each year, each county assessor shall 121.9 submit a certification to the commissioner listing the parcel 121.10 identification numbers of all parcels containing land classified 121.11 under section 273.13, subdivision 23, paragraph (b), clause (2), 121.12 item (ii), and the number of acres for each such parcel that are 121.13 classified under item (ii). 121.14 Sec. 70. [290C.06] [ANNUAL CERTIFICATION.] 121.15 Annually, beginning with the year after the owner has made 121.16 an approved application, the commissioner shall send each owner 121.17 of property enrolled under the Sustainable Forest Tax Refund Act 121.18 a certification on or before July 1. The owner must sign the 121.19 certification attesting that the requirements and conditions in 121.20 sections 290C.01 to 290C.12 for continued enrollment are 121.21 currently being met and return the signed certification to the 121.22 commissioner by August 15. The owner must enclose a copy of the 121.23 property tax statements for taxes payable in the current year 121.24 for the parcels that completely contain the lands approved for 121.25 refunds when each annual certification is returned. Failure to 121.26 return an annual certification by the due date shall result in 121.27 an involuntary withdrawal of the lands from the provisions of 121.28 the Sustainable Forest Tax Refund Act and the imposition of any 121.29 applicable withdrawal penalty, subject to the owner's appeal of 121.30 such withdrawal, and of the associated penalties, according to 121.31 the procedures and within the time allowed under section 290C.11. 121.32 Sec. 71. [290C.07] [REFUND ALLOWABLE.] 121.33 A refund of property taxes on enrolled land will be made 121.34 annually to each owner in the amount determined under section 121.35 290C.03. The refunds shall be paid on or before October 1 each 121.36 year based on the certifications due August 15 of that year. 122.1 Interest at the annual rate determined under section 270.75 122.2 shall be included with any refund not paid by the later of 122.3 October 1 of the year the certification was due or 45 days after 122.4 the completed certification was returned or filed if the 122.5 commissioner accepts a certification filed after August 15 of 122.6 the taxes payable year as the resolution of an appeal. 122.7 Sec. 72. [290C.08] [WITHDRAWAL FOR TAX DELINQUENCIES.] 122.8 If the delinquent tax list of a county contains any land 122.9 classified under section 273.13, subdivision 23, paragraph (b), 122.10 clause (2), item (ii), the county auditor shall give notice to 122.11 the commissioner by mailing a copy of the list to the 122.12 commissioner within 30 days of its publication. The 122.13 commissioner shall involuntarily withdraw property from 122.14 receiving sustainable forest tax refunds if any part of the 122.15 property taxes on the land are delinquent as defined in chapter 122.16 279. Lands withdrawn under this section are not entitled to 122.17 refunds beginning with the year in which the delinquency occurs 122.18 and are subject to withdrawal penalties. The commissioner shall 122.19 mail a notice to the owner within 60 days of a withdrawal made 122.20 under this section. The owner may appeal a withdrawal based on 122.21 a delinquency under this section, and the lands shall remain 122.22 eligible for refunds if the delinquent taxes are paid, and proof 122.23 thereof is submitted along with proof of payment of the first 122.24 one-half installment of property taxes due in the current year, 122.25 on or before the due date of the owner's timely filed annual 122.26 certification for the current year. 122.27 Sec. 73. [290C.09] [VOLUNTARY WITHDRAWALS.] 122.28 (a) After land approved to receive sustainable forest tax 122.29 refunds has remained eligible for ten consecutive years, the 122.30 owner may voluntarily withdraw the land from the provisions of 122.31 this act by notifying the commissioner in writing. Within 60 122.32 days of receiving an owner's written request for a voluntary 122.33 withdrawal under the provisions of this paragraph, the 122.34 commissioner shall inform the owner by return mail of the 122.35 effective date of the withdrawal. A withdrawal under this 122.36 paragraph causes the land to be ineligible for sustainable 123.1 forest tax refunds for taxes payable in the following year and 123.2 thereafter, except that in the case of a subsequent approved 123.3 application to enroll the same lands, such subsequent 123.4 application shall be effective according to its terms and the 123.5 provisions of this act. An owner wishing to apply under the 123.6 Sustainable Forest Tax Refund Act for lands that were previously 123.7 voluntarily or involuntarily withdrawn must reapply as 123.8 prescribed in section 290C.04. Withdrawal penalties do not 123.9 apply to lands voluntarily withdrawn according to the provisions 123.10 of this paragraph. 123.11 (b) The commissioner may withdraw lands from the provisions 123.12 of this act and declare land to be ineligible for continued 123.13 further refunds at any time if the commissioner becomes aware of 123.14 a violation of a requirement or condition of this act. The 123.15 commissioner shall mail a notice to the owner within 60 days of 123.16 a determination made under this paragraph. 123.17 (c) Within 15 days after the expiration of an appeal period 123.18 in the case of any withdrawal or denial of an application, the 123.19 commissioner shall execute and acknowledge a document releasing 123.20 the land from the covenant required under section 290C.04. The 123.21 document must be mailed to the owner and is entitled to be 123.22 recorded. 123.23 Sec. 74. [290C.10] [PENALTIES.] 123.24 Except for land voluntarily withdrawn under the provisions 123.25 of section 290C.09, land approved for refunds under this act 123.26 that is withdrawn and that becomes ineligible for further 123.27 refunds for any reason is subject to the penalties provided in 123.28 this section. The penalty for a withdrawal is 500 percent of 123.29 the owner's average refund for the years of participation if the 123.30 withdrawal occurs within the first five years of participation 123.31 or the total of the refunds paid in the prior five years if the 123.32 withdrawal occurs after the first five years of participation. 123.33 If the penalty is not paid within 90 days after a notice of its 123.34 assessment has been mailed to the owner at the address last 123.35 known to the commissioner, the commissioner shall certify such 123.36 amount to the county auditor for collection as a part of the 124.1 real property taxes on the land payable in the following year. 124.2 If property for which penalties have been added to the property 124.3 tax under this section forfeits under chapter 281 and any 124.4 portion of the penalty plus interest remains unpaid, the county 124.5 auditor shall cancel the penalty plus interest amount as 124.6 provided in section 282.07. However, any proceeds from the 124.7 subsequent sale of the forfeited property must be used, first as 124.8 provided in section 290B.07, paragraph (b), and then to 124.9 reimburse the state for the penalty under this section plus 124.10 interest. In addition, the repurchase price of forfeited land 124.11 must include the amount of any penalty added under this section 124.12 that remains unpaid at the time, plus interest. 124.13 Sec. 75. [290C.11] [APPEALS.] 124.14 Within 60 days of the denial of an application, the 124.15 imposition of a penalty, or within 60 days of an involuntary 124.16 withdrawal of lands, the commissioner shall notify the landowner 124.17 by mail. Except as provided in section 290C.08, an aggrieved 124.18 owner has 60 days from receipt of the commissioner's notice to 124.19 make an appeal to the commissioner regarding the penalties or 124.20 the withdrawal. The appeal must be in writing. If the 124.21 commissioner denies the appeal, or if the commissioner has not 124.22 made a determination on the appeal within 60 days of when the 124.23 commissioner received the written appeal, the owner may appeal 124.24 the penalties or the withdrawal to the tax court under chapter 124.25 271 as if the appeal is from an order of the commissioner. 124.26 Sec. 76. [290C.12] [APPROPRIATION.] 124.27 An amount sufficient to pay the refunds provided in 124.28 sections 290C.01 to 290C.11 is annually appropriated to the 124.29 commissioner from the general fund of the state treasury. 124.30 [EFFECTIVE DATE.] This section is effective for taxes 124.31 payable in 2003 and thereafter. 124.32 Sec. 77. Minnesota Statutes 2000, section 469.1763, 124.33 subdivision 6, is amended to read: 124.34 Subd. 6. [POOLING PERMITTED FOR DEFICITS.] (a) This 124.35 subdivision applies only to districts for which the request for 124.36 certification was made before June 2,19972001. 125.1 (b) The municipality for the district may transfer 125.2 available increments from another tax increment financing 125.3 district located in the municipality, if the transfer is 125.4 necessary to eliminate a deficit in the district to which the 125.5 increments are transferred. A deficit in the district for 125.6 purposes of this subdivision means the lesser of the following 125.7 two amounts: 125.8 (1)(i) the amount due during the calendar year to pay 125.9 preexisting obligations of the district; minus 125.10 (ii) the total increments to be collected from properties 125.11 located within the district that are available for the calendar 125.12 year; plus 125.13 (iii) total increments from properties located in other 125.14 districts in the municipality that are available to be used to 125.15 meet the district's obligations under this section, excluding 125.16 this subdivision, or other provisions of law (but excluding a 125.17 special tax under section 469.1791 and the grant program under 125.18 Laws 1997, chapter 231, article 1, section 19, or this article); 125.19 or 125.20 (2) the reduction in increments collected from properties 125.21 located in the district for the calendar year as a result of the 125.22 changes in class rates inLaws 1997, chapter 231, article 1;125.23Laws 1998, chapter 389, article 2; and Laws 1999, chapter125.24243this article or the elimination of the general education tax 125.25 levy under this article. 125.26 (c) A preexisting obligation means bonds issued and sold 125.27 before June 2,19972001, and bonds issued to refund such bonds 125.28 or to reimburse expenditures made in conjunction with a signed 125.29 contractual agreement entered into before June 2,19972001, to 125.30 the extent that the bonds are secured by a pledge of increments 125.31 from the tax increment financing district. For purposes of this 125.32 subdivision, bonds exclude an obligation to reimburse or pay a 125.33 developer or owner of property located in the district for 125.34 amounts incurred or paid by the developer or owner. 125.35 (d) The municipality may require a development authority, 125.36 other than a seaway port authority, to transfer available 126.1 increments for any of its tax increment financing districts in 126.2 the municipality to make up an insufficiency in another district 126.3 in the municipality, regardless of whether the district was 126.4 established by the development authority or another development 126.5 authority. This authority applies notwithstanding any law to 126.6 the contrary, but applies only to a development authority that: 126.7 (1) was established by the municipality; or 126.8 (2) the governing body of which is appointed, in whole or 126.9 part, by the municipality or an officer of the municipality or 126.10 which consists, in whole or part, of members of the governing 126.11 body of the municipality. 126.12 (e) The authority under this subdivision to spend tax 126.13 increments outside of the area of the district from which the 126.14 tax increments were collected: 126.15 (1) may only be exercised after obtaining approval of the 126.16 use of the increments, in writing, by the commissioner of 126.17 revenue; 126.18 (2) is an exception to the restrictions under section 126.19 469.176, subdivision 4i, and the other provisions of this 126.20 section, and the percentage restrictions under subdivision 2 126.21 must be calculated after deducting increments spent under this 126.22 subdivision from the total increments for the district; and 126.23 (3) applies notwithstanding the provisions of the Tax 126.24 Increment Financing Act in effect for districts for which the 126.25 request for certification was made before June 30, 1982, or any 126.26 other law to the contrary. 126.27 [EFFECTIVE DATE.] This section is effective January 2, 126.28 2003, and thereafter. 126.29 Sec. 78. Minnesota Statutes 2000, section 469.177, 126.30 subdivision 1a, is amended to read: 126.31 Subd. 1a. [ORIGINAL LOCAL TAX RATE.] At the time of the 126.32 initial certification of the original net tax capacity for a tax 126.33 increment financing district or a subdistrict, the county 126.34 auditor shall certify the original local tax rate that applies 126.35 to the district or subdistrict. The original local tax rate is 126.36 the sum of all the local tax rates that apply to a property in 127.1 the district or subdistrict. The local tax rate to be certified 127.2 is the rate in effect for the same taxes payable year applicable 127.3 to the tax capacity values certified as the district's or 127.4 subdistrict's original tax capacity. The resulting tax capacity 127.5 rate is the original local tax rate for the life of the district 127.6 or subdistrict. The original local tax rate does not include 127.7 any rate or amount attributable to a state levy, whether the 127.8 state levy is imposed by section 275.02 or another provision of 127.9 law. 127.10 [EFFECTIVE DATE.] This section is effective the day 127.11 following final enactment for all districts and projects 127.12 regardless of when the request for certification was made. 127.13 Sec. 79. Minnesota Statutes 2000, section 469.177, 127.14 subdivision 11, is amended to read: 127.15 Subd. 11. [DEDUCTION FOR ENFORCEMENT COSTS; 127.16 APPROPRIATION.] (a) The county treasurer shall deduct an amount 127.17 equal to0.250.34 percent of any increment distributed to an 127.18 authority or municipality. The county treasurer shall pay the 127.19 amount deducted to the state treasurer for deposit in the state 127.20 general fund. 127.21 (b) The amounts deducted and paid under paragraph (a) are 127.22 appropriated to the state auditor for the cost of (1) the 127.23 financial reporting of tax increment financing information and 127.24 (2) the cost of examining and auditing of authorities' use of 127.25 tax increment financing as provided under section 469.1771, 127.26 subdivision 1. Notwithstanding section 16A.28 or any other law 127.27 to the contrary, this appropriation does not cancel and remains 127.28 available until spent. 127.29 [EFFECTIVE DATE.] This section is effective for taxes 127.30 payable in 2002 and thereafter. 127.31 Sec. 80. [469.1816] [SCHOOL DISTRICT GENERAL EDUCATION 127.32 LEVY ABATEMENTS.] 127.33 Notwithstanding the provisions of any other law, a school 127.34 district that has adopted an abatement resolution under sections 127.35 469.1812 to 469.1815 prior to June 2, 2001, pursuant to which 127.36 all or a portion of its general education levy for a particular 128.1 parcel or parcels was to be abated for taxes payable in 2002 or 128.2 later years and pledged to the payment of bonds issued prior to 128.3 June 2, 2001, may levy an amount sufficient to make its required 128.4 payment on the bonds. The levy authorized under this section 128.5 may not exceed the lesser of: (1) the amount specified for this 128.6 purpose in the resolution for the taxes payable year, or (2) the 128.7 amount of the payable 2001 general education tax levied on the 128.8 property for which the abatements were granted. The authority 128.9 in this section terminates for a district for taxes payable in 128.10 the year following the expiration of the resolution without 128.11 giving any effect to an extension or modification of the 128.12 resolution made after June 2, 2001. 128.13 [EFFECTIVE DATE.] This section is effective the day 128.14 following final enactment. 128.15 Sec. 81. Minnesota Statutes 2000, section 473.446, 128.16 subdivision 1, is amended to read: 128.17 Subdivision 1. [WITHIN TRANSIT TAXING DISTRICT.] For the 128.18 purposes of sections 473.405 to 473.449 and the metropolitan 128.19 transit system, except as otherwise provided in this subdivision 128.20 and subdivision 1b, the council shall levy each year upon all 128.21 taxable property within the metropolitan transit taxing 128.22 district, defined in subdivision 2, a transit tax consisting of: 128.23 (a) an amount which shall be used for payment of the 128.24 expenses of operating transit and paratransit service and to 128.25 provide for payment of obligations issued by the council under 128.26 section 473.436, subdivision 6; 128.27 (b) an additional amount, if any, the council determines to 128.28 be necessary to provide for the full and timely payment of its 128.29 certificates of indebtedness and other obligations outstanding 128.30 on July 1, 1985, to which property taxes under this section have 128.31 been pledged; and 128.32 (c) an additional amount necessary to provide full and 128.33 timely payment of certificates of indebtedness, bonds, including 128.34 refunding bonds or other obligations issued or to be issued 128.35 under section 473.39 by the council for purposes of acquisition 128.36 and betterment of property and other improvements of a capital 129.1 nature and to which the council has specifically pledged tax 129.2 levies under this clause. 129.3 The property tax levied by the council for general purposes 129.4 under paragraph (a) must not exceed the following amount for the 129.5 years specified: 129.6 (1) for taxes payable in 1995, the council's property tax 129.7 levy limitation for general transit purposes is equal to the 129.8 former regional transit board's property tax levy limitation for 129.9 general transit purposes under this subdivision, for taxes 129.10 payable in 1994, multiplied by an index for market valuation 129.11 changes equal to the total market valuation of all taxable 129.12 property located within the metropolitan transit taxing district 129.13 for the current taxes payable year divided by the total market 129.14 valuation of all taxable property located within the 129.15 metropolitan transit taxing district for the previous taxes 129.16 payable year;and129.17 (2) for taxes payable in 1996and subsequent yearsthrough 129.18 2001, the product of (i) the council's property tax levy 129.19 limitation for general transit purposes for the previous year 129.20 determined under this subdivision before reduction by the amount 129.21 levied by any municipality in the previous year under section 129.22 473.388, subdivision 7, multiplied by (ii) an index for market 129.23 valuation changes equal to the total market valuation of all 129.24 taxable property located within the metropolitan transit taxing 129.25 district for the current taxes payable year divided by the total 129.26 market valuation of all taxable property located within the 129.27 metropolitan transit taxing district for the previous taxes 129.28 payable year, minus the amount levied by any municipality in the 129.29 current levy year under section 473.388, subdivision 7.; 129.30 (3) for taxes payable in 2002, the council's property tax 129.31 levy limitation for general transit purposes is equal to (i) the 129.32 council's property tax levy limitation for general transit 129.33 purposes for the previous year, determined under this 129.34 subdivision before reduction by the amount levied by any 129.35 municipality for the previous year under section 473.388, 129.36 subdivision 7, multiplied by (ii) an index for market valuation 130.1 changes equal to the total market valuation of all taxable 130.2 property located within the metropolitan transit taxing district 130.3 for the current taxes payable year divided by the total market 130.4 valuation of all taxable property located within the 130.5 metropolitan transit taxing district for the previous taxes 130.6 payable year, minus (iii) the amount levied by a municipality 130.7 under section 473.388, subdivision 7, for the same taxes payable 130.8 year as the council's limitation, plus (iv) $17,400,000. The 130.9 council must distribute 13.8 percent of any amount levied 130.10 pursuant to item (iv) as additional financial assistance under 130.11 section 473.388; 130.12 (4) for taxes payable in 2003, the council's property tax 130.13 levy limitation for general transit purposes is equal to (i) the 130.14 council's property tax levy limitation for general transit 130.15 purposes for the previous year, determined under this 130.16 subdivision before reduction by the amount levied by any 130.17 municipality for the previous year under section 473.388, 130.18 subdivision 7, minus (ii) $17,400,000, multiplied by (iii) the 130.19 index for market valuation changes as described in clause (3), 130.20 minus (iv) the amount levied by a municipality under section 130.21 473.388, subdivision 7, for the same taxes payable year as the 130.22 council's limitation, plus (v) $11,500,000. The council must 130.23 distribute 13.8 percent of any amount levied pursuant to item 130.24 (iv) as additional financial assistance under section 473.388; 130.25 and 130.26 (5) for taxes payable in 2004 and thereafter, the council's 130.27 property tax levy limitation for general transit purposes is 130.28 equal to (i) the council's property tax levy limitation for 130.29 general transit purposes for the previous year, determined under 130.30 this subdivision before reduction by the amount levied by any 130.31 municipality for the previous year under section 473.388, 130.32 subdivision 7, but excluding the amount in clause (4), item 130.33 (iv), multiplied by (ii) the index for market valuation changes 130.34 as described in clause (3), minus (iii) the amount levied by a 130.35 municipality under section 473.388, subdivision 7, for the same 130.36 taxes payable year as the council's limitation, plus (iv) 131.1 $11,500,000 times an index for market valuation changes equal to 131.2 the total market valuation of all taxable property located 131.3 within the transit district for the current taxes payable year 131.4 divided by the total market valuation of all taxable property 131.5 located in the district for the taxes payable year 2002. In 131.6 2004, and each year thereafter, the council must distribute 13.8 131.7 percent of any amount levied pursuant to item (iv) as additional 131.8 financial assistance under section 473.388, subdivision 7. 131.9 The portion of the property tax levy for transit district 131.10 operating purposes attributable to a municipality that has 131.11 exercised a local levy option under section 473.388, subdivision 131.12 7, is the amount as determined under subdivision 1b. The 131.13 portion of the property tax levy for transit district operating 131.14 purposes attributable to the remaining municipalities within the 131.15 transit district is found by subtracting the portions 131.16 attributable to the municipalities that have exercised a local 131.17 levy option under section 473.388, subdivision 7. 131.18 For the taxes payable year 1995, the index for market 131.19 valuation changes shall be multiplied by an amount equal to the 131.20 sum of the regional transit board's property tax levy limitation 131.21 for the taxes payable year 1994 and $160,665. The $160,665 131.22 increase shall be a permanent adjustment to the levy limit base 131.23 used in determining the regional transit board's property tax 131.24 levy limitation for general purposes for subsequent taxes 131.25 payable years. 131.26 For the purpose of determining the council's property tax 131.27 levy limitation for general transit purposes under this 131.28 subdivision, "total market valuation" means the total market 131.29 valuation of all taxable property within the metropolitan 131.30 transit taxing district without valuation adjustments for fiscal 131.31 disparities (chapter 473F), tax increment financing (sections 131.32 469.174 to 469.179), and high voltage transmission lines 131.33 (section 273.425). 131.34 The county auditor shall reduce the tax levied pursuant to 131.35 this section and section 473.388 on all property within 131.36 statutory and home rule charter cities and towns that receive 132.1 full-peak service and limited off-peak service by an amount 132.2 equal to the tax levy that would be produced by applying a rate 132.3 of 0.510 percent of net tax capacity on the property. The 132.4 county auditor shall reduce the tax levied pursuant to this 132.5 section and section 473.388 on all property within statutory and 132.6 home rule charter cities and towns that receive limited peak 132.7 service by an amount equal to the tax levy that would be 132.8 produced by applying a rate of 0.765 percent of net tax capacity 132.9 on the property. The amounts so computed by the county auditor 132.10 shall be submitted to the commissioner of revenue as part of the 132.11 abstracts of tax lists required to be filed with the 132.12 commissioner under section 275.29. Any prior year adjustments 132.13 shall also be certified in the abstracts of tax lists. The 132.14 commissioner shall review the certifications to determine their 132.15 accuracy and may make changes in the certification as necessary 132.16 or return a certification to the county auditor for 132.17 corrections. The commissioner shall pay to the council and to 132.18 the municipalities levying under section 473.388, subdivision 7, 132.19 the amounts certified by the county auditors on the dates 132.20 provided in section 273.1398, apportioned between the council 132.21 and the municipality in the same proportion as the total transit 132.22 levy is apportioned within the municipality. There is annually 132.23 appropriated from the general fund in the state treasury to the 132.24 department of revenue the amounts necessary to make these 132.25 payments. 132.26 For the purposes of this subdivision, "full-peak and 132.27 limited off-peak service" means peak period regular route 132.28 service, plus weekday midday regular route service at intervals 132.29 longer than 60 minutes on the route with the greatest frequency; 132.30 and "limited peak period service" means peak period regular 132.31 route service only. 132.32 For the purposes of property taxes payable in the following 132.33 year, the council shall annually determine which cities and 132.34 towns qualify for the 0.510 percent or 0.765 percent tax 132.35 capacity rate reduction and shall certify this list to the 132.36 county auditor of the county wherein such cities and towns are 133.1 located on or before September 15. No changes may be made to 133.2 the annual list after September 15. 133.3 [EFFECTIVE DATE.] This section is effective for taxes 133.4 payable in 2002 and thereafter. 133.5 Sec. 82. Minnesota Statutes 2000, section 473F.08, 133.6 subdivision 3, is amended to read: 133.7 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 133.8 apportion the levy of each governmental unit in the auditor's 133.9 county in the manner prescribed by this subdivision. The 133.10 auditor shall: 133.11 (a) by August 20, determine the areawide portion of the 133.12 levy for each governmental unit by multiplying the local tax 133.13 rate of the governmental unit for the preceding levy year times 133.14 the distribution value set forth in subdivision 2, clause (b); 133.15and133.16 (b) by September 5, determine the local portion of the 133.17 current year's levy by subtracting the resulting amount from 133.18 clause (a) from the governmental unit's current year's levy.; 133.19 and 133.20 (c) for determinations made under paragraph (a), in the 133.21 case of school districts, in 2001 and thereafter, for taxes 133.22 payable in 2002 and thereafter, exclude the general education 133.23 tax rate from the local tax rate for the preceding levy year. 133.24 [EFFECTIVE DATE.] This section is effective the day 133.25 following final enactment. 133.26 Sec. 83. Minnesota Statutes 2000, section 473H.10, 133.27 subdivision 3, is amended to read: 133.28 Subd. 3. [COMPUTATION OF TAX; STATE REIMBURSEMENT.] (a) 133.29 After having determined the market value of all land valued 133.30 according to subdivision 2, the assessor shall compute thenet133.31tax capacityassessed value of those properties by applying the 133.32 appropriate class rates. When computing the rate of tax 133.33 pursuant to section 275.08, the county auditor shall include the 133.34net tax capacityassessed value of land as provided in this 133.35 clause. 133.36 (b) The county auditor shall compute the tax on lands 134.1 valued according to subdivision 2 and nonresidential buildings 134.2 by multiplying thenet tax capacityassessed value times the 134.3 total local tax rate for all purposes as provided in clause (a). 134.4 (c) The county auditor shall then compute the tax on lands 134.5 valued according to subdivision 2 and nonresidential buildings 134.6 by multiplying thenet tax capacityassessed value times the 134.7 total local tax rate for all purposes as provided in clause (a), 134.8 subtracting $1.50 per acre of land in the preserve. 134.9 (d) The county auditor shall then compute the maximum ad 134.10 valorem property tax on lands valued according to subdivision 2 134.11 and nonresidential buildings by multiplying thenet tax capacity134.12 assessed value times 105 percent of the previous year's 134.13 statewide average local tax rate levied on property located 134.14 within townships for all purposes. 134.15 (e) The tax due and payable by the owner of preserve land 134.16 valued according to subdivision 2 and nonresidential buildings 134.17 will be the amount determined in clause (c) or (d), whichever is 134.18 less. The state shall reimburse the taxing jurisdictions for 134.19 the amount of the difference between the net tax determined 134.20 under this clause and the gross tax in clause (b). Residential 134.21 buildings shall continue to be valued and classified according 134.22 to the provisions of sections 273.11 and 273.13, as they would 134.23 be in the absence of this section, and the tax on those 134.24 buildings shall not be subject to the limitation contained in 134.25 this clause. 134.26 The county may transfer money from the county conservation 134.27 account created in section 40A.152 to the county revenue fund to 134.28 reimburse the fund for the tax lost as a result of this 134.29 subdivision or to pay taxing jurisdictions within the county for 134.30 the tax lost. The county auditor shall certify to the 134.31 commissioner of revenue on or before June 1 the total amount of 134.32 tax lost to the county and taxing jurisdictions located within 134.33 the county as a result of this subdivision and the extent that 134.34 the tax lost exceeds funds available in the county conservation 134.35 account. Payment shall be made by the state on December2615 134.36 to each of the affected taxing jurisdictions, other than school 135.1 districts, in the same proportion that the ad valorem tax is 135.2 distributed if the county conservation account is insufficient 135.3 to make the reimbursement. There is annually appropriated from 135.4 the Minnesota conservation fund under section 40A.151 to the 135.5 commissioner of revenue an amount sufficient to make the 135.6 reimbursement provided in this subdivision. If the amount 135.7 available in the Minnesota conservation fund is insufficient, 135.8 the balance that is needed is appropriated from the general fund. 135.9 [EFFECTIVE DATE.] This section is effective for taxes and 135.10 reimbursements payable in 2002 and thereafter. 135.11 Sec. 84. Minnesota Statutes 2000, section 477A.011, 135.12 subdivision 3, is amended to read: 135.13 Subd. 3. [POPULATION.] "Population" means the population 135.14 established as ofJulyJune 1 in an aid calculation year by the 135.15 most recent federal census, by a special census conducted under 135.16 contract with the United States Bureau of the Census, by a 135.17 population estimate made by the metropolitan council, or by a 135.18 population estimate of the state demographer made pursuant to 135.19 section 4A.02, whichever is the most recent as to the stated 135.20 date of the count or estimate for the preceding calendar year. 135.21 The term "per capita" refers to population as defined by this 135.22 subdivision. 135.23 [EFFECTIVE DATE.] This section is effective the day 135.24 following final enactment. 135.25 Sec. 85. Minnesota Statutes 2000, section 477A.011, is 135.26 amended by adding a subdivision to read: 135.27 Subd. 3b. [POPULATION SPRAWL FACTOR.] For a city with a 135.28 population of 5,000 or more that is located outside of the 135.29 metropolitan area, the "population sprawl factor" is equal to 135.30 ten percent of the population of the towns located within five 135.31 miles of the city. Cities of under 5,000 population located 135.32 outside the metropolitan area are to be treated as towns under 135.33 the preceding sentence. The unorganized territory of a county 135.34 is treated as one town for the same purpose, unless population 135.35 data is available for separated contiguous areas of unorganized 135.36 territory within a county. For all other cities, the 136.1 "population sprawl factor" is zero. If a town is within five 136.2 miles of more than one city, ten percent of the town's 136.3 population is counted for the closest city only, unless the town 136.4 is adjacent to more than one city. 136.5 [EFFECTIVE DATE.] This section is effective for aid payable 136.6 in 2002 and thereafter. 136.7 Sec. 86. Minnesota Statutes 2000, section 477A.011, is 136.8 amended by adding a subdivision to read: 136.9 Subd. 3c. [DENSITY FACTOR.] For a city located within the 136.10 metropolitan area, except Minneapolis and St. Paul, the "density 136.11 factor" is equal to the square root of the quotient derived by 136.12 dividing the number of residential units per acre of residential 136.13 use property as determined by the metropolitan council within 136.14 the city by the weighted average number of residential units per 136.15 acre of residential use property as determined by the 136.16 metropolitan council for all cities located within the 136.17 metropolitan area, except for the cities of St. Paul and 136.18 Minneapolis, as certified to the commissioner by the 136.19 metropolitan council on or before June 30 of the aid 136.20 determination year. If the density factor computed for a city 136.21 is greater than 1.75, the density factor for that city is 1.75. 136.22 If the density factor computed for a city is less than 0.50, the 136.23 density factor for that city is 0.50. For all cities outside 136.24 the metropolitan area, and the cities of Minneapolis and St. 136.25 Paul, the "density factor" is zero. 136.26 [EFFECTIVE DATE.] This section is effective for aid payable 136.27 in 2002 and thereafter. 136.28 Sec. 87. Minnesota Statutes 2000, section 477A.011, is 136.29 amended by adding a subdivision to read: 136.30 Subd. 3d. [TAX CAPACITY.] "Tax capacity" means (1) the net 136.31 tax capacity or assessed value of all taxable property located 136.32 in a city or town computed using the class rates in section 136.33 273.13, and the market values for taxes payable in the year 136.34 prior to the aid distribution, plus (2) the city's or town's 136.35 fiscal disparities distribution net tax capacity or assessed 136.36 value under section 276A.06, subdivision 2, paragraph (b), or 137.1 473F.08, subdivision 2, paragraph (b), for taxes payable in the 137.2 year prior to the aid distribution. The market values utilized 137.3 in computing a city's or town's tax capacity must be reduced by 137.4 the sum of (1) the city's or town's market value of commercial 137.5 industrial property as defined in section 276A.01, subdivision 137.6 3, or 473F.02, subdivision 3, multiplied by the ratio determined 137.7 pursuant to section 276A.06, subdivision 2, paragraph (a), or 137.8 473F.08, subdivision 2, paragraph (a), and (2) the market value 137.9 of the captured value of tax increment financing districts as 137.10 defined in section 469.177, subdivision 2, and (3) the market 137.11 value of transmission lines deducted from the city's or town's 137.12 total assessed value under section 273.425. Tax capacity must 137.13 be computed using equalized market values. 137.14 [EFFECTIVE DATE.] This section is effective for aid payable 137.15 in 2002 and thereafter. 137.16 Sec. 88. Minnesota Statutes 2000, section 477A.011, 137.17 subdivision 34, is amended to read: 137.18 Subd. 34. [CITY REVENUE NEED.] (a)For a city with a137.19population equal to or greater than 2,500, "city revenue need"137.20is the sum of (1) 3.462312 times the pre-1940 housing137.21percentage; plus (2) 2.093826 times the commercial industrial137.22percentage; plus (3) 6.862552 times the population decline137.23percentage; plus (4) .00026 times the city population; plus (5)137.24152.0141."City revenue need" for the city of Minneapolis is 137.25 $508. "City revenue need" for the city of St. Paul is $431. 137.26 "City revenue need" for the city of Duluth is $425. "City 137.27 revenue need" for all cities in the metropolitan area, except 137.28 for the cities of Minneapolis and St. Paul, is $194 times the 137.29 city's density factor. "City revenue need" for all cities 137.30 outside the metropolitan area with a population of 5,000 or 137.31 more, except for the city of Duluth, is $265. "City revenue 137.32 need" for all cities outside the metropolitan area with a 137.33 population of less than 5,000 is $234. 137.34 (b)For a city with a population less than 2,500, "city137.35revenue need" is the sum of (1) 1.795919 times the pre-1940137.36housing percentage; plus (2) 1.562138 times the commercial138.1industrial percentage; plus (3) 4.177568 times the population138.2decline percentage; plus (4) 1.04013 times the transformed138.3population; minus (5) 107.475.138.4(c) The city revenue need cannot be less than zero.138.5(d)For aid payable in calendar year19982003 and 138.6 subsequent years,the city revenue need for a city, as138.7determined in paragraphs (a) to (c), isthe dollar amounts in 138.8 paragraph (a) are multiplied by theratio of the annual implicit138.9price deflator for government consumption expenditures and gross138.10investment for state and local governments as prepared by the138.11United States Department of Commerce, for the most recently138.12available year to the 1993 implicit price deflator for state and138.13local government purchasesinflation adjustment determined for 138.14 the aid payment year under section 477A.03, subdivision 3, 138.15 paragraph (b), without regard to the minimum and maximum 138.16 inflation adjustments in that paragraph. 138.17 [EFFECTIVE DATE.] This section is effective for aid payable 138.18 in 2002 and thereafter. 138.19 Sec. 89. Minnesota Statutes 2000, section 477A.011, is 138.20 amended by adding a subdivision to read: 138.21 Subd. 36a. [CITY AID BASE.] For cities located outside of 138.22 the metropolitan area, "city aid base" means the sum of (1) the 138.23 amount of local government aid the city was originally certified 138.24 to receive in calendar year 2001 under section 477A.013, 138.25 subdivision 9, and (2) the amount of homestead and agricultural 138.26 aid the city was originally certified to receive in calendar 138.27 year 2001 under section 273.1398, subdivision 2, less an amount 138.28 equal to eight percent of the city tax capacity as defined in 138.29 subdivision 3d. If the amount determined under clause (2) for a 138.30 city is less than zero, the city aid base for that city is equal 138.31 to the amount determined under clause (1). 138.32 [EFFECTIVE DATE.] This section is effective for aid payable 138.33 in 2002 and thereafter. 138.34 Sec. 90. Minnesota Statutes 2000, section 477A.013, 138.35 subdivision 1, is amended to read: 138.36 Subdivision 1. [TOWNS.] In19942002 each town that had 139.1 levied for taxes payable inthe prior year1993 a local tax rate 139.2 of at least .008 shall receive a distribution equal tothe139.3amount it received in 1993 under this section before any139.4nonpermanent reductions made under section 477A.0132. In 1995139.5each town that had levied for taxes payable in 1993 a local tax139.6rate of at least .008 shall receive a distribution equal to 102139.7percent of the amount it received in 1994 under this section139.8before any increases or reductions under sections 16A.711,139.9subdivision 5, and 477A.0132.(1) $9 times the town's population 139.10 plus (2)(i) $81 minus (ii) ten percent of the per capita tax 139.11 capacity of the class 1, 3, 4, and 5 properties, and ten percent 139.12 of the per capita tax capacity of the house, garage, and 139.13 immediately surrounding one acre of land for class 2a 139.14 properties, in the town for taxes payable in 2001 times (iii) 139.15 the town's population. No town shall have a value under clause 139.16 (2) of less than zero. In19962003 and subsequent years each 139.17 townthat had levied for taxes payable in 1993 a local tax rate139.18of at least .008shall receive a distribution equal to the 139.19 amount it received in the previous year under this 139.20 section before any increases or reductions under section 139.21 477A.0132, adjusted for inflation as provided under section 139.22 477A.03, subdivision 3 and adjusted by the "household adjustment 139.23 factor" defined in section 273.1398, subdivision 1. The 139.24 commissioner shall prorate the amount distributed to each town 139.25 under clause (2) as necessary so that the total amount 139.26 distributed does not exceed the appropriation for this purpose 139.27 in section 477A.03. 139.28 [EFFECTIVE DATE.] This section is effective for aid payable 139.29 in 2002 and thereafter. 139.30 Sec. 91. Minnesota Statutes 2000, section 477A.013, 139.31 subdivision 8, is amended to read: 139.32 Subd. 8. [CITY FORMULA AID.] (a) In calendar year1994 and139.33subsequent years2002, the formula aid for a city is equal to 139.34 the need increase percentage multiplied bythe difference139.35between (1) the city's revenue need multiplied by its139.36population, and (2) the city's net tax capacity multiplied by140.1the tax effort rate.(1) the city revenue need minus (2) 0.17 140.2 times the city's tax capacity divided by its population times 140.3 (3) the city population or, for cities of 5,000 population or 140.4 more located outside the metropolitan area, the city population 140.5 plus the city's population sprawl factor. 140.6 (b) In calendar year 2003 and thereafter, the formula aid 140.7 for a city is equal to the need increase percentage multiplied 140.8 by (i) the city revenue need minus (ii) a uniform mill rate 140.9 determined by the commissioner to be the equivalent to the 0.17 140.10 rate in paragraph (a) times (iii) the city's tax capacity 140.11 divided by its population times (iv) the city's population, or 140.12 in the case of a city of 5,000 population or more located 140.13 outside the metropolitan area, the city's population plus its 140.14 population sprawl factor. 140.15 (c) No city may have a formula aid amount less than zero. 140.16 The need increase percentage must be the same within each 140.17 category for all cities in the following categories: (i) 140.18 Minneapolis, St. Paul, and Duluth; (ii) cities in the 140.19 metropolitan area except for Minneapolis and St. Paul; and (iii) 140.20 all other cities. 140.21Notwithstanding the prior sentence, in 1995 only, the need140.22increase percentage for a city shall be twice the need increase140.23percentage applicable to other cities if:140.24(1) the city, in 1992 or 1993, transferred an amount from140.25governmental funds to their sewer and water fund, and140.26(2) the amount transferred exceeded their net levy for140.27taxes payable in the year in which the transfer occurred.140.28 The applicable need increase percentage or percentages must 140.29 be calculated by the department of revenue so that the total of 140.30 the aid under subdivision 9 equals the total amount available 140.31 for aid under section 477A.03. 140.32 [EFFECTIVE DATE.] This section is effective for aid payable 140.33 in 2002 and thereafter. 140.34 Sec. 92. Minnesota Statutes 2000, section 477A.013, 140.35 subdivision 9, is amended to read: 140.36 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 141.11994 and thereafter, each city shall receive an aid distribution141.2equal to the sum of (1) the city formula aid under subdivision141.38, and (2) its city aid base2002 and thereafter, each city in 141.4 the metropolitan area and the city of Duluth shall receive an 141.5 aid distribution equal to its formula aid. 141.6 (b)The percentage increase for a first class city in141.7calendar year 1995 and thereafter shall not exceed the141.8percentage increase in the sum of the aid to all cities under141.9this section in the current calendar year compared to the sum of141.10the aid to all cities in the previous year.141.11(c) The total aid for any city, except a first class city,141.12shall not exceed the sum of (1) ten percent of the city's net141.13levy for the year prior to the aid distribution plus (2) its141.14total aid in the previous year before any increases or decreases141.15under sections 16A.711, subdivision 5, and 477A.0132.141.16(d) Notwithstanding paragraph (c), in 1995 only, for cities141.17which in 1992 or 1993 transferred an amount from governmental141.18funds to their sewer and water fund in an amount greater than141.19their net levy for taxes payable in the year in which the141.20transfer occurred, the total aid shall not exceed the sum of (1)141.2120 percent of the city's net levy for the year prior to the aid141.22distribution plus (2) its total aid in the previous year before141.23any increases or decreases under sections 16A.711, subdivision141.245, and 477A.0132.In calendar year 2002, each nonmetropolitan 141.25 city, except Duluth, shall receive an aid distribution equal to 141.26 (1) 90 percent of its city aid base plus (2) a percentage of its 141.27 city formula aid. The commissioner of revenue shall determine 141.28 the percentage of its city formula aid amount that each 141.29 nonmetropolitan city will receive by comparing the aggregate 141.30 amount determined for nonmetropolitan cities under clause (1) 141.31 with the appropriation available under section 477A.03 for this 141.32 paragraph. The percentage of city formula aid that each 141.33 nonmetropolitan city will receive is the percentage that will 141.34 make the total aid distribution for nonmetropolitan cities equal 141.35 to the appropriation for that purpose under section 477A.03. 141.36 For calendar years 2003 and thereafter, a nonmetropolitan city 142.1 shall receive the amount computed under this subdivision, except 142.2 that the percentage in clause (1) shall be 72 percent for aid 142.3 payable in 2003, 54 percent for aid payable in 2004, 36 percent 142.4 for aid payable in 2005, 18 percent for aid payable in 2006, and 142.5 zero for aid payable in 2007 and thereafter. 142.6 [EFFECTIVE DATE.] This section is effective for aid payable 142.7 in 2002 and thereafter. 142.8 Sec. 93. Minnesota Statutes 2000, section 477A.015, is 142.9 amended to read: 142.10 477A.015 [PAYMENT DATES.] 142.11 The commissioner of revenue shall make the payments of 142.12 local government aid to affected taxing authorities in two 142.13 installments on July 20 and December2615 annually. 142.14 The commissioner may pay all or part of the payment due on 142.15 December2615 at any time after August 15 upon the request of a 142.16 city or town that requests such payment as being necessary for 142.17 meeting its cash flow needs. 142.18 [EFFECTIVE DATE.] This section is effective for payments 142.19 made in 2002 and thereafter. 142.20 Sec. 94. Minnesota Statutes 2000, section 477A.03, 142.21 subdivision 2, is amended to read: 142.22 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 142.23 discharge the duties imposed by sections 477A.011 to 477A.014 is 142.24 annually appropriated from the general fund to the commissioner 142.25 of revenue. 142.26 (b)Aid payments to counties under section 477A.0121 are142.27limited to $20,265,000 in 1996. Aid payments to counties under142.28section 477A.0121 are limited to $27,571,625 in 1997.For aid 142.29 payable in 1998 and thereafter, the total aids paid under 142.30 section 477A.0121 are the amounts certified to be paid in the 142.31 previous year, adjusted for inflation as provided under 142.32 subdivision 3. 142.33 (c)(i) For aids payable in 1998 and thereafter, the total 142.34 aids paid to counties under section 477A.0122 are the amounts 142.35 certified to be paid in the previous year, adjusted for 142.36 inflation as provided under subdivision 3. 143.1 (ii) Aid payments to counties under section 477A.0122in143.22000are further increased by an additional $20,000,000 in 2000, 143.3 and an additional $10,000,000 in 2002. The amounts provided in 143.4 this clause are annually adjusted for inflation as provided in 143.5 clause (i). 143.6 (d) Aid paymentsto citiesin19992002 under section 143.7 477A.013,subdivisionsubdivisions 1 and 9, are limitedto143.8$380,565,489. For aids payable in 2000, the total aids paid143.9under section 477A.013, subdivision 9, are the amounts certified143.10to be paid in the previous year, adjusted for inflation as143.11provided in subdivision 3, and increased by the amount necessary143.12to effectuate Laws 1999, chapter 243, article 5, section 48,143.13paragraph (b)in the aggregate to $184,065,000 for the first 143.14 class cities of Minneapolis, St. Paul, and Duluth; $51,916,000 143.15 for the cities in the metropolitan area excluding the cities of 143.16 Minneapolis and St. Paul; $235,981,000 for all nonmetropolitan 143.17 cities except for the city of Duluth; and $18,476,000 for all 143.18 towns. For aids payable in2001 through2003, the total aids 143.19 paid under section 477A.013,subdivisionsubdivisions 1 and 9, 143.20 are the amounts certified to be paid in the previous year, 143.21 adjusted for inflation as provided under subdivision 3 and 143.22 increased by the household adjustment factor defined in section 143.23 273.1398. For aids payable in 2004, the total aids paid under 143.24 section 477A.013,subdivisionsubdivisions 1 and 9, are the 143.25 amounts certified to be paid in the previous year, adjusted for 143.26 inflation as provided under subdivision 3,andincreased by the 143.27 amount certified to be paid in 2003 under section 477A.06, and 143.28 increased by the household adjustment factor defined in section 143.29 273.1398. For aids payable in 2005 and thereafter, the total 143.30 aids paid under section 477A.013,subdivisionsubdivisions 1 and 143.31 9, are the amounts certified to be paid in the previous year, 143.32 adjusted for inflation as provided under subdivision 3 and 143.33 increased by the household adjustment factor defined in section 143.34 273.1398. The additional amount authorized under subdivision 4 143.35 is not included when calculating the appropriation limits under 143.36 this paragraph. 144.1 [EFFECTIVE DATE.] This section is effective for aids paid 144.2 in 2002 and thereafter. 144.3 Sec. 95. Minnesota Statutes 2000, section 477A.065, 144.4 subdivision 1, is amended to read: 144.5 Subdivision 1. [ELIGIBILITY.] Each taxes payable year, 144.6 each city containing class 4d property on which initial 144.7 construction was begun after January 1, 1999, shall be eligible 144.8 for aid equal to (1)1.5 timesthenet tax capacitymarket value 144.9 of the property for the assessment year corresponding to the 144.10 taxes payable year, multiplied by (2) the city government's 144.11 average local tax rate for the previous taxes payable year. 144.12 [EFFECTIVE DATE.] This section is effective for aids paid 144.13 in 2002 and thereafter. 144.14 Sec. 96. [TIF GRANTS; APPROPRIATIONS.] 144.15 Subdivision 1. [TIF GRANTS.] (a) The commissioner of 144.16 revenue shall pay grants to municipalities in calendar years 144.17 2003, 2004, and 2005 for deficits in tax increment financing 144.18 districts caused by the changes in class rates and the 144.19 elimination of the state-determined general education property 144.20 tax levy under this article. Municipalities must submit 144.21 applications for the grants in a form prescribed by the 144.22 commissioner no later than August 1 for grants payable during 144.23 the calendar year. The maximum grant equals the lesser of: 144.24 (1) for taxes payable in the year before the grant is paid, 144.25 the reduction in the tax increment financing district's revenues 144.26 derived from increment resulting from the class rate changes and 144.27 the elimination of the state-determined general education 144.28 property tax levy under this article; or 144.29 (2) the amount due during the calendar year to pay (i) 144.30 bonds issued before June 2, 2001, and (ii) binding contracts 144.31 entered into before June 2, 2001, less (iii) the municipality's 144.32 total tax increments, including unspent increments from previous 144.33 years. 144.34 (b) The commissioner of revenue may require applicants for 144.35 grants under this section to provide any information the 144.36 commissioner deems appropriate. The commissioner shall 145.1 calculate the amount under paragraph (a), clause (2), based on 145.2 the reports for the tax increment financing district or 145.3 districts filed with the state auditor on or before August 1 of 145.4 the year before the year in which the grant is to be paid. 145.5 (c) This section applies only to deficits in tax increment 145.6 districts for which: 145.7 (1) the request for certification was made before June 2, 145.8 2001; and 145.9 (2) all timely reports have been filed with the state 145.10 auditor, as required by Minnesota Statutes, section 469.175. 145.11 (d) The commissioner shall pay the grants under this 145.12 section by December 15 of the year. 145.13 (e) For the purposes of this section, "tax increments" and 145.14 "revenues derived from tax increments" have the meanings given 145.15 in Minnesota Statutes, section 469.174, subdivision 25, except 145.16 that the definition applies to all tax increment districts, 145.17 regardless of when the request for certification was made and 145.18 regardless of when the revenues were received, notwithstanding 145.19 the effective date of Minnesota Statutes, section 469.174, 145.20 subdivision 25. 145.21 Subd. 2. [APPROPRIATION.] $65,600,000 in fiscal year 2003, 145.22 $65,600,000 in fiscal year 2004, and $65,600,000 in fiscal year 145.23 2005 are appropriated to the commissioner of revenue from the 145.24 general fund to make grants under this section. The 145.25 appropriated amounts do not lapse at the end of a fiscal year. 145.26 Each amount is available until the later of when expended or 145.27 when this section expires. If the amount of grant entitlements 145.28 for a year exceeds the amount available for grants, the 145.29 commissioner shall reduce each grant proportionately so the 145.30 total does not exceed the amount available. 145.31 Subd. 3. [EXPIRATION.] This section expires on January 1, 145.32 2006. 145.33 [EFFECTIVE DATE.] This section is effective January 1, 145.34 2002, and thereafter. 145.35 Sec. 97. [INSTRUCTIONS TO REVISOR.] 145.36 In the next edition of Minnesota Statutes, the revisor of 146.1 statutes shall replace each occurrence of the phrase "net tax 146.2 capacity" with the phrase "assessed value," except for 146.3 occurrences in Minnesota Statutes, section 275.011. 146.4 [EFFECTIVE DATE.] This section is effective the day 146.5 following final enactment. 146.6 Sec. 98. [REPEALER.] 146.7 (a) Minnesota Statutes 2000, sections 126C.13, subdivision 146.8 1; 126C.18, subdivision 1; 273.13, subdivisions 21b and 24a; 146.9 273.1382; 275.078; and 275.08, subdivision 1e, are repealed 146.10 effective for taxes payable in 2002 and thereafter. 146.11 (b) Minnesota Statutes 2000, sections 273.138; 273.1399; 146.12 477A.011, subdivisions 30, 31, 32, 33, 36, and 37; and 477A.03, 146.13 subdivision 4, are repealed for aids payable in 2002 and 146.14 thereafter. 146.15 (c) Minnesota Statutes 2000, section 275.065, subdivision 146.16 3a, is repealed. 146.17 (d) Minnesota Statutes 2000, section 282.01, subdivisions 146.18 1c, 1d, and 1e, are repealed for deeds issued on or after July 146.19 1, 2001. 146.20 (e) Minnesota Statutes 2000, sections 270.31; 270.32; 146.21 270.33; 270.34; 270.35; 270.36; 270.37; 270.38; and 270.39, are 146.22 repealed effective for taxes payable in 2003 and thereafter. 146.23 [EFFECTIVE DATE.] This section is effective the day 146.24 following final enactment. 146.25 ARTICLE 5 146.26 CORPORATE FRANCHISE TAX REFORM 146.27 Section 1. Minnesota Statutes 2000, section 290.01, is 146.28 amended by adding a subdivision to read: 146.29 Subd. 5b. [DEFINITION OF INSURANCE COMPANY.] The terms 146.30 "insurance company," "life insurance company," and "insurance 146.31 company other than life" have the meanings given in the Internal 146.32 Revenue Code. 146.33 [EFFECTIVE DATE.] This section is effective for tax years 146.34 beginning after December 31, 2000. 146.35 Sec. 2. Minnesota Statutes 2000, section 290.05, 146.36 subdivision 1, is amended to read: 147.1 Subdivision 1. [EXEMPT ENTITIES.] The following 147.2 corporations, individuals, estates, trusts, and organizations 147.3 shall be exempted from taxation under this chapter, provided 147.4 that every such person or corporation claiming exemption under 147.5 this chapter, in whole or in part, must establish to the 147.6 satisfaction of the commissioner the taxable status of any 147.7 income or activity: 147.8 (a) corporations, individuals, estates, and trusts engaged 147.9 in the business of mining or producing iron ore and other ores 147.10 the mining or production of which is subject to the occupation 147.11 tax imposed by section 298.01; but if any such corporation, 147.12 individual, estate, or trust engages in any other business or 147.13 activity or has income from any property not used in such 147.14 business it shall be subject to this tax computed on the net 147.15 income from such property or such other business or activity. 147.16 Royalty shall not be considered as income from the business of 147.17 mining or producing iron ore within the meaning of this section; 147.18 (b) the United States of America, the state of Minnesota or 147.19 any political subdivision of either agencies or 147.20 instrumentalities, whether engaged in the discharge of 147.21 governmental or proprietary functions; 147.22 (c) any insurance company that is domiciled in a state or 147.23 country other than Minnesota that imposes retaliatory taxes, 147.24 fines, deposits, penalties, licenses, or fees and that does not 147.25 grant, on a reciprocal basis, exemption from such retaliatory 147.26 taxes to insurance companies or their agents domiciled in 147.27 Minnesota. "Retaliatory taxes" means taxes imposed on insurance 147.28 companies organized in another state or country that result from 147.29 the fact that an insurance company organized in the taxing 147.30 jurisdiction and doing business in the other jurisdiction is 147.31 subject to taxes, fines, deposits, penalties, licenses, or fees 147.32 in an amount exceeding that imposed by the taxing jurisdiction 147.33 upon an insurance company organized in the other state or 147.34 country and doing business to the same extent in the taxing 147.35 jurisdiction;and147.36 (d) town and farmers' mutual insurance companies and mutual 148.1 property and casualty insurance companies, other than those (1) 148.2 writing life insurance or (2) whose total assets on December 31, 148.3 1989, exceeded $1,600,000,000; and 148.4 (e) insurance companies that have a premium tax liability 148.5 under section 297I.05. 148.6 [EFFECTIVE DATE.] This section is effective for tax years 148.7 beginning after December 31, 2000. 148.8 Sec. 3. Minnesota Statutes 2000, section 290.0922, 148.9 subdivision 2, is amended to read: 148.10 Subd. 2. [EXEMPTIONS.] The following entities are exempt 148.11 from the tax imposed by this section: 148.12 (1) corporations exempt from tax under section 290.05other148.13than insurance companies exempt under subdivision 1, paragraph148.14(d); 148.15 (2) real estate investment trusts; 148.16 (3) regulated investment companies or a fund thereof; and 148.17 (4) entities having a valid election in effect under 148.18 section 860D(b) of the Internal Revenue Code; 148.19 (5) town and farmers' mutual insurance companies; and 148.20 (6) cooperatives organized under chapter 308A that provide 148.21 housing exclusively to persons age 55 and over and are 148.22 classified as homesteads under section 273.124, subdivision 3. 148.23 Entities not specifically exempted by this subdivision are 148.24 subject to tax under this section, notwithstanding section 148.25 290.05. 148.26 [EFFECTIVE DATE.] This section is effective for tax years 148.27 beginning after December 31, 2000. 148.28 Sec. 4. Minnesota Statutes 2000, section 290.191, 148.29 subdivision 2, is amended to read: 148.30 Subd. 2. [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 148.31 Except for those trades or businesses required to use a 148.32 different formula under subdivision 2a or 3 or section 290.35 or 148.33 290.36, and for those trades or businesses that receive 148.34 permission to use some other method under section 290.20or148.35under subdivision 4, a trade or business required to apportion 148.36 its net income must apportion its income to this state on the 149.1 basis ofthe percentage obtained by taking the sum of:149.2(1) 75 percent ofthe percentage which the sales made 149.3 within this state in connection with the trade or business 149.4 during the tax period are of the total sales wherever made in 149.5 connection with the trade or business during the tax period;. 149.6(2) 12.5 percent of the percentage which the total tangible149.7property used by the taxpayer in this state in connection with149.8the trade or business during the tax period is of the total149.9tangible property, wherever located, used by the taxpayer in149.10connection with the trade or business during the tax period; and149.11(3) 12.5 percent of the percentage which the taxpayer's149.12total payrolls paid or incurred in this state or paid in respect149.13to labor performed in this state in connection with the trade or149.14business during the tax period are of the taxpayer's total149.15payrolls paid or incurred in connection with the trade or149.16business during the tax period.149.17 [EFFECTIVE DATE.] This section is effective for taxable 149.18 years beginning after December 31, 2000. 149.19 Sec. 5. Minnesota Statutes 2000, section 290.191, is 149.20 amended by adding a subdivision to read: 149.21 Subd. 2a. [TELECOMMUNICATIONS SERVICE 149.22 PROVIDERS.] Notwithstanding subdivision 2, a provider of 149.23 telecommunications service that is required to apportion its net 149.24 income must apportion its net income to this state on the basis 149.25 of the percentage obtained by taking the sum of: 149.26 (1) 75 percent of the percentage which the sales made 149.27 within this state in connection with the trade or business 149.28 during the tax period are of the total sales wherever made in 149.29 connection with the trade or business during the tax period; 149.30 (2) 12.5 percent of the percentage which the total tangible 149.31 personal property used by the taxpayer in this state in 149.32 connection with the trade or business during the tax period is 149.33 of the total tangible personal property, wherever located, used 149.34 by the taxpayer in connection with the trade or business during 149.35 the tax period; and 149.36 (3) 12.5 percent of the percentage which the taxpayer's 150.1 total payrolls paid or incurred in this state or paid in respect 150.2 to labor performed in this state in connection with the trade or 150.3 business during the tax period are of the taxpayer's total 150.4 payrolls paid or incurred in connection with the trade or 150.5 business during the tax period. 150.6 [EFFECTIVE DATE.] This section is effective for taxable 150.7 years beginning after December 31, 2000. 150.8 Sec. 6. Minnesota Statutes 2000, section 290.191, 150.9 subdivision 3, is amended to read: 150.10 Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL 150.11 INSTITUTIONS.] Except for an investment company required to 150.12 apportion its income under section 290.36, a financial 150.13 institution that is required to apportion its net income must 150.14 apportion its net income to this state on the basis of the 150.15 percentageobtained by taking the sum of:150.16(1) 75 percent of the percentagewhich the receipts from 150.17 within this state in connection with the trade or business 150.18 during the tax period are of the total receipts in connection 150.19 with the trade or business during the tax period, from wherever 150.20 derived;. 150.21(2) 12.5 percent of the percentage which the sum of the150.22total tangible property used by the taxpayer in this state and150.23the intangible property owned by the taxpayer and attributed to150.24this state in connection with the trade or business during the150.25tax period is of the sum of the total tangible property,150.26wherever located, used by the taxpayer and the intangible150.27property owned by the taxpayer and attributed to all states in150.28connection with the trade or business during the tax period; and150.29(3) 12.5 percent of the percentage which the taxpayer's150.30total payrolls paid or incurred in this state or paid in respect150.31to labor performed in this state in connection with the trade or150.32business during the tax period are of the taxpayer's total150.33payrolls paid or incurred in connection with the trade or150.34business during the tax period.150.35 [EFFECTIVE DATE.] This section is effective for taxable 150.36 years beginning after December 31, 2000. 151.1 Sec. 7. [REPEALER.] 151.2 Minnesota Statutes 2000, sections 290.191, subdivision 4; 151.3 and 290.35, subdivisions 3, 4, and 5, are repealed. 151.4 [EFFECTIVE DATE.] This section is effective for taxable 151.5 years beginning after December 31, 2000. 151.6 ARTICLE 6 151.7 SALES TAX 151.8 Section 1. Minnesota Statutes 2000, section 297A.61, 151.9 subdivision 16, is amended to read: 151.10 Subd. 16. [TAXABLE SERVICES.] (a) "Taxable services" means 151.11 the services listed in this subdivision and other services 151.12 listed in subdivision 3. 151.13 (b) Taxable services includes the granting of the privilege 151.14 of admission to places of amusement, recreational areas, or 151.15 athletic events, and the making available of amusement devices, 151.16 tanning facilities, reducing salons, steam baths, turkish baths, 151.17 health clubs, and spas or athletic facilities. 151.18 (c) Taxable services includes the furnishing of lodging and 151.19 related services by a hotel, rooming house, resort, campground, 151.20 motel, or trailer camp and the granting of any similar license 151.21 to use real property other than the renting or leasing thereof 151.22 for a continuous period of 30 days or more. 151.23 (d) Taxable services includes the furnishing of cable 151.24 television services or similar television services, including, 151.25 but not limited to, charges for basic, premium, pay-per-view, 151.26 and any other similar service. 151.27 (e) Taxable services includes the furnishing of parking 151.28 services, whether on a contractual, hourly, or other periodic 151.29 basis, except for parking at a meter. 151.30 (f) Taxable services includes the granting of membership in 151.31 a club, association, or other organization if: 151.32 (1) the club, association, or other organization makes 151.33 available for the use of its members sports and athletic 151.34 facilities, without regard to whether a separate charge is 151.35 assessed for use of the facilities; and 151.36 (2) use of the sports and athletic facility is not made 152.1 available to the general public on the same basis as it is made 152.2 available to members. 152.3 Granting of membership means both one-time initiation fees and 152.4 periodic membership dues. Sports and athletic facilities 152.5 include golf courses; tennis, racquetball, handball, and squash 152.6 courts; basketball and volleyball facilities; running tracks; 152.7 exercise equipment; swimming pools; and other similar athletic 152.8 or sports facilities. 152.9 (g) Taxable services includes the furnishing of the 152.10 following services as provided in this paragraph: 152.11 (1) laundry and dry cleaning services including cleaning, 152.12 pressing, repairing, altering, and storing clothes, linen 152.13 services and supply, cleaning and blocking hats, and carpet, 152.14 drapery, upholstery, and industrial cleaning. Laundry and dry 152.15 cleaning services do not include services provided by coin 152.16 operated facilities operated by the customer; 152.17 (2) motor vehicle washing, waxing, and cleaning services, 152.18 including services provided by coin operated facilities operated 152.19 by the customer, and rustproofing, undercoating, and towing of 152.20 motor vehicles; 152.21 (3) building and residential cleaning, maintenance, and 152.22 disinfecting and exterminating services; 152.23 (4) detective, security, burglar, fire alarm, and armored 152.24 car services; but not including services performed within the 152.25 jurisdiction they serve by off-duty licensed peace officers as 152.26 defined in section 626.84, subdivision 1, or services provided 152.27 by a nonprofit organization for monitoring and electronic 152.28 surveillance of persons placed on in-home detention pursuant to 152.29 court order or under the direction of the Minnesota department 152.30 of corrections; 152.31 (5) pet grooming services; 152.32 (6) lawn care, fertilizing, mowing, spraying and sprigging 152.33 services; garden planting and maintenance; tree, bush, and shrub 152.34 pruning, bracing, spraying, and surgery; indoor plant care; 152.35 tree, bush, shrub, and stump removal; and tree trimming for 152.36 public utility lines. Services performed under a construction 153.1 contract for the installation of shrubbery, plants, sod, trees, 153.2 bushes, and similar items are not taxable; 153.3 (7) massages, except when provided by a licensed health 153.4 care facility or professional or upon written referral from a 153.5 licensed health care facility or professional for treatment of 153.6 illness, injury, or disease; and 153.7 (8) the furnishing of lodging, board, and care services for 153.8 animals in kennels and other similar arrangements, but excluding 153.9 veterinary and horse boarding services. 153.10 The services listed in this paragraph are taxable under 153.11 section 297A.62 if the service is performed wholly within 153.12 Minnesota or if the service is performed partly within and 153.13 partly outside Minnesota and the greater proportion of the 153.14 service is performed in Minnesota, based on the cost of 153.15 performance. In applying the provisions of this chapter, the 153.16 terms "tangible personal property" and "sales at retail" include 153.17 taxable services and the provision of taxable services, unless 153.18 specifically provided otherwise. Services performed by an 153.19 employee for an employer are not taxable. Services performed by 153.20 a partnership or association for another partnership or 153.21 association are not taxable if one of the entities owns or 153.22 controls more than 80 percent of the voting power of the equity 153.23 interest in the other entity. Services performed between 153.24 members of an affiliated group of corporations are not taxable. 153.25 For purposes of this section, "affiliated group of corporations" 153.26 includes those entities that would be classified as members of 153.27 an affiliated group under United States Code, title 26, section 153.28 1504, and that are eligible to file a consolidated tax return 153.29 for federal income tax purposes. 153.30 (h) To the extent not taxable under subdivision 3 or 153.31 paragraphs (a) to (g), taxable services includes the following 153.32 services enumerated in the North American Industry 153.33 Classification System, 1997, as prepared by the Office of 153.34 Management and Budget, Executive Office of the President, but 153.35 only if the services are purchased by an individual not for use 153.36 in connection with a trade, business, or income-producing 154.1 activity: special trade contractors (subsector no. 235); taxi 154.2 and limousine service (industry group no. 4853); scenic and 154.3 sightseeing transportation (subsector no. 487); motor vehicle 154.4 towing (industry no. 48841); postal service (subsector no. 491); 154.5 couriers and messengers (subsector no. 492); warehousing and 154.6 storage (subsector no. 493); information (sector no. 51); 154.7 security brokerage (industry no. 52312); investment advice 154.8 (industry no. 52393); insurance-related activities (industry no. 154.9 524291); lessors of miniwarehouse and self-storage units 154.10 (industry no. 531130); offices of real estate agents and brokers 154.11 (industry group no. 5312); activities related to real estate 154.12 (industry group no. 53130); professional, scientific, and 154.13 technical services (subsector no. 541); administrative and 154.14 support services (subsector no. 561); septic tank and related 154.15 services (industry no. 562991); amusement, entertainment, and 154.16 recreation services (sector no. 71), except gambling services 154.17 provided under industry group no. 7132; accommodations services 154.18 (subsector no. 721), except contracts or leases to use real 154.19 property for a continuous period of 30 days or more; repair and 154.20 maintenance services (subsector no. 811); personal and laundry 154.21 services (subsector no. 812); massage services, including 154.22 reflexology, shiatsu, and other forms of alternative medical 154.23 treatment, except when provided by a licensed health care 154.24 facility or licensed health care professional or upon written 154.25 referral from a licensed health care facility or professional 154.26 for treatment of illness, injury, or disease; and leases or 154.27 rentals of office space, meeting rooms, or convention and trade 154.28 show space for periods of 29 days or less. 154.29 [EFFECTIVE DATE.] This section is effective for sales and 154.30 purchases occurring after December 31, 2001. 154.31 Sec. 2. Minnesota Statutes 2000, section 297A.61, is 154.32 amended by adding a subdivision to read: 154.33 Subd. 24. [TELECOMMUNICATIONS SERVICES.] (a) 154.34 "Telecommunications services" means the transmission, 154.35 conveyance, or routing of voice, data, audio, video, or any 154.36 other information or signals to a point, or between or among 155.1 points, by or through any electronic, satellite, optical, 155.2 microwave, or other medium or method now in existence or 155.3 hereafter devised, regardless of the protocol used for such 155.4 transmission, conveyance, or routing. 155.5 (b) Telecommunications services includes the furnishing for 155.6 consideration of access to telephone services by a hotel to its 155.7 guests. 155.8 (c) Telecommunications services do not include: 155.9 (1) services purchased with a prepaid telephone calling 155.10 card; 155.11 (2) private communication service purchased by an agent 155.12 acting on behalf of the state lottery; 155.13 (3) information services; and 155.14 (4) purchases of telecommunications when the purchaser uses 155.15 the purchased services as a component part of or integrates such 155.16 service into another telecommunications service that is sold by 155.17 the purchaser in the normal course of business. 155.18 (d) For purposes of this subdivision, "information 155.19 services" means the offering of the capability for generating, 155.20 acquiring, storing, transforming, processing, retrieving, 155.21 utilizing, or making available information. 155.22 [EFFECTIVE DATE.] This section is effective for sales and 155.23 purchases occurring after December 31, 2001. 155.24 Sec. 3. Minnesota Statutes 2000, section 297A.68, 155.25 subdivision 5, is amended to read: 155.26 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 155.27 exempt.The tax must be imposed and collected as if the rate155.28under section 297A.62, subdivision 1, applied, and then refunded155.29in the manner provided in section 297A.75.155.30 "Capital equipment" means machinery and equipment purchased 155.31 or leased and used in this state by the purchaser or lessee 155.32 primarily for manufacturing, fabricating, mining, or refining 155.33 tangible personal property to be sold ultimately at retail. 155.34 Capital equipment means machinery and equipment essential 155.35 to the integrated production process. Capital equipment also 155.36 includes machinery and equipment used to electronically transmit 156.1 results retrieved by a customer of an online computerized data 156.2 retrieval system. 156.3 (b) Capital equipment includes, but is not limited to: 156.4 (1) machinery and equipment used to operate, control, or 156.5 regulate the production equipment; 156.6 (2) machinery and equipment used for research and 156.7 development, design, quality control, and testing activities; 156.8 (3) environmental control devices that are used to maintain 156.9 conditions such as temperature, humidity, light, or air pressure 156.10 when those conditions are essential to and are part of the 156.11 production process; 156.12 (4) materials and supplies used to construct and install 156.13 machinery or equipment; 156.14 (5) repair and replacement parts, including accessories, 156.15 whether purchased as spare parts, repair parts, or as upgrades 156.16 or modifications to machinery or equipment; 156.17 (6) materials used for foundations that support machinery 156.18 or equipment; 156.19 (7) materials used to construct and install special purpose 156.20 buildings used in the production process; and 156.21 (8) ready-mixed concrete trucks in which the ready-mixed 156.22 concrete is mixed as part of the delivery process. 156.23 (c) Capital equipment does not include the following: 156.24 (1) motor vehicles taxed under chapter 297B; 156.25 (2) machinery or equipment used to receive or store raw 156.26 materials; 156.27 (3) building materials, except for materials included in 156.28 paragraph (b), clauses (6) and (7); 156.29 (4) machinery or equipment used for nonproduction purposes, 156.30 including, but not limited to, the following: plant security, 156.31 fire prevention, first aid, and hospital stations; support 156.32 operations or administration; pollution control; and plant 156.33 cleaning, disposal of scrap and waste, plant communications, 156.34 space heating, lighting, or safety; 156.35 (5) farm machinery and aquaculture production equipment as 156.36 defined by section 297A.61, subdivisions 12 and 13; 157.1 (6) machinery or equipment purchased and installed by a 157.2 contractor as part of an improvement to real property; or 157.3 (7) any other item that is not essential to the integrated 157.4 process of manufacturing, fabricating, mining, or refining. 157.5 (d) For purposes of this subdivision: 157.6 (1) "Machinery" means mechanical, electronic, or electrical 157.7 devices, including computers and computer software, that are 157.8 purchased or constructed to be used for the activities set forth 157.9 in paragraph (a). 157.10 (2) "Equipment" means independent devices or tools separate 157.11 from machinery, including computers and computer software, used 157.12 in operating, controlling, or regulating machinery and 157.13 equipment; and any subunit or assembly comprising a component of 157.14 any machinery or accessory or attachment parts of machinery, 157.15 such as tools, dies, jigs, patterns, and molds. 157.16 (3) "Primarily" means machinery and equipment used 50 157.17 percent or more of the time in an activity described in 157.18 paragraph (a). 157.19 (4) "Manufacturing" means an operation or series of 157.20 operations where raw materials are changed in form, composition, 157.21 or condition by machinery and equipment and which results in the 157.22 production of a new article of tangible personal property. For 157.23 purposes of this subdivision, "manufacturing" includes the 157.24 generation of electricity or steam to be sold at retail. 157.25 (5) "Fabricating" means to make, build, create, produce, or 157.26 assemble components or property to work in a new or different 157.27 manner. 157.28 (6) "Mining" means the extraction of minerals, ores, stone, 157.29 or peat. 157.30 (7) "Refining" means the process of converting a natural 157.31 resource to a product, including the treatment of water to be 157.32 sold at retail. 157.33 (8) "Integrated production process" means a process 157.34 beginning with the removal of raw materials from inventory 157.35 through the completion of the product, including packaging of 157.36 the product. 158.1 (9) "Online data retrieval system" means a system whose 158.2 cumulation of information is equally available and accessible to 158.3 all its customers. 158.4 (10) "Machinery and equipment used for pollution control" 158.5 means machinery and equipment used solely to eliminate, prevent, 158.6 or reduce pollution resulting from an activity described in 158.7 paragraph (a). 158.8 [EFFECTIVE DATE.] This section is effective for purchases 158.9 made after June 30, 2001. 158.10 Sec. 4. Minnesota Statutes 2000, section 297A.75, is 158.11 amended to read: 158.12 297A.75 [REFUND; APPROPRIATION.] 158.13 Subdivision 1. [TAX COLLECTED.] The tax on the gross 158.14 receipts from the sale of the following exempt items must be 158.15 imposed and collected as if the sale were taxable and the rate 158.16 under section 297A.62, subdivision 1, applied. The exempt items 158.17 include: 158.18 (1)capital equipment exempt under section 297A.68,158.19subdivision 5;158.20(2)building materials for an agricultural processing 158.21 facility exempt under section 297A.71, subdivision 13; 158.22(3)(2) building materials for mineral production 158.23 facilities exempt under section 297A.71, subdivision 14; 158.24(4)(3) building materials for correctional facilities 158.25 under section 297A.71, subdivision 3; 158.26(5)(4) building materials used in a residence for disabled 158.27 veterans exempt under section 297A.71, subdivision 11; and 158.28(6)(5) chair lifts, ramps, elevators, and associated 158.29 building materials exempt under section 297A.71, subdivision 12. 158.30 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 158.31 forms prescribed by the commissioner, a refund equal to the tax 158.32 paid on the gross receipts of the exempt items must be paid to 158.33 the applicant. Only the following persons may apply for the 158.34 refund: 158.35 (1) for subdivision 1, clauses (1)to (3)and (2), the 158.36 applicant must be the purchaser; 159.1 (2) for subdivision 1, clause(4)(3), the applicant must 159.2 be the governmental subdivision; 159.3 (3) for subdivision 1, clause(5)(4), the applicant must 159.4 be the recipient of the benefits provided in United States Code, 159.5 title 38, chapter 21; and 159.6 (4) for subdivision 1, clause(6)(5), the applicant must 159.7 be the owner of the homestead property. 159.8 Subd. 3. [APPLICATION.](a)The application must include 159.9 sufficient information to permit the commissioner to verify the 159.10 tax paid. If the tax was paid by a contractor, subcontractor, 159.11 or builder, under subdivision 1, clause (3), (4), or (5),or159.12(6),the contractor, subcontractor, or builder must furnish to 159.13 the refund applicant a statement including the cost of the 159.14 exempt items and the taxes paid on the items unless otherwise 159.15 specifically provided by this subdivision. The provisions of 159.16 sections 289A.40 and 289A.50 apply to refunds under this section. 159.17(b) An applicant may not file more than two applications159.18per calendar year for refunds for taxes paid on capital159.19equipment exempt under section 297A.68, subdivision 5.159.20 Subd. 4. [INTEREST.] Interest must be paid on the refund 159.21 at the rate in section 270.76 from the date the refund claim is 159.22 filed for taxes paid under subdivision 1, clauses (1)to159.23(3), (2), and(5)(4), and from 60 days after the date the 159.24 refund claim is filed with the commissioner for claims filed 159.25 under subdivision 1, clauses(4)(3) and(6)(5). 159.26 Subd. 5. [APPROPRIATION.] The amount required to make the 159.27 refunds is annually appropriated to the commissioner. 159.28 [EFFECTIVE DATE.] This section is effective for purchases 159.29 made after June 30, 2001. 159.30 ARTICLE 7 159.31 HEALTH CARE PROVIDER TAX 159.32 Section 1. Minnesota Statutes 2000, section 295.52, 159.33 subdivision 1, is amended to read: 159.34 Subdivision 1. [HOSPITAL TAX.] A tax is imposed on each 159.35 hospital equal totwo1.5 percent of its gross revenues. 159.36 [EFFECTIVE DATE.] This section is effective for gross 160.1 revenues received on or after January 1, 2002. 160.2 Sec. 2. Minnesota Statutes 2000, section 295.52, 160.3 subdivision 1a, is amended to read: 160.4 Subd. 1a. [SURGICAL CENTER TAX.] A tax is imposed on each 160.5 surgical center equal totwo1.5 percent of its gross revenues. 160.6 [EFFECTIVE DATE.] This section is effective for gross 160.7 revenues received on or after January 1, 2002. 160.8 Sec. 3. Minnesota Statutes 2000, section 295.52, 160.9 subdivision 2, is amended to read: 160.10 Subd. 2. [PROVIDER TAX.] A tax is imposed on each health 160.11 care provider equal totwo1.5 percent of its gross revenues. 160.12 [EFFECTIVE DATE.] This section is effective for gross 160.13 revenues received on or after January 1, 2002. 160.14 Sec. 4. Minnesota Statutes 2000, section 295.52, 160.15 subdivision 3, is amended to read: 160.16 Subd. 3. [WHOLESALE DRUG DISTRIBUTOR TAX.] A tax is 160.17 imposed on each wholesale drug distributor equal totwo1.5 160.18 percent of its gross revenues. 160.19 [EFFECTIVE DATE.] This section is effective for gross 160.20 revenues received on or after January 1, 2002.