SF 2249

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; providing a property tax rebate; 
  1.3             providing for property tax simplification and reform; 
  1.4             extending levy limits for an additional year; 
  1.5             providing an income tax subtraction for certain 
  1.6             federal tax liability for certain distributions; 
  1.7             changing the calculation of individual alternative 
  1.8             minimum taxes; dedicating tax receipts from ticket 
  1.9             sales to athletic events sponsored by the University 
  1.10            of Minnesota; appropriating money; amending Minnesota 
  1.11            Statutes 1996, sections 273.112, subdivision 7a; 
  1.12            273.1398, subdivision 2; 290.091, subdivision 2; 
  1.13            477A.0122, subdivision 6; and 477A.03, subdivision 2; 
  1.14            Minnesota Statutes 1997 Supplement, sections 273.112, 
  1.15            subdivision 3; 273.127, subdivision 3; 273.13, 
  1.16            subdivisions 22, 23, 24, 25, as amended, 31, and 32; 
  1.17            273.1382, subdivision 1; 275.71, subdivisions 2, 3, 
  1.18            and 4; 290.01, subdivision 19b; 290.091, subdivision 
  1.19            6; and 297A.44, subdivision 1, as amended; Laws 1997, 
  1.20            chapter 231, article 3, section 9; repealing Minnesota 
  1.21            Statutes 1996, sections 273.11, subdivisions 6a and 
  1.22            15; 273.124, subdivision 17; and 273.1315. 
  1.23  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.24                             ARTICLE 1
  1.25                        PROPERTY TAX REBATE 
  1.26     Section 1.  [1998 PROPERTY TAX REBATE.] 
  1.27     (a) A credit is allowed against the tax imposed under 
  1.28  Minnesota Statutes, chapter 290, to an individual, other than as 
  1.29  a dependent, as defined in sections 151 and 152 of the Internal 
  1.30  Revenue Code, disregarding section 152(b)(3) of the Internal 
  1.31  Revenue Code, equal to 20 percent of the qualified property tax 
  1.32  paid before January 1, 1999, for taxes assessed in 1997. 
  1.33     (b) For property owned and occupied by the taxpayer during 
  1.34  1998, qualified property tax means property taxes payable as 
  2.1   defined in Minnesota Statutes, section 290A.03, subdivision 13, 
  2.2   assessed in 1997 and payable in 1998, and deductible by the 
  2.3   individual under section 164 of the Internal Revenue Code of 
  2.4   1986, as amended through December 31, 1997, except the 
  2.5   requirement in Minnesota Statutes, section 290A.03, subdivision 
  2.6   13, that the taxpayer own and occupy the property on January 2, 
  2.7   1998, does not apply. 
  2.8      (c) For a renter, the qualified property tax means the 
  2.9   amount of rent constituting property taxes under Minnesota 
  2.10  Statutes, section 290A.03, subdivision 11, based on rent paid in 
  2.11  1998.  If two or more renters could be claimants under Minnesota 
  2.12  Statutes, chapter 290A, with regard to the rent constituting 
  2.13  property taxes, the rules under Minnesota Statutes, section 
  2.14  290A.03, subdivision 8, paragraph (f), apply to determine the 
  2.15  amount of the credit for the individual. 
  2.16     (d) For an individual who both owned and rented principal 
  2.17  residences in calendar year 1998, qualified taxes are the sum of 
  2.18  the amounts under paragraphs (b) and (c). 
  2.19     (e) If the amount of the credit under this section exceeds 
  2.20  the taxpayer's tax liability under chapter 290, the commissioner 
  2.21  shall refund the excess. 
  2.22     (f) To claim a credit under this section, the taxpayer must 
  2.23  attach a copy of the property tax statement and certificate of 
  2.24  rent paid, as applicable, and provide any additional information 
  2.25  the commissioner requires. 
  2.26     (g) This credit applies to taxable years beginning after 
  2.27  December 31, 1997, and before January 1, 1999. 
  2.28     (h) Payment of the credit under this section is subject to 
  2.29  Minnesota Statutes, chapter 270A, and any other provision 
  2.30  applicable to refunds under Minnesota Statutes, chapter 290. 
  2.31     (i) An amount sufficient to pay refunds under this section 
  2.32  is appropriated to the commissioner of revenue from the general 
  2.33  fund. 
  2.34     Sec. 2.  [TRANSFER TO GENERAL FUND.] 
  2.35     Notwithstanding the provisions of Minnesota Statutes, 
  2.36  section 16A.1521, paragraph (b), $500,000,000 from the property 
  3.1   tax reform account is available to the general fund in an amount 
  3.2   equal to the rebates under section 1.  This amount is available 
  3.3   beginning March 1, 1999, except as provided in section 3. 
  3.4      Sec. 3.  [APPROPRIATION.] 
  3.5      Up to $1,800,000 of the amount available in section 2 is 
  3.6   appropriated from the general fund to the commissioner of 
  3.7   revenue to administer section 1.  Of this amount, $1,000,000 is 
  3.8   available July 1, 1998.  The remainder is available upon the 
  3.9   department of revenue's report of actual administrative 
  3.10  expenditures for the fiscal year 1998 rebate to the department 
  3.11  of finance.  The report shall include updated estimates of 
  3.12  expected administrative expenditures for the fiscal year 1999 
  3.13  rebate. 
  3.14                             ARTICLE 2 
  3.15                        PROPERTY TAX REFORM 
  3.16     Section 1.  Minnesota Statutes 1997 Supplement, section 
  3.17  273.112, subdivision 3, is amended to read: 
  3.18     Subd. 3.  Real estate shall be entitled to valuation and 
  3.19  tax deferment under this section only if it is: 
  3.20     (a) actively and exclusively devoted to golf, skiing, lawn 
  3.21  bowling, croquet, or archery or firearms range recreational use 
  3.22  or other recreational or social uses carried on at the 
  3.23  establishment; 
  3.24     (b) five acres in size or more, except in the case of a 
  3.25  lawn bowling or croquet green or an archery or firearms range or 
  3.26  an establishment actively and exclusively devoted to indoor 
  3.27  fitness, health, social, recreational, and related uses in which 
  3.28  the establishment is owned and operated by a not-for-profit 
  3.29  corporation; 
  3.30     (c)(1) operated by private individuals or, in the case of a 
  3.31  lawn bowling or croquet green, by private individuals or 
  3.32  corporations, and open to the public; or 
  3.33     (2) operated by firms or corporations for the benefit of 
  3.34  employees or guests; or 
  3.35     (3) operated by private clubs having a membership of 50 or 
  3.36  more or open to the public, provided that the club does not 
  4.1   discriminate in membership requirements or selection on the 
  4.2   basis of sex or marital status; and 
  4.3      (d) made available for use without discrimination on the 
  4.4   basis of sex during the time when the facility is open to use by 
  4.5   the public or by members, except that use for golf may be 
  4.6   restricted on the basis of sex no more frequently than one, or 
  4.7   part of one, weekend each calendar month for each sex and no 
  4.8   more than two, or part of two, weekdays each week for each sex.  
  4.9      If a golf club membership allows use of golf course 
  4.10  facilities by more than one adult per membership, the use must 
  4.11  be equally available to all adults entitled to use of the golf 
  4.12  course under the membership, except that use may be restricted 
  4.13  on the basis of sex as permitted in this section.  Memberships 
  4.14  that permit play during restricted times may be allowed only if 
  4.15  the restricted times apply to all adults using the membership.  
  4.16  A golf club may not offer a membership or golfing privileges to 
  4.17  a spouse of a member that provides greater or less access to the 
  4.18  golf course than is provided to that person's spouse under the 
  4.19  same or a separate membership in that club, except that the 
  4.20  terms of a membership may provide that one spouse may have no 
  4.21  right to use the golf course at any time while the other spouse 
  4.22  may have either limited or unlimited access to the golf course.  
  4.23     A golf club may have or create an individual membership 
  4.24  category which entitles a member for a reduced rate to play 
  4.25  during restricted hours as established by the club.  The club 
  4.26  must have on record a written request by the member for such 
  4.27  membership.  
  4.28     A golf club that has food or beverage facilities or 
  4.29  services must allow equal access to those facilities and 
  4.30  services for both men and women members in all membership 
  4.31  categories at all times.  Nothing in this paragraph shall be 
  4.32  construed to require service or access to facilities to persons 
  4.33  under the age of 21 years or require any act that would violate 
  4.34  law or ordinance regarding sale, consumption, or regulation of 
  4.35  alcoholic beverages. 
  4.36     For purposes of this subdivision and subdivision 7a, 
  5.1   discrimination means a pattern or course of conduct and not 
  5.2   linked to an isolated incident. 
  5.3      Sec. 2.  Minnesota Statutes 1996, section 273.112, 
  5.4   subdivision 7a, is amended to read: 
  5.5      Subd. 7a.  Notwithstanding subdivision 7, when real 
  5.6   property ceases to qualify under subdivision 3 because of 
  5.7   failure to comply with prohibitions against discrimination on 
  5.8   the basis of sex, or because of the changes made by this 
  5.9   article, payment of additional taxes imposed under subdivision 7 
  5.10  is not required. 
  5.11     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
  5.12  273.127, subdivision 3, is amended to read: 
  5.13     Subd. 3.  [CLASS 4C PROPERTIES.] For the market value of 
  5.14  properties that meet the criteria of subdivision 2, paragraph 
  5.15  (a), and which no longer qualify as a result of the eligibility 
  5.16  criteria specified in section 273.126, a class rate of 2.4 
  5.17  percent applies for taxes payable in 1999 and a class rate of 
  5.18  2.6 2.5 percent applies for taxes payable in 2000. 
  5.19     Sec. 4.  Minnesota Statutes 1997 Supplement, section 
  5.20  273.13, subdivision 22, is amended to read: 
  5.21     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
  5.22  23, real estate which is residential and used for homestead 
  5.23  purposes is class 1.  The market value of class 1a property must 
  5.24  be determined based upon the value of the house, garage, and 
  5.25  land.  
  5.26     For taxes payable in 1998 and thereafter, The first $75,000 
  5.27  of market value of class 1a property has a net class rate of one 
  5.28  percent of its market value; and the market value of class 1a 
  5.29  property that exceeds $75,000 has a class rate of 1.85 1.75 
  5.30  percent of its market value for taxes payable in 1999, and 1.7 
  5.31  percent of its market value for taxes payable in 2000 and 
  5.32  thereafter.  
  5.33     (b) Class 1b property includes homestead real estate or 
  5.34  homestead manufactured homes used for the purposes of a 
  5.35  homestead by 
  5.36     (1) any blind person, or the blind person and the blind 
  6.1   person's spouse; or 
  6.2      (2) any person, hereinafter referred to as "veteran," who: 
  6.3      (i) served in the active military or naval service of the 
  6.4   United States; and 
  6.5      (ii) is entitled to compensation under the laws and 
  6.6   regulations of the United States for permanent and total 
  6.7   service-connected disability due to the loss, or loss of use, by 
  6.8   reason of amputation, ankylosis, progressive muscular 
  6.9   dystrophies, or paralysis, of both lower extremities, such as to 
  6.10  preclude motion without the aid of braces, crutches, canes, or a 
  6.11  wheelchair; and 
  6.12     (iii) has acquired a special housing unit with special 
  6.13  fixtures or movable facilities made necessary by the nature of 
  6.14  the veteran's disability, or the surviving spouse of the 
  6.15  deceased veteran for as long as the surviving spouse retains the 
  6.16  special housing unit as a homestead; or 
  6.17     (3) any person who: 
  6.18     (i) is permanently and totally disabled and 
  6.19     (ii) receives 90 percent or more of total income from 
  6.20     (A) aid from any state as a result of that disability; or 
  6.21     (B) supplemental security income for the disabled; or 
  6.22     (C) workers' compensation based on a finding of total and 
  6.23  permanent disability; or 
  6.24     (D) social security disability, including the amount of a 
  6.25  disability insurance benefit which is converted to an old age 
  6.26  insurance benefit and any subsequent cost of living increases; 
  6.27  or 
  6.28     (E) aid under the federal Railroad Retirement Act of 1937, 
  6.29  United States Code Annotated, title 45, section 228b(a)5; or 
  6.30     (F) a pension from any local government retirement fund 
  6.31  located in the state of Minnesota as a result of that 
  6.32  disability; or 
  6.33     (G) pension, annuity, or other income paid as a result of 
  6.34  that disability from a private pension or disability plan, 
  6.35  including employer, employee, union, and insurance plans and 
  6.36     (iii) has household income as defined in section 290A.03, 
  7.1   subdivision 5, of $50,000 or less; or 
  7.2      (4) any person who is permanently and totally disabled and 
  7.3   whose household income as defined in section 290A.03, 
  7.4   subdivision 5, is 275 percent or less of the federal poverty 
  7.5   level. 
  7.6      Property is classified and assessed under clause (4) only 
  7.7   if the government agency or income-providing source certifies, 
  7.8   upon the request of the homestead occupant, that the homestead 
  7.9   occupant satisfies the disability requirements of this paragraph.
  7.10     Property is classified and assessed pursuant to clause (1) 
  7.11  only if the commissioner of economic security certifies to the 
  7.12  assessor that the homestead occupant satisfies the requirements 
  7.13  of this paragraph.  
  7.14     Permanently and totally disabled for the purpose of this 
  7.15  subdivision means a condition which is permanent in nature and 
  7.16  totally incapacitates the person from working at an occupation 
  7.17  which brings the person an income.  The first $32,000 market 
  7.18  value of class 1b property has a net class rate of .45 percent 
  7.19  of its market value.  The remaining market value of class 1b 
  7.20  property has a net class rate using the rates for class 1 or 
  7.21  class 2a property, whichever is appropriate, of similar market 
  7.22  value.  
  7.23     (c) Class 1c property is commercial use real property that 
  7.24  abuts a lakeshore line and is devoted to temporary and seasonal 
  7.25  residential occupancy for recreational purposes but not devoted 
  7.26  to commercial purposes for more than 250 days in the year 
  7.27  preceding the year of assessment, and that includes a portion 
  7.28  used as a homestead by the owner, which includes a dwelling 
  7.29  occupied as a homestead by a shareholder of a corporation that 
  7.30  owns the resort or a partner in a partnership that owns the 
  7.31  resort, even if the title to the homestead is held by the 
  7.32  corporation or partnership.  For purposes of this clause, 
  7.33  property is devoted to a commercial purpose on a specific day if 
  7.34  any portion of the property, excluding the portion used 
  7.35  exclusively as a homestead, is used for residential occupancy 
  7.36  and a fee is charged for residential occupancy.  In order for a 
  8.1   property to be classified as class 1c 1b, at least 40 percent of 
  8.2   the annual gross lodging receipts related to the property must 
  8.3   be from business conducted between Memorial Day weekend and 
  8.4   Labor Day weekend, and at least 60 percent of all bookings by 
  8.5   lodging guests during the year must be for periods of at least 
  8.6   two consecutive nights.  Class 1c 1b property has a class rate 
  8.7   of one percent of total market value with the following 
  8.8   limitation:  the area of the property must not exceed 100 feet 
  8.9   of lakeshore footage for each cabin or campsite located on the 
  8.10  property up to a total of 800 feet and 500 feet in depth, 
  8.11  measured away from the lakeshore.  
  8.12     (d) (c) Class 1d 1c property includes structures that meet 
  8.13  all of the following criteria: 
  8.14     (1) the structure is located on property that is classified 
  8.15  as agricultural property under section 273.13, subdivision 23; 
  8.16     (2) the structure is occupied exclusively by seasonal farm 
  8.17  workers during the time when they work on that farm, and the 
  8.18  occupants are not charged rent for the privilege of occupying 
  8.19  the property, provided that use of the structure for storage of 
  8.20  farm equipment and produce does not disqualify the property from 
  8.21  classification under this paragraph; 
  8.22     (3) the structure meets all applicable health and safety 
  8.23  requirements for the appropriate season; and 
  8.24     (4) the structure is not saleable as residential property 
  8.25  because it does not comply with local ordinances relating to 
  8.26  location in relation to streets or roads. 
  8.27     The market value of class 1d 1c property has the same class 
  8.28  rates as class 1a property under paragraph (a). 
  8.29     Sec. 5.  Minnesota Statutes 1997 Supplement, section 
  8.30  273.13, subdivision 23, is amended to read: 
  8.31     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
  8.32  land including any improvements that is homesteaded.  The market 
  8.33  value of the house and garage and immediately surrounding one 
  8.34  acre of land has the same class rates as class 1a property under 
  8.35  subdivision 22.  The value of the remaining land including 
  8.36  improvements up to $115,000 has a net class rate of 0.4 0.37 
  9.1   percent of market value for taxes payable in 1999 and 0.35 
  9.2   percent of market value for taxes payable in 2000 and 
  9.3   thereafter.  The remaining value of class 2a property over 
  9.4   $115,000 of market value that does not exceed 320 acres has a 
  9.5   net class rate of 0.9 0.85 percent of market value for taxes 
  9.6   payable in 1999 and 0.8 percent of market value for taxes 
  9.7   payable in 2000 and thereafter.  The remaining property over the 
  9.8   $115,000 market value in excess of 320 acres has a class rate of 
  9.9   1.4 1.35 percent of market value for taxes payable in 1999 and 
  9.10  1.3 percent of market value for taxes payable in 2000 and 
  9.11  thereafter.  
  9.12     (b) Class 2b property is (1) real estate, rural in 
  9.13  character and used exclusively for growing trees for timber, 
  9.14  lumber, and wood and wood products; (2) real estate that is not 
  9.15  improved with a structure and is used exclusively for growing 
  9.16  trees for timber, lumber, and wood and wood products, if the 
  9.17  owner has participated or is participating in a cost-sharing 
  9.18  program for afforestation, reforestation, or timber stand 
  9.19  improvement on that particular property, administered or 
  9.20  coordinated by the commissioner of natural resources; (3) real 
  9.21  estate that is nonhomestead agricultural land; or (4) a landing 
  9.22  area or public access area of a privately owned public use 
  9.23  airport.  Class 2b property has a net class rate of 1.4 1.35 
  9.24  percent of market value for taxes payable in 1999 and 1.3 
  9.25  percent of market value for taxes payable in 2000 and thereafter.
  9.26     (c) Agricultural land as used in this section means 
  9.27  contiguous acreage of ten acres or more, used during the 
  9.28  preceding year for agricultural purposes.  "Agricultural 
  9.29  purposes" as used in this section means the raising or 
  9.30  cultivation of agricultural products or enrollment in the 
  9.31  Reinvest in Minnesota program under sections 103F.501 to 
  9.32  103F.535 or the federal Conservation Reserve Program as 
  9.33  contained in Public Law Number 99-198.  Contiguous acreage on 
  9.34  the same parcel, or contiguous acreage on an immediately 
  9.35  adjacent parcel under the same ownership, may also qualify as 
  9.36  agricultural land, but only if it is pasture, timber, waste, 
 10.1   unusable wild land, or land included in state or federal farm 
 10.2   programs.  Agricultural classification for property shall be 
 10.3   determined excluding the house, garage, and immediately 
 10.4   surrounding one acre of land, and shall not be based upon the 
 10.5   market value of any residential structures on the parcel or 
 10.6   contiguous parcels under the same ownership. 
 10.7      (d) Real estate, excluding the house, garage, and 
 10.8   immediately surrounding one acre of land, of less than ten acres 
 10.9   which is exclusively and intensively used for raising or 
 10.10  cultivating agricultural products, shall be considered as 
 10.11  agricultural land.  
 10.12     Land shall be classified as agricultural even if all or a 
 10.13  portion of the agricultural use of that property is the leasing 
 10.14  to, or use by another person for agricultural purposes. 
 10.15     Classification under this subdivision is not determinative 
 10.16  for qualifying under section 273.111. 
 10.17     The property classification under this section supersedes, 
 10.18  for property tax purposes only, any locally administered 
 10.19  agricultural policies or land use restrictions that define 
 10.20  minimum or maximum farm acreage. 
 10.21     (e) The term "agricultural products" as used in this 
 10.22  subdivision includes production for sale of:  
 10.23     (1) livestock, dairy animals, dairy products, poultry and 
 10.24  poultry products, fur-bearing animals, horticultural and nursery 
 10.25  stock described in sections 18.44 to 18.61, fruit of all kinds, 
 10.26  vegetables, forage, grains, bees, and apiary products by the 
 10.27  owner; 
 10.28     (2) fish bred for sale and consumption if the fish breeding 
 10.29  occurs on land zoned for agricultural use; 
 10.30     (3) the commercial boarding of horses if the boarding is 
 10.31  done in conjunction with raising or cultivating agricultural 
 10.32  products as defined in clause (1); 
 10.33     (4) property which is owned and operated by nonprofit 
 10.34  organizations used for equestrian activities, excluding racing; 
 10.35  and 
 10.36     (5) game birds and waterfowl bred and raised for use on a 
 11.1   shooting preserve licensed under section 97A.115.  
 11.2      (f) If a parcel used for agricultural purposes is also used 
 11.3   for commercial or industrial purposes, including but not limited 
 11.4   to:  
 11.5      (1) wholesale and retail sales; 
 11.6      (2) processing of raw agricultural products or other goods; 
 11.7      (3) warehousing or storage of processed goods; and 
 11.8      (4) office facilities for the support of the activities 
 11.9   enumerated in clauses (1), (2), and (3), 
 11.10  the assessor shall classify the part of the parcel used for 
 11.11  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 11.12  appropriate, and the remainder in the class appropriate to its 
 11.13  use.  The grading, sorting, and packaging of raw agricultural 
 11.14  products for first sale is considered an agricultural purpose.  
 11.15  A greenhouse or other building where horticultural or nursery 
 11.16  products are grown that is also used for the conduct of retail 
 11.17  sales must be classified as agricultural if it is primarily used 
 11.18  for the growing of horticultural or nursery products from seed, 
 11.19  cuttings, or roots and occasionally as a showroom for the retail 
 11.20  sale of those products.  Use of a greenhouse or building only 
 11.21  for the display of already grown horticultural or nursery 
 11.22  products does not qualify as an agricultural purpose.  
 11.23     The assessor shall determine and list separately on the 
 11.24  records the market value of the homestead dwelling and the one 
 11.25  acre of land on which that dwelling is located.  If any farm 
 11.26  buildings or structures are located on this homesteaded acre of 
 11.27  land, their market value shall not be included in this separate 
 11.28  determination.  
 11.29     (g) To qualify for classification under paragraph (b), 
 11.30  clause (4), a privately owned public use airport must be 
 11.31  licensed as a public airport under section 360.018.  For 
 11.32  purposes of paragraph (b), clause (4), "landing area" means that 
 11.33  part of a privately owned public use airport properly cleared, 
 11.34  regularly maintained, and made available to the public for use 
 11.35  by aircraft and includes runways, taxiways, aprons, and sites 
 11.36  upon which are situated landing or navigational aids.  A landing 
 12.1   area also includes land underlying both the primary surface and 
 12.2   the approach surfaces that comply with all of the following:  
 12.3      (i) the land is properly cleared and regularly maintained 
 12.4   for the primary purposes of the landing, taking off, and taxiing 
 12.5   of aircraft; but that portion of the land that contains 
 12.6   facilities for servicing, repair, or maintenance of aircraft is 
 12.7   not included as a landing area; 
 12.8      (ii) the land is part of the airport property; and 
 12.9      (iii) the land is not used for commercial or residential 
 12.10  purposes. 
 12.11  The land contained in a landing area under paragraph (b), clause 
 12.12  (4), must be described and certified by the commissioner of 
 12.13  transportation.  The certification is effective until it is 
 12.14  modified, or until the airport or landing area no longer meets 
 12.15  the requirements of paragraph (b), clause (4).  For purposes of 
 12.16  paragraph (b), clause (4), "public access area" means property 
 12.17  used as an aircraft parking ramp, apron, or storage hangar, or 
 12.18  an arrival and departure building in connection with the airport.
 12.19     Sec. 6.  Minnesota Statutes 1997 Supplement, section 
 12.20  273.13, subdivision 24, is amended to read: 
 12.21     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 12.22  property and utility real and personal property, except class 5 
 12.23  property as identified in subdivision 31, clause (1), is class 
 12.24  3a.  Each parcel has a class rate of 2.7 2.6 percent for taxes 
 12.25  payable in 1999 and 2.5 percent for taxes payable in 2000 and 
 12.26  thereafter of the first tier of market value, and 4.0 3.65 
 12.27  percent for taxes payable in 1999 and 3.5 percent for taxes 
 12.28  payable in 2000 and thereafter of the remaining market value, 
 12.29  except that in the case of contiguous parcels of commercial and 
 12.30  industrial property owned by the same person or entity, only the 
 12.31  value equal to the first-tier value of the contiguous parcels 
 12.32  qualifies for the reduced class rate.  For the purposes of this 
 12.33  subdivision, the first tier means the first $150,000 of market 
 12.34  value.  In the case of utility property owned by one person or 
 12.35  entity, only one parcel in each county has a reduced class rate 
 12.36  on the first tier of market value. 
 13.1      For purposes of this paragraph, parcels are considered to 
 13.2   be contiguous even if they are separated from each other by a 
 13.3   road, street, vacant lot, waterway, or other similar intervening 
 13.4   type of property. 
 13.5      (b) Employment property defined in section 469.166, during 
 13.6   the period provided in section 469.170, shall constitute class 
 13.7   3b and has a class rate of 2.3 percent of the first $50,000 of 
 13.8   market value and 3.6 percent for taxes payable in 1999 and 3.5 
 13.9   percent for taxes payable in 2000 and thereafter of the 
 13.10  remainder, except that for employment property located in a 
 13.11  border city enterprise zone designated pursuant to section 
 13.12  469.168, subdivision 4, paragraph (c), the class rate of the 
 13.13  first tier of market value and the class rate of the remainder 
 13.14  is determined under paragraph (a), unless the governing body of 
 13.15  the city designated as an enterprise zone determines that a 
 13.16  specific parcel shall be assessed pursuant to the first clause 
 13.17  of this sentence.  The governing body may provide for assessment 
 13.18  under the first clause of the preceding sentence only for 
 13.19  property which is located in an area which has been designated 
 13.20  by the governing body for the receipt of tax reductions 
 13.21  authorized by section 469.171, subdivision 1. 
 13.22     (c) Structures which are (i) located on property classified 
 13.23  as class 3a, (ii) constructed under an initial building permit 
 13.24  issued after January 2, 1996, (iii) located in a transit zone as 
 13.25  defined under section 473.3915, subdivision 3, (iv) located 
 13.26  within the boundaries of a school district, and (v) not 
 13.27  primarily used for retail or transient lodging purposes, shall 
 13.28  have a class rate equal to 85 percent of the class rate of the 
 13.29  second tier of the commercial property rate under paragraph (a) 
 13.30  on any portion of the market value that does not qualify for the 
 13.31  first tier class rate under paragraph (a).  As used in item (v), 
 13.32  a structure is primarily used for retail or transient lodging 
 13.33  purposes if over 50 percent of its square footage is used for 
 13.34  those purposes.  The four percent rate A class rate equal to 85 
 13.35  percent of the class rate of the second tier of the commercial 
 13.36  property rate under paragraph (a) shall also apply to 
 14.1   improvements to existing structures that meet the requirements 
 14.2   of items (i) to (v) if the improvements are constructed under an 
 14.3   initial building permit issued after January 2, 1996, even if 
 14.4   the remainder of the structure was constructed prior to January 
 14.5   2, 1996.  For the purposes of this paragraph, a structure shall 
 14.6   be considered to be located in a transit zone if any portion of 
 14.7   the structure lies within the zone.  If any property once 
 14.8   eligible for treatment under this paragraph ceases to remain 
 14.9   eligible due to revisions in transit zone boundaries, the 
 14.10  property shall continue to receive treatment under this 
 14.11  paragraph for a period of three years. 
 14.12     Sec. 7.  Minnesota Statutes 1997 Supplement, section 
 14.13  273.13, subdivision 25, as amended by Laws 1997, Third Special 
 14.14  Session chapter 3, section 28, is amended to read: 
 14.15     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 14.16  estate containing four or more units and used or held for use by 
 14.17  the owner or by the tenants or lessees of the owner as a 
 14.18  residence for rental periods of 30 days or more.  Class 4a also 
 14.19  includes hospitals licensed under sections 144.50 to 144.56, 
 14.20  other than hospitals exempt under section 272.02, and contiguous 
 14.21  property used for hospital purposes, without regard to whether 
 14.22  the property has been platted or subdivided.  Class 4a property 
 14.23  in a city with a population of 5,000 or less, that is (1) 
 14.24  located outside of the metropolitan area, as defined in section 
 14.25  473.121, subdivision 2, or outside any county contiguous to the 
 14.26  metropolitan area, and (2) whose city boundary is at least 15 
 14.27  miles from the boundary of any city with a population greater 
 14.28  than 5,000 has a class rate of 2.3 2.25 percent of market value 
 14.29  for taxes payable in 1999 and 2.15 percent of market value for 
 14.30  taxes payable in 2000 and thereafter.  All other class 4a 
 14.31  property has a class rate of 2.9 2.65 percent of market 
 14.32  value for taxes payable in 1999 and 2.5 percent of market value 
 14.33  for taxes payable in 2000 and thereafter.  For purposes of this 
 14.34  paragraph, population has the same meaning given in section 
 14.35  477A.011, subdivision 3. 
 14.36     (b) Class 4b includes: 
 15.1      (1) residential real estate containing less than four units 
 15.2   that does not qualify as class 4bb, other than seasonal 
 15.3   residential, and recreational; 
 15.4      (2) manufactured homes not classified under any other 
 15.5   provision; 
 15.6      (3) a dwelling, garage, and surrounding one acre of 
 15.7   property on a nonhomestead farm classified under subdivision 23, 
 15.8   paragraph (b) containing two or three units; 
 15.9      (4) unimproved property that is classified residential as 
 15.10  determined under section 273.13, subdivision 33.  
 15.11     Class 4b property has a class rate of 2.1 1.8 percent of 
 15.12  market value.  
 15.13     (c) Class 4bb includes: 
 15.14     (1) nonhomestead residential real estate containing one 
 15.15  unit, other than seasonal residential, and recreational; and 
 15.16     (2) a single family dwelling, garage, and surrounding one 
 15.17  acre of property on a nonhomestead farm classified under 
 15.18  subdivision 23, paragraph (b). 
 15.19     Class 4bb has a class rate of 1.9 1.5 percent for taxes 
 15.20  payable in 1999 and 1.25 percent for taxes payable in 2000 and 
 15.21  thereafter on the first $75,000 of market value and a class rate 
 15.22  of 2.1 1.75 percent for taxes payable in 1999 and 1.7 percent 
 15.23  for taxes payable in 2000 and thereafter of its market value 
 15.24  that exceeds $75,000. 
 15.25     Property that has been classified as seasonal recreational 
 15.26  residential property at any time during which it has been owned 
 15.27  by the current owner or spouse of the current owner does not 
 15.28  qualify for class 4bb. 
 15.29     (d) Class 4c property includes: 
 15.30     (1) except as provided in subdivision 22, 
 15.31  paragraph (c) (b), real property devoted to temporary and 
 15.32  seasonal residential occupancy for recreation purposes, 
 15.33  including real property devoted to temporary and seasonal 
 15.34  residential occupancy for recreation purposes and not devoted to 
 15.35  commercial purposes for more than 250 days in the year preceding 
 15.36  the year of assessment.  For purposes of this clause, property 
 16.1   is devoted to a commercial purpose on a specific day if any 
 16.2   portion of the property is used for residential occupancy, and a 
 16.3   fee is charged for residential occupancy.  In order for a 
 16.4   property to be classified as class 4c, seasonal recreational 
 16.5   residential for commercial purposes, at least 40 percent of the 
 16.6   annual gross lodging receipts related to the property must be 
 16.7   from business conducted between Memorial Day weekend and Labor 
 16.8   Day weekend and at least 60 percent of all bookings by lodging 
 16.9   guests during the year must be for periods of at least two 
 16.10  consecutive nights.  Class 4c also includes commercial use real 
 16.11  property used exclusively for recreational purposes in 
 16.12  conjunction with class 4c property devoted to temporary and 
 16.13  seasonal residential occupancy for recreational purposes, up to 
 16.14  a total of two acres, provided the property is not devoted to 
 16.15  commercial recreational use for more than 250 days in the year 
 16.16  preceding the year of assessment and is located within two miles 
 16.17  of the class 4c property with which it is used.  Class 4c 
 16.18  property classified in this clause also includes the remainder 
 16.19  of class 1c 1b resorts.  Owners of real property devoted to 
 16.20  temporary and seasonal residential occupancy for recreation 
 16.21  purposes and all or a portion of which was devoted to commercial 
 16.22  purposes for not more than 250 days in the year preceding the 
 16.23  year of assessment desiring classification as class 1c 1b or 4c, 
 16.24  must submit a declaration to the assessor designating the cabins 
 16.25  or units occupied for 250 days or less in the year preceding the 
 16.26  year of assessment by January 15 of the assessment year.  Those 
 16.27  cabins or units and a proportionate share of the land on which 
 16.28  they are located will be designated class 1c 1b or 4c as 
 16.29  otherwise provided.  The remainder of the cabins or units and a 
 16.30  proportionate share of the land on which they are located will 
 16.31  be designated as class 3a.  The owner of property desiring 
 16.32  designation as class 1c 1b or 4c property must provide guest 
 16.33  registers or other records demonstrating that the units for 
 16.34  which class 1c 1b or 4c designation is sought were not occupied 
 16.35  for more than 250 days in the year preceding the assessment if 
 16.36  so requested.  The portion of a property operated as a (1) 
 17.1   restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
 17.2   facility operated on a commercial basis not directly related to 
 17.3   temporary and seasonal residential occupancy for recreation 
 17.4   purposes shall not qualify for class 1c 1b or 4c; 
 17.5      (2) qualified property used as a golf course if: 
 17.6      (i) any portion of the property is located within a county 
 17.7   that has a population of less than 50,000, or within a county 
 17.8   containing a golf course owned by a municipality, the county, or 
 17.9   a special taxing district; 
 17.10     (ii) it is open to the public on a daily fee basis.  It may 
 17.11  charge membership fees or dues, but a membership fee may not be 
 17.12  required in order to use the property for golfing, and its green 
 17.13  fees for golfing must be comparable to green fees typically 
 17.14  charged by municipal courses; and 
 17.15     (iii) it meets the requirements of section 273.112, 
 17.16  subdivision 3, paragraph (d). 
 17.17     A structure used as a clubhouse, restaurant, or place of 
 17.18  refreshment in conjunction with the golf course is classified as 
 17.19  class 3a property. 
 17.20     (3) real property up to a maximum of one acre of land owned 
 17.21  by a nonprofit community service oriented organization; provided 
 17.22  that the property is not used for a revenue-producing activity 
 17.23  for more than six days in the calendar year preceding the year 
 17.24  of assessment and the property is not used for residential 
 17.25  purposes on either a temporary or permanent basis.  For purposes 
 17.26  of this clause, a "nonprofit community service oriented 
 17.27  organization" means any corporation, society, association, 
 17.28  foundation, or institution organized and operated exclusively 
 17.29  for charitable, religious, fraternal, civic, or educational 
 17.30  purposes, and which is exempt from federal income taxation 
 17.31  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 17.32  Revenue Code of 1986, as amended through December 31, 1990.  For 
 17.33  purposes of this clause, "revenue-producing activities" shall 
 17.34  include but not be limited to property or that portion of the 
 17.35  property that is used as an on-sale intoxicating liquor or 3.2 
 17.36  percent malt liquor establishment licensed under chapter 340A, a 
 18.1   restaurant open to the public, bowling alley, a retail store, 
 18.2   gambling conducted by organizations licensed under chapter 349, 
 18.3   an insurance business, or office or other space leased or rented 
 18.4   to a lessee who conducts a for-profit enterprise on the 
 18.5   premises.  Any portion of the property which is used for 
 18.6   revenue-producing activities for more than six days in the 
 18.7   calendar year preceding the year of assessment shall be assessed 
 18.8   as class 3a.  The use of the property for social events open 
 18.9   exclusively to members and their guests for periods of less than 
 18.10  24 hours, when an admission is not charged nor any revenues are 
 18.11  received by the organization shall not be considered a 
 18.12  revenue-producing activity; 
 18.13     (4) post-secondary student housing of not more than one 
 18.14  acre of land that is owned by a nonprofit corporation organized 
 18.15  under chapter 317A and is used exclusively by a student 
 18.16  cooperative, sorority, or fraternity for on-campus housing or 
 18.17  housing located within two miles of the border of a college 
 18.18  campus; and 
 18.19     (5) manufactured home parks as defined in section 327.14, 
 18.20  subdivision 3. 
 18.21     Class 4c property has a class rate of 2.1 percent on the 
 18.22  first $150,000 of market value and the market value of class 4c 
 18.23  property that exceeds $150,000 has a class rate of 2.2 percent 
 18.24  for taxes payable in 1999 and 2.3 percent for taxes payable in 
 18.25  2000 and thereafter, except that (i) for each parcel of seasonal 
 18.26  residential recreational property not used for commercial 
 18.27  purposes the first $75,000 of market value has a class rate 
 18.28  of 1.4 1.35 percent for taxes payable in 1999 and 1.3 percent 
 18.29  for taxes payable in 2000 and thereafter, and the market value 
 18.30  that exceeds $75,000 has a class rate of 2.5 2.4 percent for 
 18.31  taxes payable in 1999 and 2.3 percent for taxes payable in 2000 
 18.32  and thereafter, and (ii) manufactured home parks assessed under 
 18.33  clause (5) have a class rate of two percent.  
 18.34     (e) Class 4d property is qualifying low-income rental 
 18.35  housing certified to the assessor by the housing finance agency 
 18.36  under sections 273.126 and 462A.071.  Class 4d includes land in 
 19.1   proportion to the total market value of the building that is 
 19.2   qualifying low-income rental housing.  For all properties 
 19.3   qualifying as class 4d, the market value determined by the 
 19.4   assessor must be based on the normal approach to value using 
 19.5   normal unrestricted rents. 
 19.6      Class 4d property has a class rate of one percent of market 
 19.7   value.  
 19.8      (f) Class 4e property consists of the residential portion 
 19.9   of any structure located within a city that was converted from 
 19.10  nonresidential use to residential use, provided that: 
 19.11     (1) the structure had formerly been used as a warehouse; 
 19.12     (2) the structure was originally constructed prior to 1940; 
 19.13     (3) the conversion was done after December 31, 1995, but 
 19.14  before January 1, 2003; and 
 19.15     (4) the conversion involved an investment of at least 
 19.16  $25,000 per residential unit. 
 19.17     Class 4e property has a class rate of 2.3 percent, provided 
 19.18  that a structure is eligible for class 4e classification only in 
 19.19  the 12 assessment years immediately following the conversion. 
 19.20     Sec. 8.  Minnesota Statutes 1997 Supplement, section 
 19.21  273.13, subdivision 31, is amended to read: 
 19.22     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 19.23     (1) tools, implements, and machinery of an electric 
 19.24  generating, transmission, or distribution system or a pipeline 
 19.25  system transporting or distributing water, gas, crude oil, or 
 19.26  petroleum products or mains and pipes used in the distribution 
 19.27  of steam or hot or chilled water for heating or cooling 
 19.28  buildings, which are fixtures; 
 19.29     (2) unmined iron ore and low-grade iron-bearing formations 
 19.30  as defined in section 273.14; and 
 19.31     (3) all other property not otherwise classified. 
 19.32     Class 5 property has a class rate of 4.0 3.65 percent of 
 19.33  market value for taxes payable in 1998 1999 and 3.5 percent of 
 19.34  market value for taxes payable in 2000 and thereafter. 
 19.35     Sec. 9.  Minnesota Statutes 1997 Supplement, section 
 19.36  273.13, subdivision 32, is amended to read: 
 20.1      Subd. 32.  [TARGET CLASS RATES.] (a) All classes of 
 20.2   property with a class rate of 4 four percent for taxes payable 
 20.3   in 1998 have a target class rate of 3.5 three percent.  Class 4a 
 20.4   shall have a target class rate of 2.5 two percent.  Class 4bb 
 20.5   has a target class rate of 1.25 one percent of the first $75,000 
 20.6   of market value and a target class rate of 1.85 1.5 percent of 
 20.7   the market value in excess of $75,000. 
 20.8      (b) By the fourth Tuesday in January of 1998 and at the 
 20.9   time of submission of the biennial budget under section 16A.11 
 20.10  in each biennium thereafter, the governor must recommend the 
 20.11  class rate schedule for all properties for taxes payable in 1999 
 20.12  for the schedule submitted in 1998 and for the following two 
 20.13  calendar years in each biennium thereafter.  The class rate 
 20.14  schedule must include reductions in the class rates of the 
 20.15  classes designated in paragraph (a) until such time as the 
 20.16  target class rates are reached unless the governor recommends no 
 20.17  change in the class rate schedule for all properties.  As part 
 20.18  of the recommendation, the governor shall recommend 
 20.19  appropriation of monies from the property tax reform account 
 20.20  under section 16A.1521 and include within the budget additional 
 20.21  funding for the education homestead credit, the property tax 
 20.22  refund under chapter 290A and education aids under chapters 124 
 20.23  and 124A to the extent those aids will be used to reduce 
 20.24  property tax levies.  The governor may propose alternative 
 20.25  programs to prevent the taxes of classes other than those 
 20.26  designated in paragraph (a) from increasing as a result of the 
 20.27  governor's recommended class rate schedule. 
 20.28     Sec. 10.  Minnesota Statutes 1997 Supplement, section 
 20.29  273.1382, subdivision 1, is amended to read: 
 20.30     Subdivision 1.  [EDUCATION HOMESTEAD CREDIT.] Each year, 
 20.31  beginning with property taxes payable in 1998, the respective 
 20.32  county auditors shall determine the initial tax rate for each 
 20.33  school district for the general education levy certified under 
 20.34  section 124A.23, subdivision 2 or 3.  That rate plus the school 
 20.35  district's education homestead credit tax rate adjustment under 
 20.36  section 275.08, subdivision 1e, shall be the general education 
 21.1   homestead credit local tax rate for the district.  The auditor 
 21.2   shall then determine a general education homestead credit for 
 21.3   each homestead within the county equal to 32 45 percent for 
 21.4   taxes payable in 1999 and 52 percent for taxes payable in 2000 
 21.5   and thereafter of the general education homestead credit local 
 21.6   tax rate times the net tax capacity of the homestead for the 
 21.7   taxes payable year.  The amount of general education homestead 
 21.8   credit for a homestead may not exceed $225 $270 for taxes 
 21.9   payable in 1999 and $290 for taxes payable in 2000 and 
 21.10  thereafter.  In the case of an agricultural homestead, only the 
 21.11  net tax capacity of the house, garage, and surrounding one acre 
 21.12  of land shall be used in determining the property's education 
 21.13  homestead credit. 
 21.14     Sec. 11.  Minnesota Statutes 1996, section 273.1398, 
 21.15  subdivision 2, is amended to read: 
 21.16     Subd. 2.  [HOMESTEAD AND AGRICULTURAL CREDIT AID.] 
 21.17  Homestead and agricultural credit aid for each unique taxing 
 21.18  jurisdiction equals the product of (1) the homestead and 
 21.19  agricultural credit aid base, and (2) the growth adjustment 
 21.20  factor, plus the net tax capacity adjustment and the fiscal 
 21.21  disparity adjustment.  Beginning with homestead and agricultural 
 21.22  credit aid payable in 2000, each county that receives an amount 
 21.23  in calendar year 2000 under section 477A.0122 as a result of the 
 21.24  appropriation in section 477A.03, subdivision 2, paragraph (c), 
 21.25  clause (3), shall have its homestead and agricultural credit aid 
 21.26  permanently reduced by an equal amount. 
 21.27     Sec. 12.  Minnesota Statutes 1997 Supplement, section 
 21.28  275.71, subdivision 2, is amended to read: 
 21.29     Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
 21.30  local governmental unit for taxes levied in 1997 shall be equal 
 21.31  to the sum of: 
 21.32     (1) the amount the local governmental unit levied in 1996, 
 21.33  less any amount levied for debt, as reported to the department 
 21.34  of revenue under section 275.62, subdivision 1, clause (1), and 
 21.35  less any tax levied in 1996 against market value as provided for 
 21.36  in section 275.61; 
 22.1      (2) the amount of aids the local governmental unit was 
 22.2   certified to receive in calendar year 1997 under sections 
 22.3   477A.011 to 477A.03 before any reductions for state tax 
 22.4   increment financing aid under section 273.1399, subdivision 5; 
 22.5      (3) the amount of homestead and agricultural credit aid the 
 22.6   local governmental unit was certified to receive under section 
 22.7   273.1398 in calendar year 1997 before any reductions for tax 
 22.8   increment financing aid under section 273.1399, subdivision 5; 
 22.9      (4) the amount of local performance aid the local 
 22.10  governmental unit was certified to receive in calendar year 1997 
 22.11  under section 477A.05; and 
 22.12     (5) the amount of any payments certified to the local 
 22.13  government unit in 1997 under sections 298.28 and 298.282. 
 22.14     If a governmental unit was not required to report under 
 22.15  section 275.62 for taxes levied in 1997, the commissioner shall 
 22.16  request information on levies used for debt from the local 
 22.17  governmental unit and adjust its levy limit base accordingly. 
 22.18     (b) The levy limit base for a local governmental unit for 
 22.19  taxes levied in 1998 and 1999 is limited to its adjusted levy 
 22.20  limit base in the previous year, subject to any adjustments 
 22.21  under section 275.72. 
 22.22     Sec. 13.  Minnesota Statutes 1997 Supplement, section 
 22.23  275.71, subdivision 3, is amended to read: 
 22.24     Subd. 3.  [ADJUSTED LEVY LIMIT BASE.] For taxes levied in 
 22.25  1997 and, 1998, and 1999, the adjusted levy limit is equal to 
 22.26  the levy limit base computed under subdivision 2 or section 
 22.27  275.72, multiplied by: 
 22.28     (1) one plus a percentage equal to the percentage growth in 
 22.29  the implicit price deflator; and 
 22.30     (2) for all cities and for counties outside of the 
 22.31  seven-county metropolitan area, one plus a percentage equal to 
 22.32  the percentage increase in number of households, if any, for the 
 22.33  most recent 12-month period for which data is available; and 
 22.34     (3) for counties located in the seven-county metropolitan 
 22.35  area, one plus a percentage equal to the greater of the 
 22.36  percentage increase in the number of households in the county or 
 23.1   the percentage increase in the number of households in the 
 23.2   entire seven-county metropolitan area for the most recent 
 23.3   12-month period for which data is available. 
 23.4      Sec. 14.  Minnesota Statutes 1997 Supplement, section 
 23.5   275.71, subdivision 4, is amended to read: 
 23.6      Subd. 4.  [PROPERTY TAX LEVY LIMIT.] For taxes levied in 
 23.7   1997 and, 1998, and 1999, the property tax levy limit for a 
 23.8   local governmental unit is equal to its adjusted levy limit base 
 23.9   determined under subdivision 3 plus any additional levy 
 23.10  authorized under section 275.73, which is levied against net tax 
 23.11  capacity, reduced by the sum of (1) the total amount of aids 
 23.12  that the local governmental unit is certified to receive under 
 23.13  sections 477A.011 to 477A.014, (2) homestead and agricultural 
 23.14  aids it is certified to receive under section 273.1398, (3) 
 23.15  local performance aid it is certified to receive under section 
 23.16  477A.05, and (4) taconite aids under sections 298.28 and 298.282 
 23.17  including any aid which was required to be placed in a special 
 23.18  fund for expenditure in the next succeeding year. 
 23.19     Sec. 15.  Minnesota Statutes 1996, section 477A.0122, 
 23.20  subdivision 6, is amended to read: 
 23.21     Subd. 6.  [REPORT.] On or before March 15 of the year 
 23.22  following the year in which the distributions under this section 
 23.23  are received, each county shall file with the commissioner of 
 23.24  revenue and commissioner of human services a report on prior 
 23.25  year expenditures for out-of-home placement and family 
 23.26  preservation, including expenditures under this section.  For 
 23.27  the human services programs specified in this section, the 
 23.28  commissioner of revenue and commissioner of human services, in 
 23.29  consultation with representatives of county governments, shall 
 23.30  make a recommendation to the 1999 legislature as to which 
 23.31  current reporting requirements imposed on county governments, if 
 23.32  any, may be eliminated, replaced, or consolidated on the report 
 23.33  established by this section.  For aid payable in calendar year 
 23.34  2000 and thereafter, each county shall provide information on 
 23.35  the amount of state aid, local property tax revenue, and federal 
 23.36  aid expended by that county on the programs specified in this 
 24.1   section using the consolidated financial report recommended by 
 24.2   the commissioner of revenue and commissioner of human services 
 24.3   under this subdivision. 
 24.4      Sec. 16.  Minnesota Statutes 1996, section 477A.03, 
 24.5   subdivision 2, is amended to read: 
 24.6      Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 24.7   discharge the duties imposed by sections 477A.011 to 477A.014 is 
 24.8   annually appropriated from the general fund to the commissioner 
 24.9   of revenue.  For aids payable in 1996 and thereafter, the total 
 24.10  aids paid under sections section 477A.013, subdivision 9, and 
 24.11  477A.0122 are the amounts certified to be paid in the previous 
 24.12  year, adjusted for inflation as provided under subdivision 
 24.13  3.  Aid payments to counties under section 477A.0121 are limited 
 24.14  to $20,265,000 in 1996.  Aid payments to counties under section 
 24.15  477A.0121 are limited to $27,571,625 in 1997.  
 24.16     (b) For aid payable in 1998 and thereafter, the total aids 
 24.17  paid under section 477A.0121 are the amounts certified to be 
 24.18  paid in the previous year, adjusted for inflation as provided 
 24.19  under subdivision 3. 
 24.20     (c) For aid payable in 2000, the total aid payments under 
 24.21  section 477A.0122 are the sum of:  
 24.22     (1) the amounts certified to be paid in the previous year, 
 24.23  adjusted for inflation as provided in subdivision 3; plus 
 24.24     (2) $20,000,000; plus 
 24.25     (3) $10,000,000.  
 24.26     For aid payable in 2001 and thereafter, the total aid 
 24.27  payments under section 477A.0122 are the amounts certified to be 
 24.28  paid in the previous year, adjusted for inflation as provided in 
 24.29  subdivision 3. 
 24.30     Sec. 17.  Laws 1997, chapter 231, article 3, section 9, is 
 24.31  amended to read: 
 24.32     Sec. 9.  [EFFECTIVE DATE.] 
 24.33     Sections 1 to 7 are effective for taxes levied in 1997 and, 
 24.34  1998, and 1999, payable in 1998 and, 1999, and 2000. 
 24.35     Upon compliance with Minnesota Statutes, section 645.021, 
 24.36  subdivision 3, by the governing body of Faribault county or the 
 25.1   city of Blue Earth, section 8 is effective for taxes levied in 
 25.2   1997 and, 1998, and 1999 in the county or city that approves it. 
 25.3      Sec. 18.  [FORECAST OF GENERAL FUND BALANCE; SUSPENSION.] 
 25.4      Implementation of the property tax changes for taxes 
 25.5   payable in 2000 in this act shall be dependent upon general fund 
 25.6   balances forecast in November 1998.  If, based on the November 
 25.7   1998 forecast, a negative unrestricted general fund balance is 
 25.8   projected for the biennium ending June 30, 1999, which would 
 25.9   reduce the general fund budget reserve below five percent of 
 25.10  estimated fiscal year 1999 expenditures, then: 
 25.11     (i) the provisions in any section of this article which 
 25.12  provide for an appropriation or an increase in education 
 25.13  homestead credit that would first become effective for taxes or 
 25.14  aids payable in 2000; and 
 25.15     (ii) any provision of this article which provides for a 
 25.16  class rate that would first become effective for taxes payable 
 25.17  in 2000 for a specific class of property, 
 25.18  shall be suspended for one year, and the provision shall first 
 25.19  become effective for taxes payable in 2001.  The commissioner of 
 25.20  finance shall certify to the commissioner of revenue by January 
 25.21  31, 1999, the effect of this section. 
 25.22     Sec. 19.  [APPROPRIATIONS.] 
 25.23     (a) [SHIFT RECOGNITION APPROPRIATION.] In addition to any 
 25.24  amounts appropriated by other law, $3,900,000 is appropriated to 
 25.25  the commissioner of children, families, and learning in fiscal 
 25.26  year 1999 to fund early recognition of education aid. 
 25.27     (b) [EDUCATION LEVY REDUCTION APPROPRIATION.] In addition 
 25.28  to any amount appropriated by other law, $55,000,000 is 
 25.29  appropriated to the commissioner of children, families, and 
 25.30  learning in fiscal year 2000 and thereafter to fund a reduction 
 25.31  in the statewide general education property tax levy. 
 25.32     Sec. 20.  [INSTRUCTION TO REVISOR.] 
 25.33     In the next edition of the Minnesota Statutes, the revisor 
 25.34  of statutes shall correct references to class 1b, class 1c, and 
 25.35  class 4e properties so that the statutes properly reflect the 
 25.36  changes made to Minnesota Statutes, section 273.13, by this 
 26.1   article. 
 26.2      Sec. 21.  [REPEALER.] 
 26.3      Minnesota Statutes 1996, sections 273.11, subdivisions 6a 
 26.4   and 15; 273.124, subdivision 17; and 273.1315, are repealed. 
 26.5      Sec. 22.  [EFFECTIVE DATE.] 
 26.6      Sections 1 to 10, and 21 are effective for taxes payable in 
 26.7   1999 and thereafter.  Sections 11 and 16 are effective for aid 
 26.8   payable in 2000 and thereafter.  Sections 12 to 14 and 17 to 20 
 26.9   are effective the day following final enactment. 
 26.10                             ARTICLE 3 
 26.11                       SALES AND EXCISE TAXES 
 26.12     Section 1.  Minnesota Statutes 1997 Supplement, section 
 26.13  297A.44, subdivision 1, as amended by Laws 1997, Third Special 
 26.14  Session chapter 3, section 24, is amended to read: 
 26.15     Subdivision 1.  (a) Except as provided in paragraphs (b) to 
 26.16  (d) (e), all revenues, including interest and penalties, derived 
 26.17  from the excise and use taxes imposed by sections 297A.01 to 
 26.18  297A.44 shall be deposited by the commissioner in the state 
 26.19  treasury and credited to the general fund.  
 26.20     (b) All excise and use taxes derived from sales and use of 
 26.21  property and services purchased for the construction and 
 26.22  operation of an agricultural resource project, from and after 
 26.23  the date on which a conditional commitment for a loan guaranty 
 26.24  for the project is made pursuant to section 41A.04, subdivision 
 26.25  3, shall be deposited in the Minnesota agricultural and economic 
 26.26  account in the special revenue fund.  The commissioner of 
 26.27  finance shall certify to the commissioner the date on which the 
 26.28  project received the conditional commitment.  The amount 
 26.29  deposited in the loan guaranty account shall be reduced by any 
 26.30  refunds and by the costs incurred by the department of revenue 
 26.31  to administer and enforce the assessment and collection of the 
 26.32  taxes.  
 26.33     (c) All revenues, including interest and penalties, derived 
 26.34  from the excise and use taxes imposed on sales and purchases 
 26.35  included in section 297A.01, subdivision 3, paragraphs (d) and 
 26.36  (k), clauses (1) and (2), must be deposited by the commissioner 
 27.1   in the state treasury, and credited as follows: 
 27.2      (1) first to the general obligation special tax bond debt 
 27.3   service account in each fiscal year the amount required by 
 27.4   section 16A.661, subdivision 3, paragraph (b); and 
 27.5      (2) after the requirements of clause (1) have been met, the 
 27.6   balance must be credited to the general fund. 
 27.7      (d) The revenues, including interest and penalties, 
 27.8   collected under section 297A.135, subdivision 5, shall be 
 27.9   deposited by the commissioner in the state treasury and credited 
 27.10  to the general fund.  By July 15 of each year the commissioner 
 27.11  shall transfer to the highway user tax distribution fund an 
 27.12  amount equal to the excess fees collected under section 
 27.13  297A.135, subdivision 5, for the previous calendar year. 
 27.14     (e) All revenues derived from the sales tax on the sale of 
 27.15  admission tickets to athletic events sponsored by the University 
 27.16  of Minnesota shall be credited to the University of Minnesota. 
 27.17     Sec. 2.  [EFFECTIVE DATE.] 
 27.18     Section 1 is effective for sales and purchases occurring 
 27.19  after June 30, 1998. 
 27.20                             ARTICLE 4 
 27.21                            INCOME TAXES 
 27.22     Section 1.  Minnesota Statutes 1997 Supplement, section 
 27.23  290.01, subdivision 19b, is amended to read: 
 27.24     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 27.25  individuals, estates, and trusts, there shall be subtracted from 
 27.26  federal taxable income: 
 27.27     (1) interest income on obligations of any authority, 
 27.28  commission, or instrumentality of the United States to the 
 27.29  extent includable in taxable income for federal income tax 
 27.30  purposes but exempt from state income tax under the laws of the 
 27.31  United States; 
 27.32     (2) if included in federal taxable income, the amount of 
 27.33  any overpayment of income tax to Minnesota or to any other 
 27.34  state, for any previous taxable year, whether the amount is 
 27.35  received as a refund or as a credit to another taxable year's 
 27.36  income tax liability; 
 28.1      (3) the amount paid to others, less the credit allowed 
 28.2   under section 290.0674, not to exceed $1,625 for each dependent 
 28.3   in grades kindergarten to 6 and $2,500 for each dependent in 
 28.4   grades 7 to 12, for tuition, textbooks, and transportation of 
 28.5   each dependent in attending an elementary or secondary school 
 28.6   situated in Minnesota, North Dakota, South Dakota, Iowa, or 
 28.7   Wisconsin, wherein a resident of this state may legally fulfill 
 28.8   the state's compulsory attendance laws, which is not operated 
 28.9   for profit, and which adheres to the provisions of the Civil 
 28.10  Rights Act of 1964 and chapter 363.  For the purposes of this 
 28.11  clause, "tuition" includes fees or tuition as defined in section 
 28.12  290.0674, subdivision 1, clause (1).  As used in this clause, 
 28.13  "textbooks" includes books and other instructional materials and 
 28.14  equipment used in elementary and secondary schools in teaching 
 28.15  only those subjects legally and commonly taught in public 
 28.16  elementary and secondary schools in this state.  Equipment 
 28.17  expenses qualifying for deduction includes expenses as defined 
 28.18  and limited in section 290.0674, subdivision 1, clause (3).  
 28.19  "Textbooks" does not include instructional books and materials 
 28.20  used in the teaching of religious tenets, doctrines, or worship, 
 28.21  the purpose of which is to instill such tenets, doctrines, or 
 28.22  worship, nor does it include books or materials for, or 
 28.23  transportation to, extracurricular activities including sporting 
 28.24  events, musical or dramatic events, speech activities, driver's 
 28.25  education, or similar programs; 
 28.26     (4) to the extent included in federal taxable income, 
 28.27  distributions from a qualified governmental pension plan, an 
 28.28  individual retirement account, simplified employee pension, or 
 28.29  qualified plan covering a self-employed person that represent a 
 28.30  return of contributions that were included in Minnesota gross 
 28.31  income in the taxable year for which the contributions were made 
 28.32  but were deducted or were not included in the computation of 
 28.33  federal adjusted gross income.  The distribution shall be 
 28.34  allocated first to return of contributions until the 
 28.35  contributions included in Minnesota gross income have been 
 28.36  exhausted.  This subtraction applies only to contributions made 
 29.1   in a taxable year prior to 1985; 
 29.2      (5) income as provided under section 290.0802; 
 29.3      (6) the amount of unrecovered accelerated cost recovery 
 29.4   system deductions allowed under subdivision 19g; 
 29.5      (7) to the extent included in federal adjusted gross 
 29.6   income, income realized on disposition of property exempt from 
 29.7   tax under section 290.491; 
 29.8      (8) to the extent not deducted in determining federal 
 29.9   taxable income, the amount paid for health insurance of 
 29.10  self-employed individuals as determined under section 162(l) of 
 29.11  the Internal Revenue Code, except that the 25 percent limit does 
 29.12  not apply.  If the taxpayer deducted insurance payments under 
 29.13  section 213 of the Internal Revenue Code of 1986, the 
 29.14  subtraction under this clause must be reduced by the lesser of: 
 29.15     (i) the total itemized deductions allowed under section 
 29.16  63(d) of the Internal Revenue Code, less state, local, and 
 29.17  foreign income taxes deductible under section 164 of the 
 29.18  Internal Revenue Code and the standard deduction under section 
 29.19  63(c) of the Internal Revenue Code; or 
 29.20     (ii) the lesser of (A) the amount of insurance qualifying 
 29.21  as "medical care" under section 213(d) of the Internal Revenue 
 29.22  Code to the extent not deducted under section 162(1) of the 
 29.23  Internal Revenue Code or excluded from income or (B) the total 
 29.24  amount deductible for medical care under section 213(a); 
 29.25     (9) the exemption amount allowed under Laws 1995, chapter 
 29.26  255, article 3, section 2, subdivision 3; 
 29.27     (10) to the extent included in federal taxable income, 
 29.28  postservice benefits for youth community service under section 
 29.29  121.707 for volunteer service under United States Code, title 
 29.30  42, section 5011(d), as amended; and 
 29.31     (11) the amount of income or gain included in federal 
 29.32  taxable income under section 1366 of the Internal Revenue Code 
 29.33  flowing from a corporation that has a valid election in effect 
 29.34  for the taxable year under section 1362 of the Internal Revenue 
 29.35  Code which is not allowed to be an "S" corporation under section 
 29.36  290.9725; and 
 30.1      (12) an amount equal to the portion of the distributions 
 30.2   made by a corporation, having a valid election in effect for 
 30.3   federal tax purposes under section 1362 of the Internal Revenue 
 30.4   Code but not treated as a "S" corporation for state tax purposes 
 30.5   under section 290.9725, which is equal to the individual's, 
 30.6   estate's, or trust's federal income tax liability that is 
 30.7   attributable to the items of income, expense, gain, loss, or 
 30.8   credits from the corporation. 
 30.9      Sec. 2.  Minnesota Statutes 1996, section 290.091, 
 30.10  subdivision 2, is amended to read: 
 30.11     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 30.12  this section, the following terms have the meanings given: 
 30.13     (a) "Alternative minimum taxable income" means the sum of 
 30.14  the following for the taxable year: 
 30.15     (1) the taxpayer's federal alternative minimum taxable 
 30.16  income as defined in section 55(b)(2) of the Internal Revenue 
 30.17  Code; 
 30.18     (2) the taxpayer's itemized deductions deduction allowed in 
 30.19  computing federal alternative minimum taxable income, but 
 30.20  excluding the Minnesota charitable contribution deduction and 
 30.21  the medical expense deduction and described in section 67(b)(1), 
 30.22  (2), and (4) of the Internal Revenue Code; 
 30.23     (3) for depletion allowances computed under section 613A(c) 
 30.24  of the Internal Revenue Code, with respect to each property (as 
 30.25  defined in section 614 of the Internal Revenue Code), to the 
 30.26  extent not included in federal alternative minimum taxable 
 30.27  income, the excess of the deduction for depletion allowable 
 30.28  under section 611 of the Internal Revenue Code for the taxable 
 30.29  year over the adjusted basis of the property at the end of the 
 30.30  taxable year (determined without regard to the depletion 
 30.31  deduction for the taxable year); 
 30.32     (4) to the extent not included in federal alternative 
 30.33  minimum taxable income, the amount of the tax preference for 
 30.34  intangible drilling cost under section 57(a)(2) of the Internal 
 30.35  Revenue Code determined without regard to subparagraph (E); 
 30.36     (5) to the extent not included in federal alternative 
 31.1   minimum taxable income, the amount of interest income as 
 31.2   provided by section 290.01, subdivision 19a, clause (1); 
 31.3      less the sum of the amounts determined under the following 
 31.4   clauses (1) to (3) (4): 
 31.5      (1) interest income as defined in section 290.01, 
 31.6   subdivision 19b, clause (1); 
 31.7      (2) an overpayment of state income tax as provided by 
 31.8   section 290.01, subdivision 19b, clause (2), to the extent 
 31.9   included in federal alternative minimum taxable income; and 
 31.10     (3) the amount of investment interest paid or accrued 
 31.11  within the taxable year on indebtedness to the extent that the 
 31.12  amount does not exceed net investment income, as defined in 
 31.13  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 31.14  not include amounts deducted in computing federal adjusted gross 
 31.15  income; and 
 31.16     (4) the Minnesota charitable contribution deduction. 
 31.17     In the case of an estate or trust, alternative minimum 
 31.18  taxable income must be computed as provided in section 59(c) of 
 31.19  the Internal Revenue Code. 
 31.20     (b) "Investment interest" means investment interest as 
 31.21  defined in section 163(d)(3) of the Internal Revenue Code. 
 31.22     (c) "Tentative minimum tax" equals seven percent of 
 31.23  alternative minimum taxable income after subtracting the 
 31.24  exemption amount determined under subdivision 3. 
 31.25     (d) "Regular tax" means the tax that would be imposed under 
 31.26  this chapter (without regard to this section and section 
 31.27  290.032), reduced by the sum of the nonrefundable credits 
 31.28  allowed under this chapter.  
 31.29     (e) "Net minimum tax" means the minimum tax imposed by this 
 31.30  section. 
 31.31     (f) "Minnesota charitable contribution deduction" means a 
 31.32  charitable contribution deduction under section 170 of the 
 31.33  Internal Revenue Code to or for the use of an entity described 
 31.34  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
 31.35  federal deduction for charitable contributions is limited under 
 31.36  section 170(b) of the Internal Revenue Code, the allowable 
 32.1   contributions in the year of contribution are deemed to be first 
 32.2   contributions to entities described in section 290.21, 
 32.3   subdivision 3, clauses (a) to (e). 
 32.4      Sec. 3.  Minnesota Statutes 1997 Supplement, section 
 32.5   290.091, subdivision 6, is amended to read: 
 32.6      Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
 32.7   is allowed against the tax imposed by this chapter on 
 32.8   individuals, trusts, and estates equal to the minimum tax credit 
 32.9   for the taxable year.  The minimum tax credit equals the 
 32.10  adjusted net minimum tax for taxable years beginning after 
 32.11  December 31, 1988, reduced by the minimum tax credits allowed in 
 32.12  a prior taxable year.  The credit may not exceed the excess (if 
 32.13  any) for the taxable year of 
 32.14     (1) the regular tax, over 
 32.15     (2) the greater of (i) the tentative alternative minimum 
 32.16  tax, or (ii) zero. 
 32.17     (b) The adjusted net minimum tax for a taxable year equals 
 32.18  the lesser of the net minimum tax or the excess (if any) of 
 32.19     (1) the tentative minimum tax, over 
 32.20     (2) seven percent of the sum of 
 32.21     (i) adjusted gross income as defined in section 62 of the 
 32.22  Internal Revenue Code, 
 32.23     (ii) interest income as defined in section 290.01, 
 32.24  subdivision 19a, clause (1), 
 32.25     (iii) interest on specified private activity bonds, as 
 32.26  defined in section 57(a)(5) of the Internal Revenue Code, to the 
 32.27  extent not included under clause (ii), 
 32.28     (iv) the itemized deduction allowed for computing federal 
 32.29  alternative income under section 56(b) of the Internal Revenue 
 32.30  Code and not disallowed for Minnesota purposes under subdivision 
 32.31  2, paragraph (a), clause (2), of the first series of clauses, 
 32.32     (v) depletion as defined in section 57(a)(1), determined 
 32.33  without regard to the last sentence of paragraph (1), of the 
 32.34  Internal Revenue Code, less 
 32.35     (v) (vi) the deductions provided in subdivision 2, 
 32.36  paragraph (a), clauses (1), (2), and (3), and (4) of the second 
 33.1   series of clauses, and 
 33.2      (vi) (vii) the exemption amount determined under 
 33.3   subdivision 3. 
 33.4      In the case of an individual who is not a Minnesota 
 33.5   resident for the entire year, adjusted net minimum tax must be 
 33.6   multiplied by the fraction defined in section 290.06, 
 33.7   subdivision 2c, paragraph (e).  In the case of a trust or 
 33.8   estate, adjusted net minimum tax must be multiplied by the 
 33.9   fraction defined under subdivision 4, paragraph (b). 
 33.10     Sec. 4.  [EFFECTIVE DATE.] 
 33.11     Sections 1 to 3 are effective for taxable years beginning 
 33.12  after December 31, 1997.