SF 27

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 03/06/2012 01:07pm

A bill for an act
relating to the financing of state and local government; making technical, policy,
administrative, enforcement, and clarifying changes to taxes on individual
income, estates, sales and uses, property, minerals, local taxes, aids to local
governments; reducing and eliminating certain payments and credits; modifying
property tax refund payments; authorizing grants; modifying the rural preserve
program; reducing and eliminating the state general levy; modifying various
taxes and tax-related provisions; providing income tax, estate tax, sales tax,
and property tax exemptions; authorizing local sales taxes; permitting certain
appeals; modifying tax increment financing authorities; requiring studies; setting
the levels of the cash flow account and the budget reserve account; appropriating
money; amending Minnesota Statutes 2010, sections 97A.061, subdivisions
1, 3; 270A.03, subdivisions 2, 7; 270A.07, subdivision 1; 270B.12, by adding
a subdivision; 270C.13, subdivision 1; 272.02, subdivision 39, by adding a
subdivision; 273.111, by adding a subdivision; 273.114, subdivisions 2, 5, 6;
273.13, subdivisions 21b, 23, 25, 34; 273.1384, subdivisions 1, 3, 4, by adding
a subdivision; 273.1393; 273.1398, subdivisions 3, 4; 274.01, subdivision
1; 275.025, subdivisions 1, 4; 275.08, subdivision 1a; 276.04, subdivision
2; 289A.50, subdivision 1; 290.01, subdivisions 6, 19b; 290.05, subdivision
1; 290.0674, subdivision 1; 290.081; 290.091, subdivision 2; 290A.03,
subdivisions 11, 13; 290A.04, subdivisions 2, 4; 291.005, subdivision 1; 291.03,
subdivision 1, by adding subdivisions; 297A.67, subdivision 7, by adding
subdivisions; 297A.68, subdivision 4; 297A.70, subdivisions 1, 2, 3, 8; 297A.75,
subdivisions 1, 2, 3; 297A.82, subdivision 4; 297A.99, subdivisions 1, 3, by
adding subdivisions; 298.001, by adding a subdivision; 298.01, subdivisions 3,
3a; 298.015, subdivisions 1, 2; 298.016, subdivision 4; 298.225, subdivision 1;
298.24, subdivision 1; 298.28, subdivisions 3, 6, 7, 9, 9b; 469.176, subdivisions
4c, 4m; 477A.0124, by adding a subdivision; 477A.013, subdivision 9, by
adding a subdivision; 477A.03; 477A.11, subdivision 1; 477A.12, subdivision
1; 477A.14, subdivision 1; 477A.17; Laws 1996, chapter 471, article 2, section
29, subdivision 1, as amended; Laws 1998, chapter 389, article 8, section 43,
subdivisions 3, as amended, 4, as amended, 5, as amended; Laws 2008, chapter
366, article 7, section 19, subdivision 3; Laws 2010, chapter 389, article 7, section
22; proposing coding for new law in Minnesota Statutes, chapters 275; 290;
repealing Minnesota Statutes 2010, sections 10A.322, subdivision 4; 13.4967,
subdivision 2; 273.114, subdivision 1; 273.1384, subdivision 6; 273.1398,
subdivision 4; 275.025; 275.295; 290.06, subdivision 23; 290C.01; 290C.02;
290C.03; 290C.04; 290C.05; 290C.055; 290C.06; 290C.07; 290C.08; 290C.09;
290C.10; 290C.11; 290C.12; 290C.13; 298.017; 298.227; 298.28, subdivisions
8, 9a, 9c, 10; 298.285; 477A.145; Minnesota Rules, part 8130.0500, subpart 2.

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

ARTICLE 1

INCOME AND ESTATE TAXES

Section 1.

Minnesota Statutes 2010, section 270B.12, is amended by adding a
subdivision to read:

new text begin Subd. 14. new text end

new text begin Wisconsin secretary of revenue; income tax reciprocity benchmark
study. new text end

new text begin The commissioner may disclose return information to the secretary of revenue
of the state of Wisconsin for the purpose of conducting a joint individual income tax
reciprocity study.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2010, section 290.01, subdivision 19b, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. No
deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
the qualifying child's vehicle to provide such transportation for a qualifying child. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
under the provisions of Public Law 109-1 and Public Law 111-126;

(7) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;

(8) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. The resulting delayed depreciation cannot be
less than zero;

(9) job opportunity building zone income as provided under section 469.316;

(10) to the extent included in federal taxable income, the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service performed in Minnesota, excluding compensation
for services performed under the Active Guard Reserve (AGR) program. For purposes of
this clause, "active service" means (i) state active service as defined in section 190.05,
subdivision 5a, clause (1); (ii) federally funded state active service as defined in section
190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05,
subdivision 5c, but "active service" excludes service performed in accordance with section
190.08, subdivision 3;

(11) to the extent included in federal taxable income, the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States or
United Nations for active duty performed outside Minnesota under United States Code,
title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
the United Nations;

(12) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

(13) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

(14) to the extent included in federal taxable income, compensation paid to a service
member as defined in United States Code, title 10, section 101(a)(5), for military service
as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);

(15) international economic development zone income as provided under section
469.325;

(16) to the extent included in federal taxable income, the amount of national service
educational awards received from the National Service Trust under United States Code,
title 42, sections 12601 to 12604, for service in an approved Americorps National Service
program; deleted text begin and
deleted text end

(17) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19a, clause (16) new text begin ; and
new text end

new text begin (18) to the extent included in federal taxable income, a percentage of compensation
received from a pension or other retirement pay from the federal government for service in
the military, as computed under United States Code, title 10, sections 1401 to 1414, 1447
to 1455, and 12733, as follows:
new text end

new text begin (i) for taxable years beginning after December 31, 2010, and before January 1,
2012, the percentage is 20 percent;
new text end

new text begin (ii) for taxable years beginning after December 31, 2011, and before January 1,
2013, the percentage is 35 percent; and
new text end

new text begin (iii) for taxable years beginning after December 31, 2012, the percentage is 55
percent new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 3.

Minnesota Statutes 2010, section 290.0674, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

An individual is allowed a credit against the
tax imposed by this chapter in an amount equal to 75 percent of the amount paid for
education-related expenses for a qualifying child in kindergarten through grade 12. For
purposes of this section, "education-related expenses" means:

(1) fees or tuition for instruction by an instructor under section 120A.22, subdivision
10, clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers
Association, and who is not a lineal ancestor or sibling of the dependent for instruction
outside the regular school day or school year, including tutoring, driver's education
offered as part of school curriculum, regardless of whether it is taken from a public or
private entity or summer camps, in grade or age appropriate curricula that supplement
curricula and instruction available during the regular school year, that assists a dependent
to improve knowledge of core curriculum areas or to expand knowledge and skills under
the required academic standards under section 120B.021, subdivision 1, and the elective
standard under section 120B.022, subdivision 1, clause (2), and that do not include the
teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
tenets, doctrines, or worship;

(2) expenses for textbooks, including books and other instructional materials and
equipment purchased or leased for use in elementary and secondary schools in teaching
only those subjects legally and commonly taught in public elementary and secondary
schools in this state. "Textbooks" does not include instructional books and materials
used in the teaching of religious tenets, doctrines, or worship, the purpose of which is
to instill such tenets, doctrines, or worship, nor does it include books or materials for
extracurricular activities including sporting events, musical or dramatic events, speech
activities, driver's education, or similar programs;

(3) a maximum expense of $200 per family for personal computer hardware,
excluding single purpose processors, and educational software that assists a dependent to
improve knowledge of core curriculum areas or to expand knowledge and skills under
the required academic standards under section 120B.021, subdivision 1, and the elective
standard under section 120B.022, subdivision 1, clause (2), purchased for use in the
taxpayer's home and not used in a trade or business regardless of whether the computer is
required by the dependent's school; and

(4) the amount paid to others for new text begin tuition and new text end transportation of a qualifying child
attending an elementary or secondary school situated in Minnesota, North Dakota, South
Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's
compulsory attendance laws, which is not operated for profit, and which adheres to the
provisions of the Civil Rights Act of 1964 and chapter 363A.

For purposes of this section, "qualifying child" has the meaning given in section
32(c)(3) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 4.

Minnesota Statutes 2010, section 290.081, is amended to read:

290.081 INCOME OF NONRESIDENTS, RECIPROCITY.

new text begin Subdivision 1. new text end

new text begin Reciprocity with other states. new text end

(a) The compensation received for
the performance of personal or professional services within this state by an individual
whose residence, place of abode, and place customarily returned to at least once a month
is in another state, shall be excluded from gross income to the extent such compensation is
subject to an income tax imposed by the state of residence; provided that such state allows
a similar exclusion of compensation received by residents of Minnesota for services
performed therein.

(b) When it is deemed to be in the best interests of the people of this state, the
commissioner may determine that the provisions of paragraph (a) shall not apply new text begin as they
relate to all states, except Wisconsin. The provisions of paragraph (a) apply with respect
to Wisconsin only for taxable years in which a reciprocity agreement with Wisconsin is
in effect as provided in this section new text end . As long as the provisions of paragraph (a) apply
between Minnesota and Wisconsin, the provisions of paragraph (a) shall apply to any
individual who is domiciled in Wisconsin.

(c) For the purposes of paragraph (a), whenever the Wisconsin tax on Minnesota
residents which would have been paid Wisconsin without paragraph (a) exceeds the
Minnesota tax on Wisconsin residents which would have been paid Minnesota without
paragraph (a), or vice versa, then the state with the net revenue loss resulting from
paragraph (a) must be compensated by the other state as provided in the agreement under
paragraph (d). This provision shall be effective for all years beginning after December 31,
1972. The data used for computing the loss to either state shall be determined on or before
September 30 of the year following the close of the previous calendar year.

(d) Interest is payable on all amounts calculated under paragraph (c) relating to
taxable years beginning after December 31, 2000 new text begin , and before January 1, 2010 new text end . Interest
accrues from July 1 of the taxable year.

new text begin (e) new text end The deleted text begin commissioner of revenue is authorized to enter into agreements deleted text end new text begin reciprocity
agreement new text end with the state of Wisconsin deleted text begin specifying deleted text end new text begin must specify new text end the compensation required
under paragraph (b), deleted text begin the deleted text end new text begin one or more new text end reciprocity payment due deleted text begin date, deleted text end new text begin dates for the revenue
loss relating to each taxable year, with one or more estimated payment due dates in the
same fiscal year in which the revenue loss occurred, and a final payment in the following
fiscal year, new text end conditions constituting delinquency, interest rates, and a method for computing
interest due. new text begin Interest is payable from July 1 of the taxable year on final payments made in
the following fiscal year. new text end Calculation of compensation under the agreement must specify
if the revenue loss is determined before or after the allowance of each state's credit for
taxes paid to the other state.

deleted text begin (e) deleted text end new text begin (f) new text end If an agreement cannot be reached as to the amount of the loss, the
commissioner of revenue and the taxing official of the state of Wisconsin shall each
appoint a member of a board of arbitration and these members shall appoint the third
member of the board. The board shall select one of its members as chair. Such board may
administer oaths, take testimony, subpoena witnesses, and require their attendance, require
the production of books, papers and documents, and hold hearings at such places as are
deemed necessary. The board shall then make a determination as to the amount to be paid
the other state which determination shall be final and conclusive.

deleted text begin (f) deleted text end new text begin (g) new text end The commissioner may furnish copies of returns, reports, or other information
to the taxing official of the state of Wisconsin, a member of the board of arbitration, or a
consultant under joint contract with the states of Minnesota and Wisconsin for the purpose
of making a determination as to the amount to be paid the other state under the provisions
of this section. Prior to the release of any information under the provisions of this section,
the person to whom the information is to be released shall sign an agreement which
provides that the person will protect the confidentiality of the returns and information
revealed thereby to the extent that it is protected under the laws of the state of Minnesota.

new text begin (h) Any reciprocity agreement entered into under this section continues in effect
until terminated by Minnesota or Wisconsin law. The commissioner may agree to modify
the timing or method of calculating the state payments to be made under the agreement,
consistent with the requirements of paragraphs (c) and (e), but may not terminate the
agreement.
new text end

new text begin Subd. 2. new text end

new text begin New reciprocity agreement with Wisconsin. new text end

new text begin The commissioner may
not enter into an income tax reciprocity agreement with Wisconsin under this section
until after Wisconsin has paid in full, with interest, the amount due to Minnesota under
the income tax reciprocity agreement in full effect for taxable years beginning before
January 1, 2010. The commissioner of revenue is directed to initiate negotiations with
the secretary of revenue of Wisconsin, with the objective of entering into an income
tax reciprocity agreement effective for tax years beginning after December 31, 2011.
The agreement must satisfy the conditions of subdivision 1, with one or more estimated
payment due dates and a final payment due date specified so that the state with a net
revenue loss as a result of the agreement receives estimated payments from the other state,
in the same fiscal year as that in which the net revenue loss occurred and a final payment
with interest in the following fiscal year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Subdivision 2 is effective the day following final enactment.
The changes to subdivision 1 are effective for taxable years beginning after December 31
of the year of the agreement, contingent upon agreement from the state of Wisconsin to a
reciprocity arrangement in which estimated payments are made in the same fiscal year in
which a change in revenue occurs, and a final payment is made in the following fiscal year.
new text end

Sec. 5.

Minnesota Statutes 2010, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for
the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative
minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue
Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal
Revenue Code, with respect to each property (as defined in section 614 of the Internal
Revenue Code), to the extent not included in federal alternative minimum taxable income,
the excess of the deduction for depletion allowable under section 611 of the Internal
Revenue Code for the taxable year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the
amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the
amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
to (9), (12), (13), (16), and (17);

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision
19b, clause (2), to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as
defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
amounts deducted in computing federal adjusted gross income; and

(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b, clauses (6), (8) to (15), deleted text begin and deleted text end (17) new text begin , and (18) new text end .

In the case of an estate or trust, alternative minimum taxable income must be
computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3)
of the Internal Revenue Code.

(c) "Net minimum tax" means the minimum tax imposed by this section.

(d) "Regular tax" means the tax that would be imposed under this chapter (without
regard to this section and section 290.032), reduced by the sum of the nonrefundable
credits allowed under this chapter.

(e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
income after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 6.

new text begin [290.433] BUDGET RESERVE FUND CHECKOFF.
new text end

new text begin (a) An individual who files an income tax return or property tax refund claim form
may designate on the original return that $1 or more shall be added to the tax or deducted
from the refund that would otherwise be payable by or to that individual and paid into the
general fund.
new text end

new text begin (b) All amounts designated by individuals under paragraph (a) must be deposited in
the state treasury and credited to the budget reserve established under section 16A.152,
subdivision 1a.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 7.

Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following
terms used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be
valued and otherwise determined for federal estate tax purposes under the Internal
Revenue Code.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through March 18, 2010, but without regard to the provisions of
sections 501 and 901 of Public Law 107-16.

(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
defined by section 2011(b)(3) of the Internal Revenue Code, deleted text begin increased by deleted text end new text begin plus
new text end

new text begin (i) new text end the amount of deduction for state death taxes allowed under section 2058 of
the Internal Revenue Code new text begin ; less
new text end

new text begin (ii) (A) the value of qualified small business property under section 291.03,
subdivision 9, and the value of qualified farm property under section 291.03, subdivision
10, or (B) $4,000,000, whichever is less new text end .

(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included therein which has its situs outside Minnesota,
and (b) including therein any property omitted from the federal gross estate which is
includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
authorities.

(6) "Nonresident decedent" means an individual whose domicile at the time of
death was not in Minnesota.

(7) "Personal representative" means the executor, administrator or other person
appointed by the court to administer and dispose of the property of the decedent. If there
is no executor, administrator or other person appointed, qualified, and acting within this
state, then any person in actual or constructive possession of any property having a situs in
this state which is included in the federal gross estate of the decedent shall be deemed
to be a personal representative to the extent of the property and the Minnesota estate tax
due with respect to the property.

(8) "Resident decedent" means an individual whose domicile at the time of death
was in Minnesota.

(9) "Situs of property" means, with respect to real property, the state or country in
which it is located; with respect to tangible personal property, the state or country in which
it was normally kept or located at the time of the decedent's death; and with respect to
intangible personal property, the state or country in which the decedent was domiciled
at death.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2010.
new text end

Sec. 8.

Minnesota Statutes 2010, section 291.03, subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

(a) The tax imposed shall be an amount equal to the
proportion of the maximum credit for state death taxes computed under section 2011
of the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of
federal adjusted taxable estate, as the Minnesota gross estate bears to the value of the
federal gross estate.

(b) The tax determined under this subdivision must not be greater than the sum of
the following amounts multiplied by a fraction, the numerator of which is the Minnesota
gross estate and the denominator of which is the federal gross estate:

(1) the rates and brackets under section 2001(c) of the Internal Revenue Code
multiplied by the sum of:

(i) the taxable estate, as defined under section 2051 of the Internal Revenue Code;
plus

(ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
Code; less

new text begin (iii) the lesser of (A) the sum of the value of qualified small business property
under subdivision 9, and the value of qualified farm property under subdivision 10,
or (B) $4,000,000; less
new text end

(2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
Code; and less

(3) the federal credit allowed under section 2010 of the Internal Revenue Code.

(c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through December 31, 2000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2010.
new text end

Sec. 9.

Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Definitions. new text end

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

new text begin (b) "Family member" means a family member as defined in section 2032A(e)(2) of
the Internal Revenue Code.
new text end

new text begin (c) "Qualified heir" means a family member who acquired qualified property from
the decedent and satisfies the requirement under subdivision 9, clause (6), or subdivision
10, clause (4), for the property.
new text end

new text begin (d) "Qualified property" means qualified small businesss property under subdivision
9 and qualified farm property under subdivision 10.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2010.
new text end

Sec. 10.

Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
to read:

new text begin Subd. 9. new text end

new text begin Qualified small business property. new text end

new text begin Property satisfying all of the following
requirements is qualified small business property:
new text end

new text begin (1) The value of the property was included in the federal adjusted taxable estate.
new text end

new text begin (2) The property consists of the assets of a trade or business or shares of stock or
other ownership interests in a corporation or other entity engaged in a trade or business.
The decedent or the decedent's spouse must have materially participated in the trade or
business within the meaning of section 469 of the Internal Revenue Code during the
taxable year that ended before the date of the decedent's death. Shares of stock in a
corporation or an ownership interest in another type of entity do not qualify under this
subdivision if the shares or ownership interests are traded on a public stock exchange at
any time during the three-year period ending on the decedent's date of death.
new text end

new text begin (3) The gross annual sales of the trade or business were $10,000,000 or less for the
last taxable year that ended before the date of the death of the decedent.
new text end

new text begin (4) The property does not consist of cash or cash equivalents. For property consisting
of shares of stock or other ownership interests in an entity, the amount of cash or cash
equivalents held by the corporation or other entity must be deducted from the value of
the property qualifying under this subdivision in proportion to the decedent's share of
ownership of the entity on the date of death.
new text end

new text begin (5) The decedent continuously owned the property for the three-year period ending
on the date of death of the decedent.
new text end

new text begin (6) A family member continuously uses the property in the operation of the trade or
business for three years following the date of death of the decedent.
new text end

new text begin (7) The estate and the qualified heir elect to treat the property as qualified small
business property and agree, in the form prescribed by the commissioner, to pay the
recapture tax under subdivision 11, if applicable.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2010.
new text end

Sec. 11.

Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
to read:

new text begin Subd. 10. new text end

new text begin Qualified farm property. new text end

new text begin Property satisfying all of the following
requirements is qualified farm property:
new text end

new text begin (1) The value of the property was included in the federal adjusted taxable estate.
new text end

new text begin (2) The property consists of a farm meeting the requirements of section 500.24,
and was classified for property tax purposes as the homestead of the decedent or the
decedent's spouse or both under section 273.124, and as class 2a property under section
273.13, subdivision 23.
new text end

new text begin (3) The decedent continuously owned the property for the three-year period ending
on the date of death of the decedent.
new text end

new text begin (4) A family member continuously uses the property in the operation of the trade or
business for three years following the date of death of the decedent.
new text end

new text begin (5) The estate and the qualified heir elect to treat the property as qualified farm
property and agree, in a form prescribed by the commissioner, to pay the recapture tax
under subdivision 11, if applicable.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2010.
new text end

Sec. 12.

Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
to read:

new text begin Subd. 11. new text end

new text begin Recapture tax. new text end

new text begin (a) If, within three years after the decedent's death and
before the death of the qualified heir, the qualified heir disposes of any interest in the
qualified property, other than by a disposition to a family member, or a family member
ceases to use the qualified property which was acquired or passed from the decedent, an
additional estate tax is imposed on the property.
new text end

new text begin (b) The amount of the additional tax equals the amount of the exclusion claimed by
the estate under subdivision 8, paragraph (d), multiplied by 16 percent.
new text end

new text begin (c) The additional tax under this subdivision is due on the day which is six months
after the date of the disposition or cessation in paragraph (a).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2010.
new text end

Sec. 13. new text begin INCOME TAX RECIPROCITY BENCHMARK STUDY.
new text end

new text begin (a) The Department of Revenue, in conjunction with the Wisconsin Department of
Revenue, must conduct a study to determine at least the following:
new text end

new text begin (1) the number of residents of each state who earn income from personal services in
the other state;
new text end

new text begin (2) the total amount of income earned by residents of each state who earn income
from personal services in the other state; and
new text end

new text begin (3) the change in tax revenue in each state if an income tax reciprocity arrangement
were resumed between the two states under which the taxpayers were required to pay
income taxes on the income only in their state of residence.
new text end

new text begin (b) The study must be conducted as soon as practicable, using information obtained
from each state's income tax returns for tax year 2011, and from any other source of
information the departments determine is necessary to complete the study.
new text end

new text begin (c) No later than March 1, 2013, the Department of Revenue must submit a report
containing the results of the study to the governor and to the chairs and ranking minority
members of the legislative committees having jurisdiction over taxes.
new text end

Sec. 14. new text begin APPROPRIATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Income tax reciprocity benchmark study. new text end

new text begin The sum of $409,000 in
fiscal year 2012 and $429,000 in fiscal year 2013 is appropriated from the general fund
to the commissioner of revenue for the income reciprocity benchmark study required
under section 13. The appropriation under this section is onetime and is not added to
the agency's base budget.
new text end

new text begin Subd. 2. new text end

new text begin Tax checkoff for state budget reserve. new text end

new text begin $104,000 in fiscal year 2012 and
$37,000 in fiscal year 2013 are appropriated from the general fund to the commissioner of
revenue to implement the tax checkoff in Minnesota Statutes, section 290.433.
new text end

ARTICLE 2

SALES TAXES

Section 1.

Minnesota Statutes 2010, section 297A.67, subdivision 7, is amended to
read:

Subd. 7.

Drugs; medical devices.

(a) Sales of the following drugs and medical
devices for human use are exempt:

(1) drugs, including over-the-counter drugs;

(2) single-use finger-pricking devices for the extraction of blood and other single-use
devices and single-use diagnostic agents used in diagnosing, monitoring, or treating
diabetes;

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

(4) prosthetic devices;

(5) durable medical equipment for home use only;

(6) mobility enhancing equipment;

(7) prescription corrective eyeglasses; and

(8) kidney dialysis equipment, including repair and replacement parts.

(b) new text begin Items purchased in transactions covered by:
new text end

new text begin (1) Medicare as defined under title XVIII of the Social Security Act, United States
Code, title 42, sections 1395, et seq.; or
new text end

new text begin (2) Medicaid as defined under title XIX of the Social Security Act, United States
Code, title 42, sections 1396, et seq.
new text end

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

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

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

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

(iii) intended to affect the structure or any function of the body.

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

(i) can withstand repeated use;

(ii) is primarily and customarily used to serve a medical purpose;

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

(iv) is not worn in or on the body.

For purposes of this clause, "repair and replacement parts" includes all components
or attachments used in conjunction with the durable medical equipment, deleted text begin but does not
include deleted text end new text begin including new text end repair and replacement parts which are for single patient use only.

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

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

(ii) is not generally used by persons with normal mobility; and

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

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

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

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

(i) artificially replace a missing portion of the body;

(ii) prevent or correct physical deformity or malfunction; or

(iii) support a weak or deformed portion of the body.

Prosthetic device does not include corrective eyeglasses.

(7) "Kidney dialysis equipment" means equipment that:

(i) is used to remove waste products that build up in the blood when the kidneys are
not able to do so on their own; and

(ii) can withstand repeated use, including multiple use by a single patient,
notwithstanding the provisions of clause (2).

new text begin (8) A transaction is covered by Medicare or Medicaid if any portion of the cost of
the item purchased in the transaction is paid for or reimbursed by the federal government
or the state of Minnesota pursuant to the Medicare or Medicaid program, by a private
insurance company administering the Medicare or Medicaid program on behalf of the
federal government or the state of Minnesota, or by a managed care organization for the
benefit of a patient enrolled in a prepaid program that furnishes medical services in lieu
of conventional Medicare or Medicaid coverage pursuant to agreement with the federal
government or the state of Minnesota.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 2.

Minnesota Statutes 2010, section 297A.67, is amended by adding a subdivision
to read:

new text begin Subd. 7a. new text end

new text begin Accessories and supplies. new text end

new text begin Accessories and supplies required for the
effective use of durable medical equipment for home use only or purchased in a transaction
covered by Medicare or Medicaid, that are not already exempt under subdivision 7 are
exempt. Accessories and supplies for the effective use of a prosthetic device that are
not already exempt under subdivision 7 are exempt. For purposes of this subdivision
"durable medical equipment," "prosthetic device," "Medicare," and "Medicaid" have the
definitions given in subdivision 7.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 3.

Minnesota Statutes 2010, section 297A.67, is amended by adding a subdivision
to read:

new text begin Subd. 33. new text end

new text begin Resale ticket purchases. new text end

new text begin For resale purchases made subsequent to the
purchase of a ticket from the initial seller, as defined under section 609.807, paragraph
(a), the original face value of a ticket, as defined under section 609.807, paragraph (a),
is exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 4.

Minnesota Statutes 2010, section 297A.70, subdivision 1, is amended to read:

Subdivision 1.

Scope.

(a) To the extent provided in this section, the gross receipts
from sales of items to or by, and storage, distribution, use, or consumption of items by the
organizations new text begin or units of local government new text end listed in this section are specifically exempted
from the taxes imposed by this chapter.

(b) Notwithstanding any law to the contrary enacted before 1992, only sales to
governments and political subdivisions listed in this section are exempt from the taxes
imposed by this chapter.

(c) "Sales" includes purchases under an installment contract or lease purchase
agreement under section 465.71.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 5.

Minnesota Statutes 2010, section 297A.70, subdivision 2, is amended to read:

Subd. 2.

Sales to government.

(a) All sales, except those listed in paragraph (b),
to the following governments and political subdivisions, or to the listed agencies or
instrumentalities of governments and political subdivisions, are exempt:

(1) the United States and its agencies and instrumentalities;

(2) school districts, the University of Minnesota, state universities, community
colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts
Education, and an instrumentality of a political subdivision that is accredited as an
optional/special function school by the North Central Association of Colleges and Schools;

(3) hospitals and nursing homes owned and operated by political subdivisions of
the state of tangible personal property and taxable services used at or by hospitals and
nursing homes;

(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip
operations provided for in section 473.4051;

(5) other states or political subdivisions of other states, if the sale would be exempt
from taxation if it occurred in that state; and

(6) deleted text begin sales to deleted text end public libraries, public library systems, multicounty, multitype library
systems as defined in section 134.001, county law libraries under chapter 134A, state
agency libraries, the state library under section 480.09, and the Legislative Reference
Library new text begin ; and
new text end

new text begin (7) towns new text end .

(b) This exemption does not apply to the sales of the following products and services:

(1) building, construction, or reconstruction materials purchased by a contractor
or a subcontractor as a part of a lump-sum contract or similar type of contract with a
guaranteed maximum price covering both labor and materials for use in the construction,
alteration, or repair of a building or facility;

(2) construction materials purchased by tax exempt entities or their contractors to
be used in constructing buildings or facilities which will not be used principally by the
tax exempt entities;

(3) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11,
except for leases entered into by the United States or its agencies or instrumentalities; deleted text begin or
deleted text end

(4) lodging as defined under section 297A.61, subdivision 3, paragraph (g),
clause (2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in
section 297A.67, subdivision 2, except for lodging, prepared food, candy, soft drinks,
and alcoholic beverages purchased directly by the United States or its agencies or
instrumentalities new text begin ; or new text end

new text begin (5) goods or services purchased by a town that are generally provided by a private
business and the purchases would be taxable if made by a private business engaged in the
same activity new text end .

(c) As used in this subdivision, "school districts" means public school entities and
districts of every kind and nature organized under the laws of the state of Minnesota, and
any instrumentality of a school district, as defined in section 471.59.

new text begin (d) As used in this subdivision, "goods or services generally provided by a private
business" include, but are not limited to, goods or services provided by liquor stores, gas
and electric utilities, golf courses, marinas, health and fitness centers, campgrounds, cafes,
and laundromats. "Goods or services generally provided by a private business" do not
include housing services, sewer and water services, wastewater treatment, ambulance and
other public safety services, correctional services, chore or homemaking services provided
to elderly or disabled individuals, or road and street maintenance or lighting.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 6.

Minnesota Statutes 2010, section 297A.70, subdivision 3, is amended to read:

Subd. 3.

Sales of certain goods and services to government.

(a) The following
sales to or use by the specified governments and political subdivisions of the state are
exempt:

(1) repair and replacement parts for emergency rescue vehicles, fire trucks, and
fire apparatus to a political subdivision;

(2) machinery and equipment, except for motor vehicles, used directly for mixed
municipal solid waste management services at a solid waste disposal facility as defined in
section 115A.03, subdivision 10;

(3) chore and homemaking services to a political subdivision of the state to be
provided to elderly or disabled individuals;

(4) telephone services to the Office of Enterprise Technology that are used to provide
telecommunications services through the enterprise technology revolving fund;

(5) firefighter personal protective equipment as defined in paragraph (b), if purchased
or authorized by and for the use of an organized fire department, fire protection district, or
fire company regularly charged with the responsibility of providing fire protection to the
state or a political subdivision;

(6) bullet-resistant body armor that provides the wearer with ballistic and trauma
protection, if purchased by a law enforcement agency of the state or a political subdivision
of the state, or a licensed peace officer, as defined in section 626.84, subdivision 1;

(7) motor vehicles purchased or leased by political subdivisions of the state if the
vehicles are exempt from registration under section 168.012, subdivision 1, paragraph (b),
exempt from taxation under section 473.448, or exempt from the motor vehicle sales tax
under section 297B.03, clause (12);

(8) equipment designed to process, dewater, and recycle biosolids for wastewater
treatment facilities of political subdivisions, and materials incidental to installation of
that equipment;

(9) deleted text begin sales to a town of gravel and of machinery, equipment, and accessories, except
motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of
motor vehicles exempt from tax under section 297B.03, clause (10);
deleted text end

deleted text begin (10) deleted text end the removal of trees, bushes, or shrubs for the construction and maintenance
of roads, trails, or firebreaks when purchased by an agency of the state or a political
subdivision of the state; and

deleted text begin (11) deleted text end new text begin (10) new text end purchases by the Metropolitan Council or the Department of Transportation
of vehicles and repair parts to equip operations provided for in section 174.90, including,
but not limited to, the Northstar Corridor Rail project.

(b) For purposes of this subdivision, "firefighters personal protective equipment"
means helmets, including face shields, chin straps, and neck liners; bunker coats and
pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets;
protective coveralls; goggles; self-contained breathing apparatus; canister filter masks;
personal alert safety systems; spanner belts; optical or thermal imaging search devices;
and all safety equipment required by the Occupational Safety and Health Administration.

(c) For purchases of items listed in paragraph (a), clause (11), the tax must be
imposed and collected as if the rate under section 297A.62, subdivision 1, applied and
then refunded in the manner provided in section 297A.75.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 7.

Minnesota Statutes 2010, section 297A.70, subdivision 8, is amended to read:

Subd. 8.

deleted text begin Regionwide deleted text end Public safety radio communication deleted text begin system deleted text end new text begin systems new text end ;
products and services.

Products and services including, but not limited to, end user
equipment used for construction, ownership, operation, maintenance, and enhancement
of deleted text begin the backbone system of the regionwide deleted text end public safety radio communication deleted text begin system
established under sections 403.21 to 403.40 deleted text end new text begin systems, including public safety radio
dispatch centers new text end , are exempt. deleted text begin For purposes of this subdivision, backbone system is defined
in section 403.21, subdivision 9. This subdivision is effective for purchases, sales, storage,
use, or consumption for use in the first and second phases of the system, as defined in
section 403.21, subdivisions 3, 10, and 11, that portion of the third phase of the system that
is located in the southeast district of the State Patrol and the counties of Benton, Sherburne,
Stearns, and Wright, and that portion of the system that is located in Itasca County.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2009. After December 31, 2013, purchasers may apply for a refund of tax
paid for qualifying purchases under this subdivision made after December 31, 2009, and
before January 1, 2013, in the manner provided in section 297A.75.
new text end

Sec. 8.

Minnesota Statutes 2010, section 297A.75, subdivision 1, is amended to read:

Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the
following exempt items must be imposed and collected as if the sale were taxable and the
rate under section 297A.62, subdivision 1, applied. The exempt items include:

(1) capital equipment exempt under section 297A.68, subdivision 5;

(2) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(3) building materials for mineral production facilities exempt under section
297A.71, subdivision 14;

(4) building materials for correctional facilities under section 297A.71, subdivision
3;

(5) building materials used in a residence for disabled veterans exempt under section
297A.71, subdivision 11;

(6) elevators and building materials exempt under section 297A.71, subdivision 12;

(7) building materials for the Long Lake Conservation Center exempt under section
297A.71, subdivision 17;

(8) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23;

(9) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(10) equipment and materials used for the generation, transmission, and distribution
of electrical energy and an aerial camera package exempt under section 297A.68,
subdivision 37;

(11) tangible personal property and taxable services and construction materials,
supplies, and equipment exempt under section 297A.68, subdivision 41;

(12) commuter rail vehicle and repair parts under section 297A.70, subdivision
3, clause (11);

(13) materials, supplies, and equipment for construction or improvement of projects
and facilities under section 297A.71, subdivision 40;

(14) materials, supplies, and equipment for construction or improvement of a meat
processing facility exempt under section 297A.71, subdivision 41; deleted text begin and
deleted text end

(15) materials, supplies, and equipment for construction, improvement, or expansion
of an aerospace defense manufacturing facility exempt under section 297A.71, subdivision
42 new text begin ; and
new text end

new text begin (16) products and services for a regionwide public safety radio communication
system exempt under section 297A.70, subdivision 8, purchased after December 31,
2009, and before January 1, 2013 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2009. After December 31, 2013, purchasers may apply for a refund of tax
paid for qualifying purchases under this subdivision made after December 31, 2009, and
before January 1, 2013, in the manner provided in section 297A.75.
new text end

Sec. 9.

Minnesota Statutes 2010, section 297A.75, subdivision 2, is amended to read:

Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
must be paid to the applicant. Only the following persons may apply for the refund:

(1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;

(2) for subdivision 1, clauses (4) and (7), the applicant must be the governmental
subdivision;

(3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (6), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (8), the owner of the qualified low-income housing
project;

(6) for subdivision 1, clause (9), the applicant must be a municipal electric utility or
a joint venture of municipal electric utilities;

(7) for subdivision 1, clauses (10), (11), (14), and (15), the owner of the qualifying
business; and

(8) for subdivision 1, clauses (12) deleted text begin and deleted text end new text begin , new text end (13) new text begin , and (16) new text end , the applicant must be the
governmental entity that owns or contracts for the project or facility.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2009. After December 31, 2013, purchasers may apply for a refund of tax
paid for qualifying purchases under this subdivision made after December 31, 2009, and
before January 1, 2013, in the manner provided in section 297A.75.
new text end

Sec. 10.

Minnesota Statutes 2010, section 297A.75, subdivision 3, is amended to read:

Subd. 3.

Application.

(a) The application must include sufficient information
to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), (10), (11),
(12), (13), (14), deleted text begin or deleted text end (15) new text begin , or (16) new text end , the contractor, subcontractor, or builder must furnish to
the refund applicant a statement including the cost of the exempt items and the taxes paid
on the items unless otherwise specifically provided by this subdivision. The provisions of
sections 289A.40 and 289A.50 apply to refunds under this section.

(b) An applicant may not file more than two applications per calendar year for
refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

(c) Total refunds for purchases of items in section 297A.71, subdivision 40, must not
exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
of items in sections 297A.70, subdivision 3, paragraph (a), clause (11), and 297A.71,
subdivision 40, must not be filed until after June 30, 2009.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2009. After December 31, 2013, purchasers may apply for a refund of tax
paid for qualifying purchases under this subdivision made after December 31, 2009, and
before January 1, 2013, in the manner provided in section 297A.75.
new text end

Sec. 11.

Minnesota Statutes 2010, section 297A.82, subdivision 4, is amended to read:

Subd. 4.

Exemptions.

(a) The following transactions are exempt from the tax
imposed in this chapter to the extent provided.

(b) The purchase or use of aircraft previously registered in Minnesota by a
corporation or partnership is exempt if the transfer constitutes a transfer within the
meaning of section 351 or 721 of the Internal Revenue Code.

(c) The sale to or purchase, storage, use, or consumption by a licensed aircraft dealer
of an aircraft for which a commercial use permit has been issued pursuant to section
360.654 is exempt, if the aircraft is resold while the permit is in effect.

(d) Airflight equipment when sold to, or purchased, stored, used, or consumed by
airline companies, as defined in section 270.071, subdivision 4, is exempt. For purposes of
this subdivision, "airflight equipment" includes airplanes and parts necessary for the repair
and maintenance of such airflight equipment, and flight simulators, but does not include
airplanes with a gross weight of less than 30,000 pounds that are used on intermittent or
irregularly timed flights.

(e) Sales of, and the storage, distribution, use, or consumption of aircraft, as defined
in section 360.511 and approved by the Federal Aviation Administration, and which the
seller delivers to a purchaser outside Minnesota or which, without intermediate use, is
shipped or transported outside Minnesota by the purchaser are exempt, but only if the
purchaser is not a resident of Minnesota and provided that the aircraft is not thereafter
returned to a point within Minnesota, except in the course of interstate commerce or
isolated and occasional use, and will be registered in another state or country upon its
removal from Minnesota. This exemption applies even if the purchaser takes possession of
the aircraft in Minnesota and uses the aircraft in the state exclusively for training purposes
for a period not to exceed ten days prior to removing the aircraft from this state.

new text begin (f) The sale or purchase of aircraft and aircraft equipment, including parts necessary
for repair and maintenance of such airflight equipment, as defined under Federal Aviation
Regulations, Part 135, that has a maximum certified takeoff weight of 6,000 pounds or
more are exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 12.

Minnesota Statutes 2010, section 297A.99, subdivision 1, is amended to read:

Subdivision 1.

Authorization; scope.

(a) A political subdivision of this state may
impose a general sales tax (1) under section 297A.992, (2) under section 297A.993, (3) if
permitted by special law deleted text begin enacted prior to May 20, 2008 deleted text end , or (4) if the political subdivision
enacted and imposed the tax before January 1, 1982, and its predecessor provision new text begin , or if
the tax is allowed under subdivision 1a new text end .

(b) This section governs the imposition of a general sales tax by the political
subdivision. The provisions of this section preempt the provisions of any special law:

(1) enacted before June 2, 1997, or

(2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
provision from this section's rules by reference.

(c) This section does not apply to or preempt a sales tax on motor vehicles or a
special excise tax on motor vehicles.

deleted text begin (d) Until after May 31, 2010, a political subdivision may not advertise, promote,
expend funds, or hold a referendum to support imposing a local option sales tax unless
it is for extension of an existing tax or the tax was authorized by a special law enacted
prior to May 20, 2008.
deleted text end

Sec. 13.

Minnesota Statutes 2010, section 297A.99, is amended by adding a
subdivision to read:

new text begin Subd. 1a. new text end

new text begin General authority; certain cities. new text end

new text begin (a) A city, or a group of cities acting
under a joint powers agreement, may impose a local sales and use tax of one-half of one
percent without authorization under a special law provided that:
new text end

new text begin (1) imposition of the tax is approved by the voters of each city at a general election
pursuant to subdivision 3, paragraph (a); and
new text end

new text begin (2) all the conditions for adoption, use, and termination of the tax contained in this
subdivision and subdivisions 3 to 12 are met.
new text end

new text begin The authority under this section is in addition to any local sales tax authority
permitted under special law.
new text end

new text begin (b) The proceeds of a tax imposed under this subdivision must be dedicated
exclusively to pay for specific capital projects approved by the voters in the authorizing
referendum. No proceeds may be used for normal maintenance or operating costs of a
facility or properties owned by a city or group of cities. The proceeds may be used to
pay for collecting and administering the tax, to pay all or part of the capital costs of the
development, acquisition, construction, expansion, and improvement, and to secure and
pay debt service on bonds or other obligations issued to finance capital costs of a regional
project, including the following:
new text end

new text begin (1) convention or civic center;
new text end

new text begin (2) public libraries;
new text end

new text begin (3) parks, trails, and recreational centers;
new text end

new text begin (4) overpasses, arterial and collector roads, or bridges, on, adjacent to, or connecting
to a Minnesota state highway;
new text end

new text begin (5) railroad overpasses or crossing safety improvements;
new text end

new text begin (6) flood control and protection;
new text end

new text begin (7) water quality projects to address groundwater and drinking water pollution
problems;
new text end

new text begin (8) court facilities;
new text end

new text begin (9) fire, law enforcement, or public safety facilities; or
new text end

new text begin (10) municipal buildings.
new text end

new text begin (c) At least three months prior to holding a referendum to impose the tax, a city must
provide to the commissioner of revenue a resolution approved by the city that shows that
the tax will fund a project that meets the requirements of paragraphs (a) to (c), the date on
which the referendum will be held, the maximum amount raised by the tax that may be
used for the specified project, excluding issuance and interest costs for any related bonds,
and the maximum time that the tax may be imposed. The commissioner shall certify that
the requirements under this subdivision are met and the city shall provide any additional
information on the commissioner's requests in order to make that determination. The
commissioner's decision is final.
new text end

new text begin (d) The question put to the voters at the referendum authorizing the vote must
include information on the specific project or projects to be funded by the proceeds of the
tax, the maximum amount of sales tax revenues that will be used to fund each project, not
including any issuance and interest costs for related bonds, and the maximum length of
time that the tax will be imposed, which must not exceed ten years from the date the initial
tax was imposed without regard to an increase in the rate. If the referendum is not held on
the date contained in the resolution, the authority for imposing the tax expires.
new text end

new text begin (e) A city may issue general obligation bonds to pay the costs of projects specified
in the referendum authorizing imposition of the tax. The approval of the question under
paragraph (d) meets the requirement for elector approval for issuance of bonds under
section 475.58, subdivision 1. The debt represented by the bonds must not be included in
computing any debt limitations applicable to the city, and the levy of taxes required by
section 475.61 to pay the principal or any interest on the bonds must not be subject to any
levy limitations or be included in computing or applying any levy limitation to the city.
new text end

new text begin (f) The tax, if enacted, expires when the specified revenue has been raised or the
maximum time in which the tax is in effect under the resolution is reached, whichever is
sooner. Any tax imposed under this subdivision must expire no later than ten years after
imposition from the date the initial tax was imposed without regard to an increase in the
rate. The governing board of the city may, by ordinance, terminate the tax at an earlier
date. A city must not impose a new local option sales and use tax until a previously
authorized one has been terminated.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for local sales taxes for which the
authorizing referendum is held after June 30, 2011.
new text end

Sec. 14.

Minnesota Statutes 2010, section 297A.99, subdivision 3, is amended to read:

Subd. 3.

Requirements for adoption, use, termination.

(a) Imposition of a local
sales tax is subject to approval by voters of the political subdivision at a general election. new text begin
The election must be conducted before the governing body of the political subdivision
requests legislative approval of the tax. A referendum on the issuance of bonds to be paid
from the proceeds of a local sales tax is not subject to sections 275.60 and 275.61.
new text end

(b) The proceeds of the tax must be dedicated exclusively to payment of the cost of a
specific capital improvement which is designated at least 90 days before the referendum
on imposition of the tax is conducted.

(c) The tax must terminate after the improvement designated under paragraph (b)
has been completed.

(d) After a sales tax imposed by a political subdivision has expired or been
terminated, the political subdivision is prohibited from imposing a local sales tax for a
period of one year. Notwithstanding subdivision 13, this paragraph applies to all local
sales taxes in effect at the time of or imposed after May 26, 1999.

new text begin EFFECTIVE DATE. new text end

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

Sec. 15.

Minnesota Statutes 2010, section 297A.99, is amended by adding a
subdivision to read:

new text begin Subd. 14. new text end

new text begin Local government aid offset. new text end

new text begin A home rule charter or statutory city that
imposes a tax under subdivision 1a after June 30, 2011, is subject to a reduction in the
amount of aid the city is otherwise eligible to receive under section 477A.013, as provided
in this subdivision.
new text end

new text begin The amount of the sales tax collected for the calendar year is deducted from the aid
the home rule charter or statutory city would otherwise receive under section 477A.013
in the following year, but only to the extent of the amount of aid paid to that city that is
attributable to the sum of: (1) any aid base increase under section 477A.011, subdivision
36, paragraph (k); and (2) any aid increase due to its city jobs base under section 477.013,
subdivision 8.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2012 and
thereafter.
new text end

Sec. 16.

Minnesota Statutes 2010, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year 2009 and thereafter, each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base.

(b) For aids payable in 2011 only, the total aid in the previous year for any city shall
mean the amount of aid it was certified to receive for aids payable in 2010 under this
section minus the amount of its aid reduction under section 477A.0134. For aids payable
in 2012 and thereafter, the total aid in the previous year for any city means the amount of
aid it was certified to receive under this section in the previous payable year.

(c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
aid for any city with a population of 2,500 or more may not be less than its total aid under
this section in the previous year minus the lesser of $10 multiplied by its population, or ten
percent of its net levy in the year prior to the aid distribution.

(d) For aids payable in 2010 and thereafter, the total aid for a city with a population
less than 2,500 must not be less than the amount it was certified to receive in the
previous year minus the lesser of $10 multiplied by its population, or five percent of its
2003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
population less than 2,500 must not be less than what it received under this section in the
previous year unless its total aid in calendar year 2008 was aid under section 477A.011,
subdivision 36, paragraph (s), in which case its minimum aid is zero.

(e) A city's aid loss under this section may not exceed $300,000 in any year in
which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
greater than the appropriation under that subdivision in the previous year, unless the
city has an adjustment in its city net tax capacity under the process described in section
469.174, subdivision 28.

(f) If a city's net tax capacity used in calculating aid under this section has decreased
in any year by more than 25 percent from its net tax capacity in the previous year due to
property becoming tax-exempt Indian land, the city's maximum allowed aid increase
under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
resulting from the property becoming tax exempt.

new text begin (g) In calendar year 2012 and thereafter, the aid that would otherwise be distributed
to a city under paragraphs (a) to (f) will be reduced or eliminated if the city is subject to an
aid offset under section 297A.99, subdivision 14.
new text end

Sec. 17.

Minnesota Statutes 2010, section 477A.03, subdivision 2a, is amended to read:

Subd. 2a.

Cities.

For aids payable in 2011 and thereafter, the total aid paid under
section 477A.013, subdivision 9, is $527,100,646 new text begin , reduced by the cumulative amount of
all aid offsets for that year under section 297A.99, subdivision 14 new text end .

Sec. 18.

Laws 1996, chapter 471, article 2, section 29, subdivision 1, as amended by
Laws 2006, chapter 259, article 3, section 3, is amended to read:

Subdivision 1.

Sales tax authorized.

new text begin (a) new text end Notwithstanding Minnesota Statutes,
section 477A.016, or any other contrary provision of law, ordinance, or city charter, the
city of Hermantown may, by ordinance, impose an additional sales tax of up to one
percent on sales transactions taxable pursuant to Minnesota Statutes, chapter 297A, that
occur within the city. The proceeds of the tax imposed under this section must be used to
meet the costs of:

(1) extending a sewer interceptor line;

(2) construction of a booster pump station, reservoirs, and related improvements
to the water system; and

(3) construction of a building containing a police and fire station and an
administrative services facility.

new text begin (b) If the city imposed a sales tax of only one-half of one percent under paragraph (a),
it may increase the tax to one percent to fund the purposes under paragraph (a) provided it
is approved by the voters at a general or special election held before December 31, 2012.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following compliance by the
city of Hermantown with Minnesota Statutes, section 645.021, subdivision 3.
new text end

Sec. 19.

Laws 1998, chapter 389, article 8, section 43, subdivision 3, as amended by
Laws 2005, First Special Session chapter 3, article 5, section 28, is amended to read:

Subd. 3.

Use of revenues.

new text begin (a) new text end Revenues received from the taxes authorized by
subdivisions 1 and 2 must be used by the city to pay for the cost of collecting and
administering the taxes and to pay for the following projects:

(1) transportation infrastructure improvements including regional highway and
airport improvements;

(2) improvements to the civic center complex;

(3) a municipal water, sewer, and storm sewer project necessary to improve regional
ground water quality; and

(4) construction of a regional recreation and sports center and other higher education
facilities available for both community and student use.

new text begin (b) new text end The total amount of capital expenditures or bonds for deleted text begin these deleted text end projects new text begin listed in
paragraph (a) new text end that may be paid from the revenues raised from the taxes authorized in this
section may not exceed $111,500,000. The total amount of capital expenditures or bonds
for the project in clause (4) that may be paid from the revenues raised from the taxes
authorized in this section may not exceed $28,000,000.

new text begin (c) In addition to the projects authorized in paragraph (a) and not subject to the
amount stated in paragraph (b), the city of Rochester may, if approved by the voters at an
election under subdivision 5, paragraph (c), use the revenues received from the taxes and
bonds authorized in this section to pay the costs of or bonds for the following purposes:
new text end

new text begin (1) $47,000,000 for capital expenditures and bonds for transportation infrastructure
improvements including regional highway and airport improvements, but excluding any
transportation improvements related to a railroad bypass that would divert rail traffic
from the city of Rochester;
new text end

new text begin (2) $26,500,000 for capital expenditures and bonds for higher education facilities in
the city;
new text end

new text begin (3) $40,500,000 for capital expenditures and bonds for improvements to regional
youth and elder community facilities;
new text end

new text begin (4) $8,000,000 for capital expenditures and bonds for construction of regional public
safety facilities; and
new text end

new text begin (5) $38,000,000 for project expenditures and bonds for any economic development
purposes authorized under Minnesota Statutes, chapter 469.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 20.

Laws 1998, chapter 389, article 8, section 43, subdivision 4, as amended by
Laws 2005, First Special Session chapter 3, article 5, section 29, is amended to read:

Subd. 4.

Bonding authority.

(a) The city may issue bonds under Minnesota
Statutes, chapter 475, to finance the capital expenditure and improvement projects.
An election to approve up to $71,500,000 in bonds under Minnesota Statutes, section
475.58, may be held in combination with the election to authorize imposition of the tax
under subdivision 1. Whether to permit imposition of the tax and issuance of bonds
may be posed to the voters as a single question. The question must state that the sales
tax revenues are pledged to pay the bonds, but that the bonds are general obligations
and will be guaranteed by the city's property taxes. An election to approve up to an
additional $40,000,000 of bonds under Minnesota Statutes, section 475.58, may be held
in combination with the election to authorize extension of the tax under subdivision 5,
paragraph (b). new text begin An election to approve bonds under Minnesota Statutes, section 475.58,
in an amount not to exceed $160,000,000 plus an amount equal to the costs of issuance
of the bonds, may be held in combination with the election to authorize the extension of
the tax under subdivision 5, paragraph (c).
new text end

new text begin (b) new text end The city deleted text begin may deleted text end new text begin shall new text end enter into an agreement with Olmsted County under which the
city and the county agree to jointly undertake and finance certain roadway infrastructure
improvements. The agreement deleted text begin may deleted text end new text begin shall new text end provide that the city will make available to the
county a portion of the sales tax revenues collected pursuant to the authority granted in
this section and the bonding authority provided in this subdivision. The county may,
pursuant to the agreement, issue its general obligation bonds in a principal amount not
exceeding the amount authorized by its agreement with the city payable primarily from
the sales tax revenues from the city under the agreement. The county's bonds must be
issued in accordance with the provisions of Minnesota Statutes, chapter 475, except that
no election is required for the issuance of the bonds and the bonds are not included in
the net debt of the county.

deleted text begin (b) deleted text end new text begin (c) new text end The issuance of bonds under this subdivision is not subject to Minnesota
Statutes, section 275.60.

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

new text begin (e) new text end The aggregate principal amount of bonds, plus the aggregate of the taxes used
directly to pay eligible capital expenditures and improvements new text begin for projects listed in
subdivision 3, paragraph (a), new text end may not exceed new text begin new text end $111,500,000, plus an amount equal to the
costs related to issuance of the bonds. new text begin The aggregate principal amount of bonds plus the
aggregate of the taxes used directly to pay the costs of eligible projects under subdivision
3, paragraph (c), may not exceed $160,000,000 plus an amount equal to the costs of
issuance of the bonds.
new text end

deleted text begin (d) deleted text end new text begin (f) new text end The taxes may be pledged to and used for the payment of the bonds and
any bonds issued to refund them, only if the bonds and any refunding bonds are general
obligations of the city.

new text begin EFFECTIVE DATE. new text end

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

Sec. 21.

Laws 1998, chapter 389, article 8, section 43, subdivision 5, as amended by
Laws 2005, First Special Session chapter 3, article 5, section 30, is amended to read:

Subd. 5.

Termination of taxes.

(a) The taxes imposed under subdivisions 1 and
2 expire at the later of (1) December 31, 2009, or (2) when the city council determines
that sufficient funds have been received from the taxes to finance the first $71,500,000
of capital expenditures and bonds for the projects authorized in subdivision 3, including
the amount to prepay or retire at maturity the principal, interest, and premium due on any
bonds issued for the projects under subdivision 4, unless the taxes are extended as allowed
in paragraph (b). Any funds remaining after completion of the project and retirement or
redemption of the bonds shall also be used to fund the projects under subdivision 3. The
taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city so
determines by ordinance.

(b) Notwithstanding Minnesota Statutes, sections 297A.99 and 477A.016, or any
other contrary provision of law, ordinance, or city charter, the city of Rochester may, by
ordinance, extend the taxes authorized in subdivisions 1 and 2 beyond December 31, 2009,
if approved by the voters of the city at a special election in 2005 or the general election in
2006. The question put to the voters must indicate that an affirmative vote would allow
up to an additional $40,000,000 of sales tax revenues be raised and up to $40,000,000
of bonds to be issued above the amount authorized in the June 23, 1998, referendum for
the projects specified in subdivision 3. If the taxes authorized in subdivisions 1 and 2 are
extended under this paragraph, the taxes expire when the city council determines that
sufficient funds have been received from the taxes to finance the projects and to prepay
or retire at maturity the principal, interest, and premium due on any bonds issued for the
projects under subdivision 4. Any funds remaining after completion of the project and
retirement or redemption of the bonds may be placed in the general fund of the city.

new text begin (c) Notwithstanding Minnesota Statutes, sections 297A.99 and 477A.016, or any
other contrary provision of law, ordinance, or city charter, the city of Rochester may, by
ordinance, extend the taxes authorized in subdivisions 1 and 2 beyond the date the city
council determines that sufficient funds have been received from the taxes to finance
$111,500,000 of expenditures and bonds for the projects authorized in subdivision 3,
paragraph (a), plus an amount equal to the costs of issuance of the bonds and including
the amount to prepay or retire at maturity the principal, interest, and premiums due on
any bonds issued for the projects under subdivision 4, paragraph (a), if approved by the
voters of the city at the general election in 2012. If the election to authorize the additional
$160,000,000 of bonds plus an amount equal to the costs of the issuance of the bonds is
placed on the general election ballot in 2012, the city may continue to collect the taxes
authorized in subdivisions 1 and 2 until December 31, 2012. The question put to the
voters must indicate that an affirmative vote would allow sales tax revenues be raised for
an extended period of time and an additional $160,000,000 of bonds plus an amount
equal to the costs of issuance of the bonds, to be issued above the amount authorized in
the previous elections required under paragraphs (a) and (b) for the projects and amounts
specified in subdivision 3. The issuance of bonds under this subdivision is not subject to
Minnesota Statutes, sections 275.60 and 275.61. If the taxes authorized in subdivisions 1
and 2 are extended under this paragraph, the taxes expire when the city council determines
that $160,000,000 has been received from the taxes to finance the projects plus an amount
sufficient to prepay or retire at maturity the principal, interest, and premium due on any
bonds issued for the projects under subdivision 4, including any bonds issued to refund the
bonds. Any funds remaining after completion of the projects and retirement or redemption
of the bonds may be placed in the general fund of the city.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Rochester with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 22.

Laws 2008, chapter 366, article 7, section 19, subdivision 3, is amended to
read:

Subd. 3.

Use of revenues.

new text begin Notwithstanding Minnesota Statutes, section 297A.99,
subdivision 3, paragraph (b), new text end the proceeds of the tax imposed under this section shall be
used to pay for the costs of acquisition, construction, improvement, and development of
deleted text begin a deleted text end new text begin regional parks, bicycle trails, park land, open space, and new text end pedestrian deleted text begin bridge deleted text end new text begin walkways,
as described in the city improvement plan adopted by the city council by resolution on
December 12, 2006 new text end , and land and buildings for a community and recreation center. The
total amount of revenues from the taxes in subdivisions 1 and 2 that may be used to fund
these projects is $12,000,000 plus any associated bond costs.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Clearwater with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.
new text end

Sec. 23. new text begin CITY OF FERGUS FALLS; SALES AND USE TAX AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
297A.99, subdivision 1, or 477A.016, or any other provision of law, ordinance, or city
charter, as approved by the voters at the November 2, 2010, general election, the city
of Fergus Falls may impose by ordinance a sales and use tax of up to one-half of one
percent for the purposes specified in subdivision 2. Except as provided in this section, the
provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration,
collection, and enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from taxes authorized by subdivision
1 must be used by the city of Fergus Falls to pay the cost of collecting the tax and to pay
for all or part of the costs of the acquisition and betterment of a regional community ice
arena facility. Authorized expenses include, but are not limited to, acquiring property,
predesign, design, and paying construction, furnishing, and equipment costs related to
the facility and paying debt service on bonds or other obligations issued by the Fergus
Falls Port Authority to finance the facility.
new text end

new text begin Subd. 3. new text end

new text begin Termination of taxes. new text end

new text begin The tax imposed under this section expires when
the Fergus Falls City Council determines that sufficient funds have been received from
the taxes to finance the facility and to prepay or retire at maturity the principal, interest,
and premium due on any bonds, including refunding bonds, issued by the Fergus Falls
Port Authority for the facility. Any funds remaining after completion of the facility and
retirement or redemption of the bonds may be placed in the general fund of the city of
Fergus Falls. The tax imposed under subdivision 1 may expire at an earlier time if the
city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body
of the city of Fergus Falls and its chief clerical officer timely comply with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.
new text end

Sec. 24. new text begin CITY OF LANESBORO; SALES TAX AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, as approved by
the voters at the November 2, 2010, general election, the city of Lanesboro may impose by
ordinance a sales and use tax of up to one-half of one percent for the purposes specified in
subdivision 2. Except as provided in this section, the provisions of Minnesota Statutes,
section 297A.99, govern the imposition of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the tax authorized under
subdivision 1 must be used by the city of Lanesboro to pay the costs of collecting the tax
and to pay for all or a part of the improvements to city streets and utility systems, and the
betterment of city municipal buildings consisting of (i) street and utility improvements to
Calhoun Avenue, Fillmore Avenue, Kenilworth Avenue, Pleasant Street, Kirkwood Street,
Auburn Avenue, and Zenith Street, and street light replacement on State Highways 250
and 16; (ii) improvements to utility systems consisting of wastewater treatment facility
improvements and electric utility improvements to the Lanesboro High Hazard Dam; and
(iii) improvements to the Lanesboro community center, library, and city hall, including
paying debt service on bonds or other obligations issued to fund these projects under
subdivision 3. The total amount of revenues from the taxes in subdivision 1 that may be
used to fund these projects is $800,000 plus any associated bond costs.
new text end

new text begin Subd. 3. new text end

new text begin Bonding authority. new text end

new text begin The city of Lanesboro may issue bonds under
Minnesota Statutes, chapter 475, to pay capital and administrative expenses related to the
projects authorized in subdivision 2. An election to approve the bonds under Minnesota
Statutes, section 475.58, is not required. The issuance of bonds under this subdivision
is not subject to Minnesota Statutes, sections 275.60 and 275.61. The bonds are not
included in computing any debt limitation applicable to the city and the levy of taxes
under Minnesota Statutes, section 475.61, to pay principal and interest on the bonds is
not subject to any levy limitation.
new text end

new text begin The aggregate principal amount of the bonds plus the aggregate of the taxes used
directly to pay costs of the projects listed in subdivision 2 may not exceed $800,000, plus
an amount equal to the costs related to issuance of the bonds and capitalized interest.
new text end

new text begin The taxes authorized in subdivision 1 may be pledged and used for payments of
the bonds and bonds issued to refund them, only if the bonds and any refunding bonds
are general obligations of the city.
new text end

new text begin Subd. 4. new text end

new text begin Termination of tax. new text end

new text begin The tax imposed under subdivision 1 expires when
the Lanesboro City Council determines that sufficient funds have been raised from the
taxes to finance the projects authorized under subdivision 2 and to prepay or retire at
maturity the principal, interest, and premium due on any bonds issued under subdivision 3.
Any funds remaining after completion of the project and retirement or redemption of the
bonds may be placed in the general fund of the city. The tax imposed under subdivision 1
may expire at an earlier time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of
the city of Lanesboro and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 25. new text begin CITY OF HUTCHINSON; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, as approved by
the voters at a referendum held at the 2010 general election, the city of Hutchinson
may impose by ordinance a sales and use tax of up to one-half of one percent for the
purposes specified in subdivision 3. Except as otherwise provided in this section,
Minnesota Statutes, section 297A.99, governs the imposition, administration, collection,
and enforcement of the tax authorized under this subdivision. Minnesota Statutes, section
297A.99, subdivision 1, paragraph (d), does not apply to this section.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, the city of Hutchinson
may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up
to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person
engaged within the city in the business of selling motor vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the taxes authorized by this
section must be used to pay the cost of collecting and administering the tax and to finance
the costs of constructing the water treatment facility and renovating the wastewater
treatment facility in the city of Hutchinson. Authorized costs include, but are not limited
to, construction and engineering costs of the projects and associated bond costs.
new text end

new text begin Subd. 4. new text end

new text begin Termination of tax. new text end

new text begin The taxes authorized under subdivisions 1 and 2
terminate at the earlier of: (1) 18 years after the date of initial imposition of the tax; or
(2) when the Hutchinson City Council determines that the amount of revenues raised is
sufficient to pay for the projects under subdivision 3, plus the amount needed to finance
the capital and administrative costs for the projects specified in subdivision 3, and to repay
or retire at maturity the principal, interest, and premium due on any bonds issued for the
projects. Any funds remaining after completion of the projects specified in subdivision
3 and retirement or redemption of the associated bonds may be placed in the general
fund of the city. The taxes imposed under subdivisions 1 and 2 may expire at an earlier
time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Hutchinson with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.
new text end

Sec. 26. new text begin REPEALER.
new text end

new text begin Minnesota Rules, part 8130.0500, subpart 2, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

ARTICLE 3

TAX AIDS AND CREDITS

Section 1.

Minnesota Statutes 2010, section 97A.061, subdivision 1, is amended to
read:

Subdivision 1.

Applicability; amount.

(a) The commissioner shall annually make a
payment to each county having public hunting areas and game refuges. Money to make
the payments is annually appropriated for that purpose from the general fund. Except as
provided in paragraph (b), this section does not apply to state trust fund land and other
state land not purchased for game refuge or public hunting purposes. Except as provided
in paragraph (b), the payment shall be the greatest of:

(1) deleted text begin 35 deleted text end new text begin 29.75 new text end percent of the gross receipts from all special use permits and leases of
land acquired for public hunting and game refuges;

(2) deleted text begin 50 deleted text end new text begin 42.5 new text end cents per acre on land purchased actually used for public hunting or
game refuges; or

(3) deleted text begin three-fourths of one deleted text end new text begin .6375 new text end percent of the appraised value of purchased land
actually used for public hunting and game refuges.

(b) The payment shall be 50 percent of the dollar amount deleted text begin adjusted for inflation deleted text end as
determined under section 477A.12, subdivision 1, paragraph (a), clause (1), multiplied
by the number of acres of land in the county that are owned by another state agency for
military purposes and designated as a game refuge under section 97A.085.

(c) The payment must be reduced by the amount paid under subdivision 3 for
croplands managed for wild geese.

(d) The appraised value is the purchase price for five years after acquisition.
The appraised value shall be determined by the county assessor every five years after
acquisition.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2011 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2010, section 97A.061, subdivision 3, is amended to read:

Subd. 3.

Goose management croplands.

(a) The commissioner shall make a
payment on July 1 of each year to each county where the state owns more than 1,000 acres
of crop land, for wild goose management purposes. The payment shall be equal to new text begin 85
percent of new text end the taxes assessed on comparable, privately owned, adjacent land. Money to
make the payments is annually appropriated for that purpose from the general fund. The
county treasurer shall allocate and distribute the payment as provided in subdivision 2.

(b) The land used for goose management under this subdivision is exempt from
taxation as provided in sections 272.01 and 273.19.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2011 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2010, section 270A.03, subdivision 7, is amended to read:

Subd. 7.

Refund.

"Refund" means an individual income tax refund deleted text begin or political
contribution refund deleted text end , pursuant to chapter 290, or a property tax credit or refund, pursuant to
chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.

For purposes of this chapter, lottery prizes, as set forth in section 349A.08,
subdivision 8, and amounts granted to persons by the legislature on the recommendation
of the joint senate-house of representatives Subcommittee on Claims shall be treated
as refunds.

In the case of a joint property tax refund payable to spouses under chapter 290A,
the refund shall be considered as belonging to each spouse in the proportion of the total
refund that equals each spouse's proportion of the total income determined under section
290A.03, subdivision 3. In the case of a joint income tax refund under chapter 289A, the
refund shall be considered as belonging to each spouse in the proportion of the total
refund that equals each spouse's proportion of the total taxable income determined under
section 290.01, subdivision 29. The commissioner shall remit the entire refund to the
claimant agency, which shall, upon the request of the spouse who does not owe the debt,
determine the amount of the refund belonging to that spouse and refund the amount to
that spouse. For court fines, fees, and surcharges and court-ordered restitution under
section 611A.04, subdivision 2, the notice provided by the commissioner of revenue under
section 270A.07, subdivision 2, paragraph (b), serves as the appropriate legal notice
to the spouse who does not owe the debt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims based on
contributions made after June 30, 2011.
new text end

Sec. 4.

Minnesota Statutes 2010, section 273.13, subdivision 21b, is amended to read:

Subd. 21b.

Tax capacity.

deleted text begin (a) Gross tax capacity means the product of the
appropriate gross class rates in this section and market values.
deleted text end

deleted text begin (b) deleted text end Net tax capacity means the product of the appropriate net class rates in this
section and market values new text begin , minus the property's tax capacity reduction determined under
section 273.1384, subdivision 1, if applicable new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 5.

Minnesota Statutes 2010, section 273.13, subdivision 23, is amended to read:

Subd. 23.

Class 2.

(a) An agricultural homestead consists of class 2a agricultural
land that is homesteaded, along with any class 2b rural vacant land that is contiguous to
the class 2a land under the same ownership. The market value of the house and garage
and immediately surrounding one acre of land has the same class rates as class 1a or 1b
property under subdivision 22. The value of the remaining land including improvements
up to the first tier valuation limit of agricultural homestead property has a net class rate
of 0.5 percent of market value. The remaining property over the first tier has a class rate
of one percent of market value. For purposes of this subdivision, the "first tier valuation
limit of agricultural homestead property" and "first tier" means the limit certified under
section 273.11, subdivision 23.

(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that
are agricultural land and buildings. Class 2a property has a net class rate of one percent of
market value, unless it is part of an agricultural homestead under paragraph (a). Class
2a property must also include any property that would otherwise be classified as 2b,
but is interspersed with class 2a property, including but not limited to sloughs, wooded
wind shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback
requirement, and other similar land that is impractical for the assessor to value separately
from the rest of the property or that is unlikely to be able to be sold separately from
the rest of the property.

An assessor may classify the part of a parcel described in this subdivision that is used
for agricultural purposes as class 2a and the remainder in the class appropriate to its use.

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof,
that are unplatted real estate, rural in character and not used for agricultural purposes,
including land used for growing trees for timber, lumber, and wood and wood products,
that is not improved with a structure. The presence of a minor, ancillary nonresidential
structure as defined by the commissioner of revenue does not disqualify the property from
classification under this paragraph. Any parcel of 20 acres or more improved with a
structure that is not a minor, ancillary nonresidential structure must be split-classified, and
ten acres must be assigned to the split parcel containing the structure. Class 2b property
has a net class rate of one percent of market value unless it is part of an agricultural
homestead under paragraph (a), or qualifies as class 2c under paragraph (d).

(d) Class 2c managed forest land consists of no less than 20 and no more than
1,920 acres statewide per taxpayer that is being managed under a forest management
plan deleted text begin that meets the requirements of chapter 290C, but is not enrolled in the sustainable
forest resource management incentive program deleted text end . It has a class rate of .65 percent,
provided that the owner of the property must apply to the assessor in order for the
property to initially qualify for the reduced rate and provide the information required
by the assessor to verify that the property qualifies for the reduced rate. If the assessor
receives the application and information before May 1 in an assessment year, the property
qualifies beginning with that assessment year. If the assessor receives the application
and information after April 30 in an assessment year, the property may not qualify until
the next assessment year. The commissioner of natural resources must concur that the
land is qualified. The commissioner of natural resources shall annually provide county
assessors verification information on a timely basis. The presence of a minor, ancillary
nonresidential structure as defined by the commissioner of revenue does not disqualify
the property from classification under this paragraph. new text begin For purposes of this paragraph,
a "forest management plan" means a written document providing a framework for
site-specific healthy, productive, and sustainable forest resources. A forest management
plan must include at least the following: (i) forest management goals for the land; (ii) a
reliable field inventory of the individual forest cover types, their age, and density; (iii) a
description of the soil type and quality; (iv) an aerial photo and/or map of the vegetation
and other natural features of the land clearly indicating the boundaries of the land and of
the forest land; (v) the proposed future conditions of the land; (vi) prescriptions to meet
proposed future conditions of the land; (vii) a recommended timetable for implementing
the prescribed activities; and (viii) a legal description of the land encompassing the
parcels included in the plan. All management activities prescribed in a plan must be in
accordance with the recommended timber harvesting and forest management guidelines.
The commissioner of natural resources shall provide a framework for plan content and
updating and revising plans.
new text end

(e) Agricultural land as used in this section means contiguous acreage of ten
acres or more, used during the preceding year for agricultural purposes. "Agricultural
purposes" as used in this section means the raising, cultivation, drying, or storage of
agricultural products for sale, or the storage of machinery or equipment used in support
of agricultural production by the same farm entity. For a property to be classified as
agricultural based only on the drying or storage of agricultural products, the products
being dried or stored must have been produced by the same farm entity as the entity
operating the drying or storage facility. "Agricultural purposes" also includes enrollment
in the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal
Conservation Reserve Program as contained in Public Law 99-198 or a similar state
or federal conservation program if the property was classified as agricultural (i) under
this subdivision for the assessment year 2002 or (ii) in the year prior to its enrollment.
Agricultural classification shall not be based upon the market value of any residential
structures on the parcel or contiguous parcels under the same ownership.

(f) Real estate of less than ten acres, which is exclusively or intensively used for
raising or cultivating agricultural products, shall be considered as agricultural land. To
qualify under this paragraph, property that includes a residential structure must be used
intensively for one of the following purposes:

(i) for drying or storage of grain or storage of machinery or equipment used to
support agricultural activities on other parcels of property operated by the same farming
entity;

(ii) as a nursery, provided that only those acres used to produce nursery stock are
considered agricultural land;

(iii) for livestock or poultry confinement, provided that land that is used only for
pasturing and grazing does not qualify; or

(iv) for market farming; for purposes of this paragraph, "market farming" means the
cultivation of one or more fruits or vegetables or production of animal or other agricultural
products for sale to local markets by the farmer or an organization with which the farmer
is affiliated.

(g) Land shall be classified as agricultural even if all or a portion of the agricultural
use of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under
section 273.111.

(h) The property classification under this section supersedes, for property tax
purposes only, any locally administered agricultural policies or land use restrictions that
define minimum or maximum farm acreage.

(i) The term "agricultural products" as used in this subdivision includes production
for sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
bees, and apiary products by the owner;

(2) fish bred for sale and consumption if the fish breeding occurs on land zoned
for agricultural use;

(3) the commercial boarding of horses, which may include related horse training and
riding instruction, if the boarding is done on property that is also used for raising pasture
to graze horses or raising or cultivating other agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for
equestrian activities, excluding racing;

(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed
under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, including short rotation woody crops, and not
sold for timber, lumber, wood, or wood products; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.

(j) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2),
and (3),

the assessor shall classify the part of the parcel used for agricultural purposes as class
1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
use. The grading, sorting, and packaging of raw agricultural products for first sale is
considered an agricultural purpose. A greenhouse or other building where horticultural
or nursery products are grown that is also used for the conduct of retail sales must be
classified as agricultural if it is primarily used for the growing of horticultural or nursery
products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
those products. Use of a greenhouse or building only for the display of already grown
horticultural or nursery products does not qualify as an agricultural purpose.

(k) The assessor shall determine and list separately on the records the market value
of the homestead dwelling and the one acre of land on which that dwelling is located. If
any farm buildings or structures are located on this homesteaded acre of land, their market
value shall not be included in this separate determination.

(l) Class 2d airport landing area consists of a landing area or public access area of
a privately owned public use airport. It has a class rate of one percent of market value.
To qualify for classification under this paragraph, a privately owned public use airport
must be licensed as a public airport under section 360.018. For purposes of this paragraph,
"landing area" means that part of a privately owned public use airport properly cleared,
regularly maintained, and made available to the public for use by aircraft and includes
runways, taxiways, aprons, and sites upon which are situated landing or navigational aids.
A landing area also includes land underlying both the primary surface and the approach
surfaces that comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of
the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under this paragraph must be described and certified
by the commissioner of transportation. The certification is effective until it is modified,
or until the airport or landing area no longer meets the requirements of this paragraph.
For purposes of this paragraph, "public access area" means property used as an aircraft
parking ramp, apron, or storage hangar, or an arrival and departure building in connection
with the airport.

(m) Class 2e consists of land with a commercial aggregate deposit that is not actively
being mined and is not otherwise classified as class 2a or 2b, provided that the land is not
located in a county that has elected to opt-out of the aggregate preservation program as
provided in section 273.1115, subdivision 6. It has a class rate of one percent of market
value. To qualify for classification under this paragraph, the property must be at least
ten contiguous acres in size and the owner of the property must record with the county
recorder of the county in which the property is located an affidavit containing:

(1) a legal description of the property;

(2) a disclosure that the property contains a commercial aggregate deposit that is not
actively being mined but is present on the entire parcel enrolled;

(3) documentation that the conditional use under the county or local zoning
ordinance of this property is for mining; and

(4) documentation that a permit has been issued by the local unit of government
or the mining activity is allowed under local ordinance. The disclosure must include a
statement from a registered professional geologist, engineer, or soil scientist delineating
the deposit and certifying that it is a commercial aggregate deposit.

For purposes of this section and section 273.1115, "commercial aggregate deposit"
means a deposit that will yield crushed stone or sand and gravel that is suitable for use
as a construction aggregate; and "actively mined" means the removal of top soil and
overburden in preparation for excavation or excavation of a commercial deposit.

(n) When any portion of the property under this subdivision or subdivision 22 begins
to be actively mined, the owner must file a supplemental affidavit within 60 days from
the day any aggregate is removed stating the number of acres of the property that is
actively being mined. The acres actively being mined must be (1) valued and classified
under subdivision 24 in the next subsequent assessment year, and (2) removed from the
aggregate resource preservation property tax program under section 273.1115, if the
land was enrolled in that program. Copies of the original affidavit and all supplemental
affidavits must be filed with the county assessor, the local zoning administrator, and the
Department of Natural Resources, Division of Land and Minerals. A supplemental
affidavit must be filed each time a subsequent portion of the property is actively mined,
provided that the minimum acreage change is five acres, even if the actual mining activity
constitutes less than five acres.

(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are
not rules and are exempt from the rulemaking provisions of chapter 14, and the provisions
in section 14.386 concerning exempt rules do not apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2011, payable
in 2012, and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2010, section 273.1384, subdivision 1, is amended to read:

Subdivision 1.

Residential homestead market value deleted text begin credit deleted text end new text begin tax capacity
reduction new text end .

Each county auditor shall determine a homestead deleted text begin credit deleted text end new text begin tax capacity reduction new text end
for each class 1a, 1b, and 2a homestead property within the county equal to 0.4 percent of
the first $76,000 of market value of the property minus .09 percent of the market value
in excess of $76,000. The deleted text begin credit deleted text end new text begin tax capacity reduction new text end amount may not be less than
zero. In the case of an agricultural or resort homestead, only the market value of the
house, garage, and immediately surrounding one acre of land is eligible in determining
the property's homestead deleted text begin credit deleted text end new text begin tax capacity reduction new text end . In the case of a property that is
classified as part homestead and part nonhomestead, (i) the deleted text begin credit deleted text end new text begin tax capacity reduction new text end
shall apply only to the homestead portion of the property, but (ii) if a portion of a property
is classified as nonhomestead solely because not all the owners occupy the property, not
all the owners have qualifying relatives occupying the property, or solely because not all
the spouses of owners occupy the property, the deleted text begin credit deleted text end new text begin tax capacity reduction new text end amount shall
be initially computed as if that nonhomestead portion were also in the homestead class and
then prorated to the owner-occupant's percentage of ownership. For the purpose of this
section, when an owner-occupant's spouse does not occupy the property, the percentage of
ownership for the owner-occupant spouse is one-half of the couple's ownership percentage.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 7.

Minnesota Statutes 2010, section 273.1384, subdivision 3, is amended to read:

Subd. 3.

Credit reimbursements.

The county auditor shall determine the tax
reductions allowed under deleted text begin this section deleted text end new text begin subdivision 2 new text end within the county for each taxes
payable year and shall certify that amount to the commissioner of revenue as a part of the
abstracts of tax lists submitted by the county auditors under section 275.29. Any prior
year adjustments shall also be certified on the abstracts of tax lists. The commissioner
shall review the certifications for accuracy, and may make such changes as are deemed
necessary, or return the certification to the county auditor for correction. The deleted text begin credits deleted text end new text begin
credit new text end under this section must be used to proportionately reduce the net tax capacity-based
property tax payable to each local taxing jurisdiction as provided in section 273.1393.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 8.

Minnesota Statutes 2010, section 273.1384, subdivision 4, is amended to read:

Subd. 4.

Payment.

(a) The commissioner of revenue shall reimburse each local
taxing jurisdiction, other than school districts, for the tax reductions granted under deleted text begin this
section deleted text end new text begin subdivision 2 new text end in two equal installments on October 31 and December 26 of the
taxes payable year for which the reductions are granted, including in each payment
the prior year adjustments certified on the abstracts for that taxes payable year. The
reimbursements related to tax increments shall be issued in one installment each year on
December 26.

(b) The commissioner of revenue shall certify the total of the tax reductions granted
under deleted text begin this section deleted text end new text begin subdivision 2 new text end for each taxes payable year within each school district to
the commissioner of the Department of Education and the commissioner of education shall
pay the reimbursement amounts to each school district as provided in section 273.1392.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 9.

Minnesota Statutes 2010, section 273.1384, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Credit reductions and limitation; counties and cities. new text end

new text begin In 2011, the
market value credit reimbursement payment to each county and city authorized under
subdivision 4 may not exceed the reimbursement payment received by the county or city
for taxes payable in 2010.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for credit reimbursements in 2011.
new text end

Sec. 10.

Minnesota Statutes 2010, section 273.1393, is amended to read:

273.1393 COMPUTATION OF NET PROPERTY TAXES.

Notwithstanding any other provisions to the contrary, "net" property taxes are
determined by subtracting the credits in the order listed from the gross tax:

(1) disaster credit as provided in sections 273.1231 to 273.1235;

(2) powerline credit as provided in section 273.42;

(3) agricultural preserves credit as provided in section 473H.10;

(4) enterprise zone credit as provided in section 469.171;

(5) disparity reduction credit;

(6) conservation tax credit as provided in section 273.119;

(7) deleted text begin homestead and deleted text end agricultural deleted text begin credits deleted text end new text begin credit new text end as provided in section 273.1384;

(8) taconite homestead credit as provided in section 273.135;

(9) supplemental homestead credit as provided in section 273.1391; and

(10) the bovine tuberculosis zone credit, as provided in section 273.113.

The combination of all property tax credits must not exceed the gross tax amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 11.

Minnesota Statutes 2010, section 273.1398, subdivision 3, is amended to read:

Subd. 3.

Disparity reduction aid.

The amount of disparity aid certified new text begin in 2012
new text end for each deleted text begin taxing deleted text end new text begin school new text end district within each unique taxing jurisdiction deleted text begin for taxes payable in
the prior year shall be multiplied by the ratio of (1) the jurisdiction's tax capacity using
the class rates for taxes payable in the year for which aid is being computed, to (2) its tax
capacity using the class rates for taxes payable in the year prior to that for which aid is
being computed, both based upon market values for taxes payable in the year prior to
that for which aid is being computed. If the commissioner determines that insufficient
information is available to reasonably and timely calculate the numerator in this ratio
for the first taxes payable year that a class rate change or new class rate is effective,
the commissioner shall omit the effects of that class rate change or new class rate when
calculating this ratio for aid payable in that taxes payable year. For aid payable in the
year following a year for which such omission was made, the commissioner shall use in
the denominator for the class that was changed or created, the tax capacity for taxes
payable two years prior to that in which the aid is payable, based on market values for
taxes payable in the year prior to that for which aid is being computed deleted text end new text begin is equal to the
amount certified for taxes payable in 2011 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 12.

Minnesota Statutes 2010, section 273.1398, subdivision 4, is amended to read:

Subd. 4.

Disparity reduction credit.

(a) Beginning with taxes payable in 1989,
class 4a, class 3a, and class 3b property qualifies for a disparity reduction credit if: (1)
the property is located in a border city that has an enterprise zone designated pursuant
to section 469.168, subdivision 4; (2) the property is located in a city with a population
greater than 2,500 and less than 35,000 according to the 1980 decennial census; (3) the
city is adjacent to a city in another state or immediately adjacent to a city adjacent to a city
in another state; and (4) the adjacent city in the other state has a population of greater than
5,000 and less than 75,000 according to the 1980 decennial census.

(b) new text begin For taxes payable in 2012, new text end the credit is new text begin 75 percent of new text end an amount sufficient to
reduce (i) the taxes levied on class 4a property to 2.3 percent of the property's market
value and (ii) the tax on class 3a and class 3b property to 2.3 percent of market value.
new text begin new text end

new text begin (c) For taxes payable in 2013, the credit is 50 percent of an amount sufficient to
reduce (i) the taxes levied on class 4a property to 2.3 percent of the property's market
value and (ii) the tax on class 3a and class 3b property to 2.3 percent of market value.
new text end

new text begin (d) For taxes payable in 2014, the credit is 25 percent of an amount sufficient to
reduce (i) the taxes levied on class 4a property to 2.3 percent of the property's market
value and (ii) the tax on class 3a and class 3b property to 2.3 percent of market value.
new text end

deleted text begin (c) deleted text end new text begin (e) new text end The county auditor shall annually certify the costs of the credits to the
Department of Revenue. The department shall reimburse local governments for the
property taxes forgone as the result of the credits in proportion to their total levies.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 13.

Minnesota Statutes 2010, section 275.08, subdivision 1a, is amended to read:

Subd. 1a.

Computation of tax capacity.

deleted text begin For taxes payable in 1989, the county
auditor shall compute the gross tax capacity for each parcel according to the class rates
specified in section 273.13. The gross tax capacity will be the appropriate class rate
multiplied by the parcel's market value. For taxes payable in 1990 and subsequent years, deleted text end
The county auditor shall compute the net tax capacity for each parcel deleted text begin according to the
class rates specified in deleted text end new text begin as defined under new text end section 273.13 new text begin , subdivision 21b new text end . deleted text begin The net tax
capacity will be the appropriate class rate multiplied by the parcel's market value.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 14.

new text begin [275.761] MAINTENANCE OF EFFORT REQUIREMENTS
REDUCED.
new text end

new text begin (a) Notwithstanding any law to the contrary and except as provided in paragraphs (b)
and (c), the amounts required to be expended under the maintenance of effort requirements
for counties under sections 134.34, 245.4835, 256F.10, and 256F.13, are reduced to 90
percent of the amounts required for 2011.
new text end

new text begin (b) This section does not permit a county to reduce compliance with maintenance of
effort requirements to the extent that the reduction would:
new text end

new text begin (1) require the state to expend additional money or incur additional costs; or
new text end

new text begin (2) cause a reduction in the receipt by the state or the county of federal funds.
new text end

new text begin (c) The commissioner of management and budget may determine the maintenance
of effort requirements that are not permitted, in whole or in part, to be reduced under
paragraph (b). The commissioner shall publish these determinations on the department's
Web site and no county may reduce compliance with a maintenance of effort requirement
that the commissioner determines is not subject to reduction.
new text end

new text begin (d) Notwithstanding any law to the contrary, the amounts required to be expended
under the maintenance of effort requirements for all statutory and home rule charter cities
under section 134.34 are reduced to 90 percent of the amounts required for 2011.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for maintenance of effort
requirements in 2012 and 2013.
new text end

Sec. 15.

Minnesota Statutes 2010, section 276.04, subdivision 2, is amended to read:

Subd. 2.

Contents of tax statements.

(a) The treasurer shall provide for the
printing of the tax statements. The commissioner of revenue shall prescribe the form of
the property tax statement and its contents. The tax statement must not state or imply
that property tax credits are paid by the state of Minnesota. The statement must contain
a tabulated statement of the dollar amount due to each taxing authority and the amount
of the state tax from the parcel of real property for which a particular tax statement is
prepared. The dollar amounts attributable to the county, the state tax, the voter approved
school tax, the other local school tax, the township or municipality, and the total of
the metropolitan special taxing districts as defined in section 275.065, subdivision 3,
paragraph (i), must be separately stated. The amounts due all other special taxing districts,
if any, may be aggregated except that any levies made by the regional rail authorities in the
county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
398A shall be listed on a separate line directly under the appropriate county's levy. If the
county levy under this paragraph includes an amount for a lake improvement district as
defined under sections 103B.501 to 103B.581, the amount attributable for that purpose
must be separately stated from the remaining county levy amount. In the case of Ramsey
County, if the county levy under this paragraph includes an amount for public library
service under section 134.07, the amount attributable for that purpose may be separated
from the remaining county levy amount. The amount of the tax on homesteads qualifying
under the senior citizens' property tax deferral program under chapter 290B is the total
amount of property tax before subtraction of the deferred property tax amount. The
amount of the tax on contamination value imposed under sections 270.91 to 270.98, if any,
must also be separately stated. The dollar amounts, including the dollar amount of any
special assessments, may be rounded to the nearest even whole dollar. For purposes of this
section whole odd-numbered dollars may be adjusted to the next higher even-numbered
dollar. The amount of market value excluded under section 273.11, subdivision 16, if any,
must also be listed on the tax statement.

(b) The property tax statements for manufactured homes and sectional structures
taxed as personal property shall contain the same information that is required on the
tax statements for real property.

(c) Real and personal property tax statements must contain the following information
in the order given in this paragraph. The information must contain the current year tax
information in the right column with the corresponding information for the previous year
in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's taxable market value after reductions under section 273.11,
subdivisions 1a and 16;

(3) the property's gross tax, before credits;

(4) for homestead deleted text begin residential and deleted text end agricultural properties, the deleted text begin credits deleted text end new text begin credit new text end under
section 273.1384;

(5) any credits received under sections 273.119; 273.1234 or 273.1235; 273.135;
273.1391; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of
credit received under section 273.135 must be separately stated and identified as "taconite
tax relief"; and

(6) the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county
agrees, a taxing district may include a notice with the property tax statement notifying
taxpayers when the taxing district will begin its budget deliberations for the current
year, and encouraging taxpayers to attend the hearings. If the county allows notices to
be included in the envelope containing the property tax statement, and if more than
one taxing district relative to a given property decides to include a notice with the tax
statement, the county treasurer or auditor must coordinate the process and may combine
the information on a single announcement.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 16.

Minnesota Statutes 2010, section 289A.50, subdivision 1, is amended to read:

Subdivision 1.

General right to refund.

(a) Subject to the requirements of this
section and section 289A.40, a taxpayer who has paid a tax in excess of the taxes lawfully
due and who files a written claim for refund will be refunded or credited the overpayment
of the tax determined by the commissioner to be erroneously paid.

(b) The claim must specify the name of the taxpayer, the date when and the period
for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer
claims was erroneously paid, the grounds on which a refund is claimed, and other
information relative to the payment and in the form required by the commissioner. An
income tax, estate tax, or corporate franchise tax return, or amended return claiming an
overpayment constitutes a claim for refund.

(c) When, in the course of an examination, and within the time for requesting a
refund, the commissioner determines that there has been an overpayment of tax, the
commissioner shall refund or credit the overpayment to the taxpayer and no demand
is necessary. If the overpayment exceeds $1, the amount of the overpayment must
be refunded to the taxpayer. If the amount of the overpayment is less than $1, the
commissioner is not required to refund. In these situations, the commissioner does not
have to make written findings or serve notice by mail to the taxpayer.

(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent
care exceeds the tax against which the credit is allowable, the amount of the excess is
considered an overpayment. deleted text begin The refund allowed by section 290.06, subdivision 23, is also
considered an overpayment. deleted text end The requirements of section 270C.33 do not apply to the
refunding of such an overpayment shown on the original return filed by a taxpayer.

(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes,
penalties, and interest reported in the return of the entertainment entity or imposed by
section 290.9201, the excess must be refunded to the entertainment entity. If the excess is
less than $1, the commissioner need not refund that amount.

(f) If the surety deposit required for a construction contract exceeds the liability of
the out-of-state contractor, the commissioner shall refund the difference to the contractor.

(g) An action of the commissioner in refunding the amount of the overpayment does
not constitute a determination of the correctness of the return of the taxpayer.

(h) There is appropriated from the general fund to the commissioner of revenue the
amount necessary to pay refunds allowed under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims based on
contributions made after June 30, 2011.
new text end

Sec. 17.

Minnesota Statutes 2010, section 290.01, subdivision 6, is amended to read:

Subd. 6.

Taxpayer.

The term "taxpayer" means any person or corporation subject to
a tax imposed by this chapter. deleted text begin For purposes of section 290.06, subdivision 23, the term
"taxpayer" means an individual eligible to vote in Minnesota under section 201.014.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims based on
contributions made after June 30, 2011.
new text end

Sec. 18.

Minnesota Statutes 2010, section 290A.03, subdivision 11, is amended to read:

Subd. 11.

Rent constituting property taxes.

"Rent constituting property taxes"
means deleted text begin 19 deleted text end new text begin 15 new text end percent of the gross rent actually paid in cash, or its equivalent, or the portion
of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
of occupancy of the claimant's Minnesota homestead in the calendar year, and which
rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
chapter by the claimant.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in
2010 and following years.
new text end

Sec. 19.

Minnesota Statutes 2010, section 290A.03, subdivision 13, is amended to read:

Subd. 13.

Property taxes payable.

"Property taxes payable" means the property tax
exclusive of special assessments, penalties, and interest payable on a claimant's homestead
after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
and any other state paid property tax credits in any calendar year, and after any refund
claimed and allowable under section 290A.04, subdivision 2h, that is first payable in
the year that the property tax is payable. In the case of a claimant who makes ground
lease payments, "property taxes payable" includes the amount of the payments directly
attributable to the property taxes assessed against the parcel on which the house is located.
No apportionment or reduction of the "property taxes payable" shall be required for the
use of a portion of the claimant's homestead for a business purpose if the claimant does not
deduct any business depreciation expenses for the use of a portion of the homestead in the
determination of federal adjusted gross income. For homesteads which are manufactured
homes as defined in section 273.125, subdivision 8, and for homesteads which are park
trailers taxed as manufactured homes under section 168.012, subdivision 9, "property
taxes payable" shall also include deleted text begin 19 deleted text end new text begin 15 new text end percent of the gross rent paid in the preceding
year for the site on which the homestead is located. When a homestead is owned by
two or more persons as joint tenants or tenants in common, such tenants shall determine
between them which tenant may claim the property taxes payable on the homestead. If
they are unable to agree, the matter shall be referred to the commissioner of revenue
whose decision shall be final. Property taxes are considered payable in the year prescribed
by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have
owned and occupied the homestead on January 2 of the year in which the tax is payable
and (i) the property must have been classified as homestead property pursuant to section
273.124, on or before December 15 of the assessment year to which the "property taxes
payable" relate; or (ii) the claimant must provide documentation from the local assessor
that application for homestead classification has been made on or before December 15
of the year in which the "property taxes payable" were payable and that the assessor has
approved the application.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in
2010 and following years.
new text end

Sec. 20.

Minnesota Statutes 2010, section 290A.04, subdivision 2, is amended to read:

Subd. 2.

Homeowners.

A claimant whose property taxes payable are in excess
of the percentage of the household income stated below shall pay an amount equal to
the percent of income shown for the appropriate household income level along with the
percent to be paid by the claimant of the remaining amount of property taxes payable.
The state refund equals the amount of property taxes payable that remain, up to the state
refund amount shown below.

deleted text begin Household Income deleted text end	deleted text begin Percent of Income deleted text end	deleted text begin Percent Paid by Claimant deleted text end	deleted text begin Maximum State Refund deleted text end
deleted text begin $0 to 1,189 deleted text end	deleted text begin 1.0 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,850 deleted text end
deleted text begin 1,190 to 2,379 deleted text end	deleted text begin 1.1 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,850 deleted text end
deleted text begin 2,380 to 3,589 deleted text end	deleted text begin 1.2 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,800 deleted text end
deleted text begin 3,590 to 4,789 deleted text end	deleted text begin 1.3 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,800 deleted text end
deleted text begin 4,790 to 5,979 deleted text end	deleted text begin 1.4 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,730 deleted text end
deleted text begin 5,980 to 8,369 deleted text end	deleted text begin 1.5 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,730 deleted text end
deleted text begin 8,370 to 9,559 deleted text end	deleted text begin 1.6 percent deleted text end	deleted text begin 25 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,670 deleted text end
deleted text begin 9,560 to 10,759 deleted text end	deleted text begin 1.7 percent deleted text end	deleted text begin 25 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,670 deleted text end
deleted text begin 10,760 to 11,949 deleted text end	deleted text begin 1.8 percent deleted text end	deleted text begin 25 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,610 deleted text end
deleted text begin 11,950 to 13,139 deleted text end	deleted text begin 1.9 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,610 deleted text end
deleted text begin 13,140 to 14,349 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,540 deleted text end
deleted text begin 14,350 to 16,739 deleted text end	deleted text begin 2.1 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,540 deleted text end
deleted text begin 16,740 to 17,929 deleted text end	deleted text begin 2.2 percent deleted text end	deleted text begin 35 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,480 deleted text end
deleted text begin 17,930 to 19,119 deleted text end	deleted text begin 2.3 percent deleted text end	deleted text begin 35 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,480 deleted text end
deleted text begin 19,120 to 20,319 deleted text end	deleted text begin 2.4 percent deleted text end	deleted text begin 35 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,420 deleted text end
deleted text begin 20,320 to 25,099 deleted text end	deleted text begin 2.5 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,420 deleted text end
deleted text begin 25,100 to 28,679 deleted text end	deleted text begin 2.6 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,360 deleted text end
deleted text begin 28,680 to 35,849 deleted text end	deleted text begin 2.7 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,360 deleted text end
deleted text begin 35,850 to 41,819 deleted text end	deleted text begin 2.8 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,240 deleted text end
deleted text begin 41,820 to 47,799 deleted text end	deleted text begin 3.0 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,240 deleted text end
deleted text begin 47,800 to 53,779 deleted text end	deleted text begin 3.2 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,110 deleted text end
deleted text begin 53,780 to 59,749 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 990 deleted text end
deleted text begin 59,750 to 65,729 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 870 deleted text end
deleted text begin 65,730 to 69,319 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 740 deleted text end
deleted text begin 69,320 to 71,719 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 610 deleted text end
deleted text begin 71,720 to 74,619 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 500 deleted text end
deleted text begin 74,620 to 77,519 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 370 deleted text end

new text begin Household Income new text end	new text begin Percent of Income new text end	new text begin Percent Paid by Claimant new text end	new text begin Maximum State Refund new text end
new text begin $0 to 1,549 new text end	new text begin 1.0 percent new text end	new text begin ten percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 1,550 to 3,089 new text end	new text begin 1.1 percent new text end	new text begin ten percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 3,090 to 4,669 new text end	new text begin 1.2 percent new text end	new text begin ten percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 4,670 to 6,229 new text end	new text begin 1.3 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 6,230 to 7,769 new text end	new text begin 1.4 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 7,770 to 10,879 new text end	new text begin 1.5 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 10,880 to 12,429 new text end	new text begin 1.6 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 12,430 to 13,989 new text end	new text begin 1.7 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 13,990 to 15,539 new text end	new text begin 1.8 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 15,540 to 17,079 new text end	new text begin 1.9 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 17,080 to 18,659 new text end	new text begin 2.0 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 18,660 to 21,759 new text end	new text begin 2.1 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 21,760 to 23,309 new text end	new text begin 2.2 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 23,310 to 24,859 new text end	new text begin 2.3 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 24,860 to 26,419 new text end	new text begin 2.4 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 26,420 to 32,629 new text end	new text begin 2.5 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 32,630 to 37,279 new text end	new text begin 2.6 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 2,500 new text end
new text begin 37,280 to 46,609 new text end	new text begin 2.7 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 2,000 new text end
new text begin 46,610 to 54,369 new text end	new text begin 2.8 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 2,000 new text end
new text begin 54,370 to 62,139 new text end	new text begin 2.8 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 1,750 new text end
new text begin 62,140 to 69,909 new text end	new text begin 3.0 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 1,440 new text end
new text begin 69,910 to 77,679 new text end	new text begin 3.0 percent new text end	new text begin 40 percent new text end	new text begin $ new text end	new text begin 1,290 new text end
new text begin 77,680 to 84,449 new text end	new text begin 3.0 percent new text end	new text begin 40 percent new text end	new text begin $ new text end	new text begin 1,130 new text end
new text begin 85,450 to 90,119 new text end	new text begin 3.5 percent new text end	new text begin 45 percent new text end	new text begin $ new text end	new text begin 960 new text end
new text begin 90,120 to 93,239 new text end	new text begin 3.5 percent new text end	new text begin 45 percent new text end	new text begin $ new text end	new text begin 790 new text end
new text begin 93,240 to 97,009 new text end	new text begin 3.5 percent new text end	new text begin 50 percent new text end	new text begin $ new text end	new text begin 650 new text end
new text begin 97,010 to 100,779 new text end	new text begin 3.5 percent new text end	new text begin 50 percent new text end	new text begin $ new text end	new text begin 480 new text end

The payment made to a claimant shall be the amount of the state refund calculated
under this subdivision. No payment is allowed if the claimant's household income is
deleted text begin $77,520 deleted text end new text begin $100,780 new text end or more.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with refunds based on
taxes payable in 2012.
new text end

Sec. 21.

Minnesota Statutes 2010, section 290A.04, subdivision 4, is amended to read:

Subd. 4.

Inflation adjustment.

new text begin (a) new text end Beginning for property tax refunds payable in
calendar year 2002, the commissioner shall annually adjust the dollar amounts of the
income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation.
The commissioner shall make the inflation adjustments in accordance with section 1(f) of
the Internal Revenue Code, except that for purposes of this subdivision the percentage
increase shall be determined new text begin as provided in this subdivision.
new text end

new text begin (b) In adjusting the dollar amounts of the income thresholds and the maximum
refunds under subdivision 2 for inflation, the percentage increase shall be determined from
the year ending on June 30, 2011, to the year ending on June 30 of the year preceding that
in which the refund is payable.
new text end

new text begin (c) In adjusting the dollar amounts of the income thresholds and the maximum
refunds under subdivision 2a for inflation, the percentage increase shall be determined
new text end from the year ending on June 30, 2000, to the year ending on June 30 of the year preceding
that in which the refund is payable.

new text begin (d) new text end The commissioner shall use the appropriate percentage increase to annually
adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for
inflation without regard to whether or not the income tax brackets are adjusted for inflation
in that year. The commissioner shall round the thresholds and the maximum amounts,
as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall
round it up to the next $10 amount.

new text begin (e) new text end The commissioner shall annually announce the adjusted refund schedule at the
same time provided under section 290.06. The determination of the commissioner under
this subdivision is not a rule under the Administrative Procedure Act.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning for refunds based on
taxes payable in 2013.
new text end

Sec. 22.

Minnesota Statutes 2010, section 477A.0124, is amended by adding a
subdivision to read:

new text begin Subd. 6. new text end

new text begin Aid payments in 2011 and 2012. new text end

new text begin Notwithstanding total aids calculated or
certified for 2011 under subdivisions 3, 4, and 5, for 2011 and 2012, each county shall
receive an aid distribution under this section equal to the lesser of (1) the total amount of
aid it received under this section in 2010 after the reductions under sections 477A.0133
and 477A.0134, or (2) the total amount the county is certified to receive in 2011 under
subdivisions 3 to 5.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2011 and 2012.
new text end

Sec. 23.

Minnesota Statutes 2010, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year 2009 and thereafter, each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base.

(b) For aids payable in deleted text begin 2011 deleted text end new text begin 2013 new text end only, the total aid in the previous year for any
city shall mean the amount of aid it was certified to receive for aids payable in deleted text begin 2010 deleted text end new text begin 2012 new text end
under this section deleted text begin minus the amount of its aid reduction under section deleted text end deleted text begin 477A.0134 deleted text end . For aids
payable in deleted text begin 2012 deleted text end new text begin 2014 new text end and thereafter, the total aid in the previous year for any city means
the amount of aid it was certified to receive under this section in the previous payable year.

(c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
aid for any city with a population of 2,500 or more may not be less than its total aid under
this section in the previous year minus the lesser of $10 multiplied by its population, or ten
percent of its net levy in the year prior to the aid distribution.

(d) For aids payable in 2010 and thereafter, the total aid for a city with a population
less than 2,500 must not be less than the amount it was certified to receive in the
previous year minus the lesser of $10 multiplied by its population, or five percent of its
2003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
population less than 2,500 must not be less than what it received under this section in the
previous year unless its total aid in calendar year 2008 was aid under section 477A.011,
subdivision 36, paragraph (s), in which case its minimum aid is zero.

(e) A city's aid loss under this section may not exceed $300,000 in any year in
which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
greater than the appropriation under that subdivision in the previous year, unless the
city has an adjustment in its city net tax capacity under the process described in section
469.174, subdivision 28.

(f) If a city's net tax capacity used in calculating aid under this section has decreased
in any year by more than 25 percent from its net tax capacity in the previous year due to
property becoming tax-exempt Indian land, the city's maximum allowed aid increase
under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
resulting from the property becoming tax exempt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2012 and thereafter.
new text end

Sec. 24.

Minnesota Statutes 2010, section 477A.013, is amended by adding a
subdivision to read:

new text begin Subd. 11. new text end

new text begin Aid payments in 2011 and 2012. new text end

new text begin Notwithstanding aids calculated or
certified for 2011 under subdivision 9, for 2011 and 2012, each city shall receive an aid
distribution under this section equal to the lesser of (1) the total amount of aid it received
under this section in 2010 after the reductions under sections 477A.0133 and 477A.0134,
and reduced by the amount of payments made under section 477A.011, subdivision
36, paragraphs (y) and (z), or (2) the amount it was certified to receive in 2011 under
subdivision 9. In 2011 only, a city that qualifies for the aid base adjustment under section
477A.011, subdivision 36, paragraph (aa), shall receive the amount that it was certified to
receive in 2011. In 2012, a city that qualifies for the aid base adjustment under section
477A.011, subdivision 36, paragraph (aa), shall receive the amount that it was certified
to receive in 2011, minus the aid base adjustment provided under section 477A.011,
subdivision 36, paragraph (aa).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar years
2011 and 2012.
new text end

Sec. 25.

Minnesota Statutes 2010, section 477A.03, is amended to read:

477A.03 APPROPRIATION.

Subd. 2.

Annual appropriation.

A sum sufficient to discharge the duties imposed
by sections 477A.011 to 477A.014 is annually appropriated from the general fund to the
commissioner of revenue.

Subd. 2a.

Cities.

For aids payable in deleted text begin 2011 deleted text end new text begin 2013 new text end and thereafter, the total aid paid
under section 477A.013, subdivision 9, is deleted text begin $527,100,646 deleted text end new text begin $426,438,012 new text end .

Subd. 2b.

Counties.

(a) For aids payable in deleted text begin 2011 deleted text end new text begin 2013 new text end and thereafter, the total aid
payable under section 477A.0124, subdivision 3, is deleted text begin $96,395,000 deleted text end new text begin $80,795,000 new text end . Each
calendar year, $500,000 shall be retained by the commissioner of revenue to make
reimbursements to the commissioner of management and budget for payments made
under section 611.27. For calendar year 2004, the amount shall be in addition to the
payments authorized under section 477A.0124, subdivision 1. For calendar year 2005
and subsequent years, the amount shall be deducted from the appropriation under
this paragraph. The reimbursements shall be to defray the additional costs associated
with court-ordered counsel under section 611.27. Any retained amounts not used for
reimbursement in a year shall be included in the next distribution of county need aid
that is certified to the county auditors for the purpose of property tax reduction for the
next taxes payable year.

(b) For aids payable in deleted text begin 2011 deleted text end new text begin 2013 new text end and thereafter, the total aid under section
477A.0124, subdivision 4, is deleted text begin $101,309,575 deleted text end new text begin $84,909,575 new text end . The commissioner of
management and budget shall bill the commissioner of revenue for the cost of preparation
of local impact notes as required by section 3.987, not to exceed $207,000 in fiscal year
2004 and thereafter. The commissioner of education shall bill the commissioner of
revenue for the cost of preparation of local impact notes for school districts as required by
section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner
of revenue shall deduct the amounts billed under this paragraph from the appropriation
under this paragraph. The amounts deducted are appropriated to the commissioner of
management and budget and the commissioner of education for the preparation of local
impact notes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2012 and thereafter.
new text end

Sec. 26.

Minnesota Statutes 2010, section 477A.11, subdivision 1, is amended to read:

Subdivision 1.

Terms.

For the purpose of sections 477A.11 to deleted text begin 477A.145 deleted text end new text begin 477A.14 new text end ,
the terms defined in this section have the meanings given them.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2011 and thereafter.
new text end

Sec. 27.

Minnesota Statutes 2010, section 477A.12, subdivision 1, is amended to read:

Subdivision 1.

Types of land; payments.

(a) As an offset for expenses incurred
by counties and towns in support of natural resources lands, the following amounts are
annually appropriated to the commissioner of natural resources from the general fund for
transfer to the commissioner of revenue. The commissioner of revenue shall pay the
transferred funds to counties as required by sections 477A.11 to deleted text begin 477A.145 deleted text end new text begin 477A.14 new text end .
The amounts are:

(1) for acquired natural resources land, deleted text begin $3, as adjusted for inflation under section
477A.145, deleted text end new text begin $4.363 new text end multiplied by the total number of acres of acquired natural resources
land or, at the county's option deleted text begin three-fourths of one deleted text end new text begin 0.6375 new text end percent of the appraised value of
all acquired natural resources land in the county, whichever is greater;

(2) deleted text begin 75 cents, as adjusted for inflation under section 477A.145, deleted text end new text begin $1.091 new text end multiplied by
the number of acres of county-administered other natural resources land;

(3) deleted text begin 75 cents, as adjusted for inflation under section 477A.145, deleted text end new text begin $1.091 new text end multiplied by
the total number of acres of land utilization project land; and

(4) deleted text begin 37.5 cents, as adjusted for inflation under section 477A.145, deleted text end new text begin 54.5 cents new text end multiplied
by the number of acres of commissioner-administered other natural resources land located
in each county as of July 1 of each year prior to the payment year.

(b) The amount determined under paragraph (a), clause (1), is payable for land
that is acquired from a private owner and owned by the Department of Transportation
for the purpose of replacing wetland losses caused by transportation projects, but only
if the county contains more than 500 acres of such land at the time the certification is
made under subdivision 2.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2011 and thereafter.
new text end

Sec. 28.

Minnesota Statutes 2010, section 477A.14, subdivision 1, is amended to read:

Subdivision 1.

General distribution.

Except as provided in subdivision 2 or in
section 97A.061, subdivision 5, 40 percent of the total payment to the county shall be
deposited in the county general revenue fund to be used to provide property tax levy
reduction. The remainder shall be distributed by the county in the following priority:

(a) deleted text begin 37.5 cents, as adjusted for inflation under section 477A.145, deleted text end new text begin 54.5 cents new text end for
each acre of county-administered other natural resources land shall be deposited in a
resource development fund to be created within the county treasury for use in resource
development, forest management, game and fish habitat improvement, and recreational
development and maintenance of county-administered other natural resources land. Any
county receiving less than $5,000 annually for the resource development fund may elect to
deposit that amount in the county general revenue fund;

(b) From the funds remaining, within 30 days of receipt of the payment to the
county, the county treasurer shall pay each organized township deleted text begin 30 cents, as adjusted for
inflation under section 477A.145, deleted text end new text begin 43.6 cents new text end for each acre of acquired natural resources
land and each acre of land described in section 477A.12, subdivision 1, paragraph (b), and
deleted text begin 7.5 cents, as adjusted for inflation under section 477A.145, deleted text end new text begin 10.9 cents new text end for each acre of
other natural resources land and each acre of land utilization project land located within its
boundaries. Payments for natural resources lands not located in an organized township
shall be deposited in the county general revenue fund. Payments to counties and townships
pursuant to this paragraph shall be used to provide property tax levy reduction, except
that of the payments for natural resources lands not located in an organized township, the
county may allocate the amount determined to be necessary for maintenance of roads in
unorganized townships. Provided that, if the total payment to the county pursuant to
section 477A.12 is not sufficient to fully fund the distribution provided for in this clause,
the amount available shall be distributed to each township and the county general revenue
fund on a pro rata basis; and

(c) Any remaining funds shall be deposited in the county general revenue fund.
Provided that, if the distribution to the county general revenue fund exceeds $35,000, the
excess shall be used to provide property tax levy reduction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2011 and thereafter.
new text end

Sec. 29.

Minnesota Statutes 2010, section 477A.17, is amended to read:

477A.17 LAKE VERMILION STATE PARK AND SOUDAN
UNDERGROUND MINE STATE PARK; ANNUAL PAYMENTS.

(a) Beginning in fiscal year 2012, in lieu of the payment amount provided under
section 477A.12, subdivision 1, clause (1), the county shall receive an annual payment for
land acquired for Lake Vermilion State Park, established in section 85.012, subdivision
38a, and land within the boundary of Soudan Underground Mine State Park, established
in section 85.012, subdivision 53a, equal to deleted text begin 1.5 deleted text end new text begin 1.275 new text end percent of the appraised value of
the land.

(b) For the purposes of this section, the appraised value of the land acquired for
Lake Vermilion State Park for the first five years after acquisition shall be the purchase
price of the land, plus the value of any portion of the land that is acquired by donation.
The appraised value must be redetermined by the county assessor every five years after
the land is acquired.

(c) The annual payments under this section shall be distributed to the taxing
jurisdictions containing the property as follows: one-third to the school districts; one-third
to the town; and one-third to the county. The payment to school districts is not a county
apportionment under section 127A.34 and is not subject to aid recapture. Each of those
taxing jurisdictions may use the payments for their general purposes.

(d) Except as provided in this section, the payments shall be made as provided
in sections 477A.11 to 477A.13.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2011 and thereafter.
new text end

Sec. 30. new text begin ADMINISTRATION OF PROPERTY TAX REFUND CLAIMS; 2011.
new text end

new text begin In administering Minnesota Statutes, section 290A.03, subdivisions 11 and 13, for
claims for refunds submitted using 19 percent of gross rent as rent constituting property
taxes under prior law, the commissioner shall recalculate and pay the refund amounts
using 15 percent of gross rent. The commissioner shall notify the claimant that the
recalculation was mandated by action of the 2011 Legislature.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 31. new text begin PROPERTY TAX STATEMENT FOR TAXES PAYABLE IN 2012 ONLY.
new text end

new text begin For the purposes of the property tax statements required under Minnesota Statutes,
section 276.04, subdivision 2, for taxes payable in 2012 only, the gross tax amount shown
for the previous year is the gross tax minus the residential homestead market value credit.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 only.
new text end

Sec. 32. new text begin CONSOLIDATION AND SERVICE-SHARING GRANTS;
APPROPRIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin For the purposes of this section, "local government"
means a county or a home rule charter or statutory city.
new text end

new text begin Subd. 2. new text end

new text begin Grants. new text end

new text begin (a) The state auditor may make a consolidation grant to a local
government that is planning to consolidate with at least one other contiguous local
government of the same type. The grants shall be made on a first-come first-served
basis. The state auditor shall determine the form and content of the application and
grant agreements. An application must contain a resolution adopted by the governing
body of each participating local government supporting the consolidation of the local
governments. The amount of the grant shall be determined by the state auditor based on
the estimated cost to the local governments of the consolidation process and their need for
state financial assistance to accomplish the consolidation. The maximum grant amount is
$100,000 per local government.
new text end

new text begin (b) The state auditor may make a service-sharing grant to a local government that
is planning to implement a program of providing shared services in cooperation with at
least one other local government. The grants shall be made on a first-come first-served
basis. The state auditor shall determine the form and content of the application and grant
agreements. An application must contain a resolution adopted by the governing body of
each participating local government supporting the plan to provide shared services. The
amount of the grant shall be determined by the state auditor based on the estimated cost
to the local governments of implementing the service-sharing plan, and their need for
state financial assistance to accomplish it. The maximum grant amount is $100,000 per
local government.
new text end

new text begin Subd. 3. new text end

new text begin Report. new text end

new text begin The state auditor must report to the governor and legislative
committees with jurisdiction over local government governance and local government
taxes and finance on the consolidation and service-sharing grants made and how the
money was used. An interim report is due February 1, 2012, and a final report is due
December 15, 2012.
new text end

new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin $3,500,000 is appropriated from the general fund to the
state auditor for each of the fiscal years 2012 and 2013, to make grants to counties and
cities as provided in this section. In each of those years, $2,500,000 is to be used for
consolidation grants and $1,000,000 is to be used for service-sharing grants, provided that
if by November 30 in either year, one of those amounts has not been used for its primary
purpose, that remainder may be used for the other type of grants.
new text end

Sec. 33. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2010, sections 10A.322, subdivision 4; and 13.4967,
subdivision 2, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2010, section 290.06, subdivision 23, new text end new text begin is repealed.
new text end

new text begin (c) new text end new text begin Minnesota Statutes 2010, sections 275.295; and 477A.145, new text end new text begin are repealed.
new text end

new text begin (d) new text end new text begin Minnesota Statutes 2010, section 273.1384, subdivision 6, new text end new text begin is repealed.
new text end

new text begin (e) new text end new text begin Minnesota Statutes 2010, section 273.1398, subdivision 4, new text end new text begin is repealed.
new text end

new text begin (f) new text end new text begin Minnesota Statutes 2010, sections 290C.01; 290C.02; 290C.03; 290C.04;
290C.05; 290C.055; 290C.06; 290C.07; 290C.08; 290C.09; 290C.10; 290C.11; 290C.12;
and 290C.13, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective the day following final enactment.
Paragraph (b) is effective for refund claims based on contributions made after June 30,
2011. Paragraph (c) is effective for aids payable in 2011 and thereafter. Paragraph (d)
is effective for taxes payable in 2012 and thereafter. Paragraph (e) is effective for taxes
payable in 2015 and thereafter. Paragraph (f) is effective July 1, 2011, and the covenants
under the program are void on that date. No later than 60 days after enactment of this
section, the commissioner of revenue shall issue a document to each enrollee immediately
releasing the land from the covenant as provided in Minnesota Statutes 2010, section
290C.04, paragraph (c).
new text end

ARTICLE 4

PROPERTY TAX

Section 1.

Minnesota Statutes 2010, section 272.02, subdivision 39, is amended to read:

Subd. 39.

Economic development; public purpose.

The holding of property by a
political subdivision of the state for later resale for economic development purposes shall
be considered a public purpose in accordance with subdivision 8 for a period not to exceed
deleted text begin eight deleted text end new text begin ten new text end years, except that for property located in a city of 5,000 population or under that
is located outside of the metropolitan area as defined in section 473.121, subdivision 2, the
period must not exceed 15 years.

The holding of property by a political subdivision of the state for later resale (1)
which is purchased or held for housing purposes, or (2) which meets the conditions
described in section 469.174, subdivision 10, shall be considered a public purpose in
accordance with subdivision 8.

The governing body of the political subdivision which acquires property which is
subject to this subdivision shall after the purchase of the property certify to the city or
county assessor whether the property is held for economic development purposes or
housing purposes, or whether it meets the conditions of section 469.174, subdivision 10.
If the property is acquired for economic development purposes and buildings or other
improvements are constructed after acquisition of the property, and if more than one-half
of the floor space of the buildings or improvements which is available for lease to or use
by a private individual, corporation, or other entity is leased to or otherwise used by
a private individual, corporation, or other entity the provisions of this subdivision shall
not apply to the property. This subdivision shall not create an exemption from section
272.01, subdivision 2; 272.68; 273.19; or 469.040, subdivision 3; or other provision of
law providing for the taxation of or for payments in lieu of taxes for publicly held property
which is leased, loaned, or otherwise made available and used by a private person.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2011, payable
in 2012, and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2010, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 95. new text end

new text begin Electric generation facility; personal property. new text end

new text begin (a) Notwithstanding
subdivision 9, clause (a), and section 453.54, subdivision 20, attached machinery and other
personal property that is part of a multiple reciprocating engine electric generation facility
that adds more than 20 and less than 30 megawatts of installed capacity at a site where
there is presently more than ten megawatts and fewer than 15 megawatts of installed
capacity and that meets the requirements of this subdivision is exempt from taxation and
from payments in lieu of taxation. At the time of construction, the facility must:
new text end

new text begin (1) be designed to utilize natural gas as a primary fuel;
new text end

new text begin (2) be owned and operated by a municipal power agency as defined in section
453.52, subdivision 8;
new text end

new text begin (3) be located within one mile of an existing natural gas pipeline;
new text end

new text begin (4) be designed to have black start capability and to furnish emergency backup
power service to the city in which it is located;
new text end

new text begin (5) satisfy a resource deficiency identified in an approved integrated resource plan
filed under section 216B.2422; and
new text end

new text begin (6) have received, by resolution, the approval of the governing bodies of the city
and county in which it is located for the exemption of personal property provided by
this subdivision.
new text end

new text begin (b) Construction of the facility must be commenced after December 31, 2011, and
before January 1, 2015. Property eligible for this exemption does not include (i) electric
transmission lines and interconnections or gas pipelines and interconnections appurtenant
to the property or the facility; or (ii) property located on the site on the enactment date
of this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessments in 2012, taxes
payable in 2013, and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2010, section 273.111, is amended by adding a subdivision
to read:

new text begin Subd. 17. new text end

new text begin Appeal. new text end

new text begin If an assessor denies an application for valuation under this
section, the applicant may appeal the decision to the local board of appeal and equalization
as provided under section 274.01, subdivision 1, paragraph (h).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for appeals denied after June 30,
2011.
new text end

Sec. 4.

Minnesota Statutes 2010, section 273.114, subdivision 2, is amended to read:

Subd. 2.

Requirements.

Class 2a or 2b property that had been deleted text begin assessed deleted text end new text begin properly
classified new text end under Minnesota Statutes 2006, section 273.111, or that is part of an agricultural
homestead under Minnesota Statutes, section 273.13, subdivision 23, paragraph (a), is
entitled to valuation and tax deferment under this section if:

(1) the land consists of at least ten acres;

(2) deleted text begin a conservation assessment plan for the land must be prepared by an approved
plan writer and implemented during the period in which the land is subject to valuation
and deferment under this section;
deleted text end

deleted text begin (3) the land must be enrolled for a minimum of eight years;
deleted text end

deleted text begin (4) deleted text end there are no delinquent property taxes on the land; and

deleted text begin (5) deleted text end new text begin (3) new text end the property is not also enrolled for valuation and deferment under section
273.111 or 273.112, or chapter 290C or 473H.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2010, section 273.114, subdivision 5, is amended to read:

Subd. 5.

Application deleted text begin and covenant agreement deleted text end .

deleted text begin (a) deleted text end Application for deferment
of taxes and assessment under this section shall be filed by May 1 of the year prior to
the year in which the taxes are payable. Any application filed under this subdivision
and granted shall continue in effect for subsequent years until the deleted text begin termination of the
covenant agreement under paragraph (b) deleted text end new text begin property is withdrawn or no longer qualifies new text end .
The application must be filed with the assessor of the taxing district in which the real
property is located on the form prescribed by the commissioner of revenue. new text begin Each
application must include the most recent available aerial photograph or satellite image
of the property provided by the Farm Service Agency of the United States Department
of Agriculture that clearly delineates the land that is to be enrolled. The application
form must contain a statement setting forth the consequences to the property owner of
termination of qualification of property under the rural preserve program, together with a
recommendation that land that is likely to be changed to a nonqualifying use during the
period of enrollment should not be included in the application. new text end The assessor may require
proof by affidavit or otherwise that the property qualifies under subdivision 2.

deleted text begin (b) The owner of the property must sign a covenant agreement that is filed with the
county recorder and recorded in the county where the property is located. The covenant
agreement must include all of the following:
deleted text end

deleted text begin (1) legal description of the area to which the covenant applies;
deleted text end

deleted text begin (2) name and address of the owner;
deleted text end

deleted text begin (3) a statement that the land described in the covenant must be kept as rural preserve
land, which meets the requirements of subdivision 2, for the duration of the covenant;
deleted text end

deleted text begin (4) a statement that the landowner may terminate the covenant agreement by
notifying the county assessor in writing three years in advance of the date of proposed
termination, provided that the notice of intent to terminate may not be given at any time
before the land has been subject to the covenant for a period of five years;
deleted text end

deleted text begin (5) a statement that the covenant is binding on the owner or the owner's successor or
assigns and runs with the land; and
deleted text end

deleted text begin (6) a witnessed signature of the owner, agreeing by covenant, to maintain the land as
described in subdivision 2.
deleted text end

deleted text begin (c) After a covenant under this section has been terminated, the land that had been
subject to the covenant is ineligible for subsequent valuation under this section for a
period of three years after the termination.
deleted text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2010, section 273.114, subdivision 6, is amended to read:

Subd. 6.

Additional taxes.

deleted text begin Upon termination of a covenant agreement in
subdivision 5, paragraph (b), the land to which the covenant applied deleted text end new text begin When real property
which is being, or has been valued and assessed under this section no longer qualifies
under subdivision 2, the portion no longer qualifying new text end shall be subject to additional taxes
in the amount equal to the difference between the taxes determined in accordance with
subdivision 3 and the amount determined under subdivision 4, provided that the amount
determined under subdivision 4 shall not be greater than it would have been had the
actual bona fide sale price of the real property at an arm's-length transaction been used in
lieu of the market value determined under subdivision 4. The additional taxes shall be
extended against the property on the tax list for the current year, provided that no interest
or penalties shall be levied on the additional taxes if timely paid and that the additional
taxes shall only be levied with respect to the current year plus two prior years that the
property has been valued and assessed under this section.

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2010, section 273.13, subdivision 25, is amended to read:

Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more
units and used or held for use by the owner or by the tenants or lessees of the owner
as a residence for rental periods of 30 days or more, excluding property qualifying for
class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
than hospitals exempt under section 272.02, and contiguous property used for hospital
purposes, without regard to whether the property has been platted or subdivided. The
market value of class 4a property has a class rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class
4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
farm classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

The market value of class 4b property has a class rate of 1.25 percent.

(c) Class 4bb includes:

(1) nonhomestead residential real estate containing one unit, other than seasonal
residential recreational property; and

(2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b).

Class 4bb property has the same class rates as class 1a property under subdivision 22.

Property that has been classified as seasonal residential recreational property at
any time during which it has been owned by the current owner or spouse of the current
owner does not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real and personal property
devoted to temporary and seasonal residential occupancy for recreation purposes,
including real and personal property devoted to temporary and seasonal residential
occupancy for recreation purposes and not devoted to commercial purposes for more
than 250 days in the year preceding the year of assessment. For purposes of this clause,
property is devoted to a commercial purpose on a specific day if any portion of the
property is used for residential occupancy, and a fee is charged for residential occupancy.
Class 4c property under this clause must contain three or more rental units. A "rental unit"
is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site
equipped with water and electrical hookups for recreational vehicles. Class 4c property
under this clause must provide recreational activities such as renting ice fishing houses,
boats and motors, snowmobiles, downhill or cross-country ski equipment; provide marina
services, launch services, or guide services; or sell bait and fishing tackle. A camping pad
offered for rent by a property that otherwise qualifies for class 4c under this clause is also
class 4c under this clause regardless of the term of the rental agreement, as long as the use
of the camping pad does not exceed 250 days. In order for a property to be classified as
class 4c, seasonal residential recreational for commercial purposes under this clause, at
least 40 percent of the annual gross lodging receipts related to the property must be from
business conducted during 90 consecutive days and either (i) at least 60 percent of all paid
bookings by lodging guests during the year must be for periods of at least two consecutive
nights; or (ii) at least 20 percent of the annual gross receipts must be from charges for
rental of fish houses, boats and motors, snowmobiles, downhill or cross-country ski
equipment, or charges for marina services, launch services, and guide services, or the
sale of bait and fishing tackle. For purposes of this determination, a paid booking of
five or more nights shall be counted as two bookings. Class 4c property classified under
this clause also includes commercial use real property used exclusively for recreational
purposes in conjunction with other class 4c property classified under this clause and
devoted to temporary and seasonal residential occupancy for recreational purposes, up to a
total of two acres, provided the property is not devoted to commercial recreational use for
more than 250 days in the year preceding the year of assessment and is located within two
miles of the class 4c property with which it is used. Owners of real and personal property
devoted to temporary and seasonal residential occupancy for recreation purposes and all
or a portion of which was devoted to commercial purposes for not more than 250 days in
the year preceding the year of assessment desiring classification as class 4c, must submit a
declaration to the assessor designating the cabins or units occupied for 250 days or less in
the year preceding the year of assessment by January 15 of the assessment year. Those
cabins or units and a proportionate share of the land on which they are located must
be designated class 4c under this clause as otherwise provided. The remainder of the
cabins or units and a proportionate share of the land on which they are located will be
designated as class 3a. The owner of property desiring designation as class 4c property
under this clause must provide guest registers or other records demonstrating that the units
for which class 4c designation is sought were not occupied for more than 250 days in the
year preceding the assessment if so requested. The portion of a property operated as a
(1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other
nonresidential facility operated on a commercial basis not directly related to temporary
and seasonal residential occupancy for recreation purposes does not qualify for class 4c;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or
dues, but a membership fee may not be required in order to use the property for golfing,
and its green fees for golfing must be comparable to green fees typically charged by
municipal courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
with the golf course is classified as class 3a property;

(3) real property up to a maximum of three acres of land owned and used by a
nonprofit community service oriented organization and not used for residential purposes
on either a temporary or permanent basis, provided that:

(i) the property is not used for a revenue-producing activity for more than six days
in the calendar year preceding the year of assessment; or

(ii) the organization makes annual charitable contributions deleted text begin and donations deleted text end at least
equal to the property's previous year's property taxes and the property is allowed to be
used for public and community meetings or events for no charge, as appropriate to the
size of the facility.

For purposes of this clause,

(A) "charitable deleted text begin contributions and donations deleted text end new text begin contribution new text end " has the same meaning
as deleted text begin lawful gambling purposes under section 349.12, subdivision 25, excluding those
purposes relating to the payment of taxes, assessments, fees, auditing costs, and utility
payments deleted text end new text begin given in section 349.12, subdivision 7a, except that expenditures for erection or
acquisition of a replacement building, as defined under section 349.12, subdivision 25,
paragraph (a), clause (25), may be counted to meet up to 50 percent of the contribution
requirement, for a period of not more than 20 years from the erection or acquisition of
the replacement building new text end ;

(B) "property taxes" excludes the state general tax;

(C) a "nonprofit community service oriented organization" means any corporation,
society, association, foundation, or institution organized and operated exclusively for
charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
Revenue Code; and

(D) "revenue-producing activities" shall include but not be limited to property or that
portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
insurance business, or office or other space leased or rented to a lessee who conducts a
for-profit enterprise on the premises.

Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The use
of the property for social events open exclusively to members and their guests for periods
of less than 24 hours, when an admission is not charged nor any revenues are received by
the organization shall not be considered a revenue-producing activity.

The organization shall maintain records of its charitable contributions deleted text begin and donations deleted text end
and of public meetings and events held on the property and make them available upon
request any time to the assessor to ensure eligibility. An organization meeting the
requirement under item (ii) must file an application by May 1 with the assessor for
eligibility for the current year's assessment. The commissioner shall prescribe a uniform
application form and instructions;

(4) postsecondary student housing of not more than one acre of land that is owned by
a nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;

(5) (i) manufactured home parks as defined in section 327.14, subdivision 3,
excluding manufactured home parks described in section 273.124, subdivision 3a, and (ii)
manufactured home parks as defined in section 327.14, subdivision 3, that are described in
section 273.124, subdivision 3a;

(6) real property that is actively and exclusively devoted to indoor fitness, health,
social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
and is located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt
under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the
leased premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
be filed by the new owner with the assessor of the county where the property is located
within 60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed
agreement restricting the use of the premises, prohibiting commercial use or activity
performed at the hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead
purposes, and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods
of 14 or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated
in the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer
than seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22;

(10) real property up to a maximum of three acres and operated as a restaurant
as defined under section 157.15, subdivision 12, provided it: (A) is located on a lake
as defined under section 103G.005, subdivision 15, paragraph (a), clause (3); and (B)
is either devoted to commercial purposes for not more than 250 consecutive days, or
receives at least 60 percent of its annual gross receipts from business conducted during
four consecutive months. Gross receipts from the sale of alcoholic beverages must be
included in determining the property's qualification under subitem (B). The property's
primary business must be as a restaurant and not as a bar. Gross receipts from gift shop
sales located on the premises must be excluded. Owners of real property desiring 4c
classification under this clause must submit an annual declaration to the assessor by
February 1 of the current assessment year, based on the property's relevant information for
the preceding assessment year; and

(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used
as a marina, as defined in section 86A.20, subdivision 5, which is made accessible to
the public and devoted to recreational use for marina services. The marina owner must
annually provide evidence to the assessor that it provides services, including lake or river
access to the public by means of an access ramp or other facility that is either located on
the property of the marina or at a publicly owned site that abuts the property of the marina.
No more than 800 feet of lakeshore may be included in this classification. Buildings used
in conjunction with a marina for marina services, including but not limited to buildings
used to provide food and beverage services, fuel, boat repairs, or the sale of bait or fishing
tackle, are classified as class 3a property.

Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
parcel of seasonal residential recreational property not used for commercial purposes
has the same class rates as class 4bb property, (ii) manufactured home parks assessed
under clause (5), item (i), have the same class rate as class 4b property, and the market
value of manufactured home parks assessed under clause (5), item (ii), has the same class
rate as class 4d property if more than 50 percent of the lots in the park are occupied by
shareholders in the cooperative corporation or association and a class rate of one percent if
50 percent or less of the lots are so occupied, (iii) commercial-use seasonal residential
recreational property and marina recreational land as described in clause (11), has a
class rate of one percent for the first $500,000 of market value, and 1.25 percent for the
remaining market value, (iv) the market value of property described in clause (4) has a
class rate of one percent, (v) the market value of property described in clauses (2), (6), and
(10) has a class rate of 1.25 percent, and (vi) that portion of the market value of property
in clause (9) qualifying for class 4c property has a class rate of 1.25 percent.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
of the units in the building qualify as low-income rental housing units as certified under
section 273.128, subdivision 3, only the proportion of qualifying units to the total number
of units in the building qualify for class 4d. The remaining portion of the building shall be
classified by the assessor based upon its use. Class 4d also includes the same proportion of
land as the qualifying low-income rental housing units are to the total units in the building.
For all properties qualifying as class 4d, the market value determined by the assessor must
be based on the normal approach to value using normal unrestricted rents.

Class 4d property has a class rate of 0.75 percent.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2011 and
thereafter, for taxes payable in 2012 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2010, section 273.13, subdivision 34, is amended to read:

Subd. 34.

Homestead of disabled veteran.

(a) All or a portion of the market value
of property owned by a veteran or by the veteran and the veteran's spouse qualifying
for homestead classification under subdivision 22 or 23 is excluded in determining the
property's taxable market value if it serves as the homestead of a military veteran, as
defined in section 197.447, who has a service-connected disability of 70 percent or more.
To qualify for exclusion under this subdivision, the veteran must have been honorably
discharged from the United States armed forces, as indicated by United States Government
Form DD214 or other official military discharge papers, and must be certified by the
United States Veterans Administration as having a service-connected disability.

(b)(1) For a disability rating of 70 percent or more, $150,000 of market value is
excluded, except as provided in clause (2); and

(2) for a total (100 percent) and permanent disability, $300,000 of market value is
excluded.

(c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b),
clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the
spouse holds the legal or beneficial title to the homestead and permanently resides there,
the exclusion shall carry over to the benefit of the veteran's spouse for deleted text begin one deleted text end new text begin five new text end additional
deleted text begin assessment year deleted text end new text begin taxes payable years new text end or until such time as the spouse sells, transfers,
new text begin remarries, new text end or otherwise disposes of the property, whichever comes first. new text begin To qualify for
the exemption under this paragraph, the surviving spouse must apply annually to the
assessor by July 1 of the assessment year.
new text end

(d) In the case of an agricultural homestead, only the portion of the property
consisting of the house and garage and immediately surrounding one acre of land qualifies
for the valuation exclusion under this subdivision.

(e) A property qualifying for a valuation exclusion under this subdivision is not
eligible for the credit under section 273.1384, subdivision 1, or classification under
subdivision 22, paragraph (b).

(f) To qualify for a valuation exclusion under this subdivision a property owner must
apply to the assessor by July 1 of each assessment year, except that an annual reapplication
is not required once a property has been accepted for a valuation exclusion under paragraph
(b), clause (2), and the property continues to qualify until there is a change in ownership.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2010, payable in
2011, and thereafter, and applies to homesteads that initially qualified for the exclusion
for taxes payable in 2009 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2010, section 274.01, subdivision 1, is amended to read:

Subdivision 1.

Ordinary board; meetings, deadlines, grievances.

(a) The town
board of a town, or the council or other governing body of a city, is the board of appeal
and equalization except (1) in cities whose charters provide for a board of equalization or
(2) in any city or town that has transferred its local board of review power and duties to
the county board as provided in subdivision 3. The county assessor shall fix a day and
time when the board or the board of equalization shall meet in the assessment districts
of the county. Notwithstanding any law or city charter to the contrary, a city board of
equalization shall be referred to as a board of appeal and equalization. On or before
February 15 of each year the assessor shall give written notice of the time to the city or
town clerk. Notwithstanding the provisions of any charter to the contrary, the meetings
must be held between April 1 and May 31 each year new text begin , provided that the board may review
appeals of denials of green acres treatment as provided in paragraph (h) at any time new text end .
The clerk shall give published and posted notice of the meeting at least ten days before
the date of the meeting.

The board shall meet at the office of the clerk to review the assessment and
classification of property in the town or city. No changes in valuation or classification
which are intended to correct errors in judgment by the county assessor may be made by
the county assessor after the board has adjourned in those cities or towns that hold a
local board of review; however, corrections of errors that are merely clerical in nature or
changes that extend homestead treatment to property are permitted after adjournment until
the tax extension date for that assessment year. The changes must be fully documented and
maintained in the assessor's office and must be available for review by any person. A copy
of the changes made during this period in those cities or towns that hold a local board of
review must be sent to the county board no later than December 31 of the assessment year.

(b) The board shall determine whether the taxable property in the town or city has
been properly placed on the list and properly valued by the assessor. If real or personal
property has been omitted, the board shall place it on the list with its market value, and
correct the assessment so that each tract or lot of real property, and each article, parcel,
or class of personal property, is entered on the assessment list at its market value. No
assessment of the property of any person may be raised unless the person has been
duly notified of the intent of the board to do so. On application of any person feeling
aggrieved, the board shall review the assessment or classification, or both, and correct
it as appears just. The board may not make an individual market value adjustment or
classification change that would benefit the property if the owner or other person having
control over the property has refused the assessor access to inspect the property and the
interior of any buildings or structures as provided in section 273.20. A board member
shall not participate in any actions of the board which result in market value adjustments
or classification changes to property owned by the board member, the spouse, parent,
stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew,
or niece of a board member, or property in which a board member has a financial interest.
The relationship may be by blood or marriage.

(c) A local board may reduce assessments upon petition of the taxpayer but the total
reductions must not reduce the aggregate assessment made by the county assessor by more
than one percent. If the total reductions would lower the aggregate assessments made by
the county assessor by more than one percent, none of the adjustments may be made. The
assessor shall correct any clerical errors or double assessments discovered by the board
without regard to the one percent limitation.

(d) A local board does not have authority to grant an exemption or to order property
removed from the tax rolls.

(e) A majority of the members may act at the meeting, and adjourn from day to day
until they finish hearing the cases presented. The assessor shall attend, with the assessment
books and papers, and take part in the proceedings, but must not vote. The county assessor,
or an assistant delegated by the county assessor shall attend the meetings. The board shall
list separately, on a form appended to the assessment book, all omitted property added
to the list by the board and all items of property increased or decreased, with the market
value of each item of property, added or changed by the board, placed opposite the item.
The county assessor shall enter all changes made by the board in the assessment book.

(f) Except as provided in subdivision 3, if a person fails to appear in person, by
counsel, or by written communication before the board after being duly notified of the
board's intent to raise the assessment of the property, or if a person feeling aggrieved by an
assessment or classification fails to apply for a review of the assessment or classification,
the person may not appear before the county board of appeal and equalization for a review
of the assessment or classification. This paragraph does not apply if an assessment was
made after the local board meeting, as provided in section 273.01, or if the person can
establish not having received notice of market value at least five days before the local
board meeting.

(g) The local board must complete its work and adjourn within 20 days from the
time of convening stated in the notice of the clerk, unless a longer period is approved by
the commissioner of revenue. No action taken after that date is valid. All complaints
about an assessment or classification made after the meeting of the board must be heard
and determined by the county board of equalization. A nonresident may, at any time,
before the meeting of the board file written objections to an assessment or classification
with the county assessor. The objections must be presented to the board at its meeting by
the county assessor for its consideration.

new text begin (h) The local board may, but is not required to, review appeals from property owners
of denials by assessors of applications for valuation under section 273.111. If it intends
to exercise the authority provided in this paragraph, the board must pass a resolution
stating that it will do so, and must then review all such appeals until it passes a subsequent
resolution stating that it will not review such appeals.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for appeals denied after June 30,
2011.
new text end

Sec. 10.

Minnesota Statutes 2010, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levy base amount new text begin for commercial-industrial property
new text end is deleted text begin $592,000,000 deleted text end new text begin $702,700,000 and the state general levy base amount for seasonal
residential recreational property is $39,800,000 new text end for taxes payable in deleted text begin 2002 deleted text end new text begin 2012 and 2013 new text end .
For taxes payable in subsequent years, the levy base amount is deleted text begin increased each year by
multiplying the levy base amount for the prior year by the sum of one plus the rate of
increase, if any, in the implicit price deflator for government consumption expenditures
and gross investment for state and local governments prepared by the Bureau of Economic
Analysts of the United States Department of Commerce for the 12-month period ending
March 31 of the year prior to the year the taxes are payable deleted text end new text begin decreased as follows: new text end

new text begin (1) for taxes payable in 2014, the state general levy base amount is $667,600,000
for commercial-industrial property and $37,800,000 for seasonal residential recreational
property;
new text end

new text begin (2) for taxes payable in 2015, the state general levy base amount is $632,500,000
for commercial-industrial property and $35,800,000 for seasonal residential recreational
property;
new text end

new text begin (3) for taxes payable in 2016, the state general levy base amount is $562,300,000
for commercial-industrial property and $31,800,000 for seasonal residential recreational
property;
new text end

new text begin (4) for taxes payable in 2017, the state general levy base amount is $492,100,000
for commercial-industrial property and $27,800,000 for seasonal residential recreational
property;
new text end

new text begin (5) for taxes payable in 2018, the state general levy base amount is $421,900,000
for commercial-industrial property and $23,800,000 for seasonal residential recreational
property;
new text end

new text begin (6) for taxes payable in 2019, the state general levy base amount is $351,700,000
for commercial-industrial property and $19,800,000 for seasonal residential recreational
property;
new text end

new text begin (7) for taxes payable in 2020, the state general levy base amount is $281,500,000
for commercial-industrial property and $15,800,000 for seasonal residential recreational
property;
new text end

new text begin (8) for taxes payable in 2021, the state general levy base amount is $211,300,000
for commercial-industrial property and $11,800,000 for seasonal residential recreational
property;
new text end

new text begin (9) for taxes payable in 2022, the state general levy base amount is $141,100,000
for commercial-industrial property and $7,800,000 for seasonal residential recreational
property; and
new text end

new text begin (10) for taxes payable in 2023, the state general levy base amount is $70,900,000
for commercial-industrial property and $3,800,000 for seasonal residential recreational
property new text end .

The tax under this section is not treated as a local tax rate under section 469.177 and
is not the levy of a governmental unit under chapters 276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year
as necessary to account for errors and tax base changes that affected a preliminary or final
rate for either of the two preceding years. Adjustments are allowed to the extent that the
necessary information is available to the commissioner at the time the rates for a year must
be certified, and for the following reasons:

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

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under
section 275.29 that was not reported on the abstracts of assessment submitted under
section 270C.89 for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

Sec. 11.

Minnesota Statutes 2010, section 275.025, subdivision 4, is amended to read:

Subd. 4.

Apportionment and levy of state general tax.

deleted text begin Ninety-five percent of the
state general tax must be levied by applying a uniform rate to all commercial-industrial tax
capacity and five percent of the state general tax must be levied by applying a uniform
rate to all seasonal residential recreational tax capacity. deleted text end On or before October 1 each year,
the commissioner of revenue shall certify the preliminary state general levy rates to each
county auditor that must be used to prepare the notices of proposed property taxes for taxes
payable in the following year. By January 1 of each year, the commissioner shall certify
the final state general levy rate to each county auditor that shall be used in spreading taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2011, payable
in 2012, and thereafter.
new text end

Sec. 12. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2010, section 273.114, subdivision 1, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2010, section 275.025, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective the day following final enactment.
Paragraph (b) is effective for taxes levied in 2023, payable in 2024, and thereafter.
new text end

ARTICLE 5

TAX INCREMENT FINANCING

Section 1.

Minnesota Statutes 2010, section 469.176, subdivision 4c, is amended to
read:

Subd. 4c.

Economic development districts.

(a) Revenue derived from tax
increment from an economic development district may not be used to provide
improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form
to developments consisting of buildings and ancillary facilities, if more than 15 percent
of the buildings and facilities (determined on the basis of square footage) are used for a
purpose other than:

(1) the manufacturing or production of tangible personal property, including
processing resulting in the change in condition of the property;

(2) warehousing, storage, and distribution of tangible personal property, excluding
retail sales;

(3) research and development related to the activities listed in clause (1) or (2);

(4) telemarketing if that activity is the exclusive use of the property;

(5) tourism facilities;

(6) qualified border retail facilities; or

(7) space necessary for and related to the activities listed in clauses (1) to (6).

(b) Notwithstanding the provisions of this subdivision, revenues derived from tax
increment from an economic development district may be used to provide improvements,
loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000
square feet of any separately owned commercial facility located within the municipal
jurisdiction of a small city, if the revenues derived from increments are spent only to
assist the facility directly or for administrative expenses, the assistance is necessary to
develop the facility, and all of the increments, except those for administrative expenses,
are spent only for activities within the district.

(c) A city is a small city for purposes of this subdivision if the city was a small city
in the year in which the request for certification was made and applies for the rest of
the duration of the district, regardless of whether the city qualifies or ceases to qualify
as a small city.

(d) Notwithstanding the requirements of paragraph (a) and the finding requirements
of section 469.174, subdivision 12, tax increments from an economic development district
may be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or
assistance in any form to developments consisting of buildings and ancillary facilities, if
all the following conditions are met:

(1) the municipality finds that the project will create or retain jobs in this state,
including construction jobs, and that construction of the project would not have
commenced before July 1, deleted text begin 2011 deleted text end new text begin 2012 new text end , without the authority providing assistance under
the provisions of this paragraph;

(2) construction of the project begins no later than July 1, deleted text begin 2011 deleted text end new text begin 2012 new text end ; deleted text begin and
deleted text end

(3) the request for certification of the district is made no later than June 30, deleted text begin 2011 deleted text end new text begin
2012; and
new text end

new text begin (4) for development of housing under this paragraph, the construction must begin
before July 1, 2011 new text end .

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2010, section 469.176, subdivision 4m, is amended to read:

Subd. 4m.

Temporary authority to stimulate construction.

(a) Notwithstanding
the restrictions in any other subdivision of this section or any other law to the contrary,
except the requirement to pay bonds to which the increments are pledged and the
provisions of subdivisions 4g and 4h, the authority may spend tax increments for one or
more of the following purposes:

(1) to provide improvements, loans, interest rate subsidies, or assistance in any
form to private development consisting of the construction or substantial rehabilitation
of buildings and ancillary facilities, if doing so will create or retain jobs in this state,
including construction jobs, and that the construction commences before July 1, deleted text begin 2011 deleted text end new text begin
2012 new text end , and would not have commenced before that date without the assistance; or

(2) to make an equity or similar investment in a corporation, partnership, or limited
liability company that the authority determines is necessary to make construction of a
development that meets the requirements of clause (1) financially feasible.

(b) The authority may undertake actions under the authority of this subdivision only
after approval by the municipality of a written spending plan that specifically authorizes
the authority to take the actions. The municipality shall approve the spending plan only
after a public hearing after published notice in a newspaper of general circulation in
the municipality at least once, not less than ten days nor more than 30 days prior to the
date of the hearing.

(c) The authority to spend tax increments under this subdivision expires December
31, deleted text begin 2011 deleted text end new text begin 2012 new text end .

new text begin (d) For a development consisting of housing, the authority to spend tax increments
under this subdivision expires December 31, 2011, and construction must commence
before July 1, 2011.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Laws 2010, chapter 389, article 7, section 22, is amended to read:

Sec. 22. CITY OF RAMSEY; TAX INCREMENT FINANCING DISTRICT;
SPECIAL RULES.

(a) If the city of Ramsey or an authority of the city elects upon the adoption of a tax
increment financing plan for a district, the rules under this section apply to a redevelopment
tax increment financing district established by the city or an authority of the city. The
redevelopment tax increment district includes parcels within the area bounded on the new text begin east
by Ramsey Boulevard, on the new text end north by Bunker Lake Boulevard as extended west to Llama
Street, on the west by Llama Street, and on the south by a line running parallel to and
600 feet south of the southerly right-of-way for U.S. Highway 10, but including Parcels
28-32-25-43-0007 and 28-32-25-34-0002 in their entirety, and excluding the Anoka
County Regional Park property in its entirety. A parcel within this area that is included in
a tax increment financing district that was certified before the date of enactment of this act
may be included in the district created under this act if the initial district is decertified.

(b) The requirements for qualifying a redevelopment tax increment district under
Minnesota Statutes, section 469.174, subdivision 10, do not apply to the parcels located
within the district.

(c) In addition to the costs permitted by Minnesota Statutes, section 469.176,
subdivision 4j, Eligible expenditures within the district include the city's share of the
costs necessary to provide for the construction of the Northstar Transit Station and
related infrastructure, including structured parking, a pedestrian overpass, and roadway
improvements.

(d) The requirement of Minnesota Statutes, section 469.1763, subdivision 3, that
activities must be undertaken within a five-year period from the date of certification of a
tax increment financing district, is considered to be met for the district if the activities
were undertaken within ten years from the date of certification of the district.

(e) Except for administrative expenses, the in-district percentage for purposes of
the restriction on pooling under Minnesota Statutes, section 469.1763, subdivision 2, for
this district is 100 percent.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon approval by the governing
body of the city of Ramsey, and upon compliance by the city with Minnesota Statutes,
section 645.021, subdivision 3.
new text end

Sec. 4. new text begin CITY OF COHASSET; USE OF TAX INCREMENTS.
new text end

new text begin The authority operating tax increment financing districts No. 2-1 and No. 3-1 in
the city of Cohasset may transfer tax increments from each of those districts to the city
in an amount equal to the advances made by the city from its general fund to finance
expenditures under Minnesota Statutes, section 469.176, subdivision 4, for the benefit
of that district.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
upon approval by the governing body of the city of Cohasset and compliance with
Minnesota Statutes, section 645.021, subdivision 3.
new text end

Sec. 5. new text begin CITY OF LINO LAKES; TAX INCREMENT FINANCING.
new text end

new text begin Subdivision 1. new text end

new text begin Duration of district. new text end

new text begin Notwithstanding the provisions of Minnesota
Statutes, section 469.176, subdivision 1b, the city of Lino Lakes may collect tax
increments from tax increment financing district No. 1-10 through December 31, 2023,
subject to the conditions in subdivision 2.
new text end

new text begin Subd. 2. new text end

new text begin Conditions for extension. new text end

new text begin All tax increments remaining in the account
for the district after February 1, 2011, and all tax increments collected thereafter, must
be used only to pay debt service on bonds issued to finance the interchange of Anoka
County Highway 23 and marked Interstate Highway 35W, bonds issued to finance public
improvements serving the development known as Legacy at Woods Edge, and any bonds
issued to refund those bonds. Minnesota Statutes, sections 469.176, subdivision 4c, and
469.1763 do not apply to expenditures made under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance by the governing
body of the city of Lino Lakes with the requirements of Minnesota Statutes, sections
469.1782, subdivision 2, and 645.021, subdivision 3.
new text end

ARTICLE 6

MINERALS

Section 1.

Minnesota Statutes 2010, section 290.05, subdivision 1, is amended to read:

Subdivision 1.

Exempt entities.

The following corporations, individuals, estates,
trusts, and organizations shall be exempted from taxation under this chapter, provided
that every such person or corporation claiming exemption under this chapter, in whole
or in part, must establish to the satisfaction of the commissioner the taxable status of
any income or activity:

(a) corporations, individuals, estates, and trusts engaged in the business of mining or
producing iron ore and new text begin mining, producing, or refining new text end other ores new text begin , metals, and minerals, new text end
the mining deleted text begin or deleted text end new text begin , new text end production new text begin , or refining new text end of which is subject to the occupation tax imposed
by section 298.01; but if any such corporation, individual, estate, or trust engages in any
other business or activity or has income from any property not used in such business it
shall be subject to this tax computed on the net income from such property or such other
business or activity. Royalty shall not be considered as income from the business of
mining or producing iron ore within the meaning of this section;

(b) the United States of America, the state of Minnesota or any political subdivision
of either agencies or instrumentalities, whether engaged in the discharge of governmental
or proprietary functions; and

(c) any insurance company.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 2.

Minnesota Statutes 2010, section 297A.68, subdivision 4, is amended to read:

Subd. 4.

Taconite new text begin , other ores, metals, or minerals; new text end production materials.

Mill
liners, grinding rods, and grinding balls that are substantially consumed in the production
of taconite new text begin or other ores, metals, or minerals new text end are exempt when sold to or stored, used, or
consumed by persons taxed under the in-lieu new text begin or net proceeds new text end provisions of chapter 298.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 3.

Minnesota Statutes 2010, section 298.001, is amended by adding a subdivision
to read:

new text begin Subd. 10. new text end

new text begin Refining. new text end

new text begin "Refining" means and is limited to refining:
new text end

new text begin (1) of ores, metals, or mineral products, the mining, extraction, or quarrying of
which were subject to tax under section 298.015; and
new text end

new text begin (2) carried out by the entity, or an affiliated entity, that mined, extracted, or quarried
the metal or mineral products.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 4.

Minnesota Statutes 2010, section 298.01, subdivision 3, is amended to read:

Subd. 3.

Occupation tax; other ores.

new text begin (a) new text end Every person engaged in the business of
mining new text begin , refining, new text end or producing ores new text begin , metals, or minerals new text end in this state, except iron ore or
taconite concentrates, shall pay an occupation tax to the state of Minnesota as provided
in this subdivision. new text begin For purposes of this subdivision, mining includes the application
of hydrometallurgical processes. new text end The tax is determined in the same manner as the tax
imposed by section 290.02, except that sections 290.05, subdivision 1, clause (a), 290.17,
subdivision 4, and 290.191, subdivision 2, do not apply, and the occupation tax must be
computed by applying to taxable income the rate deleted text begin of 2.45 percent deleted text end new text begin set in paragraph (b) new text end . A
person subject to occupation tax under this section shall apportion its net income on the
basis of the percentage obtained by taking the sum of:

(1) 75 percent of the percentage which the sales made within this state in connection
with the trade or business during the tax period are of the total sales wherever made in
connection with the trade or business during the tax period;

(2) 12.5 percent of the percentage which the total tangible property used by the
taxpayer in this state in connection with the trade or business during the tax period is of
the total tangible property, wherever located, used by the taxpayer in connection with the
trade or business during the tax period; and

(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred
in this state or paid in respect to labor performed in this state in connection with the trade
or business during the tax period are of the taxpayer's total payrolls paid or incurred in
connection with the trade or business during the tax period.

The tax is in addition to all other taxes.

new text begin (b) The rate of the tax imposed under this subdivision is as provided in this
paragraph for the following taxable years:
new text end

new text begin (1) for 2012 and 2013, 2.45 percent;
new text end

new text begin (2) for 2014, 2.23 percent;
new text end

new text begin (3) for 2015, 2.11 percent;
new text end

new text begin (4) for 2016, 1.99 percent;
new text end

new text begin (5) for 2017, 1.74 percent;
new text end

new text begin (6) for 2018, 1.50 percent;
new text end

new text begin (7) for 2019, 1.26 percent;
new text end

new text begin (8) for 2020, 1.02 percent;
new text end

new text begin (9) for 2021, .78 percent;
new text end

new text begin (10) for 2022, .54 percent;
new text end

new text begin (11) for 2023, .30 percent; and
new text end

new text begin (12) for 2024 and subsequent years, .06 percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 5.

Minnesota Statutes 2010, section 298.01, subdivision 3a, is amended to read:

Subd. 3a.

Gross income.

(a) For purposes of determining a person's taxable income
under subdivision 3, gross income is determined by the amount of gross proceeds from
mining in this state under section 298.016 and includes any gain or loss recognized
from the sale or disposition of assets used in the business in this state. If more than one
new text begin ore, new text end mineral, new text begin or new text end metal deleted text begin , or energy resource deleted text end referred to in section 298.016 is mined and
processed at the same mine and plant, a gross income for each new text begin ore, new text end mineral, new text begin or new text end metal deleted text begin , or
energy resource deleted text end must be determined separately. The gross incomes may be combined on
one occupation tax return to arrive at the gross income of all production.

(b) In applying section 290.191, subdivision 5, transfers of ores new text begin , metals, or minerals
that are subject to tax under this chapter new text end are deemed to be sales in this state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 6.

Minnesota Statutes 2010, section 298.015, subdivision 1, is amended to read:

Subdivision 1.

Tax imposed.

A person engaged in the business of mining shall pay
to the state of Minnesota for distribution as provided in section 298.018 a net proceeds tax
equal to two percent of the net proceeds from mining in Minnesota. The tax applies to all
deleted text begin mineral and energy resources deleted text end new text begin ores, metals, and minerals new text end mined deleted text begin or deleted text end new text begin , new text end extracted new text begin , produced,
or refined new text end within the state of Minnesota except for sand, silica sand, gravel, building
stone, crushed rock, limestone, granite, dimension granite, dimension stone, horticultural
peat, clay, soil, iron ore, and taconite concentrates. The tax is in addition to all other
taxes provided for by law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 7.

Minnesota Statutes 2010, section 298.015, subdivision 2, is amended to read:

Subd. 2.

Net proceeds.

For purposes of this section, the term "net proceeds" means
the gross proceeds from mining, as defined in section 298.016, less the deductions deleted text begin allowed
in section 298.017 deleted text end new text begin for purposes of determining taxable income under section 298.01,
subdivision 3b, applied to the mining, production, processing, beneficiation, smelting, or
refining of metal or mineral products new text end . No other credits or deductions shall apply to this tax
deleted text begin except for those provided in section 298.017 deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 8.

Minnesota Statutes 2010, section 298.016, subdivision 4, is amended to read:

Subd. 4.

deleted text begin Definitions deleted text end new text begin Metal or mineral products; definition new text end .

For the purposes of
deleted text begin sections 298.015 and 298.017 deleted text end new text begin this section new text end , deleted text begin the terms defined in this subdivision have the
meaning given them unless the context clearly indicates otherwise.
deleted text end

deleted text begin (a) deleted text end "metal or mineral products" means all those deleted text begin mineral and energy resources deleted text end new text begin ores,
metals, and minerals new text end subject to the tax provided in section 298.015.

deleted text begin (b) "Exploration" means activities designed and engaged in to ascertain the
existence, location, extent, or quality of any deposit of metal or mineral products prior to
the development of a mining site.
deleted text end

deleted text begin (c) "Development" means activities designed and engaged in to prepare or develop
a potential mining site for mining after the existence of metal or mineral products in
commercially marketable quantities has been disclosed including, but not limited to,
the clearing of forestation, the building of roads, removal of overburden, or the sinking
of shafts.
deleted text end

deleted text begin (d) "Research" means activities designed and engaged in to create new or improved
methods of mining, producing, processing, beneficiating, smelting, or refining metal
or mineral products.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 9.

Minnesota Statutes 2010, section 298.225, subdivision 1, is amended to read:

Subdivision 1.

Guaranteed distribution.

(a) The distribution of the taconite
production tax as provided in section 298.28, subdivisions 3 to 5, 6, paragraph (b), new text begin and
new text end 7, deleted text begin and 8, deleted text end shall equal the lesser of the following amounts:

(1) the amount distributed pursuant to this section and section 298.28, with respect
to 1983 production if the production for the year prior to the distribution year is no less
than 42,000,000 taxable tons. If the production is less than 42,000,000 taxable tons, the
amount of the distributions shall be reduced proportionately at the rate of two percent
for each 1,000,000 tons, or part of 1,000,000 tons by which the production is less than
42,000,000 tons; or

(2)(i) for the distributions made pursuant to section 298.28, subdivisions 4,
paragraphs (b) and (c), and 6, paragraph (c), 31.2 percent of the amount distributed
pursuant to this section and section 298.28, with respect to 1983 production;

(ii) for the distributions made pursuant to section 298.28, subdivision 5, paragraphs
(b) and (d), 75 percent of the amount distributed pursuant to this section and section
298.28, with respect to 1983 production.

(b) The distribution of the taconite production tax as provided in section 298.28,
subdivision 2, shall equal the following amount:

(1) if the production for the year prior to the distribution year is at least 42,000,000
taxable tons, the amount distributed pursuant to this section and section 298.28 with
respect to 1999 production; or

(2) if the production for the year prior to the distribution year is less than 42,000,000
taxable tons, the amount distributed pursuant to this section and section 298.28 with respect
to 1999 production, reduced proportionately at the rate of two percent for each 1,000,000
tons or part of 1,000,000 tons by which the production is less than 42,000,000 tons.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions in 2012 and
thereafter.
new text end

Sec. 10.

Minnesota Statutes 2010, section 298.24, subdivision 1, is amended to read:

Subdivision 1.

Imposed; calculation.

(a) For concentrate produced in deleted text begin 2001,
2002, and 2003 deleted text end new text begin 2011 and subsequent years new text end , there is imposed upon taconite and iron
sulphides, and upon the mining and quarrying thereof, and upon the production of
iron ore concentrate therefrom, and upon the concentrate so produced, new text begin and upon other
iron-bearing material, new text end a tax of deleted text begin $2.103 deleted text end new text begin $2.074 new text end per gross ton of merchantable iron ore
concentrate produced therefrom. deleted text begin For concentrates produced in 2005, the tax rate is the
same rate imposed for concentrates produced in 2004. For concentrates produced in 2009
and subsequent years, the tax is also imposed upon other iron-bearing material.
deleted text end

(b) deleted text begin For concentrates produced in 2006 and subsequent years, the tax rate shall be
equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate
multiplied by the percentage increase in the implicit price deflator from the fourth quarter
of the second preceding year to the fourth quarter of the preceding year. "Implicit price
deflator" means the implicit price deflator for the gross domestic product prepared by the
Bureau of Economic Analysis of the United States Department of Commerce.
deleted text end

deleted text begin (c) deleted text end An additional tax is imposed equal to three cents per gross ton of merchantable
iron ore concentrate for each one percent that the iron content of the product exceeds 72
percent, when dried at 212 degrees Fahrenheit.

deleted text begin (d) deleted text end new text begin (c) new text end The tax on taconite and iron sulphides shall be imposed on the average of the
production for the current year and the previous two years. The rate of the tax imposed
will be the current year's tax rate. This clause shall not apply in the case of the closing
of a taconite facility if the property taxes on the facility would be higher if this clause
and section 298.25 were not applicable. The tax on other iron-bearing material shall be
imposed on the current year production.

deleted text begin (e) deleted text end new text begin (d) new text end If the tax or any part of the tax imposed by this subdivision is held to be
unconstitutional, a tax of deleted text begin $2.103 deleted text end new text begin $2.074 new text end per gross ton of merchantable iron ore concentrate
produced shall be imposed.

deleted text begin (f) deleted text end new text begin (e) new text end Consistent with the intent of this subdivision to impose a tax based upon the
weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly
determine the weight of merchantable iron ore concentrate included in fluxed pellets by
subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic
flux additives included in the pellets from the weight of the pellets. For purposes of this
paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite,
olivine, or other basic flux additives are combined with merchantable iron ore concentrate.
No subtraction from the weight of the pellets shall be allowed for binders, mineral and
chemical additives other than basic flux additives, or moisture.

deleted text begin (g) deleted text end new text begin (f) new text end (1) Notwithstanding any other provision of this subdivision, for the first two
years of a plant's commercial production of direct reduced ore from ore mined in this state,
no tax is imposed under this section. As used in this paragraph, "commercial production"
is production of more than 50,000 tons of direct reduced ore in the current year or in any
prior year, "noncommercial production" is production of 50,000 tons or less of direct
reduced ore in any year, and "direct reduced ore" is ore that results in a product that has an
iron content of at least 75 percent. For the third year of a plant's commercial production of
direct reduced ore, the rate to be applied to direct reduced ore is 25 percent of the rate
otherwise determined under this subdivision. For the fourth commercial production year,
the rate is 50 percent of the rate otherwise determined under this subdivision; for the fifth
commercial production year, the rate is 75 percent of the rate otherwise determined under
this subdivision; and for all subsequent commercial production years, the full rate is
imposed.

(2) Subject to clause (1), production of direct reduced ore in this state is subject to
the tax imposed by this section, but if that production is not produced by a producer of
taconite, iron sulfides, or other iron-bearing material, the production of taconite, iron
sulfides, or other iron-bearing material, that is consumed in the production of direct
reduced iron in this state is not subject to the tax imposed by this section on taconite,
iron sulfides, or other iron-bearing material.

(3) Notwithstanding any other provision of this subdivision, no tax is imposed
on direct reduced ore under this section during the facility's noncommercial production
of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial
production of direct reduced ore is subject to the tax imposed by this section on taconite
and iron sulphides. Three-year average production of direct reduced ore does not
include production of direct reduced ore in any noncommercial year. Three-year average
production for a direct reduced ore facility that has noncommercial production is the
average of the commercial production of direct reduced ore for the current year and the
previous two commercial years.

(4) This paragraph applies only to plants for which all environmental permits have
been obtained and construction has begun before July 1, 2008.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for production in 2011 and thereafter.
new text end

Sec. 11.

Minnesota Statutes 2010, section 298.28, subdivision 3, is amended to read:

Subd. 3.

Cities; towns.

(a) deleted text begin 12.5 deleted text end new text begin 12.2 new text end cents per taxable ton, less any amount
distributed under deleted text begin subdivision 8, and deleted text end paragraph (b), must be allocated to the taconite
municipal aid account to be distributed as provided in section 298.282.

(b) An amount must be allocated to towns or cities that is annually certified by
the county auditor of a county containing a taconite tax relief area as defined in section
273.134, paragraph (b), within which there is (1) an organized township if, as of January
2, 1982, more than 75 percent of the assessed valuation of the township consists of iron
ore or (2) a city if, as of January 2, 1980, more than 75 percent of the assessed valuation
of the city consists of iron ore.

(c) The amount allocated under paragraph (b) will be the portion of a township's or
city's certified levy equal to the proportion of (1) the difference between 50 percent of
January 2, 1982, assessed value in the case of a township and 50 percent of the January 2,
1980, assessed value in the case of a city and its current assessed value to (2) the sum of
its current assessed value plus the difference determined in (1), provided that the amount
distributed shall not exceed $55 per capita in the case of a township or $75 per capita in
the case of a city. For purposes of this limitation, population will be determined according
to the 1980 decennial census conducted by the United States Bureau of the Census. If the
current assessed value of the township exceeds 50 percent of the township's January 2,
1982, assessed value, or if the current assessed value of the city exceeds 50 percent of the
city's January 2, 1980, assessed value, this paragraph shall not apply. For purposes of this
paragraph, "assessed value," when used in reference to years other than 1980 or 1982,
means the appropriate net tax capacities multiplied by 10.2.

(d) In addition to other distributions under this subdivision, deleted text begin three deleted text end new text begin 3.1 new text end cents per
taxable ton for distributions in deleted text begin 2009 deleted text end new text begin 2012 and subsequent years new text end must be allocated for
distribution to towns that are entirely located within the taconite tax relief area defined
in section 273.134, paragraph (b). deleted text begin For distribution in 2010 and subsequent years, the
three-cent amount must be annually increased in the same proportion as the increase
in the implicit price deflator as provided in section 298.24, subdivision 1. deleted text end The amount
available under this paragraph will be distributed to eligible towns on a per capita basis,
provided that no town may receive more than $50,000 in any year under this paragraph.
Any amount of the distribution that exceeds the $50,000 limitation for a town under this
paragraph must be redistributed on a per capita basis among the other eligible towns, to
whose distributions do not exceed $50,000.

Sec. 12.

Minnesota Statutes 2010, section 298.28, subdivision 6, is amended to read:

Subd. 6.

Property tax relief.

(a) In deleted text begin 2002 deleted text end new text begin 2012 new text end and thereafter, deleted text begin 33.9 deleted text end new text begin 41.6 new text end cents per
taxable ton, less any amount required to be distributed under paragraphs (b) and (c), or
section 298.2961, subdivision 5, must be allocated to St. Louis County acting as the
counties' fiscal agent, to be distributed as provided in sections 273.134 to 273.136.

(b) If an electric power plant owned by and providing the primary source of power
for a taxpayer mining and concentrating taconite is located in a county other than the
county in which the mining and the concentrating processes are conducted, .1875 cent per
taxable ton of the tax imposed and collected from such taxpayer shall be paid to the county.

(c) If an electric power plant owned by and providing the primary source of power
for a taxpayer mining and concentrating taconite is located in a school district other than
a school district in which the mining and concentrating processes are conducted, .4541
cent per taxable ton of the tax imposed and collected from the taxpayer shall be paid to
the school district.

Sec. 13.

Minnesota Statutes 2010, section 298.28, subdivision 7, is amended to read:

Subd. 7.

Iron Range Resources and Rehabilitation Board.

For the deleted text begin 1998 deleted text end new text begin 2012 and
subsequent years new text end distribution, deleted text begin 6.5 deleted text end new text begin 8.3 new text end cents per taxable ton shall be paid to the Iron Range
Resources and Rehabilitation Board for the purposes of section 298.22. deleted text begin That amount
shall be increased in 1999 and subsequent years in the same proportion as the increase
in the implicit price deflator as provided in section 298.24, subdivision 1. deleted text end The amount
distributed pursuant to this subdivision shall be expended within or for the benefit of the
taconite assistance area defined in section 273.1341. No part of the fund provided in this
subdivision may be used to provide loans for the operation of private business unless the
loan is approved by the governor.

Sec. 14.

Minnesota Statutes 2010, section 298.28, subdivision 9, is amended to read:

Subd. 9.

Douglas J. Johnson economic protection trust fund.

In deleted text begin 1999, 3.35 deleted text end new text begin 2012
and subsequent years, 4.2 new text end cents per taxable ton shall be paid to the Douglas J. Johnson
economic protection trust fund.

Sec. 15.

Minnesota Statutes 2010, section 298.28, subdivision 9b, is amended to read:

Subd. 9b.

Taconite environmental fund.

new text begin In 2012 and subsequent years, new text end five cents
per ton new text begin , plus the amount paid to the fund in 2011 under subdivision 10, paragraph (b), new text end must
be paid to the taconite environmental fund for use under section 298.2961, subdivision 4.

Sec. 16. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2010, sections 298.227; and 298.28, subdivisions 8, 9a,
9c, and 10, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2010, section 298.285, new text end new text begin is repealed.
new text end

new text begin (c) new text end new text begin Minnesota Statutes 2010, section 298.017, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective for distributions in 2012 and
thereafter of taxes on production in 2011 and thereafter. Paragraph (b) is effective June 30,
2011. Paragraph (c) is effective for taxable years beginning after December 31, 2010.
new text end

ARTICLE 7

MISCELLANEOUS

Section 1.

Minnesota Statutes 2010, section 270A.03, subdivision 2, is amended to
read:

Subd. 2.

Claimant agency.

"Claimant agency" means any state agency, as defined
by section 14.02, subdivision 2, the regents of the University of Minnesota, any district
court of the state, any county, any statutory or home rule charter city, including a city
that is presenting a claim for a municipal hospital or a public library or a municipal
ambulance service, a hospital district, a private nonprofit hospital that leases its building
from the county or city in which it is located, new text begin any ambulance service licensed under
chapter 144E, new text end any public agency responsible for child support enforcement, any public
agency responsible for the collection of court-ordered restitution, and any public agency
established by general or special law that is responsible for the administration of a
low-income housing program, and the Minnesota collection enterprise as defined in
section 16D.02, subdivision 8, for the purpose of collecting the costs imposed under
section 16D.11. deleted text begin A county may act as a claimant agency on behalf of an ambulance service
licensed under chapter 144E if the ambulance service's primary service area is located at
least in part within the county, but more than one county may not act as a claimant agency
for a licensed ambulance service with respect to the same debt.
deleted text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2010, section 270A.07, subdivision 1, is amended to read:

Subdivision 1.

Notification requirement.

(a) Any claimant agency, seeking
collection of a debt through setoff against a refund due, shall submit to the commissioner
information indicating the amount of each debt and information identifying the debtor, as
required by section 270A.04, subdivision 3.

(b) For each setoff of a debt against a refund due, the commissioner shall charge a fee
of $15. The proceeds of fees shall be allocated by depositing $4 of each $15 fee collected
into a Department of Revenue recapture revolving fund and depositing the remaining
balance into the general fund. The sums deposited into the revolving fund are appropriated
to the commissioner for the purpose of administering the Revenue Recapture Act.

(c) deleted text begin For each debt for which a county acts as claimant agency on behalf of a licensed
ambulance service, the county may charge the ambulance service a fee not to exceed the
cost of administering the claim.
deleted text end

deleted text begin (d) deleted text end The claimant agency shall notify the commissioner when a debt has been
satisfied or reduced by at least $200 within 30 days after satisfaction or reduction.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2010, section 270C.13, subdivision 1, is amended to read:

Subdivision 1.

Biennial report.

The commissioner shall report to the legislature
by March 1 of each odd-numbered year on the overall incidence of the income tax,
sales and excise taxes, and property tax. The report shall present information on the
distribution of the tax burden as follows: (1) for the overall income distribution, using
a systemwide incidence measure such as the Suits index or other appropriate measures
of equality and inequality; (2) by income classes, including at a minimum deciles of the
income distribution; and (3) by other appropriate taxpayer characteristics. new text begin The report
must also include information on the distribution of the burden of federal taxes borne
by Minnesota residents.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with the report due in
March 2013.
new text end

Sec. 4. new text begin APPROPRIATION; TAX INCIDENCE REPORT.
new text end

new text begin $15,000 in fiscal year 2012 and $15,000 in fiscal year 2013 are appropriated from
the general fund to the commissioner of revenue for the change to the tax incidence
report in section 3.
new text end

Sec. 5. new text begin CASH FLOW ACCOUNT REDUCTION.
new text end

new text begin On July 1, 2011, the commissioner of management and budget shall cancel
$216,000,000 of the balance in the cash flow account in Minnesota Statutes, section
16A.152, to the general fund.
new text end

Sec. 6. new text begin BUDGET RESERVE REDUCTION.
new text end

new text begin On July 1, 2011, the commissioner of management and budget shall cancel
$8,665,000 of the balance in the budget reserve account in Minnesota Statutes, section
16A.152, to the general fund.
new text end