as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to taxation; proposing an amendment to the 1.3 Constitution limiting the use of property taxes to 1.4 fund education; providing property tax reform; 1.5 providing for education aids; providing for local 1.6 government aids; providing county program reform aid; 1.7 changing property class rates on nonhomestead and 1.8 commercial industrial property; increasing property 1.9 tax refunds for homeowners and renters; providing a 1.10 property tax refund for cabins; imposing the sales tax 1.11 on sewer and water services, motor vehicle services, 1.12 and sales of used clothing; appropriating money; 1.13 amending Minnesota Statutes 1994, sections 124.2716, 1.14 subdivision 3; 124.2727, subdivision 6b; 162.081, 1.15 subdivision 4; 273.13, subdivision 32; 273.1398, 1.16 subdivision 2; 273.1399, subdivision 5; 275.07, 1.17 subdivision 1a; 290A.03, by adding a subdivision; 1.18 290A.04, subdivisions 1, 2, and by adding a 1.19 subdivision; 290A.10; 290A.23, subdivision 3; 297A.25, 1.20 subdivision 8; 477A.011, subdivisions 27, 34, and by 1.21 adding subdivisions; and 477A.013, subdivisions 8 and 1.22 9; Minnesota Statutes 1995 Supplement, sections 1.23 124.226, subdivision 10; 124.2711, subdivision 2a; 1.24 124.83, subdivision 4; 124.95, subdivision 4; 124A.23, 1.25 subdivision 1; 273.13, subdivision 25; 273.1398, 1.26 subdivisions 1, 6, and 8; 276.04, subdivision 2; 1.27 290A.03, subdivision 13; 290A.04, subdivision 6; 1.28 297A.01, subdivision 3; 473.253, subdivision 1; 1.29 473.711, subdivision 2; 477A.0132, subdivision 3; and 1.30 477A.03, subdivision 2; proposing coding for new law 1.31 in Minnesota Statutes, chapter 477A; repealing 1.32 Minnesota Statutes 1994, sections 290A.04, 1.33 subdivisions 2a and 2b; 290A.23, subdivision 1; 1.34 477A.011, subdivisions 35 and 37; 477A.013, 1.35 subdivision 6; and 477A.014, subdivision 1a; Minnesota 1.36 Statutes 1995 Supplement, section 477A.011, 1.37 subdivision 36. 1.38 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.39 ARTICLE 1 1.40 CONSTITUTIONAL AMENDMENT 1.41 Section 1. [CONSTITUTIONAL AMENDMENT PROPOSED.] 2.1 An amendment to the Minnesota Constitution, adding a 2.2 section to article X is proposed to the people. 2.3 If adopted, the section will read as follows: 2.4 Sec. 9. No less than two-thirds of the costs of operating 2.5 the state's entire system of public primary and secondary 2.6 schools will be funded from sources other than property taxes. 2.7 This limitation does not apply to the extent that property tax 2.8 revenues exceeding this limit are authorized by local 2.9 referendums. 2.10 Sec. 2. [SUBMISSION TO VOTERS.] 2.11 The proposed amendment must be submitted to the people at 2.12 the 1996 general election. The question submitted shall be: 2.13 "Shall the Minnesota Constitution be amended to limit 2.14 property taxes for public education? 2.15 Yes ....... 2.16 No ........" 2.17 Sec. 3. [SUBMISSION TO VOTERS CANCELED.] 2.18 If the remainder of this bill including any appropriations 2.19 in it does not become law, the question in section 2 shall not 2.20 be submitted to the voters. 2.21 ARTICLE 2 2.22 PROPERTY TAXES 2.23 Section 1. Minnesota Statutes 1994, section 162.081, 2.24 subdivision 4, is amended to read: 2.25 Subd. 4. [FORMULA FOR DISTRIBUTION TO TOWNS; PURPOSES.] 2.26 Money apportioned to a county from the town road account must be 2.27 distributed to the treasurer of each town within the county, 2.28 according to a distribution formula adopted by the county 2.29 board. The formula must take into account each town's levy for 2.30 road and bridge purposes, its population and town road mileage, 2.31 and other factors the county board deems advisable in the 2.32 interests of achieving equity among the towns. Distribution of 2.33 town road funds to each town treasurer must be made by March 1, 2.34 annually, or within 30 days after receipt of payment from the 2.35 commissioner. Distribution of funds to town treasurers in a 2.36 county which has not adopted a distribution formula under this 3.1 subdivision must be made according to a formula prescribed by 3.2 the commissioner by rule. A formula adopted by a county board 3.3 or by the commissioner must provide that a town, in order to be 3.4 eligible for distribution of funds from the town road account in 3.5 a calendar year, must have leviedbefore the deduction of3.6homestead and agricultural credit aid certified under section3.7273.1398, subdivision 2,for taxes payable in the previous year 3.8 for road and bridge purposes at least 0.04835 percent of taxable 3.9 market value. For purposes of this eligibility requirement, 3.10 taxable market value means taxable market value for taxes 3.11 payable two years prior to the aid distribution year. 3.12 Money distributed to a town under this subdivision may be 3.13 expended by the town only for the construction, reconstruction, 3.14 and gravel maintenance of town roads within the town. 3.15 Sec. 2. Minnesota Statutes 1995 Supplement, section 3.16 273.13, subdivision 25, is amended to read: 3.17 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 3.18 estate containing four or more units and used or held for use by 3.19 the owner or by the tenants or lessees of the owner as a 3.20 residence for rental periods of 30 days or more. Class 4a also 3.21 includes hospitals licensed under sections 144.50 to 144.56, 3.22 other than hospitals exempt under section 272.02, and contiguous 3.23 property used for hospital purposes, without regard to whether 3.24 the property has been platted or subdivided. Class 4a property 3.25 in a city with a population of 5,000 or less, that is (1) 3.26 located outside of the metropolitan area, as defined in section 3.27 473.121, subdivision 2, or outside any county contiguous to the 3.28 metropolitan area, and (2) whose city boundary is at least 15 3.29 miles from the boundary of any city with a population greater 3.30 than 5,000 has a class rate of 2.3 percent of market valuefor3.31taxes payable in 1996 and thereafter. All other class 4a 3.32 property has a class rate of3.4 percent of market value for3.33taxes payable in 19963.0 percent for taxes payable in 1997 and 3.34 thereafter. For purposes of this paragraph, population has the 3.35 same meaning given in section 477A.011, subdivision 3. 3.36 (b) Class 4b includes: 4.1 (1) residential real estate containing less than four 4.2 units, other than seasonal residential, and recreational; 4.3 (2) manufactured homes not classified under any other 4.4 provision; 4.5 (3) a dwelling, garage, and surrounding one acre of 4.6 property on a nonhomestead farm classified under subdivision 23, 4.7 paragraph (b). 4.8 Class 4b property has a class rate of2.8 percent of market4.9value for taxes payable in 1992, 2.5 percent of market value for4.10taxes payable in 1993, and 2.3 percent of market value for taxes4.11payable in 19942.0 percent for taxes payable in 1997 and 4.12 thereafter, provided that the first $72,000 market value of 4.13 class 4b single family residences has a class rate of 1.75 4.14 percent for taxes payable in 1998, 1.5 percent for taxes payable 4.15 in 1999, 1.25 percent for taxes payable in 2000, and 1.0 percent 4.16 for taxes payable in 2001 and thereafter. 4.17 (c) Class 4c property includes: 4.18 (1) a structure that is: 4.19 (i) situated on real property that is used for housing for 4.20 the elderly or for low- and moderate-income families as defined 4.21 in Title II, as amended through December 31, 1990, of the 4.22 National Housing Act or the Minnesota housing finance agency law 4.23 of 1971, as amended, or rules promulgated by the agency and 4.24 financed by a direct federal loan or federally insured loan made 4.25 pursuant to Title II of the Act; or 4.26 (ii) situated on real property that is used for housing the 4.27 elderly or for low- and moderate-income families as defined by 4.28 the Minnesota housing finance agency law of 1971, as amended, or 4.29 rules adopted by the agency pursuant thereto and financed by a 4.30 loan made by the Minnesota housing finance agency pursuant to 4.31 the provisions of the act. 4.32 This clause applies only to property of a nonprofit or 4.33 limited dividend entity. Property is classified as class 4c 4.34 under this clause for 15 years from the date of the completion 4.35 of the original construction or substantial rehabilitation, or 4.36 for the original term of the loan. 5.1 (2) a structure that is: 5.2 (i) situated upon real property that is used for housing 5.3 lower income families or elderly or handicapped persons, as 5.4 defined in section 8 of the United States Housing Act of 1937, 5.5 as amended; and 5.6 (ii) owned by an entity which has entered into a housing 5.7 assistance payments contract under section 8 which provides 5.8 assistance for 100 percent of the dwelling units in the 5.9 structure, other than dwelling units intended for management or 5.10 maintenance personnel. Property is classified as class 4c under 5.11 this clause for the term of the housing assistance payments 5.12 contract, including all renewals, or for the term of its 5.13 permanent financing, whichever is shorter; and 5.14 (3) a qualified low-income building as defined in section 5.15 42(c)(2) of the Internal Revenue Code of 1986, as amended 5.16 through December 31, 1990, that (i) receives a low-income 5.17 housing credit under section 42 of the Internal Revenue Code of 5.18 1986, as amended through December 31, 1990; or (ii) meets the 5.19 requirements of that section and receives public financing, 5.20 except financing provided under sections 469.174 to 469.179, 5.21 which contains terms restricting the rents; or (iii) meets the 5.22 requirements of section 273.1317. Classification pursuant to 5.23 this clause is limited to a term of 15 years. The public 5.24 financing received must be from at least one of the following 5.25 sources: government issued bonds exempt from taxes under 5.26 section 103 of the Internal Revenue Code of 1986, as amended 5.27 through December 31, 1993, the proceeds of which are used for 5.28 the acquisition or rehabilitation of the building; programs 5.29 under section 221(d)(3), 202, or 236, of Title II of the 5.30 National Housing Act; rental housing program funds under Section 5.31 8 of the United States Housing Act of 1937 or the market rate 5.32 family graduated payment mortgage program funds administered by 5.33 the Minnesota housing finance agency that are used for the 5.34 acquisition or rehabilitation of the building; public financing 5.35 provided by a local government used for the acquisition or 5.36 rehabilitation of the building, including grants or loans from 6.1 federal community development block grants, HOME block grants, 6.2 or residential rental bonds issued under chapter 474A; or other 6.3 rental housing program funds provided by the Minnesota housing 6.4 finance agency for the acquisition or rehabilitation of the 6.5 building. 6.6 For all properties described in clauses (1), (2), and (3) 6.7 and in paragraph (d), the market value determined by the 6.8 assessor must be based on the normal approach to value using 6.9 normal unrestricted rents unless the owner of the property 6.10 elects to have the property assessed under Laws 1991, chapter 6.11 291, article 1, section 55. If the owner of the property elects 6.12 to have the market value determined on the basis of the actual 6.13 restricted rents, as provided in Laws 1991, chapter 291, article 6.14 1, section 55, the property will be assessed at the rate 6.15 provided for class 4a or class 4b property, as appropriate. 6.16 Properties described in clauses (1)(ii), (3), and (4) may apply 6.17 to the assessor for valuation under Laws 1991, chapter 291, 6.18 article 1, section 55. The land on which these structures are 6.19 situated has the class rate given in paragraph (b) if the 6.20 structure contains fewer than four units, and the class rate 6.21 given in paragraph (a) if the structure contains four or more 6.22 units. This clause applies only to the property of a nonprofit 6.23 or limited dividend entity. 6.24 (4) a parcel of land, not to exceed one acre, and its 6.25 improvements or a parcel of unimproved land, not to exceed one 6.26 acre, if it is owned by a neighborhood real estate trust and at 6.27 least 60 percent of the dwelling units, if any, on all land 6.28 owned by the trust are leased to or occupied by lower income 6.29 families or individuals. This clause does not apply to any 6.30 portion of the land or improvements used for nonresidential 6.31 purposes. For purposes of this clause, a lower income family is 6.32 a family with an income that does not exceed 65 percent of the 6.33 median family income for the area, and a lower income individual 6.34 is an individual whose income does not exceed 65 percent of the 6.35 median individual income for the area, as determined by the 6.36 United States Secretary of Housing and Urban Development. For 7.1 purposes of this clause, "neighborhood real estate trust" means 7.2 an entity which is certified by the governing body of the 7.3 municipality in which it is located to have the following 7.4 characteristics: 7.5 (a) it is a nonprofit corporation organized under chapter 7.6 317A; 7.7 (b) it has as its principal purpose providing housing for 7.8 lower income families in a specific geographic community 7.9 designated in its articles or bylaws; 7.10 (c) it limits membership with voting rights to residents of 7.11 the designated community; and 7.12 (d) it has a board of directors consisting of at least 7.13 seven directors, 60 percent of whom are members with voting 7.14 rights and, to the extent feasible, 25 percent of whom are 7.15 elected by resident members of buildings owned by the trust; and 7.16 (5) except as provided in subdivision 22, paragraph (c), 7.17 real property devoted to temporary and seasonal residential 7.18 occupancy for recreation purposes, including real property 7.19 devoted to temporary and seasonal residential occupancy for 7.20 recreation purposes and not devoted to commercial purposes for 7.21 more than 250 days in the year preceding the year of 7.22 assessment. For purposes of this clause, property is devoted to 7.23 a commercial purpose on a specific day if any portion of the 7.24 property is used for residential occupancy, and a fee is charged 7.25 for residential occupancy. Class 4c also includes commercial 7.26 use real property used exclusively for recreational purposes in 7.27 conjunction with class 4c property devoted to temporary and 7.28 seasonal residential occupancy for recreational purposes, up to 7.29 a total of two acres, provided the property is not devoted to 7.30 commercial recreational use for more than 250 days in the year 7.31 preceding the year of assessment and is located within two miles 7.32 of the class 4c property with which it is used. Class 4c 7.33 property classified in this clause also includes the remainder 7.34 of class 1c resorts. Owners of real property devoted to 7.35 temporary and seasonal residential occupancy for recreation 7.36 purposes and all or a portion of which was devoted to commercial 8.1 purposes for not more than 250 days in the year preceding the 8.2 year of assessment desiring classification as class 1c or 4c, 8.3 must submit a declaration to the assessor designating the cabins 8.4 or units occupied for 250 days or less in the year preceding the 8.5 year of assessment by January 15 of the assessment year. Those 8.6 cabins or units and a proportionate share of the land on which 8.7 they are located will be designated class 1c or 4c as otherwise 8.8 provided. The remainder of the cabins or units and a 8.9 proportionate share of the land on which they are located will 8.10 be designated as class 3a. The first $100,000 of the market 8.11 value of the remainder of the cabins or units and a 8.12 proportionate share of the land on which they are located shall 8.13 have a class rate of three percent. The owner of property 8.14 desiring designation as class 1c or 4c property must provide 8.15 guest registers or other records demonstrating that the units 8.16 for which class 1c or 4c designation is sought were not occupied 8.17 for more than 250 days in the year preceding the assessment if 8.18 so requested. The portion of a property operated as a (1) 8.19 restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 8.20 facility operated on a commercial basis not directly related to 8.21 temporary and seasonal residential occupancy for recreation 8.22 purposes shall not qualify for class 1c or 4c; 8.23 (6) real property up to a maximum of one acre of land owned 8.24 by a nonprofit community service oriented organization; provided 8.25 that the property is not used for a revenue-producing activity 8.26 for more than six days in the calendar year preceding the year 8.27 of assessment and the property is not used for residential 8.28 purposes on either a temporary or permanent basis. For purposes 8.29 of this clause, a "nonprofit community service oriented 8.30 organization" means any corporation, society, association, 8.31 foundation, or institution organized and operated exclusively 8.32 for charitable, religious, fraternal, civic, or educational 8.33 purposes, and which is exempt from federal income taxation 8.34 pursuant to section 501(c)(3), (10), or (19) of the Internal 8.35 Revenue Code of 1986, as amended through December 31, 1990. For 8.36 purposes of this clause, "revenue-producing activities" shall 9.1 include but not be limited to property or that portion of the 9.2 property that is used as an on-sale intoxicating liquor or 3.2 9.3 percent malt liquor establishment licensed under chapter 340A, a 9.4 restaurant open to the public, bowling alley, a retail store, 9.5 gambling conducted by organizations licensed under chapter 349, 9.6 an insurance business, or office or other space leased or rented 9.7 to a lessee who conducts a for-profit enterprise on the 9.8 premises. Any portion of the property which is used for 9.9 revenue-producing activities for more than six days in the 9.10 calendar year preceding the year of assessment shall be assessed 9.11 as class 3a. The use of the property for social events open 9.12 exclusively to members and their guests for periods of less than 9.13 24 hours, when an admission is not charged nor any revenues are 9.14 received by the organization shall not be considered a 9.15 revenue-producing activity; 9.16 (7) post-secondary student housing of not more than one 9.17 acre of land that is owned by a nonprofit corporation organized 9.18 under chapter 317A and is used exclusively by a student 9.19 cooperative, sorority, or fraternity for on-campus housing or 9.20 housing located within two miles of the border of a college 9.21 campus; and 9.22 (8) manufactured home parks as defined in section 327.14, 9.23 subdivision 3. 9.24 Class 4c property has a class rate of 2.3 percent of market 9.25 value, except that (i) for each parcel of seasonal residential 9.26 recreational property not used for commercial purposes under 9.27 clause (5) the first $72,000 of market value on each parcel has 9.28 a class rate of 1.9 percent for taxes payable in 1997 and 1.8 9.29 percent for taxes payable in 1998 and thereafter, and the market 9.30 value of each parcel that exceeds $72,000 has a class rate of 9.31 2.5 percent, and (ii) manufactured home parks assessed under 9.32 clause (8) have a class rate of two percent for taxes payable in 9.33 1996, and thereafter. 9.34 (d) Class 4d property includes: 9.35 (1) a structure that is: 9.36 (i) situated on real property that is used for housing for 10.1 the elderly or for low and moderate income families as defined 10.2 by the Farmers Home Administration; 10.3 (ii) located in a municipality of less than 10,000 10.4 population; and 10.5 (iii) financed by a direct loan or insured loan from the 10.6 Farmers Home Administration. Property is classified under this 10.7 clause for 15 years from the date of the completion of the 10.8 original construction or for the original term of the loan. 10.9 The class rates in paragraph (c), clauses (1), (2), and (3) 10.10 and this clause apply to the properties described in them, only 10.11 in proportion to occupancy of the structure by elderly or 10.12 handicapped persons or low and moderate income families as 10.13 defined in the applicable laws unless construction of the 10.14 structure had been commenced prior to January 1, 1984; or the 10.15 project had been approved by the governing body of the 10.16 municipality in which it is located prior to June 30, 1983; or 10.17 financing of the project had been approved by a federal or state 10.18 agency prior to June 30, 1983. For those properties, 4c or 4d 10.19 classification is available only for those units meeting the 10.20 requirements of section 273.1318. 10.21 Classification under this clause is only available to 10.22 property of a nonprofit or limited dividend entity. 10.23 In the case of a structure financed or refinanced under any 10.24 federal or state mortgage insurance or direct loan program 10.25 exclusively for housing for the elderly or for housing for the 10.26 handicapped, a unit shall be considered occupied so long as it 10.27 is actually occupied by an elderly or handicapped person or, if 10.28 vacant, is held for rental to an elderly or handicapped person. 10.29 (2) For taxes payable in 1992, 1993, and 1994, only, 10.30 buildings and appurtenances, together with the land upon which 10.31 they are located, leased by the occupant under the community 10.32 lending model lease-purchase mortgage loan program administered 10.33 by the Federal National Mortgage Association, provided the 10.34 occupant's income is no greater than 60 percent of the county or 10.35 area median income, adjusted for family size and the building 10.36 consists of existing single family or duplex housing. The lease 11.1 agreement must provide for a portion of the lease payment to be 11.2 escrowed as a nonrefundable down payment on the housing. To 11.3 qualify under this clause, the taxpayer must apply to the county 11.4 assessor by May 30 of each year. The application must be 11.5 accompanied by an affidavit or other proof required by the 11.6 assessor to determine qualification under this clause. 11.7 (3) Qualifying buildings and appurtenances, together with 11.8 the land upon which they are located, leased for a period of up 11.9 to five years by the occupant under a lease-purchase program 11.10 administered by the Minnesota housing finance agency or a 11.11 housing and redevelopment authority authorized under sections 11.12 469.001 to 469.047, provided the occupant's income is no greater 11.13 than 80 percent of the county or area median income, adjusted 11.14 for family size, and the building consists of two or less 11.15 dwelling units. The lease agreement must provide for a portion 11.16 of the lease payment to be escrowed as a nonrefundable down 11.17 payment on the housing. The administering agency shall verify 11.18 the occupants income eligibility and certify to the county 11.19 assessor that the occupant meets the income criteria under this 11.20 paragraph. To qualify under this clause, the taxpayer must 11.21 apply to the county assessor by May 30 of each year. For 11.22 purposes of this section, "qualifying buildings and 11.23 appurtenances" shall be defined as one or two unit residential 11.24 buildings which are unoccupied and have been abandoned and 11.25 boarded for at least six months. 11.26 Class 4d property has a class rate of two percent of market 11.27 value except that property classified under clause (3), shall 11.28 have the same class rate as class 1a property. 11.29 (e) Residential rental property that would otherwise be 11.30 assessed as class 4 property under paragraph (a); paragraph (b), 11.31 clauses (1) and (3); paragraph (c), clause (1), (2), (3), or 11.32 (4), is assessed at the class rate applicable to it under 11.33 Minnesota Statutes 1988, section 273.13, if it is found to be a 11.34 substandard building under section 273.1316. Residential rental 11.35 property that would otherwise be assessed as class 4 property 11.36 under paragraph (d) is assessed at 2.3 percent of market value 12.1 if it is found to be a substandard building under section 12.2 273.1316. 12.3 Sec. 3. Minnesota Statutes 1994, section 273.13, 12.4 subdivision 32, is amended to read: 12.5 Subd. 32. [TARGET CLASS RATE.] All classes of property 12.6 with a class rate of 5.06 percent have a target class rate of 12.7 four percent. At the time of submission of the biennial budget 12.8 under section 16A.11, the governor shall recommend the effective 12.9 class rate for taxes payable in the following two calendar years 12.10 by designating a "phase-in percentage," equal to the proportion 12.11 of the effective class rate that will be based on the target 12.12 class rate of four percent, with the remaining proportion based 12.13 on the class rate of 5.06 percent. The governor shall identify 12.14 and include within the budget funding for the increased 12.15 expenditures for homestead and agricultural credit aid over the 12.16 amount of expenditures for homestead and agricultural credit aid 12.17 provided in Laws 1989, First Special Session chapter 1, that are 12.18 estimated to result from the recommendation. At that time, the 12.19 governor may propose alternative programs other than homestead 12.20 and agricultural credit aid to prevent other taxpayers' taxes 12.21 from increasing as a result of the governor's recommended 12.22 increase in the phase-in percentage. The effective net class 12.23 rate is the sum of the products of: 12.24 (1) the phase-in percentage adopted by the legislature 12.25 multiplied by four percent; and 12.26 (2) 100 percent minus the phase-in percentage multiplied by 12.27 5.06 percent. 12.28 The phase-in percentage in any year cannot be less than it 12.29 was in the prior year. The phase-in percentage isten percent12.30for taxes payable in 1991, 29.2 percent for taxes payable in12.311992, 34.0 percent for taxes payable in 1993, and 43.4 percent12.32for taxes payable in 199462.3 percent for taxes payable in 12.33 1997, 81.1 percent for taxes payable in 1998, and 100 percent 12.34 for taxes payable in 1999 and thereafter. 12.35Beginning in 1991,The commissioner of revenue shall 12.36 annually set the effective class rate to use for taxes payable 13.1 in the following year as provided in this subdivision and 13.2 announce it by June 1. For purposes of any aid, levy 13.3 limitation, debt limit, or salary limitation, and property tax 13.4 administration, net tax capacity must be computed with reference 13.5 to the effective class rate for the properties affected by this 13.6 subdivision. 13.7 Sec. 4. Minnesota Statutes 1995 Supplement, section 13.8 273.1398, subdivision 1, is amended to read: 13.9 Subdivision 1. [DEFINITIONS.] (a) In this section, the 13.10 terms defined in this subdivision have the meanings given them. 13.11 (b) "Unique taxing jurisdiction" means the geographic area 13.12 subject to the same set of local tax rates. 13.13 (c) "Net tax capacity" means the product of (i) the 13.14 appropriate net class rates for the year in which the aid is 13.15 payable, except that for aid payable in 1996 and thereafter the 13.16 class rate applicable to all class 4a shall be 3.4 percent, the 13.17 class rate applicable to all class 4b shall be 2.3 percent, the 13.18 class rate applicable to that portion of class 3a with a class 13.19 rate of 4.6 percent for taxes payable in 1996 and class 5 shall 13.20 be 4.6 percent; and (ii) estimated market values for the 13.21 assessment two years prior to that in which aid is payable. 13.22 "Total net tax capacity" means the net tax capacities for all 13.23 property within the unique taxing jurisdiction. The total net 13.24 tax capacity used shall be reduced by the sum of (1) the unique 13.25 taxing jurisdiction's net tax capacity of commercial industrial 13.26 property as defined in section 473F.02, subdivision 3, 13.27 multiplied by the ratio determined pursuant to section 473F.08, 13.28 subdivision 6, for the municipality, as defined in section 13.29 473F.02, subdivision 8, in which the unique taxing jurisdiction 13.30 is located, (2) the net tax capacity of the captured value of 13.31 tax increment financing districts as defined in section 469.177, 13.32 subdivision 2, and (3) the net tax capacity of transmission 13.33 lines deducted from a local government's total net tax capacity 13.34 under section 273.425.For purposes of determining the net tax13.35capacity of property referred to in clauses (1), (2), and (3),13.36the net tax capacity shall be multiplied by the ratio of the14.1highest class rate for class 3a property for taxes payable in14.2the year in which the aid is payable to the highest class rate14.3for class 3a property in the prior year.Net tax capacity 14.4 cannot be less than zero. 14.5 (d) "Previous net tax capacity" means the product of the 14.6 appropriate net class rates for the year previous to the year in 14.7 which the aid is payable, and estimated market values for the 14.8 assessment two years prior to that in which aid is payable. 14.9 "Total previous net tax capacity" means the previous net tax 14.10 capacities for all property within the unique taxing 14.11 jurisdiction. The total previous net tax capacity shall be 14.12 reduced by the sum of (1) the unique taxing jurisdiction's 14.13 previous net tax capacity of commercial-industrial property as 14.14 defined in section 473F.02, subdivision 3, multiplied by the 14.15 ratio determined pursuant to section 473F.08, subdivision 6, for 14.16 the municipality, as defined in section 473F.02, subdivision 8, 14.17 in which the unique taxing jurisdiction is located, (2) the 14.18 previous net tax capacity of the captured value of tax increment 14.19 financing districts as defined in section 469.177, subdivision 14.20 2, and (3) the previous net tax capacity of transmission lines 14.21 deducted from a local government's total net tax capacity under 14.22 section 273.425. Previous net tax capacity cannot be less than 14.23 zero. 14.24 (e) "Equalized market values" are market values that have 14.25 been equalized by dividing the assessor's estimated market value 14.26 for the second year prior to that in which the aid is payable by 14.27 the assessment sales ratios determined by class in the 14.28 assessment sales ratio study conducted by the department of 14.29 revenue pursuant to section 124.2131 in the second year prior to 14.30 that in which the aid is payable. The equalized market values 14.31 shall equal the unequalized market values divided by the 14.32 assessment sales ratio. 14.33 (f) "Equalized school levies" means the amounts levied for: 14.34 (1) general education under section 124A.23, subdivision 2; 14.35 (2) supplemental revenue under section 124A.22, subdivision 14.36 8a; 15.1 (3) capital expenditure facilities revenue under section 15.2 124.243, subdivision 3; 15.3 (4) capital expenditure equipment revenue under section 15.4 124.244, subdivision 2; 15.5 (5) basic transportation under section 124.226, subdivision 15.6 1; and 15.7 (6) referendum revenue under section 124A.03. 15.8 (g) "Current local tax rate" means the quotient derived by 15.9 dividing the taxes levied within a unique taxing jurisdiction 15.10 for taxes payable in the year prior to that for which aids are 15.11 being calculated by the total previous net tax capacity of the 15.12 unique taxing jurisdiction. 15.13 (h) For purposes of calculating and allocating homestead 15.14 and agricultural credit aid authorized pursuant to subdivision 2 15.15 for school districts and the disparity reduction aid authorized 15.16 in subdivision 3, "gross taxes levied on all properties," "gross 15.17 taxes," or "taxes levied" means the total net tax capacity based 15.18 taxes levied on all properties except that levied on the 15.19 captured value of tax increment districts as defined in section 15.20 469.177, subdivision 2, and that levied on the portion of 15.21 commercial industrial properties' assessed value or gross tax 15.22 capacity, as defined in section 473F.02, subdivision 3, subject 15.23 to the areawide tax as provided in section 473F.08, subdivision 15.24 6, in a unique taxing jurisdiction. "Gross taxes" are before 15.25 any reduction for disparity reduction aid but "taxes levied" are 15.26 after any reduction for disparity reduction aid. Gross taxes 15.27 levied or taxes levied cannot be less than zero. 15.28 "Taxes levied" excludes equalized school levies. 15.29 (i) "Human services aids" means: 15.30 (1) aid to families with dependent children under sections 15.31 256.82, subdivision 1, and 256.935, subdivision 1; 15.32 (2) medical assistance under sections 256B.041, subdivision 15.33 5, and 256B.19, subdivision 1; 15.34 (3) general assistance medical care under section 256D.03, 15.35 subdivision 6; 15.36 (4) general assistance under section 256D.03, subdivision 16.1 2; 16.2 (5) work readiness under section 256D.03, subdivision 2; 16.3 (6) emergency assistance under section 256.871, subdivision 16.4 6; 16.5 (7) Minnesota supplemental aid under section 256D.36, 16.6 subdivision 1; 16.7 (8) preadmission screening and alternative care grants; 16.8 (9) work readiness services under section 256D.051; 16.9 (10) case management services under section 256.736, 16.10 subdivision 13; 16.11 (11) general assistance claims processing, medical 16.12 transportation and related costs; and 16.13 (12) medical assistance, medical transportation and related 16.14 costs. 16.15 (j) "Household adjustment factor" means the number of 16.16 households for the second most recent year preceding that in 16.17 which the aids are payable divided by the number of households 16.18 for the third most recent year. The household adjustment factor 16.19 cannot be less than one. 16.20 (k) "Growth adjustment factor" means the household 16.21 adjustment factor in the case of counties. In the case of 16.22 cities, towns, school districts, and special taxing districts, 16.23 the growth adjustment factor equals one. The growth adjustment 16.24 factor cannot be less than one. 16.25 (l)For aid payable in 1992 and subsequent years,16.26 "Homestead and agricultural credit base" means the previous 16.27 year's certified homestead and agricultural credit aid 16.28 determined under subdivision 2 less any permanent aid reduction 16.29 in the previous year to homestead and agricultural credit aid 16.30 under section 477A.0132, plus, for aid payable in 1992, fiscal16.31disparity homestead and agricultural credit aid under16.32subdivision 2b. 16.33 (m) "Net tax capacity adjustment" means (1) the total 16.34 previous net tax capacity minus the total net tax capacity, 16.35 multiplied by (2) the unique taxing jurisdiction's current local 16.36 tax rate. The net tax capacity adjustment cannot be less than 17.1 zero. 17.2(n) "Fiscal disparity adjustment" means the difference17.3between (1) a taxing jurisdiction's fiscal disparity17.4distribution levy under section 473F.08, subdivision 3, clause17.5(a), for taxes payable in the year prior to that for which aids17.6are being calculated, and (2) the same distribution levy17.7multiplied by the ratio of the highest class rate for class 317.8property for taxes payable in the year prior to that for which17.9aids are being calculated to the highest class rate for class 317.10property for taxes payable in the second prior year to that for17.11which aids are being calculated. In the case of school17.12districts, the fiscal disparity distribution levy shall exclude17.13that part of the levy attributable to equalized school levies.17.14 Sec. 5. Minnesota Statutes 1994, section 273.1398, 17.15 subdivision 2, is amended to read: 17.16 Subd. 2. [HOMESTEAD AND AGRICULTURAL CREDIT AID.] 17.17 Homestead and agricultural credit aid for each unique taxing 17.18 jurisdiction equals the product of (1) the homestead and 17.19 agricultural credit aid base, and (2) the growth adjustment 17.20 factor, plus the net tax capacity adjustment and the fiscal17.21disparity adjustment. Only school districts shall receive 17.22 homestead and agricultural credit aid in 1997 and thereafter. 17.23 Sec. 6. Minnesota Statutes 1995 Supplement, section 17.24 273.1398, subdivision 6, is amended to read: 17.25 Subd. 6. [PAYMENT.] The commissioner shall certify the 17.26 aids provided in subdivisions 2, 2b,and 3, and 5before 17.27 September 1 of the year preceding the distribution year to the 17.28 county auditor of the affected local government. The aids 17.29 provided insubdivisions 2, 2b,subdivision 3, and 5must be 17.30 paid to local governments other than school districts at the 17.31 times provided in section 477A.015 for payment of local 17.32 government aid to taxing jurisdictions, except that the first 17.33 one-half payment of disparity reduction aid provided in 17.34 subdivision 3 must be paid on or before August 31. The 17.35 disparity reduction credit provided in subdivision 4 must be 17.36 paid to taxing jurisdictions other than school districts at the 18.1 time provided in section 473H.10, subdivision 3. Aids and 18.2 credit reimbursements to school districts must be certified to 18.3 the commissioner of children, families, and learning and paid 18.4 under section 273.1392. Except for education districts and 18.5 secondary cooperatives that receive revenue according to section 18.6 124.575, payment shall not be made to any taxing jurisdiction 18.7 that has ceased to levy a property tax. 18.8 Sec. 7. Minnesota Statutes 1995 Supplement, section 18.9 273.1398, subdivision 8, is amended to read: 18.10 Subd. 8. [APPROPRIATION.] An amount sufficient to pay the 18.11 aids and credits provided under this section for school 18.12 districts, intermediate school districts, or any group of school 18.13 districts levying as a single taxing entity, is annually 18.14 appropriated from the general fund to the commissioner of 18.15 children, families, and learning. An amount sufficient to pay 18.16 the aids and credits provided underthis sectionsubdivisions 3 18.17 and 4 for counties, cities, towns, and special taxing districts 18.18 is annually appropriated from the general fund to the 18.19 commissioner of revenue. A jurisdiction's aid amount may be 18.20 increased or decreased based on any prior year adjustments for 18.21 homestead credit or other property tax credit or aid programs. 18.22 Sec. 8. Minnesota Statutes 1994, section 273.1399, 18.23 subdivision 5, is amended to read: 18.24 Subd. 5. [LOCAL GOVERNMENT AIDS; HOMESTEAD AND 18.25 AGRICULTURAL AID CALCULATIONS.] (a) The reduction in state tax 18.26 increment financing aid for a municipality must be deducted 18.27 first from the local government aids to be paid to the 18.28 municipality.If the deduction exceeds the amount of the local18.29government aid, the rest must be deducted from the homestead and18.30agricultural credit aid to be paid to the municipality.18.31 (b) The amount of qualifying captured net tax capacity must 18.32 be included in adjusted net tax capacity for purposes of 18.33 computing the local government aid of the municipality that 18.34 approved the tax increment financing district. 18.35 Sec. 9. Minnesota Statutes 1994, section 275.07, 18.36 subdivision 1a, is amended to read: 19.1 Subd. 1a. [APPLICATION OF LIMITATIONS.] Any limitation 19.2 upon the amount that may be levied by a local taxing 19.3 jurisdiction shall apply to the sum of the levy as certified 19.4 under subdivision 1 plus the certified homestead and 19.5 agricultural credit aid amount under section 273.1398, 19.6 subdivision 2, and the county program reform aid amount under 19.7 section 477A.0123, unless the commissioner of revenue certifies 19.8 to the county auditor that the limitation applies to the levy 19.9 under subdivision 1 only. 19.10 Sec. 10. Minnesota Statutes 1995 Supplement, section 19.11 276.04, subdivision 2, is amended to read: 19.12 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 19.13 shall provide for the printing of the tax statements. The 19.14 commissioner of revenue shall prescribe the form of the property 19.15 tax statement and its contents. The statement must contain a 19.16 tabulated statement of the dollar amount due to each taxing 19.17 authority from the parcel of real property for which a 19.18 particular tax statement is prepared. The dollar amounts due 19.19 the county, township or municipality, the total of the 19.20 metropolitan special taxing districts as defined in section 19.21 275.065, subdivision 3, paragraph (i), school district excess 19.22 referenda levy, remaining school district levy, and the total of 19.23 other voter approved referenda levies based on market value 19.24 under section 275.61 must be separately stated. The amounts due 19.25 all other special taxing districts, if any, may be aggregated. 19.26 For the purposes of this subdivision, "school district excess 19.27 referenda levy" means school district taxes for operating 19.28 purposes approved at referenda, including those taxes based on 19.29 net tax capacity as well as those based on market value. 19.30 "School district excess referenda levy" does not include school 19.31 district taxes for capital expenditures approved at referendums 19.32 or school district taxes to pay for the debt service on bonds 19.33 approved at referenda. The amount of the tax on contamination 19.34 value imposed under sections 270.91 to 270.98, if any, must also 19.35 be separately stated. The dollar amounts, including the dollar 19.36 amount of any special assessments, may be rounded to the nearest 20.1 even whole dollar. For purposes of this section whole 20.2 odd-numbered dollars may be adjusted to the next higher 20.3 even-numbered dollar. The amount of market value excluded under 20.4 section 273.11, subdivision 16, if any, must also be listed on 20.5 the tax statement. The statement shall include the following 20.6 sentence, printed in upper case letters in boldface print: "THE 20.7 STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES. 20.8 THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING 20.9 CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT." 20.10 (b) The property tax statements for manufactured homes and 20.11 sectional structures taxed as personal property shall contain 20.12 the same information that is required on the tax statements for 20.13 real property. 20.14 (c) Real and personal property tax statements must contain 20.15 the following information in the order given in this paragraph. 20.16 The information must contain the current year tax information in 20.17 the right column with the corresponding information for the 20.18 previous year in a column on the left: 20.19 (1) the property's estimated market value under section 20.20 273.11, subdivision 1; 20.21 (2) the property's taxable market value after reductions 20.22 under section 273.11, subdivisions 1a and 16; 20.23 (3) the property's gross tax, calculated by multiplying the 20.24 property's gross tax capacity times the total local tax rate and 20.25 adding to the result the sum of the aids enumerated in clause 20.26 (3); 20.27 (4) a total of the following aids: 20.28 (i) education aids payable under chapters 124 and 124A; 20.29 (ii) local government aids for cities, towns, and counties 20.30 under chapter 477A; and 20.31 (iii) disparity reduction aid under section 273.1398; 20.32 (5) for homestead residential and agricultural properties, 20.33 the homestead and agricultural creditaidexemption apportioned 20.34 to the property. This amount is obtained by multiplying the 20.35 total local tax rate by the difference between the property's 20.36 gross and net tax capacities under section 273.13. This amount 21.1 must be separately stated and identified as "homestead and 21.2 agricultural credit.exemption"For purposes of comparison with21.3the previous year's amount for the statement for taxes payable21.4in 1990, the statement must show the homestead credit for taxes21.5payable in 1989 under section 273.13, and the agricultural21.6credit under section 273.132 for taxes payable in 1989; 21.7 (6) any credits received under sections 273.119; 273.123; 21.8 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 21.9 473H.10, except that the amount of credit received under section 21.10 273.135 must be separately stated and identified as "taconite 21.11 tax relief"; and 21.12 (7) the net tax payable in the manner required in paragraph 21.13 (a). 21.14 The commissioner of revenue shall certify to the county 21.15 auditor the actual or estimated aids enumerated in clauses (3) 21.16 and (4) that local governments will receive in the following 21.17 year.In the case of a county containing a city of the first21.18class, for taxes levied in 1991, and for all counties for taxes21.19levied in 1992 and thereafter,The commissioner must certify 21.20 this amount by September 1. 21.21 Sec. 11. Minnesota Statutes 1995 Supplement, section 21.22 473.253, subdivision 1, is amended to read: 21.23 Subdivision 1. [SOURCES OF FUNDS.] The council shall 21.24 credit to the livable communities demonstration account the 21.25 revenues provided in this subdivision. This tax shall be levied 21.26 and collected in the manner provided by section 473.13. The 21.27 levy shall not exceed the following amount for the years 21.28 specified: 21.29(a)(1) for taxes payable in 1996, 50 percent of (i) the 21.30 metropolitan mosquito control commission's property tax levy for 21.31 taxes payable in 1995 multiplied by (ii) an index for market 21.32 valuation changes equal to the total market valuation of all 21.33 taxable property located within the metropolitan area for the 21.34 current taxes payable year divided by the total market valuation 21.35 of all taxable property located in the metropolitan area for the 21.36 previous taxes payable year; and 22.1 (2) for taxes payable in 1997 and subsequent years, the 22.2 product of (i) the property tax levy limit under this 22.3 subdivision for the previous year multiplied by (ii) an index 22.4 for market valuation changes equal to the total market valuation 22.5 of all taxable property located within the metropolitan area for 22.6 the current taxes payable year divided by the total market 22.7 valuation of all taxable property located in the metropolitan 22.8 area for the previous taxes payable year. 22.9 For the purposes of this subdivision, "total market 22.10 valuation" means the total market valuation of all taxable 22.11 property within the metropolitan area without valuation 22.12 adjustments for fiscal disparities under chapter 473F, tax 22.13 increment financing under sections 469.174 to 469.179, and high 22.14 voltage transmission lines under section 273.425. 22.15(b) The metropolitan council, for the purposes of the fund,22.16is considered a unique taxing jurisdiction for purposes of22.17receiving aid pursuant to section 273.1398. For aid to be22.18received in 1996, the fund's homestead and agricultural credit22.19base shall equal 50 percent of the metropolitan mosquito control22.20commission's certified homestead and agricultural credit aid for22.211995, determined under section 273.1398, subdivision 2, less any22.22permanent aid reduction under section 477A.0132. For aid to be22.23received under section 273.1398 in 1997 and subsequent years,22.24the fund's homestead and agricultural credit base shall be22.25determined in accordance with section 273.1398, subdivision 1.22.26 Sec. 12. Minnesota Statutes 1995 Supplement, section 22.27 473.711, subdivision 2, is amended to read: 22.28 Subd. 2. [BUDGET; TAX LEVY.] (a) Budget. The metropolitan 22.29 mosquito control commission shall prepare an annual budget. The 22.30 budget may provide for expenditures in an amount not exceeding 22.31 the property tax levy limitation determined in this subdivision. 22.32 (b) Tax Levy. The commission may levy a tax on all taxable 22.33 property in the district as defined in section 473.702 to 22.34 provide funds for the purposes of sections 473.701 to 473.716. 22.35 The tax shall not exceed the property tax levy limitation 22.36 determined in this subdivision. A participating county may 23.1 agree to levy an additional tax to be used by the commission for 23.2 the purposes of sections 473.701 to 473.716 but the sum of the 23.3 county's and commission's taxes may not exceed the county's 23.4 proportionate share of the property tax levy limitation 23.5 determined under this subdivision based on the ratio of its 23.6 total net tax capacity to the total net tax capacity of the 23.7 entire district as adjusted by section 270.12, subdivision 3. 23.8 The auditor of each county in the district shall add the amount 23.9 of the levy made by the district to other taxes of the county 23.10 for collection by the county treasurer with other taxes. When 23.11 collected, the county treasurer shall make settlement of the tax 23.12 with the district in the same manner as other taxes are 23.13 distributed to political subdivisions. No county shall levy any 23.14 tax for mosquito, disease vectoring tick, and black gnat 23.15 (Simuliidae) control except under this section. The levy shall 23.16 be in addition to other taxes authorized by law. 23.17 The property tax levied by the metropolitan mosquito 23.18 control commission shall not exceed the following amount for the 23.19 years specified: 23.20 (i) for taxes payable in 1996, the product of (1) the 23.21 commission's property tax levy limitation for taxes payable in 23.22 1995 determined under this subdivision minus 50 percent of the 23.23 amount actually levied for taxes payable in 1995, multiplied by 23.24 (2) an index for market valuation changes equal to the total 23.25 market valuation of all taxable property located within the 23.26 district for the current taxes payable year divided by the total 23.27 market valuation of all taxable property located within the 23.28 district for the previous taxes payable year; and 23.29 (ii) for taxes payable in 1997 and subsequent years, the 23.30 product of (1) the commission's property tax levy limitation for 23.31 the previous year determined under this subdivision multiplied 23.32 by (2) an index for market valuation changes equal to the total 23.33 market valuation of all taxable property located within the 23.34 district for the current taxes payable year divided by the total 23.35 market valuation of all taxable property located within the 23.36 district for the previous taxes payable year. 24.1 For the purpose of determining the commission's property 24.2 tax levy limitation under this subdivision, "total market 24.3 valuation" means the total market valuation of all taxable 24.4 property within the district without valuation adjustments for 24.5 fiscal disparities (chapter 473F), tax increment financing 24.6 (sections 469.174 to 469.179), and high voltage transmission 24.7 lines (section 273.425). 24.8 (c)Homestead and Agricultural Credit Aid. For aids24.9payable in 1996 and subsequent years, the commission's homestead24.10and agricultural credit aid base under section 273.1398,24.11subdivision 1, is permanently reduced by 50 percent of the24.12amount certified to be received in 1995, less any permanent aid24.13reduction in 1995 under section 477A.0132.24.14(d)Emergency Tax Levy. If the commissioner of the 24.15 department of health declares a health emergency due to a 24.16 threatened or actual outbreak of disease caused by mosquitos, 24.17 disease vectoring ticks, or black gnats (Simuliidae), the 24.18 commission may levy an additional tax not to exceed $500,000 on 24.19 all taxable property in the district to pay for the required 24.20 control measures. 24.21(e)(d) Optional County Levy. A participating county may 24.22 levy a tax in an amount to be determined by the county board for 24.23 mosquito, disease vectoring tick, and black gnat (Simuliidae) 24.24 nuisance control. If the county levies the tax for nuisance 24.25 control, it must contract with the commission to provide for 24.26 nuisance control activities within the county. The levy for 24.27 nuisance control shall be in addition to other levies authorized 24.28 by law to the county. 24.29 Sec. 13. Minnesota Statutes 1994, section 477A.011, 24.30 subdivision 27, is amended to read: 24.31 Subd. 27. [REVENUE BASE.] "Revenue base" means the amount 24.32 levied for taxes payable in the previous year, including the 24.33 levy on the fiscal disparity distribution under section 473F.08, 24.34 subdivision 3, paragraph (a), and before reduction forthe24.35homestead and agricultural creditcounty program reform aid 24.36 under section273.1398, subdivision 2477A.0123, equalization 25.1 aid under section 477A.013, subdivision 5, and disparity 25.2 reduction aid under section 273.1398, subdivision 3; plus the 25.3 originally certified local government aid in the previous year 25.4 under sections 477A.011, 477A.012, and 477A.013, except for 25.5 477A.013, subdivision 5; and the taconite aids received in the 25.6 previous year under sections 298.28 and 298.282. 25.7 Sec. 14. [477A.0123] [COUNTY PROGRAM REFORM AID.] 25.8 Subdivision 1. [PURPOSE.] County program aid is intended 25.9 to provide a financing source for the provision of property tax 25.10 relief through the funding of program mandates as defined in 25.11 Minnesota Statutes 1994, section 3.881. 25.12 Subd. 2. [AID ALLOCATION.] Each calendar year, the 25.13 commissioner of revenue shall distribute aid paid under this 25.14 section as follows: For aid paid in 1997, each county's aid 25.15 distribution under this section shall equal its prior year 25.16 distribution under section 273.1398 plus the amount of the aid 25.17 reduction to counties under section 477A.0132, subdivision 1, 25.18 clause (a), adjusted for household growth as provided under 25.19 section 273.1398. For aid paid in 1998 and thereafter, each 25.20 county shall receive a distribution equal to the aid amount it 25.21 received in the previous year adjusted for household growth as 25.22 provided under section 273.1398. 25.23 Sec. 15. Minnesota Statutes 1995 Supplement, section 25.24 477A.0132, subdivision 3, is amended to read: 25.25 Subd. 3. [ORDER OF AID REDUCTIONS.] (a) The aid reduction 25.26 to a local government calculated under subdivisions 1, 25.27 paragraphs (a) and (c), and 2, paragraphs (a) and (c), is 25.28 applied to homestead and agricultural credit aid under section 25.29 273.1398 only. 25.30 (b) The aid reduction to a local government as calculated 25.31 under other paragraphs of subdivisions 1 and 2, is first applied 25.32 to its local government aid under sections 477A.012 and 477A.013 25.33 excluding aid under section 477A.013, subdivision 5; then, if 25.34 necessary, to its equalization aid under section 477A.013, 25.35 subdivision 5; then if necessary, to itshomestead and25.36agricultural creditcounty program reform aid under section 26.1273.1398, subdivision 2477A.0123; and then, if necessary, to 26.2 its disparity reduction aid under section 273.1398, subdivision 26.3 3. No aid payment may be less than $0. Aid reductions under 26.4 this section in any given year shall be divided equally between 26.5 the July and December aid payments unless specified otherwise. 26.6 Sec. 16. [REPEALER.] 26.7 Minnesota Statutes 1994, section 477A.013, subdivision 6, 26.8 is repealed. 26.9 Sec. 17. [STUDY AND FINDINGS.] 26.10 The commissioner of revenue shall identify county program 26.11 mandates as defined in Minnesota Statutes 1994, section 3.881, 26.12 including, but not limited to, income maintenance 26.13 administration, correctional services, court system, and human 26.14 services including those provided to the developmentally 26.15 challenged and mentally ill, child protection services, and 26.16 services to families. The commissioner's findings must include 26.17 the total program cost by county, the state share of these 26.18 program costs, if any, and the property tax levy by county 26.19 attributable to these program mandates. The commissioner's 26.20 recommendations must also take into account the likely effect of 26.21 federal aid reductions on these program mandates and the likely 26.22 property tax consequences of these federal aid reductions. 26.23 Sec. 18. [EFFECTIVE DATE.] 26.24 Sections 1 to 17 are effective for property taxes and aids 26.25 payable in 1997 and thereafter. 26.26 ARTICLE 3 26.27 LOCAL GOVERNMENT AID 26.28 Section 1. Minnesota Statutes 1994, section 477A.011, is 26.29 amended by adding a subdivision to read: 26.30 Subd. 32a. [POVERTY PERCENTAGE.] "Poverty percentage" for 26.31 a city is 100 times the ratio of the number of households below 26.32 the poverty line to the total number of households in the city 26.33 according to the most recent federal census. 26.34 Sec. 2. Minnesota Statutes 1994, section 477A.011, is 26.35 amended by adding a subdivision to read: 26.36 Subd. 33c. [CITY DECLINE FACTOR.] "City decline factor" 27.1 for a city is the product of the city's (1) pre-1940 housing 27.2 percentage, (2) commercial industrial percentage, and (3) 27.3 population decline percentage. 27.4 Sec. 3. Minnesota Statutes 1994, section 477A.011, 27.5 subdivision 34, is amended to read: 27.6 Subd. 34. [CITY REVENUE NEED.] (a) For a city with a 27.7 population equal to or greater than 2,500, "city revenue need" 27.8 is the sum of (1)3.4623126.110762 times the pre-1940 housing 27.9 percentage; plus (2)2.0938265.744915 times the commercial 27.10 industrial percentage; plus (3)6.862552.024686 times the 27.11populationcity declinepercentagefactor; plus 27.12 (4).000269.784552 times thecity population; plus (5) 152.014127.13 poverty percentage. 27.14 (b) For a city with a population less than 2,500, "city 27.15 revenue need" is the sum of (1) 1.795919 times the pre-1940 27.16 housing percentage; plus (2) 1.562138 times the commercial 27.17 industrial percentage; plus (3) 4.177568 times the population 27.18 decline percentage; plus (4) 1.04013 times the transformed 27.19 population; minus (5) 107.475. 27.20 (c) The city revenue need cannot be less than zero. 27.21 (d) For calendar year 1995 and subsequent years, the city 27.22 revenue need for a city with a population less than 2,500, as 27.23 determined in paragraphs(a) to(b) and (c), is multiplied by 27.24 the ratio of the annual implicit price deflator for state and 27.25 local government purchases, as prepared by the United States 27.26 Department of Commerce, for the most recently available year to 27.27 the 1993 implicit price deflator for state and local government 27.28 purchases. 27.29 (e) For calendar year 1998 and subsequent years, the city 27.30 revenue need for a city with a population of 2,500 or more, as 27.31 determined in paragraphs (a) and (c), is multiplied by the ratio 27.32 of the annual implicit price deflator for state and local 27.33 government purchases, as prepared by the United States 27.34 Department of Commerce, for the most recent available year to 27.35 the 1996 implicit price deflator for state and local government 27.36 purchases. 28.1 Sec. 4. Minnesota Statutes 1994, section 477A.013, 28.2 subdivision 8, is amended to read: 28.3 Subd. 8. [CITY FORMULA AID.] In calendar year19941997 28.4 and subsequent years, the formula aid for a city is equal to the 28.5 product of (1) the need increase percentage multiplied by 28.6 thedifference between (1)(2) the city's revenue need 28.7 multiplied by its population, and(2) the city's net tax28.8capacity multiplied by the tax effort rate(3) the square root 28.9 of the difference between (i) 4.14 and (ii) the ratio of the 28.10 city's net tax capacity to 215.06. No city may have a formula 28.11 aid amount less than zero. The need increase percentage must be 28.12 the same for all cities. 28.13Notwithstanding the prior sentence, in 1995 only, the need28.14increase percentage for a city shall be twice the need increase28.15percentage applicable to other cities if:28.16(1) the city, in 1992 or 1993, transferred an amount from28.17governmental funds to their sewer and water fund, and28.18(2) the amount transferred exceeded their net levy for28.19taxes payable in the year in which the transfer occurred.28.20 The applicable need increase percentageor percentagesmust 28.21 be calculated by the department of revenue so that the total of 28.22 the aid under subdivision 9 equals the total amount available 28.23 for aid under section 477A.03. 28.24 Sec. 5. Minnesota Statutes 1994, section 477A.013, 28.25 subdivision 9, is amended to read: 28.26 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 28.2719941997 and thereafter, each city shall receive an aid 28.28 distribution equal tothe sum of (1) the city formula aid under28.29subdivision 8, and (2)its cityaid baseformula aid, subject to 28.30 the limits in paragraphs (b), (c), and (d). 28.31 (b) The percentage increase for afirst classcity in 28.32 calendar year1995 and thereafter1997 shall not exceed 1-1/2 28.33 times the percentage increase in the sum of the aid to all 28.34 cities under this section inthe current calendar year1997 28.35 compared to the sum of the aid to all cities inthe previous28.36year1996. The percentage increase for a city in calendar year 29.1 1998 and thereafter shall not exceed 1-1/4 times the percentage 29.2 increase in the sum of the aid to all cities under this section 29.3 in the current calendar year compared to the sum of the aid to 29.4 all cities in the previous year. 29.5 (c) In addition to the limitation in paragraph (b), the 29.6 total aid for any city,except a first class city,shall not 29.7 exceed the sum of (1)ten17 percent of the city's net levy for 29.8 the year prior to the aid distribution plus (2) its total aid in 29.9 the previous year before anyincreases ordecreases 29.10 undersections 16A.711, subdivision 5, andsection 477A.0132. 29.11 (d)Notwithstanding paragraph (c), in 1995 only, for cities29.12which in 1992 or 1993 transferred an amount from governmental29.13funds to their sewer and water fund in an amount greater than29.14their net levy for taxes payable in the year in which the29.15transfer occurred, the total aid shall not exceed the sum of (1)29.1620 percent of the city's net levy for the year prior to the aid29.17distribution plus (2) its total aid in the previous year before29.18any increases or decreases under sections 16A.711, subdivision29.195, and 477A.0132.No city shall receive total aid in any 29.20 calendar year that is less than 90 percent of its prior year aid. 29.21 (e) Notwithstanding paragraphs (a), (b), (c), and (d), if a 29.22 city with a population of 2,500 or more has a reduction in its 29.23 net tax capacity of 20 percent or more in an assessment year 29.24 compared to the previous year, the following limits and minimums 29.25 apply: 29.26 (1) for aid distributed in the year immediately following 29.27 the assessment year of the net tax capacity loss, the aid may 29.28 not increase by more than an amount equal to the product of (i) 29.29 17 percent plus a percentage equal to the percent loss in net 29.30 tax capacity and (ii) the city's net levy for the year prior to 29.31 the aid distribution; 29.32 (2) for aid distributed in the five years following the 29.33 assessment year of the net tax capacity loss, the aid may not be 29.34 less than an amount equal to the following: 29.35 (i) for the first year, the amount of the net tax capacity 29.36 loss multiplied by the city tax rate from the previous year; 30.1 (ii) for the second year, 80 percent of the minimum amount 30.2 guaranteed in the first year; 30.3 (iii) for the third year, 60 percent of the minimum amount 30.4 guaranteed in the first year; 30.5 (iv) for the fourth year, 40 percent of the minimum amount 30.6 guaranteed in the first year; 30.7 (v) for the fifth year, 20 percent of the minimum amount 30.8 guaranteed in the first year. 30.9 A city must notify the commissioner of revenue by July 1 of 30.10 the year prior to the first year it would qualify for provisions 30.11 under this paragraph in order to be eligible for aid adjustments 30.12 under this paragraph. The city must also furnish the 30.13 commissioner with any information needed to administer the 30.14 provisions of this paragraph. 30.15 Sec. 6. Minnesota Statutes 1995 Supplement, section 30.16 477A.03, subdivision 2, is amended to read: 30.17 Subd. 2. [ANNUAL APPROPRIATION.] A sum sufficient to 30.18 discharge the duties imposed by sections 477A.011 to 477A.014 is 30.19 annually appropriated from the general fund to the commissioner 30.20 of revenue. For aids payable in19961997 and thereafter, the 30.21 total aids paid under sections477A.013, subdivision30.229,477A.0121 and 477A.0122 are the amounts certified to be paid 30.23 in the previous year, adjusted for inflation as provided under 30.24 subdivision 3. Aid payments tocountiescities under section 30.25477A.0121477A.013, subdivision 9, are limited to$20,265,000 in30.261996$400,000,000 in 1997. For aid payable in19971998 and 30.27 thereafter, the total aids paid under section477A.012130.28 477A.013, subdivision 9, are the amounts certified to be paid in 30.29 the previous year, adjusted for inflation as provided under 30.30 subdivision 3. 30.31 Sec. 7. [REPEALER.] 30.32 Minnesota Statutes 1994, sections 477A.011, subdivisions 35 30.33 and 37; 477A.013, subdivision 6; and 477A.014, subdivision 1a; 30.34 and Minnesota Statutes 1995 Supplement, section 477A.011, 30.35 subdivision 36; are repealed. 30.36 Sec. 8. [EFFECTIVE DATE.] 31.1 Sections 1 to 7 are effective for aids payable in 1997 and 31.2 thereafter. 31.3 ARTICLE 4 31.4 PROPERTY TAX REFUND AND RENTERS CREDIT 31.5 Section 1. Minnesota Statutes 1994, section 290A.03, is 31.6 amended by adding a subdivision to read: 31.7 Subd. 6a. [CABIN.] "Cabin" means seasonal residential 31.8 recreational property not used for commercial purposes as 31.9 defined under section 273.13, subdivision 25, paragraph (c), 31.10 clause (5). 31.11 Sec. 2. Minnesota Statutes 1995 Supplement, section 31.12 290A.03, subdivision 13, is amended to read: 31.13 Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes 31.14 payable" means the property tax exclusive of special 31.15 assessments, penalties, and interest payable on a claimant's 31.16 homestead or cabin before reductions made under section 273.13 31.17 but after deductions made under sections 273.135, 273.1391, 31.18 273.42, subdivision 2, and any other state paid property tax 31.19 credits in any calendar year. In the case of a claimant who 31.20 makes ground lease payments, "property taxes payable" includes 31.21 the amount of the payments directly attributable to the property 31.22 taxes assessed against the parcel on which the house or cabin is 31.23 located. No apportionment or reduction of the "property taxes 31.24 payable" shall be required for the use of a portion of the 31.25 claimant's homestead or cabin for a business purpose if the 31.26 claimant does not deduct any business depreciation expenses for 31.27 the use of a portion of the homestead or cabin in the 31.28 determination of federal adjusted gross income. For 31.29 homesteads or cabins which are manufactured homes as defined in 31.30 section 273.125, subdivision 8, and for homesteads or cabins 31.31 which are park trailers taxed as manufactured homes under 31.32 section 168.012, subdivision 9, "property taxes payable" shall 31.33 also include the amount of the gross rent paid in the preceding 31.34 year for the site on which the homestead or cabin is located, 31.35 which is attributable to the net tax paid on the site. The 31.36 amount attributable to property taxes shall be determined by 32.1 multiplying the net tax on the parcel by a fraction, the 32.2 numerator of which is the gross rent paid for the calendar year 32.3 for the site and the denominator of which is the gross rent paid 32.4 for the calendar year for the parcel. When a homestead or cabin 32.5 is owned by two or more persons as joint tenants or tenants in 32.6 common, such tenants shall determine between them which tenant 32.7 may claim the property taxes payable on the homestead or cabin. 32.8 If they are unable to agree, the matter shall be referred to the 32.9 commissioner of revenue whose decision shall be final. Property 32.10 taxes are considered payable in the year prescribed by law for 32.11 payment of the taxes. 32.12 In the case of a claim relating to "property taxes 32.13 payable," on a homestead, the claimant must have owned and 32.14 occupied the homestead on January 2 of the year in which the tax 32.15 is payable and (i) the property must have been classified as 32.16 homestead property pursuant to section 273.13, subdivision 22 or 32.17 23, on or before December 15 of the assessment year to which the 32.18 "property taxes payable" relate; or (ii) the claimant must 32.19 provide documentation from the local assessor that application 32.20 for homestead classification has been made on or before December 32.21 15 of the year in which the "property taxes payable" were 32.22 payable and that the assessor has approved the application. In 32.23 the case of a claim relating to "property taxes payable" on a 32.24 cabin, the claimant must have owned the cabin on January 2 of 32.25 the year in which the tax is payable and the property must have 32.26 been classified noncommercial seasonal residential recreational 32.27 property under section 273.13, subdivision 25, for the 32.28 assessment year to which the "property taxes payable" relate. 32.29 Sec. 3. Minnesota Statutes 1994, section 290A.04, 32.30 subdivision 1, is amended to read: 32.31 Subdivision 1. A refund shall be allowed each claimant in 32.32 the amount that property taxes payable or rent constituting 32.33 property taxes exceed the percentage of the household income of 32.34 the claimant specified in subdivision 1a or 2or 2ain the year 32.35 for which the taxes were levied or in the year in which the rent 32.36 was paid as specified in subdivision 1a or 2or 2a. If the 33.1 amount of property taxes payable or rent constituting property 33.2 taxes is equal to or less than the percentage of the household 33.3 income of the claimant specified in subdivision 1a or 2or 2ain 33.4 the year for which the taxes were levied or in the year in which 33.5 the rent was paid, the claimant shall not be eligible for a 33.6 state refund pursuant to this section. 33.7 Sec. 4. Minnesota Statutes 1994, section 290A.04, is 33.8 amended by adding a subdivision to read: 33.9 Subd. 1a. [CABIN OWNERS.] A claimant whose property taxes 33.10 payable on the claimant's cabin are in excess of the percentage 33.11 of the household income stated below shall pay an amount equal 33.12 to the percent of income shown for the appropriate household 33.13 income level along with the percent to be paid by the claimant 33.14 of the remaining amount of property taxes payable. The state 33.15 refund equals the amount of property taxes payable that remain, 33.16 up to the state refund amount shown below. 33.17 Percent Percent Maximum 33.18 Household Income of Income Paid by State 33.19 Claimant Refund 33.20 $0 to 1,059 0.50 percent 50.5 percent $2,000 33.21 1,060 to 2,119 0.50 percent 51.0 percent $2,000 33.22 2,120 to 3,189 0.50 percent 51.5 percent $2,000 33.23 3,190 to 4,249 0.50 percent 52.0 percent $2,000 33.24 4,250 to 5,309 0.50 percent 52.5 percent $2,000 33.25 5,310 to 7,439 0.50 percent 53.0 percent $2,000 33.26 7,440 to 8,499 0.50 percent 53.5 percent $2,000 33.27 8,500 to 9,549 0.50 percent 54.0 percent $2,000 33.28 9,550 to 10,609 0.50 percent 54.5 percent $2,000 33.29 10,610 to 12,739 0.60 percent 55.0 percent $2,000 33.30 12,740 to 14,859 0.60 percent 55.5 percent $2,000 33.31 14,860 to 16,979 0.70 percent 56.0 percent $2,000 33.32 16,980 to 18,049 0.80 percent 56.5 percent $2,000 33.33 18,050 to 19,999 0.90 percent 57.0 percent $2,000 33.34 20,000 to 23,999 1.00 percent 57.5 percent $2,000 33.35 24,000 to 27,999 1.20 percent 58.5 percent $2,000 33.36 28,000 to 29,999 1.40 percent 59.5 percent $2,000 33.37 30,000 to 34,999 1.50 percent 60.0 percent $2,000 33.38 35,000 to 39,999 1.75 percent 61.0 percent $2,000 33.39 40,000 to 42,449 2.00 percent 62.5 percent $1,900 33.40 42,450 to 44,999 2.25 percent 63.5 percent $1,800 33.41 45,000 to 47,499 2.50 percent 65.0 percent $1,700 33.42 47,500 to 49,999 2.75 percent 66.0 percent $1,600 33.43 50,000 to 54,999 3.00 percent 67.5 percent $1,500 33.44 55,000 to 59,999 3.25 percent 68.5 percent $1,400 33.45 60,000 to 64,999 3.50 percent 70.0 percent $1,300 33.46 65,000 to 69,999 3.75 percent 71.0 percent $1,200 33.47 70,000 to 74,999 4.00 percent 72.5 percent $1,100 33.48 The payment made to a claimant shall be the amount of the state 33.49 refund calculated under this subdivision. No payment is allowed 33.50 if the claimant's household income is $75,000 or more. 33.51 Sec. 5. Minnesota Statutes 1994, section 290A.04, 34.1 subdivision 2, is amended to read: 34.2 Subd. 2. [HOMEOWNERS AND RENTERS.] A claimant whose 34.3 property taxes payable or rent constituting property taxes on 34.4 the claimant's homestead are in excess of the percentage of the 34.5 household income stated below shall pay an amount equal to the 34.6 percent of income shown for the appropriate household income 34.7 level along with the percent to be paid by the claimant of the 34.8 remaining amount of property taxes payable. The state refund 34.9 equals the amount of property taxes payable that remain, up to 34.10 the state refund amount shown below. 34.11 Percent Percent Maximum 34.12 Household Income of Income Paid by State 34.13 Claimant Refund 34.14$0 to 1,0291.2 percent18 percent$44034.151,030 to 2,0591.3 percent18 percent$44034.162,060 to 3,0991.4 percent20 percent$44034.173,100 to 4,1291.6 percent20 percent$44034.184,130 to 5,1591.7 percent20 percent$44034.195,160 to 7,2291.9 percent25 percent$44034.207,230 to 8,2592.1 percent25 percent$44034.218,260 to 9,2892.2 percent25 percent$44034.229,290 to 10,3192.3 percent30 percent$44034.2310,320 to 11,3492.4 percent30 percent$44034.2411,350 to 12,3892.5 percent30 percent$44034.2512,390 to 14,4492.6 percent30 percent$44034.2614,450 to 15,4792.8 percent35 percent$44034.2715,480 to 16,5093.0 percent35 percent$44034.2816,510 to 17,5493.2 percent40 percent$44034.2917,550 to 21,6693.3 percent40 percent$44034.3021,670 to 24,7693.4 percent45 percent$44034.3124,770 to 30,9593.5 percent45 percent$44034.3230,960 to 36,1193.5 percent45 percent$44034.3336,120 to 41,2793.7 percent50 percent$44034.3441,280 to 58,8294.0 percent50 percent$44034.3558,830 to 59,8594.0 percent50 percent$31034.3659,860 to 60,8894.0 percent50 percent$21034.3760,890 to 61,9294.0 percent50 percent$10034.38 $0 to 1,059 0.50 percent 1.0 percent $2,000 34.39 1,060 to 2,119 0.50 percent 2.0 percent $2,000 34.40 2,120 to 3,189 0.50 percent 3.0 percent $2,000 34.41 3,190 to 4,249 0.50 percent 4.0 percent $2,000 34.42 4,250 to 5,309 0.50 percent 5.0 percent $2,000 34.43 5,310 to 7,439 0.50 percent 6.0 percent $2,000 34.44 7,440 to 8,499 0.50 percent 7.0 percent $2,000 34.45 8,500 to 9,549 0.50 percent 8.0 percent $2,000 34.46 9,550 to 10,609 0.50 percent 9.0 percent $2,000 34.47 10,610 to 12,739 0.60 percent 10.0 percent $2,000 34.48 12,740 to 14,859 0.60 percent 11.0 percent $2,000 34.49 14,860 to 16,979 0.70 percent 12.0 percent $2,000 34.50 16,980 to 18,049 0.80 percent 13.0 percent $2,000 34.51 18,050 to 19,999 0.90 percent 14.0 percent $2,000 34.52 20,000 to 23,999 1.00 percent 15.0 percent $2,000 34.53 24,000 to 27,999 1.20 percent 17.0 percent $2,000 34.54 28,000 to 29,999 1.40 percent 19.0 percent $2,000 34.55 30,000 to 34,999 1.50 percent 20.0 percent $2,000 34.56 35,000 to 39,999 1.75 percent 22.0 percent $2,000 34.57 40,000 to 42,449 2.00 percent 25.0 percent $1,900 34.58 42,450 to 44,999 2.25 percent 27.0 percent $1,800 34.59 45,000 to 47,499 2.50 percent 30.0 percent $1,700 34.60 47,500 to 49,999 2.75 percent 32.0 percent $1,600 35.1 50,000 to 54,999 3.00 percent 35.0 percent $1,500 35.2 55,000 to 59,999 3.25 percent 37.0 percent $1,400 35.3 60,000 to 64,999 3.50 percent 40.0 percent $1,300 35.4 65,000 to 69,999 3.75 percent 42.0 percent $1,200 35.5 70,000 to 74,999 4.00 percent 45.0 percent $1,100 35.6 The payment made to a claimant shall be the amount of the 35.7 state refund calculated under this subdivision. No payment is 35.8 allowed if the claimant's household income is$61,930$75,000 or 35.9 more. 35.10 Sec. 6. Minnesota Statutes 1995 Supplement, section 35.11 290A.04, subdivision 6, is amended to read: 35.12 Subd. 6. [INFLATION ADJUSTMENT.] Beginning for property 35.13 tax refunds payable in calendar year19961998, the commissioner 35.14 shall annually adjust the dollar amounts of the income 35.15 thresholds and the maximum refunds under 35.16subdivisionssubdivision 2and 2afor inflation. The 35.17 commissioner shall make the inflation adjustments in accordance 35.18 with section 290.06, subdivision 2d, except that for purposes of 35.19 this subdivision the percentage increase shall be determined 35.20 from the year ending on August 31,19941996, to the year ending 35.21 on August 31 of the year preceding that in which the refund is 35.22 payable. The commissioner shall use the appropriate percentage 35.23 increase to annually adjust the income thresholds and maximum 35.24 refunds undersubdivisionssubdivision 2and 2afor inflation 35.25 without regard to whether or not the income tax brackets are 35.26 adjusted for inflation in that year. The commissioner shall 35.27 round the thresholds and the maximum amounts, as adjusted to the 35.28 nearest $10 amount. If the amount ends in $5, the commissioner 35.29 shall round it up to the next $10 amount. 35.30 The commissioner shall annually announce the adjusted 35.31 refund schedule at the same time provided under section 290.06. 35.32 The determination of the commissioner under this subdivision is 35.33 not a rule under the administrative procedure act. 35.34 Sec. 7. Minnesota Statutes 1994, section 290A.10, is 35.35 amended to read: 35.36 290A.10 [PROOF OF TAXES PAID.] 35.37 Every claimant who files a claim for relief for property 35.38 taxes payable shall include with the claim a property tax 36.1 statement or a reproduction thereof in a form deemed 36.2 satisfactory by the commissioner of revenue indicating that 36.3 there are no delinquent property taxes on the homestead or cabin. 36.4 Indication on the property tax statement from the county 36.5 treasurer that there are no delinquent taxes on the homestead or 36.6 cabin shall be sufficient proof. Taxes included in a confession 36.7 of judgment under section 279.37 shall not constitute delinquent 36.8 taxes as long as the claimant is current on the payments 36.9 required to be made under section 279.37. 36.10 Sec. 8. Minnesota Statutes 1994, section 290A.23, 36.11 subdivision 3, is amended to read: 36.12 Subd. 3. [ANNUAL APPROPRIATION.] For payments made after 36.13 July 1, 1996, there is annually appropriated from the general 36.14 fund to the commissioner of revenue the amount necessary to make 36.15 the payments required under section 290A.04, subdivisions 1a, 2, 36.16 and 2h. 36.17 Sec. 9. [REPEALER.] 36.18 Minnesota Statutes 1994, sections 290A.04, subdivisions 2a 36.19 and 2b; and 290A.23, subdivision 1, are repealed. 36.20 Sec. 10. [EFFECTIVE DATE.] 36.21 Sections 1 to 9 are effective for property taxes payable in 36.22 1997 and rents payable in 1996. 36.23 ARTICLE 5 36.24 SALES AND USE TAXES 36.25 Section 1. Minnesota Statutes 1995 Supplement, section 36.26 297A.01, subdivision 3, is amended to read: 36.27 Subd. 3. A "sale" and a "purchase" includes, but is not 36.28 limited to, each of the following transactions: 36.29 (a) Any transfer of title or possession, or both, of 36.30 tangible personal property, whether absolutely or conditionally, 36.31 and the leasing of or the granting of a license to use or 36.32 consume tangible personal property other than manufactured homes 36.33 used for residential purposes for a continuous period of 30 days 36.34 or more, for a consideration in money or by exchange or barter; 36.35 (b) The production, fabrication, printing, or processing of 36.36 tangible personal property for a consideration for consumers who 37.1 furnish either directly or indirectly the materials used in the 37.3 production, fabrication, printing, or processing; 37.4 (c) The furnishing, preparing, or serving for a 37.5 consideration of food, meals, or drinks. "Sale" does not 37.6 include: 37.7 (1) meals or drinks served to patients, inmates, or persons 37.8 residing at hospitals, sanitariums, nursing homes, senior 37.9 citizens homes, and correctional, detention, and detoxification 37.10 facilities; 37.11 (2) meals or drinks purchased for and served exclusively to 37.12 individuals who are 60 years of age or over and their spouses or 37.13 to the handicapped and their spouses by governmental agencies, 37.14 nonprofit organizations, agencies, or churches or pursuant to 37.15 any program funded in whole or part through 42 USCA sections 37.16 3001 through 3045, wherever delivered, prepared or served; or 37.17 (3) meals and lunches served at public and private schools, 37.18 universities, or colleges. 37.19 Notwithstanding section 297A.25, subdivision 2, taxable food or 37.20 meals include, but are not limited to, the following: 37.21 (i) heated food or drinks; 37.22 (ii) sandwiches prepared by the retailer; 37.23 (iii) single sales of prepackaged ice cream or ice milk 37.24 novelties prepared by the retailer; 37.25 (iv) hand-prepared or dispensed ice cream or ice milk 37.26 products including cones, sundaes, and snow cones; 37.27 (v) soft drinks and other beverages prepared or served by 37.28 the retailer; 37.29 (vi) gum; 37.30 (vii) ice; 37.31 (viii) all food sold in vending machines; 37.32 (ix) party trays prepared by the retailers; and 37.33 (x) all meals and single servings of packaged snack food, 37.34 single cans or bottles of pop, sold in restaurants and bars; 37.35 (d) The granting of the privilege of admission to places of 37.36 amusement, recreational areas, or athletic events, except a 37.37 world championship football game sponsored by the national 38.1 football league, and the privilege of having access to and the 38.2 use of amusement devices, tanning facilities, reducing salons, 38.3 steam baths, turkish baths, health clubs, and spas or athletic 38.4 facilities; 38.5 (e) The furnishing for a consideration of lodging and 38.6 related services by a hotel, rooming house, tourist court, motel 38.7 or trailer camp and of the granting of any similar license to 38.8 use real property other than the renting or leasing thereof for 38.9 a continuous period of 30 days or more; 38.10 (f) The furnishing for a consideration of electricity, gas, 38.11 water, sanitary sewer services, or steam for use or consumption 38.12 within this state, or local exchange telephone service, 38.13 intrastate toll service, and interstate toll service, if that 38.14 service originates from and is charged to a telephone located in 38.15 this state. Telephone service includes paging services and 38.16 private communication service, as defined in United States Code, 38.17 title 26, section 4252(d), except for private communication 38.18 service purchased by an agent acting on behalf of the state 38.19 lottery. The furnishing for a consideration of access to 38.20 telephone services by a hotel to its guests is a sale under this 38.21 clause. Sales by municipal corporations in a proprietary 38.22 capacity are included in the provisions of this clause.The38.23furnishing of water and sewer services for residential use shall38.24not be considered a sale.The sale of natural gas to be used as 38.25 a fuel in vehicles propelled by natural gas shall not be 38.26 considered a sale for the purposes of this section; 38.27 (g) The furnishing for a consideration of cable television 38.28 services, including charges for basic service, charges for 38.29 premium service, and any other charges for any other 38.30 pay-per-view, monthly, or similar television services; 38.31 (h) The furnishing for a consideration of parking services, 38.32 whether on a contractual, hourly, or other periodic basis, 38.33 except for parking at a meter; 38.34 (i) The furnishing for a consideration of services listed 38.35 in this paragraph: 38.36 (i) laundry and dry cleaning services including cleaning, 39.1 pressing, repairing, altering, and storing clothes, linen 39.2 services and supply, cleaning and blocking hats, and carpet, 39.3 drapery, upholstery, and industrial cleaning. Laundry and dry 39.4 cleaning services do not include services provided by coin 39.5 operated facilities operated by the customer; 39.6 (ii) motor vehicle washing, waxing, and cleaning services, 39.7 including services provided by coin-operated facilities operated 39.8 by the customer, and rustproofing, undercoating, and towing of 39.9 motor vehicles; 39.10 (iii) building and residential cleaning, maintenance, and 39.11 disinfecting and exterminating services; 39.12 (iv) detective services, security services, burglar, fire 39.13 alarm, and armored car services not including services performed 39.14 within the jurisdiction they serve by off-duty licensed peace 39.15 officers as defined in section 626.84, subdivision 1; 39.16 (v) pet grooming services; 39.17 (vi) lawn care, fertilizing, mowing, spraying and sprigging 39.18 services; garden planting and maintenance; tree, bush, and shrub 39.19 pruning, bracing, spraying, and surgery; tree, bush, shrub and 39.20 stump removal; and tree trimming for public utility lines. 39.21 Services performed under a construction contract for the 39.22 installation of shrubbery, plants, sod, trees, bushes, and 39.23 similar items are not taxable; 39.24 (vii) mixed municipal solid waste management services as 39.25 described in section 297A.45; 39.26 (viii) massages, except when provided by a licensed health 39.27 care facility or professional or upon written referral from a 39.28 licensed health care facility or professional for treatment of 39.29 illness, injury, or disease;and39.30 (ix) the furnishing for consideration of lodging, board and 39.31 care services for animals in kennels and other similar 39.32 arrangements, but excluding veterinary and horse boarding 39.33 services.; 39.34 (x) pumping and maintenance services for individual sewage 39.35 treatment systems as defined in section 115.55; and 39.36 (xi) motor vehicle repair, maintenance, and diagnostic 40.1 services. 40.2 The services listed in this paragraph are taxable under section 40.3 297A.02 if the service is performed wholly within Minnesota or 40.4 if the service is performed partly within and partly without 40.5 Minnesota and the greater proportion of the service is performed 40.6 in Minnesota, based on the cost of performance. In applying the 40.7 provisions of this chapter, the terms "tangible personal 40.8 property" and "sales at retail" include taxable services and the 40.9 provision of taxable services, unless specifically provided 40.10 otherwise. Services performed by an employee for an employer 40.11 are not taxable under this paragraph. Services performed by a 40.12 partnership or association for another partnership or 40.13 association are not taxable under this paragraph if one of the 40.14 entities owns or controls more than 80 percent of the voting 40.15 power of the equity interest in the other entity. Services 40.16 performed between members of an affiliated group of corporations 40.17 are not taxable. For purposes of this section, "affiliated 40.18 group of corporations" includes those entities that would be 40.19 classified as a member of an affiliated group under United 40.20 States Code, title 26, section 1504, and who are eligible to 40.21 file a consolidated tax return for federal income tax purposes; 40.22 (j) A "sale" and a "purchase" includes the transfer of 40.23 computer software, meaning information and directions that 40.24 dictate the function performed by data processing equipment. A 40.25 "sale" and a "purchase" does not include the design, 40.26 development, writing, translation, fabrication, lease, or 40.27 transfer for a consideration of title or possession of a custom 40.28 computer program; and 40.29 (k) The granting of membership in a club, association, or 40.30 other organization if: 40.31 (1) the club, association, or other organization makes 40.32 available for the use of its members sports and athletic 40.33 facilities (without regard to whether a separate charge is 40.34 assessed for use of the facilities); and 40.35 (2) use of the sports and athletic facilities is not made 40.36 available to the general public on the same basis as it is made 41.1 available to members. 41.2 Granting of membership includes both one-time initiation fees 41.3 and periodic membership dues. Sports and athletic facilities 41.4 include golf courses, tennis, racquetball, handball and squash 41.5 courts, basketball and volleyball facilities, running tracks, 41.6 exercise equipment, swimming pools, and other similar athletic 41.7 or sports facilities. The provisions of this paragraph do not 41.8 apply to camps or other recreation facilities owned and operated 41.9 by an exempt organization under section 501(c)(3) of the 41.10 Internal Revenue Code of 1986, as amended through December 31, 41.11 1992, for educational and social activities for young people 41.12 primarily age 18 and under. 41.13 Sec. 2. Minnesota Statutes 1994, section 297A.25, 41.14 subdivision 8, is amended to read: 41.15 Subd. 8. [USED CLOTHING.] The gross receipts from the sale 41.16 of used clothing and used wearing apparel are exempt, except the 41.17 following: 41.18 (1) all articles commonly or commercially known as jewelry, 41.19 whether real or imitation; pearls, precious and semiprecious 41.20 stones, and imitations thereof; articles made of, or ornamented, 41.21 mounted or fitted with precious metals or imitations thereof; 41.22 watches; clocks; cases and movements for watches and clocks; 41.23 gold, gold-plated, silver, or sterling flatware or hollowware 41.24 and silver-plated hollowware; opera glasses; lorgnettes; marine 41.25 glasses; field glasses and binoculars; 41.26 (2) articles made of fur on the hide or pelt, and articles 41.27 of which such fur is the component material or chief value, but 41.28 only if such value is more than three times the value of the 41.29 next most valuable component material; 41.30 (3) perfume, essences, extracts, toilet waters, cosmetics, 41.31 petroleum jellies, hair oils, pomades, hair dressings, hair 41.32 restoratives, hair dyes, aromatic cachous and toilet powders. 41.33 The tax imposed by this chapter shall not apply to lotion, oil, 41.34 powder, or other articles intended to be used or applied only in 41.35 the case of babies; 41.36 (4) trunks, valises, traveling bags, suitcases, satchels, 42.1 overnight bags, hat boxes for use by travelers, beach bags, 42.2 bathing suit bags, brief cases made of leather or imitation 42.3 leather, salespeople's sample and display cases, purses, 42.4 handbags, pocketbooks, wallets, billfolds, card, pass, and key 42.5 cases and toilet cases. 42.6 Sec. 3. [EFFECTIVE DATE.] 42.7 Sections 1 and 2 are effective for sales on or after June 42.8 1, 1997. 42.9 ARTICLE 6 42.10 EDUCATION AIDS 42.11 Section 1. Minnesota Statutes 1995 Supplement, section 42.12 124.226, subdivision 10, is amended to read: 42.13 Subd. 10. [TARGETED NEEDS TRANSPORTATION LEVY.] A school 42.14 district may make a levy for targeted needs transportation costs 42.15 according to this subdivision. The amount of the levy shall be 42.16 the result of the following computation: 42.17 (1) For fiscal year 1997 and later, targeted needs 42.18 transportation levy equalization revenue equals 28 percent of 42.19 the sum of the district's special programs transportation 42.20 revenue under section 124.225, subdivision 14, and the 42.21 district's integration transportation revenue under section 42.22 124.225, subdivision 15. 42.23 (2) The targeted needs transportation levy equals the 42.24 result in clause (1) times the lesser of one or the ratio of (i) 42.25 the quotient derived by dividing the adjusted net tax capacity 42.26 of the district for the year before the year the levy is 42.27 certified by the actual pupil units in the district for the 42.28 school year to which the levy is attributable, to (ii) 42.29$3,540$3,440. 42.30 Sec. 2. Minnesota Statutes 1995 Supplement, section 42.31 124.2711, subdivision 2a, is amended to read: 42.32 Subd. 2a. [EARLY CHILDHOOD FAMILY EDUCATION LEVY.] To 42.33 obtain early childhood family education revenue, a district may 42.34 levy an amount equal to the tax rate of.609.627 percent times 42.35 the adjusted tax capacity of the district for the year preceding 42.36 the year the levy is certified. If the amount of the early 43.1 childhood family education levy would exceed the early childhood 43.2 family education revenue, the early childhood family education 43.3 levy shall equal the early childhood family education revenue. 43.4 Sec. 3. Minnesota Statutes 1994, section 124.2716, 43.5 subdivision 3, is amended to read: 43.6 Subd. 3. [EXTENDED DAY LEVY.] To obtain extended day 43.7 revenue, a school district may levy an amount equal to the 43.8 district's extended day revenue as defined in subdivision 2 43.9 multiplied by the lesser of one, or the ratio of the quotient 43.10 derived by dividing the adjusted net tax capacity of the 43.11 district for the year before the year the levy is certified by 43.12 the actual pupil units in the district for the school year to 43.13 which the levy is attributable, to$3,700$3,595. 43.14 Sec. 4. Minnesota Statutes 1994, section 124.2727, 43.15 subdivision 6b, is amended to read: 43.16 Subd. 6b. [DISTRICT COOPERATION LEVY.] To receive district 43.17 cooperation revenue, a district may levy an amount equal to the 43.18 district's cooperation revenue multiplied by the lesser of one, 43.19 or the ratio of the quotient derived by dividing the adjusted 43.20 net tax capacity of the district for the year preceding the year 43.21 the levy is certified by the actual pupil units in the district 43.22 for the school year to which the levy is attributable 43.23 to$3,500$3,400. 43.24 Sec. 5. Minnesota Statutes 1995 Supplement, section 43.25 124.83, subdivision 4, is amended to read: 43.26 Subd. 4. [HEALTH AND SAFETY LEVY.] To receive health and 43.27 safety revenue, a district may levy an amount equal to the 43.28 district's health and safety revenue as defined in subdivision 3 43.29 multiplied by the lesser of one, or the ratio of the quotient 43.30 derived by dividing the adjusted net tax capacity of the 43.31 district for the year preceding the year the levy is certified 43.32 by the actual pupil units in the district for the school year to 43.33 which the levy is attributable, to$4,707.50$4,575. 43.34 Sec. 6. Minnesota Statutes 1995 Supplement, section 43.35 124.95, subdivision 4, is amended to read: 43.36 Subd. 4. [EQUALIZED DEBT SERVICE LEVY.] To obtain debt 44.1 service equalization revenue, a district must levy an amount not 44.2 to exceed the district's debt service equalization revenue times 44.3 the lesser of one or the ratio of: 44.4 (1) the quotient derived by dividing the adjusted net tax 44.5 capacity of the district for the year before the year the levy 44.6 is certified by the actual pupil units in the district for the 44.7 school year ending in the year prior to the year the levy is 44.8 certified; to 44.9 (2)$4,707.50$4,575. 44.10 Sec. 7. Minnesota Statutes 1995 Supplement, section 44.11 124A.23, subdivision 1, is amended to read: 44.12 Subdivision 1. [GENERAL EDUCATION TAX RATE.] The 44.13 commissioner shall establish the general education tax rate by 44.14 July 1 of each year for levies payable in the following year. 44.15 The general education tax capacity rate shall be a rate, rounded 44.16 up to the nearest tenth of a percent, that, when applied to the 44.17 adjusted net tax capacity for all districts, raises the amount 44.18 specified in this subdivision. The general education tax rate 44.19 shall be the rate that raises$1,054,000,000 for fiscal year44.201996 and$1,359,000,000 for fiscal year 1997 and $1,003,000,000 44.21 for fiscal year 1998 and later fiscal years. The general 44.22 education tax rate may not be changed due to changes or 44.23 corrections made to a district's adjusted net tax capacity after 44.24 the tax rate has been established. 44.25 Sec. 8. [APPROPRIATION.] 44.26 $....... is appropriated to the commissioner of children, 44.27 families, and learning in fiscal year 1997 for additional state 44.28 aid costs associated with changes in school levy revenues 44.29 recognized under Minnesota Statutes, section 121.904, 44.30 subdivision 4a, as the result of the levy changes due to section 44.31 7. 44.32 Sec. 9. [EFFECTIVE DATE.] 44.33 Sections 1 to 7 are effective for property taxes payable in 44.34 1997 and thereafter.