Minnesota Legislature
SF 2919
as introduced - 88th Legislature (2013 - 2014) Posted on 09/04/2014 10:47am
Current Version - as introduced
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A bill for an act
relating to taxation; minerals; modifying the rates of tax on nonferrous mining;
modifying the distribution of net proceeds and production tax revenues;
amending Minnesota Statutes 2012, sections 298.015, subdivision 1; 298.225,
subdivision 1; 298.28, subdivision 5; Minnesota Statutes 2013 Supplement,
sections 298.01, subdivision 3; 298.018, subdivision 1; 298.28, subdivision 4.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2013 Supplement, section 298.01, subdivision 3, is
amended to read:
Subd. 3.
Occupation tax; other ores.
Every person engaged in the business of
mining, refining, or producing ores, metals, or minerals in this state, except iron ore or
taconite concentrates, shall pay an occupation tax to the state of Minnesota as provided
in this subdivision. For purposes of this subdivision, mining includes the application of
hydrometallurgical processes. Hydrometallurgical processes are processes that extract
the ores, metals, or minerals, by use of aqueous solutions that leach, concentrate, and
recover the ore, metal, or mineral. The tax is determined in the same manner as the tax
imposed by section 290.02, except that sections 290.05, subdivision 1, clause (a), 290.17,
subdivision 4, and 290.191, subdivision 2, do not apply, and the occupation tax must be
computed by applying to taxable income the rate of deleted text begin 2.45deleted text end new text begin 1.45new text end percent. A person subject
to occupation tax under this section shall apportion its net income on the basis of the
percentage obtained by taking the sum of:
(1) 75 percent of the percentage which the sales made within this state in connection
with the trade or business during the tax period are of the total sales wherever made in
connection with the trade or business during the tax period;
(2) 12.5 percent of the percentage which the total tangible property used by the
taxpayer in this state in connection with the trade or business during the tax period is of
the total tangible property, wherever located, used by the taxpayer in connection with the
trade or business during the tax period; and
(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred
in this state or paid in respect to labor performed in this state in connection with the trade
or business during the tax period are of the taxpayer's total payrolls paid or incurred in
connection with the trade or business during the tax period.
The tax is in addition to all other taxes.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable years beginning after
December 31, 2013.
new text end
Sec. 2.
Minnesota Statutes 2012, section 298.015, subdivision 1, is amended to read:
Subdivision 1.
Tax imposed.
A person engaged in the business of mining shall pay
to the state of Minnesota for distribution as provided in section 298.018 a net proceeds tax
equal to deleted text begin twodeleted text end new text begin threenew text end percent of the net proceeds from mining in Minnesota. The tax applies
to all ores, metals, and minerals mined, extracted, produced, or refined within the state of
Minnesota except for sand, silica sand, gravel, building stone, crushed rock, limestone,
granite, dimension granite, dimension stone, horticultural peat, clay, soil, iron ore, and
taconite concentrates. The tax is in addition to all other taxes provided for by law.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable years beginning after
December 31, 2013.
new text end
Sec. 3.
Minnesota Statutes 2013 Supplement, section 298.018, subdivision 1, is
amended to read:
Subdivision 1.
Within taconite assistance area.
The proceeds of the tax paid under
sections 298.015 and 298.016 on ores, metals, or minerals mined or extracted within the
taconite assistance area defined in section 273.1341, shall be allocated as follows:
(1) five percent to the city or town within which the minerals or energy resources
are mined or extractednew text begin , or within which the concentrate was produced. If the mining
and concentration, or different steps in either process, are carried on in more than one
taxing district, the commissioner shall apportion equitably the proceeds among the
cities and towns by attributing 50 percent of the proceeds of the tax to the operation of
mining or extraction, and the remainder to the concentrating plant and to the processes of
concentration, and with respect to each thereof giving due consideration to the relative
extent of the respective operations performed in each taxing districtnew text end ;
(2) ten percent to the taconite municipal aid account to be distributed as provided
in section 298.282;
(3) ten percent to the school district within which the minerals or energy resources
are mined or extractednew text begin , or within which the concentrate was produced. If the mining
and concentration, or different steps in either process, are carried on in more than one
school district, distribution among the school districts must be based on the apportionment
formula prescribed in clause (1)new text end ;
(4) 20 percent to a group of school districts comprised of those school districts
wherein the mineral or energy resource was mined or extracted or in which there is a
qualifying municipality as defined by section 273.134, paragraph (b), in direct proportion
to school district indexes as follows: for each school district, its pupil units determined
under section 126C.05 for the prior school year shall be multiplied by the ratio of the
average adjusted net tax capacity per pupil unit for school districts receiving aid under
this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year
ending prior to distribution to the adjusted net tax capacity per pupil unit of the district.
Each district shall receive that portion of the distribution which its index bears to the sum
of the indices for all school districts that receive the distributions;
(5) 20 percent to the county within which the minerals or energy resources are
mined or extractednew text begin , or within which the concentrate was produced. If the mining and
concentration, or different steps in either process, are carried on in more than one county,
distribution among the counties must be based on the apportionment formula prescribed in
clause (1), provided that any county receiving distributions under this clause shall pay one
percent of its proceeds to the Range Association of Municipalities and Schoolsnew text end ;
(6) 20 percent to St. Louis County acting as the counties' fiscal agent to be
distributed as provided in sections 273.134 to 273.136;
(7) five percent to the Iron Range Resources and Rehabilitation Board for the
purposes of section 298.22;
(8) deleted text begin fivedeleted text end new text begin threenew text end percent to the Douglas J. Johnson economic protection trust fund; and
(9) deleted text begin fivedeleted text end new text begin sevennew text end percent to the taconite environmental protection fund.
The proceeds of the tax shall be distributed on July 15 each year.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2014.
new text end
Sec. 4.
Minnesota Statutes 2012, section 298.225, subdivision 1, is amended to read:
Subdivision 1.
Guaranteed distribution.
(a) The distribution of the taconite
production tax as provided in section 298.28, subdivisions 3 to 5, 6, paragraph (b), 7, and
8, shall equal the lesser of the following amounts:
(1) the amount distributed pursuant to this section and section 298.28, with respect
to 1983 production if the production for the year prior to the distribution year is no less
than 42,000,000 taxable tons. If the production is less than 42,000,000 taxable tons, the
amount of the distributions shall be reduced proportionately at the rate of two percent
for each 1,000,000 tons, or part of 1,000,000 tons by which the production is less than
42,000,000 tons; or
(2)(i) for the distributions made pursuant to section 298.28, subdivisions 4,
paragraphs (b) and (c), and 6, paragraph (c), 31.2 percent of the amount distributed
pursuant to this section and section 298.28, with respect to 1983 production;
(ii) for the distributions made pursuant to section 298.28, subdivision 5, paragraphs
(b) and (d), 75 percent of the amount distributed pursuant to this section and section
298.28, with respect to 1983 production.
(b) The distribution of the taconite production tax as provided in section 298.28,
subdivision 2, shall equal the following amount:
(1) if the production for the year prior to the distribution year is at least 42,000,000
taxable tons, the amount distributed pursuant to this section and section 298.28 with
respect to 1999 production; or
(2) if the production for the year prior to the distribution year is less than 42,000,000
taxable tons, the amount distributed pursuant to this section and section 298.28 with respect
to 1999 production, reduced proportionately at the rate of two percent for each 1,000,000
tons or part of 1,000,000 tons by which the production is less than 42,000,000 tons.
new text begin
(c) The guaranteed distribution under paragraph (a) for distributions made to
counties under section 298.28, subdivision 5, paragraph (b), based on mines or plants
that have ceased operations ten or more years before the production year on which the
distribution is based must be made at one-half the amount that otherwise would apply.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective beginning for the 2015 distribution.
new text end
Sec. 5.
Minnesota Statutes 2013 Supplement, section 298.28, subdivision 4, is
amended to read:
Subd. 4.
School districts.
(a) deleted text begin 32.15deleted text end new text begin 33.5new text end cents per taxable ton, plus the increase
provided in paragraph (d), less the amount that would have been computed under
Minnesota Statutes 2008, section 126C.21, subdivision 4, for the current year for that
district, must be allocated to qualifying school districts to be distributed, based upon the
certification of the commissioner of revenue, under paragraphs (b), (c), and (f).
(b)(i) deleted text begin 3.43deleted text end new text begin 3.88new text end cents per taxable ton must be distributed to the school districts in
which the lands from which taconite was mined or quarried were located or within which
the concentrate was produced. The distribution must be based on the apportionment
formula prescribed in subdivision 2.
(ii) deleted text begin Fourdeleted text end new text begin 4.45new text end cents per taxable ton from each taconite facility must be distributed
to each affected school district for deposit in a fund dedicated to building maintenance
and repairs, as follows:
(1) proceeds from Keewatin Taconite or its successor are distributed to Independent
School Districts Nos. 316, Coleraine, and 319, Nashwauk-Keewatin, or their successor
districts;
(2) proceeds from the Hibbing Taconite Company or its successor are distributed to
Independent School Districts Nos. 695, Chisholm, and 701, Hibbing, or their successor
districts;
(3) proceeds from the Mittal Steel Company and Minntac or their successors are
distributed to Independent School Districts Nos. 712, Mountain Iron-Buhl, 706, Virginia,
2711, Mesabi East, and 2154, Eveleth-Gilbert, or their successor districts;
(4) proceeds from the Northshore Mining Company or its successor are distributed
to Independent School Districts Nos. 2142, St. Louis County, and 381, Lake Superior,
or their successor districts; and
(5) proceeds from United Taconite or its successor are distributed to Independent
School Districts Nos. 2142, St. Louis County, and 2154, Eveleth-Gilbert, or their
successor districts.
Revenues that are required to be distributed to more than one district shall be
apportioned according to the number of pupil units identified in section 126C.05,
subdivision 1, enrolled in the second previous year.
(c)(i) deleted text begin 24.72deleted text end new text begin 25.17new text end cents per taxable ton, less any amount distributed under paragraph
(e), shall be distributed to a group of school districts comprised of those school districts
which qualify as a tax relief area under section 273.134, paragraph (b), or in which there is
a qualifying municipality as defined by section 273.134, paragraph (a), in direct proportion
to school district indexes as follows: for each school district, its pupil units determined
under section 126C.05 for the prior school year shall be multiplied by the ratio of the
average adjusted net tax capacity per pupil unit for school districts receiving aid under
this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year
ending prior to distribution to the adjusted net tax capacity per pupil unit of the district.
Each district shall receive that portion of the distribution which its index bears to the sum
of the indices for all school districts that receive the distributions.
(ii) Notwithstanding clause (i), each school district that receives a distribution
under sections 298.018; 298.23 to 298.28, exclusive of any amount received under this
clause; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law imposing a tax on
severed mineral values after reduction for any portion distributed to cities and towns
under section 126C.48, subdivision 8, paragraph (5), that is less than the amount of its
levy reduction under section 126C.48, subdivision 8, for the second year prior to the
year of the distribution shall receive a distribution equal to the difference; the amount
necessary to make this payment shall be derived from proportionate reductions in the
initial distribution to other school districts under clause (i). If there are insufficient tax
proceeds to make the distribution provided under this paragraph in any year, money must
be transferred from the taconite property tax relief account in subdivision 6, to the extent
of the shortfall in the distribution.
(d)(1) Any school district described in paragraph (c) where a levy increase pursuant
to section 126C.17, subdivision 9, was authorized by referendum for taxes payable in
2001, shall receive a distribution of 21.3 cents per ton. Each district shall receive $175
times the pupil units identified in section 126C.05, subdivision 1, enrolled in the second
previous year or the 1983-1984 school year, whichever is greater, less the product of 1.8
percent times the district's taxable net tax capacity in 2011.
(2) Districts qualifying under paragraph (c) must receive additional taconite aid each
year equal to 22.5 percent of the amount obtained by subtracting:
(i) 1.8 percent of the district's net tax capacity for 2011, from:
(ii) the district's weighted average daily membership for fiscal year 2012, multiplied
by the sum of:
(A) $415, plus
(B) the district's referendum revenue allowance for fiscal year 2013.
If the total amount provided by paragraph (d) is insufficient to make the payments
herein required then the entitlement of $175 per pupil unit shall be reduced uniformly
so as not to exceed the funds available. Any amounts received by a qualifying school
district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general
education aid which the district receives pursuant to section 126C.13 or the permissible
levies of the district. Any amount remaining after the payments provided in this paragraph
shall be paid to the commissioner of Iron Range resources and rehabilitation who shall
deposit the same in the taconite environmental protection fund and the Douglas J. Johnson
economic protection trust fund as provided in subdivision 11.
Each district receiving money according to this paragraph shall reserve the lesser of
the amount received under this paragraph or $25 times the number of pupil units served in
the district. It may use the money for early childhood programs.
(e) There shall be distributed to any school district the amount which the school
district was entitled to receive under section 298.32 in 1975.
(f) Four cents per taxable ton must be distributed to qualifying school districts
according to the distribution specified in paragraph (b), clause (ii), and 11 cents per taxable
ton must be distributed according to the distribution specified in paragraph (c). These
amounts are not subject to sections 126C.21, subdivision 4, and 126C.48, subdivision 8.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective beginning for the 2015 distribution.
new text end
Sec. 6.
Minnesota Statutes 2012, section 298.28, subdivision 5, is amended to read:
Subd. 5.
Counties.
(a) 26.05 cents per taxable ton is allocated to counties to be
distributed, based upon certification by the commissioner of revenue, under paragraphs
(b) to (d).
(b) 15.525 cents per taxable ton shall be distributed to the county in which the
taconite is mined or quarried or in which the concentrate is produced, less any amount
which is to be distributed pursuant to paragraph (c). The apportionment formula prescribed
in subdivision 2 is the basis for the distribution.
(c) If an electric power plant owned by and providing the primary source of power for
a taxpayer mining and concentrating taconite is located in a county other than the county
in which the mining and the concentrating processes are conducted, one cent per taxable
ton of the tax distributed to the counties pursuant to paragraph (b) and imposed on and
collected from such taxpayer shall be paid to the county in which the power plant is located.
(d) deleted text begin 10.525deleted text end new text begin 11.416new text end cents per taxable ton shall be paid to the county from which the
taconite was mined, quarried or concentrated to be deposited in the county road and
bridge fund. If the mining, quarrying and concentrating, or separate steps in any of those
processes are carried on in more than one county, the commissioner shall follow the
apportionment formula prescribed in subdivision 2.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective beginning for the 2015 distribution.
new text end