SF 3208

as introduced - 93rd Legislature (2023 - 2024) Posted on 06/13/2023 10:04am

A bill for an act
relating to taxation; minerals; converting the net proceeds tax into a gross proceeds
tax; modifying distributions of gross proceeds and taconite production taxes;
modifying and increasing distribution of occupation tax proceeds; amending
Minnesota Statutes 2022, sections 41A.21; 272.02, subdivision 73; 273.1341;
297A.68, subdivision 4; 298.015; 298.018, subdivisions 1, 1a; 298.17; 298.28,
subdivisions 5, 7a; 298.296, subdivision 4.

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

Section 1.

Minnesota Statutes 2022, section 41A.21, is amended to read:

41A.21 deleted text begin ORIENTED STRAND BOARD PRODUCTION deleted text end new text begin TOMASSONI SOLAR
CELL new text end INCENTIVE new text begin PROGRAM new text end .

Subdivision 1.

Definitions.

(a) For the purposes of this section, the terms defined in this
subdivision have the meanings given them.

(b) "Commissioner" means the commissioner of agriculture.

(c) deleted text begin "Forest resources" means raw wood logs and material primarily made up of cellulose,
hemicellulose, or lignin, or a combination of those ingredients deleted text end new text begin "Solar cell" means a device
that is capable of converting the energy of light into electricity new text end .

deleted text begin (d) "Oriented strand board" or "OSB" means a material manufactured into panels using
forest resources.
deleted text end

Subd. 2.

Eligibility.

(a) A facility eligible for payment under this section must deleted text begin source
at least 80 percent of its forest resources raw materials from Minnesota. The facility must
be located in Minnesota; must begin construction activities by December 31, 2023, for a
specific location; must have produced at least one OSB square foot on a 3/8-inch nominal
basis at a specific location by June 30, 2026; and must not begin operating before January
1, 2022. Eligible facilities must be new OSB construction sites with total capital investment
in excess of $250,000,000. Eligible OSB production facilities must produce at least
50,000,000 OSB square feet on a 3/8-inch nominal basis of OSB each quarter. At least one
product produced at the facility should be a wood-based wall or roof structural sheathing
panel that has an integrated, cellulose-based paper overlay that serves as a water resistive
barrier deleted text end new text begin manufacture and produce solar cells in Minnesota, be located in the Taconite Tax
Relief Area, and begin operations by December 31, 2026. An eligible facility may include
solar module manufacturing, solar cell manufacturing, and warehouse facilities with a total
capital investment in excess of $100,000,000. No payments shall be made for solar cell
production that occurs after June 30, 2036 new text end .

(b) No payments shall be made for deleted text begin OSB deleted text end new text begin solar cell new text end production that occurs after June 30,
2036, for those eligible producers under paragraph (a).

deleted text begin (c) An eligible producer of OSB shall not transfer the producer's eligibility for payments
under this section to a facility at a different location.
deleted text end

deleted text begin (d) deleted text end new text begin (c) new text end A producer that ceases production for any reason is ineligible to receive payments
under this section until the producer resumes production.

Subd. 3.

Payment amounts; limits.

deleted text begin (a) deleted text end The commissioner shall make payments to new text begin the
first new text end eligible deleted text begin producers deleted text end new text begin producer new text end of deleted text begin OSB deleted text end new text begin solar cells new text end . The amount of the payment deleted text begin for each
eligible producer's annual production is $7.50 per 1,000 OSB square feet on a 3/8-inch
nominal basis of OSB produced at a specific location for ten years starting after the first
calendar year in which production begins deleted text end new text begin shall not exceed $3,000,000 per year from fiscal
year 2026 through fiscal year 2034. The payment shall be $1,000,000 for the first 12,000,000
solar cells produced each year, $2,000,000 for 24,000,000 solar cells produced each year,
and $3,000,000 for 36,000,000 solar cells produced each year, not to exceed $3,000,000 in
any fiscal year from 2026 through fiscal year 2034 new text end .

deleted text begin (b) Total payments under this section to an eligible OSB producer in a fiscal year may
not exceed the amount necessary for 400,000,000 OSB square feet on a 3/8-inch nominal
basis of OSB produced. Total payments under this section to all eligible OSB producers in
a fiscal year may not exceed the amount necessary for 400,000,000 OSB square feet on a
3/8-inch nominal basis of OSB produced. If the total amount for which all producers are
eligible in a quarter exceeds the amount available for payments, the commissioner shall
make the payments on a pro rata basis.
deleted text end

deleted text begin (c) For purposes of this section, an entity that holds a controlling interest in more than
one OSB facility is considered a single eligible producer.
deleted text end

deleted text begin Subd. 4. deleted text end

deleted text begin Forest resources requirements. deleted text end

deleted text begin Forest resources that are purchased to be used
at the facility must be in compliance with one or more of the following: the Sustainable
Forestry Initiative Fiber Sourcing Standard, the Forest Stewardship Council Chain of Custody
Standard, or the Forest Stewardship Controlled Wood Standard. For forest resources that
come from land parcels greater than 160 acres, all efforts must be made to procure from
land that is certified by one or more of the following: the Forest Stewardship Council Forest
Management Standard, the Sustainable Forestry Initiative Forest Management Standard, or
the American Tree Farm System.
deleted text end

deleted text begin Subd. 5. deleted text end

deleted text begin Claims. deleted text end

deleted text begin (a) By the last day of October, January, April, and July, each eligible
OSB producer shall file a claim for payment for OSB production during the preceding three
calendar months. An eligible OSB producer that files a claim under this subdivision shall
include a statement of the eligible producer's total board feet of OSB produced during the
quarter covered by the claim. For each claim and statement of total board feet of OSB filed
under this subdivision, the board feet of OSB produced must be examined by a certified
public accounting firm with a valid permit to practice under chapter 326A, in accordance
with Statements on Standards for Attestation Engagements established by the American
Institute of Certified Public Accountants.
deleted text end

deleted text begin (b) The commissioner must issue payments by November 15, February 15, May 15, and
August 15. A separate payment must be made for each claim filed.
deleted text end

Subd. 6.

Appropriation.

(a) In fiscal year 2025, a sum sufficient to make the payments
required by this section, not to exceed $1,500,000, is appropriated from the general fund to
the commissioner. This is a onetime appropriation.

(b) From fiscal year 2026 through fiscal year 2034, a sum sufficient to make the payments
required by this section, not to exceed $3,000,000 in a fiscal year, is annually appropriated
from the general fund to the commissioner.

Sec. 2.

Minnesota Statutes 2022, section 272.02, subdivision 73, is amended to read:

Subd. 73.

Property subject to taconite production tax or deleted text begin net deleted text end new text begin gross new text end proceeds tax.

(a)
Real and personal property described in section 298.25 is exempt to the extent the tax on
taconite and iron sulphides under section 298.24 is described in section 298.25 as being in
lieu of other taxes on such property. This exemption applies for taxes payable in each year
that the tax under section 298.24 is payable with respect to such property.

(b) Deposits of mineral, metal, or energy resources the mining of which is subject to
taxation new text begin or the minimum payment new text end under section 298.015 are exempt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 3.

Minnesota Statutes 2022, section 273.1341, is amended to read:

273.1341 TACONITE ASSISTANCE AREA.

A "taconite assistance area" means the geographic area that falls within the boundaries
of a school district that contains:

(1) a municipality in which the assessed valuation of unmined iron ore on May 1, 1941,
was not less than 40 percent of the assessed valuation of all real property; deleted text begin or
deleted text end

(2) a municipality in which on January 1, 1977, or the applicable assessment date, there
is a taconite concentrating plant or where taconite is mined or quarried or where there is
located an electric generating plant which qualifies as a taconite facility deleted text begin . deleted text end new text begin ; or
new text end

new text begin (3) a municipality that is located in a county that:
new text end

new text begin (i) contains a school district described in clause (1) or (2); and
new text end

new text begin (ii) where active mining of materials subject to the tax under section 298.015, subdivision
1, is occurring, or where a mine subject to the minimum payment under section 298.015,
subdivision 3, is located.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 4.

Minnesota Statutes 2022, section 297A.68, subdivision 4, is amended to read:

Subd. 4.

Taconite, other ores, metals, or minerals; production materials.

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2022, section 298.015, is amended to read:

298.015 deleted text begin NET deleted text end new text begin GROSS new text end PROCEEDS TAX ON MINING.

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 deleted text begin net deleted text end new text begin gross new text end proceeds
tax equal to deleted text begin two deleted text end new text begin 0.4 new text end percent of the deleted text begin net deleted text end new text begin gross new text end 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.

Subd. 2.

deleted text begin Net deleted text end new text begin Gross new text end proceeds.

For purposes of this section, the term " deleted text begin net deleted text end new text begin gross new text end proceeds"
means the gross proceeds from mining, as defined in section 298.016 deleted text begin , less the deductions
for purposes of determining taxable income under section 298.01, subdivision 3b, applied
to the mining, production, processing, beneficiation, smelting, or refining of metal or mineral
products. No other credits or deductions shall apply to this tax deleted text end .

new text begin Subd. 3. new text end

new text begin Minimum payment. new text end

new text begin A person who has obtained all required permits to mine
all ores and metals, except for sand, silica sand, gravel, building stone, crushed rock,
limestone, granite, dimension granite, dimension stone, horticultural peat, clay, soil, iron
ore, and iron concentrates, is annually subject to the minimum payment under this
subdivision, unless:
new text end

new text begin (1) the tax imposed on the individual under subdivision 1 in a given year is greater than
zero; or
new text end

new text begin (2) the commissioner of revenue verifies that litigation preventing the business of mining
is pending.
new text end

new text begin The annual payment under this subdivision is $2,000,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 6.

Minnesota Statutes 2022, section 298.018, subdivision 1, is amended to read:

Subdivision 1.

Within taconite assistance area.

new text begin (a) new text end 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) new text begin except as provided under paragraph (b), new text end five percent to the city or town within which
the minerals or energy resources are mined or extracted, 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 district;

(2) ten percent to the taconite municipal aid account to be distributed as provided in
section 298.282, subdivisions 1 and 2, on the dates provided under this section;

(3) ten percent to the school district within which the minerals or energy resources are
mined or extracted, 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);

(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) deleted text begin 20 deleted text end new text begin ten new text end percent to the county within which the minerals or energy resources are mined
or extracted, 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 Schools;

(6) deleted text begin 20 deleted text end new text begin five new text end percent to St. Louis County acting as the counties' fiscal agent to be distributed
as provided in sections 273.134 to 273.136;

(7) deleted text begin five deleted text end new text begin 20 new text end percent to the commissioner of Iron Range resources and rehabilitation for
the purposes of section 298.22;

(8) three percent to the Douglas J. Johnson economic protection trust fund; deleted text begin and
deleted text end

(9) seven percent to the taconite environmental protection fund new text begin ; and
new text end

new text begin (10) ten percent to the commissioner of Iron Range resources and rehabilitation for
capital improvements to Giants Ridge Recreation Area new text end .

new text begin (b) If the materials or energy resources are mined, extracted, or concentrated in School
District No. 2711, Mesabi East, then the amount under paragraph (a), clause (1), must instead
be distributed pursuant to this paragraph. The cities of Aurora, Babbitt, Ely, and Hoyt Lakes
must each receive 20 percent of the amount. The city of Biwabik and Embarrass Township
must each receive ten percent of the amount.
new text end

new text begin (c) For the first five years that distributions are made under this subdivision, ten percent
of the total proceeds distributed in each year must first be distributed pursuant to this
paragraph. The remaining 90 percent of the total proceeds distributed in each of those years
must be distributed as outlined in paragraph (a). Of the amount available under this paragraph,
the cities of Aurora, Babbitt, Ely, and Hoyt Lakes must each receive 20 percent. Of the
amount available under this paragraph, the city of Biwabik and Embarrass Township must
each receive ten percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions beginning after December
31, 2022.
new text end

Sec. 7.

Minnesota Statutes 2022, section 298.018, subdivision 1a, is amended to read:

Subd. 1a.

Distribution date.

The proceeds of the tax allocated under subdivision 1 shall
be distributed on December 15 each year. Any payment of proceeds received after December
15 shall be distributed on the next deleted text begin net deleted text end new text begin gross new text end proceeds tax distribution date.

new text begin EFFECTIVE DATE. new text end

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

Sec. 8.

Minnesota Statutes 2022, section 298.17, is amended to read:

298.17 OCCUPATION TAXES TO BE APPORTIONED.

(a) All occupation taxes paid by persons, copartnerships, companies, joint stock
companies, corporations, and associations, however or for whatever purpose organized,
engaged in the business of mining or producing iron ore or other ores, when collected shall
be apportioned and distributed in accordance with the Constitution of the state of Minnesota,
article X, section 3, in the manner following: 90 percent shall be deposited in the state
treasury and credited to the general fund of which four-ninths shall be used for the support
of elementary and secondary schools; and ten percent of the proceeds of the tax imposed
by this section shall be deposited in the state treasury and credited to the general fund for
the general support of the university.

(b) deleted text begin Of the money apportioned to the general fund by this section deleted text end new text begin From the general fund,
the following distributions shall be made new text end :

(1) there is annually appropriated and credited to the mining environmental and regulatory
account in the special revenue fund an amount equal to that which would have been generated
by a 2-1/2 cent tax imposed by section 298.24 on each taxable ton produced in the preceding
calendar year. Money in the mining environmental and regulatory account is appropriated
annually to the commissioner of natural resources to fund agency staff to work on
environmental issues and provide regulatory services for ferrous and nonferrous mining
operations in this state. Payment to the mining environmental and regulatory account shall
be made by July 1 annually. The commissioner of natural resources shall execute an
interagency agreement with the Pollution Control Agency to assist with the provision of
environmental regulatory services such as monitoring and permitting required for ferrous
and nonferrous mining operations;

(2) there is annually appropriated and credited to the Iron Range resources and
rehabilitation account in the special revenue fund an amount equal to that which would have
been generated by a deleted text begin 1.5 deleted text end new text begin three new text end cent tax imposed by section 298.24 on each taxable ton
produced in the preceding calendar year, to be expended for the purposes of section 298.22 new text begin .
The money appropriated shall be used (i) to provide environmental development grants to
local governments located within any county in region 3 as defined in Executive Order No.
60, issued on June 12, 1970, which does not contain a municipality qualifying pursuant to
section 273.134, paragraph (b); or (ii) to provide economic development loans or grants to
businesses located within any such county, provided that the county board or an advisory
group appointed by the county board to provide recommendations on economic development
shall make recommendations to the commissioner of Iron Range resources and rehabilitation
regarding the loans. Of the money allocated to Koochiching County, one-third must be paid
to the Koochiching County Economic Development Commission. Payment to the Iron
Range resources and rehabilitation account shall be made by May 15 annually new text end ; deleted text begin and
deleted text end

(3) there is annually appropriated and credited to the Iron Range resources and
rehabilitation account in the special revenue fund for transfer to the Iron Range school
consolidation and cooperatively operated school account under section 298.28, subdivision
7a, an amount equal to that which would have been generated by deleted text begin a six deleted text end new text begin an 18 new text end cent tax imposed
by section 298.24 on each taxable ton produced in the preceding calendar year. Payment to
the Iron Range resources and rehabilitation account shall be made by May 15 annually deleted text begin . deleted text end new text begin ;
and
new text end

new text begin (4) there is annually appropriated and credited to the Iron Range resources and
rehabilitation account under section 298.28, subdivision 7, an amount equal to that which
would have been generated by an 18 cent tax imposed by section 298.24 on each taxable
ton produced in the preceding calendar year. Payment to the Iron Range resources and
rehabilitation account shall be made by May 15 annually.
new text end

deleted text begin (c) The money appropriated pursuant to paragraph (b), clause (2), shall be used (i) to
provide environmental development grants to local governments located within any county
in region 3 as defined in governor's executive order number 60, issued on June 12, 1970,
which does not contain a municipality qualifying pursuant to section 273.134, paragraph
(b), or (ii) to provide economic development loans or grants to businesses located within
any such county, provided that the county board or an advisory group appointed by the
county board to provide recommendations on economic development shall make
recommendations to the commissioner of Iron Range resources and rehabilitation regarding
the loans. Payment to the Iron Range resources and rehabilitation account shall be made by
May 15 annually.
deleted text end

deleted text begin (d) Of the money allocated to Koochiching County, one-third must be paid to the
Koochiching County Economic Development Commission.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with the 2023 production year.
new text end

Sec. 9.

Minnesota Statutes 2022, section 298.28, subdivision 5, is amended to read:

Subd. 5.

Counties.

(a) 21.05 cents per taxable ton deleted text begin for distributions in 2015 through 2023,
and 26.05 cents per taxable ton for distributions beginning in 2024, deleted text end is allocated to counties
to be distributed, based upon certification by the commissioner of revenue, under paragraphs
(b) to (d).

(b) 10.525 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) 1.0 cent per taxable ton of the tax distributed to the counties under paragraph (b)
shall be paid to a county that received a distribution under this section in 2000 because there
was located in the county an electric power plant owned by and providing the primary source
of power for a taxpayer mining and concentrating taconite in a different county.

(d) 10.525 cents per taxable ton deleted text begin for distributions in 2015 through 2023, and 15.525 cents
per taxable ton for distributions beginning in 2024, deleted text end 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 the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2022, section 298.28, subdivision 7a, is amended to read:

Subd. 7a.

Iron Range school consolidation and cooperatively operated school
account.

(a) The following amounts must be allocated to the commissioner of Iron Range
resources and rehabilitation to be deposited in the Iron Range school consolidation and
cooperatively operated school account that is hereby created:

(1) deleted text begin (i) deleted text end for distributions new text begin beginning new text end in 2015 deleted text begin through 2023 deleted text end , ten cents per taxable ton of the
tax imposed under section 298.24; deleted text begin and
deleted text end

deleted text begin (ii) for distributions beginning in 2024, five cents per taxable ton of the tax imposed
under section 298.24;
deleted text end

(2) the amount as determined under section 298.17, paragraph (b), clause (3); and

(3) any other amount as provided by law.

(b) Expenditures from this account may be approved as ongoing annual expenditures
and shall be made only to provide disbursements to assist school districts with the payment
of bonds that were issued for qualified school projects, or for any other school disbursement
as approved by the commissioner of Iron Range resources and rehabilitation after consultation
with the Iron Range Resources and Rehabilitation Board. For purposes of this section,
"qualified school projects" means school projects within the taconite assistance area as
defined in section 273.1341, that were (1) approved, by referendum, after April 3, 2006;
and (2) approved by the commissioner of education pursuant to section 123B.71.

(c) Beginning in fiscal year 2019, the disbursement to school districts for payments for
bonds issued under section 123A.482, subdivision 9, must be increased each year to offset
any reduction in debt service equalization aid that the school district qualifies for in that
year, under section 123B.53, subdivision 6, compared with the amount the school district
qualified for in fiscal year 2018.

(d) No expenditure under this section shall be made unless approved by the commissioner
of Iron Range resources and rehabilitation after consultation with the Iron Range Resources
and Rehabilitation Board.

new text begin EFFECTIVE DATE. new text end

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

Sec. 11.

Minnesota Statutes 2022, section 298.296, subdivision 4, is amended to read:

Subd. 4.

Temporary loan authority.

(a) After consultation with the advisory board,
the commissioner may use up to $7,500,000 from the corpus of the trust for loans, loan
guarantees, grants, or equity investments as provided in this subdivision. The money would
be available for loans for construction and equipping of facilities constituting (1) a value
added iron products plant, which may be either a new plant or a facility incorporated into
an existing plant that produces iron upgraded to a minimum of 75 percent iron content or
any iron alloy with a total minimum metallic content of 90 percent; or (2) a new mine or
minerals processing plant for any mineral subject to the deleted text begin net deleted text end new text begin gross new text end proceeds tax imposed
under section 298.015. A loan or loan guarantee under this paragraph may not exceed
$5,000,000 for any facility.

(b) Additionally, the commissioner, after consultation with the advisory board, may use
up to $5,500,000 from the corpus of the trust for additional grants, loans, loan guarantees,
or equity investments for the purposes set forth in paragraph (a).

(c) The commissioner, after consultation with the advisory board, may require that the
fund receive an equity percentage in any project to which it contributes under this section.

new text begin EFFECTIVE DATE. new text end

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

Sec. 12. new text begin TRANSFER 2023 DISTRIBUTION ONLY.
new text end

new text begin The fund established under Minnesota Statutes, section 298.28, subdivision 7, shall
receive the excess balance remaining in the fund established under Minnesota Statutes,
section 298.28, subdivision 6, after the distribution of amounts required under Minnesota
Statutes, section 298.28, subdivision 6, for the 2023 distribution. The transfer amount under
this section must not exceed $6,000,000 and must be made within ten days of the August
2023 payment.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies only to the 2023 distribution.
new text end