SF 3273

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

  1.1                          A bill for an act 
  1.2             relating to taxation; providing for property tax 
  1.3             reform; advancing the effective dates of the sales tax 
  1.4             exemption for inputs to certain taxable services; 
  1.5             changing the payment and refund provisions for the 
  1.6             capital equipment exemption; providing an income tax 
  1.7             subtraction for personal and dependent exemptions; 
  1.8             advancing the effective date of the individual income 
  1.9             tax credit for long-term care insurance; changing 
  1.10            motor vehicle registration tax rates; providing for 
  1.11            fund transfers; appropriating money; amending 
  1.12            Minnesota Statutes 1996, sections 161.081, by adding a 
  1.13            subdivision; 168.013, subdivision 1a; 273.112, 
  1.14            subdivision 7a; 273.1398, subdivision 2; 297A.2572; 
  1.15            297A.2573; 477A.0122, subdivision 6; and 477A.03, 
  1.16            subdivision 2; Minnesota Statutes 1997 Supplement, 
  1.17            sections 270.60, subdivision 4; 273.112, subdivision 
  1.18            3; 273.127, subdivision 3; 273.13, subdivisions 22, 
  1.19            23, 24, 25, as amended, 31, and 32; 273.1382, 
  1.20            subdivision 1; and 289A.56, subdivision 4; 290.01, 
  1.21            subdivision 19b; Laws 1997, chapter 231, articles 5, 
  1.22            section 20; and 7, section 47; proposing coding for 
  1.23            new law in Minnesota Statutes, chapter 275; repealing 
  1.24            Minnesota Statutes 1996, sections 273.11, subdivisions 
  1.25            6a and 15; 273.124, subdivision 17; 273.1315; and 
  1.26            297A.15, subdivision 5. 
  1.27  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.28                             ARTICLE 1 
  1.29                        PROPERTY TAX REFORM 
  1.30     Section 1.  Minnesota Statutes 1997 Supplement, section 
  1.31  273.112, subdivision 3, is amended to read: 
  1.32     Subd. 3.  Real estate shall be entitled to valuation and 
  1.33  tax deferment under this section only if it is: 
  1.34     (a) actively and exclusively devoted to golf, skiing, lawn 
  1.35  bowling, croquet, or archery or firearms range recreational use 
  1.36  or other recreational or social uses carried on at the 
  2.1   establishment; 
  2.2      (b) five acres in size or more, except in the case of a 
  2.3   lawn bowling or croquet green or an archery or firearms range or 
  2.4   an establishment actively and exclusively devoted to indoor 
  2.5   fitness, health, social, recreational, and related uses in which 
  2.6   the establishment is owned and operated by a not-for-profit 
  2.7   corporation; 
  2.8      (c)(1) operated by private individuals or, in the case of a 
  2.9   lawn bowling or croquet green, by private individuals or 
  2.10  corporations, and open to the public; or 
  2.11     (2) operated by firms or corporations for the benefit of 
  2.12  employees or guests; or 
  2.13     (3) operated by private clubs having a membership of 50 or 
  2.14  more or open to the public, provided that the club does not 
  2.15  discriminate in membership requirements or selection on the 
  2.16  basis of sex or marital status; and 
  2.17     (d) made available for use without discrimination on the 
  2.18  basis of sex during the time when the facility is open to use by 
  2.19  the public or by members, except that use for golf may be 
  2.20  restricted on the basis of sex no more frequently than one, or 
  2.21  part of one, weekend each calendar month for each sex and no 
  2.22  more than two, or part of two, weekdays each week for each sex.  
  2.23     If a golf club membership allows use of golf course 
  2.24  facilities by more than one adult per membership, the use must 
  2.25  be equally available to all adults entitled to use of the golf 
  2.26  course under the membership, except that use may be restricted 
  2.27  on the basis of sex as permitted in this section.  Memberships 
  2.28  that permit play during restricted times may be allowed only if 
  2.29  the restricted times apply to all adults using the membership.  
  2.30  A golf club may not offer a membership or golfing privileges to 
  2.31  a spouse of a member that provides greater or less access to the 
  2.32  golf course than is provided to that person's spouse under the 
  2.33  same or a separate membership in that club, except that the 
  2.34  terms of a membership may provide that one spouse may have no 
  2.35  right to use the golf course at any time while the other spouse 
  2.36  may have either limited or unlimited access to the golf course.  
  3.1      A golf club may have or create an individual membership 
  3.2   category which entitles a member for a reduced rate to play 
  3.3   during restricted hours as established by the club.  The club 
  3.4   must have on record a written request by the member for such 
  3.5   membership.  
  3.6      A golf club that has food or beverage facilities or 
  3.7   services must allow equal access to those facilities and 
  3.8   services for both men and women members in all membership 
  3.9   categories at all times.  Nothing in this paragraph shall be 
  3.10  construed to require service or access to facilities to persons 
  3.11  under the age of 21 years or require any act that would violate 
  3.12  law or ordinance regarding sale, consumption, or regulation of 
  3.13  alcoholic beverages. 
  3.14     For purposes of this subdivision and subdivision 7a, 
  3.15  discrimination means a pattern or course of conduct and not 
  3.16  linked to an isolated incident. 
  3.17     Sec. 2.  Minnesota Statutes 1996, section 273.112, 
  3.18  subdivision 7a, is amended to read: 
  3.19     Subd. 7a.  Notwithstanding subdivision 7, when real 
  3.20  property ceases to qualify under subdivision 3 because of 
  3.21  failure to comply with prohibitions against discrimination on 
  3.22  the basis of sex, or because of the changes made by this 
  3.23  article, payment of additional taxes imposed under subdivision 7 
  3.24  is not required. 
  3.25     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
  3.26  273.127, subdivision 3, is amended to read: 
  3.27     Subd. 3.  [CLASS 4C PROPERTIES.] For the market value of 
  3.28  properties that meet the criteria of subdivision 2, paragraph 
  3.29  (a), and which no longer qualify as a result of the eligibility 
  3.30  criteria specified in section 273.126, a class rate of 2.4 
  3.31  percent applies for taxes payable in 1999 and a class rate of 
  3.32  2.6 2.5 percent applies for taxes payable in 2000. 
  3.33     Sec. 4.  Minnesota Statutes 1997 Supplement, section 
  3.34  273.13, subdivision 22, is amended to read: 
  3.35     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
  3.36  23, real estate which is residential and used for homestead 
  4.1   purposes is class 1.  The market value of class 1a property must 
  4.2   be determined based upon the value of the house, garage, and 
  4.3   land.  
  4.4      For taxes payable in 1998 and thereafter, The first $75,000 
  4.5   of market value of class 1a property has a net class rate of one 
  4.6   percent of its market value; and the market value of class 1a 
  4.7   property that exceeds $75,000 has a class rate of 1.85 1.7 
  4.8   percent of its market value for taxes payable in 1999 and 
  4.9   thereafter.  
  4.10     (b) Class 1b property includes homestead real estate or 
  4.11  homestead manufactured homes used for the purposes of a 
  4.12  homestead by 
  4.13     (1) any blind person, or the blind person and the blind 
  4.14  person's spouse; or 
  4.15     (2) any person, hereinafter referred to as "veteran," who: 
  4.16     (i) served in the active military or naval service of the 
  4.17  United States; and 
  4.18     (ii) is entitled to compensation under the laws and 
  4.19  regulations of the United States for permanent and total 
  4.20  service-connected disability due to the loss, or loss of use, by 
  4.21  reason of amputation, ankylosis, progressive muscular 
  4.22  dystrophies, or paralysis, of both lower extremities, such as to 
  4.23  preclude motion without the aid of braces, crutches, canes, or a 
  4.24  wheelchair; and 
  4.25     (iii) has acquired a special housing unit with special 
  4.26  fixtures or movable facilities made necessary by the nature of 
  4.27  the veteran's disability, or the surviving spouse of the 
  4.28  deceased veteran for as long as the surviving spouse retains the 
  4.29  special housing unit as a homestead; or 
  4.30     (3) any person who: 
  4.31     (i) is permanently and totally disabled and 
  4.32     (ii) receives 90 percent or more of total income from 
  4.33     (A) aid from any state as a result of that disability; or 
  4.34     (B) supplemental security income for the disabled; or 
  4.35     (C) workers' compensation based on a finding of total and 
  4.36  permanent disability; or 
  5.1      (D) social security disability, including the amount of a 
  5.2   disability insurance benefit which is converted to an old age 
  5.3   insurance benefit and any subsequent cost of living increases; 
  5.4   or 
  5.5      (E) aid under the federal Railroad Retirement Act of 1937, 
  5.6   United States Code Annotated, title 45, section 228b(a)5; or 
  5.7      (F) a pension from any local government retirement fund 
  5.8   located in the state of Minnesota as a result of that 
  5.9   disability; or 
  5.10     (G) pension, annuity, or other income paid as a result of 
  5.11  that disability from a private pension or disability plan, 
  5.12  including employer, employee, union, and insurance plans and 
  5.13     (iii) has household income as defined in section 290A.03, 
  5.14  subdivision 5, of $50,000 or less; or 
  5.15     (4) any person who is permanently and totally disabled and 
  5.16  whose household income as defined in section 290A.03, 
  5.17  subdivision 5, is 275 percent or less of the federal poverty 
  5.18  level. 
  5.19     Property is classified and assessed under clause (4) only 
  5.20  if the government agency or income-providing source certifies, 
  5.21  upon the request of the homestead occupant, that the homestead 
  5.22  occupant satisfies the disability requirements of this paragraph.
  5.23     Property is classified and assessed pursuant to clause (1) 
  5.24  only if the commissioner of economic security certifies to the 
  5.25  assessor that the homestead occupant satisfies the requirements 
  5.26  of this paragraph.  
  5.27     Permanently and totally disabled for the purpose of this 
  5.28  subdivision means a condition which is permanent in nature and 
  5.29  totally incapacitates the person from working at an occupation 
  5.30  which brings the person an income.  The first $32,000 market 
  5.31  value of class 1b property has a net class rate of .45 percent 
  5.32  of its market value.  The remaining market value of class 1b 
  5.33  property has a net class rate using the rates for class 1 or 
  5.34  class 2a property, whichever is appropriate, of similar market 
  5.35  value.  
  5.36     (c) Class 1c property is commercial use real property that 
  6.1   abuts a lakeshore line and is devoted to temporary and seasonal 
  6.2   residential occupancy for recreational purposes but not devoted 
  6.3   to commercial purposes for more than 250 days in the year 
  6.4   preceding the year of assessment, and that includes a portion 
  6.5   used as a homestead by the owner, which includes a dwelling 
  6.6   occupied as a homestead by a shareholder of a corporation that 
  6.7   owns the resort or a partner in a partnership that owns the 
  6.8   resort, even if the title to the homestead is held by the 
  6.9   corporation or partnership.  For purposes of this clause, 
  6.10  property is devoted to a commercial purpose on a specific day if 
  6.11  any portion of the property, excluding the portion used 
  6.12  exclusively as a homestead, is used for residential occupancy 
  6.13  and a fee is charged for residential occupancy.  In order for a 
  6.14  property to be classified as class 1c 1b, at least 40 percent of 
  6.15  the annual gross lodging receipts related to the property must 
  6.16  be from business conducted between Memorial Day weekend and 
  6.17  Labor Day weekend, and at least 60 percent of all bookings by 
  6.18  lodging guests during the year must be for periods of at least 
  6.19  two consecutive nights.  Class 1c 1b property has a class rate 
  6.20  of one percent of total market value with the following 
  6.21  limitation:  the area of the property must not exceed 100 feet 
  6.22  of lakeshore footage for each cabin or campsite located on the 
  6.23  property up to a total of 800 feet and 500 feet in depth, 
  6.24  measured away from the lakeshore.  
  6.25     (d) (c) Class 1d 1c property includes structures that meet 
  6.26  all of the following criteria: 
  6.27     (1) the structure is located on property that is classified 
  6.28  as agricultural property under section 273.13, subdivision 23; 
  6.29     (2) the structure is occupied exclusively by seasonal farm 
  6.30  workers during the time when they work on that farm, and the 
  6.31  occupants are not charged rent for the privilege of occupying 
  6.32  the property, provided that use of the structure for storage of 
  6.33  farm equipment and produce does not disqualify the property from 
  6.34  classification under this paragraph; 
  6.35     (3) the structure meets all applicable health and safety 
  6.36  requirements for the appropriate season; and 
  7.1      (4) the structure is not saleable as residential property 
  7.2   because it does not comply with local ordinances relating to 
  7.3   location in relation to streets or roads. 
  7.4      The market value of class 1d 1c property has the same class 
  7.5   rates as class 1a property under paragraph (a). 
  7.6      Sec. 5.  Minnesota Statutes 1997 Supplement, section 
  7.7   273.13, subdivision 23, is amended to read: 
  7.8      Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
  7.9   land including any improvements that is homesteaded.  The market 
  7.10  value of the house and garage and immediately surrounding one 
  7.11  acre of land has the same class rates as class 1a property under 
  7.12  subdivision 22.  The value of the remaining land including 
  7.13  improvements up to $115,000 has a net class rate of 0.4 0.35 
  7.14  percent of market value for taxes payable in 1999 and 
  7.15  thereafter.  The remaining value of class 2a property over 
  7.16  $115,000 of market value that does not exceed 320 acres has a 
  7.17  net class rate of 0.9 0.8 percent of market value for taxes 
  7.18  payable in 1999 and thereafter.  The remaining property over the 
  7.19  $115,000 market value in excess of 320 acres has a class rate of 
  7.20  1.4 1.3 percent of market value for taxes payable in 1999 and 
  7.21  thereafter.  
  7.22     (b) Class 2b property is (1) real estate, rural in 
  7.23  character and used exclusively for growing trees for timber, 
  7.24  lumber, and wood and wood products; (2) real estate that is not 
  7.25  improved with a structure and is used exclusively for growing 
  7.26  trees for timber, lumber, and wood and wood products, if the 
  7.27  owner has participated or is participating in a cost-sharing 
  7.28  program for afforestation, reforestation, or timber stand 
  7.29  improvement on that particular property, administered or 
  7.30  coordinated by the commissioner of natural resources; (3) real 
  7.31  estate that is nonhomestead agricultural land; or (4) a landing 
  7.32  area or public access area of a privately owned public use 
  7.33  airport.  Class 2b property has a net class rate of 1.4 1.3 
  7.34  percent of market value for taxes payable in 1999 and thereafter.
  7.35     (c) Agricultural land as used in this section means 
  7.36  contiguous acreage of ten acres or more, used during the 
  8.1   preceding year for agricultural purposes.  "Agricultural 
  8.2   purposes" as used in this section means the raising or 
  8.3   cultivation of agricultural products or enrollment in the 
  8.4   Reinvest in Minnesota program under sections 103F.501 to 
  8.5   103F.535 or the federal Conservation Reserve Program as 
  8.6   contained in Public Law Number 99-198.  Contiguous acreage on 
  8.7   the same parcel, or contiguous acreage on an immediately 
  8.8   adjacent parcel under the same ownership, may also qualify as 
  8.9   agricultural land, but only if it is pasture, timber, waste, 
  8.10  unusable wild land, or land included in state or federal farm 
  8.11  programs.  Agricultural classification for property shall be 
  8.12  determined excluding the house, garage, and immediately 
  8.13  surrounding one acre of land, and shall not be based upon the 
  8.14  market value of any residential structures on the parcel or 
  8.15  contiguous parcels under the same ownership. 
  8.16     (d) Real estate, excluding the house, garage, and 
  8.17  immediately surrounding one acre of land, of less than ten acres 
  8.18  which is exclusively and intensively used for raising or 
  8.19  cultivating agricultural products, shall be considered as 
  8.20  agricultural land.  
  8.21     Land shall be classified as agricultural even if all or a 
  8.22  portion of the agricultural use of that property is the leasing 
  8.23  to, or use by another person for agricultural purposes. 
  8.24     Classification under this subdivision is not determinative 
  8.25  for qualifying under section 273.111. 
  8.26     The property classification under this section supersedes, 
  8.27  for property tax purposes only, any locally administered 
  8.28  agricultural policies or land use restrictions that define 
  8.29  minimum or maximum farm acreage. 
  8.30     (e) The term "agricultural products" as used in this 
  8.31  subdivision includes production for sale of:  
  8.32     (1) livestock, dairy animals, dairy products, poultry and 
  8.33  poultry products, fur-bearing animals, horticultural and nursery 
  8.34  stock described in sections 18.44 to 18.61, fruit of all kinds, 
  8.35  vegetables, forage, grains, bees, and apiary products by the 
  8.36  owner; 
  9.1      (2) fish bred for sale and consumption if the fish breeding 
  9.2   occurs on land zoned for agricultural use; 
  9.3      (3) the commercial boarding of horses if the boarding is 
  9.4   done in conjunction with raising or cultivating agricultural 
  9.5   products as defined in clause (1); 
  9.6      (4) property which is owned and operated by nonprofit 
  9.7   organizations used for equestrian activities, excluding racing; 
  9.8   and 
  9.9      (5) game birds and waterfowl bred and raised for use on a 
  9.10  shooting preserve licensed under section 97A.115.  
  9.11     (f) If a parcel used for agricultural purposes is also used 
  9.12  for commercial or industrial purposes, including but not limited 
  9.13  to:  
  9.14     (1) wholesale and retail sales; 
  9.15     (2) processing of raw agricultural products or other goods; 
  9.16     (3) warehousing or storage of processed goods; and 
  9.17     (4) office facilities for the support of the activities 
  9.18  enumerated in clauses (1), (2), and (3), 
  9.19  the assessor shall classify the part of the parcel used for 
  9.20  agricultural purposes as class 1b, 2a, or 2b, whichever is 
  9.21  appropriate, and the remainder in the class appropriate to its 
  9.22  use.  The grading, sorting, and packaging of raw agricultural 
  9.23  products for first sale is considered an agricultural purpose.  
  9.24  A greenhouse or other building where horticultural or nursery 
  9.25  products are grown that is also used for the conduct of retail 
  9.26  sales must be classified as agricultural if it is primarily used 
  9.27  for the growing of horticultural or nursery products from seed, 
  9.28  cuttings, or roots and occasionally as a showroom for the retail 
  9.29  sale of those products.  Use of a greenhouse or building only 
  9.30  for the display of already grown horticultural or nursery 
  9.31  products does not qualify as an agricultural purpose.  
  9.32     The assessor shall determine and list separately on the 
  9.33  records the market value of the homestead dwelling and the one 
  9.34  acre of land on which that dwelling is located.  If any farm 
  9.35  buildings or structures are located on this homesteaded acre of 
  9.36  land, their market value shall not be included in this separate 
 10.1   determination.  
 10.2      (g) To qualify for classification under paragraph (b), 
 10.3   clause (4), a privately owned public use airport must be 
 10.4   licensed as a public airport under section 360.018.  For 
 10.5   purposes of paragraph (b), clause (4), "landing area" means that 
 10.6   part of a privately owned public use airport properly cleared, 
 10.7   regularly maintained, and made available to the public for use 
 10.8   by aircraft and includes runways, taxiways, aprons, and sites 
 10.9   upon which are situated landing or navigational aids.  A landing 
 10.10  area also includes land underlying both the primary surface and 
 10.11  the approach surfaces that comply with all of the following:  
 10.12     (i) the land is properly cleared and regularly maintained 
 10.13  for the primary purposes of the landing, taking off, and taxiing 
 10.14  of aircraft; but that portion of the land that contains 
 10.15  facilities for servicing, repair, or maintenance of aircraft is 
 10.16  not included as a landing area; 
 10.17     (ii) the land is part of the airport property; and 
 10.18     (iii) the land is not used for commercial or residential 
 10.19  purposes. 
 10.20  The land contained in a landing area under paragraph (b), clause 
 10.21  (4), must be described and certified by the commissioner of 
 10.22  transportation.  The certification is effective until it is 
 10.23  modified, or until the airport or landing area no longer meets 
 10.24  the requirements of paragraph (b), clause (4).  For purposes of 
 10.25  paragraph (b), clause (4), "public access area" means property 
 10.26  used as an aircraft parking ramp, apron, or storage hangar, or 
 10.27  an arrival and departure building in connection with the airport.
 10.28     Sec. 6.  Minnesota Statutes 1997 Supplement, section 
 10.29  273.13, subdivision 24, is amended to read: 
 10.30     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 10.31  property and utility real and personal property, except class 5 
 10.32  property as identified in subdivision 31, clause (1), is class 
 10.33  3a.  Each parcel has a class rate of 2.7 2.5 percent for taxes 
 10.34  payable in 1999 and thereafter of the first tier of market 
 10.35  value, and 4.0 3.0 percent for taxes payable in 1999 and 
 10.36  thereafter of the remaining market value, except that in the 
 11.1   case of contiguous parcels of commercial and industrial property 
 11.2   owned by the same person or entity, only the value equal to the 
 11.3   first-tier value of the contiguous parcels qualifies for the 
 11.4   reduced class rate.  For the purposes of this subdivision, the 
 11.5   first tier means the first $150,000 of market value.  In the 
 11.6   case of utility property owned by one person or entity, only one 
 11.7   parcel in each county has a reduced class rate on the first tier 
 11.8   of market value. 
 11.9      For purposes of this paragraph, parcels are considered to 
 11.10  be contiguous even if they are separated from each other by a 
 11.11  road, street, vacant lot, waterway, or other similar intervening 
 11.12  type of property. 
 11.13     (b) Employment property defined in section 469.166, during 
 11.14  the period provided in section 469.170, shall constitute class 
 11.15  3b and has a class rate of 2.3 percent of the first $50,000 of 
 11.16  market value and 3.6 3.0 percent for taxes payable in 1999 and 
 11.17  thereafter of the remainder, except that for employment property 
 11.18  located in a border city enterprise zone designated pursuant to 
 11.19  section 469.168, subdivision 4, paragraph (c), the class rate of 
 11.20  the first tier of market value and the class rate of the 
 11.21  remainder is determined under paragraph (a), unless the 
 11.22  governing body of the city designated as an enterprise zone 
 11.23  determines that a specific parcel shall be assessed pursuant to 
 11.24  the first clause of this sentence.  The governing body may 
 11.25  provide for assessment under the first clause of the preceding 
 11.26  sentence only for property which is located in an area which has 
 11.27  been designated by the governing body for the receipt of tax 
 11.28  reductions authorized by section 469.171, subdivision 1. 
 11.29     (c) Structures which are (i) located on property classified 
 11.30  as class 3a, (ii) constructed under an initial building permit 
 11.31  issued after January 2, 1996, (iii) located in a transit zone as 
 11.32  defined under section 473.3915, subdivision 3, (iv) located 
 11.33  within the boundaries of a school district, and (v) not 
 11.34  primarily used for retail or transient lodging purposes, shall 
 11.35  have a class rate equal to 85 percent of the class rate of the 
 11.36  second tier of the commercial property rate under paragraph (a) 
 12.1   on any portion of the market value that does not qualify for the 
 12.2   first tier class rate under paragraph (a).  As used in item (v), 
 12.3   a structure is primarily used for retail or transient lodging 
 12.4   purposes if over 50 percent of its square footage is used for 
 12.5   those purposes.  The four percent rate A class rate equal to 85 
 12.6   percent of the class rate of the second tier of the commercial 
 12.7   property rate under paragraph (a) shall also apply to 
 12.8   improvements to existing structures that meet the requirements 
 12.9   of items (i) to (v) if the improvements are constructed under an 
 12.10  initial building permit issued after January 2, 1996, even if 
 12.11  the remainder of the structure was constructed prior to January 
 12.12  2, 1996.  For the purposes of this paragraph, a structure shall 
 12.13  be considered to be located in a transit zone if any portion of 
 12.14  the structure lies within the zone.  If any property once 
 12.15  eligible for treatment under this paragraph ceases to remain 
 12.16  eligible due to revisions in transit zone boundaries, the 
 12.17  property shall continue to receive treatment under this 
 12.18  paragraph for a period of three years. 
 12.19     Sec. 7.  Minnesota Statutes 1997 Supplement, section 
 12.20  273.13, subdivision 25, as amended by Laws 1997, Third Special 
 12.21  Session chapter 3, section 28, is amended to read: 
 12.22     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 12.23  estate containing four or more units and used or held for use by 
 12.24  the owner or by the tenants or lessees of the owner as a 
 12.25  residence for rental periods of 30 days or more.  Class 4a also 
 12.26  includes hospitals licensed under sections 144.50 to 144.56, 
 12.27  other than hospitals exempt under section 272.02, and contiguous 
 12.28  property used for hospital purposes, without regard to whether 
 12.29  the property has been platted or subdivided.  Class 4a property 
 12.30  in a city with a population of 5,000 or less, that is (1) 
 12.31  located outside of the metropolitan area, as defined in section 
 12.32  473.121, subdivision 2, or outside any county contiguous to the 
 12.33  metropolitan area, and (2) whose city boundary is at least 15 
 12.34  miles from the boundary of any city with a population greater 
 12.35  than 5,000 has a class rate of 2.3 2.15 percent of market value 
 12.36  for taxes payable in 1999 and thereafter.  All other class 4a 
 13.1   property has a class rate of 2.9 2.5 percent of market value for 
 13.2   taxes payable in 1999 and thereafter.  For purposes of this 
 13.3   paragraph, population has the same meaning given in section 
 13.4   477A.011, subdivision 3. 
 13.5      (b) Class 4b includes: 
 13.6      (1) residential real estate containing less than four units 
 13.7   that does not qualify as class 4bb, other than seasonal 
 13.8   residential, and recreational; 
 13.9      (2) manufactured homes not classified under any other 
 13.10  provision; 
 13.11     (3) a dwelling, garage, and surrounding one acre of 
 13.12  property on a nonhomestead farm classified under subdivision 23, 
 13.13  paragraph (b) containing two or three units; 
 13.14     (4) unimproved property that is classified residential as 
 13.15  determined under section 273.13, subdivision 33.  
 13.16     Class 4b property has a class rate of 2.1 1.8 percent of 
 13.17  market value.  
 13.18     (c) Class 4bb includes: 
 13.19     (1) nonhomestead residential real estate containing one 
 13.20  unit, other than seasonal residential, and recreational; and 
 13.21     (2) a single family dwelling, garage, and surrounding one 
 13.22  acre of property on a nonhomestead farm classified under 
 13.23  subdivision 23, paragraph (b). 
 13.24     Class 4bb has a class rate of 1.9 1.25 percent for taxes 
 13.25  payable in 1999 and thereafter on the first $75,000 of market 
 13.26  value and a class rate of 2.1 1.7 percent for taxes payable in 
 13.27  1999 and thereafter of its market value that exceeds $75,000. 
 13.28     Property that has been classified as seasonal recreational 
 13.29  residential property at any time during which it has been owned 
 13.30  by the current owner or spouse of the current owner does not 
 13.31  qualify for class 4bb. 
 13.32     (d) Class 4c property includes: 
 13.33     (1) except as provided in subdivision 22, 
 13.34  paragraph (c) (b), real property devoted to temporary and 
 13.35  seasonal residential occupancy for recreation purposes, 
 13.36  including real property devoted to temporary and seasonal 
 14.1   residential occupancy for recreation purposes and not devoted to 
 14.2   commercial purposes for more than 250 days in the year preceding 
 14.3   the year of assessment.  For purposes of this clause, property 
 14.4   is devoted to a commercial purpose on a specific day if any 
 14.5   portion of the property is used for residential occupancy, and a 
 14.6   fee is charged for residential occupancy.  In order for a 
 14.7   property to be classified as class 4c, seasonal recreational 
 14.8   residential for commercial purposes, at least 40 percent of the 
 14.9   annual gross lodging receipts related to the property must be 
 14.10  from business conducted between Memorial Day weekend and Labor 
 14.11  Day weekend and at least 60 percent of all bookings by lodging 
 14.12  guests during the year must be for periods of at least two 
 14.13  consecutive nights.  Class 4c also includes commercial use real 
 14.14  property used exclusively for recreational purposes in 
 14.15  conjunction with class 4c property devoted to temporary and 
 14.16  seasonal residential occupancy for recreational purposes, up to 
 14.17  a total of two acres, provided the property is not devoted to 
 14.18  commercial recreational use for more than 250 days in the year 
 14.19  preceding the year of assessment and is located within two miles 
 14.20  of the class 4c property with which it is used.  Class 4c 
 14.21  property classified in this clause also includes the remainder 
 14.22  of class 1c 1b resorts.  Owners of real property devoted to 
 14.23  temporary and seasonal residential occupancy for recreation 
 14.24  purposes and all or a portion of which was devoted to commercial 
 14.25  purposes for not more than 250 days in the year preceding the 
 14.26  year of assessment desiring classification as class 1c 1b or 4c, 
 14.27  must submit a declaration to the assessor designating the cabins 
 14.28  or units occupied for 250 days or less in the year preceding the 
 14.29  year of assessment by January 15 of the assessment year.  Those 
 14.30  cabins or units and a proportionate share of the land on which 
 14.31  they are located will be designated class 1c 1b or 4c as 
 14.32  otherwise provided.  The remainder of the cabins or units and a 
 14.33  proportionate share of the land on which they are located will 
 14.34  be designated as class 3a.  The owner of property desiring 
 14.35  designation as class 1c 1b or 4c property must provide guest 
 14.36  registers or other records demonstrating that the units for 
 15.1   which class 1c 1b or 4c designation is sought were not occupied 
 15.2   for more than 250 days in the year preceding the assessment if 
 15.3   so requested.  The portion of a property operated as a (1) 
 15.4   restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
 15.5   facility operated on a commercial basis not directly related to 
 15.6   temporary and seasonal residential occupancy for recreation 
 15.7   purposes shall not qualify for class 1c 1b or 4c; 
 15.8      (2) qualified property used as a golf course if: 
 15.9      (i) any portion of the property is located within a county 
 15.10  that has a population of less than 50,000, or within a county 
 15.11  containing a golf course owned by a municipality, the county, or 
 15.12  a special taxing district; 
 15.13     (ii) it is open to the public on a daily fee basis.  It may 
 15.14  charge membership fees or dues, but a membership fee may not be 
 15.15  required in order to use the property for golfing, and its green 
 15.16  fees for golfing must be comparable to green fees typically 
 15.17  charged by municipal courses; and 
 15.18     (iii) it meets the requirements of section 273.112, 
 15.19  subdivision 3, paragraph (d). 
 15.20     A structure used as a clubhouse, restaurant, or place of 
 15.21  refreshment in conjunction with the golf course is classified as 
 15.22  class 3a property. 
 15.23     (3) real property up to a maximum of one acre of land owned 
 15.24  by a nonprofit community service oriented organization; provided 
 15.25  that the property is not used for a revenue-producing activity 
 15.26  for more than six days in the calendar year preceding the year 
 15.27  of assessment and the property is not used for residential 
 15.28  purposes on either a temporary or permanent basis.  For purposes 
 15.29  of this clause, a "nonprofit community service oriented 
 15.30  organization" means any corporation, society, association, 
 15.31  foundation, or institution organized and operated exclusively 
 15.32  for charitable, religious, fraternal, civic, or educational 
 15.33  purposes, and which is exempt from federal income taxation 
 15.34  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 15.35  Revenue Code of 1986, as amended through December 31, 1990.  For 
 15.36  purposes of this clause, "revenue-producing activities" shall 
 16.1   include but not be limited to property or that portion of the 
 16.2   property that is used as an on-sale intoxicating liquor or 3.2 
 16.3   percent malt liquor establishment licensed under chapter 340A, a 
 16.4   restaurant open to the public, bowling alley, a retail store, 
 16.5   gambling conducted by organizations licensed under chapter 349, 
 16.6   an insurance business, or office or other space leased or rented 
 16.7   to a lessee who conducts a for-profit enterprise on the 
 16.8   premises.  Any portion of the property which is used for 
 16.9   revenue-producing activities for more than six days in the 
 16.10  calendar year preceding the year of assessment shall be assessed 
 16.11  as class 3a.  The use of the property for social events open 
 16.12  exclusively to members and their guests for periods of less than 
 16.13  24 hours, when an admission is not charged nor any revenues are 
 16.14  received by the organization shall not be considered a 
 16.15  revenue-producing activity; 
 16.16     (4) post-secondary student housing of not more than one 
 16.17  acre of land that is owned by a nonprofit corporation organized 
 16.18  under chapter 317A and is used exclusively by a student 
 16.19  cooperative, sorority, or fraternity for on-campus housing or 
 16.20  housing located within two miles of the border of a college 
 16.21  campus; and 
 16.22     (5) manufactured home parks as defined in section 327.14, 
 16.23  subdivision 3. 
 16.24     Class 4c property has a class rate of 2.1 percent on the 
 16.25  first $150,000 of market value and the market value of class 4c 
 16.26  property that exceeds $150,000 has a class rate of 2.3 percent 
 16.27  for taxes payable in 1999 and thereafter, except that (i) for 
 16.28  each parcel of seasonal residential recreational property not 
 16.29  used for commercial purposes the first $75,000 of market value 
 16.30  has a class rate of 1.4 1.3 percent for taxes payable in 1999 
 16.31  and thereafter, and the market value that exceeds $75,000 has a 
 16.32  class rate of 2.5 2.3 percent for taxes payable in 1999 and 
 16.33  thereafter, and (ii) manufactured home parks assessed under 
 16.34  clause (5) have a class rate of two percent.  
 16.35     (e) Class 4d property is qualifying low-income rental 
 16.36  housing certified to the assessor by the housing finance agency 
 17.1   under sections 273.126 and 462A.071.  Class 4d includes land in 
 17.2   proportion to the total market value of the building that is 
 17.3   qualifying low-income rental housing.  For all properties 
 17.4   qualifying as class 4d, the market value determined by the 
 17.5   assessor must be based on the normal approach to value using 
 17.6   normal unrestricted rents. 
 17.7      Class 4d property has a class rate of one percent of market 
 17.8   value.  
 17.9      (f) Class 4e property consists of the residential portion 
 17.10  of any structure located within a city that was converted from 
 17.11  nonresidential use to residential use, provided that: 
 17.12     (1) the structure had formerly been used as a warehouse; 
 17.13     (2) the structure was originally constructed prior to 1940; 
 17.14     (3) the conversion was done after December 31, 1995, but 
 17.15  before January 1, 2003; and 
 17.16     (4) the conversion involved an investment of at least 
 17.17  $25,000 per residential unit. 
 17.18     Class 4e property has a class rate of 2.3 percent, provided 
 17.19  that a structure is eligible for class 4e classification only in 
 17.20  the 12 assessment years immediately following the conversion. 
 17.21     Sec. 8.  Minnesota Statutes 1997 Supplement, section 
 17.22  273.13, subdivision 31, is amended to read: 
 17.23     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 17.24     (1) tools, implements, and machinery of an electric 
 17.25  generating, transmission, or distribution system or a pipeline 
 17.26  system transporting or distributing water, gas, crude oil, or 
 17.27  petroleum products or mains and pipes used in the distribution 
 17.28  of steam or hot or chilled water for heating or cooling 
 17.29  buildings, which are fixtures; 
 17.30     (2) unmined iron ore and low-grade iron-bearing formations 
 17.31  as defined in section 273.14; and 
 17.32     (3) all other property not otherwise classified. 
 17.33     Class 5 property has a class rate of 4.0 3.5 percent of 
 17.34  market value for taxes payable in 1998 1999 and thereafter. 
 17.35     Sec. 9.  Minnesota Statutes 1997 Supplement, section 
 17.36  273.13, subdivision 32, is amended to read: 
 18.1      Subd. 32.  [TARGET CLASS RATES.] (a) All classes of 
 18.2   property with a class rate of 4 four percent for taxes payable 
 18.3   in 1998 have a target class rate of 3.5 three percent.  Class 4a 
 18.4   shall have a target class rate of 2.5 two percent.  Class 4bb 
 18.5   has a target class rate of 1.25 one percent of the first $75,000 
 18.6   of market value and a target class rate of 1.85 1.5 percent of 
 18.7   the market value in excess of $75,000. 
 18.8      (b) By the fourth Tuesday in January of 1998 and at the 
 18.9   time of submission of the biennial budget under section 16A.11 
 18.10  in each biennium thereafter, the governor must recommend the 
 18.11  class rate schedule for all properties for taxes payable in 1999 
 18.12  for the schedule submitted in 1998 and for the following two 
 18.13  calendar years in each biennium thereafter.  The class rate 
 18.14  schedule must include reductions in the class rates of the 
 18.15  classes designated in paragraph (a) until such time as the 
 18.16  target class rates are reached unless the governor recommends no 
 18.17  change in the class rate schedule for all properties.  As part 
 18.18  of the recommendation, the governor shall recommend 
 18.19  appropriation of monies from the property tax reform account 
 18.20  under section 16A.1521 and include within the budget additional 
 18.21  funding for the education homestead credit, the property tax 
 18.22  refund under chapter 290A and education aids under chapters 124 
 18.23  and 124A to the extent those aids will be used to reduce 
 18.24  property tax levies.  The governor may propose alternative 
 18.25  programs to prevent the taxes of classes other than those 
 18.26  designated in paragraph (a) from increasing as a result of the 
 18.27  governor's recommended class rate schedule. 
 18.28     Sec. 10.  Minnesota Statutes 1997 Supplement, section 
 18.29  273.1382, subdivision 1, is amended to read: 
 18.30     Subdivision 1.  [EDUCATION HOMESTEAD CREDIT.] Each year, 
 18.31  beginning with property taxes payable in 1998, the respective 
 18.32  county auditors shall determine the initial tax rate for each 
 18.33  school district for the general education levy certified under 
 18.34  section 124A.23, subdivision 2 or 3.  That rate plus the school 
 18.35  district's education homestead credit tax rate adjustment under 
 18.36  section 275.08, subdivision 1e, shall be the general education 
 19.1   homestead credit local tax rate for the district.  The auditor 
 19.2   shall then determine a general education homestead credit for 
 19.3   each homestead within the county equal to 32 66 percent for 
 19.4   taxes payable in 1999 and thereafter of the general education 
 19.5   homestead credit local tax rate times the net tax capacity of 
 19.6   the homestead for the taxes payable year.  The amount of general 
 19.7   education homestead credit for a homestead may not 
 19.8   exceed $225 $350 for taxes payable in 1999 and thereafter.  In 
 19.9   the case of an agricultural homestead, only the net tax capacity 
 19.10  of the house, garage, and surrounding one acre of land shall be 
 19.11  used in determining the property's education homestead credit. 
 19.12     Sec. 11.  Minnesota Statutes 1996, section 273.1398, 
 19.13  subdivision 2, is amended to read: 
 19.14     Subd. 2.  [HOMESTEAD AND AGRICULTURAL CREDIT AID.] 
 19.15  Homestead and agricultural credit aid for each unique taxing 
 19.16  jurisdiction equals the product of (1) the homestead and 
 19.17  agricultural credit aid base, and (2) the growth adjustment 
 19.18  factor, plus the net tax capacity adjustment and the fiscal 
 19.19  disparity adjustment.  Beginning with homestead and agricultural 
 19.20  credit aid payable in 1999, each county that receives an amount 
 19.21  in calendar year 1999 under section 477A.0122 as a result of the 
 19.22  appropriation in section 477A.03, subdivision 2, paragraph (c), 
 19.23  clause (3), shall have its homestead and agricultural credit aid 
 19.24  permanently reduced by an equal amount. 
 19.25     Sec. 12.  [275.071] [MARKET VALUE TAX.] 
 19.26     That portion of any county's, city's, town's, or special 
 19.27  taxing district's levy which exceeds the jurisdiction's levy for 
 19.28  taxes payable in 1999 shall be levied against the referendum 
 19.29  market value of the jurisdiction, as defined in section 124A.02, 
 19.30  subdivision 3b.  When the jurisdiction reports its levy to the 
 19.31  county auditor under section 275.07, it must separately identify 
 19.32  the portion to be levied against net tax capacity and the 
 19.33  portion to be levied against market value. 
 19.34     Sec. 13.  Minnesota Statutes 1996, section 477A.0122, 
 19.35  subdivision 6, is amended to read: 
 19.36     Subd. 6.  [REPORT.] On or before March 15 of the year 
 20.1   following the year in which the distributions under this section 
 20.2   are received, each county shall file with the commissioner of 
 20.3   revenue and commissioner of human services a report on prior 
 20.4   year expenditures for out-of-home placement and family 
 20.5   preservation, including expenditures under this section.  For 
 20.6   the human services programs specified in this section, the 
 20.7   commissioner of revenue and commissioner of human services, in 
 20.8   consultation with representatives of county governments, shall 
 20.9   make a recommendation to the 1999 legislature as to which 
 20.10  current reporting requirements imposed on county governments, if 
 20.11  any, may be eliminated, replaced, or consolidated on the report 
 20.12  established by this section.  For aid payable in calendar year 
 20.13  2000 and thereafter, each county shall provide information on 
 20.14  the amount of state aid, local property tax revenue, and federal 
 20.15  aid expended by that county on the programs specified in this 
 20.16  section using the consolidated financial report recommended by 
 20.17  the commissioner of revenue and commissioner of human services 
 20.18  under this subdivision. 
 20.19     Sec. 14.  Minnesota Statutes 1996, section 477A.03, 
 20.20  subdivision 2, is amended to read: 
 20.21     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 20.22  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 20.23  annually appropriated from the general fund to the commissioner 
 20.24  of revenue.  For aids payable in 1996 and thereafter, the total 
 20.25  aids paid under sections section 477A.013, subdivision 9, and 
 20.26  477A.0122 are the amounts certified to be paid in the previous 
 20.27  year, adjusted for inflation as provided under subdivision 
 20.28  3.  Aid payments to counties under section 477A.0121 are limited 
 20.29  to $20,265,000 in 1996.  Aid payments to counties under section 
 20.30  477A.0121 are limited to $27,571,625 in 1997.  
 20.31     (b) For aid payable in 1998 and thereafter, the total aids 
 20.32  paid under section 477A.0121 are the amounts certified to be 
 20.33  paid in the previous year, adjusted for inflation as provided 
 20.34  under subdivision 3. 
 20.35     (c) For aid payable in 1999, the total aid payments under 
 20.36  section 477A.0122 are the sum of:  
 21.1      (1) the amounts certified to be paid in the previous year, 
 21.2   adjusted for inflation as provided in subdivision 3; plus 
 21.3      (2) $20,000,000; plus 
 21.4      (3) $10,000,000.  
 21.5      For aid payable in 2000 and thereafter, the total aid 
 21.6   payments under section 477A.0122 are the amounts certified to be 
 21.7   paid in the previous year, adjusted for inflation as provided in 
 21.8   subdivision 3. 
 21.9      Sec. 15.  [APPROPRIATIONS.] 
 21.10     (a) [SHIFT RECOGNITION APPROPRIATION.] In addition to any 
 21.11  amounts appropriated by other law, $3,900,000 is appropriated to 
 21.12  the commissioner of children, families, and learning in fiscal 
 21.13  year 1999 to fund early recognition of education aid. 
 21.14     (b) [EDUCATION LEVY REDUCTION APPROPRIATION.] In addition 
 21.15  to any amount appropriated by other law, $55,000,000 is 
 21.16  appropriated to the commissioner of children, families, and 
 21.17  learning in fiscal year 2000 and thereafter to fund a reduction 
 21.18  in the statewide general education property tax levy. 
 21.19     Sec. 16.  [INSTRUCTION TO REVISOR.] 
 21.20     In the next edition of the Minnesota Statutes, the revisor 
 21.21  of statutes shall correct references to class 1b, class 1c, and 
 21.22  class 4e properties so that the statutes properly reflect the 
 21.23  changes made to Minnesota Statutes, section 273.13, by this 
 21.24  article. 
 21.25     Sec. 17.  [REPEALER.] 
 21.26     Minnesota Statutes 1996, sections 273.11, subdivisions 6a 
 21.27  and 15; 273.124, subdivision 17; and 273.1315, are repealed. 
 21.28     Sec. 18.  [EFFECTIVE DATE.] 
 21.29     Sections 1 to 10 and 17 are effective for taxes payable in 
 21.30  1999 and thereafter.  Sections 11 and 14 are effective for aid 
 21.31  payable in 1999 and thereafter.  Section 12 is effective for 
 21.32  taxes payable in 2000 and thereafter.  Section 13 is effective 
 21.33  the day following final enactment. 
 21.34                             ARTICLE 2
 21.35                       SALES AND EXCISE TAXES
 21.36     Section 1.  Minnesota Statutes 1997 Supplement, section 
 22.1   270.60, subdivision 4, is amended to read: 
 22.2      Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
 22.3   shall pay to a qualified county in which an Indian gaming casino 
 22.4   is located ten percent of the state share of all taxes generated 
 22.5   from activities on reservations and collected under a tax 
 22.6   agreement under this section with the tribal government for the 
 22.7   reservation located in the county.  If the tribe has casinos 
 22.8   located in more than one county, the payment must be divided 
 22.9   equally among the counties in which the casinos are located. 
 22.10     (b) A county qualifies for payments under this subdivision 
 22.11  only if one of the following conditions is met: 
 22.12     (1) the county's per capita income is less than 80 percent 
 22.13  of the state per capita personal income, based on the most 
 22.14  recent estimates made by the United States Bureau of Economic 
 22.15  Analysis; or 
 22.16     (2) 30 percent or more of the total market value of real 
 22.17  property in the county is exempt from ad valorem taxation. 
 22.18     (c) The commissioner shall make the payments required under 
 22.19  this subdivision by February 28 of the year following the year 
 22.20  the taxes are collected. 
 22.21     (d) (c) An amount sufficient to make the payments 
 22.22  authorized by this subdivision, not to exceed $1,100,000 in any 
 22.23  fiscal year, is annually appropriated from the general fund to 
 22.24  the commissioner.  If the authorized payments exceed the amount 
 22.25  of the appropriation, the commissioner shall proportionately 
 22.26  reduce the rate so that the total amount equals the 
 22.27  appropriation. 
 22.28     Sec. 2.  Minnesota Statutes 1997 Supplement, section 
 22.29  289A.56, subdivision 4, is amended to read: 
 22.30     Subd. 4.  [CAPITAL EQUIPMENT REFUNDS; REFUNDS TO 
 22.31  PURCHASERS.] Notwithstanding subdivision 3, for refunds payable 
 22.32  under section 297A.15, subdivision 5, interest is computed from 
 22.33  the date the refund claim is filed with the commissioner.  for 
 22.34  refunds payable under section 289A.50, subdivision 2a, interest 
 22.35  is computed from the 20th day of the month following the month 
 22.36  of the invoice date for the purchase which is the subject of the 
 23.1   refund. 
 23.2      Sec. 3.  Minnesota Statutes 1996, section 297A.2572, is 
 23.3   amended to read: 
 23.4      297A.2572 [AGRICULTURE PROCESSING FACILITY MATERIALS; 
 23.5   EXEMPTION.] 
 23.6      Purchases of construction materials and supplies are exempt 
 23.7   from the sales and use taxes imposed under this chapter, 
 23.8   regardless of whether purchased by the owner or a contractor, 
 23.9   subcontractor, or builder, if the materials and supplies are 
 23.10  used or consumed in constructing an agriculture processing 
 23.11  facility as defined in section 469.1811 in which the total 
 23.12  capital investment in the processing facility is expected to 
 23.13  exceed $100,000,000.  The tax shall be imposed and collected as 
 23.14  if the rate under section 297A.02, subdivision 1, applied, and 
 23.15  then refunded in the manner provided in Minnesota Statutes 1996, 
 23.16  section 297A.15, subdivision 5. 
 23.17     Sec. 4.  Minnesota Statutes 1996, section 297A.2573, is 
 23.18  amended to read: 
 23.19     297A.2573 [MINERAL PRODUCTION FACILITIES; EXEMPTION.] 
 23.20     Materials, equipment, and supplies used or consumed in 
 23.21  constructing, or incorporated into the construction of exempted 
 23.22  facilities as defined in this section are exempt from the taxes 
 23.23  imposed under this chapter and from any sales and use tax 
 23.24  imposed by a local unit of government, notwithstanding any 
 23.25  ordinance or city charter provision. 
 23.26     As used in this section, "exempted facilities" means: 
 23.27     (1) a value added iron products plant, which may be either 
 23.28  a new plant or a facility incorporated into an existing plant 
 23.29  that produces iron upgraded to a minimum of 75 percent iron 
 23.30  content or any iron alloy with a total minimum metallic content 
 23.31  of 90 percent; 
 23.32     (2) a facility used for the manufacture of fluxed taconite 
 23.33  pellets as defined in section 298.24; 
 23.34     (3) a new capital project that has a total cost of over 
 23.35  $40,000,000 that is directly related to production, cost, or 
 23.36  quality at an existing taconite facility that does not qualify 
 24.1   under clause (1) or (2); and 
 24.2      (4) a new mine or minerals processing plant for any mineral 
 24.3   subject to the net proceeds tax imposed under section 298.015. 
 24.4      The tax shall be imposed and collected as if the rate under 
 24.5   section 297A.02, subdivision 1, applied, and then refunded in 
 24.6   the manner provided in Minnesota Statutes 1996, section 297A.15, 
 24.7   subdivision 5. 
 24.8      Sec. 5.  Laws 1997, chapter 231, article 7, section 47, is 
 24.9   amended to read: 
 24.10     Sec. 47.  [EFFECTIVE DATES.] 
 24.11     Section 1 is effective for refund claims filed after June 
 24.12  30 December 31, 1997. 
 24.13     Sections 2, 6, 7, 9, 13, 15, 16, 17, 18, 20, 21, 25, 31, 
 24.14  and 32 are effective for purchases, sales, storage, use, or 
 24.15  consumption occurring after June 30, 1997. 
 24.16     Section 3 is effective on July 1, 1997, or upon adoption of 
 24.17  the corresponding rules, whichever occurs earlier. 
 24.18     Section 4, paragraph (i), clause (iv), is effective for 
 24.19  purchases and sales occurring after September 30, 1987; the 
 24.20  remainder of section 4 is effective for purchases and sales 
 24.21  occurring after June 30, 1997. 
 24.22     Section 5, paragraph (h), is effective for purchases and 
 24.23  sales occurring after June 30, 1997, and paragraph (i) is 
 24.24  effective for purchases and sales occurring after December 31, 
 24.25  1992. 
 24.26     Sections 8 and 46 are effective July 1, 1998. 
 24.27     Sections 10 and 22 are effective for purchases, sales, 
 24.28  storage, use, or consumption occurring after August 31, 1996. 
 24.29     Sections 11, 12, 33, 34, and 35 are effective July 1, 1997. 
 24.30     Sections Section 14 and 19 are is effective for purchases 
 24.31  and sales after June 30, 1999. 
 24.32     Section 19 is effective for purchases and sales after June 
 24.33  30, 1998. 
 24.34     Section 23 is effective January 1, 1997. 
 24.35     Section 24 is effective for purchases, sales, storage, use, 
 24.36  or consumption occurring after April 30, 1997. 
 25.1      Sections 26 and 45 are effective for purchases, sales, 
 25.2   storage, use, or consumption occurring after July 31, 1997, and 
 25.3   before August 1, 2003. 
 25.4      Section 27 is effective for purchases, sales, storage, use, 
 25.5   or consumption occurring after May 31, 1997. 
 25.6      Section 28 is effective for sales made after December 31, 
 25.7   1989, and before January 1, 1997.  The provisions of Minnesota 
 25.8   Statutes, section 289A.50, apply to refunds claimed under 
 25.9   section 28.  Refunds claimed under section 28 must be filed by 
 25.10  the later of December 31, 1997, or the time limit under 
 25.11  Minnesota Statutes, section 289A.40, subdivision 1. 
 25.12     Section 29 is effective for sales or first use after May 
 25.13  31, 1997, and before June 1, 1998. 
 25.14     Sections 30, 42, and 43 are effective the day following 
 25.15  final enactment. 
 25.16     Sections 36 to 39 are effective the day after compliance by 
 25.17  the governing body of Cook county with Minnesota Statutes, 
 25.18  section 645.021, subdivision 3. 
 25.19     Section 40 is effective for STAR funds collected after June 
 25.20  30, 1997. 
 25.21     Sec. 6.  [REPEALER.] 
 25.22     Minnesota Statutes 1996, section 297A.15, subdivision 5, is 
 25.23  repealed. 
 25.24     Sec. 7.  [EFFECTIVE DATE.] 
 25.25     Sections 2 to 4 and 6 are effective for sales and purchases 
 25.26  occurring after June 30, 1998.  Section 5 is effective the day 
 25.27  following final enactment. 
 25.28                             ARTICLE 3
 25.29                   MOTOR VEHICLE REGISTRATION TAX
 25.30     Section 1.  Minnesota Statutes 1996, section 161.081, is 
 25.31  amended by adding a subdivision to read: 
 25.32     Subd. 3.  [TRANSFER TO FUND.] The commissioner of finance 
 25.33  shall include a minimum transfer of $80,000,000 in each fiscal 
 25.34  year from the general fund to the highway user tax distribution 
 25.35  fund in the biennial budget for fiscal years 2000 and 2001 and 
 25.36  in each biennial budget thereafter, in order to compensate the 
 26.1   fund for the reduction in revenues by reason of section 2. 
 26.2      Sec. 2.  Minnesota Statutes 1996, section 168.013, 
 26.3   subdivision 1a, is amended to read: 
 26.4      Subd. 1a.  [PASSENGER AUTOMOBILES; HEARSES.] (a) On 
 26.5   passenger automobiles as defined in section 168.011, subdivision 
 26.6   7, and hearses, except as otherwise provided, the tax shall be 
 26.7   $10 plus an additional tax equal to 1.25 .95 percent of the base 
 26.8   value.  
 26.9      (b) Subject to the classification provisions herein, "base 
 26.10  value" means the manufacturer's suggested retail price of the 
 26.11  vehicle including destination charge using list price 
 26.12  information published by the manufacturer or determined by the 
 26.13  registrar if no suggested retail price exists, and shall not 
 26.14  include the cost of each accessory or item of optional equipment 
 26.15  separately added to the vehicle and the suggested retail price. 
 26.16     (c) If the manufacturer's list price information contains a 
 26.17  single vehicle identification number followed by various 
 26.18  descriptions and suggested retail prices, the registrar shall 
 26.19  select from those listings only the lowest price for determining 
 26.20  base value. 
 26.21     (d) If unable to determine the base value because the 
 26.22  vehicle is specially constructed, or for any other reason, the 
 26.23  registrar may establish such value upon the cost price to the 
 26.24  purchaser or owner as evidenced by a certificate of cost but not 
 26.25  including Minnesota sales or use tax or any local sales or other 
 26.26  local tax. 
 26.27     (e) The registrar shall classify every vehicle in its 
 26.28  proper base value class as follows: 
 26.29                        FROM                   TO
 26.30                        $  0                $199.99
 26.31                         200                 399.99
 26.32  and thereafter a series of classes successively set in brackets 
 26.33  having a spread of $200 consisting of such number of classes as 
 26.34  will permit classification of all vehicles. 
 26.35     (f) The base value for purposes of this section shall be 
 26.36  the middle point between the extremes of its class. 
 27.1      (g) The registrar shall establish the base value, when new, 
 27.2   of every passenger automobile and hearse registered prior to the 
 27.3   effective date of Extra Session Laws 1971, chapter 31, using 
 27.4   list price information published by the manufacturer or any 
 27.5   nationally recognized firm or association compiling such data 
 27.6   for the automotive industry.  If unable to ascertain the base 
 27.7   value of any registered vehicle in the foregoing manner, the 
 27.8   registrar may use any other available source or method.  The tax 
 27.9   on all previously registered vehicles shall be computed upon the 
 27.10  base value thus determined taking into account the depreciation 
 27.11  provisions of paragraph (h). 
 27.12     (h) Except as provided in paragraph (i), The annual 
 27.13  additional tax computed upon the base value as provided herein, 
 27.14  during the first and second years of vehicle life shall be 
 27.15  computed upon 100 percent of the base value; for the third and 
 27.16  fourth years, 90 percent of such value; for the fifth and sixth 
 27.17  years, 75 percent of such value; for the seventh year, 60 
 27.18  percent of such value; for the eighth year, 40 percent of such 
 27.19  value; for the ninth year, 30 percent of such value; for the 
 27.20  tenth year, ten percent of such value; for the 11th and each 
 27.21  succeeding year, the sum of $25.  
 27.22     In no event shall the annual additional tax be less than 
 27.23  $25.  
 27.24     (i) The annual additional tax under paragraph (h) on a 
 27.25  motor vehicle on which the first annual tax was paid before 
 27.26  January 1, 1990, must not exceed the tax that was paid on that 
 27.27  vehicle the year before. 
 27.28     Sec. 3.  [APPROPRIATION.] 
 27.29     $40,000,000 is appropriated from the general fund to the 
 27.30  commissioner of finance for transfer to the highway user tax 
 27.31  distribution fund. 
 27.32     Sec. 4.  [EFFECTIVE DATE.] 
 27.33     Section 2 is effective January 1, 1999. 
 27.34                             ARTICLE 4
 27.35                             INCOME TAX
 27.36     Section 1.  Minnesota Statutes 1997 Supplement, section 
 28.1   290.01, subdivision 19b, is amended to read: 
 28.2      Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 28.3   individuals, estates, and trusts, there shall be subtracted from 
 28.4   federal taxable income: 
 28.5      (1) interest income on obligations of any authority, 
 28.6   commission, or instrumentality of the United States to the 
 28.7   extent includable in taxable income for federal income tax 
 28.8   purposes but exempt from state income tax under the laws of the 
 28.9   United States; 
 28.10     (2) if included in federal taxable income, the amount of 
 28.11  any overpayment of income tax to Minnesota or to any other 
 28.12  state, for any previous taxable year, whether the amount is 
 28.13  received as a refund or as a credit to another taxable year's 
 28.14  income tax liability; 
 28.15     (3) the amount paid to others, less the credit allowed 
 28.16  under section 290.0674, not to exceed $1,625 for each dependent 
 28.17  in grades kindergarten to 6 and $2,500 for each dependent in 
 28.18  grades 7 to 12, for tuition, textbooks, and transportation of 
 28.19  each dependent in attending an elementary or secondary school 
 28.20  situated in Minnesota, North Dakota, South Dakota, Iowa, or 
 28.21  Wisconsin, wherein a resident of this state may legally fulfill 
 28.22  the state's compulsory attendance laws, which is not operated 
 28.23  for profit, and which adheres to the provisions of the Civil 
 28.24  Rights Act of 1964 and chapter 363.  For the purposes of this 
 28.25  clause, "tuition" includes fees or tuition as defined in section 
 28.26  290.0674, subdivision 1, clause (1).  As used in this clause, 
 28.27  "textbooks" includes books and other instructional materials and 
 28.28  equipment used in elementary and secondary schools in teaching 
 28.29  only those subjects legally and commonly taught in public 
 28.30  elementary and secondary schools in this state.  Equipment 
 28.31  expenses qualifying for deduction includes expenses as defined 
 28.32  and limited in section 290.0674, subdivision 1, clause (3).  
 28.33  "Textbooks" does not include instructional books and materials 
 28.34  used in the teaching of religious tenets, doctrines, or worship, 
 28.35  the purpose of which is to instill such tenets, doctrines, or 
 28.36  worship, nor does it include books or materials for, or 
 29.1   transportation to, extracurricular activities including sporting 
 29.2   events, musical or dramatic events, speech activities, driver's 
 29.3   education, or similar programs; 
 29.4      (4) to the extent included in federal taxable income, 
 29.5   distributions from a qualified governmental pension plan, an 
 29.6   individual retirement account, simplified employee pension, or 
 29.7   qualified plan covering a self-employed person that represent a 
 29.8   return of contributions that were included in Minnesota gross 
 29.9   income in the taxable year for which the contributions were made 
 29.10  but were deducted or were not included in the computation of 
 29.11  federal adjusted gross income.  The distribution shall be 
 29.12  allocated first to return of contributions until the 
 29.13  contributions included in Minnesota gross income have been 
 29.14  exhausted.  This subtraction applies only to contributions made 
 29.15  in a taxable year prior to 1985; 
 29.16     (5) income as provided under section 290.0802; 
 29.17     (6) the amount of unrecovered accelerated cost recovery 
 29.18  system deductions allowed under subdivision 19g; 
 29.19     (7) to the extent included in federal adjusted gross 
 29.20  income, income realized on disposition of property exempt from 
 29.21  tax under section 290.491; 
 29.22     (8) to the extent not deducted in determining federal 
 29.23  taxable income, the amount paid for health insurance of 
 29.24  self-employed individuals as determined under section 162(l) of 
 29.25  the Internal Revenue Code, except that the 25 percent limit does 
 29.26  not apply.  If the taxpayer deducted insurance payments under 
 29.27  section 213 of the Internal Revenue Code of 1986, the 
 29.28  subtraction under this clause must be reduced by the lesser of: 
 29.29     (i) the total itemized deductions allowed under section 
 29.30  63(d) of the Internal Revenue Code, less state, local, and 
 29.31  foreign income taxes deductible under section 164 of the 
 29.32  Internal Revenue Code and the standard deduction under section 
 29.33  63(c) of the Internal Revenue Code; or 
 29.34     (ii) the lesser of (A) the amount of insurance qualifying 
 29.35  as "medical care" under section 213(d) of the Internal Revenue 
 29.36  Code to the extent not deducted under section 162(1) of the 
 30.1   Internal Revenue Code or excluded from income or (B) the total 
 30.2   amount deductible for medical care under section 213(a); 
 30.3      (9) the exemption amount allowed under Laws 1995, chapter 
 30.4   255, article 3, section 2, subdivision 3; 
 30.5      (10) to the extent included in federal taxable income, 
 30.6   postservice benefits for youth community service under section 
 30.7   121.707 for volunteer service under United States Code, title 
 30.8   42, section 5011(d), as amended; and 
 30.9      (11) the amount of income or gain included in federal 
 30.10  taxable income under section 1366 of the Internal Revenue Code 
 30.11  flowing from a corporation that has a valid election in effect 
 30.12  for the taxable year under section 1362 of the Internal Revenue 
 30.13  Code which is not allowed to be an "S" corporation under section 
 30.14  290.9725.; and 
 30.15     (12) beginning with the 1998 taxable year, an amount equal 
 30.16  to $375 for each of the taxpayer's personal and dependent 
 30.17  exemptions, as defined in sections 151 and 152 of the Internal 
 30.18  Revenue Code, and allowed on the taxpayer's federal income tax 
 30.19  return for the tax year, provided that the amount of each 
 30.20  subtraction is reduced according to the phaseout formula in 
 30.21  section 151(d)(3).  Beginning with the 1999 taxable year, the 
 30.22  amount of the subtraction for each personal and dependent 
 30.23  exemption must be adjusted for inflation by the commissioner of 
 30.24  revenue in the manner provided in section 290.06, subdivision 2d.
 30.25     Sec. 2.  Laws 1997, chapter 231, article 5, section 20, is 
 30.26  amended to read: 
 30.27     Sec. 20.  [EFFECTIVE DATE.] 
 30.28     Sections 1, 5, 6, 11, 16, and 18 are effective the day 
 30.29  following final enactment.  
 30.30     Sections 2 to 4, and 9 are effective for taxable years 
 30.31  beginning after December 31, 1996. 
 30.32     Section 7 is effective for taxable years beginning after 
 30.33  December 31, 1998 1997. 
 30.34     Section 8 is effective for tax credit certificates issued 
 30.35  after December 31, 1996, and used in taxable years beginning 
 30.36  after December 31, 1996. 
 31.1      Section 10 is effective January 1, 1998. 
 31.2      Sections 12, 13, 15, and 19 are effective beginning for 
 31.3   property tax refunds based on rent paid after December 31, 1996. 
 31.4      Section 17 is effective April 16, 1997. 
 31.5      Sec. 3.  [EFFECTIVE DATE.] 
 31.6      Section 1 is effective for taxable years beginning after 
 31.7   December 31, 1997.  Section 2 is effective the day following 
 31.8   final enactment.