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Minnesota Legislature

Office of the Revisor of Statutes

SF 1

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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10.1 10.2

A bill for an act
relating to taxation; increasing state aids to education; increasing certain
homestead market value credits; increasing amounts of property tax refunds and
targeting refunds for homeowners; modifying and increasing aids paid to cities
and counties; amending Minnesota Statutes 2006, sections 126C.10, subdivision
2; 126C.17, subdivisions 1, 2, by adding a subdivision; 273.1384, subdivisions
1, 2; 290A.04, subdivisions 2, 2h, 4; 477A.011, subdivision 34; 477A.013,
subdivision 8; 477A.03, subdivisions 2a, 2b.

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

Section 1.

Minnesota Statutes 2006, section 126C.10, subdivision 2, is amended to read:


Subd. 2.

Basic revenue.

The basic revenue for each district equals the formula
allowance times the adjusted marginal cost pupil units for the school year. deleted text beginThe formula
allowance for fiscal year 2005 is $4,601. The formula allowance for fiscal year 2006 is
$4,783.
deleted text end The formula allowance for fiscal deleted text beginyeardeleted text endnew text begin yearsnew text end 2007 and new text begin2008 new text enddeleted text beginsubsequent yearsdeleted text end is
$4,974.new text begin The formula allowance for fiscal year 2009 and subsequent years is $4,974, plus
the referendum transfer allowance in section 126C.17, subdivision 14.
new text end

Sec. 2.

Minnesota Statutes 2006, section 126C.17, subdivision 1, is amended to read:


Subdivision 1.

Referendum allowance.

(a) For fiscal year 2003 and later, a district's
initial referendum revenue allowance equals the sum of the allowance under section
126C.16, subdivision 2, plus any additional allowance per resident marginal cost pupil
unit authorized under subdivision 9 before May 1, 2001, for fiscal year 2002 and later,
plus the referendum conversion allowance approved under subdivision 13, minus $415.
For districts with more than one referendum authority, the reduction must be computed
separately for each authority. The reduction must be applied first to the referendum
conversion allowance and next to the authority with the earliest expiration date. A
district's initial referendum revenue allowance may not be less than zero.

(b) For fiscal year 2003, a district's referendum revenue allowance equals the initial
referendum allowance plus any additional allowance per resident marginal cost pupil unit
authorized under subdivision 9 between April 30, 2001, and December 30, 2001, for
fiscal year 2003 and later.

(c) For fiscal year 2004 deleted text beginand laterdeleted text endnew text begin through 2008new text end, a district's referendum revenue
allowance equals the sum of:

(1) the product of (i) the ratio of the resident marginal cost pupil units the district
would have counted for fiscal year 2004 under Minnesota Statutes 2002, section 126C.05,
to the district's resident marginal cost pupil units for fiscal year 2004, times (ii) the initial
referendum allowance plus any additional allowance per resident marginal cost pupil unit
authorized under subdivision 9 between April 30, 2001, and May 30, 2003, for fiscal
year 2003 and later, plus

(2) any additional allowance per resident marginal cost pupil unit authorized under
subdivision 9 after May 30, 2003, for fiscal year 2005 and later.

new text begin (d) For fiscal year 2009 and later, a district's preliminary referendum revenue
allowance equals the sum of:
new text end

new text begin (1) the product of (i) the ratio of the resident marginal cost pupil units the district
would have counted for fiscal year 2004 under Minnesota Statutes 2002, section 126C.05,
to the district's resident marginal cost pupil units for fiscal year 2004, times (ii) the initial
referendum allowance plus any additional allowance per resident marginal cost pupil unit
authorized under subdivision 9 between April 30, 2001, and May 30, 2003, for fiscal
year 2003 and later, plus
new text end

new text begin (2) any additional allowance per resident marginal cost pupil unit authorized under
subdivision 9 after May 30, 2003, for fiscal year 2005 and later.
new text end

new text begin (e) For fiscal year 2009 and later, a district's referendum revenue allowance
equals the district's preliminary referendum allowance authorized under paragraph (d)
for fiscal year 2009 and later, plus any allowance per resident marginal cost pupil unit
authorized under subdivision 9 before May 1, 2007, for fiscal year 2008 and later, minus
the referendum transfer allowance under section 14. For districts with more than one
referendum authority, the reduction must be computed separately for each authority. The
reduction must be applied first to the referendum authority with the earliest expiration date
and then sequentially based on the next earliest expiration date. A district's referendum
revenue allowance may not be less than zero.
new text end

Sec. 3.

Minnesota Statutes 2006, section 126C.17, subdivision 2, is amended to read:


Subd. 2.

Referendum allowance limit.

(a) Notwithstanding subdivision 1, for
fiscal year 2007 and later, a district's referendum allowance must not exceed the greater of:

(1) the sum of: (i) a district's referendum allowance for fiscal year 1994 times 1.177
times the annual inflationary increase as calculated under paragraph (b) plus (ii) its
referendum conversion allowance for fiscal year 2003, minus (iii) $215new text begin, minus (iv) the
referendum transfer allowance for each fiscal year
new text end;

(2) the greater of (i): 26 percent of the formula allowance new text beginminus the referendum
transfer allowance for each fiscal year
new text endor (ii) $1,294 times the annual inflationary increase
as calculated under paragraph (b)new text begin minus the referendum transfer allowance for each
fiscal year
new text end; or

(3) for a newly reorganized district created after July 1, 2006, the referendum
revenue authority for each reorganizing district in the year preceding reorganization
divided by its resident marginal cost pupil units for the year preceding reorganizationnew text begin
minus the referendum transfer allowance for each fiscal year
new text end.

(b) For purposes of this subdivision, for fiscal year 2005 and later, "inflationary
increase" means one plus the percentage change in the Consumer Price Index for urban
consumers, as prepared by the United States Bureau of Labor Standards, for the current
fiscal year to fiscal year 2004. For fiscal years 2009 and later, for purposes of paragraph
(a), clause (1), the inflationary increase equals the inflationary increase for fiscal year
2008 plus one-fourth of the percentage increase in the formula allowance for that year
compared with the formula allowance for fiscal year 2008.

Sec. 4.

Minnesota Statutes 2006, section 126C.17, is amended by adding a subdivision
to read:


new text begin Subd. 14. new text end

new text begin Referendum transfer allowance. new text end

new text begin The referendum transfer allowance for
fiscal year 2009 and subsequent years is $.......
new text end

Sec. 5.

Minnesota Statutes 2006, section 273.1384, subdivision 1, is amended to read:


Subdivision 1.

Residential homestead market value credit.

Each county auditor
shall determine a homestead credit for each class 1a, 1b, and 2a homestead property
within the county equal to deleted text begin0.4deleted text endnew text begin ...new text end percent of the first deleted text begin$76,000deleted text endnew text begin $.......new text end of market value
of the property minus deleted text begin.09deleted text endnew text begin ...new text end percent of the market value in excess of deleted text begin$76,000deleted text endnew text begin $.......new text end.
The credit amount may not be less than zero. In the case of an agricultural or resort
homestead, only the market value of the house, garage, and immediately surrounding one
acre of land is eligible in determining the property's homestead credit. In the case of a
property that is classified as part homestead and part nonhomestead, (i) the credit shall
apply only to the homestead portion of the property, but (ii) if a portion of a property is
classified as nonhomestead solely because not all the owners occupy the property, not all
the owners have qualifying relatives occupying the property, or solely because not all the
spouses of owners occupy the property, the credit amount shall be initially computed as
if that nonhomestead portion were also in the homestead class and then prorated to the
owner-occupant's percentage of ownership. For the purpose of this section, when an
owner-occupant's spouse does not occupy the property, the percentage of ownership for
the owner-occupant spouse is one-half of the couple's ownership percentage.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2006, section 273.1384, subdivision 2, is amended to read:


Subd. 2.

Agricultural homestead market value credit.

Property classified as class
2a agricultural homestead is eligible for an agricultural credit. The credit is computed
using the property's agricultural credit market value, defined for this purpose as the
property's class 2a market value excluding the market value of the house, garage, and
immediately surrounding one acre of land. The credit is equal to deleted text begin0.3deleted text endnew text begin ...new text end percent of the first
deleted text begin $115,000deleted text endnew text begin $.......new text end of the property's agricultural credit market value minus deleted text begin.05deleted text end new text begin ...new text end percent
of the property's agricultural credit market value in excess of deleted text begin$115,000deleted text endnew text begin $.......new text end, subject to
a maximum reduction of deleted text begin$115deleted text endnew text begin $.......new text end. In the case of property that is classified in part as
class 2a agricultural homestead and in part as class 2b nonhomestead farm land solely
because not all the owners occupy or farm the property, not all the owners have qualifying
relatives occupying or farming the property, or solely because not all the spouses of
owners occupy the property, the credit must be initially computed as if that nonhomestead
agricultural land was also classified as class 2a agricultural homestead and then prorated
to the owner-occupant's percentage of ownership.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2006, section 290A.04, subdivision 2, is amended to read:


Subd. 2.

Homeowners.

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

Household Income
Percent of Income
Percent Paid by
Claimant
Maximum State
Refund
deleted text begin $0 to 1,189 deleted text end new text begin ........
new text end
1.0 percent
deleted text begin15deleted text endnew text begin ..new text end percent
$1,450
deleted text begin 1,190 to 2,379
deleted text end new text begin ....... to .......
new text end
1.1 percent
deleted text begin15deleted text endnew text begin ..new text end percent
$1,450
deleted text begin 2,380 to 3,589
deleted text end new text begin ....... to .......
new text end
1.2 percent
deleted text begin15deleted text endnew text begin ..new text end percent
$1,410
deleted text begin 3,590 to 4,789
deleted text end new text begin ....... to .......
new text end
1.3 percent
deleted text begin20deleted text endnew text begin ..new text end percent
$1,410
deleted text begin 4,790 to 5,979
deleted text end new text begin ....... to .......
new text end
1.4 percent
deleted text begin20deleted text endnew text begin ..new text end percent
$1,360
deleted text begin 5,980 to 8,369
deleted text end new text begin ....... to .......
new text end
1.5 percent
deleted text begin20deleted text endnew text begin ..new text end percent
$1,360
deleted text begin 8,370 to 9,559
deleted text end new text begin ....... to .......
new text end
1.6 percent
deleted text begin25deleted text endnew text begin ..new text end percent
$1,310
deleted text begin 9,560 to 10,759
deleted text end new text begin ....... to .......
new text end
1.7 percent
deleted text begin25deleted text endnew text begin ..new text end percent
$1,310
deleted text begin 10,760 to 11,949
deleted text end new text begin ....... to .......
new text end
1.8 percent
deleted text begin25deleted text endnew text begin ..new text end percent
$1,260
deleted text begin 11,950 to 13,139
deleted text end new text begin ....... to .......
new text end
1.9 percent
deleted text begin30deleted text endnew text begin ..new text end percent
$1,260
deleted text begin 13,140 to 14,349
deleted text end new text begin ....... to .......
new text end
2.0 percent
deleted text begin30deleted text endnew text begin ..new text end percent
$1,210
deleted text begin 14,350 to 16,739
deleted text end new text begin ....... to .......
new text end
2.1 percent
deleted text begin30deleted text endnew text begin ..new text end percent
$1,210
deleted text begin 16,740 to 17,929
deleted text end new text begin ....... to .......
new text end
2.2 percent
deleted text begin35deleted text endnew text begin ..new text end percent
$1,160
deleted text begin 17,930 to 19,119
deleted text end new text begin ....... to ........
new text end
2.3 percent
deleted text begin35 deleted text endnew text begin .. new text end percent
$1,160
deleted text begin 19,120 to 20,319
deleted text end new text begin ....... to .......
new text end
2.4 percent
deleted text begin35deleted text endnew text begin ..new text end percent
$1,110
deleted text begin 20,320 to 25,099
deleted text end new text begin ....... to .......
new text end
2.5 percent
deleted text begin40 deleted text endnew text begin .. new text end percent
$1,110
deleted text begin 25,100 to 28,679
deleted text end new text begin ....... to .......
new text end
2.6 percent
deleted text begin40deleted text endnew text begin ..new text end percent
$1,070
deleted text begin 28,680 to 35,849
deleted text end new text begin ....... to .......
new text end
2.7 percent
deleted text begin40deleted text endnew text begin ..new text end percent
$1,070
deleted text begin 35,850 to 41,819
deleted text end new text begin ....... to .......
new text end
2.8 percent
deleted text begin45deleted text endnew text begin ..new text end percent
$ . 970
deleted text begin 41,820 to 47,799
deleted text end new text begin ....... to .......
new text end
3.0 percent
deleted text begin45deleted text endnew text begin ..new text end percent
$ . 970
deleted text begin 47,800 to 53,779
deleted text end new text begin ....... to .......
new text end
3.2 percent
deleted text begin45deleted text endnew text begin ..new text end percent
$ . 870
deleted text begin 53,780 to 59,749
deleted text end new text begin ....... to .......
new text end
3.5 percent
deleted text begin50deleted text endnew text begin ..new text end percent
$ . 780
deleted text begin 59,750 to 65,729
deleted text end new text begin ....... to ........
new text end
4.0 percent
deleted text begin50deleted text endnew text begin ..new text end percent
$ . 680
deleted text begin 65,730 to 69,319
deleted text end new text begin ....... to .......
new text end
4.0 percent
deleted text begin50deleted text endnew text begin ..new text end percent
$ . 580
deleted text begin 69,320 to 71,719
deleted text end new text begin ....... to .......
new text end
4.0 percent
deleted text begin50deleted text endnew text begin ..new text end percent
$ . 480
deleted text begin 71,720 to 74,619
deleted text end new text begin ....... to .......
new text end
4.0 percent
deleted text begin50deleted text endnew text begin ..new text end percent
$ . 390
deleted text begin 74,620 to 77,519
deleted text end new text begin ....... to .......
new text end
4.0 percent
deleted text begin50 deleted text endnew text begin ..new text end percent
$ . 290

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on property taxes
payable in 2008 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2006, section 290A.04, subdivision 2h, is amended to read:


Subd. 2h.

Additional refund.

(a) If the gross property taxes payable on a
homestead increase more than deleted text begin12deleted text endnew text begin ..new text end percent over the property taxes payable in the prior
year on the same property that is owned and occupied by the same owner on January
2 of both years, and the amount of that increase is $100 or more, a claimant who is a
homeowner shall be allowed an additional refund equal to deleted text begin60deleted text endnew text begin ..new text end percent of the amount of
the increase over the greater of deleted text begin12deleted text endnew text begin ...new text end percent of the prior year's property taxes payable
or $100. This subdivision shall not apply to any increase in the gross property taxes
payable attributable to improvements made to the homestead after the assessment date
for the prior year's taxes. This subdivision shall not apply to any increase in the gross
property taxes payable attributable to the termination of valuation exclusions under
section 273.11, subdivision 16.

The maximum refund allowed under this subdivision is $1,000.

(b) For purposes of this subdivision "gross property taxes payable" means property
taxes payable determined without regard to the refund allowed under this subdivision.

(c) In addition to the other proofs required by this chapter, each claimant under
this subdivision shall file with the property tax refund return a copy of the property tax
statement for taxes payable in the preceding year or other documents required by the
commissioner.

(d) Upon request, the appropriate county official shall make available the names and
addresses of the property taxpayers who may be eligible for the additional property tax
refund under this section. The information shall be provided on a magnetic computer
disk. The county may recover its costs by charging the person requesting the information
the reasonable cost for preparing the data. The information may not be used for any
purpose other than for notifying the homeowner of potential eligibility and assisting the
homeowner, without charge, in preparing a refund claim.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes levied in 2007,
payable in 2008, and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2006, section 290A.04, subdivision 4, is amended to read:


Subd. 4.

Inflation adjustment.

Beginning for property tax refunds payable in
calendar year deleted text begin2002deleted text endnew text begin 2009new text end, the commissioner shall annually adjust the dollar amounts of the
income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation. The
commissioner shall make the inflation adjustments in accordance with section 1(f) of the
Internal Revenue Code, except that for purposes of this subdivision the percentage increase
shall be determined from the year ending on June 30, deleted text begin2000deleted text endnew text begin 2007new text end, to the year ending on
June 30 of the year preceding that in which the refund is payable. The commissioner shall
use the appropriate percentage increase to annually adjust the income thresholds and
maximum refunds under subdivisions 2 and 2a for inflation without regard to whether or
not the income tax brackets are adjusted for inflation in that year. The commissioner shall
round the thresholds and the maximum amounts, as adjusted to the nearest $10 amount. If
the amount ends in $5, the commissioner shall round it up to the next $10 amount.

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

Sec. 10.

Minnesota Statutes 2006, section 477A.011, subdivision 34, is amended to
read:


Subd. 34.

City revenue need.

(a) For a city with a population equal to or greater
than 2,500, "city revenue need" is the sum of (1) 5.0734098 times the pre-1940 housing
percentage; plus (2) 19.141678 times the population decline percentage; plus (3)
2504.06334 times the road accidents factor; plus (4) 355.0547; minus (5) the metropolitan
area factor; minus (6) 49.10638 times the household size.

(b) For a city with a population less than 2,500, "city revenue need" is the sum of
(1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times the commercial
industrial percentage; plus (3) 3.16042 times the population decline percentage; plus (4)
1.206 times the transformed population; minus (5) 62.772.

(c) For a city with a population of 2,500 or more and a population in one of the most
recently available five years that was less than 2,500, "city revenue need" is the sum of (1)
its city revenue need calculated under paragraph (a) multiplied by its transition factor;
plus (2) its city revenue need calculated under the formula in paragraph (b) multiplied
by the difference between one and its transition factor. For purposes of this paragraph, a
city's "transition factor" is equal to 0.2 multiplied by the number of years that the city's
population estimate has been 2,500 or more. This provision only applies for aids payable
in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500. It
applies to any city for aids payable in 2009 and thereafter.

(d) The city revenue need cannot be less than zero.

(e) For calendar year deleted text begin2005deleted text endnew text begin 2008new text end and subsequent years, the city revenue need for
a city, as determined in paragraphs (a) to (d), is multiplied by the ratio of the annual
implicit price deflator for government consumption expenditures and gross investment for
state and local governments as prepared by the United States Department of Commerce,
for the most recently available year to the deleted text begin2003deleted text endnew text begin ....new text end implicit price deflator for state and
local government purchases.

Sec. 11.

Minnesota Statutes 2006, section 477A.013, subdivision 8, is amended to read:


Subd. 8.

City formula aid.

In calendar year deleted text begin2004deleted text endnew text begin 2008new text end and subsequent years, the
formula aid for a city is equal to the need increase percentage multiplied by the difference
between (1) the city's revenue need multiplied by its population, and (2) deleted text beginthe sum of deleted text end the
city's net tax capacity multiplied by the tax effort ratedeleted text begin; the taconite aids under sections
298.28 and 298.282 to any city except a city
deleted text end deleted text begindirectly impacted by a taconite mine or plant,
multiplied by the following percentages:
deleted text end

deleted text begin (i) zero percent for aids payable in 2004;
deleted text end

deleted text begin (ii) 25 percent for aids payable in 2005;
deleted text end

deleted text begin (iii) 50 percent for aids payable in 2006;
deleted text end

deleted text begin (iv) 75 percent for aids payable in 2007; and
deleted text end

deleted text begin (v) 100 percent for aids payable in 2008 and thereafter.
deleted text end

deleted text begin For purposes of this subdivision, "a city directly impacted by a taconite mine or
plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6)
Silver Bay, or (7) Virginia
deleted text end.

No city may have a formula aid amount less than zero. The need increase percentage
must be the same for all cities.

The applicable need increase percentage must be calculated by the Department of
Revenue so that the total of the aid under subdivision 9 equals the total amount available
for aid under section 477A.03 after the subtraction under section 477A.014, subdivisions
4 and 5
.

Sec. 12.

Minnesota Statutes 2006, section 477A.03, subdivision 2a, is amended to read:


Subd. 2a.

Cities.

deleted text beginFor aids payable in 2004, the total aids paid under section
477A.013, subdivision 9, are limited to $429,000,000. For aids payable in 2005, the
total aids paid under section 477A.013, subdivision 9, are limited to $437,052,000.
deleted text endFor
aids payable in 2006 and deleted text beginthereafterdeleted text endnew text begin 2007new text end, the total aids paid under section 477A.013,
subdivision 9
, is limited to $485,052,000.new text begin For aids payable in 2008 and thereafter, the
total aids paid under section 477A.013, subdivision 9, is limited to $.......
new text end

Sec. 13.

Minnesota Statutes 2006, section 477A.03, subdivision 2b, is amended to read:


Subd. 2b.

Counties.

(a) For aids payable in calendar year deleted text begin2005deleted text endnew text begin 2008new text end and thereafter,
the total aids paid to counties under section 477A.0124, subdivision 3, are limited to
deleted text begin $100,500,000deleted text endnew text begin $.......new text end. Each calendar year, $500,000 shall be retained by the commissioner
of revenue to make reimbursements to the commissioner of finance for payments made
under section 611.27. For calendar year 2004, the amount shall be in addition to the
payments authorized under section 477A.0124, subdivision 1. For calendar year 2005
and subsequent years, the amount shall be deducted from the appropriation under
this paragraph. The reimbursements shall be to defray the additional costs associated
with court-ordered counsel under section 611.27. Any retained amounts not used for
reimbursement in a year shall be included in the next distribution of county need aid
that is certified to the county auditors for the purpose of property tax reduction for the
next taxes payable year.

(b) deleted text beginFor aids payable in 2005, the total aids under section 477A.0124, subdivision
4
, are limited to $105,000,000.
deleted text end For aids payable in deleted text begin2006deleted text endnew text begin 2008new text end and thereafter, the total
aid under section 477A.0124, subdivision 4, is limited to deleted text begin$105,132,923deleted text endnew text begin $.......new text end. The
commissioner of finance shall bill the commissioner of revenue for the cost of preparation
of local impact notes as required by section 3.987, not to exceed $207,000 in fiscal year
2004 and thereafter. The commissioner of education shall bill the commissioner of
revenue for the cost of preparation of local impact notes for school districts as required by
section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner
of revenue shall deduct the amounts billed under this paragraph from the appropriation
under this paragraph. The amounts deducted are appropriated to the commissioner of
finance and the commissioner of education for the preparation of local impact notes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2008 and thereafter.
new text end