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Minnesota Legislature

Office of the Revisor of Statutes

SF 2758

as introduced - 91st Legislature (2019 - 2020) Posted on 04/01/2019 03:41pm

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

Current Version - as introduced

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A bill for an act
relating to transportation; modifying motor fuels tax, vehicle registration tax, and
motor vehicle sales tax; amending provisions governing transportation finance;
amending Minnesota Statutes 2018, sections 168.013, subdivision 1a; 296A.07,
subdivision 3; 296A.08, subdivision 2; 297A.815, subdivision 3; 297A.94; 297B.02,
subdivision 1; repealing Laws 2017, First Special Session chapter 3, article 3,
section 123.

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

ARTICLE 1

MOTOR VEHICLE FUELS TAX

Section 1.

Minnesota Statutes 2018, section 296A.07, subdivision 3, is amended to read:


Subd. 3.

Rate of tax.

new text begin(a) After September 30, 2019, but before April 1, 2020, and on all
gasoline in distributor storage at 12:01 a.m. on October 1, 2019,
new text endthe gasoline excise tax is
imposed at the following rates:

(1) E85 is taxed at the rate of deleted text begin17.75deleted text endnew text begin 21.30new text end cents per gallon;

(2) M85 is taxed at the rate of deleted text begin14.25deleted text endnew text begin 17.10new text end cents per gallon; and

(3) all other gasoline is taxed at the rate of deleted text begin25deleted text endnew text begin 30new text end cents per gallon.

new text begin (b) After March 31, 2020, but before October 1, 2020, and on all gasoline in distributor
storage at 12:01 a.m. on April 1, 2020, the gasoline excise tax is imposed at the following
rates:
new text end

new text begin (1) E85 is taxed at the rate of 24.85 cents per gallon;
new text end

new text begin (2) M85 is taxed at the rate of 19.95 cents per gallon; and
new text end

new text begin (3) all other gasoline is taxed at the rate of 35 cents per gallon.
new text end

new text begin (c) After September 30, 2020, but before April 1, 2021, and on all gasoline in distributor
storage at 12:01 a.m. on October 1, 2020, the gasoline excise tax is imposed at the following
rates:
new text end

new text begin (1) E85 is taxed at the rate of 28.40 cents per gallon;
new text end

new text begin (2) M85 is taxed at the rate of 22.80 cents per gallon; and
new text end

new text begin (3) all other gasoline is taxed at the rate of 40 cents per gallon.
new text end

new text begin (d) After March 31, 2021, and on all gasoline in distributor storage at 12:01 a.m. on
April 1, 2021, the gasoline excise tax is imposed at the following rates:
new text end

new text begin (1) E85 is taxed at the rate of 31.95 cents per gallon;
new text end

new text begin (2) M85 is taxed at the rate of 25.65 cents per gallon; and
new text end

new text begin (3) all other gasoline is taxed at the rate of 45 cents per gallon.
new text end

new text begin (e) On or before April 1, 2022, and on or before April 1 in each subsequent year, the
commissioner shall determine the tax rate applicable to the sale of E85, M85, and all other
gasoline subject to tax under this section for the upcoming 12-month period, beginning July
1, by adding to the current fiscal year tax rate the percentage increase, if any, in the United
States Consumer Price Index for the previous calendar year. The tax rate shall be rounded
to the nearest tenth of a cent. The tax rate for E85 shall not be lower than 31.95 cents per
gallon. The tax rate for M85 shall not be less than 25.65 cents per gallon. The tax rate for
all other gasoline shall not be lower than 45 cents per gallon.
new text end

new text begin (f) For purposes of this subdivision, "the United States Consumer Price Index" means
the United States Consumer Price Index for all urban consumers, United States city average,
as determined by the United States Department of Labor.
new text end

new text begin (g) For purposes of this subdivision, "gasoline in distributor storage" means gasoline
owned or possessed by a distributor and held in storage, including being held in bulk storage,
a tank wagon, or a compartment of a delivery truck.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax imposed after September 30,
2019.
new text end

Sec. 2.

Minnesota Statutes 2018, section 296A.08, subdivision 2, is amended to read:


Subd. 2.

Rate of tax.

new text begin(a) On special fuel subject to tax under this section after September
30, 2019, but before April 1, 2020, and on special fuel in distributor storage at 12:01 a.m.
on October 1, 2019,
new text endthe special fuel excise tax is imposed at the following rates:

deleted text begin (a)deleted text endnew text begin (1)new text end liquefied petroleum gas or propane is taxed at the rate of deleted text begin18.75deleted text endnew text begin 22.50new text end cents per
gallondeleted text begin.deleted text endnew text begin;
new text end

deleted text begin (b)deleted text endnew text begin (2)new text end liquefied natural gas is taxed at the rate of deleted text begin15deleted text endnew text begin 18new text end cents per gallondeleted text begin.deleted text endnew text begin;
new text end

deleted text begin (c)deleted text endnew text begin (3)new text end compressed natural gas is taxed at the rate of deleted text begin$1.974deleted text endnew text begin $2.368new text end per thousand cubic
feet; or deleted text begin25deleted text endnew text begin 30new text end cents per gasoline equivalent. For purposes of this paragraph, "gasoline
equivalent," as defined by the National Conference on Weights and Measures, is 5.66 pounds
of natural gas or 126.67 cubic feetdeleted text begin.deleted text endnew text begin; and
new text end

deleted text begin (d)deleted text endnew text begin (4)new text end all other special fuel is taxed at the same rate as the gasoline excise tax as specified
in section 296A.07, subdivision 2. The tax is payable in the form and manner prescribed
by the commissioner.

new text begin (b) On special fuel subject to tax under this section after March 31, 2020, but before
October 1, 2020, and on all special fuel in distributor storage at 12:01 a.m. on April 1, 2020,
the special fuel excise tax is imposed at the following rates:
new text end

new text begin (1) liquefied petroleum gas or propane is taxed at the rate of 26.25 cents per gallon;
new text end

new text begin (2) liquefied natural gas is taxed at the rate of 21 cents per gallon;
new text end

new text begin (3) compressed natural gas is taxed at the rate of $2.763 per thousand cubic feet; or 35
cents per gasoline equivalent. For purposes of this paragraph, "gasoline equivalent," as
defined by the National Conference on Weights and Measures, is 5.66 pounds of natural
gas or 126.67 cubic feet; and
new text end

new text begin (4) all other special fuel is taxed at the same rate as the gasoline excise tax as specified
in section 296A.07, subdivision 2. The tax is payable in the form and manner prescribed
by the commissioner.
new text end

new text begin (c) On special fuel subject to tax under this section after September 30, 2020, but before
April 1, 2021, and on all special fuel in distributor storage at 12:01 a.m. on October 1, 2020,
the special fuel excise tax is imposed at the following rates:
new text end

new text begin (1) liquefied petroleum gas or propane is taxed at the rate of 30 cents per gallon;
new text end

new text begin (2) liquefied natural gas is taxed at the rate of 24 cents per gallon;
new text end

new text begin (3) compressed natural gas is taxed at the rate of $3.157 per thousand cubic feet; or 40
cents per gasoline equivalent. For purposes of this paragraph, "gasoline equivalent," as
defined by the National Conference on Weights and Measures, is 5.66 pounds of natural
gas or 126.67 cubic feet; and
new text end

new text begin (4) all other special fuel is taxed at the same rate as the gasoline excise tax as specified
in section 296A.07, subdivision 2. The tax is payable in the form and manner prescribed
by the commissioner.
new text end

new text begin (d) On special fuel subject to tax under this section after March 31, 2021, and on all
special fuel in distributor storage at 12:01 a.m. on April 1, 2021, the special fuel excise tax
is imposed at the following rates:
new text end

new text begin (1) liquefied petroleum gas or propane is taxed at the rate of 33.75 cents per gallon;
new text end

new text begin (2) liquefied natural gas is taxed at the rate of 27 cents per gallon;
new text end

new text begin (3) compressed natural gas is taxed at the rate of $3.552 per thousand cubic feet; or 45
cents per gasoline equivalent. For purposes of this paragraph, "gasoline equivalent," as
defined by the National Conference on Weights and Measures, is 5.66 pounds of natural
gas or 126.67 cubic feet; and
new text end

new text begin (4) all other special fuel is taxed at the same rate as the gasoline excise tax as specified
in section 296A.07, subdivision 2. The tax is payable in the form and manner prescribed
by the commissioner.
new text end

new text begin (e) On or before April 1, 2022, and on or before April 1 in each subsequent year, the
commissioner shall determine the tax rate applicable to the sale of special fuels subject to
tax under this section for the upcoming 12-month period, beginning July 1, by adding to
the current tax rate the percentage increase, if any, in the United States Consumer Price
Index for the previous calendar year. The tax rate shall be rounded to the nearest tenth of a
cent. The tax rate for liquefied petroleum gas or propane shall not be lower than 33.75 cents
per gallon. The tax rate for liquefied natural gas shall not be less than 27 cents per gallon.
The tax rate for compressed natural gas shall not be lower than $3.552 per thousand cubic
feet or 45 cents per gasoline equivalent. The tax rate for all other special fuel shall not be
lower than 45 cents per gallon.
new text end

new text begin (f) For purposes of this subdivision, "the United States Consumer Price Index" means
the United States Consumer Price Index for all urban consumers, United States city average,
as determined by the United States Department of Labor.
new text end

new text begin (g) For purposes of this subdivision, "special fuel in distributor storage" means special
fuel owned and possessed by a distributor and held in storage, including being held in bulk
storage, a tank wagon, or a compartment of a delivery truck.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax imposed after September 30,
2019.
new text end

ARTICLE 2

TRANSPORTATION FUNDING AND OTHER TAXES AND FEES

Section 1.

Minnesota Statutes 2018, section 168.013, subdivision 1a, is amended to read:


Subd. 1a.

Passenger automobile; hearse.

(a) On passenger automobiles as defined in
section 168.002, subdivision 24, and hearses, except as otherwise provided, the tax is deleted text begin$10deleted text endnew text begin
$45
new text end plus an additional tax equal to deleted text begin1.25deleted text endnew text begin 1.5new text end percent of the base value.

(b) Subject to the classification provisions herein, "base value" means the manufacturer's
suggested retail price of the vehicle deleted text beginincluding destination chargedeleted text end using list price information
published by the manufacturer or determined by the registrar if no suggested retail price
exists, and shall not include the cost of each accessory or item of optional equipment
separately added to the vehicle and the suggested retail price.

(c) If the manufacturer's list price information contains a single vehicle identification
number followed by various descriptions and suggested retail prices, the registrar shall
select from those listings only the lowest price for determining base value.

(d) If unable to determine the base value because the vehicle is specially constructed,
or for any other reason, the registrar may establish such value upon the cost price to the
purchaser or owner as evidenced by a certificate of cost but not including Minnesota sales
or use tax or any local sales or other local tax.

(e) The registrar shall classify every vehicle in its proper base value class as follows:

FROM
TO
$
0
$ 199.99
$
200
$ 399.99

and thereafter a series of classes successively set in brackets having a spread of $200
consisting of such number of classes as will permit classification of all vehicles.

(f) The base value for purposes of this section shall be the middle point between the
extremes of its class.

(g) The registrar shall establish the base value, when new, of every passenger automobile
and hearse registered prior to the effective date of Extra Session Laws 1971, chapter 31,
using list price information published by the manufacturer or any nationally recognized
firm or association compiling such data for the automotive industry. If unable to ascertain
the base value of any registered vehicle in the foregoing manner, the registrar may use any
other available source or method. The registrar shall calculate tax using base value
information available to dealers and deputy registrars at the time the application for
registration is submitted. The tax on all previously registered vehicles shall be computed
upon the base value thus determined taking into account the depreciation provisions of
paragraph (h).

(h) The annual additional tax must be computed upon a percentage of the base value as
follows: during the first year of vehicle life, upon 100 percent of the base value; for the
second year, deleted text begin90deleted text endnew text begin 100new text end percent of such value; for the third year, deleted text begin80deleted text endnew text begin 90new text end percent of such value;
for the fourth year, deleted text begin70deleted text endnew text begin 90new text end percent of such value; for the fifth year, deleted text begin60deleted text endnew text begin 75new text end percent of such
value; for the sixth year, deleted text begin50deleted text endnew text begin 75new text end percent of such value; for the seventh year, deleted text begin40deleted text endnew text begin 60new text end percent
of such value; for the eighth year, deleted text begin30deleted text endnew text begin 40new text end percent of such value; for the ninth year, deleted text begin20deleted text endnew text begin 30new text end
percent of such value; for the tenth year, ten percent of such value; for the 11th and each
succeeding year, the sum of $25.

(i) In no event shall the annual additional tax be less than $25.

deleted text begin (j) For any vehicle previously registered in Minnesota and regardless of prior ownership,
the total amount due under this subdivision and subdivision 1m must not exceed the smallest
total amount previously paid or due on the vehicle.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2020.
new text end

Sec. 2.

Minnesota Statutes 2018, section 297A.815, subdivision 3, is amended to read:


Subd. 3.

Motor vehicle lease sales tax revenue.

(a) new text beginFor purposes of this subdivision,
"net revenue" means an amount equal to the revenues, including interest and penalties,
collected under this section during the fiscal year minus $32,000,000 in each fiscal year.
new text end

new text begin (b) new text endOn or before June 30 of each fiscal year, the commissioner of revenue must estimate
the deleted text beginrevenuesdeleted text endnew text begin amount of the net revenuenew text end, including interest and penalties and minus refunds,
collected under this section for the current fiscal year.

deleted text begin (b)deleted text endnew text begin (c)new text end By July 15 of the subsequent fiscal year, the commissioner of management and
budget must transfer the new text beginnet new text endrevenues estimated under paragraph deleted text begin(a)deleted text endnew text begin (b)new text end from the general
fund as follows:

(1) deleted text begin38deleted text endnew text begin 50new text end percent new text beginannually thereafter new text endto the county state-aid highway fund;new text begin and
new text end

(2) deleted text begin38 percentdeleted text endnew text begin the remaindernew text end to the greater Minnesota transit accountdeleted text begin;deleted text endnew text begin.
new text end

deleted text begin (3) 13 percent to the Minnesota state transportation fund; and
deleted text end

deleted text begin (4) 11 percent to the highway user tax distribution fund.
deleted text end

deleted text begin (c)deleted text endnew text begin (d)new text end Notwithstanding any other law to the contrary, the commissioner of transportation
must allocate the funds transferred under paragraph deleted text begin(b)deleted text endnew text begin (c)new text end, clause (1), to the counties in the
metropolitan area, as defined in section 473.121, subdivision 4, excluding the counties of
Hennepin and Ramsey, so that each county receives the percentage that its population, as
defined in section 477A.011, subdivision 3, estimated or established by July 15 of the year
prior to the current calendar year, bears to the total population of the counties receiving
funds under this paragraph.

deleted text begin (d) The amount transferred under paragraph (b), clause (3), must be used for the local
bridge program under section 174.50, subdivisions 6 to 7.
deleted text end

(e) The revenues under this subdivision do not include the revenues, including interest
and penalties and minus refunds, generated by the sales tax imposed under section 297A.62,
subdivision 1a
, which must be deposited as provided under the Minnesota Constitution,
article XI, section 15.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
beginning with the estimate that must be completed on or before June 30, 2020, for a transfer
that occurs by July 15, 2020.
new text end

Sec. 3.

Minnesota Statutes 2018, section 297A.94, is amended to read:


297A.94 DEPOSIT OF REVENUES.

(a) Except as provided in this section, the commissioner shall deposit the revenues,
including interest and penalties, derived from the taxes imposed by this chapter in the state
treasury and credit them to the general fund.

(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic
account in the special revenue fund if:

(1) the taxes are derived from sales and use of property and services purchased for the
construction and operation of an agricultural resource project; and

(2) the purchase was made on or after the date on which a conditional commitment was
made for a loan guaranty for the project under section 41A.04, subdivision 3.

The commissioner of management and budget shall certify to the commissioner the date on
which the project received the conditional commitment. The amount deposited in the loan
guaranty account must be reduced by any refunds and by the costs incurred by the Department
of Revenue to administer and enforce the assessment and collection of the taxes.

(c) The commissioner shall deposit the revenues, including interest and penalties, derived
from the taxes imposed on sales and purchases included in section 297A.61, subdivision 3,
paragraph (g), clauses (1) and (4), in the state treasury, and credit them as follows:

(1) first to the general obligation special tax bond debt service account in each fiscal
year the amount required by section 16A.661, subdivision 3, paragraph (b); and

(2) after the requirements of clause (1) have been met, the balance to the general fund.

deleted text begin (d) Beginning with sales taxes remitted after July 1, 2017, the commissioner shall deposit
in the state treasury the revenues collected under section 297A.64, subdivision 1, including
interest and penalties and minus refunds, and credit them to the highway user tax distribution
fund.
deleted text end

deleted text begin (e)deleted text endnew text begin (d)new text end The commissioner shall deposit the revenues, including interest and penalties,
collected under section 297A.64, subdivision 5, in the state treasury and credit them to the
general fund. By July 15 of each year the commissioner shall transfer to the highway user
tax distribution fund an amount equal to the excess fees collected under section 297A.64,
subdivision 5
, for the previous calendar year.

deleted text begin (f) Beginning with sales taxes remitted after July 1, 2017, in conjunction with the deposit
of revenues under paragraph (d), the commissioner shall deposit into the state treasury and
credit to the highway user tax distribution fund an amount equal to the estimated revenues
derived from the tax rate imposed under section 297A.62, subdivision 1, on the lease or
rental for not more than 28 days of rental motor vehicles subject to section 297A.64. The
commissioner shall estimate the amount of sales tax revenue deposited under this paragraph
based on the amount of revenue deposited under paragraph (d).
deleted text end

deleted text begin (g) Starting after July 1, 2017, the commissioner shall deposit an amount of the
remittances monthly into the state treasury and credit them to the highway user tax
distribution fund as a portion of the estimated amount of taxes collected from the sale and
purchase of motor vehicle repair parts in that month. For the remittances between July 1,
2017, and June 30, 2019, the monthly deposit amount is $2,628,000. For remittances in
each subsequent fiscal year, the monthly deposit amount is $12,137,000. For purposes of
this paragraph, "motor vehicle" has the meaning given in section 297B.01, subdivision 11,
and "motor vehicle repair and replacement parts" includes (i) all parts, tires, accessories,
and equipment incorporated into or affixed to the motor vehicle as part of the motor vehicle
maintenance and repair, and (ii) paint, oil, and other fluids that remain on or in the motor
vehicle as part of the motor vehicle maintenance or repair. For purposes of this paragraph,
"tire" means any tire of the type used on highway vehicles, if wholly or partially made of
rubber and if marked according to federal regulations for highway use.
deleted text end

deleted text begin (h)deleted text endnew text begin (e)new text end 72.43 percent of the revenues, including interest and penalties, transmitted to the
commissioner under section 297A.65, must be deposited by the commissioner in the state
treasury as follows:

(1) 50 percent of the receipts must be deposited in the heritage enhancement account in
the game and fish fund, and may be spent only on activities that improve, enhance, or protect
fish and wildlife resources, including conservation, restoration, and enhancement of land,
water, and other natural resources of the state;

(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and may
be spent only for state parks and trails;

(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and may
be spent only on metropolitan park and trail grants;

(4) three percent of the receipts must be deposited in the natural resources fund, and
may be spent only on local trail grants; and

(5) two percent of the receipts must be deposited in the natural resources fund, and may
be spent only for the Minnesota Zoological Garden, the Como Park Zoo and Conservatory,
and the Duluth Zoo.

deleted text begin (i)deleted text endnew text begin (f)new text end The revenue dedicated under paragraph deleted text begin(h)deleted text endnew text begin (e)new text end may not be used as a substitute for
traditional sources of funding for the purposes specified, but the dedicated revenue shall
supplement traditional sources of funding for those purposes. Land acquired with money
deposited in the game and fish fund under paragraph deleted text begin(h)deleted text endnew text begin (e)new text end must be open to public hunting
and fishing during the open season, except that in aquatic management areas or on lands
where angling easements have been acquired, fishing may be prohibited during certain times
of the year and hunting may be prohibited. At least 87 percent of the money deposited in
the game and fish fund for improvement, enhancement, or protection of fish and wildlife
resources under paragraph deleted text begin(h)deleted text endnew text begin (e)new text end must be allocated for field operations.

deleted text begin (j)deleted text endnew text begin (g)new text end The commissioner must deposit the revenues, including interest and penalties
minus any refunds, derived from the sale of items regulated under section 624.20, subdivision
1
, that may be sold to persons 18 years old or older and that are not prohibited from use by
the general public under section 624.21, in the state treasury and credit:

(1) 25 percent to the volunteer fire assistance grant account established under section
88.068;

(2) 25 percent to the fire safety account established under section 297I.06, subdivision
3; and

(3) the remainder to the general fund.

For purposes of this paragraph, the percentage of total sales and use tax revenue derived
from the sale of items regulated under section 624.20, subdivision 1, that are allowed to be
sold to persons 18 years old or older and are not prohibited from use by the general public
under section 624.21, is a set percentage of the total sales and use tax revenues collected in
the state, with the percentage determined under Laws 2017, First Special Session chapter
1, article 3, section 39.

deleted text begin (k)deleted text endnew text begin (h)new text end The revenues deposited under paragraphs (a) to deleted text begin(j)deleted text endnew text begin (g)new text end do not include the revenues,
including interest and penalties, generated by the sales tax imposed under section 297A.62,
subdivision 1a
, which must be deposited as provided under the Minnesota Constitution,
article XI, section 15.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019.
new text end

Sec. 4.

Minnesota Statutes 2018, section 297B.02, subdivision 1, is amended to read:


Subdivision 1.

Rate.

There is imposed an excise tax of deleted text begin6.5deleted text endnew text begin 6.875new text end percent on the purchase
price of any motor vehicle purchased or acquired, either in or outside of the state of
Minnesota, which is required to be registered under the laws of this state.

The excise tax is also imposed on the purchase price of motor vehicles purchased or
acquired on Indian reservations when the tribal council has entered into a sales tax on motor
vehicles refund agreement with the state of Minnesota.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on or after
December 1, 2019.
new text end

Sec. 5. new text beginREPEALER.
new text end

new text begin Laws 2017, First Special Session chapter 3, article 3, section 123, new text end new text begin is repealed.
new text end

APPENDIX

Repealed Minnesota Session Laws: 19-4837

Laws 2017, First Special Session chapter 3, article 3, section 123

Sec. 123. new text beginMOTOR VEHICLE PARTS SALES TAXES ESTIMATION.new text end

new text begin (a) By January 15, 2019, the commissioner of revenue must submit a report on state general sales taxes attributable to motor vehicle repair and replacement parts to the chairs and ranking minority members of the legislative committees with jurisdiction over taxes and transportation policy and finance. new text end

new text begin (b) The report must provide an estimate, based on federal data and department consumption models, of the percentage of total sales tax revenues collected in a calendar year from the tax rate imposed under Minnesota Statutes, section 297A.62, subdivision 1, that is attributable to sales and purchases of motor vehicle repair and replacement parts. new text end

new text begin (c) For purposes of this section, "motor vehicle repair and replacement parts" has the meaning given in Minnesota Statutes, section 297A.94. new text end