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H.F. No. 20,  as introduced - 2011 1st Special Session   Posted on Jul 19, 2011

1.1A bill for an act
1.2relating to the financing of state and local government; making changes to
1.3individual income, corporate franchise, estate, property, aids, credits, payments,
1.4refunds, sales and use, minerals, local, tax increment financing, insurance,
1.5and other taxes and tax-related provisions; authorizing local taxes; modifying
1.6sustainable forest resource management incentive; providing a science and
1.7technology program; conforming to changes made to the Internal Revenue
1.8Code; requiring commissioner of revenue to initiate negotiations for reciprocity
1.9agreement with state of Wisconsin; setting the levels of the cash flow account
1.10and the budget reserve account; reducing certain maintenance of effort
1.11requirements; modifying powers of commissioner of revenue resulting from
1.12temporary state shutdown; providing disaster relief; authorizing income tax
1.13data sharing with Wisconsin; providing alternative process for consolidation
1.14of counties; authorizing tobacco bonds; requiring studies; requiring reports;
1.15appropriating money;amending Minnesota Statutes 2010, sections 16A.151,
1.16subdivision 2; 97A.061, subdivision 1; 126C.01, subdivision 3; 270B.12,
1.17by adding a subdivision; 270C.13, subdivision 1; 270C.991, subdivision 4;
1.18272.02, subdivision 39, by adding subdivisions; 273.121, subdivision 1; 273.13,
1.19subdivisions 23, as amended, 25, 34, by adding a subdivision; 273.1384,
1.20subdivisions 3, 4; 273.1393; 275.025, subdivision 3; 276.04, subdivision 2;
1.21289A.02, subdivision 7, as amended; 290.01, subdivisions 19, as amended, 19a,
1.22as amended, 19c, as amended, 31, as amended; 290.05, subdivision 1; 290.0671,
1.23subdivision 1; 290.0675, subdivision 1; 290.9201, subdivision 11; 290A.03,
1.24subdivisions 11, 13, 15, as amended; 290A.04, subdivisions 2, 4; 290C.07;
1.25291.005, subdivision 1; 291.03, subdivision 1, by adding subdivisions; 297A.61,
1.26subdivision 3, as amended, by adding subdivisions; 297A.66, by adding a
1.27subdivision; 297A.668, by adding a subdivision; 297A.68, subdivision 4, by
1.28adding subdivisions; 297A.70, subdivisions 1, 2, 3, 6; 297A.75, subdivisions 1,
1.292, 3; 297A.99, subdivisions 1, 3; 297B.03; 297I.01, subdivisions 9, 16, by adding
1.30subdivisions; 297I.05, subdivisions 7, 12; 297I.30, subdivisions 1, 2; 298.001,
1.31by adding a subdivision; 298.01, subdivisions 3, 3a; 298.015, subdivisions
1.321, 2; 298.016, subdivision 4; 473.757, subdivision 11; 477A.011, subdivision
1.3320; 477A.0124, by adding a subdivision; 477A.013, subdivision 9, by adding a
1.34subdivision; 477A.03; 477A.11, subdivision 1; 477A.12, subdivision 1; 477A.14,
1.35subdivision 1; Laws 1995, chapter 264, article 5, section 45, subdivision 1,
1.36as amended; Laws 1996, chapter 471, article 2, section 29, subdivision 1, as
1.37amended; Laws 1998, chapter 389, article 8, section 43, subdivisions 3, as
1.38amended, 4, as amended, 5, as amended; Laws 2006, chapter 257, section 2;
1.39Laws 2008, chapter 366, article 7, section 19, subdivision 3; Laws 2010, chapter
2.1389, article 5, section 6, subdivision 1; Laws 2010, First Special Session chapter
2.21, article 13, section 4, subdivision 1; proposing coding for new law in Minnesota
2.3Statutes, chapters 16A; 116W; 275; 373; repealing Minnesota Statutes 2010,
2.4sections 273.1384, subdivisions 1, 6; 275.295; 290.0678; 290.9201, subdivision
2.53; 297I.05, subdivisions 9, 10; 298.017; 477A.145.
2.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.7ARTICLE 1
2.8INDIVIDUAL INCOME AND ESTATE TAXES

2.9    Section 1. Minnesota Statutes 2010, section 270B.12, is amended by adding a
2.10subdivision to read:
2.11    Subd. 14. Wisconsin secretary of revenue; income tax reciprocity benchmark
2.12study. The commissioner may disclose return information to the secretary of revenue
2.13of the state of Wisconsin for the purpose of conducting a joint individual income tax
2.14reciprocity study.
2.15EFFECTIVE DATE.This section is effective the day following final enactment.

2.16    Sec. 2. Minnesota Statutes 2010, section 290.9201, subdivision 11, is amended to read:
2.17    Subd. 11. Exception Exemption from withholding for public speakers and tax.
2.18The provisions of (a) Subdivisions 7 and 8 shall not be effective for do not apply to:
2.19(1) compensation paid to nonresident public speakers, if the compensation paid to
2.20the speaker is less than $2,000 or is only a payment of the speaker's expenses.; or
2.21(2) compensation paid to an entertainment entity if the compensation paid to the
2.22entertainment entity is less than $600.
2.23(b) Compensation paid to a public speaker or an entertainment entity that is not
2.24subject to withholding tax under this subdivision is not subject to tax under subdivision 2
2.25unless the total compensation received by the public speaker or entertainment entity in the
2.26tax year exceeds the individual income tax filing requirements for a nonresident individual
2.27under section 289A.08, subdivision 1, paragraph (a), clause (1).
2.28EFFECTIVE DATE.This section is effective for compensation paid or received
2.29after December 31, 2011.

2.30    Sec. 3. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:
2.31    Subdivision 1. Scope. Unless the context otherwise clearly requires, the following
2.32terms used in this chapter shall have the following meanings:
3.1    (1) "Commissioner" means the commissioner of revenue or any person to whom the
3.2commissioner has delegated functions under this chapter.
3.3    (2) "Federal gross estate" means the gross estate of a decedent as required to be
3.4valued and otherwise determined for federal estate tax purposes under the Internal
3.5Revenue Code.
3.6    (3) "Internal Revenue Code" means the United States Internal Revenue Code of
3.71986, as amended through March 18, 2010, but without regard to the provisions of
3.8sections 501 and 901 of Public Law 107-16.
3.9    (4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
3.10defined by section 2011(b)(3) of the Internal Revenue Code, increased by plus
3.11(i) the amount of deduction for state death taxes allowed under section 2058 of
3.12the Internal Revenue Code; less
3.13(ii) (A) the value of qualified small business property under section 291.03,
3.14subdivision 9, and the value of qualified farm property under section 291.03, subdivision
3.1510, or (B) $4,000,000, whichever is less.
3.16    (5) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
3.17excluding therefrom any property included therein which has its situs outside Minnesota,
3.18and (b) including therein any property omitted from the federal gross estate which is
3.19includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
3.20authorities.
3.21    (6) "Nonresident decedent" means an individual whose domicile at the time of
3.22death was not in Minnesota.
3.23    (7) "Personal representative" means the executor, administrator or other person
3.24appointed by the court to administer and dispose of the property of the decedent. If there
3.25is no executor, administrator or other person appointed, qualified, and acting within this
3.26state, then any person in actual or constructive possession of any property having a situs in
3.27this state which is included in the federal gross estate of the decedent shall be deemed
3.28to be a personal representative to the extent of the property and the Minnesota estate tax
3.29due with respect to the property.
3.30    (8) "Resident decedent" means an individual whose domicile at the time of death
3.31was in Minnesota.
3.32    (9) "Situs of property" means, with respect to real property, the state or country in
3.33which it is located; with respect to tangible personal property, the state or country in which
3.34it was normally kept or located at the time of the decedent's death; and with respect to
3.35intangible personal property, the state or country in which the decedent was domiciled
3.36at death.
4.1EFFECTIVE DATE.This section is effective for decedents dying after June 30,
4.22011.

4.3    Sec. 4. Minnesota Statutes 2010, section 291.03, subdivision 1, is amended to read:
4.4    Subdivision 1. Tax amount. (a) The tax imposed shall be an amount equal to the
4.5proportion of the maximum credit for state death taxes computed under section 2011
4.6of the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of
4.7federal adjusted taxable estate, as the Minnesota gross estate bears to the value of the
4.8federal gross estate.
4.9    (b) The tax determined under this subdivision must not be greater than the sum of
4.10the following amounts multiplied by a fraction, the numerator of which is the Minnesota
4.11gross estate and the denominator of which is the federal gross estate:
4.12    (1) the rates and brackets under section 2001(c) of the Internal Revenue Code
4.13multiplied by the sum of:
4.14    (i) the taxable estate, as defined under section 2051 of the Internal Revenue Code;
4.15plus
4.16    (ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
4.17Code; less
4.18(iii) the lesser of (A) the sum of the value of qualified small business property
4.19under subdivision 9, and the value of qualified farm property under subdivision 10,
4.20or (B) $4,000,000; less
4.21    (2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
4.22Code; and less
4.23    (3) the federal credit allowed under section 2010 of the Internal Revenue Code.
4.24    (c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
4.25Revenue Code of 1986, as amended through December 31, 2000.
4.26EFFECTIVE DATE.This section is effective for decedents dying after June 30,
4.272011.

4.28    Sec. 5. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
4.29to read:
4.30    Subd. 8. Definitions. (a) For purposes of this section, the following terms have the
4.31meanings given in this subdivision.
4.32(b) "Family member" means a family member as defined in section 2032A(e)(2) of
4.33the Internal Revenue Code.
5.1(c) "Qualified heir" means a family member who acquired qualified property from
5.2the decedent and satisfies the requirement under subdivision 9, clause (6), or subdivision
5.310, clause (4), for the property.
5.4(d) "Qualified property" means qualified small businesss property under subdivision
5.59 and qualified farm property under subdivision 10.
5.6EFFECTIVE DATE.This section is effective for decedents dying after June 30,
5.72011.

5.8    Sec. 6. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
5.9to read:
5.10    Subd. 9. Qualified small business property. Property satisfying all of the following
5.11requirements is qualified small business property:
5.12(1) The value of the property was included in the federal adjusted taxable estate.
5.13(2) The property consists of the assets of a trade or business or shares of stock or
5.14other ownership interests in a corporation or other entity engaged in a trade or business.
5.15The decedent or the decedent's spouse must have materially participated in the trade or
5.16business within the meaning of section 469 of the Internal Revenue Code during the
5.17taxable year that ended before the date of the decedent's death. Shares of stock in a
5.18corporation or an ownership interest in another type of entity do not qualify under this
5.19subdivision if the shares or ownership interests are traded on a public stock exchange at
5.20any time during the three-year period ending on the decedent's date of death.
5.21(3) The gross annual sales of the trade or business were $10,000,000 or less for the
5.22last taxable year that ended before the date of the death of the decedent.
5.23(4) The property does not consist of cash or cash equivalents. For property consisting
5.24of shares of stock or other ownership interests in an entity, the amount of cash or cash
5.25equivalents held by the corporation or other entity must be deducted from the value of
5.26the property qualifying under this subdivision in proportion to the decedent's share of
5.27ownership of the entity on the date of death.
5.28(5) The decedent continuously owned the property for the three-year period ending
5.29on the date of death of the decedent.
5.30(6) A family member continuously uses the property in the operation of the trade or
5.31business for three years following the date of death of the decedent.
5.32(7) The estate and the qualified heir elect to treat the property as qualified small
5.33business property and agree, in the form prescribed by the commissioner, to pay the
5.34recapture tax under subdivision 11, if applicable.
6.1EFFECTIVE DATE.This section is effective for decedents dying after June 30,
6.22011.

6.3    Sec. 7. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
6.4to read:
6.5    Subd. 10. Qualified farm property. Property satisfying all of the following
6.6requirements is qualified farm property:
6.7(1) The value of the property was included in the federal adjusted taxable estate.
6.8(2) The property consists of a farm meeting the requirements of section 500.24,
6.9and was classified for property tax purposes as the homestead of the decedent or the
6.10decedent's spouse or both under section 273.124, and as class 2a property under section
6.11273.13, subdivision 23.
6.12(3) The decedent continuously owned the property for the three-year period ending
6.13on the date of death of the decedent.
6.14(4) A family member continuously uses the property in the operation of the trade or
6.15business for three years following the date of death of the decedent.
6.16(5) The estate and the qualified heir elect to treat the property as qualified farm
6.17property and agree, in a form prescribed by the commissioner, to pay the recapture tax
6.18under subdivision 11, if applicable.
6.19EFFECTIVE DATE.This section is effective for decedents dying after June 30,
6.202011.

6.21    Sec. 8. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
6.22to read:
6.23    Subd. 11. Recapture tax. (a) If, within three years after the decedent's death and
6.24before the death of the qualified heir, the qualified heir disposes of any interest in the
6.25qualified property, other than by a disposition to a family member, or a family member
6.26ceases to use the qualified property which was acquired or passed from the decedent, an
6.27additional estate tax is imposed on the property.
6.28(b) The amount of the additional tax equals the amount of the exclusion claimed by
6.29the estate under subdivision 8, paragraph (d), multiplied by 16 percent.
6.30(c) The additional tax under this subdivision is due on the day which is six months
6.31after the date of the disposition or cessation in paragraph (a).
6.32EFFECTIVE DATE.This section is effective for decedents dying after June 30,
6.332011.

7.1    Sec. 9. INCOME TAX RECIPROCITY BENCHMARK STUDY.
7.2(a) The Department of Revenue, in conjunction with the Wisconsin Department of
7.3Revenue, must, provided the conditions of paragraph (d) are satisfied, conduct a study to
7.4determine at least the following:
7.5(1) the number of residents of each state who earn income from personal services in
7.6the other state;
7.7(2) the total amount of income earned by residents of each state who earn income
7.8from personal services in the other state; and
7.9(3) the change in tax revenue in each state if an income tax reciprocity arrangement
7.10were resumed between the two states under which the taxpayers were required to pay
7.11income taxes on the income only in their state of residence.
7.12(b) The study must use information obtained from each state's income tax returns
7.13for tax year 2011, and from any other source of information the departments determine is
7.14necessary to complete the study.
7.15(c) No later than March 1, 2013, the Department of Revenue must submit a report
7.16containing the results of the study to the governor and to the chairs and ranking minority
7.17members of the legislative committees having jurisdiction over taxes, in compliance with
7.18Minnesota Statutes, sections 3.195 and 3.197.
7.19(d) The department shall conduct the study only if the commissioner of revenue
7.20receives notice from the secretary of revenue that the Wisconsin Department of Revenue
7.21will fully participate in the study.
7.22EFFECTIVE DATE.This section is effective the day following final enactment.

7.23    Sec. 10. ESTATE TAX; STUDY.
7.24(a) The commissioner of revenue shall conduct a study of the Minnesota estate tax.
7.25The study must include at least the following elements:
7.26(1) evaluation of the estate tax using standard tax policy principles and methods of
7.27analysis;
7.28(2) consideration of the implications of recent federal estate tax changes, including
7.29the repeal of the federal credit for state death taxes, the increase in the federal exclusion
7.30amount, and the portability of the federal exclusion, for state estate and inheritance taxes;
7.31(3) consideration of the advantages and disadvantages of revenue neutral alternatives
7.32to the estate tax, such as an inheritance tax, a complementary gift tax, or imposition of
7.33the income tax on bequests; and
8.1(4) analysis of the available empirical evidence on the effects of the present and
8.2alternative tax structures of a Minnesota tax on estates or inheritances on domicile and
8.3migration decisions of residents and the implications for state revenues.
8.4(b) In preparing the study, the commissioner shall consult with and seek advice from
8.5the probate and estate section of the Minnesota State Bar Association.
8.6(c) By February 1, 2013, the commissioner shall submit a report to the chairs and
8.7ranking minority members of the house of representatives and senate committees with
8.8jurisdiction over taxation, in compliance with Minnesota Statutes, sections 3.195 and
8.93.197, of the findings of the study and identification of issues for policy makers to consider
8.10in deciding whether to revise, reform, replace, or repeal the estate tax.
8.11EFFECTIVE DATE.This section is effective the day following final enactment.

8.12    Sec. 11. NEW RECIPROCITY AGREEMENT WITH WISCONSIN.
8.13(a) The commissioner of revenue shall initiate negotiations with the secretary of
8.14revenue of Wisconsin, with the objective of entering into an income tax reciprocity
8.15agreement effective for tax years beginning after December 31, 2011.
8.16(b) At least 30 days before entering a final income tax reciprocity agreement with
8.17Wisconsin, the commissioner of revenue shall provide a copy of the proposed agreement
8.18and any supporting documentation, including an estimate of the impact of the agreement
8.19on state revenues, to the chairs and ranking minority members of the committees of the
8.20house of representatives and senate with jurisdiction over taxes. The commissioner shall
8.21consider any comments on the proposed agreement provided by the chairs or ranking
8.22minority members.
8.23EFFECTIVE DATE.This section is effective the day following final enactment.

8.24    Sec. 12. APPROPRIATIONS.
8.25$291,000 in fiscal year 2012 and $314,000 in fiscal year 2013 are appropriated from
8.26the general fund to the commissioner of revenue for the income reciprocity benchmark
8.27study required under section 9. The appropriations under this section are onetime and
8.28are not added to the agency's base budget.
8.29EFFECTIVE DATE.This section is effective the day following final enactment.

8.30    Sec. 13. REPEALER.
8.31(a) Minnesota Statutes 2010, section 290.0678, is repealed.
8.32(b) Minnesota Statutes 2010, section 290.9201, subdivision 3, is repealed.
9.1EFFECTIVE DATE.Paragraph (a) is effective for taxable years beginning after
9.2December 31, 2011. Paragraph (b) is effective for compensation received after December
9.331, 2011.

9.4ARTICLE 2
9.5FEDERAL UPDATE

9.6    Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, as amended by
9.7Laws 2011, chapter 8, section 1, is amended to read:
9.8    Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, for taxable
9.9years beginning before January 1, 2010, and after December 31, 2010, "Internal Revenue
9.10Code" means the Internal Revenue Code of 1986, as amended through March 18, 2010;
9.11and for taxable years beginning after December 31, 2009, and before January 1, 2011,
9.12"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through
9.13December 31, 2010 April 14, 2011.
9.14EFFECTIVE DATE.This section is effective the day following final enactment for
9.15taxable years beginning after December 31, 2009.

9.16    Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, as amended by Laws
9.172011, chapter 8, section 2, is amended to read:
9.18    Subd. 19. Net income. The term "net income" means the federal taxable income,
9.19as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
9.20date named in this subdivision, incorporating the federal effective dates of changes to the
9.21Internal Revenue Code and any elections made by the taxpayer in accordance with the
9.22Internal Revenue Code in determining federal taxable income for federal income tax
9.23purposes, and with the modifications provided in subdivisions 19a to 19f.
9.24    In the case of a regulated investment company or a fund thereof, as defined in section
9.25851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
9.26company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
9.27except that:
9.28    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
9.29Revenue Code does not apply;
9.30    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
9.31Revenue Code must be applied by allowing a deduction for capital gain dividends and
9.32exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
9.33Revenue Code; and
10.1    (3) the deduction for dividends paid must also be applied in the amount of any
10.2undistributed capital gains which the regulated investment company elects to have treated
10.3as provided in section 852(b)(3)(D) of the Internal Revenue Code.
10.4    The net income of a real estate investment trust as defined and limited by section
10.5856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
10.6taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
10.7    The net income of a designated settlement fund as defined in section 468B(d) of
10.8the Internal Revenue Code means the gross income as defined in section 468B(b) of the
10.9Internal Revenue Code.
10.10    The Internal Revenue Code of 1986, as amended through March 18, 2010 April 14,
10.112011, shall be in effect for taxable years beginning after December 31, 1996, except
10.12that for taxable years beginning after December 31, 2009, and before January 1, 2011,
10.13"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through
10.14December 31, 2010. The provisions of the act of January 22, 2010, Public Law 111-126,
10.15to accelerate the benefits for charitable cash contributions for the relief of victims of the
10.16Haitian earthquake, are effective at the same time it became effective for federal purposes
10.17and apply to the subtraction under subdivision 19b, clause (6). The provisions of title II,
10.18section 2112, of the act of September 27, 2010, Public Law 111-240, rollovers from
10.19elective deferral plans to designated Roth accounts, are effective at the same time they
10.20became effective for federal purposes and taxable rollovers are included in net income at
10.21the same time they are included in gross income for federal purposes.
10.22    Except as otherwise provided, references to the Internal Revenue Code in
10.23subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
10.24the applicable year.
10.25EFFECTIVE DATE.This section is effective the day following final enactment,
10.26except that the changes incorporated by federal changes are effective at the same time as
10.27the changes were effective for federal purposes.

10.28    Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, as amended by
10.29Laws 2011, chapter 8, section 3, and Laws 2011, chapter 112, article 6, section 1, is
10.30amended to read:
10.31    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
10.32trusts, there shall be added to federal taxable income:
10.33    (1)(i) interest income on obligations of any state other than Minnesota or a political
10.34or governmental subdivision, municipality, or governmental agency or instrumentality
11.1of any state other than Minnesota exempt from federal income taxes under the Internal
11.2Revenue Code or any other federal statute; and
11.3    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
11.4Code, except:
11.5(A) the portion of the exempt-interest dividends exempt from state taxation under
11.6the laws of the United States; and
11.7(B) the portion of the exempt-interest dividends derived from interest income
11.8on obligations of the state of Minnesota or its political or governmental subdivisions,
11.9municipalities, governmental agencies or instrumentalities, but only if the portion of the
11.10exempt-interest dividends from such Minnesota sources paid to all shareholders represents
11.1195 percent or more of the exempt-interest dividends, including any dividends exempt
11.12under subitem (A), that are paid by the regulated investment company as defined in section
11.13851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
11.14defined in section 851(g) of the Internal Revenue Code, making the payment; and
11.15    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
11.16government described in section 7871(c) of the Internal Revenue Code shall be treated as
11.17interest income on obligations of the state in which the tribe is located;
11.18    (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
11.19accrued within the taxable year under this chapter and the amount of taxes based on net
11.20income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
11.21or to any province or territory of Canada, to the extent allowed as a deduction under
11.22section 63(d) of the Internal Revenue Code, but the addition may not be more than the
11.23amount by which the itemized deductions as allowed under section 63(d) of the Internal
11.24Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
11.25the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
11.26and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
11.27required under clause (21) if the taxpayer had claimed the standard deduction. For the
11.28purpose of this paragraph, the disallowance of itemized deductions under section 68 of
11.29the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
11.30taxes are the last itemized deductions disallowed;
11.31    (3) the capital gain amount of a lump-sum distribution to which the special tax under
11.32section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
11.33    (4) the amount of income taxes paid or accrued within the taxable year under this
11.34chapter and taxes based on net income paid to any other state or any province or territory
11.35of Canada, to the extent allowed as a deduction in determining federal adjusted gross
12.1income. For the purpose of this paragraph, income taxes do not include the taxes imposed
12.2by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
12.3    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
12.4other than expenses or interest used in computing net interest income for the subtraction
12.5allowed under subdivision 19b, clause (1);
12.6    (6) the amount of a partner's pro rata share of net income which does not flow
12.7through to the partner because the partnership elected to pay the tax on the income under
12.8section 6242(a)(2) of the Internal Revenue Code;
12.9    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
12.10Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
12.11in the taxable year generates a deduction for depreciation under section 168(k) and the
12.12activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
12.13the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
12.14limited to excess of the depreciation claimed by the activity under section 168(k) over the
12.15amount of the loss from the activity that is not allowed in the taxable year. In succeeding
12.16taxable years when the losses not allowed in the taxable year are allowed, the depreciation
12.17under section 168(k) is allowed;
12.18    (8) 80 percent of the amount by which the deduction allowed by section 179 of the
12.19Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
12.20Revenue Code of 1986, as amended through December 31, 2003;
12.21    (9) to the extent deducted in computing federal taxable income, the amount of the
12.22deduction allowable under section 199 of the Internal Revenue Code;
12.23    (10) for taxable years beginning before January 1, 2013, the exclusion allowed
12.24under section 139A of the Internal Revenue Code for federal subsidies for prescription
12.25drug plans;
12.26(11) the amount of expenses disallowed under section 290.10, subdivision 2;
12.27    (12) for taxable years beginning before January 1, 2010, and after December 31,
12.282010, the amount deducted for qualified tuition and related expenses under section 222 of
12.29the Internal Revenue Code, to the extent deducted from gross income;
12.30    (13) for taxable years beginning before January 1, 2010, and after December 31,
12.312010, the amount deducted for certain expenses of elementary and secondary school
12.32teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
12.33from gross income;
12.34(14) the additional standard deduction for property taxes payable that is allowable
12.35under section 63(c)(1)(C) of the Internal Revenue Code;
13.1(15) the additional standard deduction for qualified motor vehicle sales taxes
13.2allowable under section 63(c)(1)(E) of the Internal Revenue Code;
13.3(16) discharge of indebtedness income resulting from reacquisition of business
13.4indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
13.5(17) the amount of unemployment compensation exempt from tax under section
13.685(c) of the Internal Revenue Code; and
13.7(18) changes to federal taxable income attributable to a net operating loss that the
13.8taxpayer elected to carry back for more than two years for federal purposes but for which
13.9the losses can be carried back for only two years under section 290.095, subdivision
13.1011, paragraph (c).;
13.11(19) to the extent included in the computation of federal taxable income in taxable
13.12years beginning after December 31, 2010, the amount of disallowed itemized deductions,
13.13but the amount of disallowed itemized deductions plus the addition required under clause
13.14(2) may not be more than the amount by which the itemized deductions as allowed under
13.15section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction
13.16as defined in section 63(c) of the Internal Revenue Code, disregarding the amounts
13.17allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code, and
13.18reduced by any addition that would have been required under clause (21) if the taxpayer
13.19had claimed the standard deduction;
13.20(i) The amount of disallowed itemized deductions is equal to the lesser of:
13.21(A) three percent of the excess of the taxpayer's federal adjusted gross income
13.22over the applicable amount; or
13.23(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
13.24taxpayer under the Internal Revenue Code for the taxable year.
13.25(ii) The term "applicable amount" means $100,000, or $50,000 in the case of a
13.26married individual filing a separate return. Each dollar amount shall be increased by
13.27an amount equal to:
13.28(A) such dollar amount, multiplied by
13.29(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
13.30Revenue Code for the calendar year in which the taxable year begins, by substituting
13.31"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof.
13.32(iii) The term "itemized deductions" does not include:
13.33(A) the deduction for medical expenses under section 213 of the Internal Revenue
13.34Code;
13.35(B) any deduction for investment interest as defined in section 163(d) of the Internal
13.36Revenue Code; and
14.1(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
14.2theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
14.3Code or for losses described in section 165(d) of the Internal Revenue Code;
14.4(20) to the extent included in federal taxable income in taxable years beginning after
14.5December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
14.6federal adjusted gross income over the threshold amount;
14.7(i) The disallowed personal exemption amount is equal to the dollar amount of the
14.8personal exemptions claimed by the taxpayer in the computation of federal taxable income
14.9multiplied by the applicable percentage.
14.10(ii) "Applicable percentage" means two percentage points for each $2,500 (or
14.11fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
14.12year exceeds the threshold amount. In the case of a married individual filing a separate
14.13return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In no
14.14event shall the applicable percentage exceed 100 percent.
14.15(iii) The term "threshold amount" means:
14.16(A) $150,000 in the case of a joint return or a surviving spouse;
14.17(B) $125,000 in the case of a head of a household;
14.18(C) $100,000 in the case of an individual who is not married and who is not a
14.19surviving spouse or head of a household; and
14.20(D) $75,000 in the case of a married individual filing a separate return.
14.21(iv) The thresholds shall be increased by an amount equal to:
14.22(A) such dollar amount, multiplied by
14.23(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
14.24Revenue Code for the calendar year in which the taxable year begins, by substituting
14.25"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
14.26(21) to the extent deducted in the computation of federal taxable income, for taxable
14.27years beginning after December 31, 2010, and before January 1, 2013, the difference
14.28between the standard deduction allowed under section 63(c) of the Internal Revenue Code
14.29and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code
14.30as amended through December 1, 2010.
14.31EFFECTIVE DATE.This section is effective for taxable years beginning after
14.32December 31, 2010, except that the change to clause (10) is effective the day following
14.33final enactment.

14.34    Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, as amended by Laws
14.352011, chapter 8, section 4, is amended to read:
15.1    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
15.2there shall be added to federal taxable income:
15.3    (1) the amount of any deduction taken for federal income tax purposes for income,
15.4excise, or franchise taxes based on net income or related minimum taxes, including but not
15.5limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
15.6another state, a political subdivision of another state, the District of Columbia, or any
15.7foreign country or possession of the United States;
15.8    (2) interest not subject to federal tax upon obligations of: the United States, its
15.9possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
15.10state, any of its political or governmental subdivisions, any of its municipalities, or any
15.11of its governmental agencies or instrumentalities; the District of Columbia; or Indian
15.12tribal governments;
15.13    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
15.14Revenue Code;
15.15    (4) the amount of any net operating loss deduction taken for federal income tax
15.16purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
15.17deduction under section 810 of the Internal Revenue Code;
15.18    (5) the amount of any special deductions taken for federal income tax purposes
15.19under sections 241 to 247 and 965 of the Internal Revenue Code;
15.20    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
15.21clause (a), that are not subject to Minnesota income tax;
15.22    (7) the amount of any capital losses deducted for federal income tax purposes under
15.23sections 1211 and 1212 of the Internal Revenue Code;
15.24    (8) the exempt foreign trade income of a foreign sales corporation under sections
15.25921(a) and 291 of the Internal Revenue Code;
15.26    (9) the amount of percentage depletion deducted under sections 611 through 614 and
15.27291 of the Internal Revenue Code;
15.28    (10) for certified pollution control facilities placed in service in a taxable year
15.29beginning before December 31, 1986, and for which amortization deductions were elected
15.30under section 169 of the Internal Revenue Code of 1954, as amended through December
15.3131, 1985, the amount of the amortization deduction allowed in computing federal taxable
15.32income for those facilities;
15.33    (11) the amount of any deemed dividend from a foreign operating corporation
15.34determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
15.35shall be reduced by the amount of the addition to income required by clauses (20), (21),
15.36(22), and (23);
16.1    (12) the amount of a partner's pro rata share of net income which does not flow
16.2through to the partner because the partnership elected to pay the tax on the income under
16.3section 6242(a)(2) of the Internal Revenue Code;
16.4    (13) the amount of net income excluded under section 114 of the Internal Revenue
16.5Code;
16.6    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
16.7Revenue Code, for the taxable year when subpart F income is calculated without regard to
16.8the provisions of Division C, title III, section 303(b) of Public Law 110-343;
16.9    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
16.10and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
16.11has an activity that in the taxable year generates a deduction for depreciation under
16.12section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
16.13that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
16.14under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
16.15depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
16.16amount of the loss from the activity that is not allowed in the taxable year. In succeeding
16.17taxable years when the losses not allowed in the taxable year are allowed, the depreciation
16.18under section 168(k)(1)(A) and (k)(4)(A) is allowed;
16.19    (16) 80 percent of the amount by which the deduction allowed by section 179 of the
16.20Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
16.21Revenue Code of 1986, as amended through December 31, 2003;
16.22    (17) to the extent deducted in computing federal taxable income, the amount of the
16.23deduction allowable under section 199 of the Internal Revenue Code;
16.24    (18) for taxable years beginning before January 1, 2013, the exclusion allowed
16.25under section 139A of the Internal Revenue Code for federal subsidies for prescription
16.26drug plans;
16.27    (19) the amount of expenses disallowed under section 290.10, subdivision 2;
16.28    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
16.29accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
16.30of a corporation that is a member of the taxpayer's unitary business group that qualifies
16.31as a foreign operating corporation. For purposes of this clause, intangible expenses and
16.32costs include:
16.33    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
16.34use, maintenance or management, ownership, sale, exchange, or any other disposition of
16.35intangible property;
17.1    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
17.2transactions;
17.3    (iii) royalty, patent, technical, and copyright fees;
17.4    (iv) licensing fees; and
17.5    (v) other similar expenses and costs.
17.6For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
17.7applications, trade names, trademarks, service marks, copyrights, mask works, trade
17.8secrets, and similar types of intangible assets.
17.9This clause does not apply to any item of interest or intangible expenses or costs paid,
17.10accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
17.11to such item of income to the extent that the income to the foreign operating corporation
17.12is income from sources without the United States as defined in subtitle A, chapter 1,
17.13subchapter N, part 1, of the Internal Revenue Code;
17.14    (21) except as already included in the taxpayer's taxable income pursuant to clause
17.15(20), any interest income and income generated from intangible property received or
17.16accrued by a foreign operating corporation that is a member of the taxpayer's unitary
17.17group. For purposes of this clause, income generated from intangible property includes:
17.18    (i) income related to the direct or indirect acquisition, use, maintenance or
17.19management, ownership, sale, exchange, or any other disposition of intangible property;
17.20    (ii) income from factoring transactions or discounting transactions;
17.21    (iii) royalty, patent, technical, and copyright fees;
17.22    (iv) licensing fees; and
17.23    (v) other similar income.
17.24For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
17.25applications, trade names, trademarks, service marks, copyrights, mask works, trade
17.26secrets, and similar types of intangible assets.
17.27This clause does not apply to any item of interest or intangible income received or accrued
17.28by a foreign operating corporation with respect to such item of income to the extent that
17.29the income is income from sources without the United States as defined in subtitle A,
17.30chapter 1, subchapter N, part 1, of the Internal Revenue Code;
17.31    (22) the dividends attributable to the income of a foreign operating corporation that
17.32is a member of the taxpayer's unitary group in an amount that is equal to the dividends
17.33paid deduction of a real estate investment trust under section 561(a) of the Internal
17.34Revenue Code for amounts paid or accrued by the real estate investment trust to the
17.35foreign operating corporation;
18.1    (23) the income of a foreign operating corporation that is a member of the taxpayer's
18.2unitary group in an amount that is equal to gains derived from the sale of real or personal
18.3property located in the United States;
18.4    (24) for taxable years beginning before January 1, 2010, and after December 31,
18.52010, the additional amount allowed as a deduction for donation of computer technology
18.6and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent
18.7deducted from taxable income; and
18.8(25) discharge of indebtedness income resulting from reacquisition of business
18.9indebtedness and deferred under section 108(i) of the Internal Revenue Code.
18.10EFFECTIVE DATE.The change to clause (24) is effective for taxable years
18.11beginning after December 31, 2010. The change to clause (18) is effective the day
18.12following final enactment.

18.13    Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 31, as amended by Laws
18.142011, chapter 8, section 5, is amended to read:
18.15    Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, for
18.16taxable years beginning before January 1, 2010, and after December 31, 2010, "Internal
18.17Revenue Code" means the Internal Revenue Code of 1986, as amended through March 18,
18.182010; and for taxable years beginning after December 31, 2009, and before January 1,
18.192011, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
18.20through December 31, 2010 April 14, 2011. Internal Revenue Code also includes any
18.21uncodified provision in federal law that relates to provisions of the Internal Revenue
18.22Code that are incorporated into Minnesota law. When used in this chapter, the reference
18.23to "subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code" is to the
18.24Internal Revenue Code as amended through March 18, 2010.
18.25EFFECTIVE DATE.This section is effective the day following final enactment,
18.26except the changes incorporated by federal changes are effective at the same time as the
18.27changes were effective for federal purposes.

18.28    Sec. 6. Minnesota Statutes 2010, section 290.0671, subdivision 1, is amended to read:
18.29    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
18.30imposed by this chapter equal to a percentage of earned income. To receive a credit, a
18.31taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
18.32(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
18.33the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
19.1income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
19.2case is the credit less than zero.
19.3(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
19.4$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
19.5$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
19.6whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
19.7(d) For individuals with two or more qualifying children, the credit equals ten
19.8percent of the first $9,720 of earned income and 20 percent of earned income over
19.9$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income
19.10or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is
19.11the credit less than zero.
19.12(e) For a nonresident or part-year resident, the credit must be allocated based on the
19.13percentage calculated under section 290.06, subdivision 2c, paragraph (e).
19.14(f) For a person who was a resident for the entire tax year and has earned income
19.15not subject to tax under this chapter, including income excluded under section 290.01,
19.16subdivision 19b
, clause (9) or (15), the credit must be allocated based on the ratio of
19.17federal adjusted gross income reduced by the earned income not subject to tax under
19.18this chapter over federal adjusted gross income. For purposes of this paragraph, the
19.19subtractions for military pay under section 290.01, subdivision 19b, clauses (10) and (11),
19.20are not considered "earned income not subject to tax under this chapter."
19.21For the purposes of this paragraph, the exclusion of combat pay under section 112
19.22of the Internal Revenue Code is not considered "earned income not subject to tax under
19.23this chapter."
19.24(g) For tax years beginning after December 31, 2007, and before December 31,
19.252010, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
19.26paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
19.27$3,000 for married taxpayers filing joint returns. For tax years beginning after December
19.2831, 2008, the commissioner shall annually adjust the $3,000 by the percentage determined
19.29pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
19.30section 1(f)(3)(B), the word "2007" shall be substituted for the word "1992." For 2009,
19.31the commissioner shall then determine the percent change from the 12 months ending on
19.32August 31, 2007, to the 12 months ending on August 31, 2008, and in each subsequent
19.33year, from the 12 months ending on August 31, 2007, to the 12 months ending on August
19.3431 of the year preceding the taxable year. The earned income thresholds as adjusted
19.35for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount
20.1is rounded up to the nearest $10. The determination of the commissioner under this
20.2subdivision is not a rule under the Administrative Procedure Act.
20.3(h) For tax years beginning after December 31, 2010, and before January 1, 2012,
20.4the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
20.5(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000
20.6for married taxpayers filing joint returns. For tax years beginning after December 31,
20.72010, and before January 1, 2012, the commissioner shall annually adjust the $5,000
20.8by the percentage determined pursuant to the provisions of section 1(f) of the Internal
20.9Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for
20.10the word "1992." For 2011, the commissioner shall then determine the percent change
20.11from the 12 months ending on August 31, 2008, to the 12 months ending on August
20.1231, 2010. The earned income thresholds as adjusted for inflation must be rounded to
20.13the nearest $10. If the amount ends in $5, the amount is rounded up to the nearest $10.
20.14The determination of the commissioner under this subdivision is not a rule under the
20.15Administrative Procedure Act.
20.16(h) (i) The commissioner shall construct tables showing the amount of the credit
20.17at various income levels and make them available to taxpayers. The tables shall follow
20.18the schedule contained in this subdivision, except that the commissioner may graduate
20.19the transition between income brackets.
20.20EFFECTIVE DATE.This section is effective for taxable years beginning after
20.21December 31, 2010.

20.22    Sec. 7. Minnesota Statutes 2010, section 290.0675, subdivision 1, is amended to read:
20.23    Subdivision 1. Definitions. (a) For purposes of this section the following terms
20.24have the meanings given.
20.25(b) "Earned income" means the sum of the following, to the extent included in
20.26Minnesota taxable income:
20.27(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
20.28(2) income received from a retirement pension, profit-sharing, stock bonus, or
20.29annuity plan; and
20.30(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue
20.31Code.
20.32(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
20.33(d) "Earned income of lesser-earning spouse" means the earned income of the
20.34spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable
20.35year minus the sum of (i) the amount for one exemption under section 151(d) of the
21.1Internal Revenue Code and (ii) one-half the amount of the standard deduction under
21.2section 63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition
21.3required under section 290.01, subdivision 19a, clause (21), and one-half of the addition
21.4that would have been required under section 290.01, subdivision 19a, clause (21), if the
21.5taxpayer had claimed the standard deduction.
21.6EFFECTIVE DATE.This section is effective for taxable years beginning after
21.7December 31, 2010.

21.8    Sec. 8. Minnesota Statutes 2010, section 290A.03, subdivision 15, as amended by
21.9Laws 2011, chapter 8, section 6, is amended to read:
21.10    Subd. 15. Internal Revenue Code. For taxable years beginning before January 1,
21.112010, and after December 31, 2010, "Internal Revenue Code" means the Internal Revenue
21.12Code of 1986, as amended through March 18, 2010; and for taxable years beginning after
21.13December 31, 2009, and before January 1, 2011, "Internal Revenue Code" means the
21.14Internal Revenue Code of 1986, as amended through December 31, 2010 April 14, 2011.
21.15EFFECTIVE DATE.This section is effective for property tax refunds based on
21.16property taxes payable on or after December 31, 2011, and rent paid on or after December
21.1731, 2010.

21.18    Sec. 9. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:
21.19    Subdivision 1. Scope. Unless the context otherwise clearly requires, the following
21.20terms used in this chapter shall have the following meanings:
21.21    (1) "Commissioner" means the commissioner of revenue or any person to whom the
21.22commissioner has delegated functions under this chapter.
21.23    (2) "Federal gross estate" means the gross estate of a decedent as required to be
21.24valued and otherwise determined for federal estate tax purposes under the Internal
21.25Revenue Code.
21.26    (3) "Internal Revenue Code" means the United States Internal Revenue Code of
21.271986, as amended through March 18, 2010 April 14, 2011, but without regard to the
21.28provisions of sections 501 and 901 of Public Law 107-16, as amended by Public Law
21.29111-312, and section 301(c) of Public Law 111-312.
21.30    (4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
21.31defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of
21.32deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.
22.1    (5) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
22.2excluding therefrom any property included therein which has its situs outside Minnesota,
22.3and (b) including therein any property omitted from the federal gross estate which is
22.4includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
22.5authorities.
22.6    (6) "Nonresident decedent" means an individual whose domicile at the time of
22.7death was not in Minnesota.
22.8    (7) "Personal representative" means the executor, administrator or other person
22.9appointed by the court to administer and dispose of the property of the decedent. If there
22.10is no executor, administrator or other person appointed, qualified, and acting within this
22.11state, then any person in actual or constructive possession of any property having a situs in
22.12this state which is included in the federal gross estate of the decedent shall be deemed
22.13to be a personal representative to the extent of the property and the Minnesota estate tax
22.14due with respect to the property.
22.15    (8) "Resident decedent" means an individual whose domicile at the time of death
22.16was in Minnesota.
22.17    (9) "Situs of property" means, with respect to real property, the state or country in
22.18which it is located; with respect to tangible personal property, the state or country in which
22.19it was normally kept or located at the time of the decedent's death; and with respect to
22.20intangible personal property, the state or country in which the decedent was domiciled
22.21at death.
22.22EFFECTIVE DATE.This section is effective the day following final enactment.

22.23ARTICLE 3
22.24SALES AND USE TAXES

22.25    Section 1. Minnesota Statutes 2010, section 297A.61, subdivision 3, as amended by
22.26Laws 2011, chapter 112, article 8, section 1, is amended to read:
22.27    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited
22.28to, each of the transactions listed in this subdivision.
22.29    (b) Sale and purchase include:
22.30    (1) any transfer of title or possession, or both, of tangible personal property, whether
22.31absolutely or conditionally, for a consideration in money or by exchange or barter; and
22.32    (2) the leasing of or the granting of a license to use or consume, for a consideration
22.33in money or by exchange or barter, tangible personal property, other than a manufactured
22.34home used for residential purposes for a continuous period of 30 days or more.
23.1    (c) Sale and purchase include the production, fabrication, printing, or processing of
23.2tangible personal property for a consideration for consumers who furnish either directly or
23.3indirectly the materials used in the production, fabrication, printing, or processing.
23.4    (d) Sale and purchase include the preparing for a consideration of food.
23.5Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
23.6to, the following:
23.7    (1) prepared food sold by the retailer;
23.8    (2) soft drinks;
23.9    (3) candy;
23.10    (4) dietary supplements; and
23.11    (5) all food sold through vending machines.
23.12    (e) A sale and a purchase includes the furnishing for a consideration of electricity,
23.13gas, water, or steam for use or consumption within this state.
23.14    (f) A sale and a purchase includes the transfer for a consideration of prewritten
23.15computer software whether delivered electronically, by load and leave, or otherwise.
23.16    (g) A sale and a purchase includes the furnishing for a consideration of the following
23.17services:
23.18    (1) the privilege of admission to places of amusement, recreational areas, or athletic
23.19events, and the making available of amusement devices, tanning facilities, reducing
23.20salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities;
23.21    (2) lodging and related services by a hotel, rooming house, resort, campground,
23.22motel, or trailer camp, including furnishing the guest of the facility with access to
23.23telecommunication services, and the granting of any similar license to use real property in
23.24a specific facility, other than the renting or leasing of it for a continuous period of 30 days
23.25or more under an enforceable written agreement that may not be terminated without prior
23.26notice and including accommodations intermediary services provided in connection with
23.27other services provided under this clause;
23.28    (3) nonresidential parking services, whether on a contractual, hourly, or other
23.29periodic basis, except for parking at a meter;
23.30    (4) the granting of membership in a club, association, or other organization if:
23.31    (i) the club, association, or other organization makes available for the use of its
23.32members sports and athletic facilities, without regard to whether a separate charge is
23.33assessed for use of the facilities; and
23.34    (ii) use of the sports and athletic facility is not made available to the general public
23.35on the same basis as it is made available to members.
24.1Granting of membership means both onetime initiation fees and periodic membership
24.2dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
24.3squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
24.4swimming pools; and other similar athletic or sports facilities;
24.5    (5) delivery of aggregate materials by a third party, excluding delivery of aggregate
24.6material used in road construction; and delivery of concrete block by a third party if
24.7the delivery would be subject to the sales tax if provided by the seller of the concrete
24.8block; and
24.9    (6) services as provided in this clause:
24.10    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
24.11and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
24.12drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
24.13include services provided by coin operated facilities operated by the customer;
24.14    (ii) motor vehicle washing, waxing, and cleaning services, including services
24.15provided by coin operated facilities operated by the customer, and rustproofing,
24.16undercoating, and towing of motor vehicles;
24.17    (iii) building and residential cleaning, maintenance, and disinfecting services and
24.18pest control and exterminating services;
24.19    (iv) detective, security, burglar, fire alarm, and armored car services; but not
24.20including services performed within the jurisdiction they serve by off-duty licensed peace
24.21officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
24.22organization for monitoring and electronic surveillance of persons placed on in-home
24.23detention pursuant to court order or under the direction of the Minnesota Department
24.24of Corrections;
24.25    (v) pet grooming services;
24.26    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
24.27and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
24.28plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
24.29clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
24.30public utility lines. Services performed under a construction contract for the installation of
24.31shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
24.32    (vii) massages, except when provided by a licensed health care facility or
24.33professional or upon written referral from a licensed health care facility or professional for
24.34treatment of illness, injury, or disease; and
24.35    (viii) the furnishing of lodging, board, and care services for animals in kennels and
24.36other similar arrangements, but excluding veterinary and horse boarding services.
25.1    In applying the provisions of this chapter, the terms "tangible personal property"
25.2and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
25.3and the provision of these taxable services, unless specifically provided otherwise.
25.4Services performed by an employee for an employer are not taxable. Services performed
25.5by a partnership or association for another partnership or association are not taxable if
25.6one of the entities owns or controls more than 80 percent of the voting power of the
25.7equity interest in the other entity. Services performed between members of an affiliated
25.8group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
25.9group of corporations" means those entities that would be classified as members of an
25.10affiliated group as defined under United States Code, title 26, section 1504, disregarding
25.11the exclusions in section 1504(b).
25.12    For purposes of clause (5), "road construction" means construction of (1) public
25.13roads, (2) cartways, and (3) private roads in townships located outside of the seven-county
25.14metropolitan area up to the point of the emergency response location sign.
25.15    (h) A sale and a purchase includes the furnishing for a consideration of tangible
25.16personal property or taxable services by the United States or any of its agencies or
25.17instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
25.18subdivisions.
25.19    (i) A sale and a purchase includes the furnishing for a consideration of
25.20telecommunications services, ancillary services associated with telecommunication
25.21services, cable television services, and direct satellite services, and ring tones.
25.22Telecommunication services include, but are not limited to, the following services,
25.23as defined in section 297A.669: air-to-ground radiotelephone service, mobile
25.24telecommunication service, postpaid calling service, prepaid calling service, prepaid
25.25wireless calling service, and private communication services. The services in this
25.26paragraph are taxed to the extent allowed under federal law.
25.27    (j) A sale and a purchase includes the furnishing for a consideration of installation if
25.28the installation charges would be subject to the sales tax if the installation were provided
25.29by the seller of the item being installed.
25.30    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
25.31to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
25.32the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
25.3359B.02, subdivision 11.
25.34EFFECTIVE DATE.This section is effective for sales and purchases made after
25.35September 30, 2011, except the change in paragraph (g), clause (2), is effective the day
25.36following final enactment.

26.1    Sec. 2. Minnesota Statutes 2010, section 297A.61, is amended by adding a subdivision
26.2to read:
26.3    Subd. 47. Accommodations intermediary. "Accommodations intermediary"
26.4means any person or entity, other than an accommodations provider, that facilitates the sale
26.5of lodging as defined in subdivision 3, paragraph (g), clause (2), and that charges a room
26.6charge to a customer. The term "facilitates the sale" includes brokering, coordinating, or in
26.7any way arranging for the purchase of or the right to use accommodations by a customer.
26.8EFFECTIVE DATE.This section is effective the day following final enactment.

26.9    Sec. 3. Minnesota Statutes 2010, section 297A.61, is amended by adding a subdivision
26.10to read:
26.11    Subd. 48. Accommodations provider. "Accommodations provider" means any
26.12person or entity that furnishes lodging as defined in subdivision 3, paragraph (g), clause
26.13(2), to the general public for compensation. The term "furnishes" includes the sale of use
26.14or possession, or the sale of the right to use or possess.
26.15EFFECTIVE DATE.This section is effective the day following final enactment.

26.16    Sec. 4. Minnesota Statutes 2010, section 297A.66, is amended by adding a subdivision
26.17to read:
26.18    Subd. 6. Lodging services. An accommodations intermediary shall collect sales
26.19tax and remit it to the commissioner under section 297A.77 for services provided in
26.20connection with or for lodging located in this state.
26.21EFFECTIVE DATE.This section is effective the day following final enactment.

26.22    Sec. 5. Minnesota Statutes 2010, section 297A.668, is amended by adding a
26.23subdivision to read:
26.24    Subd. 9. Florist sales. (a) Notwithstanding other subdivisions of this section, the
26.25retail sale of "florist sales" is sourced as follows:
26.26(1) When a Minnesota retailer takes a florist sales order directly from a customer,
26.27whether or not the customer is physically present in Minnesota when placing the order,
26.28and delivers the items to the customer or a third person, either within this state or outside
26.29this state, and regardless of the delivery method, the florist sale is sourced according to
26.30subdivision 2.
26.31(2) When one retailer transmits a florist sales order to another retailer of florist sales
26.32through a floral network service or floral delivery association, whether by telephone,
27.1telegraph, Internet, or other means of communication, the florist sale is sourced to the
27.2location of the retailer which originally takes the order from the customer and accepts
27.3payment.
27.4(b) For purposes of this subdivision, florist sales means sales at retail of flowers,
27.5wreaths, floral bouquets, potted plants, hospital baskets, funeral designs, seeds, nursery
27.6seedling stock, trees, shrubs, plants, sod, soil, bulbs, sand, rock, and all other floral
27.7or nursery products.
27.8EFFECTIVE DATE.This section is effective for sales and purchases made after
27.9September 30, 2011.

27.10    Sec. 6. Minnesota Statutes 2010, section 297A.68, subdivision 4, is amended to read:
27.11    Subd. 4. Taconite, other ores, metals, or minerals; production materials. Mill
27.12liners, grinding rods, and grinding balls that are substantially consumed in the production
27.13of taconite or other ores, metals, or minerals are exempt when sold to or stored, used, or
27.14consumed by persons taxed under the in-lieu or net proceeds provisions of chapter 298.
27.15EFFECTIVE DATE.This section is effective for sales and purchases made after
27.16September 30, 2011.

27.17    Sec. 7. Minnesota Statutes 2010, section 297A.68, is amended by adding a subdivision
27.18to read:
27.19    Subd. 42. Qualified data centers. (a) Purchases of enterprise information
27.20technology equipment and computer software for use in a qualified data center are exempt.
27.21The tax on purchases exempt under this paragraph must be imposed and collected as if
27.22the rate under section 297A.62, subdivision 1, applied, and then refunded after June 30,
27.232013, in the manner provided in section 297A.75. This exemption includes enterprise
27.24information technology equipment and computer software purchased to replace or upgrade
27.25enterprise information technology equipment and computer software in a qualified data
27.26center.
27.27(b) Electricity used or consumed in the operation of a qualified data center is exempt.
27.28(c) For purposes of this subdivision, "qualified data center" means a facility in
27.29Minnesota:
27.30(1) that is comprised of one or more buildings that consist in the aggregate of
27.31at least 30,000 square feet, and that are located on a single parcel or on contiguous
27.32parcels, where the total cost of construction or refurbishment, investment in enterprise
28.1information technology equipment, and computer software is at least $50,000,000 within
28.2a 24-month period;
28.3(2) that is constructed or substantially refurbished after June 30, 2012, where
28.4"substantially refurbished" means that at least 30,000 square feet has been rebuilt or
28.5modified; and
28.6(3) that is used to house enterprise information technology equipment, where the
28.7facility has the following characteristics:
28.8(i) uninterruptible power supplies, generator backup power, or both;
28.9(ii) sophisticated fire suppression and prevention systems; and
28.10(iii) enhanced security. A facility will be considered to have enhanced security if it
28.11has restricted access to the facility to selected personnel; permanent security guards; video
28.12camera surveillance; an electronic system requiring pass codes, keycards, or biometric
28.13scans, such as hand scans and retinal or fingerprint recognition; or similar security features.
28.14In determining whether the facility has the required square footage, the square
28.15footage of the following spaces shall be included if the spaces support the operation of
28.16enterprise information technology equipment: office space, meeting space, and mechanical
28.17and other support facilities.
28.18(d) For purposes of this subdivision, "enterprise information technology equipment"
28.19means computers and equipment supporting computing, networking, or data storage,
28.20including servers and routers. It includes, but is not limited to: cooling systems,
28.21cooling towers, and other temperature control infrastructure; power infrastructure for
28.22transformation, distribution, or management of electricity used for the maintenance
28.23and operation of a qualified data center, including but not limited to exterior dedicated
28.24business-owned substations, backup power generation systems, battery systems, and
28.25related infrastructure; and racking systems, cabling, and trays, which are necessary for
28.26the maintenance and operation of the qualified data center.
28.27(e) A qualified data center may claim the exemptions in this subdivision for
28.28purchases made either within 20 years of the date of its first purchase qualifying for the
28.29exemption under paragraph (a), or by June 30, 2042, whichever is earlier.
28.30(f) The purpose of this exemption is to create jobs in the construction and data
28.31center industries.
28.32(g) This subdivision is effective for sales and purchases made after June 30, 2012,
28.33and before July 1, 2042.
28.34EFFECTIVE DATE.This section is effective for sales and purchases made after
28.35June 30, 2012, and before July 1, 2042.

29.1    Sec. 8. Minnesota Statutes 2010, section 297A.68, is amended by adding a subdivision
29.2to read:
29.3    Subd. 43. Resold admission tickets. (a) When a ticket reseller who purchased
29.4a ticket from a seller who is in the business of selling tickets resells the ticket, the
29.5ticket reseller must charge tax on the total amount for which the ticket is resold and the
29.6following rules apply:
29.7(1) if the ticket reseller did not use a fully completed exemption certificate to claim
29.8the exemption from tax for resale, but instead paid tax on the original purchase, then the
29.9ticket reseller may do one of the following:
29.10(i) seek a refund of that tax under section 289A.50; or
29.11(ii) pass through to the purchaser the amount of the tax the ticket reseller paid on
29.12the original purchase, by giving the purchaser credit for the Minnesota state and local tax
29.13paid by the ticket reseller on the ticket reseller's original purchase of the ticket. Credit
29.14for the tax cannot exceed either the sales tax paid on the original price of the ticket or the
29.15sales tax charged by the ticket reseller to the final purchaser;
29.16(2) if the ticket reseller did not pay tax on the original purchase, tax is due on the full
29.17amount of the ticket when resold, without a credit given to the final purchaser; and
29.18(3) the ticket reseller must retain records documenting the price and tax paid by the
29.19ticket reseller when purchasing the ticket and the price and tax collected when the ticket
29.20reseller resells the ticket.
29.21(b) When a ticket reseller who purchased a ticket from a seller who is not in the
29.22business of selling tickets resells the ticket, the ticket reseller must charge tax on the total
29.23amount for which the ticket is resold and the following rules apply:
29.24(1) the ticket reseller may credit its purchaser an amount equal to the tax the ticket
29.25reseller would have paid its seller, had the seller been registered to collect tax on its
29.26sale of the ticket to the ticket reseller. Credit for the tax cannot exceed either the sales
29.27tax paid on the original price of the ticket or the sales tax charged by the ticket reseller
29.28to the final purchaser. It is presumed that the original purchase price of the ticket is the
29.29face amount of the ticket;
29.30(2) if no tax was paid on the original purchase, tax is due on the full amount of the
29.31ticket when resold, without a credit given to the ticket reseller's purchaser; and
29.32(3) the ticket reseller must retain records documenting the price and tax paid by the
29.33ticket reseller when purchasing the ticket and the price and tax collected when the ticket
29.34reseller resells the ticket.
29.35(c) For purposes of this subdivision, "ticket reseller" means a person who:
30.1(1) purchases admission tickets to a sporting event, theater, musical performance, or
30.2place of public entertainment or amusement of any kind;
30.3(2) resells admission tickets to events under clause (1); and
30.4(3) is registered to collect tax under this chapter.
30.5EFFECTIVE DATE.This section is effective for sales and purchases made after
30.6September 30, 2011.

30.7    Sec. 9. Minnesota Statutes 2010, section 297A.70, subdivision 1, is amended to read:
30.8    Subdivision 1. Scope. (a) To the extent provided in this section, the gross receipts
30.9from sales of items to or by, and storage, distribution, use, or consumption of items by the
30.10organizations or units of local government listed in this section are specifically exempted
30.11from the taxes imposed by this chapter.
30.12(b) Notwithstanding any law to the contrary enacted before 1992, only sales to
30.13governments and political subdivisions listed in this section are exempt from the taxes
30.14imposed by this chapter.
30.15(c) "Sales" includes purchases under an installment contract or lease purchase
30.16agreement under section 465.71.
30.17EFFECTIVE DATE.This section is effective for sales and purchases made after
30.18September 30, 2011.

30.19    Sec. 10. Minnesota Statutes 2010, section 297A.70, subdivision 2, is amended to read:
30.20    Subd. 2. Sales to government. (a) All sales, except those listed in paragraph (b),
30.21to the following governments and political subdivisions, or to the listed agencies or
30.22instrumentalities of governments and political subdivisions, are exempt:
30.23(1) the United States and its agencies and instrumentalities;
30.24(2) school districts, the University of Minnesota, state universities, community
30.25colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts
30.26Education, and an instrumentality of a political subdivision that is accredited as an
30.27optional/special function school by the North Central Association of Colleges and Schools;
30.28(3) hospitals and nursing homes owned and operated by political subdivisions of
30.29the state of tangible personal property and taxable services used at or by hospitals and
30.30nursing homes;
30.31(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip
30.32operations provided for in section 473.4051;
31.1(5) other states or political subdivisions of other states, if the sale would be exempt
31.2from taxation if it occurred in that state; and
31.3(6) sales to public libraries, public library systems, multicounty, multitype library
31.4systems as defined in section 134.001, county law libraries under chapter 134A, state
31.5agency libraries, the state library under section 480.09, and the Legislative Reference
31.6Library; and
31.7(7) towns.
31.8(b) This exemption does not apply to the sales of the following products and services:
31.9(1) building, construction, or reconstruction materials purchased by a contractor
31.10or a subcontractor as a part of a lump-sum contract or similar type of contract with a
31.11guaranteed maximum price covering both labor and materials for use in the construction,
31.12alteration, or repair of a building or facility;
31.13(2) construction materials purchased by tax exempt entities or their contractors to
31.14be used in constructing buildings or facilities which will not be used principally by the
31.15tax exempt entities;
31.16(3) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11,
31.17except for leases entered into by the United States or its agencies or instrumentalities; or
31.18(4) lodging as defined under section 297A.61, subdivision 3, paragraph (g),
31.19clause (2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in
31.20section 297A.67, subdivision 2, except for lodging, prepared food, candy, soft drinks,
31.21and alcoholic beverages purchased directly by the United States or its agencies or
31.22instrumentalities; or
31.23(5) goods or services purchased by a town as inputs to goods and services that are
31.24generally provided by a private business and the purchases would be taxable if made by a
31.25private business engaged in the same activity.
31.26(c) As used in this subdivision, "school districts" means public school entities and
31.27districts of every kind and nature organized under the laws of the state of Minnesota, and
31.28any instrumentality of a school district, as defined in section 471.59.
31.29(d) As used in this subdivision, "goods or services generally provided by a private
31.30business" include, but are not limited to, goods or services provided by liquor stores, gas
31.31and electric utilities, golf courses, marinas, health and fitness centers, campgrounds, cafes,
31.32and laundromats. "Goods or services generally provided by a private business" do not
31.33include housing services, sewer and water services, wastewater treatment, ambulance and
31.34other public safety services, correctional services, chore or homemaking services provided
31.35to elderly or disabled individuals, or road and street maintenance or lighting.
32.1EFFECTIVE DATE.This section is effective for sales and purchases made after
32.2September 30, 2011.

32.3    Sec. 11. Minnesota Statutes 2010, section 297A.70, subdivision 3, is amended to read:
32.4    Subd. 3. Sales of certain goods and services to government. (a) The following
32.5sales to or use by the specified governments and political subdivisions of the state are
32.6exempt:
32.7    (1) repair and replacement parts for emergency rescue vehicles, fire trucks, and
32.8fire apparatus to a political subdivision;
32.9    (2) machinery and equipment, except for motor vehicles, used directly for mixed
32.10municipal solid waste management services at a solid waste disposal facility as defined in
32.11section 115A.03, subdivision 10;
32.12    (3) chore and homemaking services to a political subdivision of the state to be
32.13provided to elderly or disabled individuals;
32.14    (4) telephone services to the Office of Enterprise Technology that are used to provide
32.15telecommunications services through the enterprise technology revolving fund;
32.16    (5) firefighter personal protective equipment as defined in paragraph (b), if purchased
32.17or authorized by and for the use of an organized fire department, fire protection district, or
32.18fire company regularly charged with the responsibility of providing fire protection to the
32.19state or a political subdivision;
32.20    (6) bullet-resistant body armor that provides the wearer with ballistic and trauma
32.21protection, if purchased by a law enforcement agency of the state or a political subdivision
32.22of the state, or a licensed peace officer, as defined in section 626.84, subdivision 1;
32.23    (7) motor vehicles purchased or leased by political subdivisions of the state if the
32.24vehicles are exempt from registration under section 168.012, subdivision 1, paragraph (b),
32.25exempt from taxation under section 473.448, or exempt from the motor vehicle sales tax
32.26under section 297B.03, clause (12);
32.27    (8) equipment designed to process, dewater, and recycle biosolids for wastewater
32.28treatment facilities of political subdivisions, and materials incidental to installation of
32.29that equipment;
32.30    (9) sales to a town of gravel and of machinery, equipment, and accessories, except
32.31motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of
32.32motor vehicles exempt from tax under section 297B.03, clause (10);
32.33    (10) (9) the removal of trees, bushes, or shrubs for the construction and maintenance
32.34of roads, trails, or firebreaks when purchased by an agency of the state or a political
32.35subdivision of the state; and
33.1    (11) (10) purchases by the Metropolitan Council or the Department of Transportation
33.2of vehicles and repair parts to equip operations provided for in section 174.90, including,
33.3but not limited to, the Northstar Corridor Rail project.; and
33.4(11) purchases of water used directly in providing public safety services by an
33.5organized fire department, fire protection district, or fire company regularly charged with
33.6the responsibility of providing fire protection to the state or a political subdivision.
33.7    (b) For purposes of this subdivision, "firefighters personal protective equipment"
33.8means helmets, including face shields, chin straps, and neck liners; bunker coats and
33.9pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets;
33.10protective coveralls; goggles; self-contained breathing apparatus; canister filter masks;
33.11personal alert safety systems; spanner belts; optical or thermal imaging search devices;
33.12and all safety equipment required by the Occupational Safety and Health Administration.
33.13    (c) For purchases of items listed in paragraph (a), clause (11), the tax must be
33.14imposed and collected as if the rate under section 297A.62, subdivision 1, applied and
33.15then refunded in the manner provided in section 297A.75.
33.16EFFECTIVE DATE.This section is effective for sales and purchases made after
33.17September 30, 2011, except that the new clause (11) is effective retroactively for sales
33.18and purchases made after June 30, 2007; however, no refunds may be made for amounts
33.19already paid on water purchased between June 30, 2007, and January 30, 2010.

33.20    Sec. 12. Minnesota Statutes 2010, section 297A.70, subdivision 6, is amended to read:
33.21    Subd. 6. Ambulances. The lease of a motor vehicle for use as an ambulance by
33.22an ambulance service licensed under section 144E.10 that is equipped and specifically
33.23intended for emergency response or for providing ambulance services is exempt.
33.24EFFECTIVE DATE.This section is effective for sales and purchases made after
33.25September 30, 2011.

33.26    Sec. 13. Minnesota Statutes 2010, section 297A.75, subdivision 1, is amended to read:
33.27    Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
33.28following exempt items must be imposed and collected as if the sale were taxable and the
33.29rate under section 297A.62, subdivision 1, applied. The exempt items include:
33.30    (1) capital equipment exempt under section 297A.68, subdivision 5;
33.31    (2) building materials for an agricultural processing facility exempt under section
33.32297A.71, subdivision 13 ;
34.1    (3) building materials for mineral production facilities exempt under section
34.2297A.71, subdivision 14 ;
34.3    (4) building materials for correctional facilities under section 297A.71, subdivision
34.43
;
34.5    (5) building materials used in a residence for disabled veterans exempt under section
34.6297A.71, subdivision 11 ;
34.7    (6) elevators and building materials exempt under section 297A.71, subdivision 12;
34.8    (7) building materials for the Long Lake Conservation Center exempt under section
34.9297A.71, subdivision 17 ;
34.10    (8) materials and supplies for qualified low-income housing under section 297A.71,
34.11subdivision 23
;
34.12    (9) materials, supplies, and equipment for municipal electric utility facilities under
34.13section 297A.71, subdivision 35;
34.14    (10) equipment and materials used for the generation, transmission, and distribution
34.15of electrical energy and an aerial camera package exempt under section 297A.68,
34.16subdivision 37;
34.17    (11) tangible personal property and taxable services and construction materials,
34.18supplies, and equipment exempt under section 297A.68, subdivision 41;
34.19    (12) commuter rail vehicle and repair parts under section 297A.70, subdivision
34.203, clause (11);
34.21    (13) materials, supplies, and equipment for construction or improvement of projects
34.22and facilities under section 297A.71, subdivision 40;
34.23(14) materials, supplies, and equipment for construction or improvement of a meat
34.24processing facility exempt under section 297A.71, subdivision 41; and
34.25(15) materials, supplies, and equipment for construction, improvement, or expansion
34.26of an aerospace defense manufacturing facility exempt under section 297A.71, subdivision
34.2742.; and
34.28(16) enterprise information technology equipment and computer software for use in
34.29a qualified data center exempt under section 297A.68, subdivision 42.
34.30EFFECTIVE DATE.This section is effective for sales and purchases made after
34.31June 30, 2012.

34.32    Sec. 14. Minnesota Statutes 2010, section 297A.75, subdivision 2, is amended to read:
34.33    Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
34.34commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
34.35must be paid to the applicant. Only the following persons may apply for the refund:
35.1    (1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
35.2    (2) for subdivision 1, clauses (4) and (7), the applicant must be the governmental
35.3subdivision;
35.4    (3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits
35.5provided in United States Code, title 38, chapter 21;
35.6    (4) for subdivision 1, clause (6), the applicant must be the owner of the homestead
35.7property;
35.8    (5) for subdivision 1, clause (8), the owner of the qualified low-income housing
35.9project;
35.10    (6) for subdivision 1, clause (9), the applicant must be a municipal electric utility or
35.11a joint venture of municipal electric utilities;
35.12    (7) for subdivision 1, clauses (10), (11), (14), and (15), and (16), the owner of the
35.13qualifying business; and
35.14    (8) for subdivision 1, clauses (12) and (13), the applicant must be the governmental
35.15entity that owns or contracts for the project or facility.
35.16EFFECTIVE DATE.This section is effective for sales and purchases made after
35.17June 30, 2012.

35.18    Sec. 15. Minnesota Statutes 2010, section 297A.75, subdivision 3, is amended to read:
35.19    Subd. 3. Application. (a) The application must include sufficient information
35.20to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
35.21subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), (10), (11),
35.22(12), (13), (14), or (15), or (16), the contractor, subcontractor, or builder must furnish to
35.23the refund applicant a statement including the cost of the exempt items and the taxes paid
35.24on the items unless otherwise specifically provided by this subdivision. The provisions of
35.25sections 289A.40 and 289A.50 apply to refunds under this section.
35.26    (b) An applicant may not file more than two applications per calendar year for
35.27refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.
35.28    (c) Total refunds for purchases of items in section 297A.71, subdivision 40, must not
35.29exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
35.30of items in sections 297A.70, subdivision 3, paragraph (a), clause (11), and 297A.71,
35.31subdivision 40, must not be filed until after June 30, 2009.
35.32EFFECTIVE DATE.This section is effective for sales and purchases made after
35.33June 30, 2012.

36.1    Sec. 16. Minnesota Statutes 2010, section 297B.03, is amended to read:
36.2297B.03 EXEMPTIONS.
36.3    There is specifically exempted from the provisions of this chapter and from
36.4computation of the amount of tax imposed by it the following:
36.5    (1) purchase or use, including use under a lease purchase agreement or installment
36.6sales contract made pursuant to section 465.71, of any motor vehicle by the United States
36.7and its agencies and instrumentalities and by any person described in and subject to the
36.8conditions provided in section 297A.67, subdivision 11;
36.9    (2) purchase or use of any motor vehicle by any person who was a resident of
36.10another state or country at the time of the purchase and who subsequently becomes a
36.11resident of Minnesota, provided the purchase occurred more than 60 days prior to the date
36.12such person began residing in the state of Minnesota and the motor vehicle was registered
36.13in the person's name in the other state or country;
36.14    (3) purchase or use of any motor vehicle by any person making a valid election to be
36.15taxed under the provisions of section 297A.90;
36.16    (4) purchase or use of any motor vehicle previously registered in the state of
36.17Minnesota when such transfer constitutes a transfer within the meaning of section 118,
36.18331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal
36.19Revenue Code;
36.20    (5) purchase or use of any vehicle owned by a resident of another state and leased
36.21to a Minnesota-based private or for-hire carrier for regular use in the transportation of
36.22persons or property in interstate commerce provided the vehicle is titled in the state of
36.23the owner or secured party, and that state does not impose a sales tax or sales tax on
36.24motor vehicles used in interstate commerce;
36.25    (6) purchase or use of a motor vehicle by a private nonprofit or public educational
36.26institution for use as an instructional aid in automotive training programs operated by the
36.27institution. "Automotive training programs" includes motor vehicle body and mechanical
36.28repair courses but does not include driver education programs;
36.29    (7) purchase of a motor vehicle for use as an ambulance by an ambulance service
36.30licensed under section 144E.10 when that vehicle is equipped and specifically intended for
36.31emergency response or for providing ambulance service;
36.32    (8) purchase of a motor vehicle by or for a public library, as defined in section
36.33134.001, subdivision 2 , as a bookmobile or library delivery vehicle;
36.34    (9) purchase of a ready-mixed concrete truck;
37.1    (10) purchase or use of a motor vehicle by a town for use exclusively for road
37.2maintenance, including snowplows and dump trucks, but not including automobiles,
37.3vans, or pickup trucks;
37.4    (11) purchase or use of a motor vehicle by a corporation, society, association,
37.5foundation, or institution organized and operated exclusively for charitable, religious,
37.6or educational purposes, except a public school, university, or library, but only if the
37.7vehicle is:
37.8    (i) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
37.9passenger automobile, as defined in section 168.002, if the automobile is designed and
37.10used for carrying more than nine persons including the driver; and
37.11    (ii) intended to be used primarily to transport tangible personal property or
37.12individuals, other than employees, to whom the organization provides service in
37.13performing its charitable, religious, or educational purpose;
37.14    (12) purchase of a motor vehicle for use by a transit provider exclusively to provide
37.15transit service is exempt if the transit provider is either (i) receiving financial assistance or
37.16reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29,
37.17473.388 , or 473.405;
37.18    (13) purchase or use of a motor vehicle by a qualified business, as defined in section
37.19469.310 , located in a job opportunity building zone, if the motor vehicle is principally
37.20garaged in the job opportunity building zone and is primarily used as part of or in direct
37.21support of the person's operations carried on in the job opportunity building zone. The
37.22exemption under this clause applies to sales, if the purchase was made and delivery
37.23received during the duration of the job opportunity building zone. The exemption under
37.24this clause also applies to any local sales and use tax; and
37.25    (14) purchase of a leased vehicle by the lessee who was a participant in a
37.26lease-to-own program from a charitable organization that is:
37.27    (i) described in section 501(c)(3) of the Internal Revenue Code; and
37.28    (ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4.
37.29EFFECTIVE DATE.This section is effective the day following final enactment.

37.30    Sec. 17. Laws 2006, chapter 257, section 2, the effective date, is amended to read:
37.31EFFECTIVE DATE.This section is effective for sales and purchases after June
37.3230, 2006, and before July 1, 2011 2015.
37.33EFFECTIVE DATE.This section is effective retroactively for sales and purchases
37.34made after June 30, 2011.

38.1ARTICLE 4
38.2LOCAL TAXES

38.3    Section 1. Minnesota Statutes 2010, section 297A.99, subdivision 1, is amended to
38.4read:
38.5    Subdivision 1. Authorization; scope. (a) A political subdivision of this state may
38.6impose a general sales tax (1) under section 297A.992, (2) under section 297A.993, (3) if
38.7permitted by special law enacted prior to May 20, 2008, or (4) if the political subdivision
38.8enacted and imposed the tax before January 1, 1982, and its predecessor provision.
38.9    (b) This section governs the imposition of a general sales tax by the political
38.10subdivision. The provisions of this section preempt the provisions of any special law:
38.11    (1) enacted before June 2, 1997, or
38.12    (2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
38.13provision from this section's rules by reference.
38.14    (c) This section does not apply to or preempt a sales tax on motor vehicles or a
38.15special excise tax on motor vehicles.
38.16    (d) Until after May 31, 2010, a political subdivision may not advertise, promote,
38.17expend funds, or hold a referendum to support imposing a local option sales tax unless
38.18it is for extension of an existing tax or the tax was authorized by a special law enacted
38.19prior to May 20, 2008.
38.20(d) A political subdivision may not advertise or expend funds for the promotion of a
38.21referendum to support imposing a local option sales tax. A political subdivision may only
38.22expend funds to conduct the referendum.
38.23EFFECTIVE DATE.This section is effective the day following final enactment.

38.24    Sec. 2. Minnesota Statutes 2010, section 297A.99, subdivision 3, is amended to read:
38.25    Subd. 3. Requirements for adoption, use, termination. (a) Imposition of a local
38.26sales tax is subject to approval by voters of the political subdivision at a general election.
38.27The election must be conducted before the governing body of the political subdivision
38.28requests legislative approval of the tax.
38.29(b) The proceeds of the tax must be dedicated exclusively to payment of the cost of a
38.30specific capital improvement which is designated at least 90 days before the referendum
38.31on imposition of the tax is conducted.
38.32(c) The tax must terminate after the improvement designated under paragraph (b)
38.33has been completed.
39.1(d) After a sales tax imposed by a political subdivision has expired or been
39.2terminated, the political subdivision is prohibited from imposing a local sales tax for a
39.3period of one year. Notwithstanding subdivision 13, this paragraph applies to all local
39.4sales taxes in effect at the time of or imposed after May 26, 1999.
39.5EFFECTIVE DATE.This section is effective the day following final enactment.

39.6    Sec. 3. Minnesota Statutes 2010, section 473.757, subdivision 11, is amended to read:
39.7    Subd. 11. Uses of tax. (a) Revenues received from the tax imposed under
39.8subdivision 10 may be used:
39.9(1) to pay costs of collection;
39.10(2) to pay or reimburse or secure the payment of any principal of, premium, or
39.11interest on bonds issued in accordance with this act;
39.12(3) to pay costs and make expenditures and grants described in this section, including
39.13financing costs related to them;
39.14(4) to maintain reserves for the foregoing purposes deemed reasonable and
39.15appropriate by the county;
39.16(5) to pay for operating costs of the ballpark authority other than the cost of
39.17operating or maintaining the ballpark; and
39.18(6) to make expenditures and grants for youth activities and amateur sports and
39.19extension of library hours as described in subdivision 2;
39.20and for no other purpose.
39.21(b) Revenues from the tax designated for use under paragraph (a), clause (5), must
39.22be deposited in the operating fund of the ballpark authority.
39.23(c) After completion of the ballpark and public infrastructure, the tax revenues not
39.24required for current payments of the expenditures described in paragraph (a), clauses (1) to
39.25(6), shall be used to (i) redeem or defease the bonds and (ii) prepay or establish a fund for
39.26payment of future obligations under grants or other commitments for future expenditures
39.27which are permitted by this section. Upon the redemption or defeasance of the bonds and
39.28the establishment of reserves adequate to meet such future obligations, the taxes shall
39.29terminate and shall not be reimposed. For purposes of this subdivision, "reserves adequate
39.30to meet such future obligations" means a reserve that does not exceed the net present value
39.31of the county's obligation to make grants under paragraph (a), clauses (5) and (6), and to
39.32fund the reserve for capital improvements required under section 473.759, subdivision 3,
39.33for the 30-year period beginning on the date of the original issuance of the bonds, less
39.34those obligations that the county has already paid.
40.1EFFECTIVE DATE.This section is effective the day following final enactment.

40.2    Sec. 4. Laws 1996, chapter 471, article 2, section 29, subdivision 1, as amended by
40.3Laws 2006, chapter 259, article 3, section 3, is amended to read:
40.4    Subdivision 1. Sales tax authorized. (a) Notwithstanding Minnesota Statutes,
40.5section 477A.016, or any other contrary provision of law, ordinance, or city charter, the
40.6city of Hermantown may, by ordinance, impose an additional sales tax of up to one
40.7percent on sales transactions taxable pursuant to Minnesota Statutes, chapter 297A, that
40.8occur within the city. The proceeds of the tax imposed under this section must be used to
40.9meet the costs of:
40.10    (1) extending a sewer interceptor line;
40.11    (2) construction of a booster pump station, reservoirs, and related improvements
40.12to the water system; and
40.13    (3) construction of a building containing a police and fire station and an
40.14administrative services facility.
40.15(b) If the city imposed a sales tax of only one-half of one percent under paragraph
40.16(a), it may increase the tax to one percent to fund the purposes under paragraph (a)
40.17provided it is approved by the voters at a general election held before December 31, 2012.
40.18EFFECTIVE DATE.This section is effective the day following compliance by the
40.19city of Hermantown with Minnesota Statutes, section 645.021.

40.20    Sec. 5. Laws 1998, chapter 389, article 8, section 43, subdivision 3, as amended by
40.21Laws 2005, First Special Session chapter 3, article 5, section 28, is amended to read:
40.22    Subd. 3. Use of revenues. (a) Revenues received from the taxes authorized by
40.23subdivisions 1 and 2 must be used by the city to pay for the cost of collecting and
40.24administering the taxes and to pay for the following projects:
40.25    (1) transportation infrastructure improvements including regional highway and
40.26airport improvements;
40.27    (2) improvements to the civic center complex;
40.28    (3) a municipal water, sewer, and storm sewer project necessary to improve regional
40.29ground water quality; and
40.30    (4) construction of a regional recreation and sports center and other higher education
40.31facilities available for both community and student use.
40.32    (b) The total amount of capital expenditures or bonds for these projects listed in
40.33paragraph (a) that may be paid from the revenues raised from the taxes authorized in this
40.34section may not exceed $111,500,000. The total amount of capital expenditures or bonds
41.1for the project in clause (4) that may be paid from the revenues raised from the taxes
41.2authorized in this section may not exceed $28,000,000.
41.3(c) In addition to the projects authorized in paragraph (a) and not subject to the
41.4amount stated in paragraph (b), the city of Rochester may, if approved by the voters at an
41.5election under subdivision 5, paragraph (c), use the revenues received from the taxes and
41.6bonds authorized in this section to pay the costs of or bonds for the following purposes:
41.7(1) $17,000,000 for capital expenditures and bonds for the following Olmsted
41.8County transportation infrastructure improvements:
41.9(i) County State Aid Highway 34 reconstruction;
41.10(ii) Trunk Highway 63 and County State Aid Highway 16 interchange;
41.11(iii) phase II of the Trunk Highway 52 and County State Aid Highway 22
41.12interchange;
41.13(iv) widening of County State Aid Highway 22 West Circle Drive; and
41.14(v) 60th Avenue Northwest corridor preservation;
41.15(2) $30,000,000 for city transportation projects including:
41.16(i) Trunk Highway 52 and 65th Street interchange;
41.17(ii) NW transportation corridor acquisition;
41.18(iii) Phase I of the Trunk Highway 52 and County State Aid Highway 22 interchange;
41.19(iv) Trunk Highway 14 and Trunk Highway 63 intersection;
41.20(v) Southeast transportation corridor acquisition;
41.21(vi) Rochester International Airport expansion; and
41.22(vii) a transit operations center bus facility;
41.23(3) $14,000,000 for the University of Minnesota Rochester academic and
41.24complementary facilities;
41.25(4) $6,500,000 for the Rochester Community and Technical College/Winona State
41.26University career technical education and science and math facilities;
41.27(5) $6,000,000 for the Rochester Community and Technical College regional
41.28recreation facilities at University Center Rochester;
41.29(6) $20,000,000 for the Destination Medical Community Initiative;
41.30(7) $8,000,000 for the regional public safety and 911 dispatch center facilities;
41.31(8) $20,000,000 for a regional recreation/senior center;
41.32(9) $10,000,000 for an economic development fund; and
41.33(10) $8,000,000 for downtown infrastructure.
41.34(d) No revenues from the taxes raised from the taxes authorized in subdivisions 1
41.35and 2 may be used to fund transportation improvements related to a railroad bypass that
41.36would divert traffic from the city of Rochester.
42.1(e) The city shall use $5,000,000 of the money allocated to the purpose in paragraph
42.2(c), clause (9), for grants to the cities of Byron, Chatfield, Dodge Center, Dover, Elgin,
42.3Eyota, Kasson, Mantorville, Oronoco, Pine Island, Plainview, St. Charles, Stewartville,
42.4Zumbrota, Spring Valley, West Concord, and Hayfield for economic development projects
42.5that these communities would fund through their economic development authority or
42.6housing and redevelopment authority.
42.7EFFECTIVE DATE.This section is effective the day after compliance by the
42.8governing body of the city of Rochester with Minnesota Statutes, section 645.021.

42.9    Sec. 6. Laws 1998, chapter 389, article 8, section 43, subdivision 4, as amended by
42.10Laws 2005, First Special Session chapter 3, article 5, section 29, is amended to read:
42.11    Subd. 4. Bonding authority. (a) The city may issue bonds under Minnesota
42.12Statutes, chapter 475, to finance the capital expenditure and improvement projects.
42.13An election to approve up to $71,500,000 in bonds under Minnesota Statutes, section
42.14475.58 , may be held in combination with the election to authorize imposition of the tax
42.15under subdivision 1. Whether to permit imposition of the tax and issuance of bonds
42.16may be posed to the voters as a single question. The question must state that the sales
42.17tax revenues are pledged to pay the bonds, but that the bonds are general obligations
42.18and will be guaranteed by the city's property taxes. An election to approve up to an
42.19additional $40,000,000 of bonds under Minnesota Statutes, section 475.58, may be held
42.20in combination with the election to authorize extension of the tax under subdivision 5,
42.21paragraph (b). An election to approve bonds under Minnesota Statutes, section 475.58,
42.22in an amount not to exceed $139,500,000 plus an amount equal to the costs of issuance
42.23of the bonds, may be held in combination with the election to authorize the extension of
42.24the tax under subdivision 5, paragraph (c).
42.25    (b) The city may shall enter into an agreement with Olmsted County under which the
42.26city and the county agree to jointly undertake and finance certain roadway infrastructure
42.27improvements. The agreement may shall provide that the city will make available to the
42.28county a portion of the sales tax revenues collected pursuant to the authority granted in
42.29this section and the bonding authority provided in this subdivision. The county may,
42.30pursuant to the agreement, issue its general obligation bonds in a principal amount not
42.31exceeding the amount authorized by its agreement with the city payable primarily from
42.32the sales tax revenues from the city under the agreement. The county's bonds must be
42.33issued in accordance with the provisions of Minnesota Statutes, chapter 475, except that
42.34no election is required for the issuance of the bonds and the bonds are not included in
42.35the net debt of the county.
43.1    (b) (c) The issuance of bonds under this subdivision is not subject to Minnesota
43.2Statutes, section 275.60.
43.3    (c) (d) The bonds are not included in computing any debt limitation applicable to the
43.4city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of
43.5and interest on the bonds is not subject to any levy limitation.
43.6    (e) The aggregate principal amount of bonds, plus the aggregate of the taxes used
43.7directly to pay eligible capital expenditures and improvements for projects listed in
43.8subdivision 3, paragraph (a), may not exceed $111,500,000, plus an amount equal to the
43.9costs related to issuance of the bonds. The aggregate principal amount of bonds plus the
43.10aggregate of the taxes used directly to pay the costs of eligible projects under subdivision
43.113, paragraph (c), may not exceed $139,500,000 plus an amount equal to the costs of
43.12issuance of the bonds.
43.13    (d) (f) The taxes may be pledged to and used for the payment of the bonds and
43.14any bonds issued to refund them, only if the bonds and any refunding bonds are general
43.15obligations of the city.
43.16EFFECTIVE DATE.This section is effective the day after compliance by the
43.17governing body of the city of Rochester with Minnesota Statutes, section 645.021.

43.18    Sec. 7. Laws 1998, chapter 389, article 8, section 43, subdivision 5, as amended by
43.19Laws 2005, First Special Session chapter 3, article 5, section 30, is amended to read:
43.20    Subd. 5. Termination of taxes. (a) The taxes imposed under subdivisions 1 and
43.212 expire at the later of (1) December 31, 2009, or (2) when the city council determines
43.22that sufficient funds have been received from the taxes to finance the first $71,500,000
43.23of capital expenditures and bonds for the projects authorized in subdivision 3, including
43.24the amount to prepay or retire at maturity the principal, interest, and premium due on any
43.25bonds issued for the projects under subdivision 4, unless the taxes are extended as allowed
43.26in paragraph (b). Any funds remaining after completion of the project and retirement or
43.27redemption of the bonds shall also be used to fund the projects under subdivision 3. The
43.28taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city so
43.29determines by ordinance.
43.30    (b) Notwithstanding Minnesota Statutes, sections 297A.99 and 477A.016, or any
43.31other contrary provision of law, ordinance, or city charter, the city of Rochester may, by
43.32ordinance, extend the taxes authorized in subdivisions 1 and 2 beyond December 31, 2009,
43.33if approved by the voters of the city at a special election in 2005 or the general election in
43.342006. The question put to the voters must indicate that an affirmative vote would allow
43.35up to an additional $40,000,000 of sales tax revenues be raised and up to $40,000,000
44.1of bonds to be issued above the amount authorized in the June 23, 1998, referendum for
44.2the projects specified in subdivision 3. If the taxes authorized in subdivisions 1 and 2 are
44.3extended under this paragraph, the taxes expire when the city council determines that
44.4sufficient funds have been received from the taxes to finance the projects and to prepay
44.5or retire at maturity the principal, interest, and premium due on any bonds issued for the
44.6projects under subdivision 4. Any funds remaining after completion of the project and
44.7retirement or redemption of the bonds may be placed in the general fund of the city.
44.8(c) Notwithstanding Minnesota Statutes, sections 297A.99 and 477A.016, or any
44.9other contrary provision of law, ordinance, or city charter, the city of Rochester may, by
44.10ordinance, extend the taxes authorized in subdivisions 1 and 2 beyond the date the city
44.11council determines that sufficient funds have been received from the taxes to finance
44.12$111,500,000 of expenditures and bonds for the projects authorized in subdivision 3,
44.13paragraph (a), plus an amount equal to the costs of issuance of the bonds and including
44.14the amount to prepay or retire at maturity the principal, interest, and premiums due on
44.15any bonds issued for the projects under subdivision 4, paragraph (a), if approved by the
44.16voters of the city at the general election in 2012. If the election to authorize the additional
44.17$139,500,000 of bonds plus an amount equal to the costs of the issuance of the bonds is
44.18placed on the general election ballot in 2012, the city may continue to collect the taxes
44.19authorized in subdivisions 1 and 2 until December 31, 2012. The question put to the
44.20voters must indicate that an affirmative vote would allow sales tax revenues be raised for
44.21an extended period of time and an additional $139,500,000 of bonds plus an amount
44.22equal to the costs of issuance of the bonds, to be issued above the amount authorized in
44.23the previous elections required under paragraphs (a) and (b) for the projects and amounts
44.24specified in subdivision 3. If the taxes authorized in subdivisions 1 and 2 are extended
44.25under this paragraph, the taxes expire when the city council determines that $139,500,000
44.26has been received from the taxes to finance the projects plus an amount sufficient to
44.27prepay or retire at maturity the principal, interest, and premium due on any bonds issued
44.28for the projects under subdivision 4, including any bonds issued to refund the bonds. Any
44.29funds remaining after completion of the projects and retirement or redemption of the
44.30bonds may be placed in the general fund of the city.
44.31EFFECTIVE DATE.This section is effective the day after compliance by the
44.32governing body of the city of Rochester with Minnesota Statutes, section 645.021.

44.33    Sec. 8. Laws 2008, chapter 366, article 7, section 19, subdivision 3, is amended to read:
44.34    Subd. 3. Use of revenues. Notwithstanding Minnesota Statutes, section 297A.99,
44.35subdivision 3, paragraph (b), the proceeds of the tax imposed under this section shall be
45.1used to pay for the costs of acquisition, construction, improvement, and development of
45.2a regional parks, bicycle trails, park land, open space, and pedestrian bridge walkways,
45.3as described in the city improvement plan adopted by the city council by resolution on
45.4December 12, 2006, and land and buildings for a community and recreation center. The
45.5total amount of revenues from the taxes in subdivisions 1 and 2 that may be used to fund
45.6these projects is $12,000,000 plus any associated bond costs.
45.7EFFECTIVE DATE.This section is effective the day after compliance by the
45.8governing body of the city of Clearwater with Minnesota Statutes, section 645.021.

45.9    Sec. 9. Laws 2010, chapter 389, article 5, section 6, subdivision 1, is amended to read:
45.10    Subdivision 1. Authorization. Notwithstanding Minnesota Statutes, section
45.11297A.99, subdivisions 1 , 2, and 3, or 477A.016, or any other law, ordinance, or city
45.12charter, the city of Marshall, if imposed within two three years of the date of final
45.13enactment of this section, may impose any or all of the taxes described in this section.
45.14EFFECTIVE DATE.This section is effective the day following final enactment.

45.15    Sec. 10. CITY OF CLOQUET; TAXES AUTHORIZED.
45.16    Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section
45.17297A.99, subdivision 1, 477A.016, or any other provision of law, ordinance, or city
45.18charter, if approved by the voters pursuant to Minnesota Statutes, section 297A.99, the
45.19city of Cloquet may impose by ordinance a sales and use tax of up to one-half of one
45.20percent for the purposes specified in subdivision 3. Except as provided in this section, the
45.21provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration,
45.22collection, and enforcement of the tax authorized under this subdivision.
45.23    Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section
45.24297A.99, subdivision 1, 477A.016, or any other provision of law, ordinance, or city
45.25charter, the city of Cloquet may impose by ordinance, for the purposes specified in
45.26subdivision 3, an excise tax of up to $20 per motor vehicle, as defined by ordinance,
45.27purchased or acquired from any person engaged within the city in the business of selling
45.28motor vehicles at retail.
45.29    Subd. 3. Use of revenues. Revenues received from taxes authorized by subdivisions
45.301 and 2 must be used by the city to pay the cost of collecting the taxes and to pay for the
45.31following projects:
45.32    (1) $4,500,000 for construction and completion of park improvement projects,
45.33including St. Louis River riverfront improvements; Veteran's Park construction and
46.1improvements; improvements to the Hilltop Park soccer complex and Braun Park baseball
46.2complex; capital equipment and building and grounds improvements at the Pine Valley
46.3Park/Pine Valley Hockey Arena/Cloquet Area Recreation Center; and development of
46.4pedestrian trails within the city;
46.5    (2) $5,800,00 for extension of utilities and the construction of all improvements
46.6associated with the development of property adjacent to Highway 33 and Interstate
46.7Highway 35, including payment of all debt service on bonds issued for these; and
46.8(3) $6,200,000 for engineering and construction of infrastructure improvements,
46.9including, but not limited to, storm sewer, sanitary sewer, and water in areas identified as
46.10part of the city's comprehensive land use plan.
46.11    Authorized expenses include, but are not limited to, acquiring property and paying
46.12construction expenses related to these improvements, and paying debt service on bonds or
46.13other obligations issued to finance acquisition and construction of these improvements.
46.14    Subd. 4. Bonding authority. (a) The city may issue bonds under Minnesota
46.15Statutes, chapter 475, to pay capital and administrative expenses for the improvements
46.16described in subdivision 3 in an amount that does not exceed $16,500,000. An election to
46.17approve the bonds under Minnesota Statutes, section 475.58, is not required.
46.18    (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes,
46.19sections 275.60 and 275.61.
46.20    (c) The debt represented by the bonds is not included in computing any debt
46.21limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section
46.22475.61, to pay principal of and interest on the bonds is not subject to any levy limitation.
46.23    Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2
46.24expire at the earlier of (1) 30 years, or (2) when the city council determines that the amount
46.25of revenues received from the taxes to finance the improvements described in subdivision
46.263 first equals or exceeds $16,500,000, plus the additional amount needed to pay the costs
46.27related to issuance of bonds under subdivision 4, including interest on the bonds. Any
46.28funds remaining after completion of the project and retirement or redemption of the bonds
46.29may be placed in the general fund of the city. The taxes imposed under subdivisions 1 and
46.302 may expire at an earlier time if the city so determines by ordinance.
46.31EFFECTIVE DATE.This section is effective the day after the governing body of
46.32the city of Cloquet and its chief clerical officer timely comply with Minnesota Statutes,
46.33section 645.021.

46.34    Sec. 11. CITY OF FERGUS FALLS; SALES AND USE TAX AUTHORIZED.
47.1    Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section
47.2297A.99, subdivision 1, or 477A.016, or any other provision of law, ordinance, or city
47.3charter, as approved by the voters at the November 2, 2010 general election, the city
47.4of Fergus Falls may impose by ordinance a sales and use tax of up to one-half of one
47.5percent for the purposes specified in subdivision 2. Except as provided in this section, the
47.6provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration,
47.7collection, and enforcement of the tax authorized under this subdivision.
47.8    Subd. 2. Use of revenues. Revenues received from taxes authorized by subdivision
47.91 must be used by the city of Fergus Falls to pay the cost of collecting the tax and to pay for
47.10all or part of the costs of the acquisition and betterment of a regional community ice arena
47.11facility. Authorized expenses include, but are not limited to, acquiring property, predesign,
47.12design, and paying construction, furnishing, and equipment costs related to the facility and
47.13paying debt service on bonds or other obligations issued by the Fergus Falls Port Authority
47.14to finance the facility. The amount of revenues from the tax imposed under subdivision 1
47.15that may be used to finance the facility and any associated costs is limited to $6,600,000.
47.16    Subd. 3. Termination of taxes. The tax imposed under this section expires when
47.17the Fergus Falls City Council determines that sufficient funds have been received from
47.18the taxes to finance the facility and to prepay or retire at maturity the principal, interest,
47.19and premium due on any bonds, including refunding bonds, issued by the Fergus Falls
47.20Port Authority for the facility. Any funds remaining after completion of the facility and
47.21retirement or redemption of the bonds may be placed in the general fund of the city of
47.22Fergus Falls. The tax imposed under subdivision 1 may expire at an earlier time if the
47.23city so determines by ordinance.
47.24EFFECTIVE DATE.This section is effective the day after the governing body
47.25of the city of Fergus Falls and its chief clerical officer timely comply with Minnesota
47.26Statutes, section 645.021.

47.27    Sec. 12. CITY OF HUTCHINSON; TAXES AUTHORIZED.
47.28    Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section
47.29477A.016, or any other provision of law, ordinance, or city charter, as approved by
47.30the voters at a referendum held at the 2010 general election, the city of Hutchinson
47.31may impose by ordinance a sales and use tax of up to one-half of one percent for the
47.32purposes specified in subdivision 3. Except as otherwise provided in this section,
47.33Minnesota Statutes, section 297A.99, governs the imposition, administration, collection,
47.34and enforcement of the tax authorized under this subdivision. Minnesota Statutes, section
47.35297A.99, subdivision 1, paragraph (d), does not apply to this section.
48.1    Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section
48.2477A.016, or any other provision of law, ordinance, or city charter, the city of Hutchinson
48.3may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up
48.4to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person
48.5engaged within the city in the business of selling motor vehicles at retail.
48.6    Subd. 3. Use of revenues. Revenues received from the taxes authorized by this
48.7section must be used to pay the cost of collecting and administering the tax and to finance
48.8the costs of constructing the water treatment facility and renovating the wastewater
48.9treatment facility in the city of Hutchinson. Authorized costs include, but are not limited
48.10to, construction and engineering costs of the projects and associated bond costs.
48.11    Subd. 4. Termination of tax. The taxes authorized under subdivisions 1 and 2
48.12terminate at the earlier of: (1) 18 years after the date of initial imposition of the tax; or
48.13(2) when the Hutchinson City Council determines that the amount of revenues raised is
48.14sufficient to pay for the projects under subdivision 3, plus the amount needed to finance
48.15the capital and administrative costs for the projects specified in subdivision 3, and to repay
48.16or retire at maturity the principal, interest, and premium due on any bonds issued for the
48.17projects. Any funds remaining after completion of the projects specified in subdivision
48.183 and retirement or redemption of the associated bonds may be placed in the general
48.19fund of the city. The taxes imposed under subdivisions 1 and 2 may expire at an earlier
48.20time if the city so determines by ordinance.
48.21EFFECTIVE DATE.This section is effective the day after compliance by the
48.22governing body of the city of Hutchinson with Minnesota Statutes, section 645.021.

48.23    Sec. 13. CITY OF LANESBORO; SALES AND USE TAX AUTHORIZED.
48.24    Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes,
48.25sections 297A.99, subdivision 1, and 477A.016, or any other provision of law, ordinance,
48.26or city charter, as approved by the voters at the November 2, 2010, general election, the
48.27city of Lanesboro may impose by ordinance a sales and use tax of up to one-half of one
48.28percent for the purposes specified in subdivision 2. Except as provided in this section,
48.29the provisions of Minnesota Statutes, section 297A.99, govern the imposition of the tax
48.30authorized under this subdivision.
48.31    Subd. 2. Use of revenues. Revenues received from the tax authorized under
48.32subdivision 1 must be used by the city of Lanesboro to pay the costs of collecting the tax
48.33and to pay for all or a part of the improvements to city streets and utility systems, and the
48.34betterment of city municipal buildings consisting of (i) street and utility improvements to
48.35Calhoun Avenue, Fillmore Avenue, Kenilworth Avenue, Pleasant Street, Kirkwood Street,
49.1Auburn Avenue, and Zenith Street, and street light replacement on State Highways 250
49.2and 16; (ii) improvements to utility systems consisting of wastewater treatment facility
49.3improvements and electric utility improvements to the Lanesboro High Hazard Dam; and
49.4(iii) improvements to the Lanesboro community center, library, and city hall, including
49.5paying debt service on bonds or other obligations issued to fund these projects under
49.6subdivision 3. The total amount of revenues from the taxes in subdivision 1 that may be
49.7used to fund these projects is $800,000 plus any associated bond costs.
49.8    Subd. 3. Bonding authority. The city of Lanesboro may issue bonds under
49.9Minnesota Statutes, chapter 475, to pay capital and administrative expenses related to the
49.10projects authorized in subdivision 2. An election to approve the bonds under Minnesota
49.11Statutes, section 475.58, is not required. The issuance of bonds under this subdivision
49.12is not subject to Minnesota Statutes, sections 275.60 and 275.61. The bonds are not
49.13included in computing any debt limitation applicable to the city and the levy of taxes
49.14under Minnesota Statutes, section 475.61, to pay principal and interest on the bonds is
49.15not subject to any levy limitation.
49.16The aggregate principal amount of the bonds plus the aggregate of the taxes used
49.17directly to pay costs of the projects listed in subdivision 2 may not exceed $800,000, plus
49.18an amount equal to the costs related to issuance of the bonds and capitalized interest.
49.19The taxes authorized in subdivision 1 may be pledged and used for payments of
49.20the bonds and bonds issued to refund them, only if the bonds and any refunding bonds
49.21are general obligations of the city.
49.22    Subd. 4. Termination of tax. The tax imposed under subdivision 1 expires when
49.23the Lanesboro City Council determines that sufficient funds have been raised from the
49.24taxes to finance the projects authorized under subdivision 2 and to prepay or retire at
49.25maturity the principal, interest, and premium due on any bonds issued under subdivision 3.
49.26Any funds remaining after completion of the project and retirement or redemption of the
49.27bonds may be placed in the general fund of the city. The tax imposed under subdivision 1
49.28may expire at an earlier time if the city so determines by ordinance.
49.29EFFECTIVE DATE.This section is effective the day after the governing body of
49.30the city of Lanesboro and its chief clerical officer comply with Minnesota Statutes, section
49.31645.021.

49.32    Sec. 14. CITY OF MARSHALL; SALES AND USE TAX.
49.33    Subdivision 1. Authorization. Notwithstanding Minnesota Statutes, section
49.34297A.99, subdivisions 1 and 2, or 477A.016, or any other law, ordinance, or city charter,
49.35the city of Marshall, if approved by the voters at a general election held within two
50.1years of the date of final enactment of this section, may impose the tax authorized under
50.2subdivision 2. Two separate ballot questions must be presented to the voters, one for each
50.3of the two facility projects named in subdivision 3.
50.4    Subd. 2. Sales and use tax authorized. The city of Marshall may impose by
50.5ordinance a sales and use tax of up to one-half of one percent for the purposes specified in
50.6subdivision 3. The provisions of Minnesota Statutes, section 297A.99, except subdivisions
50.71 and 2, govern the imposition, administration, collection, and enforcement of the tax
50.8authorized under this subdivision.
50.9    Subd. 3. Use of sales and use tax revenues. The revenues derived from the tax
50.10authorized under subdivision 2 must be used by the city of Marshall to pay the costs of
50.11collecting and administering the sales and use tax and to pay all or part of the costs of the
50.12new and existing facilities of the Minnesota Emergency Response and Industry Training
50.13Center and all or part of the costs of the new facilities of the Southwest Minnesota
50.14Regional Amateur Sports Center. Authorized expenses include, but are not limited to,
50.15acquiring property, predesign, design, and paying construction, furnishing, and equipment
50.16costs related to these facilities and paying debt service on bonds or other obligations issued
50.17by the city of Marshall under subdivision 4 to finance the capital costs of these facilities.
50.18    Subd. 4. Bonds. (a) If the imposition of a sales and use tax is approved by the voters,
50.19the city of Marshall may issue bonds under Minnesota Statutes, chapter 475, to finance all
50.20or a portion of the costs of the facilities authorized in subdivision 3, and may issue bonds
50.21to refund bonds previously issued. The aggregate principal amount of bonds issued under
50.22this subdivision may not exceed $17,290,000, plus an amount to be applied to the payment
50.23of the costs of issuing the bonds. The bonds may be paid from or secured by any funds
50.24available to the city of Marshall, including the tax authorized under subdivision 2.
50.25(b) The bonds are not included in computing any debt limitation applicable to the
50.26city of Marshall, and any levy of taxes under Minnesota Statutes, section 475.61, to pay
50.27principal and interest on the bonds, is not subject to any levy limitation. A separate
50.28election to approve the bonds under Minnesota Statutes, section 475.58, is not required.
50.29    Subd. 5. Termination of taxes. The tax imposed under subdivision 2 expires at the
50.30earlier of (1) 15 years after the tax is first imposed, or (2) when the city council determines
50.31that the amount of revenues received from the tax to pay for the capital and administrative
50.32costs of the facilities under subdivision 3 first equals or exceeds the amount authorized to
50.33be spent for the facilities plus the additional amount needed to pay the costs related to
50.34issuance of the bonds under subdivision 4, including interest on the bonds. Any funds
50.35remaining after payment of all such costs and retirement or redemption of the bonds shall
51.1be placed in the general fund of the city. The tax imposed under subdivision 2 may expire
51.2at an earlier time if the city so determines by ordinance.
51.3EFFECTIVE DATE.This section is effective the day after compliance by the
51.4governing body of the city of Marshall with Minnesota Statutes, section 645.021.

51.5    Sec. 15. CITY OF MEDFORD; SALES AND USE TAX.
51.6    Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes,
51.7sections 297A.99, subdivision 1, and 477A.016, or any other provision of law, ordinance,
51.8or city charter, if approved by the voters pursuant to Minnesota Statutes, section 297A.99,
51.9at the next general election, the city of Medford may impose by ordinance a sales and use
51.10tax of one-half of one percent for the purposes specified in subdivision 2. Except as
51.11otherwise provided in this section, the provisions of Minnesota Statutes, section 297A.99,
51.12govern the imposition, administration, collection, and enforcement of the tax authorized
51.13under this subdivision.
51.14    Subd. 2. Use of revenues. The proceeds of the tax imposed under this section must
51.15be used by the city of Medford to pay the costs of collecting and administering the tax
51.16and to repay loans received from the Minnesota Public Facilities Authority since 2007
51.17that were used to finance $4,200,000 of improvements to the city's water and wastewater
51.18systems.
51.19    Subd. 3. Termination of taxes. The tax imposed under this section expires at the
51.20earlier of (1) 20 years after the date the taxes are first imposed, or (2) when the Medford
51.21City Council determines that the amount of revenues received from the tax equals or
51.22exceeds the sum of loans made to the city by the Minnesota Public Facilities Authority
51.23as described in subdivision 2, including interest on the loans. Any funds remaining
51.24after completion of the repayment of the loans may be placed in the general fund of the
51.25city. The tax imposed under subdivision 1 may expire at an earlier time if the city so
51.26determines by ordinance.
51.27EFFECTIVE DATE.This section is effective the day after compliance by the
51.28governing body of the city of Medford with Minnesota Statutes, section 645.021.

51.29ARTICLE 5
51.30PROPERTY TAXES

51.31    Section 1. Minnesota Statutes 2010, section 126C.01, subdivision 3, is amended to read:
51.32    Subd. 3. Referendum market value. "Referendum market value" means the market
51.33value of all taxable property, excluding property classified as class 2, noncommercial
52.14c(1), or 4c(4), or 4c(12) under section 273.13. The portion of class 2a property consisting
52.2of the house, garage, and surrounding one acre of land of an agricultural homestead is
52.3included in referendum market value. Any class of property, or any portion of a class of
52.4property, that is included in the definition of referendum market value and that has a class
52.5rate of less than one percent under section 273.13 shall have a referendum market value
52.6equal to its net tax capacity multiplied by 100.
52.7EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
52.8thereafter.

52.9    Sec. 2. Minnesota Statutes 2010, section 270C.991, subdivision 4, is amended to read:
52.10    Subd. 4. Property tax working group. (a) A property tax working group is
52.11established as provided in this subdivision. The goals of the working group are:
52.12(1) to investigate ways to simplify the property tax system and make advisory
52.13recommendations on ways to make the system more understandable;
52.14(2) to reexamine the property tax calendar to determine what changes could be made
52.15to shorten the two-year cycle from assessment through property tax collection; and
52.16(3) to determine the cost versus the benefits of the various property tax components,
52.17including property classifications, credits, aids, exclusions, exemptions, and abatements,
52.18and to suggest ways to achieve some of the goals in simpler and more cost-efficient ways.
52.19(b) The 13 12-member working group shall consist of the following members:
52.20(1) two state representatives, both appointed by the chair of the house of
52.21representatives Taxes Committee, one from the majority party and one from the largest
52.22minority party;
52.23(2) two senators appointed by the Subcommittee on Committees of the Senate Rules
52.24and Administration Committee, one from the majority party and one from the largest
52.25minority party;
52.26(3) the commissioner of revenue, or designee;
52.27(4) (3) one person appointed by the Association of Minnesota Counties;
52.28(5) (4) one person appointed by the League of Minnesota Cities;
52.29(6) (5) one person appointed by the Minnesota Association of Townships;
52.30(7) (6) one person appointed by the Minnesota Chamber of Commerce;
52.31(8) (7) one person appointed by the Minnesota Association of Assessing Officers;
52.32(9) (8) two homeowners, one who is under 65 years of age, and one who is 65 years
52.33of age or older, both appointed by the commissioner of revenue; and
52.34(10) (9) one person jointly appointed by the Minnesota Farm Bureau and the
52.35Minnesota Farmers Union.
53.1The commissioner of revenue shall chair the initial meeting, and the working
53.2group shall elect a chair at that initial meeting. The working group will meet at the call
53.3of the chair. Members of the working group shall serve without compensation. The
53.4commissioner of revenue must provide administrative support to the working group.
53.5Chapter 13D does not apply to meetings of the working group. Meetings of the working
53.6group must be open to the public and the working group must provide notice of a meeting
53.7to potentially interested persons at least seven days before the meeting. A meeting of the
53.8council occurs when a quorum is present.
53.9(c) The working group shall make its advisory recommendations to the chairs of
53.10the house of representatives and senate Taxes Committees on or before February 1, 2012
53.112013, at which time the working group shall be finished and this subdivision expires.
53.12The advisory recommendations should be reviewed by the Taxes Committee under
53.13subdivision 5.
53.14EFFECTIVE DATE.This section is effective the day following final enactment.

53.15    Sec. 3. Minnesota Statutes 2010, section 272.02, subdivision 39, is amended to read:
53.16    Subd. 39. Economic development; public purpose. The holding of property by a
53.17political subdivision of the state for later resale for economic development purposes shall
53.18be considered a public purpose in accordance with subdivision 8 for a period not to exceed
53.19eight nine years, except that for property located in a city of 5,000 population or under that
53.20is located outside of the metropolitan area as defined in section 473.121, subdivision 2, the
53.21period must not exceed 15 years.
53.22The holding of property by a political subdivision of the state for later resale (1)
53.23which is purchased or held for housing purposes, or (2) which meets the conditions
53.24described in section 469.174, subdivision 10, shall be considered a public purpose in
53.25accordance with subdivision 8.
53.26The governing body of the political subdivision which acquires property which is
53.27subject to this subdivision shall after the purchase of the property certify to the city or
53.28county assessor whether the property is held for economic development purposes or
53.29housing purposes, or whether it meets the conditions of section 469.174, subdivision 10.
53.30If the property is acquired for economic development purposes and buildings or other
53.31improvements are constructed after acquisition of the property, and if more than one-half
53.32of the floor space of the buildings or improvements which is available for lease to or use
53.33by a private individual, corporation, or other entity is leased to or otherwise used by
53.34a private individual, corporation, or other entity the provisions of this subdivision shall
53.35not apply to the property. This subdivision shall not create an exemption from section
54.1272.01, subdivision 2 ; 272.68; 273.19; or 469.040, subdivision 3; or other provision of
54.2law providing for the taxation of or for payments in lieu of taxes for publicly held property
54.3which is leased, loaned, or otherwise made available and used by a private person.
54.4EFFECTIVE DATE.This section is effective for taxes levied in 2011, payable
54.5in 2012, and thereafter.

54.6    Sec. 4. Minnesota Statutes 2010, section 272.02, is amended by adding a subdivision
54.7to read:
54.8    Subd. 95. Electric generation facility; personal property. (a) Notwithstanding
54.9subdivision 9, clause (a), and section 453.54, subdivision 20, attached machinery and other
54.10personal property that is part of a multiple reciprocating engine electric generation facility
54.11that adds more than 20 and less than 30 megawatts of installed capacity at a site where
54.12there is presently more than ten megawatts and fewer than 15 megawatts of installed
54.13capacity and that meets the requirements of this subdivision is exempt from taxation and
54.14from payments in lieu of taxation. At the time of construction, the facility must:
54.15(1) be designed to utilize natural gas as a primary fuel;
54.16(2) be owned and operated by a municipal power agency as defined in section
54.17453.52, subdivision 8;
54.18(3) be located within one mile of an existing natural gas pipeline;
54.19(4) be designed to have black start capability and to furnish emergency backup
54.20power service to the city in which it is located;
54.21(5) satisfy a resource deficiency identified in an approved integrated resource plan
54.22filed under section 216B.2422; and
54.23(6) have received, by resolution, the approval of the governing bodies of the city
54.24and county in which it is located for the exemption of personal property provided by
54.25this subdivision.
54.26(b) Construction of the facility must be commenced after December 31, 2011, and
54.27before January 1, 2015. Property eligible for this exemption does not include (i) electric
54.28transmission lines and interconnections or gas pipelines and interconnections appurtenant
54.29to the property or the facility; or (ii) property located on the site on the enactment date
54.30of this subdivision.
54.31EFFECTIVE DATE.This section is effective for assessments in 2012, taxes
54.32payable in 2013, and thereafter.

54.33    Sec. 5. Minnesota Statutes 2010, section 273.121, subdivision 1, is amended to read:
55.1    Subdivision 1. Notice. Any county assessor or city assessor having the powers of a
55.2county assessor, valuing or classifying taxable real property shall in each year notify those
55.3persons whose property is to be included on the assessment roll that year if the person's
55.4address is known to the assessor, otherwise the occupant of the property. The notice shall
55.5be in writing and shall be sent by ordinary mail at least ten days before the meeting of
55.6the local board of appeal and equalization under section 274.01 or the review process
55.7established under section 274.13, subdivision 1c. Upon written request by the owner of the
55.8property, the assessor may send the notice in electronic form or by electronic mail instead
55.9of on paper or by ordinary mail. It shall contain: (1) the market value for the current and
55.10prior assessment, (2) the limited market value under section 273.11, subdivision 1a, for
55.11the current and prior assessment, (3) the qualifying amount of any improvements under
55.12section 273.11, subdivision 16, for the current assessment, (4) (3) the market value subject
55.13to taxation after subtracting the amount of any qualifying improvements for the current
55.14assessment, (5) (4) the classification of the property for the current and prior assessment,
55.15(6) a note that if the property is homestead and at least 45 years old, improvements made
55.16to the property may be eligible for a valuation exclusion under section 273.11, subdivision
55.1716
, (7) (5) the assessor's office address, and (8) (6) the dates, places, and times set for the
55.18meetings of the local board of appeal and equalization, the review process established
55.19under section 274.13, subdivision 1c, and the county board of appeal and equalization. If
55.20the classification of the property has changed between the current and prior assessments, a
55.21specific note to that effect shall be prominently listed on the statement. The commissioner
55.22of revenue shall specify the form of the notice. The assessor shall attach to the assessment
55.23roll a statement that the notices required by this section have been mailed. Any assessor
55.24who is not provided sufficient funds from the assessor's governing body to provide such
55.25notices, may make application to the commissioner of revenue to finance such notices.
55.26The commissioner of revenue shall conduct an investigation and, if satisfied that the
55.27assessor does not have the necessary funds, issue a certification to the commissioner
55.28of management and budget of the amount necessary to provide such notices. The
55.29commissioner of management and budget shall issue a warrant for such amount and shall
55.30deduct such amount from any state payment to such county or municipality. The necessary
55.31funds to make such payments are hereby appropriated. Failure to receive the notice shall in
55.32no way affect the validity of the assessment, the resulting tax, the procedures of any board
55.33of review or equalization, or the enforcement of delinquent taxes by statutory means.
55.34EFFECTIVE DATE.This section is effective for notifications for taxes payable in
55.352013 and thereafter.

56.1    Sec. 6. Minnesota Statutes 2010, section 273.13, subdivision 23, as amended by Laws
56.22011, chapter 112, article 11, section 8, is amended to read:
56.3    Subd. 23. Class 2. (a) An agricultural homestead consists of class 2a agricultural
56.4land that is homesteaded, along with any class 2b rural vacant land that is contiguous to
56.5the class 2a land under the same ownership. The market value of the house and garage
56.6and immediately surrounding one acre of land has the same class rates as class 1a or 1b
56.7property under subdivision 22. The value of the remaining land including improvements
56.8up to the first tier valuation limit of agricultural homestead property has a net class rate
56.9of 0.5 percent of market value. The remaining property over the first tier has a class rate
56.10of one percent of market value. For purposes of this subdivision, the "first tier valuation
56.11limit of agricultural homestead property" and "first tier" means the limit certified under
56.12section 273.11, subdivision 23.
56.13    (b) Class 2a agricultural land consists of parcels of property, or portions thereof, that
56.14are agricultural land and buildings. Class 2a property has a net class rate of one percent of
56.15market value, unless it is part of an agricultural homestead under paragraph (a). Class
56.162a property must also include any property that would otherwise be classified as 2b,
56.17but is interspersed with class 2a property, including but not limited to sloughs, wooded
56.18wind shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback
56.19requirement, and other similar land that is impractical for the assessor to value separately
56.20from the rest of the property or that is unlikely to be able to be sold separately from
56.21the rest of the property.
56.22    An assessor may classify the part of a parcel described in this subdivision that is used
56.23for agricultural purposes as class 2a and the remainder in the class appropriate to its use.
56.24    (c) Class 2b rural vacant land consists of parcels of property, or portions thereof,
56.25that are unplatted real estate, rural in character and not used for agricultural purposes,
56.26including land used for growing trees for timber, lumber, and wood and wood products,
56.27that is not improved with a structure. The presence of a minor, ancillary nonresidential
56.28structure as defined by the commissioner of revenue does not disqualify the property from
56.29classification under this paragraph. Any parcel of 20 acres or more improved with a
56.30structure that is not a minor, ancillary nonresidential structure must be split-classified, and
56.31ten acres must be assigned to the split parcel containing the structure. Class 2b property
56.32has a net class rate of one percent of market value unless it is part of an agricultural
56.33homestead under paragraph (a), or qualifies as class 2c under paragraph (d).
56.34    (d) Class 2c managed forest land consists of no less than 20 and no more than 1,920
56.35acres statewide per taxpayer that is being managed under a forest management plan that
56.36meets the requirements of chapter 290C, but is not enrolled in the sustainable forest
57.1resource management incentive program. It has a class rate of .65 percent, provided that
57.2the owner of the property must apply to the assessor in order for the property to initially
57.3qualify for the reduced rate and provide the information required by the assessor to verify
57.4that the property qualifies for the reduced rate. If the assessor receives the application
57.5and information before May 1 in an assessment year, the property qualifies beginning
57.6with that assessment year. If the assessor receives the application and information after
57.7April 30 in an assessment year, the property may not qualify until the next assessment
57.8year. The commissioner of natural resources must concur that the land is qualified. The
57.9commissioner of natural resources shall annually provide county assessors verification
57.10information on a timely basis. The presence of a minor, ancillary nonresidential structure
57.11as defined by the commissioner of revenue does not disqualify the property from
57.12classification under this paragraph.
57.13    (e) Agricultural land as used in this section means contiguous acreage of ten
57.14acres or more, used during the preceding year for agricultural purposes. "Agricultural
57.15purposes" as used in this section means the raising, cultivation, drying, or storage of
57.16agricultural products for sale, or the storage of machinery or equipment used in support
57.17of agricultural production by the same farm entity. For a property to be classified as
57.18agricultural based only on the drying or storage of agricultural products, the products
57.19being dried or stored must have been produced by the same farm entity as the entity
57.20operating the drying or storage facility. "Agricultural purposes" also includes enrollment
57.21in the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal
57.22Conservation Reserve Program as contained in Public Law 99-198 or a similar state
57.23or federal conservation program if the property was classified as agricultural (i) under
57.24this subdivision for the assessment year 2002 or (ii) in the year prior to its enrollment.
57.25Agricultural classification shall not be based upon the market value of any residential
57.26structures on the parcel or contiguous parcels under the same ownership.
57.27    (f) Real estate of less than ten acres, which is exclusively or intensively used for
57.28raising or cultivating agricultural products, shall be considered as agricultural land. To
57.29qualify under this paragraph, property that includes a residential structure must be used
57.30intensively for one of the following purposes:
57.31    (i) for drying or storage of grain or storage of machinery or equipment used to
57.32support agricultural activities on other parcels of property operated by the same farming
57.33entity;
57.34    (ii) as a nursery, provided that only those acres used to produce nursery stock are
57.35considered agricultural land;
58.1    (iii) for livestock or poultry confinement, provided that land that is used only for
58.2pasturing and grazing does not qualify; or
58.3    (iv) for market farming; for purposes of this paragraph, "market farming" means the
58.4cultivation of one or more fruits or vegetables or production of animal or other agricultural
58.5products for sale to local markets by the farmer or an organization with which the farmer
58.6is affiliated.
58.7    (g) Land shall be classified as agricultural even if all or a portion of the agricultural
58.8use of that property is the leasing to, or use by another person for agricultural purposes.
58.9    Classification under this subdivision is not determinative for qualifying under
58.10section 273.111.
58.11    (h) The property classification under this section supersedes, for property tax
58.12purposes only, any locally administered agricultural policies or land use restrictions that
58.13define minimum or maximum farm acreage.
58.14    (i) The term "agricultural products" as used in this subdivision includes production
58.15for sale of:
58.16    (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
58.17animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
58.18bees, and apiary products by the owner;
58.19    (2) fish bred for sale and consumption if the fish breeding occurs on land zoned
58.20for agricultural use;
58.21    (3) the commercial boarding of horses, which may include related horse training and
58.22riding instruction, if the boarding is done on property that is also used for raising pasture
58.23to graze horses or raising or cultivating other agricultural products as defined in clause (1);
58.24    (4) property which is owned and operated by nonprofit organizations used for
58.25equestrian activities, excluding racing;
58.26    (5) game birds and waterfowl bred and raised (i) on a game farm licensed under
58.27section 97A.105, provided that the annual licensing report to the Department of Natural
58.28Resources, which must be submitted annually by March 30 to the assessor, to the
58.29Department of Natural Resources indicates that at least 500 birds were raised or used for
58.30breeding stock on the property during the preceding year and that the owner provides a
58.31copy of the owner's most recent schedule F; or (ii) for use on a shooting preserve licensed
58.32under section 97A.115;
58.33    (6) insects primarily bred to be used as food for animals;
58.34    (7) trees, grown for sale as a crop, including short rotation woody crops, and not
58.35sold for timber, lumber, wood, or wood products; and
59.1    (8) maple syrup taken from trees grown by a person licensed by the Minnesota
59.2Department of Agriculture under chapter 28A as a food processor.
59.3    (j) If a parcel used for agricultural purposes is also used for commercial or industrial
59.4purposes, including but not limited to:
59.5    (1) wholesale and retail sales;
59.6    (2) processing of raw agricultural products or other goods;
59.7    (3) warehousing or storage of processed goods; and
59.8    (4) office facilities for the support of the activities enumerated in clauses (1), (2),
59.9and (3),
59.10the assessor shall classify the part of the parcel used for agricultural purposes as class
59.111b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
59.12use. The grading, sorting, and packaging of raw agricultural products for first sale is
59.13considered an agricultural purpose. A greenhouse or other building where horticultural
59.14or nursery products are grown that is also used for the conduct of retail sales must be
59.15classified as agricultural if it is primarily used for the growing of horticultural or nursery
59.16products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
59.17those products. Use of a greenhouse or building only for the display of already grown
59.18horticultural or nursery products does not qualify as an agricultural purpose.
59.19    (k) The assessor shall determine and list separately on the records the market value
59.20of the homestead dwelling and the one acre of land on which that dwelling is located. If
59.21any farm buildings or structures are located on this homesteaded acre of land, their market
59.22value shall not be included in this separate determination.
59.23    (l) Class 2d airport landing area consists of a landing area or public access area of
59.24a privately owned public use airport. It has a class rate of one percent of market value.
59.25To qualify for classification under this paragraph, a privately owned public use airport
59.26must be licensed as a public airport under section 360.018. For purposes of this paragraph,
59.27"landing area" means that part of a privately owned public use airport properly cleared,
59.28regularly maintained, and made available to the public for use by aircraft and includes
59.29runways, taxiways, aprons, and sites upon which are situated landing or navigational aids.
59.30A landing area also includes land underlying both the primary surface and the approach
59.31surfaces that comply with all of the following:
59.32    (i) the land is properly cleared and regularly maintained for the primary purposes of
59.33the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
59.34facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
59.35    (ii) the land is part of the airport property; and
59.36    (iii) the land is not used for commercial or residential purposes.
60.1The land contained in a landing area under this paragraph must be described and certified
60.2by the commissioner of transportation. The certification is effective until it is modified,
60.3or until the airport or landing area no longer meets the requirements of this paragraph.
60.4For purposes of this paragraph, "public access area" means property used as an aircraft
60.5parking ramp, apron, or storage hangar, or an arrival and departure building in connection
60.6with the airport.
60.7    (m) Class 2e consists of land with a commercial aggregate deposit that is not actively
60.8being mined and is not otherwise classified as class 2a or 2b, provided that the land is not
60.9located in a county that has elected to opt-out of the aggregate preservation program as
60.10provided in section 273.1115, subdivision 6. It has a class rate of one percent of market
60.11value. To qualify for classification under this paragraph, the property must be at least
60.12ten contiguous acres in size and the owner of the property must record with the county
60.13recorder of the county in which the property is located an affidavit containing:
60.14    (1) a legal description of the property;
60.15    (2) a disclosure that the property contains a commercial aggregate deposit that is not
60.16actively being mined but is present on the entire parcel enrolled;
60.17    (3) documentation that the conditional use under the county or local zoning
60.18ordinance of this property is for mining; and
60.19    (4) documentation that a permit has been issued by the local unit of government
60.20or the mining activity is allowed under local ordinance. The disclosure must include a
60.21statement from a registered professional geologist, engineer, or soil scientist delineating
60.22the deposit and certifying that it is a commercial aggregate deposit.
60.23    For purposes of this section and section 273.1115, "commercial aggregate deposit"
60.24means a deposit that will yield crushed stone or sand and gravel that is suitable for use
60.25as a construction aggregate; and "actively mined" means the removal of top soil and
60.26overburden in preparation for excavation or excavation of a commercial deposit.
60.27    (n) When any portion of the property under this subdivision or subdivision 22 begins
60.28to be actively mined, the owner must file a supplemental affidavit within 60 days from
60.29the day any aggregate is removed stating the number of acres of the property that is
60.30actively being mined. The acres actively being mined must be (1) valued and classified
60.31under subdivision 24 in the next subsequent assessment year, and (2) removed from the
60.32aggregate resource preservation property tax program under section 273.1115, if the
60.33land was enrolled in that program. Copies of the original affidavit and all supplemental
60.34affidavits must be filed with the county assessor, the local zoning administrator, and the
60.35Department of Natural Resources, Division of Land and Minerals. A supplemental
60.36affidavit must be filed each time a subsequent portion of the property is actively mined,
61.1provided that the minimum acreage change is five acres, even if the actual mining activity
61.2constitutes less than five acres.
61.3(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are
61.4not rules and are exempt from the rulemaking provisions of chapter 14, and the provisions
61.5in section 14.386 concerning exempt rules do not apply.
61.6EFFECTIVE DATE.This section is effective for property taxes payable in 2012
61.7and thereafter.

61.8    Sec. 7. Minnesota Statutes 2010, section 273.13, subdivision 25, is amended to read:
61.9    Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more
61.10units and used or held for use by the owner or by the tenants or lessees of the owner
61.11as a residence for rental periods of 30 days or more, excluding property qualifying for
61.12class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
61.13than hospitals exempt under section 272.02, and contiguous property used for hospital
61.14purposes, without regard to whether the property has been platted or subdivided. The
61.15market value of class 4a property has a class rate of 1.25 percent.
61.16    (b) Class 4b includes:
61.17    (1) residential real estate containing less than four units that does not qualify as class
61.184bb, other than seasonal residential recreational property;
61.19    (2) manufactured homes not classified under any other provision;
61.20    (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
61.21farm classified under subdivision 23, paragraph (b) containing two or three units; and
61.22    (4) unimproved property that is classified residential as determined under subdivision
61.2333.
61.24    The market value of class 4b property has a class rate of 1.25 percent.
61.25    (c) Class 4bb includes:
61.26    (1) nonhomestead residential real estate containing one unit, other than seasonal
61.27residential recreational property; and
61.28    (2) a single family dwelling, garage, and surrounding one acre of property on a
61.29nonhomestead farm classified under subdivision 23, paragraph (b).
61.30    Class 4bb property has the same class rates as class 1a property under subdivision 22.
61.31    Property that has been classified as seasonal residential recreational property at
61.32any time during which it has been owned by the current owner or spouse of the current
61.33owner does not qualify for class 4bb.
61.34    (d) Class 4c property includes:
62.1    (1) except as provided in subdivision 22, paragraph (c), real and personal property
62.2devoted to commercial temporary and seasonal residential occupancy for recreation
62.3purposes, including real and personal property devoted to temporary and seasonal
62.4residential occupancy for recreation purposes and not devoted to commercial purposes for
62.5not more than 250 days in the year preceding the year of assessment. For purposes of this
62.6clause, property is devoted to a commercial purpose on a specific day if any portion of the
62.7property is used for residential occupancy, and a fee is charged for residential occupancy.
62.8Class 4c property under this clause must contain three or more rental units. A "rental unit"
62.9is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site
62.10equipped with water and electrical hookups for recreational vehicles. Class 4c property
62.11under this clause must provide recreational activities such as renting ice fishing houses,
62.12boats and motors, snowmobiles, downhill or cross-country ski equipment; provide marina
62.13services, launch services, or guide services; or sell bait and fishing tackle. A camping pad
62.14offered for rent by a property that otherwise qualifies for class 4c under this clause is also
62.15class 4c under this clause regardless of the term of the rental agreement, as long as the use
62.16of the camping pad does not exceed 250 days. In order for a property to be classified as
62.17class 4c, seasonal residential recreational for commercial purposes under this clause, either
62.18(i) the business located on the property must provide recreational activities, at least 40
62.19percent of the annual gross lodging receipts related to the property must be from business
62.20conducted during 90 consecutive days, and either (i) (A) at least 60 percent of all paid
62.21bookings by lodging guests during the year must be for periods of at least two consecutive
62.22nights; or (ii) (B) at least 20 percent of the annual gross receipts must be from charges
62.23for rental of fish houses, boats and motors, snowmobiles, downhill or cross-country ski
62.24equipment, or charges for marina services, launch services, and guide services, or the sale
62.25of bait and fishing tackle providing recreational activities, or (ii) the business must contain
62.2620 or fewer rental units, and must be located in a township or a city with a population of
62.272,500 or less located outside the metropolitan area, as defined under section 473.121,
62.28subdivision 2, that contains a portion of a state trail administered by the Department of
62.29Natural Resources. For purposes of this determination item (i)(A), a paid booking of
62.30five or more nights shall be counted as two bookings. Class 4c property classified under
62.31this clause also includes commercial use real property used exclusively for recreational
62.32purposes in conjunction with other class 4c property classified under this clause and
62.33devoted to temporary and seasonal residential occupancy for recreational purposes, up to a
62.34total of two acres, provided the property is not devoted to commercial recreational use for
62.35more than 250 days in the year preceding the year of assessment and is located within two
62.36miles of the class 4c property with which it is used. Owners of real and personal property
63.1devoted to temporary and seasonal residential occupancy for recreation purposes and all
63.2or a portion of which was devoted to commercial purposes for not more than 250 days in
63.3the year preceding the year of assessment desiring classification as class 4c, In order for a
63.4property to qualify for classification under this clause, the owner must submit a declaration
63.5to the assessor designating the cabins or units occupied for 250 days or less in the year
63.6preceding the year of assessment by January 15 of the assessment year. Those cabins or
63.7units and a proportionate share of the land on which they are located must be designated
63.8class 4c under this clause as otherwise provided. The remainder of the cabins or units and
63.9a proportionate share of the land on which they are located will be designated as class 3a.
63.10The owner of property desiring designation as class 4c property under this clause must
63.11provide guest registers or other records demonstrating that the units for which class 4c
63.12designation is sought were not occupied for more than 250 days in the year preceding the
63.13assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar,
63.14(3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility
63.15operated on a commercial basis not directly related to temporary and seasonal residential
63.16occupancy for recreation purposes does not qualify for class 4c. For the purposes of this
63.17paragraph, "recreational activities" means renting ice fishing houses, boats and motors,
63.18snowmobiles, downhill or cross-country ski equipment; providing marina services, launch
63.19services, or guide services; or selling bait and fishing tackle;
63.20    (2) qualified property used as a golf course if:
63.21    (i) it is open to the public on a daily fee basis. It may charge membership fees or
63.22dues, but a membership fee may not be required in order to use the property for golfing,
63.23and its green fees for golfing must be comparable to green fees typically charged by
63.24municipal courses; and
63.25    (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
63.26    A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
63.27with the golf course is classified as class 3a property;
63.28    (3) real property up to a maximum of three acres of land owned and used by a
63.29nonprofit community service oriented organization and not used for residential purposes
63.30on either a temporary or permanent basis, provided that:
63.31    (i) the property is not used for a revenue-producing activity for more than six days
63.32in the calendar year preceding the year of assessment; or
63.33    (ii) the organization makes annual charitable contributions and donations at least
63.34equal to the property's previous year's property taxes and the property is allowed to be
63.35used for public and community meetings or events for no charge, as appropriate to the
63.36size of the facility.
64.1    For purposes of this clause,
64.2    (A) "charitable contributions and donations" has the same meaning as lawful
64.3gambling purposes under section 349.12, subdivision 25, excluding those purposes
64.4relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;
64.5    (B) "property taxes" excludes the state general tax;
64.6    (C) a "nonprofit community service oriented organization" means any corporation,
64.7society, association, foundation, or institution organized and operated exclusively for
64.8charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
64.9federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
64.10Revenue Code; and
64.11    (D) "revenue-producing activities" shall include but not be limited to property or that
64.12portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
64.13liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
64.14alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
64.15insurance business, or office or other space leased or rented to a lessee who conducts a
64.16for-profit enterprise on the premises.
64.17Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The use
64.18of the property for social events open exclusively to members and their guests for periods
64.19of less than 24 hours, when an admission is not charged nor any revenues are received by
64.20the organization shall not be considered a revenue-producing activity.
64.21    The organization shall maintain records of its charitable contributions and donations
64.22and of public meetings and events held on the property and make them available upon
64.23request any time to the assessor to ensure eligibility. An organization meeting the
64.24requirement under item (ii) must file an application by May 1 with the assessor for
64.25eligibility for the current year's assessment. The commissioner shall prescribe a uniform
64.26application form and instructions;
64.27    (4) postsecondary student housing of not more than one acre of land that is owned by
64.28a nonprofit corporation organized under chapter 317A and is used exclusively by a student
64.29cooperative, sorority, or fraternity for on-campus housing or housing located within two
64.30miles of the border of a college campus;
64.31    (5) (i) manufactured home parks as defined in section 327.14, subdivision 3,
64.32excluding manufactured home parks described in section 273.124, subdivision 3a, and (ii)
64.33manufactured home parks as defined in section 327.14, subdivision 3, that are described in
64.34section 273.124, subdivision 3a;
65.1    (6) real property that is actively and exclusively devoted to indoor fitness, health,
65.2social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
65.3and is located within the metropolitan area as defined in section 473.121, subdivision 2;
65.4    (7) a leased or privately owned noncommercial aircraft storage hangar not exempt
65.5under section 272.01, subdivision 2, and the land on which it is located, provided that:
65.6    (i) the land is on an airport owned or operated by a city, town, county, Metropolitan
65.7Airports Commission, or group thereof; and
65.8    (ii) the land lease, or any ordinance or signed agreement restricting the use of the
65.9leased premise, prohibits commercial activity performed at the hangar.
65.10    If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
65.11be filed by the new owner with the assessor of the county where the property is located
65.12within 60 days of the sale;
65.13    (8) a privately owned noncommercial aircraft storage hangar not exempt under
65.14section 272.01, subdivision 2, and the land on which it is located, provided that:
65.15    (i) the land abuts a public airport; and
65.16    (ii) the owner of the aircraft storage hangar provides the assessor with a signed
65.17agreement restricting the use of the premises, prohibiting commercial use or activity
65.18performed at the hangar; and
65.19    (9) residential real estate, a portion of which is used by the owner for homestead
65.20purposes, and that is also a place of lodging, if all of the following criteria are met:
65.21    (i) rooms are provided for rent to transient guests that generally stay for periods
65.22of 14 or fewer days;
65.23    (ii) meals are provided to persons who rent rooms, the cost of which is incorporated
65.24in the basic room rate;
65.25    (iii) meals are not provided to the general public except for special events on fewer
65.26than seven days in the calendar year preceding the year of the assessment; and
65.27    (iv) the owner is the operator of the property.
65.28The market value subject to the 4c classification under this clause is limited to five rental
65.29units. Any rental units on the property in excess of five, must be valued and assessed as
65.30class 3a. The portion of the property used for purposes of a homestead by the owner must
65.31be classified as class 1a property under subdivision 22;
65.32    (10) real property up to a maximum of three acres and operated as a restaurant
65.33as defined under section 157.15, subdivision 12, provided it: (A) is located on a lake
65.34as defined under section 103G.005, subdivision 15, paragraph (a), clause (3); and (B)
65.35is either devoted to commercial purposes for not more than 250 consecutive days, or
65.36receives at least 60 percent of its annual gross receipts from business conducted during
66.1four consecutive months. Gross receipts from the sale of alcoholic beverages must be
66.2included in determining the property's qualification under subitem (B). The property's
66.3primary business must be as a restaurant and not as a bar. Gross receipts from gift shop
66.4sales located on the premises must be excluded. Owners of real property desiring 4c
66.5classification under this clause must submit an annual declaration to the assessor by
66.6February 1 of the current assessment year, based on the property's relevant information for
66.7the preceding assessment year; and
66.8(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used
66.9as a marina, as defined in section 86A.20, subdivision 5, which is made accessible to
66.10the public and devoted to recreational use for marina services. The marina owner must
66.11annually provide evidence to the assessor that it provides services, including lake or river
66.12access to the public by means of an access ramp or other facility that is either located on
66.13the property of the marina or at a publicly owned site that abuts the property of the marina.
66.14No more than 800 feet of lakeshore may be included in this classification. Buildings used
66.15in conjunction with a marina for marina services, including but not limited to buildings
66.16used to provide food and beverage services, fuel, boat repairs, or the sale of bait or fishing
66.17tackle, are classified as class 3a property; and
66.18(12) real and personal property devoted to noncommercial temporary and seasonal
66.19residential occupancy for recreation purposes.
66.20    Class 4c property has a class rate of 1.5 percent of market value, except that (i)
66.21each parcel of noncommercial seasonal residential recreational property not used for
66.22commercial purposes under clause (12) has the same class rates as class 4bb property, (ii)
66.23manufactured home parks assessed under clause (5), item (i), have the same class rate
66.24as class 4b property, and the market value of manufactured home parks assessed under
66.25clause (5), item (ii), has the same class rate as class 4d property if more than 50 percent
66.26of the lots in the park are occupied by shareholders in the cooperative corporation or
66.27association and a class rate of one percent if 50 percent or less of the lots are so occupied,
66.28(iii) commercial-use seasonal residential recreational property and marina recreational
66.29land as described in clause (11), has a class rate of one percent for the first $500,000 of
66.30market value, and 1.25 percent for the remaining market value, (iv) the market value of
66.31property described in clause (4) has a class rate of one percent, (v) the market value of
66.32property described in clauses (2), (6), and (10) has a class rate of 1.25 percent, and (vi)
66.33that portion of the market value of property in clause (9) qualifying for class 4c property
66.34has a class rate of 1.25 percent.
66.35    (e) Class 4d property is qualifying low-income rental housing certified to the assessor
66.36by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
67.1of the units in the building qualify as low-income rental housing units as certified under
67.2section 273.128, subdivision 3, only the proportion of qualifying units to the total number
67.3of units in the building qualify for class 4d. The remaining portion of the building shall be
67.4classified by the assessor based upon its use. Class 4d also includes the same proportion of
67.5land as the qualifying low-income rental housing units are to the total units in the building.
67.6For all properties qualifying as class 4d, the market value determined by the assessor must
67.7be based on the normal approach to value using normal unrestricted rents.
67.8    Class 4d property has a class rate of 0.75 percent.
67.9EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
67.10thereafter.

67.11    Sec. 8. Minnesota Statutes 2010, section 273.13, subdivision 34, is amended to read:
67.12    Subd. 34. Homestead of disabled veteran or family caregiver. (a) All or a portion
67.13of the market value of property owned by a veteran or by the veteran and the and serving
67.14as the veteran's spouse qualifying for homestead classification under subdivision 22 or
67.1523 under this section is excluded in determining the property's taxable market value if
67.16it serves as the homestead of a military veteran, as defined in section 197.447, who has
67.17a service-connected disability of 70 percent or more as certified by the United States
67.18Department of Veterans Affairs. To qualify for exclusion under this subdivision, the
67.19veteran must have been honorably discharged from the United States armed forces, as
67.20indicated by United States Government Form DD214 or other official military discharge
67.21papers, and must be certified by the United States Veterans Administration as having a
67.22service-connected disability.
67.23    (b)(1) For a disability rating of 70 percent or more, $150,000 of market value is
67.24excluded, except as provided in clause (2); and
67.25    (2) for a total (100 percent) and permanent disability, $300,000 of market value is
67.26excluded.
67.27    (c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b),
67.28clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the
67.29spouse holds the legal or beneficial title to the homestead and permanently resides there,
67.30the exclusion shall carry over to the benefit of the veteran's spouse for one additional
67.31assessment year the current taxes payable year and for five additional taxes payable years
67.32or until such time as the spouse remarries, or sells, transfers, or otherwise disposes of the
67.33property, whichever comes first. Qualification under this paragraph requires an annual
67.34application under paragraph (h).
68.1(d) If the spouse of a member of any branch or unit of the United States armed
68.2forces who dies due to a service-connected cause while serving honorably in active
68.3service, as indicated on United States Government Form DD1300 or DD2064, holds
68.4the legal or beneficial title to a homestead and permanently resides there, the spouse is
68.5entitled to the benefit described in paragraph (b), clause (2), for five taxes payable years,
68.6or until such time as the spouse remarries or sells, transfers, or otherwise disposes of the
68.7property, whichever comes first.
68.8(e) If a veteran meets the disability criteria of paragraph (a) but does not own
68.9property classified as homestead in the state of Minnesota, then the homestead of the
68.10veteran's primary family caregiver, if any, is eligible for the exclusion that the veteran
68.11would otherwise qualify for under paragraph (b).
68.12    (d) (f) In the case of an agricultural homestead, only the portion of the property
68.13consisting of the house and garage and immediately surrounding one acre of land qualifies
68.14for the valuation exclusion under this subdivision.
68.15    (e) (g) A property qualifying for a valuation exclusion under this subdivision is not
68.16eligible for the credit under section 273.1384, subdivision 1 market value exclusion under
68.17subdivision 35, or classification under subdivision 22, paragraph (b).
68.18    (f) (h) To qualify for a valuation exclusion under this subdivision a property owner
68.19must apply to the assessor by July 1 of each assessment year, except that an annual
68.20reapplication is not required once a property has been accepted for a valuation exclusion
68.21under paragraph (a) and qualifies for the benefit described in paragraph (b), clause (2), and
68.22the property continues to qualify until there is a change in ownership. For an application
68.23received after July 1 of any calendar year, the exclusion shall become effective for the
68.24following assessment year.
68.25(i) A first-time application by a qualifying spouse for the market value exclusion
68.26under paragraph (d) must be made any time within two years of the death of the service
68.27member.
68.28(j) For purposes of this subdivision:
68.29(1) "active service" has the meaning given in section 190.05;
68.30(2) "own" means that the person's name is present as an owner on the property deed;
68.31(3) "primary family caregiver" means a person who is approved by the secretary of
68.32the United States Department of Veterans Affairs for assistance as the primary provider
68.33of personal care services for an eligible veteran under the Program of Comprehensive
68.34Assistance for Family Caregivers, codified as United States Code, title 38, section 1720G;
68.35and
68.36(4) "veteran" has the meaning given the term in section 197.447.
69.1(k) The purpose of this provision of law providing a level of homestead property tax
69.2relief for gravely disabled veterans, their primary family caregivers, and their surviving
69.3spouses is to help ease the burdens of war for those among our state's citizens who bear
69.4those burdens most heavily.
69.5EFFECTIVE DATE.(a) This section is effective for taxes payable in 2012 and
69.6thereafter, and applies to homesteads that initially qualified for the exclusion for taxes
69.7payable in 2009 and thereafter.
69.8(b) Notwithstanding the deadline contained in paragraph (h), applications for a
69.9market value exclusion under paragraph (c) must be received prior to August 16, 2011,
69.10to be eligible for an exclusion for taxes payable in 2012.
69.11(c) A qualifier under paragraph (c) that would have been eligible for a market value
69.12exclusion under this section for taxes payable in 2011, if the change under this section had
69.13been effective for that year, shall be eligible to receive the benefit of the exclusion for the
69.14remaining number of total taxes payable years provided under paragraph (c).

69.15    Sec. 9. Minnesota Statutes 2010, section 275.025, subdivision 3, is amended to read:
69.16    Subd. 3. Seasonal residential recreational tax capacity. For the purposes of this
69.17section, "seasonal residential recreational tax capacity" means the tax capacity of tier III
69.18of class 1c under section 273.13, subdivision 22, and all class 4c(1) and, 4c(3)(ii), and
69.194c(12) property under section 273.13, subdivision 25, except that the first $76,000 of
69.20market value of each noncommercial class 4c(1) 4c(12) property has a tax capacity for this
69.21purpose equal to 40 percent of its tax capacity under section 273.13.
69.22EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
69.23thereafter.

69.24    Sec. 10. [275.761] MAINTENANCE OF EFFORT REQUIREMENTS
69.25REDUCED.
69.26(a) Notwithstanding any law to the contrary and except as provided in paragraphs (b)
69.27and (c), the amounts required to be expended under the maintenance of effort requirements
69.28for counties under sections 134.34, 245.4835, 256F.10, and 256F.13, are reduced to 90
69.29percent of the amounts required for 2011.
69.30(b) This section does not permit a county to reduce compliance with maintenance of
69.31effort requirements to the extent that the reduction would:
69.32(1) require the state to expend additional money or incur additional costs; or
69.33(2) cause a reduction in the receipt by the state or the county of federal funds.
70.1(c) The commissioner of management and budget may determine the maintenance
70.2of effort requirements that are not permitted, in whole or in part, to be reduced under
70.3paragraph (b). The commissioner shall publish these determinations on the department's
70.4Web site and no county may reduce compliance with a maintenance of effort requirement
70.5that the commissioner determines is not subject to reduction.
70.6(d) Notwithstanding any law to the contrary, the amounts required to be expended
70.7under the maintenance of effort requirements for all statutory and home rule charter cities
70.8under section 134.34 are reduced to 90 percent of the amounts required for 2011.
70.9EFFECTIVE DATE.This section is effective for maintenance of effort
70.10requirements in 2012 and thereafter.

70.11    Sec. 11. Laws 1995, chapter 264, article 5, section 45, subdivision 1, as amended by
70.12Laws 1996, chapter 471, article 7, section 22, Laws 1997, chapter 231, article 10, section
70.1313, Laws 2002, chapter 377, article 7, section 6, Laws 2008, chapter 154, article 9, section
70.1419, and Laws 2010, chapter 216, section 46, is amended to read:
70.15    Subdivision 1. Creation of projects. (a) An authority may create a housing
70.16replacement project under sections 44 to 47, as provided in this section.
70.17    (b) For the cities of Crystal, Fridley, Richfield, Columbia Heights, and Brooklyn
70.18Park, the authority may designate up to 100 parcels in the city to be included in a housing
70.19replacement district over the life of a district or districts. For the cities of St. Paul and
70.20Duluth, each authority may designate not more than 200 parcels in the city to be included
70.21in a housing replacement district over the life of the district. For the city of Minneapolis,
70.22the authority may designate not more than 500 parcels in the city to be included in housing
70.23replacement districts over the life of the districts. The authority may designate up to
70.24200 additional parcels, on a onetime basis, within the area of the city of Minneapolis
70.25designated by the Presidential declaration of major disaster FEMA-1990-DR. The only
70.26parcels that may be included in a district are (1) vacant sites, (2) parcels containing vacant
70.27houses, or (3) parcels containing houses that are structurally substandard, as defined in
70.28Minnesota Statutes, section 469.174, subdivision 10.
70.29    (c) The city in which the authority is located must pay at least 25 percent of the
70.30housing replacement project costs from its general fund, a property tax levy, or other
70.31unrestricted money, not including tax increments.
70.32    (d) The housing replacement district plan must have as its sole object the acquisition
70.33of parcels for the purpose of preparing the site to be sold for market rate housing. As
70.34used in this section, "market rate housing" means housing that has a market value that
71.1does not exceed 150 percent of the average market value of single-family housing in that
71.2municipality.
71.3EFFECTIVE DATE.This section is effective upon local approval and compliance
71.4by the city of Minneapolis with Minnesota Statutes, section 645.021, subdivision 3.

71.5    Sec. 12. CITY OF MINNEAPOLIS; TAX INCREMENT FINANCING.
71.6(a) Notwithstanding the provisions of Minnesota Statutes, section 469.176 or
71.7469.1763, or any other law to the contrary, a development authority of the city of
71.8Minneapolis may spend or contractually commit tax increment revenues, generated from
71.9any tax increment district located anywhere within the city, within the area of the city
71.10designated by the Presidential declaration of major disaster FEMA-1990-DR within the
71.1136-month period beginning on the date of the declaration of the disaster.
71.12(b) The authority to spend tax increments under this section is limited to one or
71.13more of the following purposes:
71.14(1) to provide improvements, loans, interest rate subsidies, or assistance in any
71.15form to private individuals and businesses to undertake the reconstruction or substantial
71.16rehabilitation of residential or commercial buildings and ancillary facilities, damaged as a
71.17result of the disaster; and
71.18(2) to pay or finance costs of the authority relating to the recovery of properties
71.19within the disaster area, including, but not limited to, acquisition, demolition, site
71.20improvements, and related administrative costs permitted under Minnesota Statutes,
71.21section 469.176, subdivision 3.
71.22(c) Expenditures made under this section are considered to be expenditures for
71.23activities within the district. An authority may undertake actions provided in this section
71.24only after approval by the city of a written spending plan that specifically authorizes the
71.25authority to take the actions. Before approving the spending plan, the city shall hold a
71.26public hearing after publishing notice in a newspaper of general circulation in the city at
71.27least once, not less than ten days nor more than 30 days prior to the date of the hearing.
71.28(d) For purposes of this section, "development authority" or "authority" has the
71.29meaning given in Minnesota Statutes, section 469.174, subdivision 2, and includes the
71.30city of Minneapolis.
71.31EFFECTIVE DATE.This section is effective upon local approval and compliance
71.32by the city of Minneapolis with Minnesota Statutes, section 645.021, subdivision 3.

72.1    Sec. 13. PROPERTY TAX RELIEF FOR HOMES DAMAGED BY MAY 22,
72.22011 TORNADOES.
72.3    Subdivision 1. Abatement authorization. Notwithstanding Minnesota Statutes,
72.4section 375.192, the county boards of Anoka County and Hennepin County may grant
72.5an abatement of net tax for taxes payable in 2011 for homestead property located within
72.6the area covered by Presidential Disaster Declaration FEMA-1990-DR or added later by
72.7federal government actions, provided that:
72.8(1) the property was found to have sustained a loss in value under the reassessment
72.9required under Minnesota Statutes, section 273.1232;
72.10(2) the property's loss in value was not of sufficient magnitude to allow it to qualify
72.11for the abatement authorized under Minnesota Statutes, section 273.1233; and
72.12(3) the owner submits a written application to the county assessor within 60 days
72.13of the effective date of this act.
72.14    Subd. 2. Abatement limit. The abatement under this section is subject to the
72.15limitation under Minnesota Statutes, section 273.1233, subdivision 2, paragraph (a).
72.16    Subd. 3. Refund required if taxes already paid. If application is made after
72.17payment of all or a portion of the taxes being abated, the portion already paid shall be
72.18refunded to the taxpayer by the county treasurer as soon as practical.
72.19    Subd. 4. Reimbursement. The county auditor shall certify the abatements granted
72.20under this section to the commissioner of revenue for reimbursement to each taxing
72.21jurisdiction in which the damaged property is located. The commissioner shall make the
72.22payments to the taxing jurisdictions containing the property, other than school districts, at
72.23the time distributions are made under Minnesota Statutes, section 473H.10, subdivision
72.243. Reimbursements to school districts shall be made as provided in Minnesota Statutes,
72.25section 273.1392.
72.26    Subd. 5. Ineligibility for credit in following year. Any property which applies for
72.27and is granted an abatement for taxes payable in 2011 under this section is not eligible
72.28for the credits provided under Minnesota Statutes, sections 273.1234 and 273.1235, for
72.29taxes payable in 2012.
72.30    Subd. 6. Appropriation. The amount necessary to make the payments required
72.31under subdivision 4 is appropriated to the commissioner of revenue from the general
72.32fund in fiscal year 2012.
72.33EFFECTIVE DATE.This section is effective the day following final enactment.

73.1ARTICLE 6
73.2AIDS, CREDITS, PAYMENTS, AND REFUNDS

73.3    Section 1. Minnesota Statutes 2010, section 97A.061, subdivision 1, is amended to
73.4read:
73.5    Subdivision 1. Applicability; amount. (a) The commissioner shall annually make a
73.6payment to each county having public hunting areas and game refuges. Money to make
73.7the payments is annually appropriated for that purpose from the general fund. Except as
73.8provided in paragraph (b), this section does not apply to state trust fund land and other
73.9state land not purchased for game refuge or public hunting purposes. Except as provided
73.10in paragraph (b), the payment shall be the greatest of:
73.11(1) 35 percent of the gross receipts from all special use permits and leases of land
73.12acquired for public hunting and game refuges;
73.13(2) 50 cents per acre on land purchased actually used for public hunting or game
73.14refuges; or
73.15(3) three-fourths of one percent of the appraised value of purchased land actually
73.16used for public hunting and game refuges.
73.17(b) The payment shall be 50 percent of the dollar amount adjusted for inflation as
73.18determined under section 477A.12, subdivision 1, paragraph (a), clause (1), multiplied
73.19by the number of acres of land in the county that are owned by another state agency for
73.20military purposes and designated as a game refuge under section 97A.085.
73.21(c) The payment must be reduced by the amount paid under subdivision 3 for
73.22croplands managed for wild geese.
73.23(d) The appraised value is the purchase price for five years after acquisition.
73.24The appraised value shall be determined by the county assessor every five years after
73.25acquisition.
73.26EFFECTIVE DATE.This section is effective for aids payable in calendar year
73.272011 and thereafter.

73.28    Sec. 2. Minnesota Statutes 2010, section 126C.01, subdivision 3, is amended to read:
73.29    Subd. 3. Referendum market value. "Referendum market value" means the market
73.30value of all taxable property, excluding property classified as class 2, noncommercial
73.314c(1), or 4c(4) under section 273.13. The portion of class 2a property consisting of the
73.32house, garage, and surrounding one acre of land of an agricultural homestead is included
73.33in referendum market value. For the purposes of this subdivision, in the case of class 1a,
73.341b, or 2a property, "market value" means the value prior to the exclusion under section
74.1273.13, subdivision 35. Any class of property, or any portion of a class of property, that
74.2is included in the definition of referendum market value and that has a class rate of less
74.3than one percent under section 273.13 shall have a referendum market value equal to its
74.4net tax capacity market value times its class rate, multiplied by 100.
74.5EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
74.6thereafter.

74.7    Sec. 3. Minnesota Statutes 2010, section 273.13, is amended by adding a subdivision
74.8to read:
74.9    Subd. 35. Homestead market value exclusion. (a) Prior to determining a property's
74.10net tax capacity under this section, property classified as class 1a or 1b under subdivision
74.1122, and the portion of property classified as class 2a under subdivision 23 consisting of
74.12the house, garage, and surrounding one acre of land, shall be eligible for a market value
74.13exclusion as determined under paragraph (b).
74.14(b) For a homestead valued at $76,000 or less, the exclusion is 40 percent of market
74.15value. For a homestead valued between $76,000 and $413,800, the exclusion is $30,400
74.16minus nine percent of the valuation over $76,000. For a homestead valued at $413,800 or
74.17more, there is no valuation exclusion. The valuation exclusion shall be rounded to the
74.18nearest whole dollar, and may not be less than zero.
74.19(c) Any valuation exclusions or adjustments under section 273.11 shall be applied
74.20prior to determining the amount of the valuation exclusion under this subdivision.
74.21(d) In the case of a property that is classified as part homestead and part
74.22nonhomestead, (i) the exclusion shall apply only to the homestead portion of the property,
74.23but (ii) if a portion of a property is classified as nonhomestead solely because not all
74.24the owners occupy the property, not all the owners have qualifying relatives occupying
74.25the property, or solely because not all the spouses of owners occupy the property, the
74.26exclusion amount shall be initially computed as if that nonhomestead portion were also in
74.27the homestead class and then prorated to the owner-occupant's percentage of ownership.
74.28For the purpose of this section, when an owner-occupant's spouse does not occupy the
74.29property, the percentage of ownership for the owner-occupant spouse is one-half of the
74.30couple's ownership percentage.
74.31EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
74.32thereafter.

74.33    Sec. 4. Minnesota Statutes 2010, section 273.1384, subdivision 3, is amended to read:
75.1    Subd. 3. Credit reimbursements. The county auditor shall determine the tax
75.2reductions allowed under this section subdivision 2 within the county for each taxes
75.3payable year and shall certify that amount to the commissioner of revenue as a part of the
75.4abstracts of tax lists submitted by the county auditors under section 275.29. Any prior
75.5year adjustments shall also be certified on the abstracts of tax lists. The commissioner
75.6shall review the certifications for accuracy, and may make such changes as are deemed
75.7necessary, or return the certification to the county auditor for correction. The credits
75.8credit under this section must be used to proportionately reduce the net tax capacity-based
75.9property tax payable to each local taxing jurisdiction as provided in section 273.1393.
75.10EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
75.11thereafter.

75.12    Sec. 5. Minnesota Statutes 2010, section 273.1384, subdivision 4, is amended to read:
75.13    Subd. 4. Payment. (a) The commissioner of revenue shall reimburse each local
75.14taxing jurisdiction, other than school districts, for the tax reductions granted under this
75.15section subdivision 2 in two equal installments on October 31 and December 26 of the
75.16taxes payable year for which the reductions are granted, including in each payment
75.17the prior year adjustments certified on the abstracts for that taxes payable year. The
75.18reimbursements related to tax increments shall be issued in one installment each year on
75.19December 26.
75.20(b) The commissioner of revenue shall certify the total of the tax reductions granted
75.21under this section subdivision 2 for each taxes payable year within each school district to
75.22the commissioner of the Department of Education and the commissioner of education shall
75.23pay the reimbursement amounts to each school district as provided in section 273.1392.
75.24EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
75.25thereafter.

75.26    Sec. 6. Minnesota Statutes 2010, section 273.1393, is amended to read:
75.27273.1393 COMPUTATION OF NET PROPERTY TAXES.
75.28    Notwithstanding any other provisions to the contrary, "net" property taxes are
75.29determined by subtracting the credits in the order listed from the gross tax:
75.30    (1) disaster credit as provided in sections 273.1231 to 273.1235;
75.31    (2) powerline credit as provided in section 273.42;
75.32    (3) agricultural preserves credit as provided in section 473H.10;
75.33    (4) enterprise zone credit as provided in section 469.171;
76.1    (5) disparity reduction credit;
76.2    (6) conservation tax credit as provided in section 273.119;
76.3    (7) homestead and agricultural credits credit as provided in section 273.1384;
76.4    (8) taconite homestead credit as provided in section 273.135;
76.5    (9) supplemental homestead credit as provided in section 273.1391; and
76.6    (10) the bovine tuberculosis zone credit, as provided in section 273.113.
76.7    The combination of all property tax credits must not exceed the gross tax amount.
76.8EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
76.9thereafter.

76.10    Sec. 7. Minnesota Statutes 2010, section 276.04, subdivision 2, is amended to read:
76.11    Subd. 2. Contents of tax statements. (a) The treasurer shall provide for the
76.12printing of the tax statements. The commissioner of revenue shall prescribe the form of
76.13the property tax statement and its contents. The tax statement must not state or imply
76.14that property tax credits are paid by the state of Minnesota. The statement must contain
76.15a tabulated statement of the dollar amount due to each taxing authority and the amount
76.16of the state tax from the parcel of real property for which a particular tax statement is
76.17prepared. The dollar amounts attributable to the county, the state tax, the voter approved
76.18school tax, the other local school tax, the township or municipality, and the total of
76.19the metropolitan special taxing districts as defined in section 275.065, subdivision 3,
76.20paragraph (i), must be separately stated. The amounts due all other special taxing districts,
76.21if any, may be aggregated except that any levies made by the regional rail authorities in the
76.22county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
76.23398A shall be listed on a separate line directly under the appropriate county's levy. If the
76.24county levy under this paragraph includes an amount for a lake improvement district as
76.25defined under sections 103B.501 to 103B.581, the amount attributable for that purpose
76.26must be separately stated from the remaining county levy amount. In the case of Ramsey
76.27County, if the county levy under this paragraph includes an amount for public library
76.28service under section 134.07, the amount attributable for that purpose may be separated
76.29from the remaining county levy amount. The amount of the tax on homesteads qualifying
76.30under the senior citizens' property tax deferral program under chapter 290B is the total
76.31amount of property tax before subtraction of the deferred property tax amount. The
76.32amount of the tax on contamination value imposed under sections 270.91 to 270.98, if any,
76.33must also be separately stated. The dollar amounts, including the dollar amount of any
76.34special assessments, may be rounded to the nearest even whole dollar. For purposes of this
76.35section whole odd-numbered dollars may be adjusted to the next higher even-numbered
77.1dollar. The amount of market value excluded under section 273.11, subdivision 16, if any,
77.2must also be listed on the tax statement.
77.3    (b) The property tax statements for manufactured homes and sectional structures
77.4taxed as personal property shall contain the same information that is required on the
77.5tax statements for real property.
77.6    (c) Real and personal property tax statements must contain the following information
77.7in the order given in this paragraph. The information must contain the current year tax
77.8information in the right column with the corresponding information for the previous year
77.9in a column on the left:
77.10    (1) the property's estimated market value under section 273.11, subdivision 1;
77.11(2) the property's homestead market value exclusion under section 273.13,
77.12subdivision 35;
77.13    (2) (3) the property's taxable market value after reductions under section sections
77.14273.11 , subdivisions 1a and 16, and 273.13, subdivision 35;
77.15    (3) (4) the property's gross tax, before credits;
77.16    (4) (5) for homestead residential and agricultural properties, the credits credit under
77.17section 273.1384;
77.18    (5) (6) any credits received under sections 273.119; 273.1234 or 273.1235; 273.135;
77.19273.1391 ; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of
77.20credit received under section 273.135 must be separately stated and identified as "taconite
77.21tax relief"; and
77.22    (6) (7) the net tax payable in the manner required in paragraph (a).
77.23    (d) If the county uses envelopes for mailing property tax statements and if the county
77.24agrees, a taxing district may include a notice with the property tax statement notifying
77.25taxpayers when the taxing district will begin its budget deliberations for the current
77.26year, and encouraging taxpayers to attend the hearings. If the county allows notices to
77.27be included in the envelope containing the property tax statement, and if more than
77.28one taxing district relative to a given property decides to include a notice with the tax
77.29statement, the county treasurer or auditor must coordinate the process and may combine
77.30the information on a single announcement.
77.31EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
77.32thereafter.

77.33    Sec. 8. Minnesota Statutes 2010, section 290A.03, subdivision 11, is amended to read:
77.34    Subd. 11. Rent constituting property taxes. "Rent constituting property taxes"
77.35means 19 17 percent of the gross rent actually paid in cash, or its equivalent, or the portion
78.1of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
78.2of occupancy of the claimant's Minnesota homestead in the calendar year, and which
78.3rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
78.4chapter by the claimant.
78.5EFFECTIVE DATE.This section is effective for claims based on rent paid in
78.62011 and following years.

78.7    Sec. 9. Minnesota Statutes 2010, section 290A.03, subdivision 13, is amended to read:
78.8    Subd. 13. Property taxes payable. "Property taxes payable" means the property tax
78.9exclusive of special assessments, penalties, and interest payable on a claimant's homestead
78.10after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
78.11and any other state paid property tax credits in any calendar year, and after any refund
78.12claimed and allowable under section 290A.04, subdivision 2h, that is first payable in
78.13the year that the property tax is payable. In the case of a claimant who makes ground
78.14lease payments, "property taxes payable" includes the amount of the payments directly
78.15attributable to the property taxes assessed against the parcel on which the house is located.
78.16No apportionment or reduction of the "property taxes payable" shall be required for the
78.17use of a portion of the claimant's homestead for a business purpose if the claimant does not
78.18deduct any business depreciation expenses for the use of a portion of the homestead in the
78.19determination of federal adjusted gross income. For homesteads which are manufactured
78.20homes as defined in section 273.125, subdivision 8, and for homesteads which are park
78.21trailers taxed as manufactured homes under section 168.012, subdivision 9, "property
78.22taxes payable" shall also include 19 17 percent of the gross rent paid in the preceding
78.23year for the site on which the homestead is located. When a homestead is owned by
78.24two or more persons as joint tenants or tenants in common, such tenants shall determine
78.25between them which tenant may claim the property taxes payable on the homestead. If
78.26they are unable to agree, the matter shall be referred to the commissioner of revenue
78.27whose decision shall be final. Property taxes are considered payable in the year prescribed
78.28by law for payment of the taxes.
78.29In the case of a claim relating to "property taxes payable," the claimant must have
78.30owned and occupied the homestead on January 2 of the year in which the tax is payable
78.31and (i) the property must have been classified as homestead property pursuant to section
78.32273.124 , on or before December 15 of the assessment year to which the "property taxes
78.33payable" relate; or (ii) the claimant must provide documentation from the local assessor
78.34that application for homestead classification has been made on or before December 15
79.1of the year in which the "property taxes payable" were payable and that the assessor has
79.2approved the application.
79.3EFFECTIVE DATE.This section is effective for claims based on rent paid in
79.42011 and following years.

79.5    Sec. 10. Minnesota Statutes 2010, section 290A.04, subdivision 2, is amended to read:
79.6    Subd. 2. Homeowners. A claimant whose property taxes payable are in excess
79.7of the percentage of the household income stated below shall pay an amount equal to
79.8the percent of income shown for the appropriate household income level along with the
79.9percent to be paid by the claimant of the remaining amount of property taxes payable.
79.10The state refund equals the amount of property taxes payable that remain, up to the state
79.11refund amount shown below.
79.12
79.13
79.14
Household Income
Percent of Income
Percent Paid by
Claimant
Maximum
State
Refund
79.15
$0 to 1,189
1.0 percent
15 percent
$
1,850
79.16
1,190 to 2,379
1.1 percent
15 percent
$
1,850
79.17
2,380 to 3,589
1.2 percent
15 percent
$
1,800
79.18
3,590 to 4,789
1.3 percent
20 percent
$
1,800
79.19
4,790 to 5,979
1.4 percent
20 percent
$
1,730
79.20
5,980 to 8,369
1.5 percent
20 percent
$
1,730
79.21
8,370 to 9,559
1.6 percent
25 percent
$
1,670
79.22
9,560 to 10,759
1.7 percent
25 percent
$
1,670
79.23
10,760 to 11,949
1.8 percent
25 percent
$
1,610
79.24
11,950 to 13,139
1.9 percent
30 percent
$
1,610
79.25
13,140 to 14,349
2.0 percent
30 percent
$
1,540
79.26
14,350 to 16,739
2.1 percent
30 percent
$
1,540
79.27
16,740 to 17,929
2.2 percent
35 percent
$
1,480
79.28
17,930 to 19,119
2.3 percent
35 percent
$
1,480
79.29
19,120 to 20,319
2.4 percent
35 percent
$
1,420
79.30
20,320 to 25,099
2.5 percent
40 percent
$
1,420
79.31
25,100 to 28,679
2.6 percent
40 percent
$
1,360
79.32
28,680 to 35,849
2.7 percent
40 percent
$
1,360
79.33
35,850 to 41,819
2.8 percent
45 percent
$
1,240
79.34
41,820 to 47,799
3.0 percent
45 percent
$
1,240
79.35
47,800 to 53,779
3.2 percent
45 percent
$
1,110
79.36
53,780 to 59,749
3.5 percent
50 percent
$
990
79.37
59,750 to 65,729
3.5 percent
50 percent
$
870
79.38
65,730 to 69,319
3.5 percent
50 percent
$
740
79.39
69,320 to 71,719
3.5 percent
50 percent
$
610
80.1
71,720 to 74,619
3.5 percent
50 percent
$
500
80.2
74,620 to 77,519
3.5 percent
50 percent
$
370
80.3
80.4
80.5
Household Income
Percent of Income
Percent Paid by
Claimant
Maximum
State
Refund
80.6
$0 to 1,549
1.0 percent
15 percent
$
2,460
80.7
1,550 to 3,089
1.1 percent
15 percent
$
2,460
80.8
3,090 to 4,669
1.2 percent
15 percent
$
2,460
80.9
4,670 to 6,229
1.3 percent
20 percent
$
2,460
80.10
6,230 to 7,769
1.4 percent
20 percent
$
2,460
80.11
7,770 to 10,879
1.5 percent
20 percent
$
2,460
80.12
10,880 to 12,429
1.6 percent
20 percent
$
2,460
80.13
12,430 to 13,989
1.7 percent
20 percent
$
2,460
80.14
13,990 to 15,539
1.8 percent
20 percent
$
2,460
80.15
15,540 to 17,079
1.9 percent
25 percent
$
2,460
80.16
17,080 to 18,659
2.0 percent
25 percent
$
2,460
80.17
18,660 to 21,759
2.1 percent
25 percent
$
2,460
80.18
21,760 to 23,309
2.2 percent
30 percent
$
2,460
80.19
23,310 to 24,859
2.3 percent
30 percent
$
2,460
80.20
24,860 to 26,419
2.4 percent
30 percent
$
2,460
80.21
26,420 to 32,629
2.5 percent
35 percent
$
2,460
80.22
32,630 to 37,279
2.6 percent
35 percent
$
2,460
80.23
37,280 to 46,609
2.7 percent
35 percent
$
2,000
80.24
46,610 to 54,369
2.8 percent
35 percent
$
2,000
80.25
54,370 to 62,139
2.8 percent
40 percent
$
1,750
80.26
62,140 to 69,909
3.0 percent
40 percent
$
1,440
80.27
69,910 to 77,679
3.0 percent
40 percent
$
1,290
80.28
77,680 to 85,449
3.0 percent
40 percent
$
1,130
80.29
85,450 to 90,119
3.5 percent
45 percent
$
960
80.30
90,120 to 93,239
3.5 percent
45 percent
$
790
80.31
93,240 to 97,009
3.5 percent
50 percent
$
650
80.32
97,010 to 100,779
3.5 percent
50 percent
$
480
80.33    The payment made to a claimant shall be the amount of the state refund calculated
80.34under this subdivision. No payment is allowed if the claimant's household income is
80.35$77,520 $100,780 or more.
80.36EFFECTIVE DATE.This section is effective beginning with refunds based on
80.37taxes payable in 2012.

80.38    Sec. 11. Minnesota Statutes 2010, section 290A.04, subdivision 4, is amended to read:
81.1    Subd. 4. Inflation adjustment. (a) Beginning for property tax refunds payable in
81.2calendar year 2002, the commissioner shall annually adjust the dollar amounts of the
81.3income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation.
81.4The commissioner shall make the inflation adjustments in accordance with section 1(f) of
81.5the Internal Revenue Code, except that for purposes of this subdivision the percentage
81.6increase shall be determined as provided in this subdivision.
81.7(b) In adjusting the dollar amounts of the income thresholds and the maximum
81.8refunds under subdivision 2 for inflation, the percentage increase shall be determined from
81.9the year ending on June 30, 2011, to the year ending on June 30 of the year preceding that
81.10in which the refund is payable.
81.11(c) In adjusting the dollar amounts of the income thresholds and the maximum
81.12refunds under subdivision 2a for inflation, the percentage increase shall be determined
81.13from the year ending on June 30, 2000, to the year ending on June 30 of the year preceding
81.14that in which the refund is payable.
81.15(d) The commissioner shall use the appropriate percentage increase to annually
81.16adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for
81.17inflation without regard to whether or not the income tax brackets are adjusted for inflation
81.18in that year. The commissioner shall round the thresholds and the maximum amounts,
81.19as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall
81.20round it up to the next $10 amount.
81.21(e) The commissioner shall annually announce the adjusted refund schedule at the
81.22same time provided under section 290.06. The determination of the commissioner under
81.23this subdivision is not a rule under the Administrative Procedure Act.
81.24EFFECTIVE DATE.This section is effective beginning for refunds based on
81.25taxes payable in 2013.

81.26    Sec. 12. Minnesota Statutes 2010, section 290C.07, is amended to read:
81.27290C.07 CALCULATION OF INCENTIVE PAYMENT.
81.28    (a) An approved claimant under the sustainable forest incentive program is eligible
81.29to receive an annual payment. The payment shall equal the greater of:
81.30    (1) the difference between the property tax that would be paid on the land using the
81.31previous year's statewide average total township tax rate and a class rate of one percent, if
81.32the land were valued at (i) the average statewide managed forest land market value per
81.33acre calculated under section 290C.06, and (ii) the average statewide managed forest land
81.34current use value per acre calculated under section 290C.02, subdivision 5; or
82.1    (2) two-thirds of the property tax amount determined by using the previous year's
82.2statewide average total township tax rate, the estimated market value per acre as calculated
82.3in section 290C.06, and a class rate of one percent, provided that the payment shall be no
82.4less than $7 per acre for each acre enrolled in the sustainable forest incentive program.
82.5(b) The annual payment for each Social Security number or state or federal business
82.6tax identification number must not exceed $100,000.
82.7EFFECTIVE DATE.This section is effective beginning for payments in calendar
82.8year 2011. A claimant whose calendar year 2011 payment is limited by paragraph (b) or
82.9whose calendar year 2010 payment was limited by Laws 2010, First Special Session
82.10chapter 1, article 13, section 4, subdivision 3, may elect, through December 31, 2011, to
82.11terminate participation in the sustainable forest incentive program and to terminate its
82.12covenant under the program without regard to the limitations under Minnesota Statutes,
82.13section 290C.055. The commissioner of revenue shall issue a document to each claimant
82.14so electing releasing the land from the covenant as provided in Minnesota Statutes, section
82.15290C.04, paragraph (c), effective retroactive to the date of the election, provided that if
82.16the claimant certified to the commissioner under Minnesota Statutes, section 290C.05, its
82.17participation in the program for calendar year 2011, the release is effective on December
82.1831, 2011.

82.19    Sec. 13. [373.51] ALTERNATIVE PROCESS FOR CONSOLIDATION.
82.20Notwithstanding the provisions relating to petitions in sections 371.02 and 371.03,
82.21two or more counties may begin the process for consolidation by filing with the secretary
82.22of state a resolution unanimously adopted by the board of each affected county to seek
82.23voter approval for consolidation of the counties following the procedures in chapter 371.
82.24EFFECTIVE DATE.This section is effective the day following final enactment.

82.25    Sec. 14. Minnesota Statutes 2010, section 477A.011, subdivision 20, is amended to
82.26read:
82.27    Subd. 20. City net tax capacity. "City net tax capacity" means (1) the net tax
82.28capacity computed using the net tax capacity rates in section 273.13 for taxes payable
82.29in the year of the aid distribution, and the market values, after the exclusion in section
82.30273.13, subdivision 35, for taxes payable in the year prior to the aid distribution plus (2)
82.31a city's fiscal disparities distribution tax capacity under section 276A.06, subdivision 2,
82.32paragraph (b), or 473F.08, subdivision 2, paragraph (b), for taxes payable in the year prior
82.33to that for which aids are being calculated. The market value utilized in computing city
83.1net tax capacity shall be reduced by the sum of (1) a city's market value of commercial
83.2industrial property as defined in section 276A.01, subdivision 3, or 473F.02, subdivision 3,
83.3multiplied by the ratio determined pursuant to section 276A.06, subdivision 2, paragraph
83.4(a), or 473F.08, subdivision 2, paragraph (a), (2) the market value of the captured value
83.5of tax increment financing districts as defined in section 469.177, subdivision 2, and (3)
83.6the market value of transmission lines deducted from a city's total net tax capacity under
83.7section 273.425. The city net tax capacity will be computed using equalized market values.
83.8EFFECTIVE DATE.This section is effective for aids payable in calendar year
83.92013 and thereafter.

83.10    Sec. 15. Minnesota Statutes 2010, section 477A.0124, is amended by adding a
83.11subdivision to read:
83.12    Subd. 6. Aid payments in 2011 and 2012. Notwithstanding total aids calculated or
83.13certified for 2011 under subdivisions 3, 4, and 5, for 2011 and 2012, each county shall
83.14receive an aid distribution under this section equal to the lesser of (1) the total amount of
83.15aid it received under this section in 2010 after the reductions under sections 477A.0133
83.16and 477A.0134, or (2) the total amount the county is certified to receive in 2011 under
83.17subdivisions 3 to 5.
83.18EFFECTIVE DATE.This section is effective for aids payable in calendar year
83.192011 and 2012.

83.20    Sec. 16. Minnesota Statutes 2010, section 477A.013, subdivision 9, is amended to read:
83.21    Subd. 9. City aid distribution. (a) In calendar year 2009 and thereafter, each
83.22city shall receive an aid distribution equal to the sum of (1) the city formula aid under
83.23subdivision 8, and (2) its city aid base.
83.24    (b) For aids payable in 2011 2013 only, the total aid in the previous year for any
83.25city shall mean the amount of aid it was certified to receive for aids payable in 2010 2012
83.26under this section minus the amount of its aid reduction under section 477A.0134. For aids
83.27payable in 2012 2014 and thereafter, the total aid in the previous year for any city means
83.28the amount of aid it was certified to receive under this section in the previous payable year.
83.29    (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
83.30the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
83.31plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
83.32aid for any city with a population of 2,500 or more may not be less than its total aid under
84.1this section in the previous year minus the lesser of $10 multiplied by its population, or ten
84.2percent of its net levy in the year prior to the aid distribution.
84.3    (d) For aids payable in 2010 and thereafter, the total aid for a city with a population
84.4less than 2,500 must not be less than the amount it was certified to receive in the
84.5previous year minus the lesser of $10 multiplied by its population, or five percent of its
84.62003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
84.7population less than 2,500 must not be less than what it received under this section in the
84.8previous year unless its total aid in calendar year 2008 was aid under section 477A.011,
84.9subdivision 36, paragraph (s), in which case its minimum aid is zero.
84.10    (e) A city's aid loss under this section may not exceed $300,000 in any year in
84.11which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
84.12greater than the appropriation under that subdivision in the previous year, unless the
84.13city has an adjustment in its city net tax capacity under the process described in section
84.14469.174, subdivision 28 .
84.15    (f) If a city's net tax capacity used in calculating aid under this section has decreased
84.16in any year by more than 25 percent from its net tax capacity in the previous year due to
84.17property becoming tax-exempt Indian land, the city's maximum allowed aid increase
84.18under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
84.19year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
84.20resulting from the property becoming tax exempt.
84.21EFFECTIVE DATE.This section is effective for aids payable in calendar year
84.222013 and thereafter.

84.23    Sec. 17. Minnesota Statutes 2010, section 477A.013, is amended by adding a
84.24subdivision to read:
84.25    Subd. 11. Aid payments in 2011 and 2012. Notwithstanding aids calculated or
84.26certified for 2011 under subdivision 9, for 2011 and 2012, each city shall receive an aid
84.27distribution under this section equal to the lesser of (1) the total amount of aid it received
84.28under this section in 2010 after the reductions under sections 477A.0133 and 477A.0134,
84.29and reduced by the amount of payments made under section 477A.011, subdivision
84.3036, paragraphs (y) and (z), or (2) the amount it was certified to receive in 2011 under
84.31subdivision 9. In 2011 only, a city that qualifies for the aid base adjustment under section
84.32477A.011, subdivision 36, paragraph (aa), shall receive the amount that it was certified to
84.33receive in 2011. In 2012, a city that qualifies for the aid base adjustment under section
84.34477A.011, subdivision 36, paragraph (aa), shall receive the amount that it was certified
85.1to receive in 2011, minus the aid base adjustment provided under section 477A.011,
85.2subdivision 36, paragraph (aa).
85.3EFFECTIVE DATE.This section is effective for aids payable in calendar years
85.42011 and 2012.

85.5    Sec. 18. Minnesota Statutes 2010, section 477A.03, is amended to read:
85.6477A.03 APPROPRIATION.
85.7    Subd. 2. Annual appropriation. A sum sufficient to discharge the duties imposed
85.8by sections 477A.011 to 477A.014 is annually appropriated from the general fund to the
85.9commissioner of revenue.
85.10    Subd. 2a. Cities. For aids payable in 2011 2013 and thereafter, the total aid paid
85.11under section 477A.013, subdivision 9, is $527,100,646 $426,438,012.
85.12    Subd. 2b. Counties. (a) For aids payable in 2011 2013 and thereafter, the total aid
85.13payable under section 477A.0124, subdivision 3, is $96,395,000 $80,795,000. Each
85.14calendar year, $500,000 shall be retained by the commissioner of revenue to make
85.15reimbursements to the commissioner of management and budget for payments made
85.16under section 611.27. For calendar year 2004, the amount shall be in addition to the
85.17payments authorized under section 477A.0124, subdivision 1. For calendar year 2005
85.18and subsequent years, the amount shall be deducted from the appropriation under
85.19this paragraph. The reimbursements shall be to defray the additional costs associated
85.20with court-ordered counsel under section 611.27. Any retained amounts not used for
85.21reimbursement in a year shall be included in the next distribution of county need aid
85.22that is certified to the county auditors for the purpose of property tax reduction for the
85.23next taxes payable year.
85.24    (b) For aids payable in 2011 2013 and thereafter, the total aid under section
85.25477A.0124, subdivision 4 , is $101,309,575 $84,909,575. The commissioner of
85.26management and budget shall bill the commissioner of revenue for the cost of preparation
85.27of local impact notes as required by section 3.987, not to exceed $207,000 in fiscal year
85.282004 and thereafter. The commissioner of education shall bill the commissioner of
85.29revenue for the cost of preparation of local impact notes for school districts as required by
85.30section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner
85.31of revenue shall deduct the amounts billed under this paragraph from the appropriation
85.32under this paragraph. The amounts deducted are appropriated to the commissioner of
85.33management and budget and the commissioner of education for the preparation of local
85.34impact notes.
86.1EFFECTIVE DATE.This section is effective for aids payable in calendar year
86.22012 and thereafter.

86.3    Sec. 19. Minnesota Statutes 2010, section 477A.11, subdivision 1, is amended to read:
86.4    Subdivision 1. Terms. For the purpose of sections 477A.11 to 477A.145 477A.14,
86.5the terms defined in this section have the meanings given them.
86.6EFFECTIVE DATE.This section is effective for aids payable in calendar year
86.72011 and thereafter.

86.8    Sec. 20. Minnesota Statutes 2010, section 477A.12, subdivision 1, is amended to read:
86.9    Subdivision 1. Types of land; payments. (a) As an offset for expenses incurred
86.10by counties and towns in support of natural resources lands, the following amounts are
86.11annually appropriated to the commissioner of natural resources from the general fund for
86.12transfer to the commissioner of revenue. The commissioner of revenue shall pay the
86.13transferred funds to counties as required by sections 477A.11 to 477A.145 477A.14.
86.14The amounts are:
86.15(1) for acquired natural resources land, $3, as adjusted for inflation under section
86.16477A.145, $5.133 multiplied by the total number of acres of acquired natural resources
86.17land or, at the county's option three-fourths of one percent of the appraised value of all
86.18acquired natural resources land in the county, whichever is greater;
86.19(2) 75 cents, as adjusted for inflation under section 477A.145, $1.283 multiplied by
86.20the number of acres of county-administered other natural resources land;
86.21(3) 75 cents, as adjusted for inflation under section 477A.145, $1.283 multiplied by
86.22the total number of acres of land utilization project land; and
86.23(4) 37.5 64.2 cents, as adjusted for inflation under section 477A.145, multiplied by
86.24the number of acres of commissioner-administered other natural resources land located in
86.25each county as of July 1 of each year prior to the payment year.
86.26(b) The amount determined under paragraph (a), clause (1), is payable for land
86.27that is acquired from a private owner and owned by the Department of Transportation
86.28for the purpose of replacing wetland losses caused by transportation projects, but only
86.29if the county contains more than 500 acres of such land at the time the certification is
86.30made under subdivision 2.
86.31EFFECTIVE DATE.This section is effective for aids payable in calendar year
86.322011 and thereafter.

87.1    Sec. 21. Minnesota Statutes 2010, section 477A.14, subdivision 1, is amended to read:
87.2    Subdivision 1. General distribution. Except as provided in subdivision 2 or in
87.3section 97A.061, subdivision 5, 40 percent of the total payment to the county shall be
87.4deposited in the county general revenue fund to be used to provide property tax levy
87.5reduction. The remainder shall be distributed by the county in the following priority:
87.6(a) 37.5 64.2 cents, as adjusted for inflation under section 477A.145, for each
87.7acre of county-administered other natural resources land shall be deposited in a
87.8resource development fund to be created within the county treasury for use in resource
87.9development, forest management, game and fish habitat improvement, and recreational
87.10development and maintenance of county-administered other natural resources land. Any
87.11county receiving less than $5,000 annually for the resource development fund may elect to
87.12deposit that amount in the county general revenue fund;
87.13(b) From the funds remaining, within 30 days of receipt of the payment to the
87.14county, the county treasurer shall pay each organized township 30 51.3 cents, as adjusted
87.15for inflation under section 477A.145, for each acre of acquired natural resources land
87.16and each acre of land described in section 477A.12, subdivision 1, paragraph (b), and
87.177.5 12.8 cents, as adjusted for inflation under section 477A.145, for each acre of other
87.18natural resources land and each acre of land utilization project land located within its
87.19boundaries. Payments for natural resources lands not located in an organized township
87.20shall be deposited in the county general revenue fund. Payments to counties and townships
87.21pursuant to this paragraph shall be used to provide property tax levy reduction, except
87.22that of the payments for natural resources lands not located in an organized township, the
87.23county may allocate the amount determined to be necessary for maintenance of roads in
87.24unorganized townships. Provided that, if the total payment to the county pursuant to
87.25section 477A.12 is not sufficient to fully fund the distribution provided for in this clause,
87.26the amount available shall be distributed to each township and the county general revenue
87.27fund on a pro rata basis; and
87.28(c) Any remaining funds shall be deposited in the county general revenue fund.
87.29Provided that, if the distribution to the county general revenue fund exceeds $35,000, the
87.30excess shall be used to provide property tax levy reduction.
87.31EFFECTIVE DATE.This section is effective for aids payable in calendar year
87.322011 and thereafter.

87.33    Sec. 22. Laws 2010, First Special Session chapter 1, article 13, section 4, subdivision
87.341, is amended to read:
88.1    Subdivision 1. Political contribution credit. Notwithstanding the provisions of
88.2Minnesota Statutes, section 290.06, subdivision 23, or any other law to the contrary, the
88.3political contribution refund does not apply to contributions made after June 30, 2009, and
88.4before July 1, 2011 2013.
88.5EFFECTIVE DATE.This section is effective retroactively from July 1, 2011.

88.6    Sec. 23. CREDIT REDUCTIONS AND LIMITATION; COUNTIES AND
88.7CITIES.
88.8    In 2011, the market value credit reimbursement payment to each county and city
88.9authorized under Minnesota Statutes, section 273.1384, subdivision 4, may not exceed the
88.10reimbursement payment received by the county or city for taxes payable in 2010.
88.11EFFECTIVE DATE.This section is effective for credit reimbursements in 2011.

88.12    Sec. 24. PROPERTY TAX STATEMENT FOR TAXES PAYABLE IN 2012 ONLY.
88.13For the purposes of the property tax statements required under Minnesota Statutes,
88.14section 276.04, subdivision 2, for taxes payable in 2012 only, the gross tax amount shown
88.15for the previous year is the gross tax minus the residential homestead market value credit.
88.16EFFECTIVE DATE.This section is effective for taxes payable in 2012 only.

88.17    Sec. 25. DELAY IN CERTAIN JULY STATE PAYMENTS TO LOCAL
88.18GOVERNMENTS.
88.19Notwithstanding any law to the contrary, the commissioner of revenue shall not make
88.20July 20, 2011, payments under Minnesota Statutes, section 477A.015, until July 27, 2011.
88.21EFFECTIVE DATE.This section is effective upon final enactment and applies
88.22to the July 20, 2011, payments.

88.23    Sec. 26. SUSTAINABLE FOREST INCENTIVE ACT REDUCTION; PURPOSE
88.24STATEMENT; TRANSITION PROVISIONS.
88.25(a) Given the limits on state budgetary resources for the current and future fiscal
88.26biennia, the projected cost of the sustainable forest resource management incentive
88.27program under Minnesota Statutes, chapter 290C, of over $31,000,000 for the fiscal 2012
88.28and 2013 biennium, and the modest amount of tangible public benefits of that program,
88.29the legislature determines that it is prudent and necessary to reduce that program effective
88.30immediately to help balance the state budget for the fiscal 2012 and 2013 biennium
89.1and to help provide permanent structural balance to the state budget. The legislature
89.2takes notice of and finds that many of the eligibility requirements for participants in
89.3the sustainable forest incentive program are in the participants' own financial interests,
89.4determined without regard to whether they receive state payments for doing so, and that
89.5the participants with the largest amounts of acreage in the program do follow and would
89.6likely continue to follow similar or more stringent management practices, regardless
89.7of whether the program exists.
89.8(b) Land enrolled in the sustainable forest incentive program on May 1, 2011, for
89.9which the owner elects to terminate its enrollment before September 1, 2011, under the
89.10effective date provision of section 12, may be reclassified as class 2(c) managed forest
89.11land for taxes payable in 2012 if the owner applies to the assessor for the reclassification
89.12before September 1, 2011, notwithstanding the application date in Minnesota Statutes,
89.13section 273.13, subdivision 23, paragraph (d).
89.14EFFECTIVE DATE.This section is effective the day following final enactment.

89.15    Sec. 27. REPEALER.
89.16(a) Minnesota Statutes 2010, sections 275.295; and 477A.145, are repealed.
89.17(b) Minnesota Statutes 2010, section 273.1384, subdivisions 1 and 6, are repealed.
89.18EFFECTIVE DATE.Paragraph (a) is effective for aids payable in 2012 and
89.19thereafter. Paragraph (b) is effective for taxes payable in 2012 and thereafter.

89.20ARTICLE 7
89.21MINERALS

89.22    Section 1. Minnesota Statutes 2010, section 272.02, is amended by adding a
89.23subdivision to read:
89.24    Subd. 97. Property used in business of mining subject to net proceeds tax. The
89.25following property used in the business of mining that is subject to the net proceeds tax
89.26under section 298.015 is exempt:
89.27(1) deposits of ores, metals, and minerals and the lands in which they are contained;
89.28(2) all real and personal property used in mining, quarrying, producing, or refining
89.29ores, minerals, or metals, including lands occupied by or used in connection with the
89.30mining, quarrying, production, or ore refining facilities; and
89.31(3) concentrate or direct reduced ore.
90.1This exemption applies for each year that a person subject to tax under section
90.2298.015 uses the property for mining, quarrying, producing, or refining ores, metals, or
90.3minerals.
90.4EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
90.5thereafter.

90.6    Sec. 2. Minnesota Statutes 2010, section 290.05, subdivision 1, is amended to read:
90.7    Subdivision 1. Exempt entities. The following corporations, individuals, estates,
90.8trusts, and organizations shall be exempted from taxation under this chapter, provided
90.9that every such person or corporation claiming exemption under this chapter, in whole
90.10or in part, must establish to the satisfaction of the commissioner the taxable status of
90.11any income or activity:
90.12(a) corporations, individuals, estates, and trusts engaged in the business of mining or
90.13producing iron ore and mining, producing, or refining other ores, metals, and minerals,
90.14the mining or, production, or refining of which is subject to the occupation tax imposed
90.15by section 298.01; but if any such corporation, individual, estate, or trust engages in any
90.16other business or activity or has income from any property not used in such business it
90.17shall be subject to this tax computed on the net income from such property or such other
90.18business or activity. Royalty shall not be considered as income from the business of
90.19mining or producing iron ore within the meaning of this section;
90.20(b) the United States of America, the state of Minnesota or any political subdivision
90.21of either agencies or instrumentalities, whether engaged in the discharge of governmental
90.22or proprietary functions; and
90.23(c) any insurance company.
90.24EFFECTIVE DATE.This section is effective for taxable years beginning after
90.25December 31, 2010.

90.26    Sec. 3. Minnesota Statutes 2010, section 298.001, is amended by adding a subdivision
90.27to read:
90.28    Subd. 10. Refining. "Refining" means and is limited to refining:
90.29(1) of ores, metals, or mineral products, the mining, extraction, or quarrying of
90.30which were subject to tax under section 298.015; and
90.31(2) carried out by the entity, or an affiliated entity, that mined, extracted, or quarried
90.32the metal or mineral products.
91.1EFFECTIVE DATE.This section is effective for taxable years beginning after
91.2December 31, 2010.

91.3    Sec. 4. Minnesota Statutes 2010, section 298.01, subdivision 3, is amended to read:
91.4    Subd. 3. Occupation tax; other ores. Every person engaged in the business of
91.5mining, refining, or producing ores, metals, or minerals in this state, except iron ore or
91.6taconite concentrates, shall pay an occupation tax to the state of Minnesota as provided
91.7in this subdivision. For purposes of this subdivision, mining includes the application
91.8of hydrometallurgical processes. The tax is determined in the same manner as the tax
91.9imposed by section 290.02, except that sections 290.05, subdivision 1, clause (a), 290.17,
91.10subdivision 4
, and 290.191, subdivision 2, do not apply, and the occupation tax must
91.11be computed by applying to taxable income the rate of 2.45 percent. A person subject
91.12to occupation tax under this section shall apportion its net income on the basis of the
91.13percentage obtained by taking the sum of:
91.14(1) 75 percent of the percentage which the sales made within this state in connection
91.15with the trade or business during the tax period are of the total sales wherever made in
91.16connection with the trade or business during the tax period;
91.17(2) 12.5 percent of the percentage which the total tangible property used by the
91.18taxpayer in this state in connection with the trade or business during the tax period is of
91.19the total tangible property, wherever located, used by the taxpayer in connection with the
91.20trade or business during the tax period; and
91.21(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred
91.22in this state or paid in respect to labor performed in this state in connection with the trade
91.23or business during the tax period are of the taxpayer's total payrolls paid or incurred in
91.24connection with the trade or business during the tax period.
91.25The tax is in addition to all other taxes.
91.26EFFECTIVE DATE.This section is effective for taxable years beginning after
91.27December 31, 2010.

91.28    Sec. 5. Minnesota Statutes 2010, section 298.01, subdivision 3a, is amended to read:
91.29    Subd. 3a. Gross income. (a) For purposes of determining a person's taxable income
91.30under subdivision 3, gross income is determined by the amount of gross proceeds from
91.31mining in this state under section 298.016 and includes any gain or loss recognized
91.32from the sale or disposition of assets used in the business in this state. If more than one
91.33ore, mineral, or metal, or energy resource referred to in section 298.016 is mined and
91.34processed at the same mine and plant, a gross income for each ore, mineral, or metal, or
92.1energy resource must be determined separately. The gross incomes may be combined on
92.2one occupation tax return to arrive at the gross income of all production.
92.3(b) In applying section 290.191, subdivision 5, transfers of ores, metals, or minerals
92.4that are subject to tax under this chapter are deemed to be sales in this state.
92.5EFFECTIVE DATE.This section is effective for taxable years beginning after
92.6December 31, 2010.

92.7    Sec. 6. Minnesota Statutes 2010, section 298.015, subdivision 1, is amended to read:
92.8    Subdivision 1. Tax imposed. A person engaged in the business of mining shall pay
92.9to the state of Minnesota for distribution as provided in section 298.018 a net proceeds tax
92.10equal to two percent of the net proceeds from mining in Minnesota. The tax applies to all
92.11mineral and energy resources ores, metals, and minerals mined or, extracted, produced,
92.12or refined within the state of Minnesota except for sand, silica sand, gravel, building
92.13stone, crushed rock, limestone, granite, dimension granite, dimension stone, horticultural
92.14peat, clay, soil, iron ore, and taconite concentrates. The tax is in addition to all other
92.15taxes provided for by law.
92.16EFFECTIVE DATE.This section is effective for taxable years beginning after
92.17December 31, 2010.

92.18    Sec. 7. Minnesota Statutes 2010, section 298.015, subdivision 2, is amended to read:
92.19    Subd. 2. Net proceeds. For purposes of this section, the term "net proceeds" means
92.20the gross proceeds from mining, as defined in section 298.016, less the deductions allowed
92.21in section 298.017 for purposes of determining taxable income under section 298.01,
92.22subdivision 3b, applied to the mining, production, processing, beneficiation, smelting, or
92.23refining of metal or mineral products. No other credits or deductions shall apply to this tax
92.24except for those provided in section 298.017.
92.25EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
92.26thereafter.

92.27    Sec. 8. Minnesota Statutes 2010, section 298.016, subdivision 4, is amended to read:
92.28    Subd. 4. Definitions Metal or mineral products; definition. For the purposes of
92.29sections 298.015 and 298.017 this section, the terms defined in this subdivision have the
92.30meaning given them unless the context clearly indicates otherwise.
92.31(a) "metal or mineral products" means all those mineral and energy resources ores,
92.32metals, and minerals subject to the tax provided in section 298.015.
93.1(b) "Exploration" means activities designed and engaged in to ascertain the
93.2existence, location, extent, or quality of any deposit of metal or mineral products prior to
93.3the development of a mining site.
93.4(c) "Development" means activities designed and engaged in to prepare or develop
93.5a potential mining site for mining after the existence of metal or mineral products in
93.6commercially marketable quantities has been disclosed including, but not limited to,
93.7the clearing of forestation, the building of roads, removal of overburden, or the sinking
93.8of shafts.
93.9(d) "Research" means activities designed and engaged in to create new or improved
93.10methods of mining, producing, processing, beneficiating, smelting, or refining metal
93.11or mineral products.
93.12EFFECTIVE DATE.This section is effective for taxable years beginning after
93.13December 31, 2010.

93.14    Sec. 9. REPEALER.
93.15Minnesota Statutes 2010, section 298.017, is repealed.
93.16EFFECTIVE DATE.This section is effective for taxable years beginning after
93.17December 31, 2010.

93.18ARTICLE 8
93.19INSURANCE TAXES

93.20    Section 1. Minnesota Statutes 2010, section 297I.01, is amended by adding a
93.21subdivision to read:
93.22    Subd. 2a. Affiliated group. "Affiliated group" means a group that includes the
93.23insured and any entity, or group of entities, that controls, is controlled by, or is under
93.24common control with the insured. An entity has control over another entity when: (1) the
93.25entity directly or indirectly or acting through one or more other persons owns, controls,
93.26or has the power to vote 25 percent or more of any class of voting securities of the other
93.27entity; or (2) the entity controls in any manner the election of a majority of the directors or
93.28trustees of the other entity.
93.29EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
93.30that go into effect after July 20, 2011.

93.31    Sec. 2. Minnesota Statutes 2010, section 297I.01, subdivision 9, is amended to read:
94.1    Subd. 9. Gross premiums. "Gross premiums" means total premiums paid by
94.2policyholders and applicants of policies, whether received in the form of money or other
94.3valuable consideration, on property, persons, lives, interests and other risks located,
94.4resident, or to be performed in this state, but excluding consideration and premiums for
94.5reinsurance assumed from other insurance companies.
94.6 (a) "Gross premiums" includes the total consideration paid to bail bond agents
94.7for bail bonds.
94.8(b) For title insurance companies, "gross premiums" means the charge for title
94.9insurance made by a title insurance company or its agents according to the company's rate
94.10filing approved by the commissioner of commerce without a deduction for commissions
94.11paid to or retained by the agent. Gross premiums of a title insurance company does not
94.12include any other charge or fee for abstracting, searching, or examining the title, or
94.13escrow, closing, or other related services.
94.14 (c) "Gross premiums" includes any workers' compensation special compensation
94.15fund premium surcharge pursuant to section 176.129.
94.16(d) "Gross premiums" for surplus lines nonadmitted insurance includes all
94.17related charges, commissions, and fees received by the licensee any payment made as
94.18consideration for an insurance contract for such insurance, including premium deposits,
94.19assessments, fees, and any other compensation given in consideration for a contract
94.20of insurance. Gross premiums does not include the stamping fee, as provided under
94.21section 60A.2085, subdivision 7, nor the operating assessment, as provided under section
94.2260A.208, subdivision 8 .
94.23EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
94.24that go into effect after July 20, 2011.

94.25    Sec. 3. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision
94.26to read:
94.27    Subd. 10a. Home state. "Home state" means the state in which an insured maintains
94.28its principal place of business, or in the case of an individual, the individual's principal
94.29residence; or if 100 percent of the insured risk is located out of the state, the state to
94.30which the greatest percentage of the insured's taxable premium for that insurance contract
94.31is allocated. If more than one insured from an affiliated group are named insureds on a
94.32single nonadmitted insurance contract, the term home state means the home state of the
94.33member of the affiliated group that has the largest percentage of premium attributed to
94.34it under that insurance contract.
95.1EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
95.2that go into effect after July 20, 2011.

95.3    Sec. 4. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision
95.4to read:
95.5    Subd. 10b. Independently procured insurance. "Independently procured
95.6insurance" means insurance procured directly by an insured from a nonadmitted insurer.
95.7EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
95.8that go into effect after July 20, 2011.

95.9    Sec. 5. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision
95.10to read:
95.11    Subd. 10c. Nonadmitted insurance. "Nonadmitted insurance" means any property
95.12and casualty insurance permitted to be placed directly or through a surplus lines broker
95.13with a nonadmitted insurer.
95.14EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
95.15that go into effect after July 20, 2011.

95.16    Sec. 6. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision
95.17to read:
95.18    Subd. 10d. Nonadmitted insurance premium tax. "Nonadmitted insurance
95.19premium tax" means, with respect to surplus lines or independently procured insurance
95.20coverage, any tax, fee, assessment, or other charge imposed directly or indirectly by a
95.21government entity.
95.22EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
95.23that go into effect after July 20, 2011.

95.24    Sec. 7. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision
95.25to read:
95.26    Subd. 10e. Nonadmitted insurer. "Nonadmitted insurer" means an insurer not
95.27licensed to engage in the business of insurance in Minnesota, but does not include a risk
95.28retention group as the term is defined in section 2(a)(4) of the Liability Risk Retention Act
95.29of 1986, United States Code, title 15, section 3901(a)(4).
96.1EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
96.2that go into effect after July 20, 2011.

96.3    Sec. 8. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision
96.4to read:
96.5    Subd. 15a. Surplus lines broker. "Surplus lines broker" means an individual,
96.6firm, or corporation which is licensed in a state to sell, solicit, or negotiate insurance on
96.7properties, risks, or exposures located or to be performed in a state with nonadmitted
96.8insurers.
96.9EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
96.10that go into effect after July 20, 2011.

96.11    Sec. 9. Minnesota Statutes 2010, section 297I.01, subdivision 16, is amended to read:
96.12    Subd. 16. Taxpayer. "Taxpayer" means any insurance company, association,
96.13surplus lines licensee broker, automobile risk self-insurer, or insured or any other person
96.14or entity required to pay any amount due under this chapter.
96.15EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
96.16that go into effect after July 20, 2011.

96.17    Sec. 10. Minnesota Statutes 2010, section 297I.05, subdivision 7, is amended to read:
96.18    Subd. 7. Surplus lines Nonadmitted insurance premium tax. (a) A tax is imposed
96.19on surplus lines licensees brokers. The rate of tax is equal to three percent of the gross
96.20premiums less return premiums paid by an insured whose home state is Minnesota.
96.21(b) If surplus lines insurance placed by a surplus lines licensee and taxed under this
96.22subdivision covers a subject of insurance residing, located, or to be performed outside this
96.23state, a proper pro rata portion of the entire premium payable for all of that insurance must
96.24be allocated according to the subjects of insurance residing, located, or to be performed
96.25in this state. A tax is imposed on persons, firms, or corporations that procure insurance
96.26directly from a nonadmitted insurer. The rate of tax is equal to two percent of the gross
96.27premiums less return premiums paid by an insured whose home state is Minnesota.
96.28(c) No state other than the home state of an insured may require any premium tax
96.29payment for nonadmitted insurance. When Minnesota is the home state of the insured,
96.30as provided under section 297I.01, 100 percent of the gross premiums are taxable in
96.31Minnesota with no allocation of the tax to other states.
97.1EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
97.2that go into effect after July 20, 2011.

97.3    Sec. 11. Minnesota Statutes 2010, section 297I.05, subdivision 12, is amended to read:
97.4    Subd. 12. Other entities. (a) A tax is imposed equal to two percent of:
97.5    (1) gross premiums less return premiums written for risks resident or located in
97.6Minnesota by a risk retention group;
97.7    (2) gross premiums less return premiums received by an attorney in fact acting
97.8in accordance with chapter 71A;
97.9    (3) gross premiums less return premiums received pursuant to assigned risk policies
97.10and contracts of coverage under chapter 79;
97.11    (4) the direct funded premium received by the reinsurance association under section
97.1279.34 from self-insurers approved under section 176.181 and political subdivisions that
97.13self-insure; and
97.14    (5) gross premiums less return premiums paid to an insurer other than a licensed
97.15insurance company or a surplus lines licensee broker for coverage of risks resident or
97.16located in Minnesota by a purchasing group or any members of the purchasing group to a
97.17broker or agent for the purchasing group.
97.18    (b) A tax is imposed on a joint self-insurance plan operating under chapter 60F. The
97.19rate of tax is equal to two percent of the total amount of claims paid during the fund year,
97.20with no deduction for claims wholly or partially reimbursed through stop-loss insurance.
97.21    (c) A tax is imposed on a joint self-insurance plan operating under chapter 62H.
97.22The rate of tax is equal to two percent of the total amount of claims paid during the
97.23fund's fiscal year, with no deduction for claims wholly or partially reimbursed through
97.24stop-loss insurance.
97.25    (d) A tax is imposed equal to the tax imposed under section 297I.05, subdivision 5,
97.26on the gross premiums less return premiums on all coverages received by an accountable
97.27provider network or agents of an accountable provider network in Minnesota, in cash or
97.28otherwise, during the year.
97.29EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
97.30that go into effect after July 20, 2011.

97.31    Sec. 12. Minnesota Statutes 2010, section 297I.30, subdivision 1, is amended to read:
97.32    Subdivision 1. General rule. On or before March 1, every taxpayer subject to
97.33taxation under section 297I.05, subdivisions 1 to 5, 9, 10 7, paragraph (b), 12, paragraphs
98.1(a), clauses (1) to (4), (b), (c), and (d), and 14, shall file an annual return for the preceding
98.2calendar year in the form prescribed by the commissioner.
98.3EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
98.4that go into effect after July 20, 2011.

98.5    Sec. 13. Minnesota Statutes 2010, section 297I.30, subdivision 2, is amended to read:
98.6    Subd. 2. Surplus lines licensees brokers and purchasing groups. On or before
98.7February 15 and August 15 of each year, every surplus lines licensee broker subject to
98.8taxation under section 297I.05, subdivision 7, paragraph (a), and every purchasing group
98.9or member of a purchasing group subject to tax under section 297I.05, subdivision 12,
98.10paragraph (a), clause (5), shall file a return with the commissioner for the preceding
98.11six-month period ending December 31, or June 30, in the form prescribed by the
98.12commissioner.
98.13EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
98.14that go into effect after July 20, 2011.

98.15    Sec. 14. REPEALER.
98.16Minnesota Statutes 2010, section 297I.05, subdivisions 9 and 10, are repealed.
98.17EFFECTIVE DATE.This section is effective for nonadmitted insurance policies
98.18that go into effect after July 20, 2011.

98.19ARTICLE 9
98.20SCIENCE AND TECHNOLOGY PROGRAM

98.21    Section 1. [116W.25] CITATION.
98.22Sections 116W.26 to 116W.34 may be cited as the "Minnesota science and
98.23technology program."

98.24    Sec. 2. [116W.26] DEFINITIONS.
98.25    Subdivision 1. Applicability. For the purposes of sections 116W.26 to 116W.34,
98.26the terms in this section have the meanings given them.
98.27    Subd. 2. Authority. "Authority" means the Minnesota Science and Technology
98.28Authority established under this chapter.
98.29    Subd. 3. College or university. "College or university" means an institution of
98.30postsecondary education, public or private, that grants undergraduate or postgraduate
99.1academic degrees, conducts significant research or development activities in the areas of
99.2science and technology.
99.3    Subd. 4. Commercialization. "Commercialization" means any of the full spectrum
99.4of activities required for a new technology, product, or process to be developed from
99.5its basic research of conceptual stage through applied research or development to the
99.6marketplace including, without limitation, the steps leading up to and including licensure,
99.7sales, and services.
99.8    Subd. 5. Commercialized research project. "Commercialized research project"
99.9means research conducted within a college or university or nonprofit research institution
99.10or by a qualified science and technology company that has shown advanced commercial
99.11potential through license agreements, patents, or other forms of invention disclosure, and
99.12by which a qualified science and technology company has been or is being currently
99.13formed.
99.14    Subd. 6. Fund. "Fund" means the Minnesota science and technology fund.
99.15    Subd. 7. Nonprofit research institution. "Nonprofit research institution" means an
99.16entity with its principle place of business in Minnesota, that qualifies under section 501(c)
99.17of the Internal Revenue Code, and that conducts significant research or development
99.18activities in this state in the areas of science and technology.
99.19    Subd. 8. Program. "Program" means the Minnesota science and technology
99.20program.
99.21    Subd. 9. Qualified science and technology company. "Qualified science and
99.22technology company" means a corporation, limited liability company, S corporation,
99.23partnership, limited liability partnership, or sole proprietorship with fewer than 100
99.24employees that is engaged in research, development, or production of science or
99.25technology in this state including, without limitation, research, development, or production
99.26directed toward developing or providing science and technology products, processes, or
99.27services for specific commercial or public purposes.

99.28    Sec. 3. [116W.27] MINNESOTA SCIENCE AND TECHNOLOGY FUND.
99.29A Minnesota science and technology fund is created in the state treasury. The fund
99.30is a direct-appropriated special revenue fund. Money of the authority must be paid to the
99.31commissioner of management and budget as agent of the authority and the commissioner
99.32shall not commingle the money with other money. The money in the fund must be paid out
99.33only on warrants drawn by the commissioner of management and budget on requisition of
99.34the executive director of the authority or designee.

100.1    Sec. 4. [116W.28] MINNESOTA SCIENCE AND TECHNOLOGY FUND;
100.2AUTHORIZED USES.
100.3The Minnesota science and technology fund may be used for the following to:
100.4(1) establish the commercialized research program authorized under section
100.5116W.29;
100.6(2) establish the federal research and development support program under section
100.7116W.30;
100.8(3) establish the industry technology and competitiveness program under section
100.9116W.31; and
100.10(4) carry out the powers of the authority authorized under sections 116W.04 and
100.11116W.32 that are in support of the programs in clauses (1) to (3).

100.12    Sec. 5. [116W.29] COMMERCIALIZED RESEARCH PROGRAM.
100.13(a) The authority may establish a commercialized research program. The purpose of
100.14the program is to accelerate the commercialization of science and technology products,
100.15processes, or services from colleges or universities, nonprofit research institutions or
100.16qualified science and technology companies that lead to an increase in science and
100.17technology businesses and jobs. The program shall:
100.18(1) provide science and technology gap funding of up to $250,000 per science and
100.19technology research project to assist in the commercialization and transfer of science and
100.20technology research projects from a college or university or nonprofit research institution
100.21to a qualified science and technology company; and
100.22(2) provide funding of up to $250,000 for early stage development for qualified
100.23science and technology companies to conduct commercialized research projects.
100.24(b) All activities under the commercialized research program must require:
100.25(1) written criteria set by the authority for the application, award, and use of the
100.26funds;
100.27(2) matching funds by the participating qualified science and technology company,
100.28college or university, or nonprofit research institution;
100.29(3) no more than 15 percent of the funds awarded by the authority may be used
100.30for overhead costs; and
100.31(4) a report by the participating qualified science and technology company, college
100.32or university, or nonprofit research institution that provides documentation of the use of
100.33funds and outcomes of the award. The report must be submitted to the authority within
100.34one calendar year of the date of the award.

101.1    Sec. 6. [116W.30] FEDERAL RESEARCH AND DEVELOPMENT SUPPORT
101.2PROGRAM.
101.3The authority may establish a federal research and development support program.
101.4The purpose of the program is to increase and coordinate efforts to procure federal funding
101.5for research projects of primary benefit to qualified science and technology companies,
101.6colleges or universities, and nonprofit research institutions. The program shall:
101.7(1) develop and execute a strategy to identify specific federal agencies and programs
101.8that support the growth of science and technology industries in this state; and
101.9(2) provide grants to qualified science and technology companies:
101.10(i) to assist in the development of federal Small Business Innovation (SBIR) or
101.11Small Business Technology Transfer (STTR) proposals; and
101.12(ii) to match funds received through SBIR or STTR awards. No more than
101.13$1,500,000 may be awarded in a year for matching grants under this clause.

101.14    Sec. 7. [116W.31] INDUSTRY INNOVATION AND COMPETITIVENESS
101.15PROGRAM.
101.16(a) The authority may establish an industry technology and competitiveness program.
101.17The purpose of the program is to advance the technological capacity and competitiveness
101.18of existing and emerging science and technology industries. The program shall:
101.19(1) provide matching funds to programs and organizations that assist entrepreneurs
101.20in starting and growing qualified science and technology companies including, but not
101.21limited to, matching funds for mentoring programs, consulting and technical services,
101.22and related activities;
101.23(2) fund initiatives that retain engineering, science, technology, and mathematical
101.24occupations in the state including, but not limited to, internships, mentoring, and support
101.25of industry and professional organizations; and
101.26(3) fund initiatives that support the growth of targeted industry clusters and the
101.27competitiveness of existing qualified science and technology companies in developing
101.28and marketing new products and services.
101.29(b) All activities under the industry innovation and competitiveness program shall
101.30require:
101.31(i) written criteria set by the authority for the application, award, and use of the funds;
101.32(ii) matching funds by the participating qualified science and technology company,
101.33college or university, or nonprofit research institution; and
101.34(iii) a report by the participating qualified science and technology company, college
101.35or university, or nonprofit research institution providing documentation on the use of the
102.1funds and outcomes of the award. The report must be submitted to the authority within
102.2one calendar year from the date of the award.

102.3    Sec. 8. [116W.32] MINNESOTA SCIENCE AND TECHNOLOGY AUTHORITY;
102.4POWERS UNDER FUND.
102.5    Subdivision 1. General powers. The authority shall have all of the powers
102.6necessary to carry out the purposes and provisions of sections 116W.26 to 116W.34,
102.7including, but not limited to, those provided under section 116W.04 and the following:
102.8(1) The authority may make awards in the forms of grants or loans, and charge and
102.9receive a reasonable interest for the loans, or take an equity position in form of stock, a
102.10convertible note, or other securities in consideration of an award. Interests, revenues, or
102.11other proceeds received as a result of a transaction authorized by use of this fund shall be
102.12deposited to the corpus of the fund and used in the same manner as the corpus of the fund.
102.13(2) In awarding money from the fund, priority shall be given to proposals from
102.14qualified science and technology companies that have demonstrable economic benefit to
102.15the state in terms of the formation of a new private sector business entity, the creation of
102.16jobs, or the attraction of federal and private funding.
102.17(3) In awarding money from the fund, priority shall be given to proposals from
102.18colleges or universities and nonprofit research institutions that:
102.19(i) promote collaboration between any combination of colleges or universities,
102.20nonprofit research institutions, and private industry;
102.21(ii) enhance existing research superiority by attracting new research entities,
102.22research talent, or resources to the state; and
102.23(iii) create new research superiority that attracts significant researchers and resources
102.24from outside the state.
102.25(4) Subject to the limits in this clause, money within the fund may be used
102.26for reasonable administrative expenses by the authority including staffing and direct
102.27operational expenses, and professional fees for accounting, legal, and other technical
102.28services required to carry out the intent of the program and administration of the fund.
102.29Administrative expenses may not exceed five percent of the first $5,000,000 in the fund
102.30and two percent of any amount in excess of $5,000,000.
102.31(5) Before making an award, the authority shall enter into a written agreement with
102.32the entity receiving the award that specifies the uses of the award.
102.33(6) If the award recipient has not used the award received for the purposes intended,
102.34as of the date provided in the agreement, the recipient shall repay that amount and any
103.1interest applicable under the agreement to the authority. All repayments must be deposited
103.2to the corpus of the fund.
103.3    Subd. 2. Rules. The authority may adopt rules to implement the programs
103.4authorized under sections 116W.29 to 116W.31.

103.5    Sec. 9. [116W.33] REPAYMENT.
103.6An entity must repay all or a portion of the amount of any award, grant, loan, or
103.7financial assistance of any type paid by the authority under sections 116W.29 to 116W.32
103.8if the entity relocates outside the state or ceases operation in Minnesota within four years
103.9from the date the authority provided the financial award. If the entity relocates outside of
103.10this state or ceases operation in Minnesota within three years of the financial award, the
103.11entity must repay 100 percent of the award. If the entity relocates or ceases operation in
103.12Minnesota after a period of three years but before four years from the date of the financial
103.13award, the entity must repay 75 percent of the financial award.

103.14    Sec. 10. [116W.34] EXPIRATION.
103.15Sections 116W.26 to 116W.33 expire on the expiration date of the authority under
103.16section 116W.03, subdivision 7. Any unused money in the fund shall be deposited in the
103.17general fund.

103.18    Sec. 11. APPROPRIATION.
103.19Except as otherwise provided by law, $500,000 is appropriated to the Minnesota
103.20science and technology fund for fiscal year 2012 and any unspent money carries over
103.21to fiscal year 2013. Notwithstanding section 116W.32, subdivision 1, clause (4), up to
103.22$107,000 of the appropriation may be used for administrative expenses of the authority.
103.23This is a onetime appropriation and is not added to the authority's base budget.

103.24    Sec. 12. EFFECTIVE DATE.
103.25Sections 1 to 11 are effective the day following final enactment.

103.26ARTICLE 10
103.27MISCELLANEOUS

103.28    Section 1. Minnesota Statutes 2010, section 270C.13, subdivision 1, is amended to read:
103.29    Subdivision 1. Biennial report. The commissioner shall report to the legislature
103.30by March 1 of each odd-numbered year on the overall incidence of the income tax,
103.31sales and excise taxes, and property tax. The report shall present information on the
104.1distribution of the tax burden as follows: (1) for the overall income distribution, using
104.2a systemwide incidence measure such as the Suits index or other appropriate measures
104.3of equality and inequality; (2) by income classes, including at a minimum deciles of the
104.4income distribution; and (3) by other appropriate taxpayer characteristics. The report
104.5must also include information on the distribution of the burden of federal taxes borne
104.6by Minnesota residents.
104.7EFFECTIVE DATE.This section is effective beginning with the report due in
104.8March 2013.

104.9    Sec. 2. BUDGET RESERVE REDUCTION.
104.10Retroactive to July 1, 2011, the commissioner of management and budget shall
104.11cancel $8,665,000 of the balance in the budget reserve account in Minnesota Statutes,
104.12section 16A.152, to the general fund.
104.13EFFECTIVE DATE.This section is effective the day following final enactment.

104.14    Sec. 3. CASH FLOW ACCOUNT REDUCTION.
104.15Retroactive to July 1, 2011, the commissioner of management and budget shall
104.16cancel $171,000,000 of the balance in the cash flow account in Minnesota Statutes,
104.17section 16A.152, to the general fund.
104.18EFFECTIVE DATE.This section is effective the day following final enactment.

104.19    Sec. 4. APPROPRIATION.
104.20$15,000 in fiscal year 2012 and $15,000 in fiscal year 2013 are appropriated from
104.21the general fund to the commissioner of revenue for the change in the tax incidence
104.22report in section 1.
104.23EFFECTIVE DATE.This section is effective the day following final enactment.

104.24    Sec. 5. APPROPRIATION; DISASTER RELIEF.
104.25    Subdivision 1. Disaster match appropriation. (a) $9,000,000 is appropriated from
104.26the general fund for fiscal year 2012 to the commissioner of public safety to provide the
104.27state and local match for Federal Emergency Management Agency disaster assistance to
104.28state agencies and political subdivisions under Minnesota Statutes, section 12.221, for
104.29disaster recovery work in:
105.1(1) the area designated by Presidential Declaration of Major Disaster
105.2FEMA-1982-DR, for the flooding in Minnesota in the spring of 2011, whether included in
105.3the original declaration or added by later federal government action;
105.4(2) the area designated by the Presidential Declaration of Major Disaster
105.5FEMA-1990-DR, for the tornado in Hennepin and Anoka Counties on May 22, 2011,
105.6whether included in the original declaration or added by later federal government action; or
105.7(3) the area affected by the severe storms and tornadoes on or about July 1, 2011,
105.8whether included in the original declaration or added by later federal government action.
105.9(b) This is a onetime appropriation. The appropriation under this subdivision does
105.10not lapse, notwithstanding the provisions of Minnesota Statutes, section 16A.28.
105.11    Subd. 2. Reserved funds. Of the appropriation in subdivision 1, $5,000,000 is
105.12reserved for disaster recovery activities within the area designated as DR-1982, for spring
105.132011 flooding in Minnesota.
105.14    Subd. 3. Transfer of previous appropriation. Any unexpended portion of the
105.15appropriation in Laws 2010, Second Special Session chapter 1, article 1, section 11, may
105.16be transferred by the commissioner of management and budget to the commissioner of
105.17public safety for the purposes of subdivision 1. Amounts transferred under this subdivision
105.18are available to the commissioner of public safety until June 30, 2013. Any amounts
105.19remaining unexpended and unencumbered on that date lapse to the general fund.
105.20EFFECTIVE DATE.This section is effective the day following final enactment.

105.21    Sec. 6. MODIFICATION TO POWERS RESULTING FROM TEMPORARY
105.22STATE SHUTDOWN.
105.23(a) Any statute of limitation that limits the ability of a person to file a claim for
105.24refund, appeal, or other document with the commissioner of revenue is tolled until 30 days
105.25after the end of a Department of Revenue shutdown if the commissioner determines that
105.26the shutdown contributed to that person being unable to file the claim for refund, appeal,
105.27or other document within the applicable period of limitation.
105.28(b) Any action required to be taken by the commissioner of revenue after June 30,
105.292011, and before 30 days after the date of final enactment of this section, is considered
105.30timely if the commissioner failed to take the action in a timely manner as a result of the
105.31budget-related shutdown of the Department of Revenue and the action is taken by the
105.32commissioner within 30 days after the date of final enactment of this section. This section
105.33does not, however, extend any statute of limitations concerning the assessment of tax.
106.1(c)(1) If the commissioner of revenue determines that the state shutdown has made
106.2it impractical for property tax administrators to take an action or make a determination
106.3in 2011 by the date specified in law, the commissioner may by order either eliminate the
106.4mandatory nature of the action or determination, or allow more time for it to be done,
106.5provided that the commissioner also determines that taxpayers will not be significantly
106.6prejudiced by the elimination or delay.
106.7(2) An appeal may not be taken from an order of the commissioner made in the
106.8exercise of a discretionary authority granted in this paragraph. This paragraph does not
106.9limit or modify the provisions of law that govern appeals of the local property taxes
106.10that are affected by an order made under the authority of this section, including but not
106.11limited to Minnesota Statutes, section 278.01.
106.12EFFECTIVE DATE.This section is effective the day following final enactment.
106.13Paragraph (a) is effective only to periods of limitation that otherwise expire or expired
106.14after June 30, 2011, and before 30 days after the date of final enactment of this section.

106.15    Sec. 7. PURPOSE STATEMENTS; TAX EXPENDITURES.
106.16    Subdivision 1. Authority. This section is intended to fulfill the requirement under
106.17Minnesota Statutes, section 3.192, that a bill creating, renewing, or continuing a tax
106.18expenditure provide a purpose for the tax expenditure and a standard or goal against
106.19which its effectiveness may be measured.
106.20    Subd. 2. Estate tax exclusion for qualified farm and small business property.
106.21The provisions of article 1, sections 3 through 8, providing an estate tax subtraction of
106.22the combined value of qualified farm property and qualified small business property up
106.23to $4,000,000 from the federal adjusted taxable estate, are intended to provide estate tax
106.24reductions to owner-operators of family farms and small businesses to allow retention and
106.25continued operation of those farms and businesses by the families.
106.26    Subd. 3. Federal update. The provisions of article 2, conforming Minnesota
106.27individual income, corporate franchise, and estate taxes to changes in federal law, are
106.28intended to simplify compliance with and administration of those taxes.
106.29    Subd. 4. Sales tax exemption for ring tones. The provisions of article 3, section 1,
106.30exempting ring tones from sales taxation are intended (1) to bring the state of Minnesota
106.31into compliance with the requirements of the streamlined sales tax agrement and (2) to
106.32simplify the tax and to make compliance with the sales tax by remote sellers easier to
106.33encourage congress to enact federal legislation allowing state and local governments to
106.34require remote sellers to collect use tax on behalf of the state and its local governments.
107.1    Subd. 5. Minerals processing equipment. The provisions of article 3, section
107.26, extending the sales tax exemption for certain equipment used in processing of
107.3minerals is intended to provide sales tax treatment for the nonferrous mining industry
107.4equivalent to that provided to the taconite mining industry. Because these purchases are
107.5intermediate inputs to production, the legislature does not consider this allowance to be
107.6a tax expenditure.
107.7    Subd. 6. Sales tax exemption for resold admission tickets. The provisions of
107.8article 3, section 8, providing an exemption for resold admission tickets by allowing resale
107.9ticket sellers to claim a refund or provide a credit to the purchaser of resold tickets for
107.10the value of sales tax paid on the original ticket, is intended to reduce the competitive
107.11advantage of ticket resellers that do not have nexus in Minnesota requiring them to
107.12collect Minnesota sales tax and to ensure that resold admission tickets are subject to
107.13sales tax only on the full, final retail price of the tickets. As a result, the legislature does
107.14not consider this to be a tax expenditure.
107.15    Subd. 7. Sales tax exemption for sales to townships. The provisions of article 3,
107.16sections 10 and 11, exempting goods and services purchased by townships, is intended
107.17to provide state assistance for the functions of Minnesota townships not exempted under
107.18current law.
107.19    Subd. 8. Sales tax exemption; water purchases. The provisions of article 3,
107.20section 11, exempting water purchases by fire departments, fire protection districts, and
107.21fire companies is intended to provide state assistance for this public safety function
107.22of Minnesota local governments.
107.23    Subd. 9. Emergency vehicles. The provisions of article 3, section 12, extending
107.24the sales tax exemption for lease of ambulances to other emergency vehicles are intended
107.25to clarify the exemption and to provide consistent treatment of emergency vehicles. The
107.26underlying purpose of the exemption is to provide state assistance to local governments
107.27and other organizations that provide emergency response services.
107.28EFFECTIVE DATE.This section is effective the day following final enactment.

107.29    Sec. 8. EFFECTIVE DATE; RELATIONSHIP TO OTHER APPROPRIATIONS.
107.30Unless otherwise specified, this act is effective retroactively from July 1, 2011,
107.31and supersedes and replaces funding authorized by order of the Second Judicial District
107.32Court in Case No. 62-CV-11-5203.

108.1ARTICLE 11
108.2TOBACCO BONDS

108.3    Section 1. Minnesota Statutes 2010, section 16A.151, subdivision 2, is amended to
108.4read:
108.5    Subd. 2. Exceptions. (a) If a state official litigates or settles a matter on behalf of
108.6specific injured persons or entities, this section does not prohibit distribution of money
108.7to the specific injured persons or entities on whose behalf the litigation or settlement
108.8efforts were initiated. If money recovered on behalf of injured persons or entities cannot
108.9reasonably be distributed to those persons or entities because they cannot readily be
108.10located or identified or because the cost of distributing the money would outweigh the
108.11benefit to the persons or entities, the money must be paid into the general fund.
108.12(b) Money recovered on behalf of a fund in the state treasury other than the general
108.13fund may be deposited in that fund.
108.14(c) This section does not prohibit a state official from distributing money to a person
108.15or entity other than the state in litigation or potential litigation in which the state is a
108.16defendant or potential defendant.
108.17(d) State agencies may accept funds as directed by a federal court for any restitution
108.18or monetary penalty under United States Code, title 18, section 3663(a)(3) or United
108.19States Code, title 18, section 3663A(a)(3). Funds received must be deposited in a special
108.20revenue account and are appropriated to the commissioner of the agency for the purpose
108.21as directed by the federal court.
108.22(e) Tobacco settlement revenues as defined in section 16A.95, subdivision 1,
108.23paragraph (t), may be deposited as provided in section 16A.95, subdivision 12.
108.24EFFECTIVE DATE.This section is effective the day following final enactment.

108.25    Sec. 2. [16A.94] TOBACCO BONDS.
108.26The commissioner may sell and issue debt under either or both of sections 16A.95
108.27and 16A.96, but the net proceeds of bonds issued and sold under those sections together
108.28must not exceed $640,000,000 during fiscal years 2012 and 2013.
108.29EFFECTIVE DATE.This section is effective the day following final enactment.

108.30    Sec. 3. [16A.95] TOBACCO SECURITIZATION BONDS.
108.31    Subdivision 1. Definitions. The definitions in this subdivision apply to this section.
109.1(a) "Authority" means the Tobacco Securitization Authority created and established
109.2under subdivision 3.
109.3(b) "Authorized officer" means any of the members of the authority identified and
109.4described in subdivision 3.
109.5(c) "Bond" means any instrument evidencing the obligation to pay money authorized
109.6or issued by the authority as provided by this section, including without limitation, bonds,
109.7notes, or certificates.
109.8(d) "Bondholder" means, in the case of a bond issued in registered form, the
109.9registered owner of the bond and otherwise, the owner of the bond.
109.10(e) "Commissioner" means the commissioner of management and budget.
109.11(f) "Consent judgment" means the consent judgment, as the same has been and may
109.12be corrected, amended, or modified, in the action styled as The State of Minnesota, By
109.13Hubert Humphrey, III, Its attorney general, and Blue Cross and Blue Shield of Minnesota
109.14v. Philip Morris Incorporated, et al., No. C1-94-8565 (Minnesota District Court, Second
109.15Judicial District, May 8, 1998).
109.16(g) "General tobacco subaccount" means the account established by the authority
109.17within the tobacco settlement recovery account established under subdivision 12 for
109.18the net proceeds of bonds.
109.19(h) "Settlement agreement" means the settlement agreement and stipulation for entry
109.20of consent judgment, dated May 8, 1998, between the State of Minnesota, By Hubert
109.21Humphrey, III, Its attorney general, and Blue Cross and Blue Shield of Minnesota, on
109.22the one hand, and Philip Morris Incorporated, et al., on the other hand, and the subject
109.23of the consent judgment.
109.24(i) "Net proceeds of bonds" means the gross proceeds of the sale of bonds issued
109.25under subdivision 5, less any amounts applied or to be applied to pay transaction and
109.26administrative expenses, including underwriting discount, to pay capitalized interest
109.27and to fund any reserves deemed necessary or appropriate by the authority, but does not
109.28include any investment earnings realized thereon.
109.29(j) "Participating manufacturer" means a tobacco product manufacturer that is or
109.30becomes a signatory to the settlement agreement.
109.31(k) "Pledged tobacco revenues" means the state's tobacco settlement revenues sold
109.32to the authority under the sale agreement and pledged by the authority for the payment of
109.33bonds and any related bond facility.
109.34(l) "Related bond facility" means any interest rate exchange or similar agreement or
109.35any bond insurance policy, letter of credit or other credit enhancement facility, liquidity
110.1facility, guaranteed investment or reinvestment agreement, or other similar agreement,
110.2arrangement, or contract.
110.3(m) "Residual amount in tobacco settlement revenues" means any tobacco settlement
110.4revenues determined as moneys received but not required for the identified period in
110.5which revenues are received, to pay principal or interest on bonds or administrative or
110.6transaction expenses of the authority, or to fund reserves or other requirements relating to
110.7bonds issued or related bond facilities made under this section.
110.8(n) "Sale agreement" means any agreement authorized as provided in this section
110.9in which the state provides for the sale of all or a portion of the tobacco settlement
110.10revenues to the authority.
110.11(o) "State" means the state of Minnesota.
110.12(p) "Tobacco settlement bond proceeds fund" is established within the state treasury
110.13and consists of the net proceeds from any sale, conveyance, or transfer of the state's
110.14tobacco settlement revenues from the authority.
110.15(q) "Tobacco settlement recovery account" is the account established by the authority
110.16outside of the state's treasury.
110.17(r) "Tobacco settlement revenues subaccount" means the account established by the
110.18authority within the tobacco settlement recovery account established under subdivision
110.1912 for receipt of tobacco settlement revenues and for payment of debt service of bonds
110.20authorized under this section.
110.21(s) "Tobacco settlement residual subaccount" means the account established by the
110.22authority within the tobacco settlement recovery account established under subdivision 12
110.23for receipt of the residual amount in the tobacco settlement revenues subaccount.
110.24(t) "Tobacco settlement revenues" means all tobacco settlement payments received
110.25by the state on and after the effective date of this section and required to be made under
110.26the terms of the settlement agreement by participating manufacturers, and the state's rights
110.27to receive the tobacco settlement payments on and after the effective date of this section,
110.28exclusive of any payments made with respect to liability to make those payments for
110.29calendar years completed before the effective date of this section.
110.30    Subd. 2. Ownership, transfer, and sale of state's right to tobacco settlement
110.31revenues. All tobacco settlement revenues received and to be received by the state are
110.32the property of the state, to be used as provided by law, including a sale, assignment, or
110.33transfer of the right to receive the tobacco settlement revenues under this subdivision.
110.34During fiscal years 2012 and 2013, the commissioner may sell, convey, or otherwise
110.35transfer to the authority, and may take any action necessary to facilitate and complete the
110.36sale, conveyance, or transfer to the authority the tobacco settlement revenues in exchange
111.1for the net proceeds of bonds and a right to the residual amount in the tobacco settlement
111.2revenues subaccount. Unless otherwise directed by statute, the net proceeds of any such
111.3sale, conveyance, or transfer shall be deposited in the general tobacco subaccount. The
111.4authority's purchased interest in tobacco settlement revenues received by the state from
111.5time to time shall be deposited in the tobacco settlement revenues subaccount, and the
111.6residual amount in tobacco settlement revenues received by the state from time to time
111.7shall be deposited in the tobacco settlement residual subaccount, in each case to be applied
111.8for the purposes and in the manner described in this section.
111.9Any sale, conveyance, or other transfer authorized by this subdivision shall be
111.10evidenced by an instrument or agreement in writing signed on behalf of the state by
111.11the commissioner. A certified copy of the instrument or agreement shall be filed with
111.12the commissioner and the chairs of the senate Finance Committee and the house of
111.13representatives Ways and Means Committee promptly upon execution and delivery
111.14thereof. The instrument or agreement shall require, as a condition of the sale, conveyance,
111.15or other transfer, that the authority notify the commissioner promptly upon the issuance,
111.16sale, and delivery thereof if any bonds are issued that are secured by any of the tobacco
111.17settlement revenues and provide the commissioner with all information on the distribution
111.18of the bond proceeds. The commissioner shall submit a report to the chairs of the senate
111.19finance committee and the house of representatives ways and means committee that
111.20includes all of the information provided to the commissioner by the authority under
111.21this subdivision. The instrument or agreement may include an irrevocable direction to
111.22pay all or a specified portion of the tobacco settlement revenues directly to or upon the
111.23order of the authority, or to any escrow agent or any trustee under an indenture or other
111.24agreement securing any bonds issued or related bond facilities made under this section.
111.25Upon execution and delivery of the sale agreement as provided in this section, the sale,
111.26conveyance, or other transfer of the right to receive the tobacco settlement revenues, shall,
111.27for all purposes, be a true sale and absolute conveyance of all right, title, and interest
111.28therein and not as a pledge or other security interest for any borrowing, valid, binding,
111.29and enforceable in accordance with the terms thereof and such instrument or agreements
111.30and any related instrument, agreement, or other arrangement, including any pledge, grant
111.31of security interest, or other encumbrance made by authority to secure any bonds issued
111.32by the authority, and shall not be subject to disavowal, disaffirmance, cancellation, or
111.33avoidance by reason of insolvency of any party, lack of consideration, or any other fact,
111.34occurrence, or rule of law. On and after the effective date of the sale of any portion,
111.35including all of the tobacco settlement revenues, the state shall have no right, title or
111.36interest in or to the portion of the tobacco settlement revenues sold, and the portion of
112.1the tobacco settlement revenues sold shall be the property of the authority, and shall be
112.2received, held, and disbursed by the authority in a trust fund outside the state treasury.
112.3Any portions of the tobacco settlement revenues sold to the authority and held in trust may
112.4be invested in investments and deposit accounts or certificates, and with security, agreed
112.5upon with the bondholders or a trustee for the bondholders.
112.6The procedures and requirements set forth in this subdivision shall be the sole
112.7procedures and requirements applicable to the sale of the tobacco settlement revenues.
112.8    Subd. 3. Establishment and powers of authority. (a) The authority is hereby
112.9established as a body corporate and politic and a public instrumentality of, but having
112.10a legal existence independent and separate from the state and, accordingly, the assets,
112.11liabilities, and funds of the authority shall be neither consolidated nor commingled with
112.12those of the state treasury, provided that the assets, liabilities, and funds of the authority
112.13shall be held by a duly designated agent or fiduciary of the authority. If the authority does
112.14not designate a fiduciary or an agent for the purposes of this subdivision, the assets and
112.15funds of the authority shall be held in the state treasury. The authority and its corporate
112.16existence shall continue until 12 months after all its liabilities have been met or otherwise
112.17discharged. Upon the termination of the existence of the authority, all of its rights and
112.18property shall pass to and be vested in the state. The authority shall be established for the
112.19express limited public purposes set forth in this section, and no part of the net earnings of
112.20the authority shall inure to any private individual.
112.21(b) The authority shall be governed by a three-member board consisting of the
112.22commissioner, the commissioner of revenue, and the commissioner of health. The
112.23commissioner shall serve as the chair and chief executive officer of the authority,
112.24who shall sign instruments or agreements authorized by this section on behalf of the
112.25authority; provided that the authority may by resolution authorize a member other than
112.26the commissioner to sign authorized instruments or agreements. The authority may
112.27elect other officers as necessary from its members. The authority may also appoint a
112.28nonremunerated chief financial officer who may or may not be a member of the authority
112.29in order to provide financial analysis and advice regarding any transaction of the authority.
112.30The powers of the authority shall be subject to the terms, conditions, and limitations
112.31contained within this section, and any applicable covenants or agreements of the authority
112.32in any indenture or other agreement relating to any then outstanding bonds or related bond
112.33facilities. The authority may enter into contracts regarding any matter connected with
112.34any corporate purpose within the objects and purposes of this section. The members of
112.35the authority shall receive no salary or other compensation, either direct or indirect, for
112.36serving as members of the authority, other than reimbursement for actual and necessary
113.1expenses incurred in the performance of such person's duties. Notwithstanding the
113.2foregoing, the authority shall not be authorized to make any covenant, pledge, promise, or
113.3agreement purporting to bind the state with respect to tobacco settlement revenues, except
113.4as otherwise specifically authorized by this section.
113.5(c) A majority of the authority, excluding vacancies, constitutes a quorum to conduct
113.6its business, to exercise its powers, and for all other purposes.
113.7(d) The authority may conduct its business as provided under section 13D.015,
113.8including teleconference calls or interactive video, that allows for an interaction between
113.9members. If a meeting is conducted under this paragraph, a specific location must be
113.10available for the public to attend the meeting and at least one member must be present at
113.11that location.
113.12(e) The authority may not file a voluntary petition under or be or become a debtor
113.13or bankrupt under the federal bankruptcy code or any other federal or state bankruptcy,
113.14insolvency, or moratorium law or statute as may, from time to time, be in effect, and
113.15neither any public officer nor any organization, entity, or other person shall authorize the
113.16authority to be or become a debtor or bankrupt under the federal bankruptcy code or any
113.17other federal or state bankruptcy, insolvency, or moratorium law or statute, as may, from
113.18time to time be in effect.
113.19(f) The authority may not guarantee the debts of another.
113.20(g) The commissioner shall provide administrative services to the authority.
113.21(h) The authority may accept appropriations, gifts, grants, bequests, and devises,
113.22and use or dispose of them for its purposes. All gifts, grants, bequests, and revenues from
113.23those sources are appropriated to the authority.
113.24(i) Proceeds of the authority's bonds, notes, and other obligations; amounts granted
113.25or appropriated to the authority for bond debt service reserves; income from investment;
113.26money in the funds; and all revenues from fees and charges of the authority including
113.27rentals, royalties, dividends, or other proceeds are annually appropriated to the authority
113.28for the accomplishment of its corporate purposes and must be spent, administered,
113.29and accounted for in accordance with the applicable provisions of all bond and note
113.30resolutions, indentures, and other instruments, contracts, and agreements of the authority.
113.31Notwithstanding section 16A.28, these appropriations are available until expended.
113.32    Subd. 4. Certain powers of the authority. The authority shall have the power to:
113.33(1) sue and be sued;
113.34(2) have a seal and alter the same at pleasure;
113.35(3) make and alter bylaws for its organization and internal management;
114.1(4) make and execute contracts and all other instruments necessary or convenient
114.2for the exercise of its powers and functions under this subdivision, including without
114.3limitation the purchase from the state of all or a portion of the right to receive tobacco
114.4settlement revenues, and request the attorney general to commence any action to protect
114.5or enforce any right conferred upon it by any law, contract, or other agreement;
114.6(5) retain or contract for the services of underwriters, financial advisors, accountants
114.7or other consultants or agents;
114.8(6) pay its operating expenses and its financing costs, including its reasonable costs
114.9of issuance and sale of bonds and those of the attorney general, if any;
114.10(7) borrow money in its name, issue negotiable bonds as named by the authority, and
114.11provide for the rights of the holders thereof as otherwise provided in this section;
114.12(8) procure insurance against any loss in connection with its activities, properties,
114.13and assets in such amount and from such insurers as it deems desirable;
114.14(9) invest any funds or other moneys under its custody and control in investment
114.15securities or under any related bond facility;
114.16(10) as security for the payment of the principal of and interest on any bonds issued
114.17by it under this section and any agreement made in connection therewith and for its
114.18obligations under any related bond facility, pledge all or any part of the tobacco settlement
114.19revenues;
114.20(11) establish and create debt service reserve funds and capitalized interest accounts
114.21and deposit therein proceeds of bonds in such amount or amounts as shall be provided
114.22by the resolutions or trust indentures for the bonds; and
114.23(12) do any and all things necessary and proper to carry out its purposes and exercise
114.24the powers expressly given and granted in this section.
114.25    Subd. 5. Bonds of the authority. (a) The authority shall have power and is hereby
114.26authorized to issue bonds from time to time in one or more series, in an aggregate principal
114.27amount no greater than $900,000,000, excluding refunding bonds sold and issued under
114.28this section, to provide funds not to exceed $640,000,000 and subject to the limitation in
114.29section 16A.94, for the purchase of all or a portion of the tobacco settlement revenues
114.30pursuant to subdivision 2, and also to provide sufficient funds for the establishment of
114.31a debt service reserve fund, and the payment or provision for capitalized interest and
114.32financing costs, including, without limitation, the cost of any related credit facility.
114.33The issuance of bonds shall be authorized by a resolution of the authority, adopted
114.34by a majority of the members of the authority without further authorization or approval.
114.35The issue of the bonds of the authority shall be special limited revenue obligations payable
114.36from and secured by a pledge of the pledged tobacco revenues, those proceeds of bonds
115.1deposited in a debt service reserve fund for the benefit of bondholders, and earnings on
115.2funds of the authority, upon terms and conditions as specified by the authority in the
115.3resolution under which the bonds are issued or in a related trust indenture.
115.4The authority shall have the power and is hereby authorized from time to time to
115.5issue bonds, whenever it deems refunding expedient, to refund any outstanding bonds by
115.6the issuance of new bonds, provided that the refunding bonds mature not more than 30
115.7years after the date of issuance as may be determined by the authority. The refunding
115.8bonds may be exchanged for the bonds to be refunded or sold and the proceeds applied to
115.9the purchase, redemption, or payment of the bonds to be refunded.
115.10(b) The bonds of each issue shall be dated, shall bear interest, which may be
115.11includable in or excludable from the gross income of the owners for federal income tax
115.12purposes, at fixed or variable rates, payable at or prior to maturity, and shall mature
115.13at such time or times, not more than 30 years after the date of issuance, as may be
115.14determined by the authority, and may be made redeemable before maturity, at the option
115.15of the authority, at such price or prices and under such terms and conditions as may be
115.16fixed by the authority. The principal and interest of the bonds may be made payable
115.17in any lawful medium. The resolution of the authority approving the issuance of the
115.18bonds shall determine the form of the bonds and the manner of execution of the bonds
115.19and shall fix the denomination or denominations of the bonds and the place or places of
115.20payment of principal and interest thereof, which may be at any bank or trust company
115.21within or outside the state. If any officer whose signature or a facsimile thereof appears
115.22on any bonds shall cease to be an officer before the delivery of the bonds, the signature
115.23or facsimile shall nevertheless be valid and sufficient for all purposes the same as if the
115.24officer had remained in office until such delivery.
115.25(c) The authority may sell such bonds at either public or private sale upon terms
115.26as the commissioner shall determine are not inconsistent with this section and the bonds
115.27may be sold at any price or percentage of par value. Any bid received may be rejected by
115.28the authority. The proceeds of the bonds shall be disbursed for the purposes for which
115.29the bonds were issued under the restrictions as the sale agreement and the resolution
115.30authorizing the issuance of the bonds or the related trust indenture may provide. The bonds
115.31shall be issued upon approval of the authority and without any other approvals, filings,
115.32proceedings or the happening of any other conditions or things other than the approvals,
115.33findings, proceedings, conditions, and things that are specified and required by this section.
115.34(d) Any pledge made by the authority shall be valid and binding at the time the
115.35pledge is made. The assets, property, revenues, reserves, or earnings so pledged shall
115.36immediately be subject to the lien of the pledge without any physical delivery thereof or
116.1further act, and the lien of any pledge shall be valid and binding as against all parties
116.2having claims of any kind in tort, contract, or otherwise against the authority, irrespective
116.3of whether such parties have notice thereof. Notwithstanding any other provision of law
116.4to the contrary, neither the resolution nor any indenture or other instrument by which a
116.5pledge is created or by which the authority's interest in pledged assets, property, revenues,
116.6reserves, or earnings is assigned need be filed, perfected, or recorded in any public records
116.7in order to protect the pledge or perfect the lien as against third parties, except that a copy
116.8shall be filed in the records of the authority.
116.9(e) Whether or not the bonds of the authority are of such form and character as to
116.10be negotiable instruments under the terms of the Uniform Commercial Code, the bonds
116.11are hereby made negotiable instruments for all purposes, subject only to the provisions of
116.12the bonds for registration.
116.13(f) At the sole discretion of the authority, any bonds issued by the authority and
116.14any related bond facility made under the provisions of this section shall be secured by a
116.15resolution or trust indenture by and between the authority and the indenture trustee, which
116.16may be any trust company or bank having the powers of a trust company, whether located
116.17within or outside the state. The trust indenture or resolution providing for the issuance
116.18of the bonds shall, without limitation, (1) provide for the creation and maintenance of
116.19reserves as the authority shall determine to be proper; (2) include covenants setting forth
116.20the duties of the authority in relation to the bonds, the income of the authority, the related
116.21sale agreement and the related tobacco settlement revenues; (3) contain provisions relating
116.22to the transfer of the residual interest upon receipt of the tobacco settlement revenues; (4)
116.23contain provisions respecting the custody, safeguarding, and application of all moneys and
116.24securities; (5) contain provisions for protecting and enforcing against the authority or the
116.25state the rights and remedies pursuant thereto and to the sale agreement of the owners of
116.26the bonds and any provider of a related bond facility as may be reasonable and proper
116.27and not in violation of law; and (6) contain other provisions as the authority may deem
116.28reasonable and proper for priorities and subordination among the owners of the bonds and
116.29providers of related bond facilities. Any reference in this section to a resolution of the
116.30authority shall include any trust indenture authorized thereby.
116.31(g) The net proceeds of any sale, conveyance, or transfer by the state of tobacco
116.32settlement revenues shall be deposited into the authority's general tobacco subaccount. The
116.33authority shall transfer all moneys in the general tobacco subaccount to the commissioner
116.34for deposit in the tobacco settlement bond proceeds fund. Any residual amount in tobacco
116.35settlement revenues shall be deposited in the tobacco settlement residual subaccount. The
117.1balance in the tobacco residual subaccount shall be transferred to the commissioner for
117.2deposit in the general fund, as provided in subdivision 12, paragraph (b).
117.3(h) The authority may enter into, amend, or terminate, as it determines to be
117.4necessary or appropriate, any related bond facility (1) to facilitate the issuance, sale, resale,
117.5purchase, repurchase, or payment of bonds, interest rate savings or market diversification,
117.6or the making or performance of swap contracts, including without limitation bond
117.7insurance, letters of credit and liquidity facilities, or (2) to attempt to manage or hedge
117.8risk or achieve a desirable effective interest rate or cash flow. Such facility shall be made
117.9upon the terms and conditions established by the authority, including without limitation
117.10provisions as to security, default, termination, payment, remedy, jurisdiction, and consent
117.11to service of process.
117.12(i) The authority may enter into, amend, or terminate, as it deems to be necessary
117.13or appropriate, any related bond facility to place the obligations or investments of the
117.14authority, as represented by the bonds or the investment of reserves securing the bonds or
117.15related bond facilities or other tobacco settlement revenues or its other assets, in whole
117.16or in part, on the interest rate, cash flow, or other basis approved by the authority, which
117.17facility may include without limitation contracts commonly known as interest rate swap
117.18agreements, forward purchase contracts, or guaranteed investment contracts and futures or
117.19contracts providing for payments based on levels of, or changes in, interest rates. These
117.20contracts or arrangements may be entered into by the authority in connection with, or
117.21incidental to, entering into, or maintaining any (1) agreement that secures bonds of the
117.22authority or (2) investment or contract providing for investment of reserves or similar
117.23facility guaranteeing an investment rate for a period of years not to exceed the underlying
117.24term of the bonds. The determination by the authority that a related bond facility or
117.25the amendment or termination thereof is necessary or appropriate as aforesaid shall be
117.26conclusive. Any related bond facility may contain such provisions as to security, default,
117.27termination, payment, remedy, jurisdiction, and consent to service of process, and other
117.28terms and conditions as determined by the authority, after giving due consideration to the
117.29creditworthiness of the counterparty or other obligated party, including any rating by any
117.30nationally recognized rating agency, and any other criteria as may be appropriate.
117.31(j) Bonds or any related bond facility may contain a recital that they are issued or
117.32executed, respectively, pursuant to this section, which recital shall be conclusive evidence
117.33of their validity, respectively, and the regularity of the proceedings relating thereto.
117.34(k) No member or officer of the authority or any person executing the bonds is liable
117.35personally on the bonds or is subject to any personal liability or accountability by reason
117.36of their issuance, or is liable for any other debt or obligation of the authority.
118.1(l) Information in any register of ownership of bonds or certificates is nonpublic data
118.2under section 13.02, subdivision 9, or private data on individuals under section 13.02,
118.3subdivision 12. The information is open only to the subject of it, except as disclosure:
118.4(1) is necessary for the registrar, the commissioner, or the legislative auditor to
118.5perform a duty;
118.6(2) is requested by an authorized representative of the commissioner of revenue,
118.7the attorney general, or the United States commissioner of internal revenue to determine
118.8the application of a tax; or
118.9(3) is required under section 13.03, subdivision 4.
118.10(m) The bonds of the authority are not subject to chapter 16C.
118.11(n) The commissioner and any other member of the authority charged with the
118.12responsibility of issuing bonds for or on behalf of the authority, may enter into written
118.13agreements or contracts relating to the continuing disclosure of information necessary to
118.14comply with, or facilitate the issuance of bonds in accordance with, federal securities
118.15laws, rules, and regulations, including Securities and Exchange Commission rules and
118.16regulations, in Code of Federal Regulations, title 17, section 240.15c2-12. An agreement
118.17may be in the form of covenants with purchasers and holders of bonds set forth in the order
118.18or resolution authorizing the issuance of the bonds, or a separate document authorized
118.19by the order or resolution.
118.20    Subd. 6. State not liable on bonds or related bond facilities. The state is not
118.21liable on bonds of the authority, and no bond or related bond facility shall constitute an
118.22indebtedness or an obligation of the state or any subdivision thereof, within the meaning
118.23of any constitutional or statutory limitation or provision or a charge against the general
118.24credit or taxing powers, if any, of any of them but shall be payable solely from pledged
118.25tobacco revenues. No owner of any bond or provider of any related bond facility shall
118.26have the right to compel the exercise of the taxing power of the state to pay any principal
118.27installment of, redemption premium, if any, or interest on the bonds or to make any
118.28payment due under any related bond facility. The bonds must contain on their face a
118.29statement to the effect of this subdivision.
118.30    Subd. 7. Agreement with the state. (a) The state pledges and agrees with the
118.31authority, and the owners of the bonds of the authority in which the authority has included
118.32such pledge and agreement, that the state shall: (1) irrevocably direct the transfer of
118.33all pledged tobacco revenues received by the state under and in accordance with the
118.34settlement agreement directly to the authority or its assignee; (2) diligently enforce its
118.35right to collect all moneys due from the participating manufacturers under the settlement
118.36agreement, in each case in the manner and to the extent deemed necessary in the judgment
119.1of and consistent with the discretion of the attorney general of the state, provided,
119.2however, that the sale agreement shall provide (i) that the remedies available to the
119.3authority and the bondholders for any breach of the pledges and agreements of the state
119.4set forth in this clause shall be limited to injunctive relief, and (ii) that the state shall be
119.5deemed to have diligently enforced this subdivision so long as there has been no judicial
119.6determination by a court of competent jurisdiction in this state, in an action commenced
119.7by a participating tobacco manufacturer, that the state has failed to diligently enforce this
119.8subdivision; (3) in any materially adverse way, neither amend the settlement agreement
119.9or take any other action that would (i) impair the authority's right to receive pledged
119.10tobacco revenues, or (ii) limit or alter the rights hereby vested in the authority to fulfill
119.11the terms of its agreements with the bondholders, or (iii) impair the rights and remedies
119.12of the bondholders or the security for such bonds until such bonds, together with the
119.13interest thereon and all costs and expenses in connection with any action or proceedings
119.14by or on behalf of the bondholders, are fully paid and discharged, provided, that nothing
119.15herein shall be construed to preclude the state's regulation of smoking, smoking cessation
119.16activities and laws, and taxation and regulation of the sale of cigarettes or the like or to
119.17restrict the right of the state to amend, modify, repeal, or otherwise alter statutes imposing
119.18or relating to the taxes; and (4) not amend, supersede or repeal the settlement agreement or
119.19this section in any way that would materially adversely affect the amount of any payment
119.20to, or the rights to such payments of, the authority or the bondholders. This pledge and
119.21agreement may be included in the sale agreement and the authority may include this
119.22pledge and agreement in any contract with the bondholders of the authority.
119.23(b) The provisions of this section, the bonds issued pursuant to this section, and
119.24the pledges and agreements by the state and the authority to the bondholders shall not
119.25be interpreted or construed to limit or impair the authority or discretion of the attorney
119.26general to administer and enforce provisions of the settlement agreement or to direct,
119.27control, and settle any litigation or arbitration proceeding arising from or relating to the
119.28settlement agreement.
119.29    Subd. 8. Enforcement of contract. The provisions of this section and of any
119.30resolution or proceeding authorizing the issuance of bonds or a related bond facility shall
119.31constitute a contract with the holders of the bonds or the related bond facility, and the
119.32provisions thereof shall be enforceable either by mandamus or other proceeding in any
119.33Minnesota court of competent jurisdiction in Ramsey County to enforce and compel the
119.34performance of all duties required by this section and by any resolution authorizing the
119.35issuance of bonds a related bond facility adopted in response hereto.
120.1    Subd. 9. Bonds as legal investments. Any of the following entities may legally
120.2invest any sinking funds, money, or other funds belonging to them or under their control
120.3in any bonds issued under this section: (1) the state, the investment board, public
120.4officers, municipal corporations, political subdivisions, and public bodies; (2) banks and
120.5bankers, savings and loan associations, credit unions, trust companies, savings banks and
120.6institutions, investment companies, insurance companies, insurance associations, and other
120.7persons carrying on a banking or insurance business; and (3) personal representatives,
120.8guardians, trustees, and other fiduciaries.
120.9    Subd. 10. Exemption from taxation. It is hereby determined that the creation of
120.10the authority and the carrying out of its corporate purposes are in all respects for the
120.11benefit of the people of the state and are public purposes. Accordingly, the property of the
120.12authority, its income, and its operations shall be exempt from taxation. The authority shall
120.13not be required to pay any fees, taxes, or assessments of any kind, whether state or local,
120.14including, but not limited to, fees, taxes, ad valorem taxes on real property, sales taxes
120.15or other taxes, upon or with respect to any property owned by it or under its jurisdiction,
120.16control or supervision, or upon the uses thereof, or upon or with respect to its activities or
120.17operations in furtherance of the powers conferred upon it by this section.
120.18    Subd. 11. Report; audit. The authority shall report to the legislature and the
120.19governor by the January 15 following the end of each fiscal year. The report must include
120.20a complete operating and financial statement covering the authority's operations during
120.21the fiscal year, including amounts of income from all sources. Books and records of
120.22the authority are subject to audit by the legislative auditor in the manner prescribed for
120.23state agencies.
120.24    Subd. 12. Tobacco settlement recovery account. (a) The authority shall establish
120.25the tobacco settlement recovery account, which shall consist of three subaccounts: (1)
120.26the general tobacco subaccount, (2) the tobacco settlement revenues subaccount, and (3)
120.27the tobacco settlement residual subaccount. The authority shall deposit all moneys paid
120.28pursuant to the settlement agreement, and any other moneys as provided by law into the
120.29several subaccounts of the tobacco settlement recovery account. Money shall be deposited
120.30into the tobacco settlement revenues subaccount and the tobacco settlement residual
120.31subaccount as provided by the terms of this section, including any agreement between
120.32the state and the authority implementing the same. All other moneys available to be
120.33deposited into the tobacco settlement recovery account shall be deposited into the general
120.34tobacco subaccount. An investment made from moneys credited to a specific subaccount
120.35constitutes part of that subaccount and such subaccount shall be credited with all income
120.36from the investment of such moneys. The commissioner may invest the moneys in the
121.1several subaccounts of the tobacco settlement recovery account in the same manner, in
121.2the same types of investments, and subject to the same limitations provided in section
121.311A.24. Notwithstanding the foregoing, to the extent necessary to preserve the tax-exempt
121.4status of any bonds issued pursuant to this section, the interest on which is intended to be
121.5excludable from the gross income of the owners for federal income tax purposes, moneys
121.6on deposit in the tobacco settlement revenues subaccount and the tobacco settlement
121.7residual subaccount may be invested in obligations the interest upon which is tax exempt
121.8under the provisions of Section 103 of the Internal Revenue Code of 1986, as now or
121.9hereafter amended, or any successor code or provision.
121.10(b) Moneys on deposit in the tobacco settlement residual subaccount shall be
121.11transferred to the commissioner for deposit in the general fund.
121.12(c) The amounts deposited into the tobacco settlement bond proceeds fund from the
121.13general tobacco subaccount and interest thereon are appropriated to the commissioner
121.14for payment of working capital, debt service on outstanding obligations of the general
121.15fund, the funding of debt service reserves for the bonds, each as permitted by state and
121.16federal law, nonsalary expenses incurred in conjunction with the sale of the bonds and to
121.17supplement the tobacco settlement residual subaccount to pay for appropriated obligations
121.18of the tobacco settlement recovery account for state fiscal years 2012 and 2013. The
121.19commissioner may transfer the amounts available to reduce debt service on outstanding
121.20obligations of the general fund to the state bond fund under section 16A.641.
121.21    Subd. 13. Supplemental nature of section; construction and purpose. The
121.22powers conferred by this section shall be in addition to and supplemental to the powers
121.23conferred by any other law, general or special, and may be exercised notwithstanding the
121.24provisions of any other such law. Insofar as the provisions of this section are inconsistent
121.25with the provisions of any other law, general or special, the provisions of this section
121.26shall be controlling.
121.27    Subd. 14. Severability. If any provision of this section is held invalid, such
121.28provision shall be deemed to be excised and the invalidity thereof shall not affect any of
121.29the other provisions of this section. If the application of any provision of this section to
121.30any person or circumstance is held invalid, it shall not affect the application of such
121.31provision to such persons or circumstances other than those as to which it is held invalid.
121.32EFFECTIVE DATE.This section is effective the day following final enactment.

121.33    Sec. 4. [16A.96] TOBACCO APPROPRIATION BONDS.
121.34    Subdivision 1. Definitions. (a) The definitions in this subdivision apply to this
121.35section.
122.1(b) "Appropriation bond" means a bond, note, or other similar instrument of the state
122.2payable during a biennium in whole or in part from tobacco settlement revenues and
122.3from one or more of the following sources:
122.4(1) money appropriated by law in any biennium for debt service due with respect
122.5to obligations described in subdivision 2, paragraph (b);
122.6(2) proceeds of the sale of obligations described in subdivision 2, paragraph (b);
122.7(3) payments received for that purpose under agreements and ancillary arrangements
122.8described in subdivision 2, paragraph (d); and
122.9(4) investment earnings on amounts in clauses (1) to (3).
122.10(c) "Consent Judgment" means the Consent Judgment, as the same has been and
122.11may be corrected, amended or modified, in the action styled as The State of Minnesota, By
122.12Hubert Humphrey, III, Its Attorney General, and Blue Cross and Blue Shield of Minnesota
122.13v. Philip Morris Incorporated, et al., No. C1-94-8565 (Minnesota District Court, Second
122.14Judicial District, May 8, 1998).
122.15(d) "Debt service" means the amount payable in any biennium of principal, premium,
122.16if any, and interest on appropriation bonds.
122.17(e) "Settlement agreement" means the settlement agreement and Stipulation
122.18for Entry of Consent Judgment, dated May 8, 1998, between the State of Minnesota,
122.19By Hubert Humphrey, III, Its Attorney General, and Blue Cross and Blue Shield of
122.20Minnesota, on the one hand, and Philip Morris Incorporated, et al., on the other hand,
122.21and the subject of the Consent Judgment.
122.22(f) "Tobacco settlement revenues" means all tobacco settlement payments received
122.23by the state on and after the effective date of this section and required to be made, pursuant
122.24to the terms of the settlement agreement, by participating manufacturers and the state's
122.25rights to receive the tobacco settlement payments on and after the effective date of this
122.26section, exclusive of any payments made with respect to liability to make those payments
122.27for calendar years completed before the effective date of this section.
122.28    Subd. 2. Authority. (a) Subject to the limitations of this subdivision, the
122.29commissioner may sell and issue appropriation bonds of the state under this section for
122.30public purposes as provided by law. Proceeds of the bonds must be credited to a special
122.31appropriation bond proceeds fund in the state treasury. Net income from investment of the
122.32proceeds, as estimated by the commissioner, must be credited to the special appropriation
122.33bond proceeds fund.
122.34(b) Appropriation bonds may be sold and issued in amounts that, in the opinion of
122.35the commissioner, are necessary to provide sufficient funds, not to exceed $640,000,000
122.36and subject to the limitation in section 16A.94, for achieving the purposes authorized as
123.1provided under paragraph (a), and pay debt service, pay costs of issuance, make deposits
123.2to reserve funds, pay the costs of credit enhancement, or make payments under other
123.3agreements entered into under paragraph (d); provided, however, that bonds issued and
123.4unpaid shall not exceed $800,000,000 in principal amount, excluding refunding bonds
123.5sold and issued under subdivision 4.
123.6(c) Appropriation bonds may be issued from time to time in one or more series on
123.7the terms and conditions the commissioner determines to be in the best interests of the
123.8state, but the term on any series of bonds may not exceed 30 years. The bonds of each
123.9issue shall be dated and bear interest, and may be includable in or excludable from the
123.10gross income of the owners for federal income tax purposes.
123.11(d) At the time of, or in anticipation of, issuing the appropriation bonds, and at any
123.12time thereafter, so long as the appropriation bonds are outstanding, the commissioner
123.13may enter into agreements and ancillary arrangements relating to the appropriation
123.14bonds, including but not limited to trust indentures, liquidity facilities, remarketing or
123.15dealer agreements, letter of credit agreements, insurance policies, guaranty agreements,
123.16reimbursement agreements, indexing agreements, or interest exchange agreements. Any
123.17payments made or received according to the agreement or ancillary arrangement shall be
123.18made from or deposited as provided in the agreement or ancillary arrangement. The
123.19determination of the commissioner included in an interest exchange agreement that the
123.20agreement relates to an appropriation bond shall be conclusive.
123.21(e) The commissioner may enter into written agreements or contracts relating to the
123.22continuing disclosure of information necessary to comply with, or facilitate the issuance
123.23of appropriation bonds in accordance with federal securities laws, rules, and regulations,
123.24including Securities and Exchange Commission rules and regulations in Code of Federal
123.25Regulations, title 17, section 240.15c2-12. An agreement may be in the form of covenants
123.26with purchasers and holders of appropriation bonds set forth in the order or resolution
123.27authorizing the issuance of the appropriation bonds, or a separate document authorized
123.28by the order or resolution.
123.29(f) The appropriation bonds are not subject to chapter 16C.
123.30    Subd. 3. Form; procedure. (a) Appropriation bonds may be issued in the form
123.31of bonds, notes, or other similar instruments, and in the manner provided in section
123.3216A.672. In the event that any provision of section 16A.672 conflicts with this section,
123.33this section shall control.
123.34(b) Every appropriation bond shall include a conspicuous statement of the limitation
123.35established in subdivision 6.
124.1(c) Appropriation bonds may be sold at either public or private sale upon such terms
124.2as the commissioner shall determine are not inconsistent with this section and may be sold
124.3at any price or percentage of par value. Any bid received may be rejected.
124.4(d) Appropriation bonds may bear interest at a fixed or variable rate.
124.5(e) Notwithstanding any other law, appropriation bonds issued pursuant to this
124.6section shall be fully negotiable.
124.7    Subd. 4. Refunding bonds. The commissioner from time to time may issue
124.8appropriation bonds for the purpose of refunding any appropriation bonds or tobacco
124.9securitization bonds authorized under section 16A.95 then outstanding, including the
124.10payment of any redemption premiums on the bonds, any interest accrued or to accrue to
124.11the redemption date, and costs related to the issuance and sale of the refunding bonds. The
124.12proceeds of any refunding bonds may, in the discretion of the commissioner, be applied
124.13to the purchase or payment at maturity of the appropriation bonds to be refunded, to the
124.14redemption of the outstanding bonds on any redemption date, or to pay interest on the
124.15refunding bonds and may, pending application, be placed in escrow to be applied to the
124.16purchase, payment, retirement, or redemption. Any escrowed proceeds, pending such
124.17use, may be invested and reinvested in obligations that are authorized investments under
124.18section 11A.24. The income earned or realized on the investment may also be applied
124.19to the payment of the bonds to be refunded or interest or premiums on the refunded
124.20bonds, or to pay interest on the refunding bonds. After the terms of the escrow have
124.21been fully satisfied, any balance of the proceeds and any investment income may be
124.22returned to the general fund or, if applicable, the appropriation bond proceeds account
124.23for use in any lawful manner. All refunding bonds issued under this subdivision must
124.24be prepared, executed, delivered, and secured by appropriations in the same manner as
124.25the bonds to be refunded.
124.26    Subd. 5. Appropriation bonds as legal investments. Any of the following entities
124.27may legally invest any sinking funds, money, or other funds belonging to them or under
124.28their control in any appropriation bonds issued under this section:
124.29(1) the state, the investment board, public officers, municipal corporations, political
124.30subdivisions, and public bodies;
124.31(2) banks and bankers, savings and loan associations, credit unions, trust companies,
124.32savings banks and institutions, investment companies, insurance companies, insurance
124.33associations, and other persons carrying on a banking or insurance business; and
124.34(3) personal representatives, guardians, trustees, and other fiduciaries.
124.35    Subd. 6. No full faith and credit; state not required to make appropriations.
124.36The appropriation bonds are not public debt of the state, and the full faith, credit, and
125.1taxing powers of the state are not pledged to the payment of the appropriation bonds or to
125.2any payment that the state agrees to make under this section. Appropriation bonds shall
125.3not be obligations paid directly, in whole or in part, from a tax of statewide application
125.4on any class of property, income, transaction, or privilege. Appropriation bonds shall be
125.5payable in each fiscal year only from amounts that the legislature may appropriate for
125.6debt service for any fiscal year, provided that nothing in this section shall be construed
125.7to require the state to appropriate funds sufficient to make debt service payments with
125.8respect to the bonds in any fiscal year. Appropriation bonds shall be canceled and shall
125.9no longer be outstanding on the earlier of (1) the first day of a fiscal year for which the
125.10legislature shall not have appropriated amounts sufficient for debt service, or (2) the date
125.11of final payment of the principal of and interest on the appropriation bonds.
125.12    Subd. 7. Appropriation of proceeds. The proceeds of appropriation bonds and
125.13interest credited to the special appropriation bond proceeds fund are appropriated to
125.14the commissioner for payment of working capital, capital expenses, debt service on
125.15outstanding indebtedness of the state and the funding of debt service reserves for the
125.16appropriation bonds, each as permitted by state and federal law, and nonsalary expenses
125.17incurred in conjunction with the sale of the appropriation bonds.
125.18    Subd. 8. Appropriation for debt service. The amount needed to pay principal and
125.19interest on appropriation bonds issued under this section is appropriated each year to the
125.20commissioner from the general fund subject to the repeal, unallotment under section
125.2116A.152, or cancellation otherwise pursuant to subdivision 6.
125.22    Subd. 9. Validation. (a) Appropriation bonds issued pursuant to this section may be
125.23validated in the manner provided by this subdivision. Nothing in this subdivision shall be
125.24construed to prevent sale or delivery of any appropriation bonds or notes after entry of a
125.25judgment of validation by the Minnesota Supreme Court.
125.26(b) Any appropriation bonds issued pursuant to this section that are validated shall
125.27be validated in the manner provided by this subdivision.
125.28(c) The Minnesota Supreme Court shall have original jurisdiction to determine the
125.29validation of appropriation bonds and all matters connected therewith.
125.30(d) The commissioner may determine the commissioner's authority to issue
125.31appropriation bonds and the legality of all proceedings in connection therewith. For this
125.32purpose a complaint shall be filed by the commissioner in the Minnesota Supreme Court
125.33against the state and the taxpayers and citizens thereof.
125.34(e) As a condition precedent to filing of a complaint for the validation of
125.35appropriation bonds, the commissioner shall take action providing for the issuance of such
125.36appropriation bonds in accordance with law.
126.1(f) The complaint shall set out the state's authority to issue appropriation bonds, the
126.2action or proceeding authorizing the issue and its adoption, all other essential proceedings
126.3had or taken in connection therewith, the amount of the bonds to be issued and the
126.4maximum interest they are to bear, and all other pertinent matters.
126.5(g) The Minnesota Supreme Court shall issue an order directed against the state
126.6and taxpayers, citizens and others having or claiming any right, title, or interest affected
126.7by the issuance of appropriation bonds, or to be affected thereby, allowing all persons,
126.8in general terms and without naming them, and the state through its attorney general to
126.9appear before the Minnesota Supreme Court at a designated time and place and show why
126.10the complaint should not be granted and the proceedings and bonds validated. A copy of
126.11the complaint and order shall be served on the attorney general at least 20 days before the
126.12time fixed for hearing. The attorney general shall examine the complaint, and, if it appears
126.13or there is reason to believe that it is defective, insufficient, or untrue, or if in the opinion
126.14of the attorney general the issuance of the bonds in question has not been duly authorized,
126.15defense shall be made by the attorney general as the attorney general deems appropriate.
126.16(h) Before the date set for hearing, as directed by the Minnesota Supreme Court,
126.17either the clerk of the Minnesota Appellate Courts or the commissioner shall publish a
126.18copy of the order in a legal newspaper of general circulation in Ramsey County and the
126.19state, at least once each week for two consecutive weeks, commencing with the first
126.20publication, which shall not be less than 20 days before the date set for hearing. By this
126.21publication, all taxpayers, citizens, and others having or claiming any right, title or interest
126.22in the state, are made parties defendant to the action and the Minnesota Supreme Court has
126.23jurisdiction of them to the same extent as if named as defendants in the complaint and
126.24personally served with process.
126.25(i) Any taxpayer, citizen, or person interested may become a party to the action by
126.26moving against or pleading to the complaint at or before the time set for hearing. The
126.27Minnesota Supreme Court shall determine all questions of law and fact and make such
126.28orders as will enable it to properly try and determine the action and render a final judgment
126.29within 30 days of the hearing with the least possible delay.
126.30(j) If the judgment validates such appropriation bonds, such judgment is forever
126.31conclusive as to all matters adjudicated and as against all parties affected and all others
126.32having or claiming any right, title, or interest affected by the issuance of said bonds,
126.33or to be affected in any way thereby, and the validity of said bonds or of any revenues
126.34pledged for the payment thereof, or of the proceedings authorizing the issuance thereof,
126.35including any remedies provided for their collection, shall never be called in question in
126.36any court by any person or party.
127.1(k)(1) Bonds, when validated under this section, shall have stamped or written
127.2thereon, by the proper officers of the state issuing them, a statement in substantially the
127.3following form: "This bond is one of a series of bonds which were validated by judgment
127.4of the Supreme Court of the State of Minnesota, rendered on ....., (year) ......"
127.5(2) A certified copy of the judgment or decree shall be received as evidence in any
127.6court in this state.
127.7(l) The costs shall be paid by the state, except when a taxpayer, citizen, or other
127.8person contests the action or intervenes, the court may tax the whole or any part of the
127.9costs against the person is equitable.
127.10(m) A justice of the Minnesota Supreme Court is not disqualified in any validation
127.11action because the justice is a landowner or taxpayer of the state.
127.12EFFECTIVE DATE.This section is effective the day following final enactment.