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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

 

                         Laws of Minnesota 1985 

                         CHAPTER 14-H.F.No. 10 
           An act relating to financing and operation of state 
          and local government; simplifying Minnesota income tax 
          law by increasing conformity to federal income tax law;
          changing income tax rates, rate brackets, credits, and 
          deductions; providing for computation of interest on 
          overpayments; reducing the estate tax; changing 
          corporate income tax provisions; rescheduling payments 
          and increasing the budget reserve; reducing sales tax 
          rate on farm machinery and providing sales tax 
          exemptions; changing taxation of agricultural 
          gasoline; changing the tax credit on fermented malt 
          beverages; changing motor vehicle excise taxes for 
          certain automobiles; authorizing lodging taxes for 
          towns and unorganized territories; recodifying 
          property tax law; changing property tax exemptions, 
          classes, classification ratios, and credits; changing 
          the taxation of telephone companies; providing for the 
          allocation of industrial revenue bonds; providing 
          economic development incentives; establishing a jobs 
          program; providing for retention of mortgage 
          registration and deed taxes by counties; altering 
          provisions relating to the iron range resources and 
          rehabilitation board; changing mining taxes; 
          authorizing reimbursement to local units of government 
          for certain railroad property tax abatements; giving 
          enforcement powers to the department of revenue; 
          changing provisions relating to leased state lands; 
          increasing cigarette taxes and allocating the 
          proceeds; providing for studies; imposing duties on 
          the commissioner of revenue, commissioner of natural 
          resources, and the state auditor; changing property 
          tax provisions relating to collection of property tax, 
          confessions of judgment, special assessments, and sale 
          of tax forfeit lands; changing property tax refund 
          benefit schedules and definitions; changing local 
          government aids; authorizing the issuance of bonds; 
          changing computation of adjusted levy limit base; 
          changing tax court jurisdiction; changing certain 
          dates; changing and adding definitions; changing 
          provisions relating to the Hennepin county park 
          reserve district; updating income tax provisions to 
          changes in the Internal Revenue Code; providing 
          penalties; appropriating money; amending Minnesota 
          Statutes 1984, sections 10A.31, subdivisions 1 and 3; 
          13.04, subdivision 2; 13.58; 15A.081, subdivisions 1 
          and 8; 16A.128, subdivision 2; 16A.15, subdivisions 1 
          and 6; 16A.641, subdivision 11; 16B.60, subdivision 5; 
          18.023, subdivision 7; 37.17, subdivision 1; 41.55; 
          47.58, subdivisions 2 and 3; 60A.15, subdivision 12; 
          60A.199, subdivision 8; 84B.08, subdivision 6; 85A.05, 
          subdivision 5; 86.33; 92.46, subdivision 1; 93.55, 
          subdivision 2; 97.488, subdivision 1a; 110A.28, 
          subdivisions 11 and 12; 115A.58, subdivision 6; 
          116.16, subdivisions 1 and 2; 116.17, subdivision 6; 
          116.18, subdivisions 1, 2a, and 3a; 116C.63, 
          subdivision 4; 116J.035, by adding a subdivision; 
          116J.64, subdivision 6; 116L.03, subdivision 7; 
          116L.04, by adding a subdivision; 116M.03, by adding a 
          subdivision; 116M.06, subdivisions 2 and 3; 116M.07, 
          subdivision 11, and by adding subdivisions; 116M.08, 
          subdivision 11; 117.55; 121.904, subdivision 4c, and 
          by adding a subdivision; 124.155, subdivision 2; 
          124.2131, subdivision 3; 124.2137, subdivision 1; 
          124.2138, subdivision 4; 124.2139; 124.46, subdivision 
          3; 124A.02, subdivisions 11 and 12; 129A.02, 
          subdivision 2; 136.40, subdivision 7; 136.63, by 
          adding a subdivision; 136C.06; 136C.43, subdivision 6; 
          145.882; 145.883, subdivision 8, and by adding a 
          subdivision; 145.884, subdivision 1; 145.885; 145.886; 
          167.52; 168.012, subdivision 9; 174.51, subdivision 6; 
          178.03, by adding a subdivision; 245.87; 248.07; 
          248.08; 256.01, subdivision 4; 256.736, subdivisions 
          1, 3, 4, 5, 7, and by adding subdivisions; 256.737; 
          256C.24; 256C.25, subdivision 1; 256C.26; 256D.02, 
          subdivision 13; 256D.03, subdivision 2; 256D.09, 
          subdivision 3; 268.31; 268.32; 268.33; 268.34; 268.36; 
          268.672, subdivisions 6 and 12; 268.673, subdivisions 
          3, 4, 5, and 6; 268.676; 268.677; 268.678, 
          subdivisions 1, 3, 4, 5, and 6; 268.679; 268.681; 
          268.682; 270.68, subdivision 4; 270A.07, subdivision 5;
          271.01, subdivision 5; 271.12; 272.02, subdivision 1, 
          as amended, and by adding a subdivision; 272.03, 
          subdivision 1; 272.039; 272.04, subdivision 1; 
          272.115, subdivision 4; 273.11, subdivision 8; 
          273.1104, subdivision 1; 273.1105, subdivision 2; 
          273.111, subdivision 11; 273.115, subdivision 7; 
          273.116, subdivision 7; 273.118; 273.121; 273.123, 
          subdivisions 1 and 4; 273.13, subdivisions 4, as 
          amended, 6, 7, 7a, 8a, 9, 14a, 15a, 17b, 19, and by 
          adding subdivisions; 273.1311; 273.1313, subdivisions 
          1, 2, 3, and by adding a subdivision; 273.1314, 
          subdivisions 8 and 16a; 273.1315; 273.133, by adding a 
          subdivision; 273.135; subdivisions 1 and 2; 273.136, 
          subdivisions 1, 2, 3, and 4; 273.1391, subdivisions 1 
          and 2; 273.1392; 273.1393, as added; 273.38; 273.42, 
          subdivision 2; 273.74, subdivision 2, and by adding a 
          subdivision; 273.75, subdivision 4; 274.19, 
          subdivisions 1, 2, 3, 4, 6, 7, and by adding a 
          subdivision; 275.50, subdivision 5; 275.51, 
          subdivision 3h; 276.04; 277.03; 277.10; 278.01, 
          subdivisions 1 and 2; 278.05, subdivision 5; 279.01, 
          subdivision 1, as amended; 279.06; 279.37, 
          subdivisions 1, 3, 4, 8, and by adding a subdivision; 
          281.17; 281.23, subdivision 1; 281.29; 282.01, 
          subdivision 7a; 282.021; 282.261, by adding a 
          subdivision; 287.05, subdivision 1; 287.08; 287.09; 
          287.12; 287.21, subdivision 2; 287.23; 287.25; 287.27; 
          287.28; 287.29, subdivision 1; 287.33; 287.35; 290.01, 
          subdivisions 19, 20, as amended, 20a, 20b, 20d, 20e, 
          20f, and 21; 290.032, subdivisions 1 and 2; 290.05, 
          subdivision 3; 290.06, subdivisions 2c, 2d, 2f, 3f, 
          3g, and 11; 290.067, subdivision 1; 290.068, 
          subdivisions 1, 2, 3, 4, and 5; 290.069, subdivisions 
          2, 2a, 4a, 4b, 5, 6, and 7; 290.07, subdivisions 5 and 
          7; 290.071, subdivision 5; 290.079, subdivision 1; 
          290.08, subdivision 26; 290.088; 290.089, subdivisions 
          2, 3, and 7; 290.09, subdivisions 1, 2, 7, and 19; 
          290.091; 290.095, subdivisions 7, 9, and 11; 290.10; 
          290.12, subdivision 2; 290.13, subdivision 1; 290.131, 
          subdivision 1; 290.132, subdivision 1; 290.133, 
          subdivision 1; 290.135, subdivision 1; 290.136, 
          subdivision 1; 290.14; 290.16, subdivisions 3, 7, 9, 
          13, 15, 16, and by adding a subdivision; 290.17, 
          subdivision 2; 290.18, subdivision 2; 290.19, 
          subdivision 1; 290.21, subdivisions 4 and 8; 290.23, 
          subdivision 5; 290.26, subdivision 2; 290.31, 
          subdivisions 2, 4, and 5; 290.37, subdivision 1; 
          290.38; 290.41, subdivisions 1, 2, and by adding a 
          subdivision; 290.50, subdivisions 1, 5, and 6; 290.53, 
          subdivisions 9 and 11; 290.65, subdivision 16; 290.92, 
          subdivisions 2a, 11, 13, 15, 18, 19, as amended, and 
          21; 290.93, subdivisions 1, 3, 5, 6, 7, 9, and 10; 
          290.931, subdivision 1; 290.936; 290A.03, subdivisions 
          3, as amended, 6, 12, 13, and 14; 290A.04, 
          subdivisions 1, 2, and 3; 290A.06; 290A.07, 
          subdivisions 2a and 3; 290A.19, as amended; 291.005, 
          subdivision 1; 291.03, subdivision 1; 291.075; 291.09, 
          subdivisions 1a, 2a, and 3a; 291.11, subdivision 1; 
          291.15, subdivisions 1 and 3; 291.215, subdivision 1; 
          291.32; 294.09, subdivision 1; 295.01, subdivision 10; 
          295.34, subdivision 1; 296.01, subdivision 24; 296.02, 
          subdivisions 7 and 8; 296.18, subdivision 1, as 
          amended; 296.22, subdivision 13; 297.02, subdivision 1;
          297.03, subdivisions 5 and 6; 297.13, subdivision 1; 
          297.22, subdivision 1; 297.32, subdivisions 1, 2, and 
          by adding a subdivision; 297.35, subdivision 1; 
          297A.01, subdivisions 14 and 15; 297A.02, subdivision 
          2; 297A.14; 297A.15, subdivision 5; 297A.25, 
          subdivision 1; 297A.35, subdivision 1; 297A.39, 
          subdivision 8; 297B.02; 297B.03; 297C.02, as added; 
          298.01, subdivision 1, as amended; 298.03; 298.031, 
          subdivisions 2 and 3; 298.09, subdivision 4; 298.223; 
          298.225, as amended; 298.24, subdivision 4; 298.27; 
          298.28, subdivisions 1, as amended, and 2; 298.282, 
          subdivisions 1, 4, and 5; 298.292; 298.293; 299.01, 
          subdivision 1, as amended; 299.05; 299F.26, 
          subdivision 1; 325D.41; 360.301, subdivision 1; 
          462.445, subdivision 13; 462A.22, subdivision 1, as 
          amended; 462C.02, by adding subdivisions; 462C.03, 
          subdivision 1, and by adding a subdivision; 462C.04, 
          subdivision 2; 462C.09, subdivisions 2a, 3, and by 
          adding a subdivision; 473.556, subdivision 4; 473F.02, 
          subdivisions 3 and 4; 474.16, subdivision 3, and by 
          adding subdivisions; 474.17; 474.19; 474.20; 474.22; 
          474.23; 475.52, subdivision 6; 475.54, subdivision 1, 
          and by adding a subdivision; 475.56; 475.58, 
          subdivision 1; 475.60, subdivision 2; 475.67, 
          subdivision 8, and by adding a subdivision; 475.754; 
          475A.06, subdivision 6; 477A.011, subdivisions 3, 10, 
          and by adding subdivisions; 477A.012; 477A.013; 
          477A.018; 514.03, subdivision 3; 524.3-1202; and 
          583.02; Laws 1967, chapter 721, section 2, as amended; 
          Laws 1979, chapter 288, section 2, subdivisions 2, 3, 
          and 4, and section 3; Laws 1981, chapter 223, section 
          4, subdivisions 2 and 3; Laws 1982, chapter 523, 
          article XXX, section 4, subdivision 1, as amended; 
          Laws 1984, chapter 502, article 5, section 19, 
          subdivision 1, and article 11, section 6; Laws 1985, 
          chapter 83, section 7; proposing coding for new law in 
          Minnesota Statutes, chapters 16A; 116; 124; 144; 145; 
          248; 256C; 256D; 268; 270; 272; 273; 290; 297A; 297B; 
          298; 325E; 462C; and 474; proposing coding for new law 
          as Minnesota Statutes, section 267; repealing 
          Minnesota Statutes 1984, sections 41.58, subdivision 3;
          41.59, subdivisions 2 and 3; 55.10, subdivision 2; 
          62E.03, subdivision 2; 116.18, subdivision 2; 129A.02, 
          subdivision 4; 145.884, subdivision 2; 245.84, 
          subdivision 2; 256.736, subdivisions 1 and 2; 256D.02, 
          subdivision 8a; 256D.111, subdivision 1a; 256D.112; 
          268.011; 268.012; 268.013; 268.12, subdivisions 1 and 
          1a; 268.671; 268.672, subdivisions 2, 8, 10, and 11; 
          268.673, subdivisions 1 and 2; 268.674; 268.675; 
          268.676, subdivision 3; 268.678, subdivisions 2, 7, 
          and 8; 268.679, subdivisions 1 and 2; 268.68; 268.683; 
          268.684; 268.685; 268.686; 268.80; 268.81; 268.82; 
          268.83; 268.84; 270.75, subdivision 7; 273.1105; 
          273.13, subdivisions 2, 2a, 3, 4, 5a, 6, 6a, 7, 7b, 
          7c, 7d, 8a, 9, 10, 11, 12, 14a, 16, 17, 17a, 17b, 17c, 
          17d, 19, 20, and 21; 273.133; 273.15; 287.27; 287.29, 
          subdivision 3; 287.32; 290.01, subdivisions 20c and 26;
          290.012; 290.06, subdivisions 3d, as amended, 3e, 14, 
          16, 17, 18, and 19; 290.069, subdivision 4; 290.077, 
          subdivision 4; 290.08, subdivisions 23 and 24; 
          290.089, subdivisions 4 and 6; 290.09, subdivision 29; 
          290.101, as amended; 290.18, subdivision 4; 290.39, 
          subdivision 2; 290.41, subdivision 5; 290A.04, 
          subdivisions 2a and 2b; 291.015; 291.03, subdivisions 
          3, 4, 5, 6, and 7; 291.05; 291.051; 291.06; 291.065; 
          291.07; 291.08; 291.09, subdivision 5; 291.111; 
          291.131, subdivisions 5 and 6; 291.132; 291.15, 
          subdivision 2; 291.18; 291.20; 291.29, subdivision 5; 
          295.34; 297.02, subdivision 2; 385.36; 462C.09, 
          subdivision 2; 474.16, subdivision 4; 474.18; 474.24; 
          and 477A.0131; Laws 1982, chapter 523, article VII, 
          section 3; and Laws 1984, chapter 502, article 2, 
          section 4, and chapter 582, section 23. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                               ARTICLE 1 

                               INCOME TAX 
    Section 1.  Minnesota Statutes 1984, section 10A.31, 
subdivision 1, is amended to read: 
    Subdivision 1.  Every individual resident of Minnesota who 
files an income tax return or a renter and homeowner property 
tax refund return with the commissioner of revenue may designate 
on their original return that $2 shall be paid from the general 
fund of the state into the state elections campaign fund.  If a 
husband and wife file a joint return, each spouse may designate 
that $2 shall be paid.  An individual who is 18 years of age or 
older, who is a resident of Minnesota, and who is a dependent of 
another individual who files a tax return or a renter and 
homeowner property tax refund return, may designate that $2 
shall be paid from the general fund of the state into the state 
elections campaign fund.  No individual shall be allowed to 
designate $2 more than once in any year. 
    Sec. 2.  Minnesota Statutes 1984, section 10A.31, 
subdivision 3, is amended to read: 
    Subd. 3.  The commissioner of the department of revenue 
shall provide on the first page of the income tax form and the 
renter and homeowner property tax refund return a space for the 
filing individual and any adult dependent of that individual to 
indicate whether or not he wishes to allocate $2 ($4 if filing a 
joint return) from the general fund of the state to finance the 
election campaigns of state candidates.  The form shall also 
contain language prepared by the commissioner which permits the 
individual to direct the state to allocate the $2 (or $4 if 
filing a joint return) to:  (i) one of the major political 
parties; (ii) any minor political party as defined in section 
10A.01, subdivision 13, which qualifies under the provisions of 
subdivision 3a; or (iii) all qualifying candidates as provided 
by subdivision 7.  The dependent on the tax return or the renter 
and homeowner property tax refund return shall sign a statement 
which authorizes the designation of $2.  The renter and 
homeowner property tax refund return shall include instructions 
that the individual filing the return may designate $2 on the 
return only if he has not designated $2 on the income tax return.
    Sec. 3.  Minnesota Statutes 1984, section 13.04, 
subdivision 2, is amended to read:  
    Subd. 2.  [INFORMATION REQUIRED TO BE GIVEN INDIVIDUAL.] An 
individual asked to supply private or confidential data 
concerning himself shall be informed of:  (a) the purpose and 
intended use of the requested data within the collecting state 
agency, political subdivision, or statewide system; (b) whether 
he may refuse or is legally required to supply the requested 
data; (c) any known consequence arising from his supplying or 
refusing to supply private or confidential data; and (d) the 
identity of other persons or entities authorized by state or 
federal law to receive the data.  This requirement shall not 
apply when an individual is asked to supply investigative data, 
pursuant to section 13.82, subdivision 5, to a law enforcement 
officer. 
    The commissioner of revenue may place the notice required 
under this subdivision in the individual income tax or property 
tax refund instructions instead of on those forms. 
    Sec. 4.  Minnesota Statutes 1984, section 41.55, is amended 
to read:  
    41.55 [ELIGIBILITY.] 
    A family farm security loan approval may be granted if the 
following criteria are satisfied: 
    (a) That the applicant is a resident of the state of 
Minnesota; 
    (b) That the applicant has sufficient education, training, 
or experience in the type of farming for which he wishes the 
loan and continued participation in a farm management program, 
approved by the commissioner, for at least the first ten years 
of the family farm security loan; 
    (c) That the applicant, his dependents and spouse have 
total net worth valued at less than $75,000 and has demonstrated 
a need for the loan; 
    (d) That the applicant intends to purchase farm land to be 
used by the applicant for agricultural purposes; 
    (e) That the applicant is credit worthy according to 
standards prescribed by the commissioner; 
    (f) That the seller has not acquired the farm land for 
purposes of obtaining the income tax exemption allowed by 
sections 41.58 and Laws 1976, chapter 210, section 12.  
    Sec. 5.  Minnesota Statutes 1984, section 117.55, is 
amended to read: 
    117.55 [PAYMENTS NOT CONSIDERED INCOME FOR TAX OR PUBLIC 
ASSISTANCE PURPOSES.] 
    No payments received under sections 117.50 to 117.56 shall 
be considered as income for the purposes of chapter 290, or for 
purposes of determining the eligibility or the extent of 
eligibility of any person for public assistance based on need 
under the laws of the state of Minnesota.  
    Sec. 6.  Minnesota Statutes 1984, section 270.68, 
subdivision 4, is amended to read:  
    Subd. 4.  [CONFESSION OF JUDGMENT.] (a) The commissioner 
may, within 3-1/2 years after any return or report is filed, 
notwithstanding section 541.09, enter judgment on any confession 
of judgment contained in the return or report after ten days 
notice served upon the taxpayer by mail at the address shown in 
his return or report.  The judgment shall be entered by the 
clerk of court of any county upon the filing of a photocopy or 
similar reproduction of that part of the return or report 
containing the confession of judgment along with a statement of 
the commissioner or his agent that the tax has not been 
paid.  The commissioner may prescribe the words for the 
confession of judgment statement contained on the return or 
report.  
    (b) Notwithstanding any other provision of the law to the 
contrary, the commissioner may, within five years after a 
written agreement is signed by the taxpayer and the commissioner 
under the provisions of section 270.67, subdivision 2, enter 
judgment on the confession of judgment contained within the 
agreement after ten days notice served upon the taxpayer at the 
address shown in the agreement.  Such judgment shall be entered 
by the clerk of court of any county upon the filing of the 
agreement or a certified copy thereof along with a statement of 
the commissioner or his agent that the tax has not been paid.  
     Sec. 7.  Minnesota Statutes 1984, section 290.01, 
subdivision 19, is amended to read: 
    Subd. 19.  [NET INCOME.] The term "net income" means the 
gross income, as defined in subdivision 20, less the following 
deductions to the extent allowed by section 290.18, subdivision 
1:  
    (a) For corporations, the deductions allowed by section 
290.09; 
    (b) For individuals, the deductions allowed in section 
290.088, without regard to sections 290.18, subdivision 1, if 
the taxpayer elects to compute the taxes under section 290.06, 
subdivision 2c, paragraph (a) or (c); 290.089,; and 290.09; and 
    (c) For estates and trusts, the deduction allowed by 
section 290.088, without regard to section 290.18, subdivision 1 
if the taxpayer elects to compute the taxes under section 
290.06, subdivision 2c, paragraph (c). 
    Sec. 8.  Minnesota Statutes 1984, section 290.01, 
subdivision 20, as amended by Laws 1985, chapter 2, section 1, 
is amended to read: 
    Subd. 20.  [GROSS INCOME.] Except as otherwise provided in 
this chapter, the term "gross income," as applied to 
corporations includes every kind of compensation for labor or 
personal services of every kind from any private or public 
employment, office, position or services; income derived from 
the ownership or use of property; gains or profits derived from 
every kind of disposition of, or every kind of dealing in, 
property; income derived from the transaction of any trade or 
business; and income derived from any source.  
    The term "gross income" in its application to individuals, 
estates, and trusts shall mean the adjusted gross income as 
defined in the Internal Revenue Code of 1954, as amended through 
the date specified herein for the applicable taxable year, with 
the modifications specified in this subdivision and in 
subdivisions 20a to 20f.  For estates and trusts the adjusted 
gross income shall be their federal taxable income as defined in 
the Internal Revenue Code of 1954, as amended through the date 
specified herein for the applicable taxable year, with the 
modifications specified in this subdivision and in subdivisions 
20a to 20f. 
    (i) The Internal Revenue Code of 1954, as amended through 
December 31, 1976, including the amendments made to section 280A 
(relating to licensed day care centers) in H.R. 3477 as it 
passed the Congress on May 16, 1977, shall be in effect for the 
taxable years beginning after December 31, 1976.  The provisions 
of the Tax Reform Act of 1976, P.L. 94-455, which affect 
adjusted gross income shall become effective for purposes of 
this chapter at the same time they become effective for federal 
income tax purposes.  
    The provisions of section 4 of P.L. 95-458, sections 131, 
133, 134, 141, 152, 156, 157, 405, and 543 of P.L. 95-600, and 
section 2 of P.L. 96-608 (relating to pensions, individual 
retirement accounts, deferred compensation plans, the sale of a 
residence and to conservation payments to farmers) including the 
amendments made to these sections in P.L. 96-222 shall be 
effective at the same time that these provisions became 
effective for federal income tax purposes. 
    (ii) The Internal Revenue Code of 1954, as amended through 
December 31, 1979, shall be in effect for taxable years 
beginning after December 31, 1979. 
    (iii) The Internal Revenue Code of 1954, as amended through 
December 31, 1980, and as amended by sections 302(b) and 501 to 
509 of Public Law Number 97-34, shall be in effect for taxable 
years beginning after December 31, 1980 including the provisions 
of section 404 (relating to partial exclusions of dividends and 
interest received by individuals) of the Crude Oil Windfall 
Profit Tax Act of 1980, P.L. 96-223.  The provisions of P.L. 
96-471 (relating to installment sales) sections 122, 123, 126, 
201, 202, 203, 204, 211, 213, 214, 251, 261, 264, 265, 
311(g)(3), 313, 314(a)(1), 321(a), 501 to 507, 811, and 812 of 
the Economic Recovery Tax Act of 1981, Public Law Number 97-34 
and section 113 of Public Law Number 97-119 shall be effective 
at the same time that they become effective for federal income 
tax purposes. 
    (iv) (ii) The Internal Revenue Code of 1954, as amended 
through December 31, 1981, shall be in effect for taxable years 
beginning after December 31, 1981.  The provisions of sections 
205(a), 214 to 222, 231, 232, 236, 247, 251, 252, 253, 265, 266, 
285, 288, and 335 of the Tax Equity and Fiscal Responsibility 
Act of 1982, Public Law Number 97-248, section 6(b)(2) and (3) 
of the Subchapter S Revision Act of 1982, Public Law Number 
97-354, section 517 of Public Law Number 97-424, sections 101(c) 
and (d), 102(a), (aa), (f)(4), (g), (j), (l), 103(c), 104(b)(3), 
105, 305(d), 306(a)(9) of Public Law Number 97-448, and sections 
101 and 102 of Public Law Number 97-473 shall be effective at 
the same time that they become effective for federal income tax 
purposes.  The Payment-in-Kind Tax Treatment Act of 1983, Public 
Law Number 98-4, shall be effective at the same time that it 
becomes effective for federal income tax purposes. 
    (v) (iii) The Internal Revenue Code of 1954, as amended 
through January 15, 1983, shall be in effect for taxable years 
beginning after December 31, 1982. 
    (vi) (iv) The Internal Revenue Code of 1954, as amended 
through December 31, 1983, shall be in effect for taxable years 
beginning after December 31, 1983.  
    The provisions of section 611(a) of the Deficit Reduction 
Act of 1984, Public Law Number 98-369, shall be effective at the 
same time that they become effective for federal income tax 
purposes. 
    (v) The Internal Revenue Code of 1954, as amended through 
May 25, 1985, shall be in effect for taxable years beginning 
after December 31, 1984.  
    References to the Internal Revenue Code of 1954 in 
subdivisions 20a, 20b, 20c, 20e, and 20f shall mean the code in 
effect for the purpose of defining gross income for the 
applicable taxable year.  
    Sec. 9.  Minnesota Statutes 1984, section 290.01, 
subdivision 20a, is amended to read:  
    Subd. 20a.  [MODIFICATIONS INCREASING FEDERAL ADJUSTED 
GROSS INCOME.] There shall be added to federal adjusted gross 
income: 
    (1) Interest income on obligations of any state other than 
Minnesota or a political subdivision of any other state exempt 
from federal income taxes under the Internal Revenue Code of 
1954; 
    (2) Income taxes imposed by this state or any other taxing 
jurisdiction, to the extent deductible in determining federal 
adjusted gross income and not credited against federal income 
tax; 
    (3) The amount of any increase in the taxpayer's federal 
tax liability under section 47 of the Internal Revenue Code of 
1954 to the extent of the credit under section 38 of the 
Internal Revenue Code of 1954 that was previously allowed as a 
deduction under Minnesota Statutes 1982, section 290.01, 
subdivision 20b, clause (7); 
    (4) Expenses and losses arising from a farm which are not 
allowable under section 290.09, subdivision 29; 
    (5) Expenses and depreciation attributable to substandard 
buildings disallowed by section 290.101; 
    (6) The amount by which the gain determined pursuant to 
section 41.59, subdivision 2 exceeds the amount of such gain 
included in federal adjusted gross income; 
    (7) To the extent deducted in computing the taxpayer's 
federal adjusted gross income for the taxable year, losses 
recognized upon a transfer of property to the spouse or former 
spouse of the taxpayer in exchange for the release of the 
spouse's marital rights;  
    (8) Interest income from qualified scholarship funding 
bonds as defined in section 103(e) of the Internal Revenue Code 
of 1954, if the nonprofit corporation is domiciled outside of 
Minnesota; 
    (9) (4) Exempt-interest dividends, as defined in section 
852(b)(5)(A) of the Internal Revenue Code of 1954, not included 
in federal adjusted gross income pursuant to section 
852(b)(5)(B) of the Internal Revenue Code of 1954, except for 
that portion of exempt-interest dividends derived from interest 
income on obligations of the state of Minnesota, any of its 
political or governmental subdivisions, any of its 
municipalities, or any of its governmental agencies or 
instrumentalities; 
    (10) The amount of any excluded gain recognized by a trust 
on the sale or exchange of property as defined in section 
641(c)(1) of the Internal Revenue Code of 1954; 
    (11) To the extent not included in the taxpayer's federal 
adjusted gross income, the amount of any gain, from the sale or 
other disposition of property having a lower adjusted basis for 
Minnesota income tax purposes than for federal income tax 
purposes.  This modification shall not exceed the difference in 
basis.  If the gain is considered a long term capital gain for 
federal income tax purposes, the modification shall be limited 
to 40 percent of the portion of the gain.  This modification is 
limited to property that qualified for the equity investment 
credit contained in section 290.069, subdivision 4, and to 
property acquired in exchange for the release of the taxpayer's 
marital rights contained in section 290.14, clause (7);  
    (12) (5) For an estate or trust, the amount of any loss 
from a source outside of Minnesota which is not allowed under 
section 290.17 including any capital loss or net operating loss 
carryforwards or carrybacks resulting from the loss; 
    (13) (6) To the extent deducted in computing the estate or 
trust's federal taxable income, interest, taxes and other 
expenses which are not allowed under section 290.10, clause (9) 
or (10); and 
    (14) The deduction for two-earner married couples provided 
in section 221 of the Internal Revenue Code of 1954;  
    (15) (7) Losses from the business of mining as defined in 
section 290.05, subdivision 1, clause (a) which is not subject 
to the Minnesota income tax;  
    (16) Expenses and depreciation attributable to property 
subject to Laws 1982, chapter 523, article 7, section 3 which 
has not been registered;  
    (17) The amount of contributions to an individual 
retirement account, including a qualified voluntary employee 
contribution, simplified employee pension plan, or self-employed 
retirement plan which is allowed under sections 311 and 312 of 
Public Law Number 97-34, section 238 of Public Law Number 
97-248, and section 103(d)(1)(B) of Public Law Number 97-448 to 
the extent those contributions were not an allowable deduction 
prior to the enactment of that law; provided that an individual 
on whose behalf stock worth less than $300 is contributed during 
the taxable year to a tax credit employee stock ownership plan 
that satisfies the requirements of sections 44G and 409A of the 
Internal Revenue Code of 1954 shall not be required, as a 
consequence of that contribution, to include contributions to 
another plan or account in gross income under this clause to the 
extent the contributions do not exceed the difference between 
the value of the stock contributed during the taxable year and 
$1,500; and 
    (18) To the extent not included in the taxpayer's federal 
adjusted gross income, the amount of any contributions to a 
qualified pension plan, designated as employee contributions but 
which the employing unit picks up and which are treated as 
employer contributions pursuant to section 414(h)(2) of the 
Internal Revenue Code of 1954, provided that employee 
contributions to police and fire relief associations that 
previously were not included within gross income as 
contributions to organizations qualified under section 501(c)(4) 
of the Internal Revenue Code of 1954 shall not be included in 
gross income under this clause.  
    Sec. 10.  Minnesota Statutes 1984, section 290.01, 
subdivision 20b, is amended to read:  
    Subd. 20b.  [MODIFICATIONS REDUCING FEDERAL ADJUSTED GROSS 
INCOME.] There shall be subtracted from federal adjusted gross 
income: 
    (1) Interest income on obligations of any authority, 
commission or instrumentality of the United States to the extent 
includible in gross income for federal income tax purposes but 
exempt from state income tax under the laws of the United States;
    (2) The portion of any gain, from the sale or other 
disposition of property having a higher adjusted basis for 
Minnesota income tax purposes than for federal income tax 
purposes, that does not exceed such difference in basis; but if 
such gain is considered a long-term capital gain for federal 
income tax purposes, the modification shall be limited to 40 per 
centum of the portion of the gain.  This modification shall not 
be applicable if the difference in basis is due to disallowance 
of depreciation pursuant to section 290.101.; 
    (3) Income from the performance of personal or professional 
services which is subject to the reciprocity exclusion contained 
in section 290.081, clause (a); 
    (4) Losses, not otherwise reducing federal adjusted gross 
income assignable to Minnesota, arising from events or 
transactions which are assignable to Minnesota under the 
provisions of sections 290.17 to 290.20, including any capital 
loss or net operating loss carryforwards or carrybacks or out of 
state loss carryforwards resulting from the losses, and 
including any farm loss carryforwards or carrybacks; 
    (5) (4) If included in federal adjusted gross income, the 
amount of any credit received, whether received as a refund or 
credit to another taxable year's income tax liability, pursuant 
to chapter 290A, and the amount of any overpayment of income tax 
to Minnesota, or any other state, for any previous taxable year, 
whether the amount is received as a refund or credited to 
another taxable year's income tax liability; 
    (6) To the extent included in federal adjusted gross 
income, or the amount reflected as the ordinary income portion 
of a lump sum distribution under section 402(e) of the Internal 
Revenue Code of 1954, notwithstanding any other law to the 
contrary, the amount received by any person (i) from the United 
States, its agencies or instrumentalities, the Federal Reserve 
Bank or from the state of Minnesota or any of its political or 
governmental subdivisions or from any other state or its 
political or governmental subdivisions, or a Minnesota volunteer 
firefighter's relief association, by way of payment as a 
pension, public employee retirement benefit, or any combination 
thereof, (ii) as a retirement or survivor's benefit made from a 
plan qualifying under section 401, 403, 404, 405, 408, 409 or 
409A of the Internal Revenue Code of 1954, or (iii) severance 
pay distributed to an individual upon discontinuance of the 
individual's employment due to termination of business 
operations by the individual's employer, provided that the 
termination is reasonably likely to be permanent, involves the 
discharge of at least 75 percent of the employees at that site 
within a one-year period, and the business is not acquired by 
another person who continues operations at that site.  The 
maximum amount of this subtraction shall be $11,000 less the 
amount by which the individual's federal adjusted gross income, 
plus the ordinary income portion of a lump sum distribution as 
defined in section 402(e) of the Internal Revenue Code of 1954, 
exceeds $17,000.  For purposes of the preceding sentence, 
"federal adjusted gross income" shall not include railroad 
retirement or social security benefit amounts provided in 
sections 86 and 72(r) of the Internal Revenue Code of 1954.  For 
purposes of this clause, "severance pay" means an amount 
received for cancellation of an employment contract or a 
collectively bargained termination payment made as a substitute 
for income which would have been earned for personal services to 
be rendered in the future.  In the case of a volunteer 
firefighter who receives an involuntary lump sum distribution of 
his pension or retirement benefits, the maximum amount of this 
subtraction shall be $11,000; this subtraction shall not be 
reduced by the amount of the individual's federal adjusted gross 
income in excess of $17,000; 
    (7) To the extent included in the taxpayer's federal 
adjusted gross income for the taxable year, gain recognized upon 
a transfer of property to the spouse or former spouse of the 
taxpayer in exchange for the release of the spouse's marital 
rights;  
    (8) (5) The amount of any distribution from a qualified 
pension or profit sharing plan included in federal adjusted 
gross income in the year of receipt to the extent of any 
contribution not previously allowed as a deduction by reason of 
a change in federal law which was not adopted by Minnesota law 
for a taxable year beginning in 1974 or later; 
    (9) (6) Interest, including payment adjustment to the 
extent that it is applied to interest, earned by the seller of 
the property on a family farm security loan executed before 
January 1, 1986 that is guaranteed by the commissioner of 
agriculture as provided in sections 41.51 to 41.60 Pension 
income as provided by section 290.08, subdivision 26; 
    (10) (7) The first $3,000 of compensation for personal 
services in the armed forces of the United States or the United 
Nations, and the next $2,000 of compensation for personal 
services in the armed forces of the United States or the United 
Nations wholly performed outside the state of Minnesota.  This 
modification does not apply to compensation defined in 
subdivision 20b, clause (6); 
    (11) In the case of wages or salaries paid or incurred on 
or after January 1, 1977, the amount of any credit for 
employment of certain new employees under sections 44B and 51 to 
53 of the Internal Revenue Code of 1954 which is claimed as a 
credit against the taxpayer's federal tax liability, but only to 
the extent that the credit is connected with or allocable 
against the production or receipt of income included in the 
measure of the tax imposed by this chapter; 
    (12) (8) Unemployment compensation to the extent includible 
in gross income for federal income tax purposes under section 85 
of the Internal Revenue Code of 1954; 
    (13) (9) For an estate or trust, the amount of any income 
or gain which is not assignable to Minnesota under the 
provisions of section 290.17; 
    (14) Interest earned on a contract for deed entered into 
for the sale of property for agricultural use if the rate of 
interest set in the contract is no more than nine percent per 
year for the duration of the term of the contract.  This 
exclusion shall be available only if (1) the purchaser is an 
individual who, together with his spouse and dependents, has a 
total net worth valued at less than $150,000 and (2) the 
property sold under the contract is farm land as defined in 
section 41.52, subdivision 6 of no more than 1,000 acres that 
the purchaser intends to use for agricultural purposes. 
Compliance with these requirements shall be stated in an 
affidavit to be filed with the first income tax return on which 
the taxpayer claims the exclusion provided in this clause.  Upon 
request accompanied by the information necessary to make the 
determination, the commissioner shall determine whether interest 
to be paid on a proposed transaction will qualify for this 
exclusion; the determination shall be provided within 30 days of 
receipt of the request, unless the commissioner finds it 
necessary to obtain additional information, or verification of 
the information provided, in which case the determination shall 
be provided within 30 days of receipt of the final item of 
information or verification.  The exclusion provided in this 
clause shall apply to interest earned on contracts for deed 
entered into after December 31, 1981 and before July 1, 1983; 
    (15) (10)(a) Income from the business of mining as defined 
in section 290.05, subdivision 1, clause (a) which is not 
subject to the Minnesota income tax; (b) to the extent included 
in computing federal adjusted gross income, expenses and other 
items allocable to the business of mining or producing iron ore, 
the mining or production of which is subject to the occupation 
tax imposed by section 298.01, subdivision 1, shall be allowed 
as a subtraction to the extent that the expenses or other items 
are included in computing the modifications provided in section 
290.01, subdivision 20a, clause (7) or paragraph (a) of this 
clause and to the extent that the expenses or other items are 
not deductible, capitalizable, retainable in basis, or taken 
into account by allowance or otherwise in computing the 
occupation tax.  Occupation taxes imposed under chapter 298, 
royalty taxes imposed under chapter 299, and depletion expenses 
may not be subtracted under this paragraph; 
    (16) (11) To the extent included in federal adjusted gross 
income, distributions from a qualified governmental pension plan 
which represent a return of designated employee contributions to 
the plan and which contributions were included in gross income 
pursuant to Minnesota Statutes 1984, section 290.01, subdivision 
20a, clause (18).  The provisions of this clause shall apply 
before the provisions of clause (6) apply and an amount 
subtracted under this clause may not be subtracted under clause 
(6); and 
    (17) (12) To the extent included in federal adjusted gross 
income, distributions from an individual retirement account 
which represent a return of contributions if the contributions 
were included in gross income pursuant to Minnesota Statutes 
1984, section 290.01, subdivision 20a, clause (17).  The 
distribution shall be allocated first to return of contributions 
included in gross income until the amount of the contributions 
has been exhausted; and 
    (18) To the extent included in federal adjusted gross 
income, social security benefits as defined and as provided in 
section 86 of the Internal Revenue Code of 1954, railroad 
retirement benefits as provided in section 72(r) of the Internal 
Revenue Code of 1954, and sick pay paid under the Railroad 
Unemployment Insurance Act as provided in section 105(i) of the 
Internal Revenue Code of 1954, provided that any amount 
subtracted under this clause may not be subtracted under clause 
(6). 
    Sec. 11.  Minnesota Statutes 1984, section 290.01, 
subdivision 20d, is amended to read: 
    Subd. 20d.  [MODIFICATION FOR AMOUNTS TRANSFERRED TO 
SURPLUS.] Amounts transferred from a reserve or other account, 
if in effect transfers to surplus, shall, for corporate 
taxpayers, to the extent that the amounts were accumulated 
through deductions from gross income or entered into the 
computation of taxable net income during any taxable year, be 
treated as gross income for the year in which the transfer 
occurs, but only to the extent that the amounts resulted in a 
reduction of the tax imposed by this chapter and amounts 
received as refunds on account of taxes deducted from gross 
income during any taxable year shall be treated as gross income 
for the year in which actually received, but only to the extent 
that such amounts resulted in a reduction of the tax imposed by 
this chapter.  
    Sec. 12.  Minnesota Statutes 1984, section 290.01, 
subdivision 20f, is amended to read: 
    Subd. 20f.  [MODIFICATION FOR ACCELERATED COST RECOVERY 
SYSTEM.] A modification shall be made for the allowable 
deduction under the accelerated cost recovery system.  The 
allowable deduction for the accelerated cost recovery system as 
provided in section 168 of the Internal Revenue Code of 1954 
shall be the same amount as provided in that section for 
individuals, estates, and trusts with the following 
modifications:  
    (1) For property placed in service after December 31, 1980, 
and for taxable years beginning before January 1, 1982, 15 
percent of the allowance provided in section 168 of the Internal 
Revenue Code of 1954 shall not be allowed.  
    (2)(a) For taxable years beginning after December 31, 1981, 
and before January 1, 1983, for 15-year real property as defined 
in section 168 of the Internal Revenue Code of 1954, 40 percent 
of the allowance provided in section 168 of the Internal Revenue 
Code of 1954 shall not be allowed and for all other property, 17 
percent of the allowance shall not be allowed.  
    (b) For taxable years beginning after December 31, 1982, 
and with respect to property placed in service in taxable years 
beginning before January 1, 1983, for 15-year real property as 
defined in section 168 of the Internal Revenue Code of 1954, 40 
percent of the allowance provided in section 168 of the Internal 
Revenue Code of 1954 shall not be allowed and for all other 
property 20 percent of the allowance shall not be allowed.  
     (3) For property placed in service in taxable years 
beginning after December 31, 1982, the allowable deduction shall 
be the amount provided by section 168 of the Internal Revenue 
Code of 1954.  
     (4) For property placed in service after December 31, 1980, 
for which the taxpayer elects to use the straight line method 
provided in section 168(b)(3) or a method provided in section 
168(e)(2) of the Internal Revenue Code of 1954, the 
modifications provided in clauses (1) and (2) do not apply.  
     (5) For property subject to the modifications contained in 
clause (1) or (2) above, the following modification shall be 
made after the entire amount of the allowable deduction for that 
property under the provision of section 168 of the Internal 
Revenue Code of 1954 has been obtained.  The remaining 
depreciable basis in those assets for Minnesota purposes shall 
be a depreciation allowance computed by using the straight line 
method over the following number of years:  
     (a) 3 year property - 1 year.  
     (b) 5 year property - 2 years.  
     (c) 10 year property - 5 years.  
     (d) All 15 year property - 7 years.  
     (6) The basis of property to which section 168 of the 
Internal Revenue Code of 1954 applies shall be its basis as 
provided in this chapter and including the modifications 
provided in this subdivision.  The recapture tax provisions 
provided in sections 1245 and 1250 of the Internal Revenue Code 
of 1954 shall apply but shall be calculated using the basis 
provided in the preceding sentence.  When an asset is exchanged 
for another asset including an involuntary conversion and under 
the provision of the Internal Revenue Code of 1954 gain is not 
recognized in whole or in part on the exchange of the first 
asset, the basis of the second asset shall be the same as its 
federal basis provided that the difference in basis due to 
clause (1) or (2) can be written off as provided in clause (5).  
    (7) The modifications provided in this subdivision shall 
apply before applying any limitation to farm losses contained in 
section 290.09, subdivision 29.  
    (8) The first taxable year after the entire amount of the 
allowable deduction for that property under the provisions of 
section 168 of the Internal Revenue Code of 1954 has been 
obtained, or where the straight line method provided in section 
168(b)(3) is used, the last taxable year in which an amount of 
allowable depreciation for that property under section 168 is 
obtained, the remaining depreciable basis in those assets for 
Minnesota purposes that is attributable to the basis reduction 
made for federal purposes under section 48(q) of the Internal 
Revenue Code of 1954 to reflect the investment tax credit shall 
be allowed as a deduction.  No amount shall be allowed as a 
deduction under section 196 of the Internal Revenue Code of 1954.
    Sec. 13.  Minnesota Statutes 1984, section 290.032, 
subdivision 2, is amended to read: 
    Subd. 2.  The amount of tax imposed by subdivision 1 shall 
be computed in the same way as the tax imposed under section 
402(e) of the Internal Revenue Code of 1954, as amended through 
December 31, 1983, except that the initial separate tax shall be 
an amount equal to ten times the tax which would be imposed by 
section 290.03 290.06, subdivision 2c, if the recipient was an 
unmarried individual referred to in such section electing to 
deduct federal income taxes, and the taxable net income, 
excluding the credits allowed in section 290.06, subdivision 3f, 
was an amount equal to one-tenth of the excess of 
    (i) the total taxable amount of the lump sum distribution 
for the year, over 
    (ii) the minimum distribution allowance, and except that 
references in section 402(e) of the Internal Revenue Code of 
1954, as amended through December 31, 1983, to paragraph (1)(A) 
thereof shall instead be references to subdivision 1 of this 
section. 
    The amount of any distribution from a qualified pension or 
profit sharing plan which is received as a lump sum distribution 
shall be reduced to the extent of any contribution:  
    (1) not previously allowed as a deduction by reason of a 
change in federal law which was not adopted by Minnesota for a 
taxable year beginning in 1974 or thereafter; or 
    (2) designated as an employee contribution but which the 
employing unit picks up and which is treated as an employer 
contribution and which was taxed on the Minnesota return but not 
the federal return in the year the contribution was made.  
    Sec. 14.  Minnesota Statutes 1984, section 290.05, 
subdivision 3, is amended to read:  
    Subd. 3.  (a) An organization exempt from taxation under 
subdivision 2 shall, nevertheless, be subject to tax under this 
chapter to the extent provided in the following provisions of 
the Internal Revenue Code:  
    (i) Section 527 (dealing with political organizations) and 
(ii) section 528 (dealing with certain homeowners associations) 
but 
    notwithstanding this subdivision, shall be considered an 
organization exempt from income tax for the purposes of any law 
which refers to organizations exempt from income taxes.  
    (b) The tax shall be imposed on the taxable income of 
political organizations or homeowner associations.  The tax 
shall be at the corporate rates.  The tax shall only be imposed 
on income and deductions assignable to this state under sections 
290.17 to 290.20.  Except for section 290.09, subdivision 29, To 
the extent deducted in computing federal taxable income, the 
deductions contained in sections 290.09 and 290.21 shall not be 
allowed in computing Minnesota taxable net income.  
    Sec. 15.  Minnesota Statutes 1984, section 290.06, 
subdivision 2c, is amended to read:  
    Subd. 2c.  [SCHEDULE SCHEDULES OF RATES FOR INDIVIDUALS, 
ESTATES, AND TRUSTS.] (a) The income taxes imposed by this 
chapter upon married individuals, estates and trusts, other than 
those taxable as corporations, shall filing joint returns who 
elect to deduct federal income taxes under section 290.088 must 
be computed by applying to their taxable net income the 
following schedule of rates: 
    (1) On the first $500, one and six-tenths percent; 
    (2) On the second $500, two and two-tenths percent; 
    (3) On the next $1,000, three and five-tenths percent; 
    (4) On the next $1,000, five and eight-tenths percent; 
    (5) On the next $1,000, seven and three-tenths percent; 
    (6) On the next $1,000, eight and eight-tenths percent; 
    (7) On the next $2,000, ten and two-tenths percent; 
    (8) On the next $2,000, eleven and five-tenths percent; 
    (9) On the next $3,500, twelve and eight-tenths percent; 
    (10) On all over $12,500, and not over $20,000, fourteen 
percent; 
    (11) On all over $20,000 and not over $27,500, fifteen 
percent; 
    (12) On all over $27,500, sixteen percent. 
     If taxable net income is:           The tax is:      
       not over $875                1.5 percent 
       over $875 but not            $13 plus 2.0 percent of the 
       over $1,750                  excess over $875 
       over $1,750 but not          $31 plus 2.9 percent of the 
       over $3,500                  excess over $1,750 
       over $3,500 but not          $81 plus 4.8 percent of 
       over $5,375                  the excess over $3,500 
       over $5,375 but not          $171 plus 5.9 percent of 
       over $7,000                  the excess over $5,375 
       over $7,000 but not          $267 plus 6.1 percent of 
       over $7,125                  the excess over $7,000 
       over $7,125 but not          $275 plus 7.2 percent of 
       over $8,875                  the excess over $7,125 
       over $8,875 but not          $401 plus 8.3 percent of 
       over $12,375                 the excess over $8,875 
       over $12,375 but not         $691 plus 9.3 percent of 
       over $14,000                 the excess over $12,375 
       over $14,000 but not         $842 plus 10 percent of 
       over $16,000                 the excess over $14,000 
       over $16,000 but not         $1,042 plus 11 percent 
       over $21,500                 of the excess over $16,000 
       over $21,500 but not         $1,647 plus 11.3 percent 
       over $22,125                 of the excess over $21,500 
       over $22,125 but not         $1,718 plus 12.3 percent 
       over $25,500                 of the excess over $22,125 
       over $25,500 but not         $2,133 plus 12.6 percent 
       over $28,500                 of the excess over $25,500 
       over $28,500 but not         $2,511 plus 13.7 percent 
       over $31,750                 of the excess over $28,500 
       over $31,750                 $2,957 plus 14.0 percent 
                                    of the excess over $31,750 
    (b) The income taxes imposed by this chapter upon all other 
married individuals filing joint returns must be computed by 
applying to their taxable net income the following schedule of 
rates: 
     If taxable net income is:           The tax is:      
       not over $1,200              1.7 percent 
       over $1,200 but not          $20 plus 2.1 percent of the 
       over $1,700                  excess over $1,200 
       over $1,700 but not          $31 plus 2.3 percent of the 
       over $2,700                  excess over $1,700 
       over $2,700 but not          $54 plus 3.3 percent of 
       over $5,600                  the excess over $2,700 
       over $5,600 but not          $150 plus 5.3 percent of 
       over $9,100                  the excess over $5,600 
       over $9,100 but not          $335 plus 6.8 percent of 
       over $12,600                 the excess over $9,100 
       over $12,600 but not         $573 plus 8.5 percent of 
       over $17,800                 the excess over $12,600 
       over $17,800 but not         $1,015 plus 9.3 percent of 
       over $30,800                 the excess over $17,800 
       over $30,800                 $2,224 plus 9.9 percent of 
                                    the excess over $30,800 
    (b) (c) The income taxes imposed by this chapter upon 
unmarried individuals, married individuals filing separate 
returns, estates, and trusts that elect to deduct federal income 
taxes under section 290.088 must be computed by applying to 
taxable net income the following schedule of rates: 
     If taxable net income is:           The tax is:      
       not over $700                1.3 percent 
       over $700 but not            $9 plus 1.9 percent of the 
       over $1,400                  excess over $700 
       over $1,400 but not          $22 plus 3.2 percent of the 
       over $2,800                  excess over $1,400 
       over $2,800 but not          $67 plus 5.4 percent of 
       over $4,300                  the excess over $2,800 
       over $4,300 but not          $148 plus 6.9 percent of 
       over $5,700                  the excess over $4,300 
       over $5,700 but not          $245 plus 8.4 percent of 
       over $7,100                  the excess over $5,700 
       over $7,100 but not          $362 plus 9.8 percent of 
       over $9,900                  the excess over $7,100 
       over $9,900 but not          $637 plus 11.1 percent of 
       over $12,800                 the excess over $9,900 
       over $12,800 but not         $959 plus 12.4 percent of 
       over $15,400                 the excess over $12,800 
       over $15,400 but not         $1,281 plus 13.6 percent of 
       over $19,400                 the excess over $15,400 
       over $19,400                 $1,825 plus 14 percent 
                                    of the excess over $19,400 
    (d) The income taxes imposed by this chapter upon all other 
unmarried individuals, married individuals filing separate 
returns, estates, and trusts must be computed by applying to 
taxable net income the following schedule of rates: 
     If taxable net income is:           The tax is:      
       not over $300                1 percent 
       over $300 but not            $3 plus 1.3 percent of the 
       over $600                    excess over $300 
       over $600 but not            $7 plus 1.6 percent of the 
       over $900                    excess over $600 
       over $900 but not            $12 plus 2.1 percent of 
       over $1,300                  the excess over $900 
       over $1,300 but not          $20 plus 2.7 percent of 
       over $2,000                  the excess over $1,300 
       over $2,000 but not          $39 plus 3.7 percent of 
       over $2,800                  the excess over $2,000 
       over $2,800 but not          $69 plus 4.5 percent of 
       over $4,300                  the excess over $2,800 
       over $4,300 but not          $136 plus 6.1 percent of 
       over $6,400                  the excess over $4,300 
       over $6,400 but not          $264 plus 7.5 percent of 
       over $9,400                  the excess over $6,400 
       over $9,400 but not          $489 plus 9.3 percent of 
       over $16,200                 the excess over $9,400 
       over $16,200                 $1,122 plus 9.9 percent 
                                    of the excess over $16,200 
    (e) In lieu of a tax computed according to the rates set 
forth in clause (a) of this subdivision, the tax of any 
individual taxpayer whose taxable net income for the taxable 
year is less than $40,000 shall an amount determined by the 
commissioner must be computed in accordance with tables prepared 
and issued by the commissioner of revenue based on income 
brackets of not more than $100.  The amount of tax for each 
bracket shall be computed at the rates set forth in this 
subdivision, provided that the commissioner may disregard a 
fractional part of a dollar unless it amounts to 50 cents or 
more, in which case it may be increased to $1. 
    (c) (f) An individual who is not a Minnesota resident for 
the entire year must compute his Minnesota income tax as 
provided in clause (a) this subdivision.  After the application 
of the nonrefundable credits provided in this chapter, the tax 
liability must then be multiplied by a fraction in which:  
    (1) The numerator is the individual's Minnesota sourced 
federal adjusted gross income, computed as if the provisions of 
section 290.081, clause (a), 290.17, subdivision 2, or 290.171 
applied; and 
    (2) the denominator is the individual's federal adjusted 
gross income. 
    Sec. 16.  Minnesota Statutes 1984, section 290.06, 
subdivision 2d, is amended to read: 
    Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] For taxable 
years beginning after December 31, 1980 1985, the taxable net 
income brackets minimum and maximum dollar amounts for each rate 
bracket for which a tax is imposed in subdivision 2c shall be 
adjusted for inflation.  For the purpose of making the 
adjustment as provided in this subdivision all of the rate 
brackets provided in subdivision 2c shall be the adjusted rate 
brackets as they existed for taxable years beginning after 
December 31, 1979 1984 and before January 1, 1981 1986.  The 
commissioner shall determine:  (a) the percentage increase in 
the revised consumer price index for all urban consumers for the 
Minneapolis-St. Paul metropolitan area prepared by the United 
States department of labor.  He The rate applicable to any rate 
bracket must not be changed.  The dollar amounts setting forth 
the tax shall be adjusted to reflect the changes in the rate 
brackets.  The rate brackets as adjusted must be rounded to the 
nearest $10 amount. If the rate bracket ends in $5, it must be 
rounded up to the nearest $10 amount.  
    The commissioner shall adjust the rate brackets by the 
percentage determined under section 1(f) of the Internal Revenue 
Code of 1954, as amended through December 31, 1984, except that 
in section 1(f)(3)(B) the word "1984" shall be substituted for 
the word "1983."  The commissioner shall then determine the 
percent change from August, 1980 the 12 months ending on 
September 30, 1984, to, in 1981, August, 1981 for 1986, the 12 
months ending on September 30, 1985, and in each subsequent 
year, from August of the preceding year to August the 12 months 
ending on September 30, 1984, to the 12 months ending on 
September 30 of the current preceding year; and (b) the 
percentage increase in average Minnesota gross income from tax 
year 1980 to, in 1981, tax year 1981, and in each subsequent tax 
year between the previous tax year and the current tax year. The 
percent increases in Minnesota gross income shall be estimated 
using the best available data sources and reasonable forecasting 
procedures.  The determination of the commissioner pursuant to 
this section subdivision shall not be considered a "rule" and 
shall not be subject to the administrative procedures act 
contained in chapter 14.  
    The dollar amount in each taxable net income bracket for 
the prior year in subdivision 2c shall be multiplied by a figure 
calculated as one plus 100 percent of the consumer price index 
increase or 100 percent of the Minnesota gross income increase, 
whichever is smaller.  The product of the calculation shall 
yield the inflation adjusted tax brackets for each succeeding 
year.  If the product exceeds a whole dollar amount, it shall be 
rounded to the nearest whole dollar.  
    No later than October 1 December 15 of each year, the 
commissioner shall announce both percentage increases and the 
specific percentage that will be used to adjust the tax rate 
brackets, the maximum standard deduction amount, and the 
personal credit amounts. 
    Sec. 17.  Minnesota Statutes 1984, section 290.06, 
subdivision 2f, is amended to read: 
    Subd. 2f.  [SUSPENSION OF INFLATION ADJUSTMENTS.] (a) The 
taxable net income rate brackets, the personal credit amounts 
established pursuant to subdivision 3f and 3g, and the maximum 
standard deduction provided under section 290.089, subdivision 
3, shall not be adjusted for inflation pursuant to subdivision 
2d, for taxable years beginning during a calendar year if the 
following conditions occur:  
     (1) The legislature and the governor have enacted a budget 
providing for an appropriation to the budget reserve account of 
at least $250,000,000 for the biennium during which the calendar 
year began or, in the second half of an odd-numbered year, for 
the biennium which began during the calendar year; and 
     (2) The commissioner of finance estimated at the time the 
budget is enacted that the state would receive sufficient 
general fund receipts during the biennium to fund the full 
appropriation to the budget reserve account; and 
     (3) On or before September 15 of the calendar year it is 
estimated by the commissioner of finance that the probable 
general fund receipts from taxes and other sources will be less 
than estimated and consequently the amount available for the 
remainder of the biennium after transferring any available funds 
in the budget reserve account will be less than the amount 
estimated or allotted to be expended or incurred from the 
general fund; and 
     (4) The additional receipts resulting from the suspension 
of the inflation adjustments, together with all other general 
fund revenues, are not estimated to exceed the sum of the 
amounts necessary to fund in full all appropriations, including 
the appropriation to the budget reserve account, in which case 
the commissioner of revenue shall provide for partial inflation 
adjustments sufficient to fund in full the appropriations.  
    (b) The suspension of inflation adjustments shall apply 
only during the biennium in which the conditions specified in 
paragraph (a) have been satisfied.  
    (c) For taxable years beginning during a calendar year in 
which the inflation adjustments of the brackets, credits, and 
maximum standard deduction are not made pursuant to this 
subdivision, the taxable net income adjustment factor, as 
defined in section 290.18, subdivision 4, shall be the 
adjustment factor applicable to taxable years beginning during 
the preceding calendar year.  For taxable years beginning during 
a calendar year in which the inflation adjustments are suspended 
for one-half of the taxable year as a result of paragraph (b), 
the taxable net income adjustment factor shall be determined by 
multiplying the factor for the previous year by an amount equal 
to the current year factor minus one, divided by two, plus one.  
    (d) For taxable years beginning during a calendar year in 
which the inflation adjustments are suspended pursuant to this 
subdivision and for which paragraph (b) will result in the 
inflation adjustments being suspended for only one-half of the 
taxable year, the commissioner of revenue shall adjust the 
withholding tables, notwithstanding section 290.92, subdivision 
2a, so that the additional tax imposed is withheld and remitted 
by employers during the first six months of the taxable year as 
if the suspension were in effect for the entire year.  
    Sec. 18.  Minnesota Statutes 1984, section 290.06, 
subdivision 3f, is amended to read: 
    Subd. 3f.  [CREDITS AGAINST TAX.] Subject to the provisions 
of subdivision 3g the taxes due under the computation in 
accordance with this section shall be credited with the 
following amounts: 
    (1) In the case of an unmarried individual $68 or a married 
individual filing separately, $70; 
    (2) In the case of a married individual, $136.  If the 
spouses file separate, combined or joint returns the personal 
credits may be taken by either or divided between 
them individuals filing a joint return, $140; 
    (3) In the case of an individual, $68 $70 for each person 
(other than a spouse) dependent upon and receiving his chief 
support from the taxpayer. One taxpayer only shall be allowed 
this credit with respect to any given dependent.  A payment to a 
divorced or separated spouse, other than a payment for support 
of minor children under a temporary order or final decree of 
dissolution or legal separation, shall not be considered a 
payment by the other spouse for the support of any dependent who 
was claimed by the individual as a dependent on the individual's 
federal income tax return as provided in sections 151(e) and 152 
of the Internal Revenue Code of 1954, as amended through 
December 31, 1984. 
    (4)(a) In the case of an unmarried individual or a married 
individual filing separately who has attained the age of 65 
before the close of his taxable year, an additional $68 $70; 
    (b) In the case of an unmarried individual or a married 
individual filing separately who is blind at the close of the 
taxable year, an additional $68 $70; 
    (c) In the case of a married individual individuals filing 
a joint return, an additional $68 $70 for each spouse who has 
attained the age of 65 before the close of the individual's 
taxable year, and an additional $68 $70 for each spouse who is 
blind at the close of the individual's taxable year.  If the 
spouses file separate, combined or joint returns, these credits 
may be taken by either or divided between them; 
    (d) In the case of an individual, another $68 $70 for each 
person, other than a spouse, who is blind and was claimed as a 
dependent upon and receiving his chief support from the taxpayer 
of the individual under clause (3); 
    (e) For the purposes of subparagraphs (b), (c) and (d) of 
paragraph (4), an individual is blind if his central visual 
acuity does not exceed 20/200 in the better eye with correcting 
lenses, or if his visual acuity is greater than 20/200 but is 
accompanied by a limitation in the fields of vision such that 
the widest diameter of the visual field subtends an angle no 
greater than 20 degrees. 
    (f) In the case of an unmarried individual or married 
individual filing separately who is deaf at the close of the 
taxable year, an additional $68 $70. 
    (g) In the case of a married individual individuals filing 
a joint return, an additional $68 $70 for each spouse who is 
deaf at the close of the taxable year.  If the spouses file 
separate, combined or joint returns, these credits may be taken 
by either or divided between them. 
    (h) In the case of an individual, an additional $68 $70 for 
each person (other than a spouse) who is deaf and was claimed as 
a dependent upon and receiving his chief support from the 
taxpayer of the individual under clause (3). 
    (i) For the purposes of subparagraphs (f), (g) and (h) of 
paragraph (4), an individual is deaf if the average loss in the 
speech frequencies (500-2000 Hertz) in the better ear, unaided, 
is 92 decibels, American National Standards Institute, or worse. 
    (5) (a) In the case of an unmarried individual or a married 
individual filing separately who is a quadriplegic at the close 
of the taxable year, an additional $68 $70; 
    (b) In the case of a married individual individuals filing 
a joint return, an additional $68 $70 for each spouse who is a 
quadriplegic at the close of the taxable year.  If the spouses 
file separate, combined or joint returns, these credits may be 
taken by either or divided between them; 
    (c) In the case of an individual, another $68 $70 for each 
person, other than a spouse, who is quadriplegic and was claimed 
as a dependent upon and receiving his chief support from the 
taxpayer of the individual under clause (3); and 
    (d) For the purposes of subparagraphs (a), (b) and (c) of 
paragraph 5, "quadriplegic" means an individual who has a 
congenital or traumatic partial or total loss of all four limbs 
or who has a disability that substantially impairs the 
functioning of all four limbs. 
    (6) In the case of an insurance company, it shall receive a 
credit on the tax computed as above equal in amount to any taxes 
based on premiums paid by it during the period for which the tax 
under this chapter is imposed by virtue of any law of this 
state, other than the surcharge on premiums imposed by sections 
69.54 to 69.56. 
    Sec. 19.  Minnesota Statutes 1984, section 290.06, 
subdivision 3g, is amended to read:  
    Subd. 3g.  [INFLATION ADJUSTMENT OF CREDITS.] For taxable 
years beginning after December 31, 1980 1985, the credits 
provided for individuals in subdivision 3f shall be adjusted for 
inflation.  The dollar amount of each credit for the prior year 
in subdivision 3f shall be increased in the same manner as 
provided in subdivision 2d for the expansion of the taxable net 
income tax rate brackets. 
    Sec. 20.  Minnesota Statutes 1984, section 290.06, 
subdivision 11, is amended to read: 
    Subd. 11.  [CONTRIBUTIONS TO POLITICAL PARTIES AND 
CANDIDATES.] A taxpayer may take a credit against the tax due 
under this chapter of 50 percent of his contributions to 
candidates for elective state or federal public office and to 
any political party.  The maximum credit for an individual shall 
not exceed $50 and, for a married couple filing jointly or 
filing a combined return, shall not exceed $100.  No credit 
shall be allowed under this subdivision for a contribution to 
any candidate, other than a candidate for elective judicial 
office or federal office, who has not signed an agreement to 
limit his campaign expenditures as provided in section 10A.32, 
subdivision 3b.  For purposes of this subdivision, a political 
party means a major political party as defined in section 
200.02, subdivision 7, or a minor political party qualifying for 
inclusion on the income tax or property tax refund form under 
section 10A.31, subdivision 3a.  A major or minor party includes 
the aggregate of the party organization within each house of the 
legislature, the state party organization, and the party 
organization within congressional districts, counties, 
legislative districts, municipalities, and precincts.  A 
"federal office" means the office of the president or vice 
president of the United States or the office of United States 
senator or congressman from Minnesota. 
    This credit shall be allowed only if the contribution is 
verified in the manner the commissioner of revenue shall 
prescribe. 
    Sec. 21.  Minnesota Statutes 1984, section 290.068, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CREDIT ALLOWED.] In addition to the 
deduction provided in section 290.09, a credit shall be 
corporation, other than a corporation with a valid election in 
effect under section 290.9725, is allowed a credit against the 
tax imposed by this chapter for the taxable year equal to 
    (a) 12.5 percent of the first $2 million of the excess (if 
any) of 
    (1) the qualified research expenses for the taxable year, 
over 
    (2) the base period research expenses; and 
    (b) 6.25 percent on all of such excess expenses over $2 
million.  
    Sec. 22.  Minnesota Statutes 1984, section 290.068, 
subdivision 3, is amended to read: 
    Subd. 3.  [LIMITATION; CARRYBACK AND CARRYOVER.] (a)(1) The 
credit for the taxable year shall not exceed the liability for 
tax.  "Liability for tax" for purposes of this section means the 
tax imposed under this chapter for the taxable year reduced by 
the sum of the nonrefundable credits allowed under this chapter. 
    (2) In the case of an individual who a corporation which 
    (A) owns an interest in an unincorporated business, 
    (B) is a partner in a partnership, 
    (C) is a beneficiary of an estate or trust, or 
    (D) is a shareholder in an S corporation, 
    the credit allowed for the taxable year shall not exceed 
the lesser of the amount determined under clause (1) for the 
taxable year or an amount (separately computed with respect to 
such person's the corporation's interest in the trade or 
business or entity) equal to the amount of tax attributable to 
that portion of a person's taxable income which is allocable or 
apportionable to the person's corporation's interest in the 
trade or business or entity.  
    (b) If the amount of the credit determined under this 
section for any taxable year exceeds the limitation under clause 
(a), the excess shall be a research credit carryback to each of 
the three preceding taxable years and a research credit 
carryover to each of the 15 succeeding taxable years.  The 
entire amount of the excess unused credit for the taxable year 
shall be carried first to the earliest of the taxable years to 
which the credit may be carried and then to each successive year 
to which the credit may be carried.  The amount of the unused 
credit which may be added under this clause shall not exceed the 
taxpayer's liability for tax less the research credit for the 
taxable year.  
    For the purposes of sections 290.46 and 290.50, if the 
claim for refund relates to an overpayment attributable to a 
research and experimental expenditure credit carryback under 
this subdivision, in lieu of the period of limitation prescribed 
in sections 290.46 and 290.50, the period of limitation shall be 
that period which ends with the expiration of the 15th day of 
the 46th month, or the 45th month, in the case of a corporation, 
following the end of the taxable year in which the research and 
experimental expenditure credit arises which results in the 
carryback.  With respect to any portion of a credit carryback 
from a taxable year attributable to a loss carryback from a 
subsequent taxable year, the period of limitations shall be that 
period which ends with the expiration of the 15th day of the 
46th month, or, in the case of a corporation, the 45th month 
following the end of the subsequent taxable year.  In any case 
in which a taxpayer is entitled to a refund in a carryback year 
due to the carryback of a research and experimental expenditure 
credit, interest shall be computed only from the end of the 
taxable year in which the credit arises.  With respect to any 
portion of a credit carryback from a taxable year attributable 
to a loss carryback from a subsequent taxable year, interest 
shall be computed from the end of the subsequent taxable year.  
    Sec. 23.  Minnesota Statutes 1984, section 290.068, 
subdivision 4, is amended to read: 
    Subd. 4.  [ESTATES AND TRUSTS; PARTNERSHIPS.] In the case 
of estates and trusts, and partnerships, the credit shall be 
allocated in the same manner provided by section 44F(f)(2) of 
the Internal Revenue Code. 
    Sec. 24. Minnesota Statutes 1984, section 290.069, 
subdivision 2, is amended to read: 
    Subd. 2.  [TECHNOLOGY TRANSFER CREDIT.] A credit may be 
claimed against the taxes imposed by this chapter in an amount 
equal to 30 percent of the net value of the technology 
transferred to a qualified small business if the following 
conditions are satisfied:  
    (a) The commissioner certifies that the technology has the 
value claimed by the transferor taxpayer. 
    (b) The transferor taxpayer is the exclusive and undisputed 
owner of the technology at the time the transfer is made. 
    (c) Except as provided in paragraph (h), the transferor 
retains no proprietary or financial interest in the technology 
subsequent to its transfer to the qualified small business and 
no credit is claimed for the transfer of the technology in a 
prior or subsequent taxable year, except pursuant to the 
carryover provisions of subdivision 5.  
    (d) The credit shall apply only to the first $1,000,000 of 
the net value of the technology transferred during the taxable 
year.  The value of the technology shall not exceed the total 
qualified research expenses, as defined in section 290.068, 
subdivision 2, expended by the transferor to create or develop 
the technology.  For purposes of this paragraph, "net value" 
means the total value of the technology less any payments 
received from the transferee and less the value of any equity 
interest in the transferee received by the transferor in 
exchange for the technology.  For purposes of determining the 
value of the equity interest, the total value of the transferee 
shall be deemed to be not less than the value of the technology 
transferred, less any cash payment made to the transferor.  
    (e) The taxpayer has not deducted the value of the 
transferred property from income under any other provisions of 
this chapter, except that the costs of developing the technology 
may have been deducted as a business expense or depreciated or 
included in the computation of the research and experimental 
expenditure credit pursuant to section 290.068.  
    (f) The transferee business entity may not be a subsidiary 
or affiliate of the transferor taxpayer.  The principal place of 
business of the transferee business entity is located in the 
technology corridor project area as authorized by Laws 1984, 
chapter 654, article 2, section 15, clause (k). 
    (g) The transferee makes a substantial investment in 
acquiring or developing the technology.  The requirements of 
this clause are satisfied if over a two-year period beginning 
not later than the date of the transfer (1) the transferee pays 
the transferor an amount equal to 20 percent of the value of the 
technology in return for acquisition of the rights to the 
technology, or if (2) the transferee expends an equivalent 
amount for equipment, materials, wages, or other direct costs to 
develop, produce, or otherwise use the technology.  The 
requirements of this paragraph may not be satisfied by granting 
the transferor an equity interest as provided by paragraph (h).  
    (h) The transferor may receive in exchange for the transfer 
of the technology an equity interest in the transferee, but this 
interest may not exceed 25 percent of the capital interest, if 
the transferee is a partnership, or 25 percent in value of the 
outstanding stock, if the transferee is a corporation.  The 
transferor's basis in the equity interest shall be reduced by 
the amount of the credits received pursuant to this 
subdivision.  The transferor may not deduct any loss realized on 
the sale or exchange of the equity interest.  
    (i) The maximum credit which is allowed for technology 
transferred during the taxable year is $300,000.  The maximum 
credit which is allowable for technology transferred during all 
taxable years to an entity or a related person to the transferee 
entity is $300,000.  A person is a related person to the entity 
if (i) the relationship would result in disallowance of losses 
under section 267 or 707(b) of the Internal Revenue Code or (ii) 
the person and the entity are members of the same controlled 
group or corporation.  
    The commissioner may require that the taxpayer obtain an 
appraisal of the value of the transferred technology by a 
reliable, expert third party.  The disclosure to a third party 
appraiser of information necessary to make an appraisal shall 
not be subject to the provisions of section 290.61.  The 
commissioner may promulgate administrative rules for appraising 
the value of transferred technology.  
    Sec. 25.  Minnesota Statutes 1984, section 290.069, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [RECAPTURE; TECHNOLOGY TRANSFER CREDIT.] (a) A 
corporation which receives a tax reduction pursuant to 
subdivision 2 shall repay to the commissioner an amount of the 
tax reduction as specified in paragraph (b) if any of the 
following conditions occur within a three-year period after the 
date of transfer of the technology.  
    (1) The transferee ceases operations in Minnesota the 
technology corridor project area.  
    (2) The transferee becomes a subsidiary or affiliate of the 
transferor.  
    (3) The transferee sells, transfers, or otherwise disposes 
of the rights to technology.  
    (4) The transferee fails to make the necessary payments or 
expenditures required by subdivision 2, paragraph (g).  
    (5) The transferee grants an interest to the transferor in 
violation of subdivision 2, paragraph (h).  
    (b) The amount of the repayment is determined pursuant to 
the following schedule:  
Occurrence of event causing recapture     Repayment portion
Less than six months                          100 percent
Six months or more but less than 12 months    83-1/3 percent
12 months or more but less than 18 months     66-2/3 percent
18 months or more but less than 24 months     50 percent
24 months or more but less than 30 months     33-1/3 percent
30 months or more but less than 36 months     16-2/3 percent
    Sec. 26.  Minnesota Statutes 1984, section 290.069, 
subdivision 4a, is amended to read: 
    Subd. 4a.  [RECAPTURE; EQUITY INVESTMENT CREDIT.] (a) A 
taxpayer who receives a tax reduction pursuant to Minnesota 
Statutes 1984, section 290.069, subdivision 4 shall repay to the 
commissioner an amount of the tax reduction as specified in 
paragraph (b) if any of the following conditions occur within a 
four-year period after the date of the investment: 
    (1) The taxpayer transfers, sells, or otherwise disposes of 
the stock other than transfer by the estate of a taxpayer who 
died after acquiring the stock.  
    (2) The taxpayer or a related person acquires an interest 
in the qualified small business in excess of that permitted by 
subdivision 4, clause (b)(2).  
    (3) The transferee ceases operations in Minnesota. 
    (b) The amount of the repayment is determined pursuant to 
the following schedule:  
Occurrence of event causing recapture         Repayment portion
Less than six months                              100 percent
Six months or more but less than 12 months        87-1/2 percent
12 months or more but less than 18 months         75 percent
18 months or more but less than 24 months         62-1/2 percent
24 months or more but less than 30 months         50 percent
30 months or more but less than 36 months         37-1/2 percent
36 months or more but less than 42 months         25 percent
42 months or more but less than 48 months         12-1/2 percent
    (c) If a credit was allowed for a qualified small business 
whose principal place of business was located in an enterprise 
zone and the business ceases operations in the zone within three 
years after the investment is made, the taxpayer shall file an 
amended return claiming the credit without regard to Minnesota 
Statutes 1984, section 290.069, subdivision 4, paragraph (c).  
    Sec. 27.  Minnesota Statutes 1984, section 290.069, 
subdivision 4b, is amended to read: 
    Subd. 4b.  [MULTISTATE BUSINESSES.] If a qualified small 
business is engaged in a business partly within and partly 
without the state, the credit allowable pursuant to subdivision 
2 or 4 for technology transferred to or a net investment made in 
the business must be apportioned.  The credit determined 
pursuant to subdivision 2 or 4 must be multiplied by the 
arithmetical average of the qualified small business' property 
and payrolls, determined as provided by section 290.19, 
subdivision 1, clauses (2)(a)(2) and (2)(a)(3), using data from 
the most recently available year.  After the technology is 
transferred or the investment made, the qualified small business 
shall certify to the transferor taxpayer its factors under 
section 290.19, subdivision 1, clauses (2)(a)(2) and (2)(a)(3) 
for each of the succeeding two tax years.  If the factors for 
either of these years would result in at least a 25 percent 
change in the allowable credit, the taxpayer shall file an 
amended return repaying or claiming the difference in the 
credit.  The preceding sentence does not apply if the qualified 
small business ceases operations in Minnesota and the recapture 
provisions of subdivision 2a or 4a apply.  
    Sec. 28.  Minnesota Statutes 1984, section 290.069, 
subdivision 5, is amended to read: 
    Subd. 5.  [CARRYOVER; OTHER CONDITIONS.] If the amount of 
the allowable credit pursuant to subdivision 2 or 3 for the 
taxable year exceeds the taxpayer's tax liability or if the 
limitation contained in subdivision 4, clause (a)(3) applies, 
the unused credit for the taxable year is a carryover to each of 
the succeeding five taxable years.  The entire amount of the 
unused credit must be carried to the earliest of the taxable 
years to which it may be carried.  "Tax liability" means the tax 
imposed by this chapter reduced by the sum of the nonrefundable 
credits allowed under this chapter except the credit allowed by 
section 290.068.  The credits allowed by subdivisions 2 and 3 
shall only be available to corporations and banks whose tax is 
computed pursuant to section 290.06, subdivision 1. 
    The maximum limitations on the amount of credits pursuant 
to subdivisions 2, or 3, and 4 shall be determined by 
aggregating together the credits of all the corporations in the 
controlled group of corporations with the taxpayer.  In order to 
facilitate compliance with and enforcement of this provision the 
commissioner may require the taxpayer to claim the credit on a 
combined report of the unitary business or to file a copy of the 
consolidated federal return with the state return or both.  
    Sec. 29.  Minnesota Statutes 1984, section 290.069, 
subdivision 6, is amended to read: 
    Subd. 6.  [REPEALER.] This section is repealed effective 
for contributions made to a small business office or to an 
innovation center public corporation as provided in subdivision 
3, and for technology transferred as described in subdivision 2, 
and for investments made as described in subdivision 4 in 
taxable years beginning after December 31, 1985 1988. 
    Sec. 30.  Minnesota Statutes 1984, section 290.069, 
subdivision 7, is amended to read: 
    Subd. 7.  [COMMISSIONER'S POWER TO DISALLOW CREDIT.] The 
commissioner may disallow a credit under subdivision 2 or 4 if 
he determines that the transaction giving rise to the credit was 
entered into by the parties primarily to reduce taxes and not 
primarily for an independent business or commercial purpose 
other than the reduction of taxes.  
    Sec. 31.  Minnesota Statutes 1984, section 290.08, 
subdivision 26, is amended to read: 
    Subd. 26.  [PENSION INCOME.] (a) [EXCLUSION.] Gross income 
shall not include the taxpayer's pension income of a qualified 
recipient and spouse if the spouse is a qualified recipient.  
The maximum amount of this exclusion is the greater of the 
following two amounts amount:  
    (1) $11,000 reduced by the amount of the taxpayer's 
qualified recipient's and spouse's combined federal adjusted 
gross income in excess of $17,000 excluding social security 
benefits and railroad retirement benefits to the extent included 
in federal adjusted gross income; or 
    (2) $11,000 reduced by the sum of 
    (A) social security benefits, 
    (B) railroad retirement benefits, and 
    (C) the excess over $23,000 of federal adjusted gross 
income, but excluding social security benefits and railroad 
retirement benefits to the extent included in federal adjusted 
gross income.  
    (3) (2) Notwithstanding clauses clause (1) and (2), in 
the case of an involuntary lump sum distribution of pension or 
retirement benefits to volunteer firefighters, the maximum 
amount of the exclusion is $11,000.  This amount is not subject 
to reduction for other income of the taxpayer and applies 
without regard to the limitation in paragraph (b), clause (4). 
    (3) Notwithstanding clause (1), to the extent included in 
federal adjusted gross income, all railroad retirement benefits 
of a qualified recipient are excludable without limitation as to 
level of benefits received, maximum amount, or income offset. 
    (4) In the case of pension income received from the 
correctional employees retirement program established pursuant 
to chapter 352; the state patrol fund retirement fund 
established pursuant to chapter 352B; the public employees 
police and fire fund established pursuant to chapter 353; the 
retirement funds enumerated in section 69.77, subdivision 1a; or 
similar retirement plans established by another state or a 
political subdivision of another state, an individual is a 
qualified recipient without regard to age. 
    Pension income consisting of severance pay qualifies only 
for the exclusion computed according to paragraph (a), clause 
(1). 
    (b) [DEFINITIONS.] For purposes of this subdivision the 
following terms have the meanings given:  
    (1) "Internal Revenue Code" means the Internal Revenue Code 
of 1954, as amended through December 31, 1983 in effect for the 
purpose of defining gross income for the applicable taxable year 
as provided in section 290.01, subdivision 20.  
    (2) "Federal adjusted gross income" is the federal adjusted 
gross income referred to in section 290.01, subdivision 20, for 
the current taxable year, and includes the ordinary income 
portion of a lump sum distribution as defined in section 402(e) 
of the Internal Revenue Code.  
    (3) "Pension income" means to the extent included in the 
taxpayer's federal adjusted gross income the amount received by 
the taxpayer 
    (A) from the United States, its agencies or 
instrumentalities, the Federal Reserve Bank or from the state of 
Minnesota or any of its political or governmental subdivisions 
or from any other state or its political or governmental 
subdivisions, or a Minnesota volunteer firefighter's relief 
association, by way of payment as a pension, public employee 
retirement benefit, or any combination thereof, or 
    (B) as a retirement or survivor's benefit made from a plan 
qualifying under section 401, 403, 404, 405, 408, or 409, or 
409A of the Internal Revenue Code, or 
    (C) severance pay distributed to an individual upon 
discontinuance of the individual's employment due to termination 
of business operations by the individual's employer, if the 
termination is reasonably likely to be permanent, involves the 
discharge of at least 75 percent of the employees at that site 
within a one-year period, and the business is not acquired by 
another person who continues operations at that site. 
    (4) "Severance pay" means an amount received for 
cancellation of an employment contract or a collectively 
bargained termination payment made as a substitute for income 
which would have been earned for personal services to be 
rendered in the future "Qualified recipient" means an individual 
who, at the end of the taxable year, is aged 65 or older or is 
disabled as defined in section 290A.03, subdivision 9. 
    Sec. 32.  Minnesota Statutes 1984, section 290.088, is 
amended to read: 
    290.088 [DEDUCTION FOR FEDERAL INCOME TAXES; ELECTION.] 
    Adjusted gross income for individuals, estates, and trusts 
shall be computed by allowing to individuals, estates, and 
trusts a deduction from gross income for federal income taxes. 
The amount of the deduction is determined under section 290.18, 
subdivision 2.  (a) In determining net income, individuals, 
estates, and trusts may elect to deduct federal income taxes 
from gross income after allowing the deductions under section 
290.089.  If the election is made, the amount of the deduction 
is determined under section 290.18, subdivision 2, and the 
taxpayer must compute the tax according to the schedule 
contained in section 290.06, subdivision 2c, paragraph (a) or 
(c), whichever applies. 
    (b) Individuals, estates, and trusts who elect not to 
deduct federal income taxes in determining net income, must 
compute the tax according to the schedule contained in section 
290.06, subdivision 2c, paragraph (b) or (d), whichever applies. 
    Sec. 33.  Minnesota Statutes 1984, section 290.089, 
subdivision 2, is amended to read: 
    Subd. 2.  [ITEMIZED DEDUCTIONS.] An amount equal to the 
amount determined pursuant to section 63(f) of the Internal 
Revenue Code is allowed with the following adjustments:  
    (a) Add the amount paid to others not to exceed $650 for 
each dependent in grades K to 6 and $1,000 for each dependent in 
grades 7 to 12, for tuition, textbooks, and transportation of 
each dependent in attending an elementary or secondary school 
situated in Minnesota, North Dakota, South Dakota, Iowa, or 
Wisconsin, wherein a resident of this state may legally fulfill 
the state's compulsory attendance laws, which is not operated 
for profit, and which adheres to the provisions of the Civil 
Rights Act of 1964 and chapter 363.  As used in this clause, 
"textbooks" includes books and other instructional materials and 
equipment used in elementary and secondary schools in teaching 
only those subjects legally and commonly taught in public 
elementary and secondary schools in this state.  "Textbooks" 
does not include instructional books and materials used in the 
teaching of religious tenets, doctrines, or worship, the purpose 
of which is to instill such tenets, doctrines, or worship, nor 
does it include books or materials for, or transportation to, 
extracurricular activities including sporting events, musical or 
dramatic events, speech activities, driver's education, or 
similar programs;  
    (b) Add the amount of Minnesota and other states' estate or 
inheritance taxes which were allowed as a deduction under 
section 290.077, subdivision 4, on income in respect of a 
decedent;  
    (c) Add the amount by which the deduction for the taxable 
year allowed pursuant to subdivision 4 exceeds the amount 
determined pursuant to section 222 of the Internal Revenue Code; 
    (d) (b) Subtract income taxes paid or accrued within the 
taxable year under this chapter;  
    (e) (c) Subtract income taxes paid to any other state or to 
any province or territory of Canada; and 
    (f) (d) If the deduction computed under section 164 of the 
Internal Revenue Code is not reduced by the amount of the credit 
or refund allowed under chapter 290A, subtract that amount; 
    (g) Subtract the amount of interest on investment 
indebtedness paid or accrued in a taxable year beginning before 
January 1, 1981, which has been carried forward and is allowed 
as a deduction in the taxable year under section 163(d) of the 
Internal Revenue Code;  
    (h) Subtract the amount of charitable contributions 
deducted under section 170 of the Internal Revenue Code that (i) 
exceeds the following limitations:  (A) an overall limit of 30 
percent of the taxpayer's Minnesota gross income which, for 
purposes of this paragraph, shall include the ordinary income 
portion of a lump sum distribution as defined in section 402(e) 
of the Internal Revenue Code; and (B) the aggregate of 
contributions to organizations described in section 290.21, 
subdivision 3, clause (c) shall not exceed 20 percent of the 
taxpayer's Minnesota gross income; or (ii) was deducted as a 
carryover under section 170(d) of the Internal Revenue Code.  
    Sec. 34.  Minnesota Statutes 1984, section 290.089, 
subdivision 3, is amended to read:  
    Subd. 3.  [STANDARD DEDUCTION.] In lieu of the deductions 
provided in subdivision 2, an individual may claim or be allowed 
a standard deduction as follows:  
    (a) Subject to modification pursuant to clause (b), the 
standard deduction shall be an amount equal to ten percent of 
the adjusted gross income of the taxpayer or the joint gross 
income of a married couple filing a joint return, up to a 
maximum deduction of $2,268 $2,400.  
    In the case of a husband and wife married individual filing 
a separate return, the standard deduction is ten percent of the 
gross income of the taxpayer, up to a maximum of $1,200, except 
that the standard deduction shall not be allowed to either if 
the net income of one of the spouses is determined without 
regard to the standard deduction.  
    (b) For taxable years beginning after December 31, 1985, 
the maximum amount of the standard deduction shall be adjusted 
for inflation in the same manner as provided in section 290.06, 
subdivision 2d, for the expansion of the taxable net income rate 
brackets.  The commissioner shall then round the maximum amount 
of the standard deduction to the nearest hundred dollar amount.  
When adjusting the maximum amount of standard deduction for 
inflation, the commissioner shall use the actual dollar amount 
of the maximum amount of the standard deduction prior to 
rounding the dollar amounts.  
    (c) The commissioner of revenue may establish a standard 
deduction tax table incorporating the rates set forth in section 
290.06, subdivision 2c, and the standard deduction.  The tax of 
any individual taxpayer whose adjusted gross income is less than 
$20,000 shall, if an election is made not to itemize nonbusiness 
deductions, be computed in accordance with tables prepared and 
issued by the commissioner of revenue.  The tables shall be 
prepared to reflect the allowance of the standard deduction and 
the personal and dependent credits.  
    Sec. 35.  Minnesota Statutes 1984, section 290.09, 
subdivision 1, is amended to read: 
    Subdivision 1.  [LIMITATIONS.] Except as provided in this 
subdivision, the deductions provided in this section from gross 
income shall only be allowed to corporations in computing net 
income.  The provisions of subdivisions 2, clause (c), and 28, 
and 29 shall also apply to individuals, estates, and trusts to 
the extent provided in those subdivisions. 
    Sec. 36.  Minnesota Statutes 1984, section 290.09, 
subdivision 7, is amended to read:  
    Subd. 7.  [DEPRECIATION.] (A) [CUMULATIVE DEPRECIATION.] 
(a) There shall be allowed as a depreciation deduction a 
reasonable allowance for the exhaustion, wear and tear 
(including a reasonable allowance for obsolescence): 
    (1) of property used in the trade or business, or 
    (2) of property held for the production of income. 
    In the case of recovery property as provided in clause (c), 
the deduction allowable under clause (c) shall be deemed to 
constitute the reasonable allowance provided by this 
subdivision, except for the provisions of Part (B) relating to 
first year depreciation and except with respect to that portion 
of the basis of the property to which section 167(k) of the 
Internal Revenue Code of 1954, as amended through December 31, 
1983, applies.  
    (b) The term "reasonable allowance" as used in clause (a) 
shall include (but shall not be limited to) an allowance 
computed in accordance with regulations prescribed by the 
commissioner, under any of the following methods: 
     (1) the straight line method. 
     (2) the declining balance method, using a rate not 
exceeding twice the rate which would have been used had the 
annual allowance been computed under the method described in 
paragraph (1). 
     (3) the sum of the years-digits method, and 
     (4) any other consistent method productive of an annual 
allowance, which, when added to all allowances for the period 
commencing with the taxpayer's use of the property and including 
the taxable year, does not, during the first two-thirds of the 
useful life of the property, exceed the total of such allowances 
which would have been used had such allowances been computed 
under the method described in (2).  Nothing in this clause (b) 
shall be construed to limit or reduce an allowance otherwise 
allowable under clause (a). 
     (c) For purposes of this subdivision "reasonable allowance" 
shall be the accelerated cost recovery system provisions of 
section 168 of the Internal Revenue Code of 1954, as amended 
through December 31, 1983, except as provided in this 
subdivision.  In the case of recovery property within the 
meaning of section 168 of the Internal Revenue Code of 1954, as 
amended through December 31, 1983, the term "reasonable 
allowance" as used in clause (a) shall mean 85 percent of the 
deduction allowed pursuant to section 168 of the Internal 
Revenue Code of 1954 for property placed in service after 
December 31, 1980 and for taxable years beginning before January 
1, 1982.  
    For taxable years beginning after December 31, 1981 the 
term reasonable allowance as used in clause (a) shall mean the 
following percent of the deduction allowed pursuant to section 
168 of the Internal Revenue Code of 1954, as amended through 
December 31, 1983:  
     (1) For 3, 5 and 10 year property and for 15 year public 
utility property the allowable percentage is 83 percent and 80 
percent for taxable years beginning after December 31, 1982.  
     (2) For 15 year real property the allowable percentage is 
60 percent.  
     For property placed in service after December 31, 1980 the 
term "reasonable allowance" as used in clause (a) shall mean 100 
percent of the deduction allowed pursuant to section 168 of the 
Internal Revenue Code of 1954 where the taxpayer uses for 
federal income tax purposes the straight line method provided in 
section 168(b)(3) or a method provided in section 168(e)(2) of 
the Internal Revenue Code of 1954, as amended through December 
31, 1983.  For property placed in service after December 31, 
1980 and for which the full amount of the deduction allowed 
under section 168 of the Internal Revenue Code of 1954, as 
amended through December 31, 1983 has been allowed, the 
remaining depreciable basis in those assets for Minnesota 
purposes shall be a depreciation allowance computed by using the 
straight line method over the following number of years:  
     (1) 3 year property - 1 year.  
     (2) 5 year property - 2 years.  
     (3) 10 year property - 5 years.  
     (4) All 15 year property - 7 years.  
     When an asset is exchanged for another asset including an 
involuntary conversion and under the provision of the Internal 
Revenue Code gain is not recognized in whole or in part on the 
exchange of the first asset, the basis of the second asset shall 
be the same as its federal basis provided that the difference in 
basis due to the limitations provided in this clause can be 
written off as provided in the preceding sentence.  
    After the full amount of the allowable deduction for that 
property under the provision of section 168 of the Internal 
Revenue Code of 1954, as amended through December 31, 1983, has 
been obtained, the remaining depreciable basis in those assets 
for Minnesota purposes that shall be allowed as a depreciation 
allowance as provided above shall include the amount of any 
basis reduction made for federal purposes under section 48(q) of 
the Internal Revenue Code, as amended through December 31, 1983, 
to reflect the investment tax credit.  No amount shall be 
allowed as a deduction under section 196 of the Internal Revenue 
Code of 1954, as amended through December 31, 1983.  
    The provisions of section 168(i)(4) of the Internal Revenue 
Code of 1954, as amended through December 31, 1983 shall apply 
to restrict research credit carrybacks and net operating loss 
carrybacks which are allocable to elected qualified leased 
property, notwithstanding section 290.068, subdivision 3, or 
290.095, subdivision 3.  
    The modification provided in this clause shall apply before 
applying a limitation on farm losses as contained in subdivision 
29.  
    (d) Paragraphs (2), (3), and (4) of clause (b) shall apply 
only in the case of property (other than intangible property) 
described in clause (a) with a useful life of three years or 
more. 
     (1) the construction, reconstruction, or erection of which 
is completed after December 31, 1958, and then only to that 
portion of the basis which is properly attributable to such 
construction, reconstruction, or erection after December 31, 
1958, or 
     (2) acquired after December 31, 1958, if the original use 
of such property commenced with the taxpayer and commences after 
such date. 
     (e) Where, under rules prescribed by the commissioner, the 
taxpayer and the commissioner have, after June 30, 1959, entered 
into an agreement in writing specifically dealing with the 
useful life and rate of depreciation of any property, the rate 
so agreed upon shall be binding on both the taxpayer and the 
commissioner in the absence of facts or circumstances not taken 
into consideration in the adoption of such agreement.  The 
responsibility of establishing the existence of such facts and 
circumstances shall rest with the party initiating the 
modification.  Any change in the agreed rate and useful life 
specified in the agreement shall not be effective for taxable 
years before the taxable year in which notice in writing by 
certified mail is served by the party to the agreement 
initiating such change.  This clause shall not apply with 
respect to recovery property as defined in clause (c). 
     (f) In the absence of an agreement under clause (e) 
containing a provision to the contrary, a taxpayer may at any 
time elect in accordance with rules prescribed by the 
commissioner to change from the method of depreciation 
prescribed in clause (b)(2) to the method described in clause 
(b)(1). 
     (g) The basis on which exhaustion, wear and tear, and 
obsolescence are to be allowed in respect of any property shall 
be the adjusted basis provided in this chapter for the purpose 
of determining the gain on the sale or other disposition of such 
property. 
     (B) [FIRST YEAR DEPRECIATION.] The term "reasonable 
allowance" as used in this subdivision may, at the election of 
the taxpayer, include an amount as provided under section 179 of 
the Internal Revenue Code of 1954, as amended through December 
31, 1983.  
    Sec. 37.  Minnesota Statutes 1984, section 290.091, is 
amended to read: 
    290.091 [ALTERNATIVE MINIMUM TAX ON PREFERENCE ITEMS.] 
    Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
other taxes imposed by this chapter there a tax is hereby 
imposed on individuals, estates, and trusts a tax which, in the 
case of a resident individual, shall be equal to 40 percent of 
the amount of the taxpayer's alternative minimum tax liability 
for tax preference items pursuant to the provisions of sections 
55, 57, 58 and 443(d) of the Internal Revenue Code of 1954 as 
amended through December 31, 1983 the excess (if any) of 
    (a) an amount equal to four percent of alternative minimum 
taxable income after subtracting the exemption amount, over 
    (b) the regular tax for the taxable year.  
    Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
this section, the following modifications shall be made terms 
have the meanings given: 
    (a) "Alternative minimum taxable income" means the sum of 
the following for the taxable year: 
    (1) the taxpayer's federal adjusted gross income as defined 
in the Internal Revenue Code; 
    (2) the taxpayer's federal tax preference items; less the 
sum of 
    (i) interest income as defined in section 290.01, 
subdivision 20b, clause (1); and 
    (ii) the amount of interest paid or accrued within the 
taxable year on indebtedness to the extent that the amount does 
not exceed qualified net investment income, as defined in 
section 55(e)(5) of the Internal Revenue Code.  Interest does 
not include amounts deducted in computing federal adjusted gross 
income or amounts that are not allowable under section 55(e)(8) 
of the Internal Revenue Code. 
     In the case of an estate or trust, adjusted gross income 
must be modified as provided in section 55(e)(6)(B) of the 
Internal Revenue Code. 
    (b) "Federal tax preference items" means items as defined 
in sections 57, 58, and 443(d) of the Internal Revenue Code, 
modified as follows: 
    (1) Alternative tax itemized deductions shall include the 
amount allowable as a deduction for the taxable year under 
section 164 of the Internal Revenue Code for Minnesota income 
tax paid or accrued.  
    (2) The capital gain preference item shall be reduced where 
the gain would be modified because some or all of the assets 
have a higher basis for Minnesota purposes than for federal 
purposes.  
    (3) (2) In the case of a nonresident individual, or an 
estate or trust, with a net operating loss that is a larger 
amount for Minnesota than for federal, the capital gain 
preference item shall be reduced to the extent it was reduced in 
the allowance of the net operating loss.  
    (4) (3) Federal preference items from the business of 
mining or producing iron ore and other ores which are subject to 
the occupation tax and exempt from taxation under section 
290.05, subdivision 1, shall not be a preference item for 
Minnesota.  
    (5) The term "regular tax" as defined in section 55(f)(2) 
of the Internal Revenue Code shall be increased by the amount of 
the credit allowable under section 38 of the Internal Revenue 
Code and it shall be computed before the limitation on tax 
provided in section 1301 of the Internal Revenue Code.  
    (6) Federal preference items which arise from a farm shall 
not be a preference item to the extent they exceed the loss 
allowed under section 290.09, subdivision 29, other than 
interest and taxes.  
    In the case of any taxpayer who is not a full year resident 
individual, or who is an estate or trust the tax shall equal 40 
percent of that federal liability, multiplied by a fraction the 
numerator of which is the amount of the taxpayer's preference 
item income allocated to this state pursuant to the provisions 
of sections 290.17 to 290.20, and the denominator of which is 
the taxpayer's total preference item income for federal purposes.
    The tax benefit rule contained in section 58(h) of the 
Internal Revenue Code is applied to the Minnesota minimum tax 
only to the extent that it determines if there is a federal 
minimum tax.  No separate tax benefit rule is allowable for the 
Minnesota minimum tax.  
    (4) Other federal preference items to the extent not 
allowed in the computation of Minnesota gross income, as 
determined by the commissioner, are not preference items for 
Minnesota. 
    For property placed in service after December 31, 1980, and 
in a taxable year beginning before January 1, 1983, the 
preference items contained in section 57 (a)(12) of the Internal 
Revenue Code of 1954, as amended through December 31, 1983, 
shall not apply. 
    (c) "Internal Revenue Code" means the Internal Revenue Code 
of 1954, as amended through December 31, 1984. 
    (d) "Regular tax" means the tax that would be imposed under 
this chapter (without regard to this section), reduced by the 
sum of the nonrefundable credits allowed under this chapter.  
    Subd. 3.  [EXEMPTION AMOUNT.] For purposes of computing the 
alternative minimum tax, the exemption amount is: 
    (a) $40,000 in the case of a married couple filing a joint 
return; 
    (b) $30,000 in the case of an individual who is not 
married, as defined in section 143 of the Internal Revenue Code; 
    (c) $20,000 in the case of 
    (1) an estate or trust or 
    (2) a married individual who files a separate tax return. 
    Subd. 4.  [PART YEAR RESIDENTS; ESTATES AND TRUSTS.] (a) An 
individual who is not a Minnesota resident for the entire year 
must compute his alternative minimum tax liability using a 
regular tax liability determined under section 290.06, 
subdivision 2c, paragraph (f), without regard to the provision 
for allocation to Minnesota.  The resulting alternative minimum 
tax liability must be multiplied by the fraction defined in 
section 290.06, subdivision 2c, paragraph (f). 
    (b) In the case of an estate or trust, the alternative 
minimum tax liability must be computed by multiplying 
alternative minimum taxable income and the exemption amount by a 
fraction, the numerator of which is the amount of the taxpayer's 
alternative minimum taxable income allocated to this state 
pursuant to the provisions of sections 290.17 to 290.20, and the 
denominator of which is the taxpayer's total alternative minimum 
taxable income. 
    Subd. 5.  [TAX BENEFIT RULE.] The tax benefit rule 
contained in section 58(h) of the Internal Revenue Code applies 
to the computation of the tax under this section only to the 
extent that it determines if there is an item of tax preference 
for purposes of subdivision 2, clause (a)(2).  
    Sec. 38.  Minnesota Statutes 1984, section 290.095, 
subdivision 7, is amended to read: 
    Subd. 7.  [TENTATIVE CARRYBACK ADJUSTMENTS.] (a) 
Application for adjustment.  A taxpayer may file an application 
for a tentative carryback adjustment of the tax for the prior 
taxable year affected by a loss or credit carryback from any 
taxable year.  The application shall be signed and verified as 
provided in section 290.37, subdivision 1, and shall be filed on 
or after the date of filing of the return for the taxable year 
from which the carryback results and within a period of 12 
months from the end of such taxable year (or with respect to any 
portion of a credit carryback from a taxable year attributable 
to a loss carryback from a subsequent taxable year, the 
application shall be filed within a period of 12 months from the 
end of the subsequent taxable year), in the manner and form 
required by rules prescribed by the commissioner.  The 
application shall set forth in such detail and with such 
supporting data and explanation as such rules shall require: 
    (1) The amount of the loss or credit; 
    (2) The amount of the tax previously determined for the 
prior taxable year affected by such carryback; 
    (3) The amount of decrease in such tax, attributable to 
such carryback, such decrease being determined by applying the 
carryback in the manner provided by law to the items on the 
basis of which such tax was determined; 
     (4) The unpaid amount of such tax; 
     (5) Such other information for purposes of carrying out the 
provisions of this subdivision as may be required by such rules. 
     An application under this subdivision shall not constitute 
a claim for refund until 90 days from the date on which the 
application was filed, at which time it will become a claim for 
refund under the provisions of section 290.50. 
     (b) Allowance of adjustments.  Within a period of 90 days 
from the date on which an application for a tentative carryback 
adjustment is filed under (a), or from the last day of the month 
in which falls the last date prescribed by law (including any 
extension of time granted the taxpayer) for filing the return 
for the taxable year from which such carryback results, 
whichever is the later, the commissioner shall make, to the 
extent he deems practicable in such period a limited examination 
of the application, to discover omissions and errors of 
computation therein, and shall determine the amount of the 
decrease in the tax attributable to such carryback upon the 
basis of the application and the examination, except that the 
commissioner may disallow, without further action, any 
application which he finds contains errors of computation which 
he deems cannot be corrected by him within such 90-day period or 
material omissions.  Such decrease shall be applied against any 
unpaid amount of tax decreased and any remainder shall, within 
such 90-day period, be either credited against any tax or 
installment thereof then due from the taxpayer, or refunded to 
the taxpayer. 
    (c) The provisions of this subdivision shall apply to net 
operating loss carrybacks as provided in subdivision 3 or 11; 
capital loss carrybacks as provided in section 290.16, 
subdivision 6; farm loss carrybacks as provided in section 
290.09, subdivision 29; research credit carrybacks as provided 
in section 290.068, subdivision 3; and to any other carrybacks 
which may be provided in this chapter.  
    Sec. 39.  Minnesota Statutes 1984, section 290.095, 
subdivision 9, is amended to read:  
    Subd. 9.  [SPECIAL PERIOD OF LIMITATION WITH RESPECT TO NET 
OPERATING LOSS CARRYBACKS.] For the purposes of sections 290.46 
and 290.50 if the claim for refund relates to an overpayment 
attributable to a net operating loss carryback under this 
section or as the result in the case of an individual of an 
adjustment of "federal adjusted gross income" because of the 
carryback under section 172 of the Internal Revenue Code of 
1954, as amended through December 31, 1983 in lieu of the period 
of limitation prescribed in sections 290.46 and 290.50, the 
period shall be that period which ends with the expiration of 
the 15th day of the 46th month (or the 45th month, in the case 
of a corporation) following the end of the taxable year of the 
net operating loss which results in such carryback or adjustment 
of "federal adjusted gross income."  During this extended 
period, for taxable years beginning before January 1, 1985, 
married individuals who elected to file separate returns or a 
combined return may change their election and file a joint 
return.  
    Sec. 40.  Minnesota Statutes 1984, section 290.095, 
subdivision 11, is amended to read:  
    Subd. 11.  [CARRYBACK OR CARRYOVER ADJUSTMENTS.] (a) For 
individuals the amount of a net operating loss that may be 
carried back or carried over shall be the same dollar amount 
allowable in the determination of federal adjusted gross 
income.  For estates and trusts the amount of a net operating 
loss that may be carried back or carried over shall be the same 
dollar amount allowable in the determination of federal taxable 
income. 
    (b) The following adjustments to the amount of the net 
operating loss that may be carried back or carried over must be 
made for: 
    (1) Nonassignable income or losses as required by section 
290.17, subdivision 2. 
    (2) Modifications required because of the restrictions on 
farm losses as provided in section 290.09, subdivision 29. 
    (3) Adjustments to the determination of federal adjusted 
gross income that must be made because of changes in the 
Internal Revenue Code that have not yet been adopted by the 
legislature by updating the reference to the Internal Revenue 
Code contained in section 290.01, subdivision 20. 
    (4) Modifications to income contained in federal adjusted 
gross income according to the provisions of section 290.01, 
subdivision 20c. 
    (5) (3) Gains or losses which result from the sale or other 
disposition of property having a higher adjusted basis for 
Minnesota income tax purposes than for federal income tax 
purposes subject to the limitations contained in section 290.01, 
subdivision 20b, clauses (2) and (4) (3). 
    (6) (4) Interest, taxes, and other expenses not allowed 
under section 290.10, clause (9) or section 290.101. 
    (7) (5) The modification for accelerated cost recovery 
system depreciation as provided in section 290.01, subdivision 
20f. 
    (c)(1) The net operating loss carryback or carryover 
applied as a deduction in the taxable year to which the net 
operating loss is carried back or carried over shall be equal to 
the net operating loss carryback or carryover applied in the 
taxable year in arriving at federal adjusted gross income (or 
federal taxable income for trusts and estates) subject to the 
modifications contained in clause (b) and to the following 
modifications: 
    (A) Increase the amount of carryback or carryover applied 
in the taxable year by the amount of losses and interest, taxes 
and other expenses not assignable or allowable to Minnesota 
incurred in the taxable year. 
    (B) Decrease the amount of carryback or carryover applied 
in the taxable year by the amount of income not assignable to 
Minnesota earned in the taxable year and the amount of federal 
jobs credit earned in the taxable year. 
    (C) A taxpayer who is not a resident of Minnesota during 
any part of the taxable year and who has no income assignable to 
Minnesota during the taxable year shall apply no net operating 
loss carryback or carryover in the taxable year. 
    (2) The provisions of section 172(b) of the Internal 
Revenue Code of 1954 as amended through December 31, 1983 
(relating to carrybacks and carryovers) shall apply.  The net 
operating loss carryback or carryover to the next consecutive 
taxable year shall be the net operating loss carryback or 
carryover as calculated in clause (c)(1) less the amount applied 
in the earlier taxable year(s).  No additional net operating 
loss carryback or carryover shall be allowed if the entire 
amount has been used to offset Minnesota income in a year 
earlier than was possible on the federal return.  A net 
operating loss carryback or carryover that was allowed to offset 
federal income in a year earlier than was possible on the 
Minnesota return shall still be allowed to offset Minnesota 
income but only if the loss was assignable to Minnesota in the 
year the loss occurred. 
    (d) A net operating loss shall be allowed to be carried 
back or carried forward only to the extent that loss was 
assignable to Minnesota in the year the loss occurred or in the 
year to which the loss was carried over, whichever would allow 
more of the loss to be allowed for Minnesota purposes. 
    (e) If a taxpayer has a net operating loss for federal 
purposes and the provisions of the farm loss limitation as 
provided in section 290.09, subdivision 29 apply, the 
limitations applying to the farm losses that are carried back or 
carried over are applied first and the net operating loss that 
is carried back or carried over is limited to the excess, if 
any, that the net operating loss exceeds the farm loss 
limitation. 
    Sec. 41.  Minnesota Statutes 1984, section 290.10, is 
amended to read: 
    290.10 [NONDEDUCTIBLE ITEMS.] 
    In computing the net income no deduction shall in any case 
be allowed for: 
    (1) Personal, living or family expenses; 
    (2) Amounts paid out for new buildings or for permanent 
improvements or betterments made to increase the value of any 
property or estate, except as otherwise provided in this chapter;
    (3) Amounts expended in restoring property or in making 
good the exhaustion thereof for which an allowance is or has 
been made; 
    (4) Premiums paid on any life insurance policy covering the 
life of the taxpayer or of any other person; 
    (5) The shrinkage in value, due to the lapse of time, of a 
life or terminable interest of any kind in property acquired by 
gift, devise, bequest or inheritance; 
    (6) Losses from sales or exchanges of property, directly or 
indirectly, between related taxpayers as defined and as provided 
in section 267 of the Internal Revenue Code of 1954, as amended 
through December 31, 1983; 
    (7) In computing net income, no deduction shall be allowed 
under section 290.09, subdivision 2, relating to expenses 
incurred or under section 290.09, subdivision 3, relating to 
interest accrued as provided in section 267 of the Internal 
Revenue Code of 1954, as amended through December 31, 1983; 
    (8)(a) Contributions by employees under the federal 
railroad retirement act and the federal social security act;  
(b) Payments to Minnesota or federal public employee retirement 
funds; (c) Three-fourths (75 percent) 60 percent of the amount 
of taxes imposed on self-employment income under section 1401 of 
the Internal Revenue Code of 1954, as amended through December 
31, 1983, provided that.  Effective for taxable years beginning 
after December 31, 1989, no deduction is allowed for 
self-employment taxes where the taxpayer claimed a deduction for 
those taxes under section 164(f) of the Internal Revenue Code of 
1954, as amended through December 31, 1983; 
    (9) Expenses, interest and taxes connected with or 
allocable against the production or receipt of all income not 
included in the measure of the tax imposed by this chapter, 
except that for persons engaged in the business of mining or 
producing iron ore, the mining of which is subject to the 
occupation tax imposed by section 298.01, subdivision 1, this 
shall not prevent a subtraction to the extent allowed under 
section 290.01, subdivision 20b, clause (10)(b), or the 
deduction by a corporate taxpayer of expenses and other items to 
the extent that the expenses and other items are allowable under 
section 290.09 and are not deductible, capitalizable, retainable 
in basis, or taken into account by allowance or otherwise in 
computing the occupation tax and do not exceed the amounts taken 
for federal income tax purposes for that year.  Occupation taxes 
imposed under chapter 298, royalty taxes imposed under chapter 
299, or depletion expenses may not be deducted under this clause;
    (10) In situations where this chapter provides for a 
subtraction from gross income of a specific dollar amount of an 
item of income assignable to this state, and within the measure 
of the tax imposed by this chapter, that portion of the federal 
income tax liability assessed upon such income subtracted, and 
any expenses attributable to earning such income, shall not be 
deductible in computing net income; 
    (11) Amounts paid or accrued for such taxes and carrying 
charges as, under rules prescribed by the commissioner, are 
chargeable to capital account with respect to property, if the 
taxpayer elects, in accordance with such rules, to treat such 
taxes or charges as so chargeable; 
    (12) No deduction or credit shall be allowed for any amount 
paid or incurred during the taxable year in carrying on any 
trade or business if the trade or business (or the activities 
which comprise the trade or business) consists of trafficking in 
controlled substances (within the meaning of schedule I and II 
of the federal Controlled Substances Act) which is prohibited by 
federal law or the law of Minnesota.  
    For purposes of this section, reference to the Internal 
Revenue Code means the Internal Revenue Code of 1954, as amended 
through December 31, 1984. 
    Sec. 42.  Minnesota Statutes 1984, section 290.12, 
subdivision 2, is amended to read: 
    Subd. 2.  [ADJUSTMENTS.] In computing the amount of gain or 
loss under subdivision 1 proper adjustment shall be made for any 
expenditure, receipt, loss, or other item properly chargeable to 
capital account by the taxpayer during his ownership thereof.  
The basis shall be diminished by the amount of the deductions 
for exhaustion, wear and tear, obsolescence, amortization, 
depletion, and the allowance for amortization of bond premium if 
an election to amortize was made in accordance with section 
290.09, subdivision 13, which could, during the period of his 
ownership thereof, have been deducted by the taxpayer under this 
chapter in respect of such property.  The basis shall also be 
diminished by the amount of depreciation relating to a 
substandard building disallowed by section 290.101.  In 
addition, if the property was acquired before January 1, 1933, 
the basis, if other than the fair market value as of such date, 
shall be diminished by the amount of exhaustion, wear and tear, 
obsolescence, amortization, or depletion actually sustained 
before such date.  In respect of any period since December 31, 
1932, during which property was held by a person or an 
organization not subject to income taxation under this chapter, 
proper adjustment shall be made for exhaustion, wear and tear, 
obsolescence, amortization, and depletion of such property to 
the extent sustained.  For the purpose of determining the amount 
of these adjustments the taxpayer who sells or otherwise 
disposes of property acquired by gift shall be treated as the 
owner thereof from the time it was acquired by the last 
preceding owner who did not acquire it by gift, and the taxpayer 
who sells or otherwise disposes of property acquired by gift 
through an inter vivos transfer in trust shall be treated as the 
owner from the time it was acquired by the grantor.  
    No adjustment shall be made: 
    (1) for taxes or other carrying charges described in 
section 290.10, clause (11), or 
    (2) for expenditures described in section 290.09, 
subdivision 16 (relating to circulation expenditures), for which 
deductions have been taken by the taxpayer in determining 
taxable income for the taxable year or prior years. 
    Sec. 43.  Minnesota Statutes 1984, section 290.14, is 
amended to read:  
     290.14 [GAIN OR LOSS ON DISPOSITION OF PROPERTY, BASIS.] 
     Except as otherwise provided in this chapter, the basis for 
determining the gain or loss from the sale or other disposition 
of property acquired on or after January 1, 1933, shall be the 
cost to the taxpayer of such property, with the following 
exceptions: 
     (1) If the property should have been included in the last 
inventory, it shall be the last inventory value thereof; 
     (2) If the property was acquired by gift, it shall be the 
same as it would be if it were being sold or otherwise disposed 
of by the last preceding owner not acquiring it by gift; if the 
facts required for this determination cannot be ascertained, it 
shall be the fair market value as of the date, or approximate 
date, of acquisition by the last preceding owner, as nearly as 
the requisite facts can be ascertained by the commissioner; 
     (3) If the property was acquired by gift through an inter 
vivos transfer in trust, it shall be the same as it would be if 
it were being sold or otherwise disposed of by the grantor; 
     (4) Except as otherwise provided in this clause, the basis 
of property in the hands of a person acquiring the property from 
a decedent or to whom the property passed from a decedent shall, 
if not sold, exchanged or otherwise disposed of before the 
decedent's death by the person, be the fair market value of the 
property at the date of decedent's death or, in the case of an 
election under section 2032 (relating to alternate valuation) of 
the Internal Revenue Code of 1954, as amended through December 
31, 1983, its valuation at the applicable valuation date 
prescribed by that section, or in the case of an election under 
section 2032A (relating to valuation of farm real property) of 
the Internal Revenue Code of 1954, as amended through December 
31, 1983, its value determined by that section. 
     For the purposes of the preceding paragraph, the following 
property shall be considered to have been acquired from or to 
have passed from the decedent: 
     (a) Property acquired by bequest, devise, or inheritance, 
or by the decedent's estate from the decedent; 
     (b) Property transferred by the decedent during his 
lifetime in trust to pay the income for life to or on the order 
or direction of the decedent, with the right reserved to the 
decedent at all times before his death to revoke the trust; 
     (c) Property transferred by the decedent during his 
lifetime in trust to pay the income for life to or on the order 
or direction of the decedent with the right reserved to the 
decedent at all times before his death to make any change in the 
enjoyment thereof through the exercise of a power to alter, 
amend, or terminate the trust; 
     (d) Property passing without full and adequate 
consideration under a general power of appointment exercised by 
the decedent by will; 
     (e) In the case of a decedent's dying after December 31, 
1956, property acquired from the decedent by reason of death, 
form of ownership, or other conditions (including property 
acquired through the exercise or non-exercise of a power of 
appointment), if by reason thereof the property is required to 
be included in determining the value of the decedent's gross 
estate for Minnesota inheritance or estate tax purposes.  In 
this case, if the property is acquired before the death of the 
decedent, the basis shall be the amount determined under the 
first paragraph of this clause reduced by the amount allowed to 
the taxpayer as deductions in computing taxable net income under 
this chapter or prior Minnesota income tax laws for exhaustion, 
wear and tear, obsolescence, amortization, and depletion on the 
property before the death of the decedent.  The basis shall be 
applicable to the property commencing on the death of the 
decedent.  This paragraph shall not apply to annuities and 
property described in paragraphs (a), (b), (c) and (d) of this 
clause. 
     This clause shall not apply to property which constitutes a 
right to receive an item of income in respect of a decedent 
under section 290.077.  
     (5) If substantially identical property was acquired in the 
place of stocks or securities which were sold or disposed of and 
in respect of which loss was not allowed as a deduction under 
section 290.089 or section 290.09, subdivision 5, the basis in 
the case of property so acquired shall be the same as that 
provided in section 1091 of the Internal Revenue Code of 1954, 
as amended through December 31, 1983.  
    (6) Neither the basis nor the adjusted basis of any portion 
of real property shall, in the case of a lessor of the property, 
be increased or diminished on account of income derived by the 
lessor in respect of the property and excludable from gross 
income under section 290.08, subdivision 14. 
    If an amount representing any part of the value of real 
property attributable to buildings erected or other improvements 
made by a lessee in respect of the property was included in 
gross income of the lessor for any taxable year beginning before 
January 1, 1943, the basis of each portion of the property shall 
be properly adjusted for the amount included in gross income. 
    (7) If the property was acquired by the taxpayer as a 
transfer of property in exchange for the release of the 
taxpayer's marital rights, the basis of the property shall be 
the same as it would be if it were being sold or otherwise 
disposed of by the person who transferred the property to the 
taxpayer.  
    (8) The basis of property subject to the provisions of 
section 1034 of the Internal Revenue Code of 1954, as amended 
through December 31, 1983 (relating to the rollover of gain on 
sale of principal residence) shall be the same as the basis for 
federal income tax purposes.  The basis shall be increased by 
the amount of gain realized on the sale of a principal residence 
outside of Minnesota, while a nonresident of this state, which 
gain was not recognized because of the provisions of section 
1034.  
    Sec. 44.  Minnesota Statutes 1984, section 290.18, 
subdivision 2, is amended to read: 
    Subd. 2.  [FEDERAL INCOME TAX PAYMENTS AND REFUNDS.] In the 
case of individuals, estates, or trusts electing to deduct 
federal income taxes under section 290.088, the adjusted gross 
net income shall be computed by deducting from the gross income 
assignable to this state under section 290.17, first the 
deductions allowed under section 290.089, and second the 
deduction for allowable federal income taxes determined under 
the provisions of sections 290.10 (8), (9) or (10), and 290.18.  
For purposes of the preceding sentence, federal income tax shall 
include the foreign tax credit allowed under section 33 of the 
Internal Revenue Code of 1954, as amended through December 31, 
1983.  
    This deduction shall be allowed to individuals, estates, or 
trusts (i) for taxable years beginning after December 31, 1980 
in the taxable year to which the liability applies.  Such 
liability includes the portion of self-employment tax allowed 
under section 290.10, clause (8).  The self-employment tax must 
be deducted by the person who is deriving the income.  When the 
federal tax liability is joint and several under the computation 
of a joint federal return of husband and wife, the federal tax 
liability must be split between the spouses in the same ratio 
that the federal adjusted gross income of that spouse bears to 
the total federal adjusted gross income.  For purposes of the 
preceding sentence, "federal adjusted gross income" includes the 
ordinary income portion of a lump sum distribution as defined in 
section 402(e) of the Internal Revenue Code of 1954, as amended 
through December 31, 1983.  
    (ii) Taxes paid for a taxable year beginning before January 
1, 1981 shall be allowed as follows:  
    (1) Those taxes paid in a taxable year beginning before 
January 1, 1981, shall be claimed in the year in which the 
payment was made.  
    (2) Those paid in a taxable year beginning after December 
31, 1980 but before January 1, 1983 shall be divided and 
deducted in equal installments reflected by the yearly periods 
beginning with the first day of the taxable year in which the 
payment was made and ending December 31, 1986.  For an amount 
which remains to be deducted in a taxable year beginning after 
December 31, 1982, where the federal tax liability for the year 
in which the payment was made is joint and several under the 
computation of a joint federal return of husband and wife, the 
remaining amounts to be deducted shall be claimed by the same 
spouse and in the same dollar amount as the deduction was 
claimed in the first taxable year beginning after December 31, 
1981.  
    (3) Those paid in a taxable year beginning after December 
31, 1982 shall be claimed in the year in which the payment was 
made.  This amount shall be apportioned between spouses as 
provided in clause (i) and shall be allocated for exempt income 
under the provisions of section 290.10, clause (9) or (10) as 
though the payment was part of the federal tax liability for the 
year in which the payment was made.  
    (4) In the case of a person who was self employed during 
all or a portion of the taxable year, the federal income tax 
liability for purposes of this clause shall be increased by the 
self-employment tax allowed under section 290.10, clause (8).  
The self-employment tax shall be deducted in the year paid as 
provided in paragraph (1), (2), or (3).  The self-employment tax 
must be deducted by the person who earned the income.  
Self-employment tax paid in a taxable year beginning after 
December 31, 1982 shall be allocated for exempt income as 
provided in paragraph (3).  
    (iii) If a taxpayer's federal tax liability is eventually 
not paid by reason of compromise, discharge, or court order, the 
deduction allowed pursuant to this subdivision shall be 
disallowed for the taxable year in which the liability was 
accrued.  
    (iv) In the event a federal tax liability for a taxable 
year commencing after December 31, 1980 is increased, decreased 
or modified, and such increase, decrease or modification has 
resulted in a change in the amount of Minnesota income tax in 
the year to which such increase, decrease or modification is 
attributable, the taxpayer's deduction under this subdivision 
shall be modified for such year.  
           (v) If the readjustments required in (iii) or (iv) are for 
taxes reflected in the transition rule described in (ii)(2), the 
readjustment shall be made equally to the remaining installments 
and if a reduction to such installments is required under this 
readjustment which exceeds the total of all remaining 
installments, the remaining installments will be reduced to zero 
and the excess included in income as a federal income tax refund.
            (vi) Refunds which are not involved with any readjustments 
under the transition rule shall be included in income under 
Minnesota Statutes 1982, section 290.01, subdivision 20a, clause 
(6) if it is from a year beginning before January 1, 1981.  
             (vii) Refunds of taxes for years beginning after December 
31, 1980, shall be used to adjust the deduction in the taxable 
year of the liability unless that year is closed by statute and 
no other adjustments are to be required or allowable in which 
case such refund shall be reportable in the year received. 
    Sec. 45.  Minnesota Statutes 1984, section 290.19, 
subdivision 1, is amended to read: 
    Subdivision 1.  [COMPUTATION, BUSINESS CONDUCTED PARTLY 
WITHIN STATE; APPORTIONMENT.] The taxable net income from a 
trade or business carried on partly within and partly without 
this state shall be computed by deducting from the gross income 
of such business, wherever derived, deductions of the kind 
permitted by section 290.09, so far as connected with or 
allocable against the production or receipt of such income.  The 
remaining net income shall be apportioned to Minnesota as 
follows: 
    (1) If the business consists of the mining, producing, 
smelting, refining, or any combination of these activities of 
copper and nickel ores, or of the manufacture of personal 
property and the sale of said property within and without the 
state, the remainder shall be apportioned to Minnesota on the 
basis of the percentage obtained by taking the arithmetical 
average of the following three percentages: 
    (a) The percentage which the sales made within this state 
is of the total sales wherever made; 
    (b) The percentage which the total tangible property, real, 
personal, and mixed, owned or rented, and used by the taxpayer 
in this state during the tax period in connection with such 
trade or business is of the total tangible property, real, 
personal, or mixed, wherever located, owned or rented and, used 
by the taxpayer in connection with such trade or business during 
the tax period; and, 
     (c) The percentage which the taxpayer's total payrolls paid 
or incurred in this state or paid in respect to labor performed 
in this state in connection with such trade or business is of 
the taxpayer's total payrolls paid or incurred in connection 
with such entire trade or business; 
     (d) The percentage of such remainder to be assigned to this 
state shall not be in excess of the sum of the following 
percentages: 70 percent of the percentage determined under 
clause (1) (a), 15 percent of the percentage determined under 
clause (1) (b), and 15 percent of the percentage determined 
under clause (1) (c); 
     (2) (a) In all other cases the remainder shall be 
apportioned to Minnesota on the basis of the percentage obtained 
by taking the arithmetical average of the following three 
percentages: 
     (1) The percentage which the sales, gross earnings, or 
receipts from business operations, in whole or in part, within 
this state bear to the total sales, gross earnings, or receipts 
from business operations wherever conducted; 
     (2) The percentage which the total tangible property, real, 
personal, and mixed, owned or rented, and used by the taxpayer 
in this state during the tax period in connection with such 
trade or business is of the total tangible property, real, 
personal, or mixed, wherever located, owned, or rented, and used 
by the taxpayer in connection with such trade or business during 
the tax period; and 
    (3) The percentage which the taxpayer's total payrolls paid 
or incurred in this state or paid in respect to labor performed 
in this state in connection with such trade or business is of 
the taxpayer's total payrolls paid or incurred in connection 
with such entire trade or business; 
    (4) The percentage of such remainder to be assigned to this 
state shall not be in excess of the sum of the following 
percentages:  70 percent of the percentage determined under 
clause (2) (a) (1), 15 percent of the percentage determined 
under clause (2) (a) (2), and 15 percent of the percentage 
determined under clause (2) (a) (3); 
    (b) If the methods prescribed under clause (2) (a) will not 
properly reflect taxable net income assignable to the state, 
there may be used, if practicable and if such use will properly 
and fairly reflect such income, the percentage which the sales, 
gross earnings, or receipts from business operations, in whole 
or in part, within this state bear to the total sales, gross 
earnings, or receipts from business operations wherever 
conducted; or the separate or segregated accounting method; 
however, for athletic teams when the visiting team does not 
share in the gate receipts, all of the team's income is 
apportioned to the state in which the team's operation is based; 
    (3) If the business consists exclusively of the selling of 
tangible personal property and services in response to orders 
received by United States mail or telephone, and 100 percent of 
the taxpayer's property and payroll is within Minnesota, then 
the taxpayer may apportion net income to Minnesota as provided 
in clause (1) or (2), except that the percentage applicable in 
clause (1)(d) or (2)(a)(4) shall be 100 percent of the 
percentage determined under clause (1)(a) or (2)(a)(1).  In 
determining eligibility for this paragraph, the sale not in the 
ordinary course of business of tangible or intangible assets 
used in conducting business activities shall be disregarded. 
    (4) The sales, payrolls, earnings, and receipts referred to 
in this section shall be those for the taxable year in respect 
of which the tax is being computed.  The property referred to in 
this section shall be the average of the property owned or 
rented and used by the taxpayer during the taxable year in 
respect of which the tax is being computed.  For purposes of 
computing the property factor referred to in this section, 
United States government property which is used by the taxpayer 
shall be considered as being owned by the taxpayer.  
    Sec. 46.  Minnesota Statutes 1984, section 290.21, 
subdivision 8, is amended to read: 
    Subd. 8.  [FOREIGN SOURCE ROYALTIES.] (a) Rentals, fees, 
and royalties accrued or received from a foreign corporation for 
the use of or for the privilege of using outside of the United 
States patents, copyrights, secret processes and formulas, good 
will, know-how, trademarks, trade brands, franchises, and other 
like property.  Rentals, fees, or royalties deducted under this 
subdivision shall not be included in the taxpayer's 
apportionment factors under section 290.19, subdivision 1, 
clause (1)(a) or (2)(a)(1).  The preceding sentence shall not be 
construed to imply that nondeductible rentals, fees, and 
royalties from such properties are or were included in or 
excluded from the apportionment factors under any other 
provision of law.  
    (b) A corporation is allowed the deduction provided by this 
subdivision only if during the taxable year it received or 
accrued at least 80 percent of its gross income from sources as 
defined in clause (a) and from dividends received from foreign 
corporations.  The A corporation's gross income for purposes of 
this clause paragraphs (b) and (c) shall be computed without 
regard to the requirement of section 290.34, subdivision 2, that 
a combined report be filed reflecting the entire income of the 
unitary business.  
    (c) For purposes of this subdivision, a foreign corporation 
is (i) a corporation organized under the laws of a foreign 
country or the political subdivision of a foreign country or 
(ii) a corporation which for the taxable year derives at least 
80 percent of its gross income from sources without the United 
States, the commonwealth of Puerto Rico, and the possessions of 
the United States.  A foreign corporation does not include a 
DISC as defined in section 992(a) of the Internal Revenue Code 
of 1954, as amended through December 31, 1983.  
    (d) The deduction provided in this subdivision is allowed 
only with respect to rentals, fees, and royalties that are 
included in a corporation's Minnesota taxable net income for the 
taxable year. 
    Sec. 47.  Minnesota Statutes 1984, section 290.37, 
subdivision 1, is amended to read:  
    Subdivision 1.  [PERSONS MAKING RETURNS.] (a) The 
commissioner of revenue shall annually determine the gross 
income levels at which individuals, trusts, and estates shall be 
required to file a return for each taxable year.  An individual 
who is not a Minnesota resident for any part of the year is not 
required to file a Minnesota income tax return if the 
individual's Minnesota gross income computed under section 
290.06, subdivision 2c, clause (c)(1) (f)(1) is less than the 
filing requirements for an individual who is a full year 
resident of Minnesota with the same marital status and number of 
personal credits.  
    The decedent's final income tax return, and all other 
income tax returns for prior years where the decedent had gross 
income in excess of the minimum amount at which an individual is 
required to file and did not file, shall be filed by his or her 
personal representative, if any.  If there is no personal 
representative, the return or returns shall be filed by the 
transferees as defined in section 290.29, subdivision 3, who 
receive any property of the decedent. 
    The trustee or other fiduciary of property held in trust 
shall file a return with respect to the taxable net income of 
such trust if that exceeds an amount determined by the 
commissioner if such trust belongs to the class of taxable 
persons. 
    Every corporation shall file a return.  The commissioner 
may adopt rules for the filing of one return on behalf of the 
members of an affiliated group of corporations that are required 
to file a combined report if the affiliated group includes a 
corporation subject to tax under section 290.361.  The return in 
this the case of a corporation shall be signed by an officer of 
a person designated by the corporation. 
    The receivers, trustees in bankruptcy, or assignees 
operating the business or property of a taxpayer shall file a 
return with respect to the taxable net income of such taxpayer 
if that exceeds an amount on which a tax at the rates herein 
provided would exceed the specific credits allowed a return is 
required. 
    (b) Such return shall (1) be verified or contain a written 
declaration that it is made under the penalties of criminal 
liability for willfully making a false return correct and 
complete, and (2) shall contain language prescribed by the 
commissioner providing a confession of judgment for the amount 
of the tax shown due thereon to the extent not timely paid. 
    (c) For purposes of this subdivision the term "gross income"
shall mean gross income as defined in section 61 of the Internal 
Revenue Code of 1954, as amended through December 31, 1983, 
modified and adjusted in accordance with the provisions of 
sections 290.01, subdivision 20b, clauses (1), (6), and 
(10) (7), and (8), 290.08, and 290.17. 
    Sec. 48.  Minnesota Statutes 1984, section 290.38, is 
amended to read: 
    290.38 [JOINT RETURNS OF HUSBAND AND WIFE MARRIED PERSONS.] 
    A husband and wife may make a single return jointly even 
though one of the spouses has neither gross income nor 
deductions must file a joint Minnesota income tax return if they 
filed a joint federal income tax return.  If a joint return is 
made the tax shall be computed on the aggregate income and the 
liability with respect to the tax shall be joint and several.  
If both the husband and wife have gross income elected to file 
separate federal income tax returns they may elect to either 
file a single return jointly or may must file separate Minnesota 
income tax returns pursuant to this section or as provided in 
section 290.39, subdivision 2.  This election to file a joint or 
separate returns may must be changed within the period provided 
for the assessment of additional taxes on said return or returns 
if they change their election for federal purposes.  In the 
event taxpayers desire to change their election, such change 
shall be done in the manner and on such form as the commissioner 
shall prescribe by regulation rule. 
    No joint return shall be made if the husband and wife have 
different taxable years; except that if such taxable years begin 
on the same day and end on different days because of the death 
of either or of both, then the joint return may be made with 
respect to the taxable year of each.  The above exception shall 
not apply if the surviving spouse remarries before the close of 
his taxable year or if the taxable year of either spouse is a 
fractional part of a year under section 290.32 The determination 
of whether an individual is married is made as of the close of 
that person's taxable year; except that if that person's spouse 
dies during the taxable year the determination is made as of the 
time of the death.  An individual who is legally separated from 
a spouse under a decree of divorce, dissolution, or of separate 
maintenance is not considered to be married.  
    In the case of the death of one spouse or both spouses the 
joint return with respect to the decedent may be made only by 
the personal representative of his estate; except that in the 
case of the death of one spouse the joint return may be made by 
the surviving spouse with respect to both himself and the 
decedent if (a) no return for the taxable year has been made by 
the decedent, (b) no personal representative has been appointed, 
and (c) no personal representative is appointed before the last 
day prescribed by law for filing the return of the surviving 
spouse.  If a personal representative of the estate of the 
decedent is appointed after the joint return has been filed by 
the surviving spouse, the personal representative may disaffirm 
such joint return by filing, within one year after the last day 
prescribed by law for filing the return of the surviving spouse, 
a separate return for the taxable year of the decedent with 
respect to which the joint return was made, in which case the 
return made by the survivor shall constitute his separate return 
provided that the election has been also disaffirmed for federal 
purposes. 
    If husband and wife determine their federal income tax on a 
joint return but determine their Minnesota income taxes 
separately, they shall determine their Minnesota gross income 
separately as if their federal adjusted gross incomes had been 
determined separately. 
    Sec. 49.  Minnesota Statutes 1984, section 290.41, 
subdivision 2, is amended to read: 
    Subd. 2.  [BY PERSONS, CORPORATIONS, COOPERATIVES, 
GOVERNMENTAL ENTITIES OR SCHOOL DISTRICTS.] Every person, 
corporation, or cooperative, the state of Minnesota and its 
political subdivisions, and every city, county and school 
district in Minnesota, making payments in the regular course of 
a trade or business during the taxable year to any person or 
corporation of $600 or more on account of rents or royalties, or 
of $10 or more on account of interest, or $10 or more on account 
of dividends or patronage dividends, or $600 or more on account 
of either wages, salaries, commissions, fees, prizes, awards, 
pensions, annuities, or any other fixed or determinable gains, 
profits or income, not otherwise reportable under section 
290.92, subdivision 7, or on account of earnings of $10 or more 
distributed to its members by savings, building and loan 
associations or credit unions chartered under the laws of this 
state or the United States, (a) shall make a return (except in 
cases where a valid agreement to participate in the combined 
federal and state information reporting system has been entered 
into, and such return is therefore filed only with the 
commissioner of internal revenue pursuant to the applicable 
filing and informational reporting requirements of the Internal 
Revenue Code of 1954 as amended through December 31, 1983) in 
respect to such payments in excess of the amounts specified, 
giving the names and addresses of the persons to whom such 
payments were made, the amounts paid to each, and (b) shall make 
a return in respect to the total number of such payments and 
total amount of such payments, for each category of income 
specified, which were in excess of the amounts specified.  This 
subdivision shall not apply to the payment of interest or 
dividends to a person who was a nonresident of Minnesota for the 
entire year.  
    A person, corporation, or cooperative required to file 
returns under this subdivision on interest, dividends, or 
patronage dividend payments with respect to more than 50 payees 
for any calendar year must file all of these returns on magnetic 
media unless the person establishes to the satisfaction of the 
commissioner that compliance with this requirement would be an 
undue hardship.  
    Upon request from the commissioner, any public pension plan 
as defined in section 356.61 in which the employer picks up the 
employee contributions under section 356.62 shall furnish the 
commissioner, on magnetic media to the extent possible, with the 
name, address, and social security number of each employee who 
participated in the plan during that calendar year for which 
picked up contributions were made.  
    Sec. 50.  [290.491] [TAX ON GAIN; DISCHARGE IN BANKRUPTCY.] 
     Any tax due under this chapter on a gain realized on a 
forced sale pursuant to foreclosure of a mortgage or other 
security interest in agricultural production property, other 
real property, or equipment, used in a farm business that was 
owned and operated by the taxpayer shall be a dischargeable debt 
in a bankruptcy proceeding under United States Code, title 11, 
section 727.  A gain realized on a sale of agricultural 
production property, other real property, or equipment, used in 
a farm business that was owned and operated by the taxpayer 
shall be exempt from taxation under this chapter, if the 
taxpayer was insolvent at the time of the sale and the proceeds 
of the sale were used solely to discharge indebtedness secured 
by a mortgage, lien or other security interest on the property 
sold.  For purposes of this section, "insolvent" means insolvent 
as defined in section 108(d)(3) of the Internal Revenue Code of 
1954, as amended through December 31, 1984. 
    Sec. 51.  Minnesota Statutes 1984, section 290.50, 
subdivision 5, is amended to read: 
    Subd. 5.  [OVERPAYMENTS; CREDITS AND REFUNDS.] (a) If the 
amount allowable as a credit under section 290.92, subdivision 
12 (relating to credit for tax withheld at source) or an amount 
determined to be an overpayment under section 290.93, 
subdivision 9, or 290.936 exceeds the taxes imposed by this 
chapter against which such credit is allowable the amount of 
such excess shall be considered an overpayment.  An amount paid 
as tax shall constitute an overpayment even if in fact there was 
no tax liability with respect to which such amount was paid. 
    (b) Notwithstanding any other provision of law to the 
contrary, in the case of any overpayment the commissioner, 
within the applicable period of limitations, may credit the 
amount of such overpayment against any liability in respect of 
Minnesota income tax on the part of the person who made the 
overpayment or against any liability in respect to Minnesota 
income tax on the part of either spouse who shall have filed a 
joint or combined return for the taxable year in which the 
overpayment was made and shall refund any balance of more than 
one dollar to such person if the taxpayer shall so request. 
    The commissioner is authorized to prescribe rules providing 
for the crediting against the estimated income tax for any 
taxable year of the amount determined by the commissioner to be 
an overpayment of the income tax for a preceding taxable year. 
    Sec. 52.  Minnesota Statutes 1984, section 290.50, 
subdivision 6, is amended to read: 
    Subd. 6.  [WITHHOLDING OF REFUNDS FROM CHILD SUPPORT 
DEBTORS.] Upon a finding by a court of this state that a person 
obligated to pay child support is delinquent in making payments, 
the amount of child support unpaid and owing including attorneys 
fees and costs incurred in ascertaining or collecting child 
support shall be withheld from a refund due the person under 
this section.  The public agency responsible for child support 
enforcement or the parent or guardian of a child for whom the 
support, attorneys fees and costs are owed may petition the 
district or county court for an order providing for the 
withholding of the amount of child support, attorneys fees and 
costs unpaid and owing as determined by court order.  The person 
from whom the refund may be withheld shall be notified of the 
petition pursuant to the rules of civil procedure prior to the 
issuance of an order pursuant to this subdivision.  The order 
may be granted on a showing to the court that required support 
payments, attorneys fees and costs have not been made when they 
were due.  
    On order of the court, the money shall be withheld by the 
commissioner from the refund due to the person obligated to pay 
and the amount withheld shall be remitted to the public agency 
responsible for child support enforcement or to the parent or 
guardian petitioning on behalf of the child, provided that any 
delinquent tax obligations of the taxpayer owed to the revenue 
department shall be satisfied first.  Any amount received by the 
responsible public agency or the petitioning parent or guardian 
in excess of the amount of public assistance expended for the 
benefit of the child to be supported, or the amount of any 
support, attorneys fees and costs that had been the subject of 
the claim pursuant to this subdivision which has been paid by 
the taxpayer prior to the diversion of the refund, shall be 
remitted to the person entitled to the money.  If the refund is 
based on a joint or combined return, the portion of the refund 
that shall be remitted to the petitioner shall be the proportion 
of the total refund that equals the proportion of the total 
federal adjusted gross income of the spouses that is the federal 
adjusted gross income of the spouse who is delinquent in making 
the child support payments.  A petition filed pursuant to this 
subdivision shall be in effect with respect to any refunds due 
under this section until the support money, attorneys fees and 
costs have been paid in full or the court orders the 
commissioner to discontinue withholding the money from the 
refund due the person obligated to pay the support, attorneys 
fees and costs.  If a petition is filed pursuant to this 
subdivision and a claim is made pursuant to chapter 270A with 
respect to the same individual's refund and notices of both are 
received prior to the time when payment of the refund is made on 
either claim, the claim relating to the liability that accrued 
first in time shall be paid first; any amount of the refund 
remaining shall then be applied to the other claim.  The 
provisions of section 290.61 shall not prohibit the exchange of 
information among the department, the petitioner, and the court 
to the extent necessary to accomplish the intent of this 
subdivision.  
    Sec. 53.  Minnesota Statutes 1984, section 290.92, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [COLLECTION AT SOURCE.] (1) [DEDUCTIONS.] Every 
employer making payment of wages shall deduct and withhold upon 
such wages a tax as provided in this section. 
    (2) [WITHHOLDING ON PAYROLL PERIOD.] The employer shall 
withhold the tax on the basis of each payroll period or as 
otherwise provided in this section. 
    (3) [WITHHOLDING TABLES.] Unless the amount of tax to be 
withheld is determined as provided in subdivision 3, the amount 
of tax to be withheld for each individual shall be based upon 
tables to be prepared and distributed by the commissioner.  The 
tables shall be computed for the several permissible withholding 
periods and shall take account of exemptions allowed under this 
section; and the amounts computed for withholding shall be such 
that the amount withheld for any individual during his taxable 
year shall approximate in the aggregate as closely as possible 
the tax which is levied and imposed under this chapter for that 
taxable year, upon his salary, wages, or compensation for 
personal services of any kind for the employer, and shall take 
into consideration the allowable optional deduction for federal 
income tax and the deduction allowable under section 290.089, 
subdivision 3, and the personal credits allowed against the tax. 
    (4) [MISCELLANEOUS PAYROLL PERIOD.] If wages are paid with 
respect to a period which is not a payroll period, the amount to 
be deducted and withheld shall be that applicable in the case of 
a miscellaneous payroll period containing a number of days, 
including Sundays and holidays, equal to the number of days in 
the period with respect to which such wages are paid. 
    (5) [MISCELLANEOUS PAYROLL PERIOD.] (a) In any case in 
which wages are paid by an employer without regard to any 
payroll period or other period, the amount to be deducted and 
withheld shall be that applicable in the case of a miscellaneous 
payroll period containing a number of days equal to the number 
of days, including Sundays and holidays, which have elapsed 
since the date of the last payment of such wages by such 
employer during the calendar year, or the date of commencement 
of employment with such employer during such year, or January 1 
of such year, whichever is the later. 
    (b) In any case in which the period, or the time described 
in clause (a), in respect of any wages is less than one week, 
the commissioner, under regulations prescribed by him, may 
authorize an employer to determine the amount to be deducted and 
withheld under the tables applicable in the case of a weekly 
payroll period, in which case the aggregate of the wages paid to 
the employee during the calendar week shall be considered the 
weekly wages. 
    (6) [WAGES COMPUTED TO NEAREST DOLLAR.] If the wages exceed 
the highest bracket, in determining the amount to be deducted 
and withheld under this subdivision, the wages may, at the 
election of the employer, be computed to the nearest dollar. 
    (7) [REGULATIONS ON WITHHOLDING.] The commissioner may, by 
regulations rule, authorize employers: 
    (a) To estimate the wages which will be paid to any 
employee in any quarter of the calendar year; 
    (b) To determine the amount to be deducted and withheld 
upon each payment of wages to such employee during such quarter 
as if the appropriate average of the wages so estimated 
constituted the actual wages paid; and 
    (c) To deduct and withhold upon any payment of wages to 
such employee during such quarter such amount as may be 
necessary to adjust the amount actually deducted and withheld 
upon wages of such employee during such quarter to the amount 
required to be deducted and withheld during such quarter without 
regard to this paragraph (7). 
     (8) [ADDITIONAL WITHHOLDING.] The commissioner is 
authorized to provide by rule for increases or decreases in the 
amount of withholding otherwise required under this section in 
cases where the employee requests the changes.  Such additional 
withholding shall for all purposes be considered tax required to 
be deducted and withheld under this section. 
     (9) [TIPS.] In the case of tips which constitute wages, 
this subdivision shall be applicable only to such tips as are 
included in a written statement furnished to the employer 
pursuant to section 6053 of the Internal Revenue Code of 1954, 
as amended through December 31, 1983, and only to the extent 
that the tax can be deducted and withheld by the employer, at or 
after the time such statement is so furnished and before the 
close of the calendar year in which such statement is furnished, 
from such wages of the employee (excluding tips, but including 
funds turned over by the employee to the employer for the 
purpose of such deduction and withholding) as are under the 
control of the employer; and an employer who is furnished by an 
employee a written statement of tips (received in a calendar 
month) pursuant to section 6053 of the Internal Revenue Code of 
1954 as amended through December 31, 1983 to which subdivision 1 
is applicable may deduct and withhold the tax with respect to 
such tips from any wages of the employee (excluding tips) under 
his control, even though at the time such statement is furnished 
the total amount of the tips included in statements furnished to 
the employer as having been received by the employee in such 
calendar month in the course of his employment by such employer 
is less than $20.  Such tax shall not at any time be deducted 
and withheld in an amount which exceeds the aggregate of such 
wages and funds as are under the control of the employer minus 
any tax required by other provisions of state or federal law to 
be collected from such wages and funds.  
    Sec. 54.  Minnesota Statutes 1984, section 290.92, 
subdivision 18, is amended to read:  
    Subd. 18.  [RETURNS; CONFESSION OF JUDGMENT.] Any return 
that is required to be filed with the commissioner of revenue 
under this section shall (a) contain a written declaration that 
it is made under the penalties of criminal liability for 
wilfully making a false return correct and complete, and (b) 
shall contain language prescribed by the commissioner providing 
a confession of judgment for the amount of the tax shown due 
thereon to the extent not timely paid. 
    Sec. 55.  Minnesota Statutes 1984, section 290.92, 
subdivision 19, as amended by Laws 1985, chapter 210, article 1, 
section 14, is amended to read: 
    Subd. 19.  [EMPLOYEES INCURRING NO INCOME TAX LIABILITY.] 
Notwithstanding any other provision of this section, except the 
provisions of subdivision 5a, an employer shall not be required 
to deduct and withhold any tax under this chapter upon a payment 
of wages to an employee if there is in effect with respect to 
such payment a withholding exemption certificate, in such form 
and containing such other information as the commissioner may 
prescribe, furnished to the employer by the employee certifying 
that the employee 
    (a) incurred no liability for income tax imposed under this 
chapter for his preceding taxable year, and 
    (b) anticipates that he will incur no liability for income 
tax imposed under this chapter for his current taxable year.  
When an employee anticipates no liability for the current 
taxable year because of the provision contained in section 
290.06, subdivision 3d, no withholding shall be required, clause 
(a) notwithstanding, except for the provisions of subdivision 
5a.  The commissioner shall by rule provide for the coordination 
of the provisions of this subdivision with the provisions of 
subdivision 7. 
    Sec. 56.  Minnesota Statutes 1984, section 290.92, 
subdivision 21, is amended to read: 
    Subd. 21.  [EXTENSION OF WITHHOLDING TO UNEMPLOYMENT 
COMPENSATION BENEFITS.] For purposes of this section, any 
supplemental unemployment compensation benefit paid to an 
individual to the extent includable in such individual's 
Minnesota adjusted gross income, shall be treated as if it were 
a payment of wages by an employer to an employee for a payroll 
period. 
    Sec. 57.  Minnesota Statutes 1984, section 290.931, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REQUIREMENTS OF DECLARATION.] Every 
corporation subject to taxation under this chapter (excluding 
section 290.92) shall make a declaration of estimated tax for 
the taxable year if its tax liability so computed can reasonably 
be expected to exceed $1,000, or in accordance with rules 
prescribed by the commissioner for an affiliated group of 
corporations electing to file one return as permitted by rules 
prescribed under section 290.37, subdivision 1. 
    Sec. 58.  Minnesota Statutes 1984, section 290A.03, 
subdivision 3, as amended by Laws 1985, chapter 210, article 2, 
section 9, is amended to read: 
    Subd. 3.  [INCOME.] (1) "Income" means the sum of the 
following: 
    (a) federal adjusted gross income as defined in the 
Internal Revenue Code of 1954 as amended through December 31, 
1983 May 25, 1985; and 
    (b) the sum of the following amounts to the extent not 
included in clause (a): 
    (i) additions to federal adjusted gross income as provided 
in Minnesota Statutes, section 290.01, subdivision 20a, clauses 
(1), (2), (3), and (4), (9), (10), and (14); 
    (ii) all nontaxable income; 
    (iii) recognized net long term capital gains; 
    (iv) dividends and interest excluded from federal adjusted 
gross income under sections section 116 or 128 of the Internal 
Revenue Code of 1954; 
    (v) cash public assistance and relief; 
    (vi) any pension or annuity (including railroad retirement 
benefits, all payments received under the federal social 
security act, supplemental security income, and veterans 
benefits), which was not exclusively funded by the claimant or 
spouse, or which was funded exclusively by the claimant or 
spouse and which funding payments were excluded from federal 
adjusted gross income in the years when the payments were made; 
    (vii) nontaxable interest received from the state or 
federal government or any instrumentality or political 
subdivision thereof; 
    (viii) workers' compensation; 
    (ix) unemployment benefits; 
    (x) nontaxable strike benefits;  
    (xi) the gross amounts of payments received in the nature 
of disability income or sick pay as a result of accident, 
sickness, or other disability, whether funded through insurance 
or otherwise; and 
   (xii) the ordinary income portion of a lump sum 
distribution under section 402(e) of the Internal Revenue Code 
of 1954. 
     In the case of an individual who files an income tax return 
on a fiscal year basis, the term "federal adjusted gross income" 
shall mean federal adjusted gross income reflected in the fiscal 
year ending in the calendar year.  Federal adjusted gross income 
shall not be reduced by the amount of a net operating loss 
carryback. 
    (2) "Income" does not include 
    (a) amounts excluded pursuant to the Internal Revenue Code, 
Sections 101(a), 102, 117, and 121; 
    (b) amounts of any pension or annuity which was exclusively 
funded by the claimant or spouse and which funding payments were 
not excluded from federal adjusted gross income in the years 
when the payments were made; 
    (c) surplus food or other relief in kind supplied by a 
governmental agency; 
    (d) relief granted under this chapter; or 
    (e) child support payments received under a temporary or 
final decree of dissolution or legal separation; or 
    (f) federal adjusted gross income shall be reduced by wage 
or salary expense which is not allowed as a deduction under 
provisions of section 280C of the Internal Revenue Code of 1954. 
    Sec. 59.  [REPEALER.] 
    (a) Minnesota Statutes 1984, sections 41.58, subdivision 3; 
41.59, subdivisions 2 and 3; 62E.03, subdivision 2; 290.01, 
subdivisions 20c and 26; 290.012; 290.06, subdivision 3d, as 
amended by Laws 1985, chapter 210, article 2, section 1, 
subdivisions 3e, 14, 16, 17, 18, and 19; 290.077, subdivision 4; 
290.08, subdivisions 23 and 24; 290.089, subdivisions 4 and 6; 
290.09, subdivision 29; 290.101, as amended by Laws 1985, 
chapter 210, article 2, section 4; 290.18, subdivision 4; 
290.39, subdivision 2; 290.41, subdivision 5; Laws 1982, chapter 
523, article VII, section 3; and Laws 1984, chapter 502, article 
2, section 4, are repealed.  
    (b) Minnesota Statutes 1984, section 290.069, subdivision 4 
is repealed. 
    Sec. 60.  [CARRYOVER OF FARM LOSS DEDUCTION.] 
    Any remaining balance of the deductions attributable to 
farming, after any carryback or carryover deductions allowed 
under Minnesota Statutes 1984, section 290.09, subdivision 29 in 
taxable years beginning before January 1, 1985, may be carried 
forward to taxable years beginning after December 31, 1984.  The 
deductions carried over to taxable years beginning after 
December 31, 1984, shall be allowed in an amount up to gross 
income or, in the case of a corporation, taxable net income.  
The term "gross income" includes the ordinary income portion of 
a lump sum distribution as defined in section 402(e) of the 
Internal Revenue Code of 1954, as amended through December 31, 
1984. 
    For purposes of this section, "remaining balance" means the 
amount that would be allowable under the carryover provisions of 
Minnesota Statutes 1984, section 290.09, subdivision 29, 
paragraph (c), for taxable year 1985, if the income limitations 
under Minnesota Statutes 1984, section 290.09, subdivision 29, 
were not applicable.  The carryover deduction provided in this 
section is deductible in computing alternative minimum taxable 
income for purposes of section 290.091.  
    Sec. 61.  [EFFECTIVE DATE.] 
    Except as otherwise provided, sections 1 to 23, 31 to 44, 
46 to 49, 51 to 56, 59, paragraph (a), and 60 are effective for 
taxable years beginning after December 31, 1984.  Sections 24, 
25, and 29 are effective for taxable years beginning after 
December 31, 1985.  The provisions of Minnesota Statutes 1984, 
section 290.069, subdivisions 1 to 3, and 4a to 7 remain in 
effect as amended, provided that the credits are repealed as 
provided in section 29.  Section 59, paragraph (b) is effective 
for qualified small businesses certified after June 30, 1985 and 
for stock purchased after June 30, 1985 and the provisions of 
sections 26 to 30 conforming to the repeal of Minnesota 
Statutes, section 290.069, subdivision 4, are effective at the 
same time.  The amendment to Minnesota Statutes 1984, section 
290.10, clause (8) in section 41 changing the percentage of 
deductible self-employment tax is effective for taxable years 
beginning after December 31, 1985.  Section 45 is effective for 
taxable years beginning after December 31, 1984 and before 
January 1, 1989.  Sections 50, 57 and the amendment to Minnesota 
Statutes 1984, section 290.37, subdivision 1, paragraph (a), in 
section 47, authorizing the adoption of rules, are effective the 
day after final enactment.  The provision in section 58, 
clause(1)(a), updating the reference to the Internal Revenue 
Code, is effective for claims based on rent paid in 1984 and 
thereafter and property taxes payable in 1985 and thereafter.  
The balance of section 58 is effective for claims based on rent 
paid in 1985 and thereafter and property taxes payable in 1986 
and thereafter. 

                               ARTICLE 2 

                         SALES AND EXCISE TAXES 
    Section 1.  Minnesota Statutes 1984, section 296.01, 
subdivision 24, is amended to read: 
    Subd. 24.  [AGRICULTURAL ALCOHOL GASOLINE.] "Agricultural 
alcohol gasoline" means a gasoline blend at least up to ten 
percent of which is agriculturally derived fermentation ethyl 
alcohol ethanol of a purity of at least 99 percent, determined 
without regard to any added denaturants, denatured in conformity 
with one of the approved methods set forth by the United States 
Department of Treasury, Bureau of Alcohol, Tobacco and Firearms, 
and derived from agricultural products such as cereal grains, 
cheese whey, sugar beets, or forest products or other renewable 
resources, distilled in the United States and derived from 
agricultural products produced in the United States. 
    Sec. 2.  Minnesota Statutes 1984, section 296.02, 
subdivision 7, is amended to read: 
    Subd. 7.  [TAX REDUCTION FOR AGRICULTURAL ALCOHOL 
GASOLINE.] The tax on gasoline imposed by subdivision 1 shall be 
reduced by two cents per gallon beginning July 1, 1983, and 
continuing through June 30, 1985, and four cents per gallon 
beginning July 1, 1985, and continuing through June 30, 1992, 
for gasoline which is agricultural alcohol gasoline as defined 
in section 296.01, subdivision 24, which is blended by a 
distributor with alcohol distilled in the United States from 
agricultural products produced in the United States, and which 
is used on the public highways of this state.  The tax imposed 
by this subdivision shall be payable at the same time, and 
collected in the same manner, as the tax imposed by subdivision 
1 A distributor shall be allowed a credit on each gallon of fuel 
grade alcohol commercially blended with gasoline or blended in a 
tank trunk with gasoline on which the tax imposed by subdivision 
1 is due and payable.  The amount of the credit is 40 cents for 
every gallon of fuel-grade alcohol blended with gasoline to 
produce agricultural alcohol gasoline.  The credit allowed a 
distributor must not exceed the total tax liability under 
subdivision 1.  The tax credit received by a distributor on 
alcohol blended with motor fuels shall be passed on to the 
retailer. 
    Sec. 3.  Minnesota Statutes 1984, section 296.02, 
subdivision 8, is amended to read: 
    Subd. 8.  [TAX REDUCTION FOR AGRICULTURAL ALCOHOL GASOLINE 
SOLD IN BULK TO GOVERNMENT OR FOR SCHOOL TRANSPORTATION.] The 
tax on gasoline imposed by subdivision 1 shall be reduced by 
eight cents per gallon beginning January 1, 1984, and continuing 
through June 30, 1992, for gasoline which is agricultural 
alcohol gasoline as defined in section 296.01, subdivision 24, 
meets the criteria established in subdivision 7, and A 
distributor shall be allowed a credit of 80 cents for every 
gallon of fuel grade alcohol blended with gasoline to produce 
agricultural alcohol gasoline which is sold in bulk to the 
state, local units of government, or for use in the 
transportation of pupils to and from school or school-related 
events in school buses vehicles.  This reduction is in lieu of 
the reductions provided in subdivision 7. 
    Sec. 4.  Minnesota Statutes 1984, section 296.18, 
subdivision 1, as amended by Laws 1985, chapter 248, section 50, 
is amended to read:  
    Subdivision 1.  [GASOLINE OR SPECIAL FUEL USED IN OTHER 
THAN MOTOR VEHICLES.] Any person who shall buy and use gasoline 
for a qualifying purpose other than use in motor vehicles, 
snowmobiles, or motorboats, or special fuel for a qualifying 
purpose other than use in licensed motor vehicles, and who shall 
have paid the Minnesota excise tax directly or indirectly 
through the amount of the tax being included in the price of the 
gasoline or special fuel, or otherwise, shall be reimbursed and 
repaid the amount of the tax paid by him upon filing with the 
commissioner a signed claim in writing in the form and 
containing the information the commissioner shall require and 
accompanied by the original invoice thereof.  By signing any 
such claim which is false or fraudulent, the applicant shall be 
subject to the penalties provided in this section for knowingly 
making a false claim.  The claim shall set forth the total 
amount of the gasoline so purchased and used by him other than 
in motor vehicles, or special fuel so purchased and used by him 
other than in licensed motor vehicles, and shall state when and 
for what purpose it was used.  When a claim contains an error in 
computation or preparation, the commissioner is authorized to 
adjust the claim in accordance with the evidence shown on the 
claim or other information available to him.  If the 
commissioner is satisfied that the claimant is entitled to the 
payments, he shall approve the claim and transmit it to the 
commissioner of finance.  No repayment shall be made unless the 
claim and invoice shall be filed with the commissioner within 
one year from the date of the purchase.  The postmark on the 
envelope in which the claim is mailed shall determine the date 
of filing.  The words "gasoline" or "special fuel" as used in 
this subdivision do not include aviation gasoline or special 
fuel for aircraft.  Gasoline or special fuel bought and used for 
a "qualifying purpose" means: 
    (1) Gasoline or special fuel used in carrying on a trade or 
business, used on a farm situated in Minnesota, and used for a 
farming purpose.  "Farm" and "farming purpose" have the meanings 
given them in section 6420(c)(2), (3), and (4) of the Internal 
Revenue Code of 1954, as amended through December 31, 1983.  
    (2) Gasoline or special fuel used for off-highway business 
use.  "Off-highway business use" means any use by a person in 
that person's trade, business, or activity for the production of 
income.  "Off-highway business use" does not include use as a 
fuel in a motor vehicle which, at the time of use, is registered 
or is required to be registered for highway use under the laws 
of any state or foreign country.  
    (3) Gasoline or special fuel placed in the fuel tanks of 
new motor vehicles, manufactured in Minnesota, and shipped by 
interstate carrier to destinations in other states or foreign 
countries.  
    Sec. 5.  Minnesota Statutes 1984, section 296.22, 
subdivision 13, is amended to read: 
    Subd. 13.  [GASOLINE-ALCOHOL BLENDS; IDENTIFICATION.] When 
gasoline blended with alcohol is sold, offered for sale, or 
dispensed for use in motor vehicles, the dispenser shall be 
clearly marked to identify each type of alcohol, if more than 
one percent by volume, blended with the gasoline.  The marking 
shall consist of a white or yellow adhesive decal not less than 
two inches by six inches with clearly printed black lettering 
not less than one-half inch high and one-eighth inch in stroke. 
The marking shall be conspicuously displayed on the front side 
of the dispenser and state that the gasoline "CONTAINS ETHANOL" 
or "CONTAINS METHANOL" or has been improved "WITH ETHANOL 
ENRICHMENT."  This subdivision does not prohibit the posting of 
other alcohol or additive information. 
    Sec. 6.  Minnesota Statutes 1984, section 297A.01, 
subdivision 15, is amended to read:  
    Subd. 15.  "Farm machinery" means new or used machinery, 
equipment, implements, accessories and contrivances used 
directly and principally in the production for sale, but not 
including the processing, of livestock, dairy animals, dairy 
products, poultry and poultry products, fruits, vegetables, 
forage, grains and bees and apiary products.  "Farm machinery"  
shall include machinery for the preparation, seeding or 
cultivation of soil for growing agricultural crops, harvesting 
and threshing of agricultural products, and certain machinery 
for dairy, livestock and poultry farms, together with barn 
cleaners, milking systems, grain dryers, automatic feeding 
systems and similar installations.  Irrigation equipment sold 
for exclusively agricultural use, including pumps, pipe 
fittings, valves, sprinklers and other equipment necessary to 
the operation of an irrigation system when sold as part of an 
irrigation system, except irrigation equipment which is situated 
below ground and considered to be a part of the real property, 
shall be included in the definition of farm machinery.  Logging 
equipment, except including chain saws used for logging only if 
the engine displacement equals or exceeds five cubic inches, 
shall be included in the definition of farm machinery.  Repair 
or replacement parts for farm machinery shall not be included in 
the definition of farm machinery.  
    Tools, shop equipment, grain bins, feed bunks, fencing 
material, communication equipment and other farm supplies shall 
not be considered to be farm machinery.  "Farm machinery" does 
not include motor vehicles taxed under chapter 297B, 
snowmobiles, snow blowers, lawn mowers, garden-type tractors or 
garden tillers and the repair and replacement parts for those 
vehicles and machines. 
    Sec. 7.  Minnesota Statutes 1984, section 297A.02, 
subdivision 2, is amended to read:  
    Subd. 2.  [MACHINERY AND EQUIPMENT.] Notwithstanding the 
provisions of subdivision 1, the rate of the excise tax imposed 
upon sales of farm machinery, special tooling, and capital 
equipment is four percent and upon sales of farm machinery is 
two percent.  
    Sec. 8.  Minnesota Statutes 1984, section 297A.14, is 
amended to read:  
    297A.14 [USING, STORING OR CONSUMING TANGIBLE PERSONAL 
PROPERTY; ADMISSIONS; UTILITIES.] 
    For the privilege of using, storing or consuming in 
Minnesota tangible personal property, tickets or admissions to 
places of amusement and athletic events, electricity, gas, and 
local exchange telephone service purchased for use, storage or 
consumption in this state, a use tax is imposed on every person 
in this state at the rate of six percent of the sales price of 
sales at retail unless the tax imposed by section 297A.02 was 
paid on the sales price.  Notwithstanding the provisions of the 
preceding sentence, the rate of the use tax imposed upon the 
sales price of sales of farm machinery, special tooling, and 
capital equipment is four percent and upon the sales price of 
sales of farm machinery is two percent.  
    A motor vehicle subject to tax under this section shall be 
taxed at its fair market value at the time of transport into 
Minnesota if the motor vehicle was acquired more than three 
months prior to its transport into this state. 
    Sec. 9.  Minnesota Statutes 1984, section 297A.25, 
subdivision 1, is amended to read:  
    Subdivision 1.  The following are specifically exempted 
from the taxes imposed by sections 297A.01 to 297A.44: 
    (a) The gross receipts from the sale of food products 
including but not limited to cereal and cereal products, butter, 
cheese, milk and milk products, oleomargarine, meat and meat 
products, fish and fish products, eggs and egg products, 
vegetables and vegetable products, fruit and fruit products, 
spices and salt, sugar and sugar products, coffee and coffee 
substitutes, tea, cocoa and cocoa products, and food products 
which are not taxable pursuant to section 297A.01, subdivision 
3, clause (c) and which are sold by a retailer, organized as a 
nonprofit corporation or association, within a place located on 
property owned by the state or an agency or instrumentality of 
the state, the entrance to which is subject to an admission 
charge.  This exemption does not include the following:  
     (i) candy and candy products, except when sold for 
fundraising purposes by a nonprofit organization that provides 
educational and social activities for young people primarily 
aged 18 and under; 
     (ii) carbonated beverages, beverages commonly referred to 
as soft drinks containing less than 15 percent fruit juice, or 
bottled water other than noncarbonated and noneffervescent 
bottled water sold in individual containers of one-half gallon 
or more in size; 
     (b) The gross receipts from the sale of prescribed drugs 
and medicine intended for use, internal or external, in the 
cure, mitigation, treatment or prevention of illness or disease 
in human beings and products consumed by humans for the 
preservation of health, including prescription glasses, 
therapeutic and prosthetic devices, but not including cosmetics 
or toilet articles notwithstanding the presence of medicinal 
ingredients therein; 
       (c) The gross receipts from the sale of and the storage, 
use or other consumption in Minnesota of tangible personal 
property, tickets, or admissions, electricity, gas, or local 
exchange telephone service, which under the Constitution or laws 
of the United States or under the Constitution of Minnesota, the 
state of Minnesota is prohibited from taxing; 
       (d) The gross receipts from the sale of tangible personal 
property (i) which, without intermediate use, is shipped or 
transported outside Minnesota by the purchaser and thereafter 
used in a trade or business or is stored, processed, fabricated 
or manufactured into, attached to or incorporated into other 
tangible personal property transported or shipped outside 
Minnesota and thereafter used in a trade or business outside 
Minnesota, and which is not thereafter returned to a point 
within Minnesota, except in the course of interstate commerce 
(storage shall not constitute intermediate use); provided that 
the property is not subject to tax in that state or country to 
which it is transported for storage or use, or, if subject to 
tax in that other state, that state allows a similar exemption 
for property purchased therein and transported to Minnesota for 
use in this state; except that sales of tangible personal 
property that is shipped or transported for use outside 
Minnesota shall be taxed at the rate of the use tax imposed by 
the state to which the property is shipped or transported, 
unless that state has no use tax, in which case the sale shall 
be taxed at the rate generally imposed by this state; and 
provided further that sales of tangible personal property to be 
used in other states or countries as part of a maintenance 
contract shall be specifically exempt; or (ii) which the seller 
delivers to a common carrier for delivery outside Minnesota, 
places in the United States mail or parcel post directed to the 
purchaser outside Minnesota, or delivers to the purchaser 
outside Minnesota by means of the seller's own delivery 
vehicles, and which is not thereafter returned to a point within 
Minnesota, except in the course of interstate commerce; 
      (e) The gross receipts from the sale of packing materials 
used to pack and ship household goods, the ultimate destination 
of which is outside the state of Minnesota and which are not 
thereafter returned to a point within Minnesota, except in the 
course of interstate commerce; 
      (f) The gross receipts from the sale of and storage, use or 
consumption of petroleum products upon which a tax has been 
imposed under the provisions of chapter 296, whether or not any 
part of said tax may be subsequently refunded; 
      (g) The gross receipts from the sale of clothing and 
wearing apparel except the following: 
      (i) all articles commonly or commercially known as jewelry, 
whether real or imitation; pearls, precious and semi-precious 
stones, and imitations thereof; articles made of, or ornamented, 
mounted or fitted with precious metals or imitations thereof; 
watches; clocks; cases and movements for watches and clocks; 
gold, gold-plated, silver, or sterling flatware or hollow ware 
and silver-plated hollow ware; opera glasses; lorgnettes; marine 
glasses; field glasses and binoculars; 
     (ii) articles made of fur on the hide or pelt, and articles 
of which such fur is the component material or chief value, but 
only if such value is more than three times the value of the 
next most valuable component material; 
     (iii) perfume, essences, extracts, toilet waters, 
cosmetics, petroleum jellies, hair oils, pomades, hair 
dressings, hair restoratives, hair dyes, aromatic cachous and 
toilet powders.  The tax imposed by this act shall not apply to 
lotion, oil, powder, or other article intended to be used or 
applied only in the case of babies; 
       (iv) trunks, valises, traveling bags, suitcases, satchels, 
overnight bags, hat boxes for use by travelers, beach bags, 
bathing suit bags, brief cases made of leather or imitation 
leather, salesmen's sample and display cases, purses, handbags, 
pocketbooks, wallets, billfolds, card, pass, and key cases and 
toilet cases; 
       (h) The gross receipts from the sale of and the storage, 
use, or consumption of all materials, including chemicals, 
fuels, petroleum products, lubricants, packaging materials, 
including returnable containers used in packaging food and 
beverage products, feeds, seeds, fertilizers, electricity, gas 
and steam, used or consumed in agricultural or industrial 
production of personal property intended to be sold ultimately 
at retail, whether or not the item so used becomes an ingredient 
or constituent part of the property produced.  Such production 
shall include, but is not limited to, research, development, 
design or production of any tangible personal property, 
manufacturing, processing (other than by restaurants and 
consumers) of agricultural products whether vegetable or animal, 
commercial fishing, refining, smelting, reducing, brewing, 
distilling, printing, mining, quarrying, lumbering, generating 
electricity and the production of road building materials.  Such 
production shall not include painting, cleaning, repairing or 
similar processing of property except as part of the original 
manufacturing process.  Machinery, equipment, implements, tools, 
accessories, appliances, contrivances, furniture and fixtures, 
used in such production and fuel, electricity, gas or steam used 
for space heating or lighting, are not included within this 
exemption; however, accessory tools, equipment and other short 
lived items, which are separate detachable units used in 
producing a direct effect upon the product, where such items 
have an ordinary useful life of less than 12 months, are 
included within the exemption provided herein.  Electricity used 
to make snow for outdoor use for ski hills, ski slopes, or ski 
trails is included in this exemption; 
     (i) The gross receipts from the sale of and storage, use or 
other consumption in Minnesota of tangible personal property 
(except as provided in section 297A.14) which is used or 
consumed in producing any publication regularly issued at 
average intervals not exceeding three months, and any such 
publication.  For purposes of this subsection, "publication" as 
used herein shall include, without limiting the foregoing, a 
legal newspaper as defined by Minnesota Statutes 1965, section 
331.02, and any supplements or enclosures with or part of said 
newspaper; and the gross receipts of any advertising contained 
therein or therewith shall be exempt.  For this purpose, 
advertising in any such publication shall be deemed to be a 
service and not tangible personal property, and persons or their 
agents who publish or sell such newspapers shall be deemed to be 
engaging in a service with respect to gross receipts realized 
from such newsgathering or publishing activities by them, 
including the sale of advertising.  The term "publication" shall 
not include magazines and periodicals sold over the counter.  
Machinery, equipment, implements, tools, accessories, 
appliances, contrivances, furniture and fixtures used in such 
publication and fuel, electricity, gas or steam used for space 
heating or lighting, are not exempt; 
      (j) The gross receipts from all sales, including sales in 
which title is retained by a seller or a vendor or is assigned 
to a third party under an installment sale or lease purchase 
agreement under section 465.71, of tangible personal property 
to, and all storage, use or consumption of such property by, the 
United States and its agencies and instrumentalities or a state 
and its agencies, instrumentalities and political subdivisions. 
Sales exempted by this clause include sales pursuant to section 
297A.01, subdivision 3, clauses (d) and (f).  This exemption 
shall not apply to building, construction or reconstruction 
materials purchased by a contractor or a subcontractor as a part 
of a lump-sum contract or similar type of contract with a 
guaranteed maximum price covering both labor and materials for 
use in the construction, alteration or repair of a building or 
facility.  This exemption does not apply to construction 
materials purchased by tax exempt entities or their contractors 
to be used in constructing buildings or facilities which will 
not be used principally by the tax exempt entities; 
      (k) The gross receipts from the isolated or occasional sale 
of tangible personal property in Minnesota not made in the 
normal course of business of selling that kind of property, and 
the storage, use, or consumption of property acquired as a 
result of such a sale.  For purposes of this clause, sales by a 
nonprofit organization shall be deemed to be "isolated or 
occasional" if they occur at sale events that have a duration of 
three or fewer consecutive days.  The granting of the privilege 
of admission to places of amusement and the privilege of use of 
amusement devices by a nonprofit organization at an isolated or 
occasional event conducted on property owned or leased for a 
continuous period of more than 30 days by the nonprofit 
organization are also exempt.  The exemption provided for 
isolated sales of tangible personal property and of the granting 
of admissions or the privilege of use of amusement devices by 
nonprofit organizations pursuant to this clause shall be 
available only if the sum of the days on which the organization 
and any subsidiary nonprofit organization sponsored by it that 
does not have a separate sales tax exemption permit conduct 
sales of tangible personal property, plus the days with respect 
to which the organization charges for the use of amusement 
devices or admission to places of amusement, does not exceed 
eight days in a calendar year.  For purposes of this clause, a 
"nonprofit organization" means any corporation, society, 
association, foundation, or institution organized and operated 
exclusively for charitable, religious, or educational purposes, 
no part of the net earnings of which inures to the benefit of a 
private individual; 
      (l) The gross receipts from sales of rolling stock and the 
storage, use or other consumption of such property by railroads, 
freight line companies, sleeping car companies and express 
companies taxed on the gross earnings basis in lieu of ad 
valorem taxes.  For purposes of this clause "rolling stock" is 
defined as the portable or moving apparatus and machinery of any 
such company which moves on the road, and includes, but is not 
limited to, engines, cars, tenders, coaches, sleeping cars and 
parts necessary for the repair and maintenance of such rolling 
stock; 
     (m) The gross receipts from sales of airflight equipment 
and the storage, use or other consumption of such property by 
airline companies taxed under the provisions of sections 270.071 
to 270.079.  For purposes of this clause, "airflight equipment" 
includes airplanes and parts necessary for the repair and 
maintenance of such airflight equipment, and flight simulators; 
    (n) The gross receipts from the sale of telephone central 
office telephone equipment used in furnishing intrastate and 
interstate telephone service to the public; 
    (o) The gross receipts from the sale of and the storage, 
use or other consumption by persons taxed under the in lieu 
provisions of chapter 298, of mill liners, grinding rods and 
grinding balls which are substantially consumed in the 
production of taconite, the material of which primarily is added 
to and becomes a part of the material being processed; 
    (p) (o) The gross receipts from the sale of tangible 
personal property to, and the storage, use or other consumption 
of such property by, any corporation, society, association, 
foundation, or institution organized and operated exclusively 
for charitable, religious or educational purposes if the 
property purchased is to be used in the performance of 
charitable, religious or educational functions, or any senior 
citizen group or association of groups that in general limits 
membership to persons age 55 or older and is organized and 
operated exclusively for pleasure, recreation and other 
nonprofit purposes, no part of the net earnings of which inures 
to the benefit of any private shareholders.  Sales exempted by 
this clause include sales pursuant to section 297A.01, 
subdivision 3, clauses (d) and (f).  This exemption shall not 
apply to building, construction or reconstruction materials 
purchased by a contractor or a subcontractor as a part of a 
lump-sum contract or similar type of contract with a guaranteed 
maximum price covering both labor and materials for use in the 
construction, alteration or repair of a building or facility.  
This exemption does not apply to construction materials 
purchased by tax exempt entities or their contractors to be used 
in constructing buildings or facilities which will not be used 
principally by the tax exempt entities; 
    (q) (p) The gross receipts from the sale of caskets and 
burial vaults; 
    (r) (q) The gross receipts from the sale of an automobile 
or other conveyance if the purchaser is assisted by a grant from 
the United States in accordance with 38 United States Code, 
section 1901, as amended; 
    (s) (r) The gross receipts from the sale to the licensed 
aircraft dealer of an aircraft for which a commercial use permit 
has been issued pursuant to section 360.654, if the aircraft is 
resold while the permit is in effect; 
    (t) (s) The gross receipts from the sale of building 
materials to be used in the construction or remodeling of a 
residence when the construction or remodeling is financed in 
whole or in part by the United States in accordance with 38 
United States Code, sections 801 to 805, as amended.  This 
exemption shall not be effective at time of sale of the 
materials to contractors, subcontractors, builders or owners, 
but shall be applicable only upon a claim for refund to the 
commissioner of revenue filed by recipients of the benefits 
provided in title 38 United States Code, chapter 21, as 
amended.  The commissioner shall provide by regulation for the 
refund of taxes paid on sales exempt in accordance with this 
paragraph; 
    (u) (t) The gross receipts from the sale of textbooks which 
are prescribed for use in conjunction with a course of study in 
a public or private school, college, university and business or 
trade school to students who are regularly enrolled at such 
institutions.  For purposes of this clause a "public school" is 
defined as one that furnishes course of study, enrollment and 
staff that meets standards of the state board of education and a 
private school is one which under the standards of the state 
board of education, provides an education substantially 
equivalent to that furnished at a public school.  Business and 
trade schools shall mean such schools licensed pursuant to 
section 141.25; 
    (v) (u) The gross receipts from the sale of and the storage 
of material designed to advertise and promote the sale of 
merchandise or services, which material is purchased and stored 
for the purpose of subsequently shipping or otherwise 
transferring outside the state by the purchaser for use 
thereafter solely outside the state of Minnesota; 
    (w) (v) The gross receipt from the sale of residential 
heating fuels in the following manner: 
    (i) all fuel oil, coal, wood, steam, hot water, propane 
gas, and L.P. gas sold to residential customers for residential 
use; 
    (ii) natural gas sold for residential use to customers who 
are metered and billed as residential users and who use natural 
gas for their primary source of residential heat, for the 
billing months of November, December, January, February, March 
and April; 
    (iii) electricity sold for residential use to customers who 
are metered and billed as residential users and who use 
electricity for their primary source of residential heat, for 
the billing months of November, December, January, February, 
March and April; 
    (x) (w) The gross receipts from the sale or use of tickets 
or admissions to the premises of or events sponsored by an 
association, corporation or other group of persons which 
provides an opportunity for citizens of the state to participate 
in the creation, performance or appreciation of the arts and 
which qualifies as a tax-exempt organization within the meaning 
of Minnesota Statutes 1980, section 290.05, subdivision 1, 
clause (i); 
    (y) (x) The gross receipts from either the sales to or the 
storage, use or consumption of tangible personal property by an 
organization of military service veterans or an auxiliary unit 
of an organization of military service veterans, provided that: 
      (i) the organization or auxiliary unit is organized within 
the state of Minnesota and is exempt from federal taxation 
pursuant to section 501(c), clause (19), of the Internal Revenue 
Code as amended through December 31, 1982; and 
      (ii) the tangible personal property which is sold to or 
stored, used or consumed by the organization or auxiliary unit 
is for charitable, civic, educational, or nonprofit uses and not 
for social, recreational, pleasure or profit uses; 
    (z) (y) The gross receipts from the sale of sanitary 
napkins, tampons, or similar items used for feminine hygiene; 
    (aa) (z) The gross receipts from the sale of a manufactured 
home, as defined in section 327.31, subdivision 6, to be used by 
the purchaser for residential purposes, unless the sale is the 
first retail sale of the manufactured home in this state; 
    (bb) (aa) The gross receipts from the sale of equipment 
used for processing solid or hazardous waste at a resource 
recovery facility, as defined in section 115A.03, subdivision 28;
    (bb) The gross receipts from the sale of repair and 
replacement parts, except tires, used for maintenance or repair 
of farm machinery, if the part replaces a farm machinery part 
assigned a specific or generic part number by the manufacturer 
of the farm machinery;  
    (cc) The gross receipts from sales of tickets or admissions 
to regular season school games, events, and activities.  For 
purposes of this clause, "school" has the meaning given it in 
section 120.10, subdivision 2.  
    Sec. 10.  [297A.256] [EXEMPTIONS FOR CERTAIN NONPROFIT 
GROUPS.] 
    Notwithstanding the provisions of this chapter, the 
following sales made by a "nonprofit organization" are exempt 
from the sales and use tax. 
    (a) All sales made by an organization for fundraising 
purposes if that organization exists solely for the purpose of 
providing educational or social activities for young people 
primarily age 18 and under.  This exemption shall apply only if 
the gross annual sales receipts of the organization from 
fundraising do not exceed $10,000. 
    (b) All sales made by an organization for fundraising 
purposes if that organization is a senior citizen group which 
qualifies for exemption on its purchases pursuant to section 
297A.25, subdivision 1, clause (o).  This exemption shall apply 
only if the gross annual sales receipts of the organization from 
fundraising do not exceed $10,000. 
    (c) The gross receipts from the sales of tangible personal 
property at, admission charges for, and sales of food, meals, or 
drinks at fundraising events sponsored by a nonprofit 
organization when the entire proceeds, except for the necessary 
expenses therewith, will be used solely and exclusively for 
charitable, religious, or educational purposes.  This exemption 
does not apply to admission charges for events involving bingo 
or other gambling activities or to charges for use of amusement 
devices involving bingo or other gambling activities.  For 
purposes of this clause, a "nonprofit organization" means any 
unit of government, corporation, society, association, 
foundation, or institution organized and operated for 
charitable, religious, educational, civic, fraternal, senior 
citizens' or veterans' purposes, no part of the net earnings of 
which enures to the benefit of a private individual. 
    If the profits are not used solely and exclusively for 
charitable, religious, or educational purposes, the entire gross 
receipts are subject to tax. 
    Each nonprofit organization shall keep a separate 
accounting record, including receipts and disbursements from 
each fundraising event.  All deductions from gross receipts must 
be documented with receipts and other records.  If records are 
not maintained as required, the entire gross receipts are 
subject to tax. 
    The exemption provided by this section does not apply to 
any sale made by or in the name of a nonprofit corporation as 
the active or passive agent of a person that is not a nonprofit 
corporation. 
    The exemption for fundraising events under this section is 
limited to no more than 24 days a year.  Fundraising events 
conducted on premises leased or occupied for more than four days 
but less than 30 days do not qualify for this exemption.  
     Sec. 11.  Minnesota Statutes 1984, section 297B.02, is 
amended to read: 
    297B.02 [TAX IMPOSED.] 
    Subdivision 1.  [RATE.] There is imposed an excise tax at 
the rate provided in chapter 297A on the purchase price of any 
motor vehicle purchased or acquired, either in or outside of the 
state of Minnesota, which is required to be registered under the 
laws of this state.  
     Subd. 2.  [IN LIEU TAX.] In lieu of the tax imposed in 
subdivision 1, there is imposed a tax of $10 on the purchase 
price of any passenger automobile described in section 12. 
    Sec. 12.  [297B.025] [OLDER PASSENGER AUTOMOBILES.] 
    Purchase or use of a passenger automobile as defined in 
section 168.011, subdivision 7, shall be taxed pursuant to 
section 297B.02, subdivision 2, if the passenger automobile is 
(1) in the tenth or subsequent year of vehicle life, (2) is 
currently registered in Minnesota other than registration under 
section 168.10, subdivisions 1a, 1b, 1c, and 1d, and (3) is not 
an above-market automobile as designated by the registrar of 
motor vehicles. 
    The registrar of motor vehicles shall prepare, and 
distribute to all deputy motor vehicle registrars by July 15, 
1985, a listing by make, model, and year of above-market 
automobiles.  The registrar must include in the list all 
automobiles with a resale value of $3,000 or more, as determined 
using nationally recognized sources of information on automobile 
resale values.  The registrar shall revise the list by February 
1 of each year.  The initial list and all subsequent revisions 
must include only those automobiles which are in the tenth or 
subsequent year of vehicle life.  
    Sec. 13.  Minnesota Statutes 1984, section 297B.03, is 
amended to read: 
    297B.03 [EXEMPTIONS.] 
    There is specifically exempted from the provisions of this 
chapter and from computation of the amount of tax imposed by it 
the following: 
    (1) Purchase or use, including use under a lease purchase 
agreement or installment sales contract made pursuant to section 
465.71, of any motor vehicle by any person described in and 
subject to the conditions provided in section 297A.25, 
subdivision 1, clauses (j), (p) (o) and (r) (q). 
    (2) Purchase or use of any motor vehicle by any person who 
was a resident of another state at the time of the purchase and 
who subsequently becomes a resident of Minnesota, provided the 
purchase occurred more than 60 days prior to the date such 
person moved his residence to the state of Minnesota. 
    (3) Purchase or use of any motor vehicle by any person 
making a valid election to be taxed under the provisions of 
section 297A.211. 
    (4) Purchase or use of any motor vehicle previously 
registered in the state of Minnesota by any corporation or 
partnership when such transfer constitutes a transfer within the 
meaning of sections 351 or 721 of the Internal Revenue Code of 
1954, as amended through December 31, 1974. 
    (5) Purchase or use of any vehicle owned by a resident of 
another state and leased to a Minnesota based private or for 
hire carrier for regular use in the transportation of persons or 
property in interstate commerce provided the vehicle is titled 
in the state of the owner or secured party, and that state does 
not impose a sales or motor vehicle excise tax on motor vehicles 
used in interstate commerce.  
    Sec. 14.  Minnesota Statutes 1984, section 297C.02, as 
added by Laws 1985, chapter 305, article 2, section 2, is 
amended to read: 
    297C.02 [TAX IMPOSED.] 
    Subdivision 1.  [DISTILLED SPIRITS AND WINE.] There is 
imposed on all distilled spirits and wine manufactured, 
imported, sold, or possessed in this state the following excise 
tax: 
                          Standard            Metric
(a) Distilled spirits,    $4.39 per gallon    $1.16 per liter
    liqueurs, cordials,
    and specialties
    regardless of
    alcohol content
    (excluding ethyl
    alcohol)
(b) Wine containing 14    $.27 per gallon     $.07 per liter
    percent or less
    alcohol by volume
(c) Wine containing more  $.79 per gallon     $.21 per liter
    than 14 percent but
    not more than 21
    percent alcohol by
    volume
(d) Wine containing more  $1.58 per gallon    $.42 per liter
    than 21 percent but
    not more than 24
    percent alcohol by
    volume
(e) Wine containing more  $3.08 per gallon    $.81 per liter
    than 24 percent
    alcohol by volume
(f) Natural and           $1.50 per gallon    $.40 per liter
    artificial sparkling
    wines containing
    alcohol
The metric tax is imposed on all products taxable under this 
subdivision when the net contents are stated in metric units of 
measure.  
    In computing the tax on a package of distilled spirits or 
wine a proportional tax at a like rate on all fractional parts 
of a gallon or liter must be paid, except that the tax on a 
fractional part of a gallon less than 1/16 of a gallon is the 
same as for 1/16 of a gallon.  
    The tax on miniatures of two fluid ounces or less or 50 
milliliters or less is 12 cents. 
    The commissioner of revenue may establish by rule a date 
and procedure for the conversion of excise tax computation and 
reporting from rates expressed in gallons to rates expressed in 
metric volumes.  The official conversion factor is one liter 
equals 0.264172 U.S. gallons. 
    Subd. 2.  [FERMENTED MALT BEVERAGES.] There is imposed on 
the direct or indirect sale of fermented malt beverages the 
following excise tax:  
    (1) On fermented malt beverages containing not more than 
3.2 percent alcohol by weight, $2 per barrel of 31 gallons;  
    (2) On fermented malt beverages containing more than 3.2 
percent alcohol by weight, $4 per barrel of 31 gallons.  
    The tax is at a proportional rate for fractions of a barrel 
of 31 gallons.  
    Subd. 3.  [TAX CREDIT.] A qualified brewer producing 
fermented malt beverages is entitled to a tax credit of $2 $4 
per barrel on the first 25,000 barrels sold in any fiscal year 
beginning July 1, regardless of the alcohol content of the 
product.  Qualified brewers may take the credit on the 15th day 
of each month, but the total credit allowed may not exceed the 
allowable credit on more than 25,000 barrels produced and sold 
in Minnesota in any fiscal year the lesser of (a) the liability 
for tax or (b) $100,000.  
    For purposes of this subdivision, a "qualified brewer" 
means a brewer, whether or not located in this state, 
manufacturing less than 100,000 barrels of fermented malt 
beverages in the calendar year immediately preceding the 
calendar year for which the credit under this subdivision is 
claimed.  In determining the number of barrels, all brands or 
labels of a brewer must be combined.  All facilities for the 
manufacture of fermented malt beverages owned or controlled by 
the same person, corporation, or other entity must be treated as 
a single brewer. 
    Sec. 15.  Minnesota Statutes 1984, section 477A.018, is 
amended to read: 
    477A.018 [CITY LOCAL LODGING TAX.] 
    Subdivision 1.  [AUTHORIZATION.] Notwithstanding section 
477A.016 or any other law, a statutory or home rule charter city 
may by ordinance, and a town may by vote at its annual meeting, 
impose a tax of up to three percent on the gross receipts from 
the furnishing for consideration of lodging at a hotel, motel, 
rooming house, tourist court, or other use of space by a 
transient resort, other than the renting or leasing of it for a 
continuous period of 30 days or more.  A statutory or home rule 
charter city may by ordinance impose the tax authorized under 
this subdivision on the camping site receipts of a municipal 
campground.  
    Subd. 2.  [EXISTING TAXES.] No statutory or home rule 
charter city or town may impose a tax under this section upon 
transient lodging that, when combined with any tax authorized by 
special law or enacted prior to 1972, exceeds a rate of three 
percent.  
    Subd. 3.  [DISPOSITION OF PROCEEDS.] Ninety-five percent of 
the gross proceeds from any tax imposed under subdivision 1 
shall be used by the statutory or home rule charter city or town 
to fund a local convention or tourism bureau for the purpose of 
marketing and promoting the city or town as a tourist or 
convention center.  This subdivision shall not apply to any 
statutory or home rule charter city or town that has a lodging 
tax authorized by special law or enacted prior to 1972 at the 
time of enactment of this section.  
    Subd. 4.  [UNORGANIZED TERRITORIES.] A county board acting 
as a town board with respect to an unorganized territory may 
impose a lodging tax within the unorganized territory according 
to this section if it determines by resolution that imposition 
of the tax is in the public interest. 
    Subd. 5.  [REVERSE REFERENDUM.] If the county board passes 
a resolution under subdivision 4 to impose the tax, the 
resolution must be published for two successive weeks in a 
newspaper of general circulation within the unorganized 
territory, together with a notice fixing a date for a public 
hearing on the proposed tax. 
    The hearing must be held not less than two weeks nor more 
than four weeks after the first publication of the notice.  
After the public hearing, the county board may determine to take 
no further action, or may adopt a resolution authorizing the tax 
as originally proposed or approving a lesser rate of tax.  The 
resolution must be published in a newspaper of general 
circulation within the unorganized territory.  The voters of the 
unorganized territory may request a referendum on the proposed 
tax by filing a petition with the county auditor within 30 days 
after the resolution is published.  The petition must be signed 
by voters who reside in the unorganized territory.  The number 
of signatures must equal at least five percent of the number of 
persons voting in the unorganized territory in the last general 
election.  If such a petition is timely filed, the resolution is 
not effective until it has been submitted to the voters residing 
in the unorganized territory at a general or special election 
and a majority of votes cast on the question of approving the 
resolution are in the affirmative.  The commissioner of revenue 
shall prepare a suggested form of question to be presented at 
the referendum.  
    Subd. 6.  [JOINT POWERS AGREEMENTS.] Any statutory or home 
rule charter city, town, or county when the county board is 
acting as a town board with respect to an unorganized territory, 
may enter into a joint exercise of powers agreement pursuant to 
section 471.59 for the purpose of imposing the tax and disposing 
of its proceeds pursuant to this section. 
    Sec. 16.  Laws 1985, chapter 83, section 7, is amended to 
read:  
    Sec. 7.  [EFFECTIVE DATE.] 
    Sections 1 to 3 are effective the day following final 
enactment, except that section 1 does not apply to written 
contracts entered into before July 1, 1985, or to written bids 
submitted for contracts before July 1, 1985.  Sections 4 and 5 
are effective July 1, 1985.  Section 6 is effective for sales 
tax paid on electricity billed on or after January 1, 1987. 
    Sec. 17.  [EFFECTIVE DATE.] 
    Sections 1 to 3 and 5 are effective July 1, 1986.  Sections 
11 and 12 are effective for sales and transfers made after July 
31, 1985.  Section 14 is effective August 1, 1985.  Sections 6 
to 10 are effective for sales occurring after June 30, 1985, 
except that the amendment in section 9 eliminating the exemption 
for sales of telephone equipment is effective for sales after 
December 31, 1986.  Section 13 is effective January 1, 1987.  
Section 4 applies to gasoline or special fuels placed in the 
fuel tanks of new motor vehicles under the circumstances 
described in section 296.18, subdivision 1, clause (3), on or 
after July 1, 1982.  Section 4 shall not become effective unless 
the commissioner of revenue and any manufacturer of motor 
vehicles in Minnesota with pending gasoline or special fuel 
excise tax litigation execute an agreement to settle the 
litigation under terms and conditions satisfactory to the 
commissioner and the motor vehicle manufacturer before the 
governor approves this act.  Section 16 is effective May 9, 1985.

                                ARTICLE 3

                              PROPERTY TAX
    Section 1.  Minnesota Statutes 1984, section 124.2131, 
subdivision 3, is amended to read: 
    Subd. 3.  [DECREASE IN IRON ORE ASSESSED VALUE.] (1) 
[REDETERMINATION OF ASSESSED VALUE.] If in any year the assessed 
value of any district is less than the assessed value of the 
immediate preceding year, the equalization aid review committee 
shall, upon notification by the county assessor prior to October 
16 of that assessment year, redetermine for all purposes the 
adjusted assessed value of the immediate preceding year taking 
into account the decrease in assessed value.  On or before 
November 1 of the assessment year, the equalization aid review 
committee shall file the redetermined adjusted assessed value 
with the commissioner of education who shall thereupon certify 
to the county auditors and school districts affected the 
redetermined adjusted assessed value and the appropriate levy 
limits of the school districts affected pursuant to section 
275.125, subdivision 10.  Notwithstanding section 275.07, the 
districts affected may certify the taxes voted to the county 
auditor on or before December 1. 
    (2) [IRON ORE VALUE.] If in any year the assessed value of 
class 1 and class 1a property, as defined in section 273.13, 
subdivision 2, in any district is less than the assessed value 
of such property in the immediately preceding year, the 
equalization aid review committee shall redetermine for all 
purposes the adjusted assessed value of the immediately 
preceding year taking into account only the decrease in assessed 
value of class 1 and class 1a property.  If subdivision 2, 
clause (a) is applicable to such a district, the decrease in 
class 1 and class 1a property shall be applied to the adjusted 
assessed value as limited therein.  In all other respects, the 
provisions of clause (1) shall be applicable. 
    Sec. 2.  Minnesota Statutes 1984, section 124.2137, 
subdivision 1, is amended to read: 
    Subdivision 1.  [TAX REDUCTIONS.] The county auditor shall 
reduce the tax for school purposes on all property receiving the 
homestead credit pursuant to section 273.13, subdivision 6, by 
an amount equal to 33 36 percent of the tax levy imposed on up 
to 320 acres of land including the buildings and structures 
thereon but excluding all dwellings and an acre of land for each 
dwelling.  The county auditor shall reduce the tax for school 
purposes on the next 320 acres classified pursuant to section 
273.13, subdivision 6 by an amount equal to 15 percent of the 
tax levy imposed on the property.  The tax on all other 
agricultural lands classified pursuant to section 273.13, 
subdivision 6 shall be reduced by an amount equal to ten 26 
percent of the tax levy imposed on the property.  The tax on the 
first 320 acres of agricultural land classified pursuant to 
section 273.13, subdivision 4 including buildings and structures 
thereon but excluding all dwellings and an acre of land for each 
dwelling and on timber land classified pursuant to section 
273.13, subdivision 8a shall be reduced by an amount equal to 26 
percent of the tax levy imposed on the property.  The tax on all 
real estate devoted to temporary and seasonal residential 
occupancy for recreational purposes, but not devoted to 
commercial purposes, shall be reduced by an amount equal to 15 
percent of the tax imposed on the property.  The tax on timber 
land classified pursuant to section 273.13, subdivision 8a and 
agricultural land in excess of 320 acres classified pursuant to 
section 273.13, subdivision 4 shall be reduced by an amount 
equal to ten percent of the tax levy imposed on the property. 
The amounts so computed by the county auditor shall be submitted 
to the commissioner of revenue as part of the abstracts of tax 
lists required to be filed with the commissioner under the 
provisions of section 275.29.  Any prior year adjustments shall 
also be certified in the abstracts of tax lists.  The 
commissioner of revenue shall review the certifications to 
determine their accuracy.  He may make changes in the 
certification as he may deem necessary or return a certification 
to the county auditor for corrections.  The amount of the 
reduction provided under this subdivision which any taxpayer can 
receive on all qualifying property which he owns shall not 
exceed $4,000 in the case of agricultural property and shall not 
exceed $100 in the case of seasonal residential recreational 
property.  In the case of property owned by more than one 
person, the maximum amount of the reduction shall apply to the 
total of all the owners.  For purposes of computing the credit 
pursuant to this subdivision, the "tax levy" shall be the tax 
levy reduced by the credits provided by sections 273.115, 
273.116, 273.123, 273.42, subdivision 2, and 473H.10.  
    Sec. 3.  Minnesota Statutes 1984, section 272.02, 
subdivision 1, as amended by Laws 1985, chapter 300, section 4, 
is amended to read: 
    Subdivision 1.  All property described in this section to 
the extent herein limited shall be exempt from taxation: 
    (1) All public burying grounds; 
    (2) All public schoolhouses; 
    (3) All public hospitals; 
    (4) All academies, colleges, and universities, and all 
seminaries of learning; 
    (5) All churches, church property, and houses of worship; 
    (6) Institutions of purely public charity except parcels of 
property containing structures and the structures assessed 
pursuant to section 273.13, subdivisions 17, 17b, 17c or 17d; 
    (7) All public property exclusively used for any public 
purpose; 
    (8) Except for the taxable personal property enumerated 
below, all personal property and the property described in 
section 272.03, subdivision 1, clause paragraphs (c) and (d) 
shall be exempt.  
    The following personal property shall be taxable:  
    (a) personal property which is part of an electric 
generating, transmission, or distribution system or a pipeline 
system transporting or distributing water, gas, crude oil, or 
petroleum products or mains and pipes used in the distribution 
of steam or hot or chilled water for heating or cooling 
buildings and structures;  
    (b) railroad docks and wharves which are part of the 
operating property of a railroad company as defined in section 
270.80;  
     (c) personal property defined in section 272.03, 
subdivision 2, clause (3);  
     (d) leasehold or other personal property interests which 
are taxed pursuant to section 272.01, subdivision 2; 273.13, 
subdivision 7b or 7d; or 273.19, subdivision 1; or any other law 
providing the property is taxable as if the lessee or user were 
the fee owner;  
     (e) property classified as class 2a property; and 
     (f) flight property as defined in section 270.071.  
     (9) Real and personal property used primarily for the 
abatement and control of air, water, or land pollution to the 
extent that it is so used, other than real property used 
primarily as a solid waste disposal site. 
     Any taxpayer requesting exemption of all or a portion of 
any equipment or device, or part thereof, operated primarily for 
the control or abatement of air or water pollution shall file an 
application with the commissioner of revenue.  The equipment or 
device shall meet standards, regulations or criteria prescribed 
by the Minnesota Pollution Control Agency, and must be installed 
or operated in accordance with a permit or order issued by that 
agency.  The Minnesota Pollution Control Agency shall upon 
request of the commissioner furnish information or advice to the 
commissioner.  If the commissioner determines that property 
qualifies for exemption, he shall issue an order exempting the 
property from taxation.  The equipment or device shall continue 
to be exempt from taxation as long as the permit issued by the 
Minnesota Pollution Control Agency remains in effect. 
     (10) Wetlands.  For purposes of this subdivision, 
"wetlands" means (1) land described in section 105.37, 
subdivision 15, or (2) land which is mostly under water, 
produces little if any income, and has no use except for 
wildlife or water conservation purposes, provided it is 
preserved in its natural condition and drainage of it would be 
legal, feasible, and economically practical for the production 
of livestock, dairy animals, poultry, fruit, vegetables, forage 
and grains, except wild rice.  "Wetlands" shall include adjacent 
land which is not suitable for agricultural purposes due to the 
presence of the wetlands.  "Wetlands" shall not include woody 
swamps containing shrubs or trees, wet meadows, meandered water, 
streams, rivers, and floodplains or river bottoms.  Exemption of 
wetlands from taxation pursuant to this section shall not grant 
the public any additional or greater right of access to the 
wetlands or diminish any right of ownership to the wetlands. 
     (11) Native prairie.  The commissioner of the department of 
natural resources shall determine lands in the state which are 
native prairie and shall notify the county assessor of each 
county in which the lands are located.  Pasture land used for 
livestock grazing purposes shall not be considered native 
prairie for the purposes of this clause and section 273.116.  
Upon receipt of an application for the exemption and credit 
provided in this clause and section 273.116 for lands for which 
the assessor has no determination from the commissioner of 
natural resources, the assessor shall refer the application to 
the commissioner of natural resources who shall determine within 
30 days whether the land is native prairie and notify the county 
assessor of his decision.  Exemption of native prairie pursuant 
to this clause shall not grant the public any additional or 
greater right of access to the native prairie or diminish any 
right of ownership to it. 
    (12) Property used in a continuous program to provide 
emergency shelter for victims of domestic abuse, provided the 
organization that owns and sponsors the shelter is exempt from 
federal income taxation pursuant to section 501(c)(3) of the 
Internal Revenue Code of 1954, as amended through December 31, 
1982, notwithstanding the fact that the sponsoring organization 
receives funding under section 8 of the United States Housing 
Act of 1937, as amended. 
    (13) If approved by the governing body of the municipality 
in which the property is located, property not exceeding one 
acre which is owned and operated by any senior citizen group or 
association of groups that in general limits membership to 
persons age 55 or older and is organized and operated 
exclusively for pleasure, recreation, and other nonprofit 
purposes, no part of the net earnings of which inures to the 
benefit of any private shareholders; provided the property is 
used primarily as a clubhouse, meeting facility or recreational 
facility by the group or association and the property is not 
used for residential purposes on either a temporary or permanent 
basis. 
    (14) To the extent provided by section 295.44, real and 
personal property used or to be used primarily for the 
production of hydroelectric or hydromechanical power on a site 
owned by the state or a local governmental unit which is 
developed and operated pursuant to the provisions of section 
105.482, subdivisions 1, 8 and 9. 
     (15) If approved by the governing body of the municipality 
in which the property is located, and if construction is 
commenced after June 30, 1983:  
     (a) a "direct satellite broadcasting facility" operated by 
a corporation licensed by the federal communications commission 
to provide direct satellite broadcasting services using direct 
broadcast satellites operating in the 12-ghz. band;  
     (b) a "fixed satellite regional or national program service 
facility" operated by a corporation licensed by the federal 
communications commission to provide fixed satellite-transmitted 
regularly scheduled broadcasting services using satellites 
operating in the 6-ghz. band; and 
     (c) a facility at which a licensed Minnesota manufacturer 
produces distilled spirituous liquors, liqueurs, cordials, or 
liquors designated as specialties regardless of alcoholic 
content, but not including ethyl alcohol, distilled with a 
majority of the ingredients grown or produced in Minnesota.  
An exemption provided by paragraph (15) shall apply for a period 
not to exceed five years.  When the facility no longer qualifies 
for exemption, it shall be placed on the assessment rolls as 
provided in subdivision 4.  Before approving a tax exemption 
pursuant to this paragraph, the governing body of the 
municipality shall provide an opportunity to the members of the 
county board of commissioners of the county in which the 
facility is proposed to be located and the members of the school 
board of the school district in which the facility is proposed 
to be located to meet with the governing body.  The governing 
body shall present to the members of those boards its estimate 
of the fiscal impact of the proposed property tax exemption.  
The tax exemption shall not be approved by the governing body 
until the county board of commissioners has presented its 
written comment on the proposal to the governing body, or 30 
days has passed from the date of the transmittal by the 
governing body to the board of the information on the fiscal 
impact, whichever occurs first. 
      The exemptions granted by this subdivision shall be subject 
to the limits contained in the other subdivisions of this 
section, section 272.025, or section 273.13, subdivisions 17, 
17b, 17c, or 17d.  
    (16) Real and personal property owned and operated by a 
private, nonprofit corporation exempt from federal income 
taxation pursuant to United States Code, title 26, section 
501(c)(3), primarily used in the generation and distribution of 
hot water for heating buildings and structures.  
    Sec. 4.  Minnesota Statutes 1984, section 272.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REAL PROPERTY.] (a) For the purposes of 
taxation, "real property" includes the land itself, rails, ties, 
and other track materials annexed to the land, and all 
buildings, structures, and improvements or other fixtures on it, 
bridges of bridge companies, and all rights and privileges 
belonging or appertaining to the land, and all mines, minerals, 
quarries, fossils, and trees on or under it.  
    (b) A building or structure shall include the building or 
structure itself, together with all improvements or fixtures 
annexed to the building or structure, which are integrated with 
and of permanent benefit to the building or structure, 
regardless of the present use of the building, and which cannot 
be removed without substantial damage to itself or to the 
building or structure.  
    (c) (i) The term real property shall not include tools, 
implements, machinery, and equipment attached to or installed in 
real property for use in the business or production activity 
conducted thereon, regardless of size, weight or method of 
attachment.  
    (ii) The exclusion provided in clause (c) (i) shall not 
apply to machinery and equipment includable as real estate 
by clauses paragraphs (a) and (b) even though such machinery and 
equipment is used in the business or production activity 
conducted on the real property if and to the extent such 
business or production activity consists of furnishing services 
or products to other buildings or structures which are subject 
to taxation under this chapter.  
    (iii) The exclusion provided in clause (i) does not apply 
to the exterior shell of a structure which constitutes walls, 
ceilings, roofs, or floors if the shell of the structure has 
structural, insulation, or temperature control functions or 
provides protection from the elements.  Such an exterior shell 
is included in the definition of real property even if it also 
has special functions distinct from that of a building. 
    (d) The term real property does not include tools, 
implements, machinery, equipment, poles, lines, cables, wires, 
conduit, and station connections which are part of a telephone 
communications system, regardless of attachment to or 
installation in real property and regardless of size, weight, or 
method of attachment or installation. 
    Sec. 5.  Minnesota Statutes 1984, section 273.13, 
subdivision 4, as amended by Laws 1985, chapter 300, section 6, 
is amended to read: 
    Subd. 4.  [CLASS 3.] (a) Tools, implements and machinery of 
an electric generating, transmission or distribution system or a 
pipeline system transporting or distributing water, gas, crude 
oil, or petroleum products or mains and pipes used in the 
distribution of steam or hot or chilled water for heating or 
cooling buildings, which are fixtures, all agricultural land, 
except as provided by classes 1, 3b, 3e, shall constitute class 
3 and shall be valued and assessed at 33-1/3 percent of the 
market value thereof, except as provided in clause (b).  All 
buildings and structures assessed as personal property and 
situated upon land of the state of Minnesota or the United 
States government which is rural in character and devoted or 
adaptable to rural but not necessarily agricultural use shall be 
assessed based upon the use made of the building or structure.  
Except as provided in subdivision 5a, all real property devoted 
to temporary and seasonal residential occupancy for recreational 
purposes, and which is not devoted to commercial purposes for 
more than 200 days in the year preceding the year of assessment, 
shall be class 3 property and assessed accordingly.  For this 
purpose, property is devoted to commercial use on a specific day 
if it is used, or offered for use, and a fee is charged for such 
use.  Class 3 shall also include commercial use real property 
used exclusively for recreational purposes in conjunction with 
class 3 property devoted to temporary and seasonal residential 
occupancy for recreational purposes, up to a total of two acres, 
provided the property is not devoted to commercial recreational 
use for more than 200 days in the year preceding the year of 
assessment and is located within two miles of the class 3 
property with which it is used.  
     Class 3 shall also include real property up to a maximum of 
one acre of land owned by a nonprofit community service oriented 
organization; provided that the property is not used for a 
revenue-producing activity for more than six days in the 
calendar year preceding the year of assessment and the property 
is not used for residential purposes on either a temporary or 
permanent basis.  For purposes of this subdivision, a "nonprofit 
community service oriented organization" means any corporation, 
society, association, foundation, or institution organized and 
operated exclusively for charitable, religious, fraternal, 
civic, or educational purposes, and which is exempt from federal 
income taxation pursuant to section 501(c)(3), (10), or (19) of 
the Internal Revenue Code of 1954, as amended through December 
31, 1984.  For purposes of this subdivision, "revenue-producing 
activities" shall include but not be limited to property or that 
portion of the property that is used as an on-sale intoxicating 
liquor or nonintoxicating malt liquor establishment licensed 
under chapter 340A, a restaurant open to the public, bowling 
alley, a retail store, gambling conducted by organizations 
licensed under chapter 349, an insurance business, or office or 
other space leased or rented to a lessee who conducts a 
for-profit enterprise on the premises.  Any portion of the 
property which is used for revenue-producing activities for more 
than six days in the calendar year preceding the year of 
assessment shall be assessed as class 4.  The use of the 
property for social events open exclusively to members and their 
guests for periods of less than 24 hours, when an admission is 
not charged nor any revenues are received by the organization 
shall not be considered a revenue-producing activity.  
    (b) Agricultural land which is classified as class 3 shall 
be assessed at 19 18 percent of its market value.  Real property 
devoted to temporary and seasonal residential occupancy for 
recreation purposes which is classified as class 3 shall be 
assessed at 21 percent of its market value.  Real property owned 
by a nonprofit community service oriented organization which is 
classified as class 3 shall be assessed at 21 percent of its 
market value. 
    Sec. 6.  Minnesota Statutes 1984, section 273.13, 
subdivision 6, is amended to read: 
    Subd. 6.  [CLASS 3B.] Agricultural land, except as provided 
by class 1, which is used for the purposes of a homestead shall 
constitute class 3b and shall be valued and assessed as 
follows:  the first $60,000 $64,000 of market value shall be 
valued and assessed at 14 percent; the remaining market value 
shall be valued and assessed at 19 18 percent.  The maximum 
amount of the market value of the homestead bracket subject to 
the 14 percent rate shall be adjusted by the commissioner of 
revenue as provided in section 273.1311.  The property tax to be 
paid on class 3b property as otherwise determined by law less 
any reduction received pursuant to sections 124.2137, 273.123, 
and 473H.10 shall be reduced by 54 percent of the tax.  The 
amount of the reduction shall not exceed $650 $700.  
Noncontiguous land shall constitute class 3b only if the 
homestead is classified as class 3b and the detached land is 
located in the same township or city or not farther than two 
townships or cities or combination thereof from the homestead.  
    Agricultural land as used herein, and in section 124.2137, 
shall mean contiguous acreage of ten acres or more, primarily 
used during the preceding year for agricultural purposes.  
Agricultural use may include pasture, timber, waste, unusable 
wild land and land included in federal farm programs. 
    Real estate of less than ten acres used principally for 
raising poultry, livestock, fruit, vegetables or other 
agricultural products, shall be considered as agricultural land, 
if it is not used primarily for residential purposes. 
     The assessor shall determine and list separately on his 
records the market value of the homestead dwelling and the one 
acre of land on which that dwelling is located.  If any farm 
buildings or structures are located on this homesteaded acre of 
land, their market value shall not be included in this separate 
determination. 
    Agricultural land used for purposes of a homestead and 
actively farmed by a person holding a vested remainder interest 
in it must be classified class 3b.  If agricultural land is 
classified class 3b, any other dwellings on the land used for 
purposes of a homestead by persons holding vested remainder 
interests who are actively engaged in farming the property, and 
up to one acre of the land surrounding each homestead and 
reasonably necessary for the use of the dwelling as a home, must 
also be assessed class 3b and is entitled to the homestead 
credit. 
    Sec. 7.  Minnesota Statutes 1984, section 273.13, 
subdivision 7, is amended to read: 
    Subd. 7.  [CLASS 3C, 3CC.] All other real estate and class 
2a property, except as provided by classes 1 and 3cc, which is 
used for the purposes of a homestead, shall constitute class 3c, 
and shall be valued and assessed as follows:  the 
first $30,000 $64,000 of market value shall be valued and 
assessed at 17 18 percent; the next $30,000 of market value 
shall be valued and assessed at 19 percent; and the remaining 
market value shall be valued and assessed at 30 29 percent for 
taxes levied in 1985 and payable in 1986, and at 28 percent for 
taxes levied in 1986 and payable in 1987 and thereafter.  The 
maximum amounts of the market value of the homestead brackets 
subject to the 17 18 percent and 19 percent rates rate shall be 
adjusted by the commissioner of revenue as provided in section 
273.1311.  The property tax to be paid on class 3c property as 
otherwise determined by law, less any reduction received 
pursuant to sections 273.123 and 473H.10 shall be reduced by 54 
percent of the tax imposed on the first $67,000 $68,000 of 
market value.  The amount of the reduction shall not 
exceed $650 $700.  
    Class 3cc property shall include real estate or 
manufactured homes used for the purposes of a homestead by (a) 
any blind person, if the blind person is the owner thereof or if 
the blind person and his or her spouse are the sole owners 
thereof; or (b) any person (hereinafter referred to as veteran) 
who:  (1) served in the active military or naval service of the 
United States and (2) is entitled to compensation under the laws 
and regulations of the United States for permanent and total 
service-connected disability due to the loss, or loss of use, by 
reason of amputation, ankylosis, progressive muscular 
dystrophies, or paralysis, of both lower extremities, such as to 
preclude motion without the aid of braces, crutches, canes, or a 
wheelchair, and (3) with assistance by the administration of 
veterans affairs has acquired a special housing unit with 
special fixtures or movable facilities made necessary by the 
nature of the veteran's disability, or the surviving spouse of 
the deceased veteran for as long as the surviving spouse retains 
the special housing unit as his or her homestead; or (c) any 
person who:  (1) is permanently and totally disabled and (2) 
receives 90 percent or more of his total income from (i) aid 
from any state as a result of that disability, or (ii) 
supplemental security income for the disabled, or (iii) workers' 
compensation based on a finding of total and permanent 
disability, or (iv) social security disability, including the 
amount of a disability insurance benefit which is converted to 
an old age insurance benefit and any subsequent cost of living 
increases, or (v) aid under the Federal Railroad Retirement Act 
of 1937, 45 United States Code Annotated, Section 228b(a)5, or 
(vi) a pension from any local government retirement fund located 
in the state of Minnesota as a result of that disability.  
Property shall be classified and assessed pursuant to clause (a) 
only if the commissioner of human services certifies to the 
assessor that the owner of the property satisfies the 
requirements of this subdivision.  The commissioner of human 
services shall provide a copy of the certification to the 
commissioner of revenue.  Class 3cc property shall be valued and 
assessed as follows:  in the case of agricultural land, 
including a manufactured home, used for a homestead, the first 
$30,000 $32,000 of market value shall be valued and assessed at 
five percent, the next $30,000 $32,000 of market value shall be 
valued and assessed at 14 percent, and the remaining market 
value shall be valued and assessed at 19 18 percent; and in the 
case of all other real estate and manufactured homes, the 
first $30,000 $32,000 of market value shall be valued and 
assessed at five percent, the next $30,000 $32,000 of market 
value shall be valued and assessed at 19 18 percent, and the 
remaining market value shall be valued and assessed at 30 29 
percent for taxes levied in 1985 and payable in 1986, and at 28 
percent for taxes levied in 1986 and payable in 1987 and 
thereafter.  In the case of agricultural land including a 
manufactured home used for purposes of a homestead, the 
commissioner of revenue shall adjust, as provided in section 
273.1311, the maximum amount of the market value of the 
homestead brackets subject to the five percent and 14 percent 
rates; and for all other real estate and manufactured homes, the 
commissioner of revenue shall adjust, as provided in section 
273.1311, the maximum amount of the market value of the 
homestead brackets subject to the five percent and 19 18 percent 
rates.  Permanently and totally disabled for the purpose of this 
subdivision means a condition which is permanent in nature and 
totally incapacitates the person from working at an occupation 
which brings him an income.  The property tax to be paid on 
class 3cc property as otherwise determined by law, shall be 
reduced by 54 percent of the tax imposed on the first 
$67,000 $68,000 of market value.  The amount of the reduction 
shall not exceed $650 $700. 
    For purposes of this subdivision, homestead property which 
qualifies for the classification ratios and credits provided in 
this subdivision shall include property which is used for 
purposes of the homestead but is separated from the homestead by 
a road, street, lot, waterway, or other similar intervening 
property.  The term "used for purposes of the homestead" shall 
include but not be limited to uses for gardens, garages, or 
other outbuildings commonly associated with a homestead, but 
shall not include vacant land held primarily for future 
development.  In order to receive homestead treatment for the 
noncontiguous property, the owner shall apply for it to the 
assessor by July 1 of the year when the treatment is initially 
sought.  After initial qualification for the homestead 
treatment, additional applications for subsequent years are not 
required.  
    Sec. 8.  Minnesota Statutes 1984, section 273.13, 
subdivision 8a, is amended to read: 
    Subd. 8a.  [CLASS 3E.] Real estate, rural in character, and 
used exclusively for the purpose of growing trees for timber, 
lumber, wood and wood products shall constitute class 3e, and 
shall be valued and assessed at 19 18 percent of the market 
value thereof. 
    Sec. 9.  Minnesota Statutes 1984, section 273.13, 
subdivision 9, is amended to read: 
    Subd. 9.  [CLASS 4A, 4B, 4C, AND 4D.] (1) All property not 
included in the preceding classes shall constitute class 4a and 
shall be valued and assessed at 43 percent of the market value 
thereof, except as otherwise provided in this subdivision. 
     (2) Real property which is not improved with a structure 
and which is not utilized as part of a commercial or industrial 
activity shall constitute class 4b and shall be valued and 
assessed at 40 percent of market value.  
     (3) Commercial and industrial property, except as provided 
in this subdivision, shall constitute class 4c and shall be 
valued and assessed at 28 percent of the first $60,000 of market 
value and 43 percent of the remainder, provided that in the case 
of state-assessed commercial or industrial property owned by one 
person or entity, only one parcel shall qualify for the 28 
percent assessment, and in the case of other commercial or 
industrial property owned by one person or entity, only one 
parcel in each county shall qualify for the 28 percent 
assessment. 
     (4) Employment property defined in section 273.1313, during 
the period provided in section 273.1313, shall constitute class 
4d and shall be valued and assessed at 20 percent of the first 
$50,000 of market value and 21.5 percent of the remainder, 
except that for employment property located in an enterprise 
zone designated pursuant to section 273.1312, subdivision 4, 
paragraph (c), clause (3), the first $50,000 $60,000 of market 
value shall be valued and assessed at 31.5 28 percent and the 
remainder shall be assessed and valued at 38.5 percent, unless 
the governing body of the city designated as an enterprise zone 
determines that a specific parcel shall be assessed pursuant to 
the first clause of this sentence.  The governing body may 
provide for assessment under the first clause of the preceding 
sentence only for property which is located in an area which has 
been designated by the governing body for the receipt of tax 
reductions authorized by section 273.1314, subdivision 9, 
paragraph (a). 
    Sec. 10.  Minnesota Statutes 1984, section 273.13, 
subdivision 14a, is amended to read: 
    Subd. 14a.  [BUILDINGS AND APPURTENANCES ON LAND NOT OWNED 
BY OCCUPANT.] The property tax to be paid in respect of the 
value of all buildings and appurtenances thereto owned and used 
by the occupant for the purposes of a homestead, which are 
located upon land subject to property taxes and the title to 
which is vested in a person or entity other than the occupant, 
for all purposes shall be reduced by 54 percent of the amount of 
the tax in respect of the value not in excess of $67,000 $68,000 
as otherwise determined by law, but not by more than $650 $700.  
    Sec. 11.  Minnesota Statutes 1984, section 273.13, 
subdivision 17b, is amended to read: 
    Subd. 17b.  [VALUATION OF FARMERS HOME ADMINISTRATION 
PROPERTY IN MUNICIPALITIES OF UNDER 10,000.] (a) Notwithstanding 
any other provision of law, except as provided in clause (b), 
any structure 
    (1) situated on real property that is used for housing for 
the elderly or for low and moderate income families as defined 
by the farmers home administration, 
    (2) located in a municipality of less than 10,000 
population, 
    (3) financed by a direct loan or insured loan from the 
farmers home administration, and 
    (4) which qualifies under subdivision 17a, shall, for 15 
years from the date of the completion of the original 
construction or for the original term of the loan, be assessed 
at five ten percent of the market value thereof, provided that 
the fair market value as determined by the assessor is based on 
the normal approach to value using normal unrestricted rents.  
    (b) A structure described in clause (a) shall be assessed 
at 20 percent of its market value, but only in proportion to its 
occupancy by elderly persons or low and moderate income families 
as defined above unless (1) construction of the structure had 
been commenced prior to January 1, 1984; or (2) the project had 
been approved by the governing body of the municipality in which 
it is located prior to June 30, 1983; or (3) financing of the 
project had been approved by a federal or state agency prior to 
June 30, 1983.  
    Sec. 12.  Minnesota Statutes 1984, section 273.13, 
subdivision 19, is amended to read: 
    Subd. 19.  [CLASS 3D, 3DD.] Residential real estate 
containing four or more units, other than seasonal residential, 
recreational and homesteads shall be classified as class 3d 
property and shall have a taxable value equal to 34 percent of 
market value.  Residential real estate containing three or less 
units, other than seasonal residential, recreational and 
homesteads, shall be classified as class 3dd property and shall 
have a taxable value equal to 28 percent of market value. 
     Residential real estate as used in this subdivision means 
real property used or held for use by the owner thereof, or by 
his tenants or lessees as a residence for rental periods of 30 
days or more, but shall not include homesteads, or real estate 
devoted to temporary or seasonal residential occupancy for 
recreational purposes.  Where a portion of a parcel of property 
qualified for class 3d or 3dd and a portion does not qualify for 
class 3d or 3dd the valuation shall be apportioned according to 
the respective uses. 
     Residential real estate containing less than four units 
when entitled to homestead classification for one or more units 
shall be classed as 3b, 3c or 3cc according to the provisions of 
subdivisions 6 and 7.  A single rented or leased dwelling unit 
located within or attached to a private garage or similar 
structure owned by the owner of a homestead and located on the 
premises of that homestead must be classified as 3b, 3c, or 3cc 
as part of the owner's homestead according to the provisions of 
subdivisions 6 and 7.  If more than one dwelling unit is 
attached to the structure, the units must be assessed as class 
3d or 3dd property.  
    For purposes of this subdivision, class 3d also includes 
hospitals licensed under sections 144.50 to 144.56, other than 
hospitals exempt under section 272.02, and contiguous property 
used for hospital purposes, without regard to whether the 
property has been platted or subdivided. 
    For purposes of this subdivision, class 3dd shall also 
include post-secondary student housing not to exceed one acre of 
land which is owned by a nonprofit corporation organized under 
chapter 317 and is used exclusively by a sorority or fraternity 
organization for housing. 
    Sec. 13.  Minnesota Statutes 1984, section 273.1311, is 
amended to read: 
    273.1311 [FLEXIBLE HOMESTEAD BRACKETS.] 
    The maximum amount of the market value of the homestead 
brackets shall be adjusted as provided in this section.  
    For taxes payable in 1985 1987 and subsequent years, the 
commissioner shall adjust the brackets used in the preceding 
assessment by the estimated percentage increase in the statewide 
average assessors' estimated market value, as equalized by the 
state board of equalization, of a residential home for the 
current assessment over the previous assessment.  The revised 
bracket shall be rounded to the nearest $500 $1,000, except that 
the brackets applicable to class 3cc property shall be rounded 
to the nearest $500.  The commissioner of revenue shall 
determine and announce the revised bracket on December 15 of 
each year preceding the assessment date. 
    Sec. 14.  Minnesota Statutes 1984, section 273.133, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [CONTINUING CARE FACILITIES.] When a building 
containing several dwelling units is owned by an entity which is 
regulated under the provisions of chapter 80D and operating as a 
continuing care facility enters into residency agreements with 
persons who occupy a unit in the building and the residency 
agreement entitles the resident to occupancy in the building 
after personal assets are exhausted and regardless of ability to 
pay the monthly maintenance fee, homestead classification shall 
be given to each unit so occupied and the entire building shall 
be assessed in the manner provided in subdivision 1 for 
cooperatives and charitable corporations. 
    Sec. 15.  [270.068] [REVISION OF MINNESOTA ASSESSORS' 
MANUAL.] 
    In accordance with the provisions of Minnesota Statutes, 
section 270.06, clause (14), the commissioner of revenue shall 
prepare a revised Minnesota assessors' manual by July 1, 1986, 
and thereafter shall revise the manual in a timely manner. 
    Sec. 16.  [LOCAL GOVERNMENT FINANCE STUDY COMMISSION.] 
    A local government finance study commission consisting of 
18 members is created.  Nine members of the commission shall be 
members of the senate and appointed by the committee on 
committees.  Nine members of the commission shall be members of 
the house of representatives and appointed by the speaker.  The 
study commission shall elect a chairman from among its members 
and meetings of the commission will be held at the call of the 
chairman. 
    The purpose of the commission is to study the present local 
government finance structure, concentrating on the state paid 
homestead credit, agricultural credit, and local government aid 
programs.  The commission will study the aid distribution 
patterns past and present, and relationships between the aid 
programs, local government property tax levies, and local 
government spending patterns.  The commission may do all things 
necessary and reasonable to conduct the study including holding 
meetings and soliciting testimony and information.  The 
commission shall make specific recommendations on changes in the 
present system which encourage local government accountability 
while at the same time attempting to simplify the property tax 
system.  The commission shall expire on February 1, 1986.  
Expenses of the commission including per diem and expenses of 
commission members will be provided by the appointing authority. 
    Sec. 17.  [1985 ADJUSTED ASSESSED VALUES.] 
    The 1985 adjusted assessed value for each school district 
computed pursuant to Minnesota Statutes, section 124.2131, shall 
be adjusted by the department of revenue as provided in this 
section.  Sales occurring for the nine-month period from January 
1, 1984, to September 30, 1984, shall not be adjusted for 
financing terms of sales.  Sales occurring for the 12-month 
period from October 1, 1984, to September 30, 1985, shall be 
adjusted as necessary to their cash equivalency value by taking 
financing terms of the sale into account.  The department shall 
compute an adjusted assessed value for the school district based 
upon the aggregate ratio resulting from the nine-month time 
period using unadjusted sales.  The department shall also 
compute an adjusted assessed value based upon the aggregate 
ratio resulting from the 12-month time period using sales which 
have been adjusted to their cash equivalency.  The school 
district's 1985 adjusted assessed value shall be the arithmetic 
average of the two resulting values as provided in this section. 
    The same methodology shall be used in determining the 
aggregate ratios for distributing 1986 local government aids 
pursuant to Minnesota Statutes, section 477A.011, subdivision 4. 
    Sec. 18.  [EFFECTIVE DATE.] 
    Section 3 and section 4, paragraph (d), are effective 
beginning with taxes assessed in 1987 and payable in 1988 and 
thereafter.  Sections 2, 4, paragraph (c), 5 to 12, and 14 are 
effective beginning with taxes assessed in 1985 and payable in 
1986 and thereafter.  Sections 15 and 16 are effective the day 
after final enactment.  The change in the classification ratio 
for employment property in section 9 does not modify the 
required amount of local contribution for enterprise zones, 
approved prior to enactment of this act, that provide local 
contributions in lieu of the employment classification for 
projects already approved.  

                               ARTICLE 4 

                      PROPERTY TAX RECODIFICATION 
    Section 1.  Minnesota Statutes 1984, section 13.58, is 
amended to read: 
    13.58 [HOMESTEAD APPLICATION DATA.] 
    The following data collected and maintained by political 
subdivisions are classified as private data pursuant to section 
13.02, subdivision 12:  the social security account numbers and 
detailed financial data submitted by individuals who are 
applying for class 3cc 1b homestead classifications pursuant to 
section 273.13.  
    Sec. 2.  Minnesota Statutes 1984, section 16A.641, 
subdivision 11, is amended to read: 
    Subd. 11.  [CONSTITUTIONAL TAX LEVY.] Under the 
Constitution, article XI, section 7, the state auditor must levy 
each year on all taxable property within the state a tax 
sufficient, with the amount then on hand in the state bond fund, 
to pay all principal and interest on state bonds due and to 
become due to and including July 1 in the second ensuing year. 
If levied, this tax must be assessed and extended against real 
property used for the purposes of a homestead, as well as other 
taxable property, notwithstanding section 273.13, subdivisions 6 
and 7.  The tax is not subject to limitation of rate or amount. 
However, the amount of money appropriated from other sources as 
provided in subdivision 10, and actually received and on hand 
prior to the levy in any year, reduces the amount of the tax 
otherwise required to be levied.  The proceeds of the tax must 
be credited to the state bond fund.  
    Sec. 3.  Minnesota Statutes 1984, section 16B.60, 
subdivision 5, is amended to read: 
    Subd. 5.  [AGRICULTURAL BUILDING.] "Agricultural building" 
means a structure on agricultural land as defined in section 
273.13, subdivision 6 23, designed, constructed, and used to 
house farm implements, livestock, or agricultural produce or 
products used by the owner, lessee, and sublessee of the 
building and members of their immediate families, their 
employees, and persons engaged in the pickup or delivery of 
agricultural produce or products.  
    Sec. 4.  Minnesota Statutes 1984, section 18.023, 
subdivision 7, is amended to read: 
    Subd. 7.  [FINANCING.] (a) A municipality may collect the 
amount assessed against the property under subdivision 2 as a 
special assessment and may issue obligations as provided in 
section 429.101, subdivision 1, provided that a municipality at 
its option make any assessment levied payable with interest in 
installments not to exceed five years from the date of the 
assessment. 
    (b) After a contract for the sanitation or approved 
treatment of trees on private property has been let, or the work 
commenced, the municipality may issue obligations to defray the 
expense of any such work financed by special assessments imposed 
upon private property.  Section 429.091 shall apply to such 
obligations with the following modifications: 
    (1) Such obligations shall be payable not more than five 
years from the date of issuance; and 
    (2) No election shall be required. 
    Obligations issued under the provisions of this clause 
shall not be considered bonded indebtedness for the purposes of 
section 273.13, subdivisions 6 and 7.  The certificates shall 
not be included in the net debt of the issuing municipality. 
    Sec. 5.  Minnesota Statutes 1984, section 47.58, 
subdivision 2, is amended to read: 
    Subd. 2.  [AUTHORIZATION.] Pursuant to rules which the 
commissioner of commerce or commissioner of insurance may find 
to be necessary and proper, if any, and subject to federal laws 
and regulations, lenders may make investments in reverse 
mortgage loans and purchases of obligations representing reverse 
mortgage loans, provided the aggregate total of committed 
principal of the investment in reverse mortgage loans by any 
bank, savings bank, or savings and loan association, does not 
exceed five percent of that lender's total deposits and savings 
accounts.  This limitation shall be determined at each June 30 
and December 31 for the following six month period.  Any decline 
in the total of deposits and savings accounts subsequent to a 
determination may be disregarded.  Security for loans made under 
this section shall be a first lien on residential property (a) 
which the borrower occupies as principal residence and which 
qualifies for a homestead credit classification pursuant to 
section 273.13, and (b) to which the borrower alone has title.  
    Sec. 6.  Minnesota Statutes 1984, section 47.58, 
subdivision 3, is amended to read: 
    Subd. 3.  [PAYMENT; REPAYMENT; AMOUNT.] The committed 
principal amount of a reverse mortgage loan shall be paid to the 
borrower over the period of months or years as specified in the 
loan agreement.  The borrower and lender may, by written 
agreement, amend the loan agreement from time to time.  Pursuant 
to the terms of the contract the borrower shall make repayment 
to the lender:  
    (a) Upon payment to the borrower of the final installment 
unless, by written agreement between the borrower and lender 
whereunder the borrower agrees to periodically pay the lender 
interest accruing on the outstanding loan balance, repayment of 
the outstanding loan balance is postponed until default in 
payment of interest or until the occurrence of any of the events 
specified in clauses (b) to (e);  
    (b) Upon sale of the property securing the loan;  
    (c) Upon the death of the last surviving borrower; 
    (d) Upon the borrower terminating use of the property as 
principal residence so as to disqualify the property from the 
homestead credit given in classification under section 273.13; 
or 
    (e) Upon renegotiation of the terms of the reverse mortgage 
loan agreement, unless the parties agree in writing to postpone 
repayment.  
    Except as otherwise provided in this subdivision, the 
outstanding loan balance as projected by the lender to the 
anticipated time of payment to the borrower of the final 
installment of committed principal shall not exceed 80 percent 
of the appraised value of the property at inception of the 
loan.  If upon reappraisal of the property made at any time 
during the term of the loan, the projected outstanding loan 
balance does not exceed 70 percent of the reappraised value of 
the property, the schedule of the lender's installment payments 
may be extended and the amount of the committed principal amount 
increased, provided the revised outstanding loan balance at 
payment of the lender's final installment of committed principal 
does not exceed 80 percent of the reappraised value of the 
property.  
    Sec. 7.  Minnesota Statutes 1984, section 84B.08, 
subdivision 6, is amended to read: 
    Subd. 6.  On or before December 1 in each year the state 
auditor shall levy on all taxable property within the state 
whatever tax may be necessary to produce an amount sufficient, 
with all money then and theretofore credited to the bond 
account, to pay the entire amount of principal and interest then 
and theretofore due and principal and interest to become due on 
or before July 1 in the second year thereafter on Voyageurs 
National Park bonds.  This tax shall be levied upon all real 
property used for the purposes of a homestead, as well as other 
taxable property, notwithstanding the provisions of section 
273.13, subdivisions 6 and 7, and shall be subject to no 
limitation of rate or amount until all such bonds and interest 
thereon are fully paid.  The proceeds of this tax are 
appropriated and shall be credited to the state bond fund, and 
the principal of and interest on the bonds are payable from such 
proceeds, and the whole thereof, or so much as may be necessary, 
is appropriated for such payments.  
    Sec. 8.  Minnesota Statutes 1984, section 85A.05, 
subdivision 5, is amended to read: 
    Subd. 5.  [TAX LEVY.] On or before December 1 in each year 
the state auditor shall levy on all taxable property within the 
state whatever tax may be necessary to produce an amount 
sufficient, with all money then and theretofore credited to the 
Minnesota zoological garden bond account, to pay the entire 
amount of principal and interest then and theretofore due and 
principal and interest to become due on or before July 1 in the 
second year thereafter on Minnesota zoological garden bonds.  
This tax shall be levied upon all real property used for the 
purposes of a homestead, as well as other taxable property, 
notwithstanding the provisions of section 273.13, subdivisions 6 
and 7, and shall be subject to no limitation of rate or amount 
until all such bonds and interest thereon are fully paid.  The 
proceeds of this tax are appropriated and shall be credited to 
the state bond fund, and the principal of and interest on the 
bonds are payable from such proceeds, and the whole thereof, or 
so much as may be necessary, is appropriated for such payments.  
If at any time there is insufficient money from the proceeds of 
such taxes to pay the principal and interest when due on 
Minnesota zoological garden bonds, such principal and interest 
shall be paid out of the general fund in the state treasury, and 
the amount necessary therefor is hereby appropriated, with such 
sums from tax levies and the general fund subject to future 
reimbursement to the bond fund by the Minnesota zoological 
garden bond account as indicated in section 85A.04, subdivision 
2.  
    Sec. 9.  Minnesota Statutes 1984, section 93.55, 
subdivision 2, is amended to read: 
    Subd. 2.  The commissioner shall notify the last owner of 
record on file in either the county recorder's or registrar of 
titles' office of a hearing on an order to show cause why the 
mineral interest should not forfeit to the state absolutely.  
The notice shall be served in the same manner as provided for 
the service of summons in a civil action to determine adverse 
claims under chapter 559 and shall contain the following:  (1) 
the legal description of the property upon or beneath which the 
interest exists;  (2) a recitation that the statement of severed 
mineral interest either did not comply with the requirements 
specified by section 93.52 for such a statement or was not filed 
within the time specified in section 93.55, or both;  and (3) 
that the court will be requested to enter an order adjudging the 
forfeiture of the mineral interest to be absolute in the absence 
of a showing that there was substantial compliance with laws 
requiring the registration and taxation of severed mineral 
interests.  For the purposes of this section, substantial 
compliance with laws requiring the registration and taxation of 
severed mineral interests means:  (1) that the records in the 
office of the county recorder or registrar of titles specified 
the true ownership of the severed mineral interest during the 
time period within which the statement of severed mineral 
interest should have been registered with the county recorder or 
the registrar of titles, or that probate, divorce, bankruptcy, 
mortgage foreclosure, or other proceedings affecting the title 
had been timely initiated and diligently pursued by the true 
owner during the time period within which the severed mineral 
interest statement should have been registered, and (2) that all 
taxes relating to severed mineral interests had been timely 
paid, including any taxes which would have been due and owing 
under section 273.13 273.165, subdivision 2a 1, had the interest 
been properly filed for record as required by section 93.52 
within the time specified in section 93.55.  For the purposes of 
this section, "timely paid" means paid within the time period 
during which tax forfeiture would not have been possible had a 
real property tax been assessed against the property.  
    Sec. 10.  Minnesota Statutes 1984, section 97.488, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [APPLICATION.] The provisions of subdivision 1 
do not apply to plants on land classified for property tax 
purposes as class 3 or 3b 2a or 2c agricultural land pursuant to 
section 273.13, or on ditches and roadways.  The provisions of 
subdivision 1 do not apply to noxious weeds designated pursuant 
to sections 18.171 to 18.315 or to weeds otherwise designated as 
troublesome by the department of agriculture.  When control of 
noxious weeds is necessary, it takes priority over the 
protection of endangered plant species, as long as reasonable 
effort is taken to preserve the endangered plant species first.  
    The taking or killing of an endangered plant species on 
land adjacent to class 3 or 3b agricultural land as a result of 
the application of pesticides or other agricultural chemical on 
the class 3 or 3b land shall not be a violation of subdivision 
1, as long as reasonable care is taken in the pesticide or other 
chemical application to avoid impact on adjacent lands.  
    The accidental taking of an endangered plant, where the 
existence of the plant is not known at the time of the taking, 
shall not be a violation of subdivision 1.  
    For the purpose of this subdivision, class 3 or 3b 
agricultural land does not include timber land, waste land, or 
any land for which the owner receives a state paid wetlands or 
native prairie tax credit.  
    Sec. 11.  Minnesota Statutes 1984, section 110A.28, 
subdivision 11, is amended to read: 
    Subd. 11.  A district shall not, in the exercise of the 
powers conferred by sections 110A.01 to 110A.36, provide service 
to actual or potential residential, commercial, industrial or 
publicly-owned land uses within one-half mile of the limits of a 
city of up to 20,000 persons without approval by the city 
council.  Approval shall not be required prior to serving class 
3b 2a lands as defined in section 273.13. 
    Sec. 12.  Minnesota Statutes 1984, section 110A.28, 
subdivision 12, is amended to read: 
    Subd. 12.  A district shall not, in the exercise of the 
powers conferred by sections 110A.01 to 110A.36, provide service 
to actual or potential residential, commercial, industrial or 
publicly-owned land uses within one mile of the limits of a city 
of more than 20,000 persons without approval by the city 
council.  Approval shall not be required prior to serving class 
3b 2a lands as defined in section 273.13. 
    Sec. 13.  Minnesota Statutes 1984, section 115A.58, 
subdivision 6, is amended to read: 
    Subd. 6.  [SECURITY.] On or before December 1 in each year 
the state auditor shall levy on all taxable property within the 
state whatever tax may be necessary to produce an amount 
sufficient, with all money currently credited to the debt 
service account, to pay the entire amount of principal and 
interest currently due and the principal and interest to become 
due before July 1 in the second year thereafter on Minnesota 
waste management bonds.  This tax shall be levied upon all real 
property used for the purposes of a homestead, as well as other 
taxable property, notwithstanding the provisions of section 
273.13, subdivisions 6 and 7, and shall be subject to no 
limitation of rate or amount until all the bonds and interest 
thereon are fully paid.  The proceeds of this tax are 
appropriated to the debt service account.  The principal of and 
interest on the bonds are payable from the proceeds of this tax. 
    Sec. 14.  Minnesota Statutes 1984, section 116.17, 
subdivision 6, is amended to read: 
    Subd. 6.  [TAX LEVY.] On or before December 1 in each year 
the state auditor shall levy on all taxable property within the 
state whatever tax may be necessary to produce an amount 
sufficient, with all money then and theretofore credited to the 
bond account, to pay the entire amount of principal and interest 
then and theretofore due and principal and interest to become 
due on or before July 1 in the second year thereafter on 
Minnesota water pollution control bonds.  This tax shall be 
levied upon all real property used for the purposes of a 
homestead, as well as other taxable property, notwithstanding 
the provisions of section 273.13, subdivisions 6 and 7, and 
shall be subject to no limitation of rate or amount until all 
such bonds and interest thereon are fully paid.  The proceeds of 
this tax are appropriated and shall be credited to the state 
bond fund, and the principal of and interest on the bonds are 
payable from such proceeds, and the whole thereof, or so much as 
may be necessary, is appropriated for such payments.  If at any 
time there is insufficient money from the proceeds of such taxes 
to pay the principal and interest when due on Minnesota water 
pollution control bonds, such principal and interest shall be 
paid out of the general fund in the state treasury, and the 
amount necessary therefor is hereby appropriated. 
    Sec. 15.  Minnesota Statutes 1984, section 116C.63, 
subdivision 4, is amended to read: 
    Subd. 4.  When private real property defined as class 3, 
3b, 3c, 3cc, 3d, or 3f 1a, 1b, 2a, 2c, 4a, 5a, or 6a pursuant to 
section 273.13 is proposed to be acquired for the construction 
of a site or route by eminent domain proceedings, the fee owner, 
or when applicable, the fee owner with the written consent of 
the contract for deed vendee, or the contract for deed vendee 
with the written consent of the fee owner, shall have the option 
to require the utility to condemn a fee interest in any amount 
of contiguous, commercially viable land which he wholly owns or 
has contracted to own in undivided fee and elects in writing to 
transfer to the utility within 60 days after his receipt of the 
notice of the objects of the petition filed pursuant to section 
117.055.  Commercial viability shall be determined without 
regard to the presence of the utility route or site.  The owner 
or, when applicable, the contract vendee shall have only one 
such option and may not expand or otherwise modify his election 
without the consent of the utility.  The required acquisition of 
land pursuant to this subdivision shall be considered an 
acquisition for a public purpose and for use in the utility's 
business, for purposes of chapter 117 and section 500.24, 
respectively; provided that a utility shall divest itself 
completely of all such lands used for farming or capable of 
being used for farming not later than the time it can receive 
the market value paid at the time of acquisition of lands less 
any diminution in value by reason of the presence of the utility 
route or site.  Upon the owner's election made under this 
subdivision, the easement interest over and adjacent to the 
lands designated by the owner to be acquired in fee, sought in 
the condemnation petition for a high voltage transmission line 
right-of-way shall automatically be converted into a fee taking. 
    Sec. 16.  Minnesota Statutes 1984, section 116J.64, 
subdivision 6, is amended to read: 
    Subd. 6.  The remaining 20 percent of the tax revenue 
received by the county auditor under section 273.13 273.165, 
subdivision 2a 1 shall be remitted by the county auditor to the 
state treasurer and shall be deposited in a special account 
called the "Indian business loan account", which shall be a 
revolving fund created and established under the jurisdiction 
and control of the agency, which may engage in a business loan 
program for American Indians as that term is defined in 
subdivision 2.  The tribal councils may administer the fund, 
provided that, before making any eligible loans, each tribal 
council must submit to the agency, for its review and approval, 
a plan for that council's loan program which specifically 
describes, as to that program, its content, utilization of 
funds, administration, operation, implementation, and other 
matters required by the agency.  All such programs must provide 
for a reasonable balance in the distribution of funds 
appropriated pursuant to this section for the purpose of making 
business loans between Indians residing on and off the 
reservations within the state.  As a condition to the making of 
such eligible loans, the tribal councils shall enter into a loan 
agreement and other contractual arrangements with the agency for 
the purpose of carrying out the provisions of this chapter, and 
shall agree that all official books and records relating to the 
business loan program shall be subject to audit by the 
legislative auditor in the same manner prescribed for agencies 
of state government.  
     Whenever any moneys are appropriated by the state treasurer 
to the agency solely for the above-specified purpose or 
purposes, the agency shall establish a separate bookkeeping 
account or accounts in the Indian business loan fund to record 
the receipt and disbursement of such moneys and of the income, 
gain and loss from the investment and reinvestment thereof.  
     Sec. 17.  Minnesota Statutes 1984, section 124.155, 
subdivision 2, is amended to read: 
    Subd. 2.  [SUBTRACTION FROM AIDS.] The amount specified in 
Laws 1981, Third Special Session chapter 2, article 4, section 
3, subdivision 2, as amended by Laws 1982, chapter 548, article 
7, section 7, as further amended by Laws 1982, Third Special 
Session chapter 1, article III, section 4 shall be subtracted 
from the following state aids and credits in the order listed in 
fiscal year 1983.  The amount specified in subdivision 1 shall 
be used to adjust the following state aids and credits in the 
order listed: 
     (a) Foundation aid as authorized in section 124.212, 
subdivision 1;  
     (b) Secondary vocational aid authorized in section 124.573; 
     (c) Special education aid authorized in section 124.32;  
     (d) Secondary vocational aid for handicapped children 
authorized in section 124.574;  
     (e) Gifted and talented aid authorized in section 124.247;  
     (f) Aid for pupils of limited English proficiency 
authorized in section 124.273;  
     (g) Aid for chemical use programs authorized in section 
124.246;  
         (h) Transportation aid authorized in section 124.225;  
         (i) Community education programs aid authorized in section 
124.271;  
         (j) Adult education aid authorized in section 124.26;  
         (k) Capital expenditure equalization aid authorized in 
section 124.245;  
    (l) Homestead credit authorized in section 273.13, 
subdivisions 6, 7, and 14a 22 and 23;  
    (m) Reduced assessment credit authorized in section 273.139;
    (n) Wetlands credit authorized in section 273.115;  
    (o) (n) Native prairie credit authorized in section 273.116;
and 
    (p) (o) Attached machinery aid authorized in section 
273.138, subdivision 3.  
    The commissioner of education shall schedule the timing of 
the reductions from state aids and credits specified in Laws 
1981, Third Special Session chapter 2, article 4, section 3, 
subdivision 2, as amended by Laws 1982, chapter 548, article 7, 
section 7, as further amended by article III, section 4 of this 
act, and the adjustments to state aids and credits specified in 
subdivision 1, as close to the end of the fiscal year as 
possible and in such a manner that will minimize the impact of 
Laws 1981, Third Special Session chapter 2, article 4, as 
amended, on the cash flow needs of the school districts. 
    Sec. 18.  Minnesota Statutes 1984, section 124.2131, 
subdivision 3, is amended to read: 
    Subd. 3.  [DECREASE IN IRON ORE ASSESSED VALUE.] (1) [ 
REDETERMINATION OF ASSESSED VALUE.] If in any year the assessed 
value of any district is less than the assessed value of the 
immediate preceding year, the equalization aid review committee 
shall, upon notification by the county assessor prior to October 
16 of that assessment year, redetermine for all purposes the 
adjusted assessed value of the immediate preceding year taking 
into account the decrease in assessed value.  On or before 
November 1 of the assessment year, the equalization aid review 
committee shall file the redetermined adjusted assessed value 
with the commissioner of education who shall thereupon certify 
to the county auditors and school districts affected the 
redetermined adjusted assessed value and the appropriate levy 
limits of the school districts affected pursuant to section 
275.125, subdivision 10.  Notwithstanding section 275.07, the 
districts affected may certify the taxes voted to the county 
auditor on or before December 1. 
    (2) [IRON ORE VALUE.] If in any year the assessed value of 
class 1 and class 1a 9a property, as defined in section 273.13, 
subdivision 30, and 273.165, subdivision 2, in any district is 
less than the assessed value of such property in the immediately 
preceding year, the equalization aid review committee shall 
redetermine for all purposes the adjusted assessed value of the 
immediately preceding year taking into account only the decrease 
in assessed value of class 1 and class 1a 9a property.  If 
subdivision 2, clause (a) is applicable to such a district, the 
decrease in class 1 and class 1a 9a property shall be applied to 
the adjusted assessed value as limited therein.  In all other 
respects, the provisions of clause (1) shall be applicable. 
    Sec. 19.  Minnesota Statutes 1984, section 124.2137, 
subdivision 1, is amended to read: 
    Subdivision 1.  [TAX REDUCTIONS.] The county auditor shall 
reduce the tax for school purposes on all property receiving the 
homestead credit pursuant to section 273.13, subdivision 6 23, 
by an amount equal to 33 36 percent of the tax levy imposed on 
up to 320 acres of land including the buildings and structures 
thereon but excluding all dwellings and an acre of land for each 
dwelling.  The county auditor shall reduce the tax for school 
purposes on the next 320 acres classified pursuant to section 
273.13, subdivision 6 by an amount equal to 15 percent of the 
tax levy imposed on the property.  The tax on all other 
agricultural lands classified pursuant to section 273.13, 
subdivision 6 shall be reduced 23, including buildings and 
structures thereon but excluding all dwellings and an acre of 
land for each dwelling, and on timber land classified pursuant 
to section 273.13, subdivision 23, paragraph (b) by an amount 
equal to ten 26 percent of the tax levy imposed on the 
property.  The tax on the first 320 acres of agricultural land 
classified pursuant to section 273.13, subdivision 4 including 
buildings and structures thereon but excluding all dwellings and 
an acre of land for each dwelling and The tax on all real estate 
devoted to temporary and seasonal residential occupancy for 
recreational purposes, but not devoted to commercial purposes, 
shall be reduced by an amount equal to 15 percent of the tax 
imposed on the property.  The tax on timber land classified 
pursuant to section 273.13, subdivision 8a and agricultural land 
in excess of 320 acres classified pursuant to section 273.13, 
subdivision 4 shall be reduced by an amount equal to ten percent 
of the tax levy imposed on the property.  The amounts so 
computed by the county auditor shall be submitted to the 
commissioner of revenue as part of the abstracts of tax lists 
required to be filed with the commissioner under the provisions 
of section 275.29.  Any prior year adjustments shall also be 
certified in the abstracts of tax lists.  The commissioner of 
revenue shall review the certifications to determine their 
accuracy.  He may make changes in the certification as he may 
deem necessary or return a certification to the county auditor 
for corrections.  The amount of the reduction provided under 
this subdivision which any taxpayer can receive on all 
qualifying property which he owns shall not exceed $4,000 in the 
case of agricultural property and shall not exceed $100 in the 
case of seasonal residential recreational property.  In the case 
of property owned by more than one person, the maximum amount of 
the reduction shall apply to the total of all the owners.  For 
purposes of computing the credit pursuant to this subdivision, 
the "tax levy" shall be the tax levy reduced by the credits 
provided by sections 273.115, 273.116, 273.123, 273.42, 
subdivision 2, and 473H.10.  
    Sec. 20.  Minnesota Statutes 1984, section 124.2138, 
subdivision 4, is amended to read: 
    Subd. 4.  [NONAGRICULTURAL DISTRICT DEFINED.] For the 
purposes of this section and section 124A.037, nonagricultural 
district means a district where the assessed valuation of 
agricultural land identified in section 273.13, subdivisions 4, 
6, and 6a subdivision 23, comprises less than 60 percent of the 
assessed valuation of the district.  
     Sec. 21.  Minnesota Statutes 1984, section 124.2139, is 
amended to read: 
    124.2139 [REDUCTION OF HOMESTEAD CREDIT PAYMENTS TO SCHOOL 
DISTRICTS.] 
    Beginning with homestead credit payments made to school 
districts pursuant to section 273.13, subdivisions 6, 7, and 
14a, in fiscal year 1985 for taxes payable in 1984, and each 
year thereafter, The commissioner of revenue shall reduce these 
payments to any school district homestead credit payments made 
to school districts pursuant to section 273.13, subdivisions 22 
and 23, by the product of:  
    (1) the district's fiscal year 1984 payroll for coordinated 
plan members of the public employees retirement association, 
times 
    (2) the difference between the employer contribution rate 
in effect prior to July 1, 1984, and the total employer 
contribution rate in effect after June 30, 1984.  
    Sec. 22.  Minnesota Statutes 1984, section 124.46, 
subdivision 3, is amended to read: 
    Subd. 3.  The commissioner of finance shall maintain a 
separate school loan bond account in the state bond fund, 
showing all moneys transferred to that fund for the payment of 
school loan bonds and all income received from the investment of 
such moneys.  Upon the issuance of each series of school loan 
bonds the commissioner of finance shall deduct from the proceeds 
thereof and credit to said bond account a sum sufficient, with 
the balance then on hand in said account, to pay all interest to 
become due on such bonds on and before July 1 in the second 
ensuing year.  On the first day of November in each year there 
shall be transferred to the bond account all or so much of the 
moneys then on hand in the loan repayment account in the maximum 
effort school loan fund as will be sufficient, with the balance 
then on hand in said bond account, to pay all principal and 
interest then and theretofore due and to become due within the 
next ensuing year and to and including July 1 in the second 
ensuing year on school loan bonds issued and sold pursuant to 
this section.  In the event that moneys are not available for 
such transfer in the full amount required, the state auditor 
shall levy on all taxable property within the state a tax 
sufficient to meet the deficiency.  Such tax shall be levied 
upon all real property used for the purposes of a homestead, as 
well as other taxable property, notwithstanding the provisions 
of section 273.13, subdivisions 6 and 7, and shall be and remain 
subject to no limitation of rate or amount until all school loan 
bonds and all interest thereon are fully paid.  The proceeds of 
this tax are hereby irrevocably appropriated and shall be 
credited to the state bond fund, but the school loan bond 
account is appropriated as the primary source of payment of such 
bonds and interest, and only so much of said tax as may be 
necessary is appropriated for this purpose.  If any principal or 
interest on school loan bonds should become due at any time when 
there is not on hand a sufficient amount from any of the sources 
herein appropriated for the payment thereof, it shall 
nevertheless be paid out of the general fund in the state 
treasury, and the amount necessary therefor is hereby 
appropriated; but any such payments shall be reimbursed from the 
proceeds of taxes levied as required herein, and any such 
payments made from taxes shall be reimbursed from the loan 
repayment account in the maximum effort school loan fund, when 
the balance therein is sufficient. 
     Sec. 23.  Minnesota Statutes 1984, section 124A.02, 
subdivision 11, is amended to read: 
    Subd. 11.  [MINIMUM AID.] A qualifying district's minimum 
aid for each school year shall equal its minimum guarantee for 
that school year, minus the sum of: 
    (1) The amount of the district's state school agricultural 
tax credit aid for that school year; 
    (2) The amount by which property taxes of the district for 
use in that school year are reduced by the homestead credit 
provisions in section 273.13, subdivisions 6, 7, and 14a 22 and 
23; 
    (3) The amount by which property taxes of the district for 
use in that school year are reduced by the taconite homestead 
credit provisions in section 273.135;  
    (4) The amount by which property taxes of the district for 
use in that school year are reduced by the attached machinery 
provisions in section 273.138, subdivision 6;  
    (5) The amount by which property taxes of the district for 
use in that school year are reduced by the state paid wetlands 
credit provisions in section 273.115;  
    (6) The amount by which property taxes of the district for 
use in that school year are reduced by the state paid native 
prairie credit provisions in section 273.116;  
    (7) The amount by which property taxes of the district for 
use in that school year are reduced by the state reimbursed 
disaster or emergency reassessment provisions in section 
273.123; and 
    (8) The amount by which property taxes of the district for 
use in that school year are reduced by the metropolitan 
agricultural preserve provisions in section 473H.10. 
    Sec. 24.  Minnesota Statutes 1984, section 124A.02, 
subdivision 12, is amended to read: 
    Subd. 12.  [MINIMUM AID QUALIFYING DISTRICT.] A district 
where the assessed valuation of agricultural land identified in 
section 273.13, subdivisions 4, 6 and 6a subdivision 23, 
comprises 60 percent or more of the assessed valuation of the 
district shall qualify for minimum aid.  
    Sec. 25.  Minnesota Statutes 1984, section 136.40, 
subdivision 7, is amended to read:  
    Subd. 7.  [TAX LEVY.] On or before December 1 in each year 
the state auditor shall levy on all taxable property within the 
state whatever tax may be necessary to produce an amount 
sufficient, with all money then and theretofore credited to the 
Minnesota state university bond account, to pay the entire 
amount of principal and interest then and theretofore due and 
principal and interest to become due on or before July 1 in the 
second year thereafter on Minnesota state university bonds.  
This tax shall be levied upon all real property used for the 
purposes of a homestead, as well as other taxable property, 
notwithstanding the provisions of section 273.13, subdivisions 6 
and 7, and shall be subject to no limitation of rate or amount 
until all such bonds and interest thereon are fully paid.  The 
proceeds of this tax are appropriated and shall be credited to 
the state bond fund, and the principal of and interest on the 
bonds are payable from such proceeds, and the whole thereof, or 
so much as may be necessary, is appropriated for such payments.  
If at any time there is insufficient money from the proceeds of 
such taxes to pay the principal and interest when due on 
Minnesota state university bonds, such principal and interest 
shall be paid out of the general fund in the state treasury, and 
the amount necessary therefor is hereby appropriated.  
    Sec. 26.  Minnesota Statutes 1984, section 136C.43, 
subdivision 6, is amended to read:  
    Subd. 6.  [TAX LEVY.] On or before December 1 in each year, 
if the full amount appropriated to the bond account in 
subdivision 5 has not been credited thereto, the tax required by 
the Constitution shall be levied upon all taxable property 
within the state.  This tax shall be levied upon all real 
property used for the purposes of a homestead, as well as other 
taxable property, notwithstanding the provisions of section 
273.13, subdivisions 6 and 7, and shall be subject to no 
limitation of rate or amount until all vocational technical 
building bonds and interest thereon are fully paid.  The 
proceeds of this tax are appropriated and shall be credited to 
the state bond fund, and the principal of and interest on the 
bonds are payable from such proceeds, and the whole thereof, or 
so much as may be necessary, is appropriated for such payments.  
If at any time there is not sufficient money from the proceeds 
of such taxes to pay the principal and interest when due on 
vocational technical building bonds, such principal and interest 
shall be paid out of the general fund in the state treasury, and 
the amount necessary therefor is hereby appropriated.  
    Sec. 27.  Minnesota Statutes 1984, section 167.52, is 
amended to read: 
    167.52 [TAX LEVY.] 
    The state auditor shall levy each year on all taxable 
property within the state whatever tax may be necessary to 
produce an amount sufficient, with all money then and 
theretofore transferred under section 167.51, and all income 
from the investment thereof, to pay the entire amount of 
principal and interest which is then due or is to become due 
within the then ensuing year and to and including July 1 of the 
second ensuing year, on Minnesota trunk highway bonds heretofore 
issued and all such bonds hereafter issued pursuant to section 
167.50.  Such tax shall be levied upon all real property used 
for the purposes of a homestead, as well as other taxable 
property, notwithstanding the provisions of section 273.13, 
subdivisions 6 and 7.  Such tax shall be subject to no 
limitation of rate or amount until all such bonds and all 
interest thereon are fully paid.  The proceeds of such taxes are 
appropriated and credited to the state bond fund, and the 
principal and interest of said bonds are payable from the 
proceeds of such taxes, and the whole thereof, or so much 
thereof as may be necessary, is appropriated for such payments.  
If at any time there is insufficient money from the proceeds of 
the taxes provided for herein to pay the principal and interest 
when due on such bonds, then such principal and interest shall 
be paid out of the general fund in the state treasury, and the 
amount necessary therefor is hereby appropriated.  The general 
fund shall be reimbursed from the proceeds of said taxes when 
received. 
    Sec. 28.  Minnesota Statutes 1984, section 168.012, 
subdivision 9, is amended to read:  
    Subd. 9.  Manufactured homes shall not be taxed as motor 
vehicles using the public streets and highways and shall be 
exempt from the motor vehicle tax provisions of this chapter.  
Except as provided in section 273.13 274.19, manufactured homes 
shall be taxed as personal property.  The provisions of 
Minnesota Statutes 1957, Section 272.02 or any other act 
providing for tax exemption shall be inapplicable to 
manufactured homes, except such manufactured homes as are held 
by a licensed dealer and exempted as inventory.  House trailers 
not used on the highway during any calendar year shall be taxed 
as manufactured homes if occupied as human dwelling places. 
    Sec. 29.  Minnesota Statutes 1984, section 174.51, 
subdivision 6, is amended to read: 
    Subd. 6.  On or before December 1 in each year, if the full 
amount appropriated to the bond account in subdivision 5 has not 
been credited thereto, the tax required by article XI of the 
constitution shall be levied upon all taxable property within 
the state.  This tax shall be levied upon all real property used 
for the purposes of a homestead, as well as other taxable 
property, notwithstanding the provisions of section 273.13, 
subdivisions 6 and 7, and shall be subject to no limitation of 
rate or amount until all Minnesota state transportation bonds 
and interest thereon are fully paid.  The proceeds of this tax 
are appropriated and shall be credited to the state bond fund, 
and the principal of and interest on the bonds are payable from 
such proceeds, and the whole thereof, or so much as may be 
necessary, is appropriated for such payments.  If at any time 
there is not sufficient money from the proceeds of such taxes to 
pay the principal and interest when due on Minnesota state 
transportation bonds, such principal and interest shall be paid 
out of the general fund in the state treasury, and the amount 
necessary therefor is hereby appropriated. 
    Sec. 30.  Minnesota Statutes 1984, section 272.02, 
subdivision 1, as amended by Laws 1985, chapter 300, section 4, 
is amended to read: 
    Subdivision 1.  All property described in this section to 
the extent herein limited shall be exempt from taxation: 
    (1) All public burying grounds; 
    (2) All public schoolhouses; 
    (3) All public hospitals; 
    (4) All academies, colleges, and universities, and all 
seminaries of learning; 
    (5) All churches, church property, and houses of worship; 
    (6) Institutions of purely public charity except parcels of 
property containing structures and the structures assessed 
pursuant to section 273.13, subdivisions 17, 17b, 17c or 17d as 
class 7(a), (b), (c), or (d); 
    (7) All public property exclusively used for any public 
purpose; 
    (8) Except for the taxable personal property enumerated 
below, all personal property and the property described in 
section 272.03, subdivision 1, clause (c) shall be exempt.  
    The following personal property shall be taxable:  
    (a) personal property which is part of an electric 
generating, transmission, or distribution system or a pipeline 
system transporting or distributing water, gas, crude oil, or 
petroleum products or mains and pipes used in the distribution 
of steam or hot or chilled water for heating or cooling 
buildings and structures;  
    (b) railroad docks and wharves which are part of the 
operating property of a railroad company as defined in section 
270.80;  
    (c) personal property defined in section 272.03, 
subdivision 2, clause (3);  
    (d) leasehold or other personal property interests which 
are taxed pursuant to section 272.01, subdivision 2; 273.13, 
subdivision 7b or 7d 273.124, subdivision 7; or 273.19, 
subdivision 1; or any other law providing the property is 
taxable as if the lessee or user were the fee owner;  
    (e) property classified as class 2a property manufactured 
homes and sectional structures; and 
    (f) flight property as defined in section 270.071.  
    (9) Real and personal property used primarily for the 
abatement and control of air, water, or land pollution to the 
extent that it is so used, other than real property used 
primarily as a solid waste disposal site. 
    Any taxpayer requesting exemption of all or a portion of 
any equipment or device, or part thereof, operated primarily for 
the control or abatement of air or water pollution shall file an 
application with the commissioner of revenue.  The equipment or 
device shall meet standards, regulations or criteria prescribed 
by the Minnesota Pollution Control Agency, and must be installed 
or operated in accordance with a permit or order issued by that 
agency.  The Minnesota Pollution Control Agency shall upon 
request of the commissioner furnish information or advice to the 
commissioner.  If the commissioner determines that property 
qualifies for exemption, he shall issue an order exempting the 
property from taxation.  The equipment or device shall continue 
to be exempt from taxation as long as the permit issued by the 
Minnesota Pollution Control Agency remains in effect. 
     (10) Wetlands.  For purposes of this subdivision, 
"wetlands" means (1) land described in section 105.37, 
subdivision 15, or (2) land which is mostly under water, 
produces little if any income, and has no use except for 
wildlife or water conservation purposes, provided it is 
preserved in its natural condition and drainage of it would be 
legal, feasible, and economically practical for the production 
of livestock, dairy animals, poultry, fruit, vegetables, forage 
and grains, except wild rice.  "Wetlands" shall include adjacent 
land which is not suitable for agricultural purposes due to the 
presence of the wetlands.  "Wetlands" shall not include woody 
swamps containing shrubs or trees, wet meadows, meandered water, 
streams, rivers, and floodplains or river bottoms.  Exemption of 
wetlands from taxation pursuant to this section shall not grant 
the public any additional or greater right of access to the 
wetlands or diminish any right of ownership to the wetlands. 
     (11) Native prairie.  The commissioner of the department of 
natural resources shall determine lands in the state which are 
native prairie and shall notify the county assessor of each 
county in which the lands are located.  Pasture land used for 
livestock grazing purposes shall not be considered native 
prairie for the purposes of this clause and section 273.116.  
Upon receipt of an application for the exemption and credit 
provided in this clause and section 273.116 for lands for which 
the assessor has no determination from the commissioner of 
natural resources, the assessor shall refer the application to 
the commissioner of natural resources who shall determine within 
30 days whether the land is native prairie and notify the county 
assessor of his decision.  Exemption of native prairie pursuant 
to this clause shall not grant the public any additional or 
greater right of access to the native prairie or diminish any 
right of ownership to it. 
     (12) Property used in a continuous program to provide 
emergency shelter for victims of domestic abuse, provided the 
organization that owns and sponsors the shelter is exempt from 
federal income taxation pursuant to section 501(c)(3) of the 
Internal Revenue Code of 1954, as amended through December 31, 
1982, notwithstanding the fact that the sponsoring organization 
receives funding under section 8 of the United States Housing 
Act of 1937, as amended. 
    (13) If approved by the governing body of the municipality 
in which the property is located, property not exceeding one 
acre which is owned and operated by any senior citizen group or 
association of groups that in general limits membership to 
persons age 55 or older and is organized and operated 
exclusively for pleasure, recreation, and other nonprofit 
purposes, no part of the net earnings of which inures to the 
benefit of any private shareholders; provided the property is 
used primarily as a clubhouse, meeting facility or recreational 
facility by the group or association and the property is not 
used for residential purposes on either a temporary or permanent 
basis. 
    (14) To the extent provided by section 295.44, real and 
personal property used or to be used primarily for the 
production of hydroelectric or hydromechanical power on a site 
owned by the state or a local governmental unit which is 
developed and operated pursuant to the provisions of section 
105.482, subdivisions 1, 8 and 9. 
     (15) If approved by the governing body of the municipality 
in which the property is located, and if construction is 
commenced after June 30, 1983:  
    (a) a "direct satellite broadcasting facility" operated by 
a corporation licensed by the federal communications commission 
to provide direct satellite broadcasting services using direct 
broadcast satellites operating in the 12-ghz. band;  
    (b) a "fixed satellite regional or national program service 
facility" operated by a corporation licensed by the federal 
communications commission to provide fixed satellite-transmitted 
regularly scheduled broadcasting services using satellites 
operating in the 6-ghz. band; and 
    (c) a facility at which a licensed Minnesota manufacturer 
produces distilled spirituous liquors, liqueurs, cordials, or 
liquors designated as specialties regardless of alcoholic 
content, but not including ethyl alcohol, distilled with a 
majority of the ingredients grown or produced in Minnesota.  
An exemption provided by paragraph (15) shall apply for a period 
not to exceed five years.  When the facility no longer qualifies 
for exemption, it shall be placed on the assessment rolls as 
provided in subdivision 4.  Before approving a tax exemption 
pursuant to this paragraph, the governing body of the 
municipality shall provide an opportunity to the members of the 
county board of commissioners of the county in which the 
facility is proposed to be located and the members of the school 
board of the school district in which the facility is proposed 
to be located to meet with the governing body.  The governing 
body shall present to the members of those boards its estimate 
of the fiscal impact of the proposed property tax exemption.  
The tax exemption shall not be approved by the governing body 
until the county board of commissioners has presented its 
written comment on the proposal to the governing body, or 30 
days has passed from the date of the transmittal by the 
governing body to the board of the information on the fiscal 
impact, whichever occurs first. 
    The exemptions granted by this subdivision shall be subject 
to the limits contained in the other subdivisions of this 
section, section 272.025, or section 273.13, subdivisions 17, 
17b, 17c, or 17d.  
    (16) Real and personal property owned and operated by a 
private, nonprofit corporation exempt from federal income 
taxation pursuant to United States Code, title 26, section 
501(c)(3), primarily used in the generation and distribution of 
hot water for heating buildings and structures.  
    Sec. 31.  Minnesota Statutes 1984, section 272.02, is 
amended by adding a subdivision to read:  
    Subd. 1a.  The exemptions granted by subdivision 1 are 
subject to the limits contained in the other subdivisions of 
this section, section 272.025, or 273.13, subdivision 28, 
paragraphs (a), (b), (c) and (d).  
    Sec. 32.  Minnesota Statutes 1984, section 272.039, is 
amended to read: 
     272.039 [LEGISLATIVE FINDINGS AND CONCLUSIONS RELATED TO 
THE TAXATION OF MINERALS OWNED SEPARATELY FROM THE SURFACE.] 
     The legislature finds, for the reasons stated below, that a 
class of real property has been created which, although not 
exempt from taxation, is not assessed for tax purposes and does 
not, therefore, contribute anything toward the cost of 
supporting the governments which protect and preserve the 
continued existence of the property.  These reasons are as 
follows:  (1) In the case of Washburn v. Gregory, 1914, 125 
Minn. 491, 147 N.W. 706, the Minnesota Supreme Court determined 
that where mineral interests are owned separately from the 
surface interests in real estate, the mineral interest is a 
separate interest in land, separately taxable, and does not 
forfeit if the overlying surface interest forfeits for 
nonpayment of taxes due on the surface interest; (2) Since this 
1914 decision, mineral interests owned separately from the 
surface have been valued and assessed for tax purposes, as a 
practical matter, only if the value of the minerals has been 
determined through drilling and drill core analysis; and (3) The 
absence of any taxation of mineral interests owned separately 
from the surface, except where drilling analysis is available, 
has encouraged the separation of ownership of surface and 
mineral estates and resulted in the creation of hundreds of 
thousands of acres of untaxed mineral estate lands which thus 
are immune from tax forfeiture.  The legislature also finds that 
the province of Ontario in Canada, which has land ownership 
patterns and mineral characteristics similar to that of 
Minnesota, has imposed a tax of $.50 an acre on minerals owned 
separately from the surface since 1968, and $.10 an acre before 
that.  The legislature further finds that the identification of 
separately owned mineral interests by taxing authorities 
requires title searches which are extremely burdensome and, 
where no public tract index is available, prohibitively 
expensive.  This result is caused in part by the decision in 
Wichelman v. Messner, 1957, 250 Minn. 88, 83 N.W. (2d) 800, 
where the so called "40 year law" was held inapplicable to 
mineral interests owned separately from surface interests.  On 
the basis of the above findings, and for the purpose of 
requiring mineral interests owned separately from surface 
interests to contribute to the cost of government at a time when 
other interests in real property are heavily burdened with real 
property taxes, the legislature concludes that the taxation of 
severed mineral interests as provided in section 273.13 273.165, 
subdivision 2a 1 is necessary and in the public interest, and 
provides fair taxation of a class of real property which has 
escaped taxation for many years.  The legislature further 
concludes that such a tax is not prohibited by Minnesota 
Constitution, Article 10, Section 2.  The legislature concludes 
finally that the amendments and repeals made by Laws 1973, 
Chapter 650 to sections 93.52 to 93.58, are necessary to provide 
adequate identification of mineral interests owned separately 
from the surface and to prevent the continued escape from 
taxation of obscure and fractionalized severed mineral interests.
    Sec. 33.  Minnesota Statutes 1984, section 272.04, 
subdivision 1, is amended to read:  
    Subdivision 1.  When any mineral, gas, coal, oil, or other 
similar interests in real estate are owned separately and apart 
from and independently of the rights and interests owned in the 
surface of such real estate, such mineral, gas, coal, oil, or 
other similar interests may be assessed and taxed separately 
from such surface rights and interests in such real estate, 
including but not limited to the taxation provided in section 
273.13 273.165, subdivision 2a 1, and may be sold for taxes in 
the same manner and with the same effect as other interests in 
real estate are sold for taxes.  
    Sec. 34.  Minnesota Statutes 1984, section 272.115, 
subdivision 4, is amended to read: 
    Subd. 4.  Beginning with taxes payable in 1979, No real 
estate sold on or after January 1, 1978 for which a certificate 
of value is required pursuant to subdivision 1 shall receive the 
homestead credit provided under section 273.13, subdivisions 6 
and 7 22 and 23; the agricultural mill credit provided in 
section 124.2137; or the taconite homestead credit provided in 
sections 273.134 to 273.136, unless a certificate of value has 
been filed with the county auditor in accordance with this 
section. 
    This subdivision shall apply to any real estate taxes that 
are payable the year or years following the sale of the property.
    Sec. 35.  Minnesota Statutes 1984, section 273.11, 
subdivision 8, is amended to read:  
    Subd. 8.  [LIMITED EQUITY COOPERATIVE APARTMENTS.] For the 
purposes of this subdivision, the terms defined in this 
subdivision have the meanings given them.  
    A "limited equity cooperative" is a corporation organized 
under Minnesota Statutes, chapter 308, which has as its primary 
purpose the provision of housing and related services to its 
members, who must be persons or families of low and moderate 
income as defined in section 462A.03, subdivision 10, at the 
time they purchase their membership, and which meets the 
following requirements:  
    (a) The articles of incorporation set the sale price of 
occupancy entitling cooperative shares or memberships at no more 
than a transfer value determined as provided in the articles. 
That value may not exceed the sum of the following:  
    (1) the consideration paid for the membership or shares by 
the first occupant of the unit, as shown in the records of the 
corporation;  
    (2) the fair market value, as shown in the records of the 
corporation, of any improvements to the real property that were 
installed at the sole expense of the member with the prior 
approval of the board of directors;  
    (3) accumulated interest, or an inflation allowance not to 
exceed the greater of a ten percent annual noncompounded 
increase on the consideration paid for the membership or share 
by the first occupant of the unit, or the amount that would have 
been paid on that consideration if interest had been paid on it 
at the rate of the percentage increase in the revised consumer 
price index for all urban consumers for the Minneapolis-St. Paul 
metropolitan area prepared by the United States Department of 
Labor, provided that the amount determined pursuant to this 
clause may not exceed $500 for each year or fraction of a year 
the membership or share was owned; plus 
     (4) real property capital contributions shown in the 
records of the corporation to have been paid by the transferor 
member and previous holders of the same membership, or of 
separate memberships that had entitled occupancy to the unit of 
the member involved.  These contributions include contributions 
to a corporate reserve account the use of which is restricted to 
real property improvements or acquisitions, contributions to the 
corporation which are used for real property improvements or 
acquisitions, and the amount of principal amortized by the 
corporation on its indebtedness due to the financing of real 
property acquisition or improvement or the averaging of 
principal paid by the corporation over the term of its real 
property-related indebtedness. 
     (b) The articles of incorporation require that the board of 
directors limit the purchase price of stock or membership 
interests for new member-occupants or resident shareholders to 
an amount which does not exceed the transfer value for the 
membership or stock as defined in clause (a).  
    (c) The articles of incorporation require that the total 
distribution out of capital to a member shall not exceed that 
transfer value. 
    (d) The articles of incorporation require that upon 
liquidation of the corporation any assets remaining after 
retirement of corporate debts and distribution to members will 
be conveyed to a charitable organization described in section 
501(c)(3) of the Internal Revenue Code of 1954, as amended 
through December 31, 1982 1984, or a public agency.  
    A "limited equity cooperative apartment" is a dwelling unit 
owned or leased by a limited equity cooperative.  If the 
dwelling unit is leased by the cooperative the lease agreement 
must meet the conditions for a cooperative lease stated in 
Minnesota Statutes, section 273.133 273.124, subdivision 3 6.  
    "Occupancy entitling cooperative share or membership" is 
the ownership interest in a cooperative organization which 
entitles the holder to an exclusive right to occupy a dwelling 
unit owned or leased by the cooperative.  
    For purposes of taxation, the assessor shall value a unit 
owned by a limited equity cooperative at the lesser of its 
market value or the value determined by capitalizing the net 
operating income of a comparable apartment operated on a rental 
basis at the capitalization rate used in valuing comparable 
buildings that are not limited equity cooperatives.  If a 
cooperative fails to operate in accordance with the provisions 
of clauses (a) to (d), the property shall be subject to 
additional property taxes in the amount of the difference 
between the taxes determined in accordance with this subdivision 
for the last ten years that the property had been assessed 
pursuant to this subdivision and the amount that would have been 
paid if the provisions of this subdivision had not applied to 
it.  The additional taxes, plus interest at the rate specified 
in section 549.09, shall be extended against the property on the 
tax list for the current year.  
    Sec. 36.  Minnesota Statutes 1984, section 273.1104, 
subdivision 1, is amended to read: 
    Subdivision 1.  The term value as applied to iron ore in 
section 273.13 273.165, subdivision 2 and in section 273.15 
273.13, subdivision 30, paragraph (b) shall be deemed to be 
three times the present value of future income notwithstanding 
the provisions of section 273.11. The present value of future 
income shall be determined by the commissioner of revenue in 
accordance with professionally recognized mineral valuation 
practice and procedure.  Nothing contained herein shall be 
construed as requiring any change in the method of determining 
present value of iron ore utilized by the commissioner prior to 
the enactment hereof or as limiting any remedy presently 
available to the taxpayer in connection with the commissioner's 
determination of present value, or precluding the commissioner 
from making subsequent changes in the present worth formula. 
     Sec. 37.  Minnesota Statutes 1984, section 273.1105, 
subdivision 2, is amended to read: 
    Subd. 2.  To qualify for valuation pursuant to subdivision 
1, the owner of a building shall apply to the assessor prior to 
commencing a rehabilitation project.  The assessor shall approve 
treatment pursuant to subdivision 1 for a building if:  (a) the 
building is more than 25 years old; (b) the anticipated 
rehabilitation costs, which are those expenses incurred in the 
process of renovation, including labor, materials, and 
management costs, exceed 60 percent of the estimated market 
value of the building at the time when the application is made; 
(c) the rehabilitation is completed within one year and prior to 
the January 2 assessment date; (d) the building contains more 
than three rental units; (e) the building is not used as a hotel 
or motel in which the rental units are used by tenants for 
rental periods of less than 30 days; (f) the property is not 
classified pursuant to Minnesota Statutes, section 273.13, 
subdivisions 17, 17a or 17b subdivision 28, paragraph (a) or (c);
(g) not more than 25 percent of the residential units in the 
building are subsidized through section 8 of the U.S. Housing 
Act of 1937, 42 USC 1437(f); and (h) limits the rehabilitation 
to the original structure. 
     Sec. 38.  Minnesota Statutes 1984, section 273.115, 
subdivision 7, is amended to read: 
    Subd. 7.  The total credits allowed by subdivision 1 shall 
be deducted from the gross property tax before determination of 
the homestead credit provided by section 273.13, subdivisions 6 
and 7 22 and 23 and the taconite homestead credit provided by 
section 273.135.  
     Sec. 39.  Minnesota Statutes 1984, section 273.116, 
subdivision 7, is amended to read: 
    Subd. 7.  The total credits allowed by subdivision 1 shall 
be deducted from the gross property tax before determination of 
the homestead credit provided by section 273.13, subdivisions 6 
and 7 22 and 23 and the taconite homestead credit provided by 
section 273.135.  
    Sec. 40.  Minnesota Statutes 1984, section 273.118, is 
amended to read: 
    273.118 [TAX PAID IN RECOGNITION OF CONGRESSIONAL MEDAL OF 
HONOR.] 
    An owner of homestead property classified under section 
273.13, subdivision 6, 6a, 7, 7d, or 14a, who submits to the 
commissioner of revenue his property tax statement and 
reasonable proof that the owner of the property:  
    (a) is a veteran as defined in section 197.447;  
    (b) was a resident of this state for at least six months 
before entering military service, or has been a resident of this 
state for five consecutive years before submitting the statement 
and proof; and 
    (c) has been awarded the congressional medal of honor;  
    shall be paid by the commissioner of revenue, within 30 
days after the commissioner receives the statement and proof, 
the amount of the owner's property tax liability as shown on the 
statement, up to $2,000.  The surviving spouse of a property 
owner who has received a payment under this section may receive 
payment of property taxes under this section as long as the 
spouse continues to own and occupy the property for which the 
taxes were paid under this section and the property continues to 
have an eligible classification be a homestead.  Property taxes 
paid under this section reduce property taxes payable for 
purposes of chapter 290A, the Property Tax Refund Act.  
    Sec. 41.  Minnesota Statutes 1984, section 273.121, is 
amended to read: 
    273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 
    Any county assessor or city assessor having the powers of a 
county assessor, valuing or classifying taxable real property 
shall in each year notify those persons whose property is to be 
assessed or reclassified that year if the person's address is 
known to the assessor, otherwise the occupant of the property.  
In the case of property owned by a married couple in joint 
tenancy or tenancy in common, the assessor shall not deny the 3b 
or 3c property classification homestead treatment in whole or in 
part if only one of the spouses is occupying the property and 
the other spouse is absent due to divorce or separation, or is a 
resident of a nursing home or a boarding care facility.  The 
notice shall be in writing and shall be sent by ordinary mail at 
least ten days before the meeting of the local board of review 
or equalization.  It shall contain the amount of the valuation 
in terms of market value, the new classification, the assessor's 
office address, and the dates, places, and times set for the 
meetings of the local board of review or equalization and the 
county board of equalization.  If the assessment roll is not 
complete, the notice shall be sent by ordinary mail at least ten 
days prior to the date on which the board of review has 
adjourned.  The assessor shall attach to the assessment roll a 
statement that the notices required by this section have been 
mailed.  Any such assessor who is not provided sufficient funds 
from his governing body to provide such notices, may make 
application to the commissioner of revenue to finance such 
notices.  The commissioner of revenue shall conduct an 
investigation and if he is satisfied that the assessor does not 
have the necessary funds, issue his certification to the 
commissioner of finance of the amount necessary to provide such 
notices.  The commissioner of finance shall issue a warrant for 
such amount and shall deduct such amount from any state payment 
to such county or municipality.  The necessary funds to make 
such payments are hereby appropriated.  Failure to receive the 
notice shall in no way affect the validity of the assessment, 
the resulting tax, the procedures of any board of review or 
equalization, or the enforcement of delinquent taxes by 
statutory means. 
    Sec. 42.  Minnesota Statutes 1984, section 273.123, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] For purposes of this section 
(a) "disaster or emergency" means 
    (1) a major disaster as determined by the president of the 
United States;  
    (2) a natural disaster as determined by the secretary of 
agriculture;  
    (3) a disaster as determined by the administrator of the 
small business administration; or 
    (4) a tornado, storm, flood, earthquake, landslide, 
explosion, fire or similar catastrophe, as a result of which a 
local emergency is declared pursuant to section 12.29.  
    (b) "disaster or emergency area" means an area 
    (1) in which the president of the United States, the 
secretary of agriculture, or the administrator of the small 
business administration has determined that a disaster exists 
pursuant to federal law or in which a local emergency has been 
declared pursuant to section 12.29; and 
    (2) for which an application by the local unit of 
government requesting property tax relief under this section has 
been received by the governor and approved by the executive 
council.  
    (c) "homestead property" means homestead dwelling located 
on property classified pursuant to section 273.13, subdivision 
6, 6a, 7, 7b, 7d, or 14a, including manufactured homes and 
sectional homes used as homesteads and taxed pursuant to section 
273.13, subdivision 3, clause (b), (c), or (d) that is 
classified as class 1a, 1b, or 2a property or a manufactured 
home or sectional home used as a homestead and taxed pursuant to 
section 274.19, subdivision 8, paragraph (b), (c), or (d).  
    Sec. 43.  Minnesota Statutes 1984, section 273.123, 
subdivision 4, is amended to read: 
    Subd. 4.  [STATE REIMBURSEMENT.] The county auditor shall 
calculate the tax on the property described in subdivision 2 
based on the assessment made on January 1 2 of the year in which 
the disaster or emergency occurred.  The difference between the 
tax determined on the January 1 2 assessed value and the tax 
actually payable based on the reassessed value determined under 
subdivision 2 shall be reimbursed to each taxing jurisdiction in 
which the damaged property is located.  The amount shall be 
certified by the county auditor and reported to the commissioner 
of revenue.  The commissioner shall make the payments to the 
taxing jurisdictions containing the property at the time 
distributions are made pursuant to section 273.13, subdivision 
15a, in the same proportion that the ad valorem tax is 
distributed.  
    Sec. 44.  [273.124] [HOMESTEAD DETERMINATION; SPECIAL 
RULES.] 
    Subdivision 1.  [GENERAL RULE.] Residential real estate 
that is occupied and used for the purposes of a homestead by its 
owner, who must be a Minnesota resident, is a homestead. Dates 
for establishment of a homestead and homestead treatment 
provided to particular types of property are as provided in this 
section.  
    The assessor shall require proof, by affidavit or 
otherwise, of the facts upon which classification as a homestead 
may be determined. 
    For purposes of this section, homestead property shall 
include property which is used for purposes of the homestead but 
is separated from the homestead by a road, street, lot, 
waterway, or other similar intervening property.  The term "used 
for purposes of the homestead" shall include but not be limited 
to uses for gardens, garages, or other outbuildings commonly 
associated with a homestead, but shall not include vacant land 
held primarily for future development.  In order to receive 
homestead treatment for the noncontiguous property, the owner 
shall apply for it to the assessor by July 1 of the year when 
the treatment is initially sought.  After initial qualification 
for the homestead treatment, additional applications for 
subsequent years are not required. 
     Subd. 2.  [TOWNHOUSES; COMMON AREAS; CONDOMINIUMS; 
COOPERATIVES.] (a) The total value of townhouse property, 
including the value added as provided in this paragraph, must 
have the benefit of homestead treatment or other special 
classification if the townhouse otherwise qualifies.  The value 
of townhouse property must be increased by the value added by 
the right to use any common areas in connection with the 
townhouse development.  The common areas of the development must 
not be separately taxed.  
    (b) Condominium property qualifying as a homestead under 
section 515A.1-105 and property owned by a cooperative 
association that qualifies as a homestead must have the benefit 
of homestead treatment or other special classification if the 
condominium or cooperative association property otherwise 
qualifies.  
     (c) If the condominium, townhouse, or cooperative 
association property is owned by the occupant and used for the 
purposes of a homestead but is located upon land which is 
leased, that leased land must be valued and assessed as if it 
were homestead property within class 1 if all of the following 
criteria are met: 
    (1) the occupant is using the property as his permanent 
residence;  
    (2) the occupant or the cooperative association is paying 
the ad valorem property taxes and any special assessments levied 
against the land and structure;  
    (3) the occupant or the cooperative association has signed 
a land lease; and 
    (4) the term of the land lease is at least 50 years, 
notwithstanding the fact that the amount of the rental payment 
may be renegotiated at shorter intervals.  
    Subd. 3.  [COOPERATIVES AND CHARITABLE CORPORATIONS.] When 
one or more dwellings, or one or more buildings which each 
contain several dwelling units, are owned by a corporation or 
association organized under sections 308.05 to 308.18, and each 
person who owns a share or shares in the corporation or 
association is entitled to occupy a dwelling, or dwelling unit 
in the building, the corporation or association may claim 
homestead treatment for each dwelling, or for each unit in case 
of a building containing several dwelling units, for the 
dwelling or for the part of the value of the building occupied 
by a shareholder.  Each dwelling or unit must be designated by 
legal description or number, and the assessed value of each 
dwelling that qualifies for assessment under this subdivision 
must include not more than one-half acre of land, if platted, 
nor more than 80 acres if unplatted.  The assessed value of the 
building or buildings containing several dwelling units is the 
sum of the assessed values of each of the respective units 
comprising the building.  To qualify for the treatment provided 
by this subdivision, the corporation or association must be 
wholly owned by persons having a right to occupy a dwelling or 
dwelling unit owned by the corporation or association.  A 
charitable corporation organized under the laws of Minnesota and 
not otherwise exempt thereunder with no outstanding stock 
qualifies for homestead treatment with respect to member 
residents of the dwelling units who have purchased and hold 
residential participation warrants entitling them to occupy the 
units. 
    Subd. 4.  [NONPROFIT CORPORATIONS.] When a building 
containing several dwelling units is owned by an entity 
organized under chapter 317 and operating as a nonprofit 
corporation which enters into membership agreements with persons 
under which they are entitled to life occupancy in a unit in the 
building, homestead classification must be given to each unit so 
occupied and the entire building must be assessed in the manner 
provided in subdivision 3 for cooperatives and charitable 
corporations. 
    Subd. 5.  [CONTINUING CARE FACILITIES.] When a building 
containing several dwelling units is owned by an entity which is 
regulated under the provisions of chapter 80D and operating as a 
continuing care facility enters into residency agreements with 
persons who occupy a unit in the building and the residency 
agreement entitles the resident to occupancy in the building 
after personal assets are exhausted and regardless of ability to 
pay the monthly maintenance fee, homestead classification shall 
be given to each unit so occupied and the entire building shall 
be assessed in the manner provided in subdivision 1 for 
cooperatives and charitable corporations. 
    Subd. 6.  [LEASEHOLD COOPERATIVES.] When one or more 
dwellings or one or more buildings which each contain several 
dwelling units is owned by a nonprofit corporation subject to 
the provisions of chapter 317 or a limited partnership which 
corporation or partnership operates the property in conjunction 
with a cooperative association, homestead treatment may be 
claimed for each dwelling unit occupied by a member of the 
cooperative.  To qualify for the treatment provided by this 
subdivision, the following conditions must be met:  (a) the 
cooperative association must be organized under sections 308.05 
to 308.18; (b) the cooperative association must have a lease for 
occupancy of the property for a term of at least 20 years; (c) 
the cooperative association must have a right under a written 
agreement with the owner to purchase the property if the owner 
proposes to sell it; if the cooperative association does not 
purchase the property when it is offered for sale, the owner may 
not subsequently sell the property to another purchaser at a 
price lower than the price at which it was offered for sale to 
the cooperative association unless the cooperative association 
approves the sale; and (d) if a limited partnership owns the 
property, it must include as the managing general partner either 
the cooperative association or a nonprofit organization 
operating under the provisions of chapter 317.  Homestead 
treatment must be afforded to units occupied by members of the 
cooperative association and the units must be assessed as 
provided in subdivision 1, provided that any unit not so 
occupied shall be classified and assessed pursuant to the 
appropriate class.  No more than three acres of land may, for 
assessment purposes, be included with each dwelling unit that 
qualifies for homestead treatment under this subdivision.  
    Subd. 7.  [LEASED BUILDINGS OR LAND.] For purposes of class 
1 determinations, homesteads include: 
    (a) buildings and appurtenances owned and used by the 
occupant as a permanent residence which are located upon land 
the title to which is vested in a person or entity other than 
the occupant; 
    (b) all buildings and appurtenances located upon land owned 
by the occupant and used for the purposes of a homestead 
together with the land upon which they are located, if all of 
the following criterial are met: 
    (1) the occupant is using the property as his permanent 
residence; 
    (2) the occupant is paying the property taxes and any 
special assessments levied against the property; 
    (3) the occupant has signed a lease which has an option to 
purchase the buildings and appurtenances; and 
    (4) the term of the lease is at least five years. 
    Any taxpayer meeting all the requirements of this paragraph 
must notify the county assessor, or the assessor who has the 
powers of the county assessor pursuant to section 273.063, in 
writing, as soon as possible after signing the lease agreement 
and occupying the buildings as his homestead. 
    Subd. 8.  [HOMESTEAD OWNED BY FAMILY FARM CORPORATION OR 
PARTNERSHIP.] (a) Each family farm corporation and each 
partnership operating a family farm is entitled to class 1 
assessment for one homestead occupied by a shareholder or 
partner thereof who is residing on the land and actively engaged 
in farming of the land owned by the corporation or partnership. 
Homestead treatment applies even if legal title to the property 
is in the name of the corporation or partnership and not in the 
name of the person residing on it.  "Family farm corporation" 
and "family farm" have the meanings given in section 500.24. 
    (b) In addition to property specified in paragraph (a), any 
other residences owned by corporations or partnerships described 
in paragraph (a) which are located on agricultural land and 
occupied as homesteads by shareholders or partners who are 
actively engaged in farming on behalf of the corporation or 
partnership must also be assessed as class 1 property, but the 
property eligible is limited to the residence itself and as much 
of the land surrounding the homestead, not exceeding one acre, 
as is reasonably necessary for the use of the dwelling as a 
home, and does not include any other structures that may be 
located on it. 
    Subd. 9.  [HOMESTEAD ESTABLISHED AFTER ASSESSMENT DATE.] 
Any property that was not used for the purpose of a homestead on 
the assessment date, but which was used for the purpose of a 
homestead on June 1 of a year, constitutes class 1 to the extent 
of one-half of the valuation that would have been includable in 
class 1. 
    Any taxpayer meeting the requirements of this subdivision 
must notify the county assessor, or the assessor who has the 
powers of the county assessor pursuant to section 273.063, in 
writing, prior to June 15 of the year of occupancy in order to 
qualify under this subdivision. 
    The county assessor and the county auditor may make the 
necessary changes on their assessment and tax records to provide 
for proper homestead classification as provided in this 
subdivision. 
    The owner of any property qualifying under this 
subdivision, which has not been accorded the benefits of this 
subdivision, regardless of whether or not the notification has 
been timely filed, may be entitled to receive homestead 
classification by proper application as provided in section 
270.07 or 375.192. 
    The county assessor shall publish in a newspaper of general 
circulation within the county no later than June 1 of each year 
a notice informing the public of the requirement to file an 
application for homestead prior to June 15.  
    Subd. 10.  [REAL ESTATE PURCHASED FOR OCCUPANCY AS A 
HOMESTEAD.] Real estate purchased for occupancy as a homestead 
must be classified as class 1 if the purchaser is prevented from 
obtaining possession on January 2 next following the purchase by 
reason of federal or state rent control laws or regulations.  
    Subd. 11.  [LIMITATION ON HOMESTEAD CLASSIFICATION.] If the 
assessor has classified a property as both homestead and 
nonhomestead, the greater of the value attributable to the 
portion of the property classified as class 1a, 1b, or 2a or the 
value of the first tier of assessment percentages provided under 
section 273.13, subdivision 22, paragraph (a) or (b) or 
subdivision 23, paragraph (a) is entitled to homestead 
treatment, except as provided in subdivision 26 for buildings 
containing fewer than four residential units and for a single 
rented or leased dwelling unit located within or attached to a 
private garage or similar structure owned by the owner of a 
homestead and located on the premises of that homestead.  
    If the assessor has classified a property as both homestead 
and nonhomestead, the homestead credit provided in section 
273.13, subdivisions 22 and 23, and the reductions in tax 
provided under sections 273.135 and 273.1391 apply to the value 
of both the homestead and the nonhomestead portions of the 
property.  
    Subd. 12.  [HOMESTEAD OF MEMBER OF U.S. ARMED FORCES.] Real 
estate actually occupied and used for the purpose of a homestead 
by a member of the armed forces of the United States, or by a 
member of his immediate family shall, notwithstanding the 
absence of the person, while on active duty with the armed 
forces of the United States or his family under such conditions, 
be classified as a homestead provided that absence of the owner 
is solely by reason of service in the armed forces, and that he 
intends to return as soon as discharged or relieved from 
service, and claims it as his homestead.  Every person who, for 
the purpose of obtaining or aiding another in obtaining any 
benefit under this subdivision, shall knowingly make or submit 
to any assessor any affidavit or other statement which is false 
in any material matter shall be guilty of a felony. 
     Sec. 45.  Minnesota Statutes 1984, section 273.13, 
subdivision 7a, is amended to read:  
    Subd. 7a.  [PERCENTAGE OF MARKET VALUE.] Except as 
otherwise provided for the purpose of determining tax 
limitations established by statute or by charter, class 3b 2a 
and class 3c 1a property shall be figured at 33 1/3 percent and 
40 percent of the market value thereof, respectively. 
     Sec. 46.  Minnesota Statutes 1984, section 273.13, 
subdivision 15a, is amended to read: 
    Subd. 15a.  [GENERAL FUND, REPLACEMENT OF REVENUE.] (1) 
Payment from the general fund shall be made, as provided herein, 
for the purpose of replacing revenue lost as a result of the 
reduction of property taxes provided in subdivisions 6, 7, and 
14a 22 and 23. 
    (2) Each county auditor shall certify, not later than May 1 
of each year to the commissioner of revenue the amount of 
reduction resulting from subdivisions 6, 7, and 14a 22 and 23 in 
his county.  This certification shall be submitted to the 
commissioner of revenue as part of the abstracts of tax lists 
required to be filed with the commissioner under the provisions 
of section 275.29.  Any prior year adjustments shall also be 
certified in the abstracts of tax lists.  The commissioner of 
revenue shall review such certifications to determine their 
accuracy.  He may make such changes in the certification as he 
may deem necessary or return a certification to the county 
auditor for corrections. 
    (3) Based on current year tax data reported in the 
abstracts of tax lists, the commissioner of revenue shall 
annually determine the taxing district distribution of the 
amounts certified under clause (2).  The commissioner of revenue 
shall pay to each taxing district, other than school districts, 
its total payment for the year in equal installments on or 
before July 15, August 15, September 15, October 15, November 
15, and December 15 of each year.  
    Sec. 47.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read: 
    Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
23, real estate which is residential and used for homestead 
purposes is class 1.  The market value of class 1a property must 
be determined based upon the value of the house, garage, and 
land.  
    The first $64,000 of market value of class 1a property must 
be assessed at 18 percent of its market value.  The homestead 
value of class 1a property that exceeds $64,000 must be assessed 
at 28 percent of its value. 
    (b) Class 1b property includes real estate or manufactured 
homes used for the purposes of a homestead by 
    (1) any blind person, if the blind person is the owner 
thereof or if the blind person and his or her spouse are the 
sole owners thereof; or 
    (2) any person, hereinafter referred to as "veteran," who: 
    (i) served in the active military or naval service of the 
United States; and 
    (ii) is entitled to compensation under the laws and 
regulations of the United States for permanent and total 
service-connected disability due to the loss, or loss of use, by 
reason of amputation, ankylosis, progressive muscular 
dystrophies, or paralysis, of both lower extremities, such as to 
preclude motion without the aid of braces, crutches, canes, or a 
wheelchair; and 
    (iii) with assistance by the administration of veterans 
affairs has acquired a special housing unit with special 
fixtures or movable facilities made necessary by the nature of 
the veteran's disability, or the surviving spouse of the 
deceased veteran for as long as the surviving spouse retains the 
special housing unit as his or her homestead; or 
    (3) any person who: 
    (i) is permanently and totally disabled and 
    (ii) receives 90 percent or more of his or her total income 
from 
    (A) aid from any state as a result of that disability; or 
    (B) supplemental security income for the disabled; or 
    (C) workers' compensation based on a finding of total and 
permanent disability; or 
    (D) social security disability, including the amount of a 
disability insurance benefit which is converted to an old age 
insurance benefit and any subsequent cost of living increases; 
or 
    (E) aid under the Federal Railroad Retirement Act of 1937, 
United States Code Annotated, title 45, section 228b(a)5; or 
     (F) a pension from any local government retirement fund 
located in the state of Minnesota as a result of that disability.
     Property is classified and assessed pursuant to clause (1) 
only if the commissioner of human services certifies to the 
assessor that the owner of the property satisfies the 
requirements of this subdivision.  The commissioner of human 
services shall provide a copy of the certification to the 
commissioner of revenue.  
     Class 1b property is valued and assessed as follows:  in 
the case of agricultural land, including a manufactured home, 
used for a homestead, the first $32,000 of market value shall be 
valued and assessed at five percent, the next $32,000 of market 
value shall be valued and assessed at 14 percent, and the 
remaining market value shall be valued and assessed at 18 
percent; and in the case of all other real estate and 
manufactured homes, the first $32,000 of market value shall be 
valued and assessed at five percent, the next $32,000 of market 
value shall be valued and assessed at 18 percent, and the 
remaining market value shall be valued and assessed at 28 
percent.  In the case of agricultural land including a 
manufactured home used for purposes of a homestead, the 
commissioner of revenue shall adjust, as provided in section 
273.1311, the maximum amount of the market value of the 
homestead brackets subject to the five percent and 18 percent 
rates; and for all other real estate and manufactured homes, the 
commissioner of revenue shall adjust, as provided in section 
273.1311, the maximum amount of the market value of the 
homestead brackets subject to the five percent and 18 percent 
rates.  Permanently and totally disabled for the purpose of this 
subdivision means a condition which is permanent in nature and 
totally incapacitates the person from working at an occupation 
which brings him an income. 
    (c) Class 1c property is commercial use real property that 
abuts a lakeshore line and is devoted to temporary and seasonal 
residential occupancy for recreational purposes but not devoted 
to commercial purposes for more than 200 days in the year 
preceding the year of assessment, and that includes a portion 
used as a homestead by the owner.  It must be assessed at 12 
percent of market value with the following limitation: the area 
of the property must not exceed 100 feet of lakeshore footage 
for each cabin or campsite located on the property up to a total 
of 800 feet and 500 feet in depth, measured away from the 
lakeshore. 
    (d) The tax to be paid on class 1a or class 1b property, 
less any reduction received pursuant to sections 273.123 and 
473H.10, shall be reduced by 54 percent of the tax imposed on 
the first $68,000 of market value.  The amount of the reduction 
shall not exceed $700. 
    Sec. 48.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read: 
    Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
land that is homesteaded, together with the house and garage.  
The first $64,000 of market value of an agricultural homestead 
is valued at 14 percent.  The remaining value of class 2a 
property is assessed at 18 percent of market value. 
    Noncontinguous land shall constitute class 2a only if the 
homestead is classified as class 2a and the detached land is 
located in the same township or city or not farther than two 
townships or cities or combination thereof from the homestead. 
    Agricultural land used for purposes of a homestead and 
actively farmed by a person holding a vested remainder interest 
in it must be classified class 2a.  If agricultural land is 
classified class 2a, any other dwellings on the land used for 
purposes of a homestead by persons holding vested remainder 
interests who are actively engaged in farming the property, and 
up to one acre of the land surrounding each homestead and 
reasonably necessary for the use of the dwelling as a home, must 
also be assessed class 2a and is entitled to the homestead 
credit. 
    The tax to be paid on class 2a property, less any reduction 
received pursuant to sections 124.2137, 273.123, and 473H.10 
shall be reduced by 54 percent of the tax.  The amount of the 
reduction shall not exceed $700. 
    (b) Class 2b property is real estate, rural in character 
and used exclusively for growing trees for timber, lumber, and 
wood and wood products.  It is assessed at 18 percent of market 
value.  
    (c) Class 2c Property is real estate that is nonhomestead 
agricultural land.  It is assessed at 18 percent of market value.
    Agricultural land as used in this section shall mean 
contiguous acreage of ten acres or more, primarily used during 
the preceding year for agricultural purposes.  Agricultural use 
may include pasture, timber, waste, unusable wild land and land 
included in federal farm programs. 
    Real estate of less than ten acres used principally for 
raising poultry, livestock, fruit, vegetables or other 
agricultural products, shall be considered as agricultural land, 
if it is not used primarily for residential purposes. 
    The assessor shall determine and list separately on his 
records the market value of the homestead dwelling and the one 
acre of land on which that dwelling is located.  If any farm 
buildings or structures are located on this homesteaded acre of 
land, their market value shall not be included in this separate 
determination. 
    Sec. 49.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read: 
    Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
property is class 3a.  It is assessed at 28 percent of the first 
$60,000 of market value and 43 percent for the market value over 
$60,000.  In the case of state-assessed commercial or industrial 
property owned by one person or entity, only one parcel may 
qualify for the 28 percent assessment.  In the case of other 
commercial or industrial property owned by one person or entity, 
only one parcel in each county may qualify for the 28 percent 
assessment. 
     (b) Employment property defined in section 273.1313, during 
the period provided in section 273.1313, shall constitute class 
3b and shall be valued and assessed at 20 percent of the first 
$50,000 of market value and 21.5 percent of the remainder, 
except that for employment property located in an enterprise 
zone designated pursuant to section 273.1312, subdivision 4, 
paragraph (c), clause (3), the first $60,000 of market value 
shall be valued and assessed at 28 percent and the remainder 
shall be assessed and valued at 38.5 percent, unless the 
governing body of the city designated as an enterprise zone 
determines that a specific parcel shall be assessed pursuant to 
the first clause of this sentence.  The governing body may 
provide for assessment under the first clause of the preceding 
sentence only for property which is located in an area which has 
been designated by the governing body for the receipt of tax 
reductions authorized by section 273.1314, subdivision 9, 
paragraph (a). 
    (c) Real property which is not improved with a structure 
and which is not utilized as part of a commercial or industrial 
activity shall constitute class 3c and shall be valued and 
assessed at 40 percent of market value. 
    Sec. 50.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read: 
    Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
estate containing four or more units and used or held for use by 
the owner or by the tenants or lessees of the owner as a 
residence for rental periods of 30 days or more.  Class 4a also 
includes hospitals licensed under sections 144.50 to 144.56, 
other than hospitals exempt under section 272.02, and contiguous 
property used for hospital purposes, without regard to whether 
the property has been platted or subdivided.  Class 4a property 
is assessed at 34 percent of market value.  
    (b) Class 4b is tools, implements, and machinery of an 
electric generating, transmission, or distribution system or a 
pipeline system transporting or distributing water, gas, crude 
oil, or petroleum products or mains and pipes used in the 
distribution of steam or hot or chilled water for heating or 
cooling buildings, which are fixtures.  Class 4b property is 
assessed at 33-1/3 percent of market value. 
    Sec. 51.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read: 
    Subd. 26.  [CLASS 5.] (a) Residential real estate 
containing less than four units, other than seasonal 
residential, recreational, and homesteads, is class 5a.  Class 
5a shall also include post-secondary student housing not to 
exceed one acre of land which is owned by a nonprofit 
corporation organized under chapter 317 and is used exclusively 
by a sorority or fraternity organization for housing.  Class 5a 
property is assessed at 28 percent of market value.  
    (b) Structures of five stories or more and constructed with 
materials meeting the requirements for type I or II construction 
as defined in the state building code, if at least 90 percent of 
the structure is used or to be used as apartment housing, is 
class 5b.  Class 5b property is assessed at 25 percent of market 
value.  The 25 percent assessment ratio applies to these 
structures for a period of 40 years from the date of completion 
of original construction, or the date of initial though partial 
use, whichever is earlier. 
    Sec. 52.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read:  
    Subd. 27.  [CLASS 6.] (a) Except as provided in subdivision 
22, real property devoted to temporary and seasonal residential 
occupancy for recreation purposes is class 6a.  
    Class 6a property also includes real property devoted to 
temporary and seasonal residential occupancy for recreation 
purposes and not devoted to commercial purposes for more than 
200 days in the year preceding the year of assessment.  For this 
purpose, property is devoted to commercial use on a specific day 
if it is used, or offered for use, and a fee is charged for the 
use.  Class 6a shall also include commercial use real property 
used exclusively for recreational purposes in conjunction with 
class 6a property devoted to temporary and seasonal residential 
occupancy for recreational purposes, up to a total of two acres, 
provided the property is not devoted to commercial recreational 
use for more than 200 days in the year preceding the year of 
assessment and is located within two miles of the class 6a 
property with which it is used.  Class 6a property and the 
remainder of class 1 resorts is assessed at 21 percent. 
    (b) Class 6b is real property up to a maximum of one acre 
of land owned by a nonprofit community service oriented 
organization; provided that the property is not used for a 
revenue-producing activity for more than six days in the 
calendar year preceding the year of assessment and the property 
is not used for residential purposes on either a temporary or 
permanent basis.  For purposes of this subdivision, a "nonprofit 
community service oriented organization" means any corporation, 
society, association, foundation, or institution organized and 
operated exclusively for charitable, religious, fraternal, 
civic, or educational purposes, and which is exempt from federal 
income taxation pursuant to section 501(c)(3), (10), or (19) of 
the Internal Revenue Code of 1954, as amended through December 
31, 1984.  For purposes of this subdivision, "revenue-producing 
activities" shall include but not be limited to property or that 
portion of the property that is used as an on-sale intoxicating 
liquor or nonintoxicating malt liquor establishment licensed 
under chapter 340A, a restaurant open to the public, bowling 
alley, a retail store, gambling conducted by organizations 
licensed under chapter 349, an insurance business, or office or 
other space leased or rented to a lessee who conducts a 
for-profit enterprise on the premises.  Any portion of the 
property which is used for revenue-producing activities for more 
than six days in the calendar year preceding the year of 
assessment shall be assessed as class 3a.  The use of the 
property for social events open exclusively to members and their 
guests for periods of less than 24 hours, when an admission is 
not charged nor any revenues are received by the organization 
shall not be considered a revenue-producing activity.  Class 6b 
property is assessed at 21 percent of market value.  
    Sec. 53.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read:  
    Subd. 28.  [CLASS 7.] (a) Class 7a is a structure that is 
situated on real property that is used for housing for the 
elderly or for low and moderate income families as defined by 
Title II of the National Housing Act or the Minnesota housing 
finance agency law of 1971 or regulations promulgated by the 
agency pursuant thereto and financed by a direct federal loan or 
federally insured loan or a loan made by the Minnesota housing 
finance agency pursuant to the provisions of either of those 
acts and acts amendatory thereof.  Class 7a property must, for 
15 years from the date of the completion of the original 
construction or substantial rehabilitation, or for the original 
term of the loan, be assessed at 20 percent of the market value. 
    (b) Class 7b is a structure which is 
    (1) situated upon real property that is used for housing 
lower income families or elderly or handicapped persons, as 
defined in section 8 of the United States Housing Act of 1937, 
as amended, and 
    (2) owned by an entity which has entered into a housing 
assistance payments contract under section 8 which provides 
assistance for 100 percent of the dwelling units in the 
structure, other than dwelling units intended for management or 
maintenance personnel.  Class 7b property must, for the term of 
the housing assistance payments contract, including all 
renewals, or for the term of its permanent financing, whichever 
is shorter, be assessed at 20 percent of its market value.  
    (c) Class 7c is any structure 
    (1) situated on real property that is used for housing for 
the elderly or for low and moderate income families as defined 
by the farmers home administration; 
    (2) located in a municipality of less than 10,000 
population; and 
    (3) financed by a direct loan or insured loan from the 
farmers home administration; 
Class 7c property must be assessed at ten percent of its market 
value for 15 years from the date of the completion of the 
original construction or for the original term of the loan 
except that if (1) construction of the structure had been 
commenced after December 31, 1983; and (2) the project had been 
approved by the governing body of the municipality in which it 
is located after June 30, 1983; and (3) financing of the project 
had been approved by a federal or state agency after June 30, 
1983, it must be assessed at 20 percent. 
    The 20 percent and ten percent assessment ratios apply to 
the properties described in paragraphs (a), (b), and (c) only in 
proportion to occupancy of the structure by elderly or 
handicapped persons or low and moderate income families as 
defined in the applicable laws unless construction of the 
structure had been commenced prior to January 1, 1984; or the 
project had been approved by the governing body of the 
municipality in which it is located prior to June 30, 1983; or 
financing of the project had been approved by a federal or state 
agency prior to June 30, 1983.  
     For all properties described in paragraphs (a), (b), and 
(c), the market value determined by the assessor must be based 
on the normal approach to value using normal unrestricted rents. 
    The provisions of paragraphs (a) and (c) apply only to 
nonprofit and limited dividend entities.  
    (d) Class 7d property is a parcel of land, not to exceed 
one acre, and its improvements or a parcel of unimproved land, 
not to exceed one acre, if it is owned by a neighborhood real 
estate trust and at least 60 percent of the dwelling units, if 
any, on all land owned by the trust are leased to or occupied by 
lower income families.  Class 7d land and improvements, if any, 
shall be assessed at 20 percent of the market value.  This 
paragraph shall not apply to any portion of the land or 
improvements used for nonresidential purposes.  For purposes of 
this paragraph, a lower income family is a family with an income 
that does not exceed 65 percent of the median family income for 
the area as determined by the U.S. Secretary of Housing and 
Urban Development.  For purposes of this paragraph, 
"neighborhood real estate trust" means an entity which is 
certified by the governing body of the municipality in which it 
is located to have the following characteristics:  (1) it is a 
nonprofit corporation organized under chapter 317; (2) it has as 
its principal purpose providing housing for lower income 
families in a specific geographic community designated in its 
articles or bylaws; (3) it limits membership with voting rights 
to residents of the designated community; and (4) it has a board 
of directors consisting of at least seven directors, 60 percent 
of whom are members with voting rights and, to the extent 
feasible, 25 percent of whom are elected by resident members of 
buildings owned by the trust. 
    Sec. 54.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read:  
    Subd. 29.  [CLASS 8.] Distribution lines, and the 
attachments and appurtenances to them, used primarily for 
supplying electricity to farmers at retail, as described in 
section 273.38 is class 8 and is assessed at five percent of 
market value.  
    Sec. 55.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read:  
    Subd. 30.  [CLASS 9.] (a) Unmined iron ore is class 9a and 
is assessed at 50 percent of market value. 
    (b) Class 9b consists of all low-grade iron-bearing 
formations as defined in section 273.14.  Class 9b shall be 
assessed at the following percentages of its value:  If the 
tonnage recovery is less than 50 percent and not less than 49 
percent, the assessed value shall be 48-1/2 percent of the 
value; if the tonnage recovery is less than 49 percent and not 
less than 48 percent, the assessed value shall be 47 percent of 
the value; and for each subsequent reduction of one percent in 
tonnage recovery, the percentage of assessed value to value 
shall be reduced an additional 1-1/2 percent of the value, but 
the assessed value shall never be less than 30 percent of the 
value.  The land, exclusive of the formations, shall be assessed 
as otherwise provided by law.  The commissioner of revenue may 
estimate the reasonable market value of the iron ore on any 
parcel of land which at the assessment date is considered 
uneconomical to mine. 
    Sec. 56.  Minnesota Statutes 1984, section 273.13, is 
amended by adding a subdivision to read:  
    Subd. 31.  [CLASS 10.] All property not included in any 
other class is class 10 property and is assessed at 43 percent 
of market value.  
    Sec. 57.  Minnesota Statutes 1984, section 273.1311, is 
amended to read: 
    273.1311 [FLEXIBLE HOMESTEAD BRACKETS.] 
    The maximum amount of the market value of the homestead 
brackets shall be adjusted as provided in this section.  
    For taxes payable in 1985 1987 and subsequent years, the 
commissioner shall adjust the brackets used in the preceding 
assessment by the estimated percentage increase in the statewide 
average assessors' estimated market value, as equalized by the 
state board of equalization, of a residential home for the 
current assessment over the previous assessment.  The revised 
bracket shall be rounded to the nearest $500 $1,000, except that 
the brackets applicable to class 1b property shall be rounded to 
the nearest $500.  The commissioner of revenue shall determine 
and announce the revised bracket on December 15 of each year 
preceding the assessment date. 
    Sec. 58.  Minnesota Statutes 1984, section 273.1313, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
the following terms have the meanings given them.  
    (b) "Commissioner" means the commissioner of revenue.  
    (c) "Employment property" means taxable property, excluding 
land but including buildings, structures, fixtures, and 
improvements that satisfy each of the following conditions:  
    (1) The property is located within an enterprise zone 
designated according to section 273.1312.  
    (2) The property is commercial or industrial property which 
is not used in a trade or business which either is described in 
section 103(b)(6)(O) of the Internal Revenue Code of 1954, as 
amended through January 15, 1983 December 31, 1984, or is 
property of a public utility.  
    (d) "Market value" of a parcel of employment property means 
the value of the taxable property as annually determined 
pursuant to section 273.12, less (i) the market value of all 
property existing at the time of application for classification, 
as last assessed prior to the time of application, and (ii) any 
increase in the market value of the property referred to in 
clause (i) as assessed in each year after the employment 
property is first placed in service.  In each year, any change 
in the values of the employment property and the other property 
on the land shall be deemed to be proportionate unless caused by 
a capital improvement or loss.  
    (e) "Municipality" means any home rule charter or statutory 
city or county, but a county may not exercise the powers granted 
in this section with reference to property situated within a 
city.  
    (f) Notwithstanding the provisions of paragraphs (c) and 
(d) "employment property" and "market value" includes in the 
case of taxable real property located in an enterprise zone 
designated under section 273.1312, subdivision 4, paragraph (c), 
clause (3), the entire value of the commercial and industrial 
property, including land, used in a trade or business which is 
not used in a trade or business which either is described in 
section 103(b)(0)(ii) of the Internal Revenue Code of 1954, as 
amended through January 15, 1983 December 31, 1984, or is the 
property of a public utility.  The provisions of this paragraph 
shall not apply to employment property located in an enterprise 
zone designated pursuant to section 273.1312, subdivision 4, 
paragraph (c), clause (3), that is assessed pursuant to the 
first clause of the first sentence of section 273.13, 
subdivision 9 24, paragraph (4) (b). 
    Sec. 59.  Minnesota Statutes 1984, section 273.1313, 
subdivision 2, is amended to read: 
    Subd. 2.  [PROGRAM.] (a) The governing body of any 
municipality which contains a designated enterprise zone as 
provided by section 273.1312 shall by resolution establish a 
program for classification of new property or improvements to 
existing property as employment property pursuant to the 
provisions of this section.  Applications for classification 
under the program shall be filed with the municipal clerk or 
auditor in a form prescribed by the commissioner, with additions 
as may be prescribed by the municipal governing body.  The 
application shall contain, where appropriate, a legal 
description of the parcel of land on which the facility is to be 
situated or improved; a general description of the facility or 
improvement and its proposed use, the probable time schedule for 
undertaking any construction or improvement, and information 
regarding the matters referred to in paragraph (d); the market 
value and the assessed value of the land and of all other 
taxable property then situated on it, according to the most 
recent assessment; and if the property is to be improved or 
expanded, an estimate of the probable cost of the new 
construction or improvement and the market value of the new or 
improved facility (excluding land) when completed.  
     (b) Upon receipt of an application the municipal clerk or 
auditor, subject to any prior approval required by the 
resolution establishing the program, shall furnish a copy to the 
assessor for the property and to the governing body of each 
school district and other public body authorized to levy taxes 
on the property, and shall publish a notice in the official 
newspaper of the time and place of a hearing to be held by the 
governing body on the application, not less than 30 days after 
the notice is published, stating that the applicant, the 
assessor, representatives of the affected taxing authorities, 
and any taxpayer of the municipality may be heard or may present 
their views in writing at or before the hearing.  The hearing 
may be adjourned from time to time, but the governing body shall 
take action on the application by resolution within 30 days 
after the hearing.  If disapproved, the reasons shall be set 
forth in the resolution, and the applicant may appeal to the 
commissioner within 30 days thereafter, but only on the ground 
that the determination is arbitrary, in relation to prior 
determinations as to classification under the program, or based 
upon a mistake of law.  If approved, the resolution shall 
include determinations as to the matters set forth in paragraph 
(d), and the clerk or auditor shall transmit it to the 
commissioner.  
          (c) Within 60 days after receipt of an approved application 
or an appeal from the disapproval of an application, the 
commissioner shall take action on it.  The commissioner shall 
approve each application approved by the governing body if he 
finds that it complies with the provisions of this section.  If 
he disapproves the application, or finds grounds exist for 
appeal of a disapproved application, he shall transmit the 
finding to the governing body and the applicant.  When grounds 
for appeal have been determined to exist, the governing body 
shall reconsider and take further action on the application 
within 30 days after receipt of the commissioner's notice and 
serve written notice of the action upon the applicant.  The 
applicant, within 30 days after receipt of notice of final 
disapproval by the commissioner or the governing body, may 
appeal from the disapproval to a court of competent jurisdiction.
          (d) In the case of enterprise zones qualifying pursuant to 
section 273.1312, subdivision 4, paragraph (c), clause (1), an 
application shall not be approved unless the governing body 
finds and determines that the construction or improvement of the 
facility: 
          (1) Is reasonably likely to create new employment or 
prevent a loss of employment in the municipality;  
          (2) Is not likely to have the effect of transferring 
existing employment from one or more other municipalities within 
the state;  
          (3) Is not likely to cause the total market value of 
employment property within the municipality to exceed five 
percent of the total market value of all taxable property within 
the municipality; or if it will, the resulting limitation upon 
the increase of the assessed value of all taxable property 
within the municipality, considering the amount of additional 
municipal services likely to be required for the employment 
property, is not likely to substantially impede the operation or 
the financial integrity of the municipality or any other public 
body levying taxes on property in the municipality; and 
    (4) Will not result in the reduction of the assessed value 
of existing property within the municipality owned by the 
applicant, through abandonment, demolition, or otherwise, 
without provision for the restoration of the existing property 
within a reasonable time in a manner sufficient to restore the 
assessed valuation.  
    (e) In the case of enterprise zones qualifying pursuant to 
section 273.1312, subdivision 4, paragraph (c), clause (3), an 
application for assessment as employment property under section 
273.13, subdivision 9 24, paragraph (b), or for a tax reduction 
pursuant to section 273.1314, subdivision 9, may not be approved 
unless the governing body finds and determines that the 
construction or improvement of the facility is not likely to 
have the effect of transferring existing employment from one or 
more other municipalities within the state.  
    Sec. 60.  Minnesota Statutes 1984, section 273.1313, 
subdivision 3, is amended to read: 
    Subd. 3.  [CLASSIFICATION.] Property shall be classified as 
employment property and assessed as provided for class 4d 
property in section 273.13, subdivision 9 24, paragraph (4) (b), 
for taxes levied in the year in which the classification is 
approved and for the four succeeding years after the approval.  
If the classification is revoked, the revocation is effective 
for taxes levied in the next year after revocation.  
    Sec. 61.  Minnesota Statutes 1984, section 273.1315, is 
amended to read:  
    273.1315 [CERTIFICATION OF 3CC 1B PROPERTY.] 
    Any property owner seeking classification and assessment of 
his homestead as class 3cc 1b property pursuant to section 
273.13, subdivision 7, clause (b) or (c) 22, paragraph (b), 
clause (2) or (3), shall file with the commissioner of revenue 
for each assessment year a 3cc 1b homestead declaration, on a 
form prescribed by the commissioner.  The declaration shall 
contain the following information:  
    (a) the information necessary to verify that the property 
owner or his spouse satisfies the requirements of section 
273.13, subdivision 7 22, for 3cc 1b classification;  
    (b) the property owner's household income, as defined in 
section 290A.03, for the previous calendar year; and 
    (c) any additional information prescribed by the 
commissioner.  
    The declaration shall be filed on or before March 1 of each 
year to be effective for property taxes payable during the 
succeeding calendar year.  The declaration and any supplementary 
information received from the property owner pursuant to this 
section shall be subject to section 290A.17.  
    The commissioner shall provide to the assessor on or before 
April 1 a listing of the parcels of property qualifying for 3cc 
1b classification.  
    Sec. 62.  Minnesota Statutes 1984, section 273.135, 
subdivision 1, is amended to read: 
    Subdivision 1.  The property tax to be paid in respect to 
property taxable within a tax relief area on class 3b property, 
on class 3c property, and on class 3cc homestead property, as 
otherwise determined by law and regardless of the market value 
of the property, for all purposes shall be reduced in the amount 
prescribed by subdivision 2, subject to the limitations 
contained therein. 
    Sec. 63.  Minnesota Statutes 1984, section 273.135, 
subdivision 2, is amended to read: 
    Subd. 2.  The amount of the reduction authorized by 
subdivision 1 shall be 
    (a) In the case of property located within the boundaries 
of a municipality which meets the qualifications prescribed in 
section 273.134, 66 percent of the net tax up to the taconite 
breakpoint plus a percentage equal to the homestead credit 
equivalency percentage of the net tax in excess of the taconite 
breakpoint, provided that the reduction shall not exceed the 
maximum amounts specified in clause (c). 
    (b) In the case of property located within the boundaries 
of a school district which qualifies as a tax relief area but 
which is outside the boundaries of a municipality which meets 
the qualifications prescribed in section 273.134, 57 percent of 
the net tax up to the taconite breakpoint plus a percentage 
equal to the homestead credit equivalency percentage of the net 
tax in excess of the taconite breakpoint, provided that the 
reduction shall not exceed the maximum amounts specified in 
clause (c). 
    (c) (1) The maximum reduction of the net tax up to the 
taconite breakpoint is $225.40 on property described in clause 
(a) and $200.10 on property described in clause (b), for taxes 
payable in 1985.  These maximum amounts shall increase by $15 
times the quantity one minus the homestead credit equivalency 
percentage per year for taxes payable in 1986 and subsequent 
years. 
    (2) The total maximum reduction of the net tax on property 
described in clause (a) is $490 for taxes payable in 1985.  The 
total maximum reduction for the net tax on property described in 
clause (b) is $435 for taxes payable in 1985.  These maximum 
amounts shall increase by $15 per year for taxes payable in 1986 
and thereafter.  
    For the purposes of this subdivision, "net tax" means the 
tax on the property after deduction of any credit under section 
273.13, subdivision 6, 7, or 14a 22 or 23, "taconite breakpoint" 
means the lowest possible net tax for a homestead qualifying for 
the maximum reduction pursuant to section 273.13, subdivision 7 
22, rounded to the nearest whole dollar, and "homestead credit 
equivalency percentage" means a percentage equal to the 
percentage reduction authorized in section 273.13, subdivision 7 
22. 
    Sec. 64.  Minnesota Statutes 1984, section 273.1391, 
subdivision 1, is amended to read: 
    273.1391 [SUPPLEMENTARY HOMESTEAD PROPERTY TAX RELIEF.] 
    Subdivision 1.  The property tax to be paid in respect to 
property taxable within a tax relief area described in 
subdivision 2 on class 3b property, on class 3c property, and on 
class 3cc homestead property, as otherwise determined by law and 
regardless of the market value of the property, for all purposes 
shall be reduced in the amount prescribed by subdivision 2, 
subject to the limitations contained therein.  
    Sec. 65.  Minnesota Statutes 1984, section 273.1391, 
subdivision 2, is amended to read:  
    Subd. 2.  The amount of the reduction authorized by 
subdivision 1 shall be:  
    (a) In the case of property located within a school 
district which does not meet the qualifications of section 
273.134 as a tax relief area, but which is located in a county 
with a population of less than 100,000 in which taconite is 
mined or quarried and wherein a school district is located which 
does meet the qualifications of a tax relief area, and provided 
that at least 90 percent of the area of the school district 
which does not meet the qualifications of section 273.134 lies 
within such county, 57 percent of the net tax up to the taconite 
breakpoint plus a percentage equal to the homestead credit 
equivalency percentage of the net tax in excess of the taconite 
breakpoint on qualified property located in the school district 
that does not meet the qualifications of section 273.134, 
provided that the amount of said reduction shall not exceed the 
maximum amounts specified in clause (c).  The reduction provided 
by this clause shall only be applicable to property located 
within the boundaries of the county described therein.  
     (b) In the case of property located within a school 
district which does not meet the qualifications of section 
273.134 as a tax relief area, but which is located in a school 
district in a county containing a city of the first class and a 
qualifying municipality, but not in a school district containing 
a city of the first class or adjacent to a school district 
containing a city of the first class unless the school district 
so adjacent contains a qualifying municipality, 57 percent of 
the net tax up to the taconite breakpoint plus a percentage 
equal to the homestead credit equivalency percentage of the net 
tax in excess of the taconite breakpoint, but not to exceed the 
maximums specified in clause (c). 
    (c) (1) The maximum reduction of the net tax up to the 
taconite breakpoint is $200.10 for taxes payable in 1985.  This 
maximum amount shall increase by $15 multiplied by the quantity 
one minus the homestead credit equivalency percentage per year 
for taxes payable in 1986 and subsequent years.  
    (2) The total maximum reduction of the net tax is $435 for 
taxes payable in 1985.  This total maximum amount shall increase 
by $15 per year for taxes payable in 1986 and thereafter. 
    For the purposes of this subdivision, "net tax" means the 
tax on the property after deduction of any credit under section 
273.13, subdivision 6, 7, or 14a 22 or 23, "taconite breakpoint" 
means the lowest possible net tax for a homestead qualifying for 
the maximum reduction pursuant to section 273.13, subdivision 7 
22, rounded to the nearest whole dollar, and "homestead credit 
equivalency percentage" means a percentage equal to the 
percentage reduction authorized in section 273.13, subdivision 7 
22. 
    Sec. 66.  Minnesota Statutes 1984, section 273.1392, is 
amended to read: 
    273.1392 [PAYMENT; AIDS TO SCHOOL DISTRICTS.] 
    The amounts of homestead credit under section 273.13, 
subdivisions 6, 7, and 14a 22 and 23; wetlands credit and 
reimbursement under section 273.115; native prairie credit and 
reimbursement under section 273.116; disaster or emergency 
reimbursement under section 273.123; attached machinery aid 
under section 273.138; reimbursement under section 273.139; and 
metropolitan agricultural preserve reduction under section 
473H.10, shall be certified to the department of education by 
the department of revenue.  The amounts so certified shall be 
paid according to the schedule for payment of foundation aids 
pursuant to section 124.11 for fiscal year 1983.  Beginning in 
fiscal year 1984, The amounts so certified shall be paid 
according to section 124.195, subdivisions 6 and 10. 
    Sec. 67.  Minnesota Statutes 1984, section 273.1393, as 
added by Laws 1985, chapter 300, section 8, is amended to read: 
    Sec. 8.  [273.1393] [COMPUTATION OF NET PROPERTY TAXES.] 
    Notwithstanding any other provisions to the contrary, "net" 
property taxes are determined by subtracting the credits in the 
order listed from the gross tax:  
    (1) disaster credit as provided in section 273.123;  
    (2) wetlands credit as provided in section 273.115;  
    (3) native prairie credit as provided in section 273.116;  
    (4) powerline credit as provided in section 273.42;  
    (5) agricultural preserves credit as provided in section 
473H.10; 
    (6) enterprise zone credit as provided in section 273.1314; 
    (7) state school agricultural credit as provided in section 
124.2137; 
    (8) state paid homestead credit as provided in section 
273.13, subdivisions 6 and 7 22 and 23; 
    (9) taconite homestead credit as provided in section 
273.135;  
    (10) supplemental homestead credit as provided in section 
273.1391.  
    The combination of all property tax credits must not exceed 
the gross tax amount.  
    Sec. 68.  [273.165] [TAXATION OF SEPARATE MINERAL INTERESTS 
AND UNMINED IRON ORE.] 
    Subdivision 1.  [MINERAL INTEREST.] "Mineral interest," for 
the purpose of this subdivision, means an interest in any 
minerals, including but not limited to gas, coal, oil, or other 
similar interest in real estate, which is owned separately and 
apart from the fee title to the surface of such real property. 
Mineral interests which are filed for record in the offices of 
either the county recorder or registrar of titles, whether or 
not filed pursuant to sections 93.52 to 93.58, are taxed as 
provided in this subdivision unless specifically excluded by 
this subdivision.  A tax of 25 cents per acre or portion of an 
acre of mineral interest is imposed and is payable annually.  If 
an interest is a fractional undivided interest in an area, the 
tax due on the interest per acre or portion of an acre is equal 
to the product obtained by multiplying the fractional interest 
times 25 cents, computed to the nearest cent.  However, the 
minimum annual tax on any mineral interest is $2.  No such tax 
on mineral interests is imposed on the following:  (1) mineral 
interests valued and taxed under other laws relating to the 
taxation of minerals, gas, coal, oil, or other similar 
interests; or (2) mineral interests which are exempt from 
taxation pursuant to constitutional or related statutory 
provisions.  Taxes received under this subdivision must be 
apportioned to the taxing districts included in the area taxed 
in the same proportion as the surface interest mill rate of a 
taxing district bears to the total mill rate applicable to 
surface interests in the area taxed.  The tax imposed by this 
subdivision is not included within any limitations as to rate or 
amount of taxes which may be imposed in an area to which the tax 
imposed by this subdivision applies.  The tax imposed by this 
subdivision does not cause the amount of other taxes levied or 
to be levied in the area, which are subject to any such 
limitation, to be reduced in any amount.  Twenty percent of the 
revenues received from the tax imposed by this subdivision must 
be distributed under the provisions of section 116J.64.  
    Subd. 2.  [IRON ORE.] Unmined iron ore included in class 9 
must be assessed with and as a part of the real estate in which 
it is located, but at the rate established in section 273.13, 
subdivision 30.  The real estate in which iron ore is located, 
other than the ore, must be classified and assessed in 
accordance with the provisions of the appropriate classes.  In 
assessing any tract or lot of real estate in which iron ore is 
known to exist, the assessable value of the ore exclusive of the 
land in which it is located, and the assessable value of the 
land exclusive of the ore must be determined and set down 
separately and the aggregate of the two must be assessed against 
the tract or lot. 
    Sec. 69.  Minnesota Statutes 1984, section 273.38, is 
amended to read: 
    273.38 [PERCENTAGE OF ASSESSMENTS; EXCEPTIONS.] 
    The commissioner of revenue shall assess at five percent of 
market value distribution lines, and the attachments and 
appurtenances thereto, used primarily for supplying electricity 
to farmers at retail, and which shall be taxed at the average 
rate of taxes levied for all purposes throughout the county, and 
which shall be entered, certified and credited as provided in 
section 273.42.  It is further provided that the distribution 
lines and the attachments and appurtenances thereto of 
cooperative associations organized under the provisions of Laws 
1923, Chapter 326, and laws amendatory thereof and supplemental 
thereto, and engaged in the electrical heat, light and power 
business, upon a mutual, non-profit and cooperative plan, shall 
be assessed and taxed as provided in sections 273.40 and 273.41. 
    Sec. 70.  Minnesota Statutes 1984, section 273.42, 
subdivision 2, is amended to read:  
    Subd. 2.  Owners of land defined as class 3, 3b, 3c, 3cc, 
3d or 3f 1a, 1b, 2a, 2c, 4a, 5a, or 6a, pursuant to section 
273.13 listed on records of the county auditor or county 
treasurer over which runs a high voltage transmission line as 
defined in section 116C.52, subdivision 3, except a high voltage 
transmission line the construction of which was commenced prior 
to July 1, 1974, shall receive a property tax credit in an 
amount determined by multiplying a fraction, the numerator of 
which is the length of high voltage transmission line which runs 
over that parcel and the denominator of which is the total 
length of that particular line running over all property within 
the city or township by ten percent of the transmission line tax 
revenue derived from the tax on that portion of the line within 
the city or township pursuant to section 273.36.  In the case of 
property owners in unorganized townships, the property tax 
credit shall be determined by multiplying a fraction, the 
numerator of which is the length of the qualifying high voltage 
transmission line which runs over the parcel and the denominator 
of which is the total length of the qualifying high voltage 
transmission line running over all property within all the 
unorganized townships within the county, by the total utility 
property tax credit fund amount available within the county for 
that year pursuant to section 273.42, subdivision 1.  Where a 
right-of-way width is shared by more than one property owner, 
the numerator shall be adjusted by multiplying the length of 
line on the parcel by the proportion of the total width on the 
parcel owned by that property owner.  The amount of credit for 
which the property qualifies shall not exceed 20 percent of the 
total gross tax on the parcel prior to deduction of the state 
paid agricultural credit and the state paid homestead credit, 
provided that, if the property containing the right of way is 
included in a parcel which exceeds 40 acres, the total gross tax 
on the parcel shall be multiplied by a fraction, the numerator 
of which is the sum of the number of acres in each 
quarter-quarter section or portion thereof which contains a 
right of way and the denominator of which is the total number of 
acres in the parcel set forth on the tax statement, and the 
maximum credit shall be 20 percent of the product of that 
computation, prior to deduction of those credits.  The auditor 
of the county in which the affected parcel is located shall 
calculate the amount of the credit due for each parcel and 
transmit that information to the county treasurer.  The county 
auditor, in computing the credits received pursuant to sections 
273.13 and 273.135, shall reduce the gross tax by the amount of 
the credit received pursuant to this section, unless the amount 
of the credit would be less than $10. 
    If, after the county auditor has computed the credit to 
those qualifying property owners in unorganized townships, there 
is money remaining in the utility property tax credit fund, then 
that excess amount in the fund shall be returned to the general 
school fund of the county.  
    Sec. 71.  Minnesota Statutes 1984, section 274.19, 
subdivision 1, is amended to read:  
    Subdivision 1.  Each manufactured home constituting class 
2a property shall be valued each year by the assessor and be 
assessed with reference to its value on January 2 of that year.  
Notice of the value shall be mailed to the person to be assessed 
at least ten days before the meeting of the local board of 
review or equalization.  The notice shall contain the amount of 
valuation in terms of market value, the assessor's office 
address, and the date, place, and time set for the meeting of 
the local board of review or equalization and the county board 
of equalization. 
    Sec. 72.  Minnesota Statutes 1984, section 274.19, 
subdivision 2, is amended to read:  
    Subd. 2.  On or before May 1, the assessor shall return to 
the county auditor his assessment books relating to the 
assessment of class 2a property manufactured homes.  After 
receiving the assessment books, the county auditor shall 
determine the tax to be due by applying the rate of levy of the 
preceding year and shall transmit a list of the taxes to the 
county treasurer not later than May 30. 
    Sec. 73.  Minnesota Statutes 1984, section 274.19, 
subdivision 3, is amended to read:  
    Subd. 3.  Not later than July 15 in the year of assessment 
the county treasurer shall mail to the taxpayer a statement of 
tax due on class 2a property a manufactured home.  The taxes 
shall be due on the last day of August.  Taxes remaining unpaid 
after the due date shall be deemed delinquent, and a penalty of 
eight percent shall be assessed and collected as part of the 
unpaid taxes.  On September 30 the county treasurer shall make a 
list of taxes remaining unpaid and shall certify the list 
immediately to the clerk of district court, who shall issue 
warrants to the sheriff for collection.  
    Sec. 74.  Minnesota Statutes 1984, section 274.19, 
subdivision 4, is amended to read:  
    Subd. 4.  Any person who claims that his class 2a property 
manufactured home has been unfairly or unequally assessed, or 
that such property has been assessed at a valuation greater than 
its real or actual value, or that the tax levied against the 
same is illegal, in whole or in part, or has been paid, or that 
the property is exempt from the tax so levied, may have the 
validity of his claim, defense or objection determined by the 
district court of the county in which the tax is levied or by 
the tax court by filing a petition for such determination, in 
the office of the clerk of the district court on or before the 
first day of September of the year in which such tax becomes 
payable.  A petition for determination under this section may be 
transferred by the district court to the tax court. 
    Sec. 75.  Minnesota Statutes 1984, section 274.19, 
subdivision 6, is amended to read:  
    Subd. 6.  If the local board of review or equalization or 
the county board of equalization change the assessor's valuation 
of class 2a property a manufactured home, the change shall be 
transmitted to the county auditor, who shall immediately 
recompute the tax and advise the treasurer of the corrected 
tax.  If the property is entitled to homestead 
classification and tax credit pursuant to section 273.13, 
subdivision 16, the auditor shall also take appropriate action 
to reflect the reduction in tax. 
    Sec. 76.  Minnesota Statutes 1984, section 274.19, 
subdivision 7, is amended to read:  
    Subd. 7.  The tax assessed on class 2a property 
manufactured homes shall be deemed to be a personal property tax 
and laws relating to assessment, review, and collection of 
personal property taxes shall be applicable to this tax, if not 
inconsistent with provisions in Laws 1975, Chapter 376 this 
section. 
    Sec. 77.  Minnesota Statutes 1984, section 274.19, is 
amended by adding a subdivision to read:  
    Subd. 8.  [MANUFACTURED HOMES; SECTIONAL STRUCTURES.] (a) 
For purposes of this section, a "manufactured home" means a 
structure transportable in one or more sections, which is built 
on a permanent chassis, and designed to be used as a dwelling 
with or without a permanent foundation when connected to the 
required utilities, and contains the plumbing, heating, 
air-conditioning, and electrical systems therein, including any 
accessory structure which is an addition or supplement to the 
manufactured home and, when installed, becomes a part of the 
manufactured home.  
    (b) A manufactured home which meets each of the following 
criteria must be valued and assessed as an improvement to real 
property, the appropriate real property classification shall 
apply and the valuation is subject to review and the taxes 
payable in the manner provided for real property:  
    (i) the owner of the unit holds title to the land upon 
which it is situated;  
    (ii) the unit is affixed to the land by a permanent 
foundation or is installed at its location in accordance with 
the manufactured home building code contained in sections 327.31 
to 327.34, and the rules adopted thereto, or is affixed to the 
land in a manner comparable to other real property in the taxing 
district; and 
    (iii) the unit is connected to public utilities, has a well 
and septic tank system, or is serviced by water and sewer 
facilities comparable to other real property in the taxing 
district.  
    (c) A manufactured home which meets each of the following 
criteria must be assessed at the rate provided by the 
appropriate real property classification but must be classified 
as a manufactured home, and the valuation is subject to review 
and the taxes payable thereon in the manner provided in this 
section: 
    (i) the owner of the unit is a lessee of the land pursuant 
to the terms of a lease;  
    (ii) the unit is affixed to the land by a permanent 
foundation or is installed at its location in accordance with 
the manufactured homes building code contained in sections 
327.31 to 327.34, and the rules adopted thereto, or is affixed 
to the land in a manner comparable to other real property in the 
taxing district; and 
    (iii) the unit is connected to public utilities, has a well 
and septic tank system, or is serviced by water and sewer 
facilities comparable to other real property in the taxing 
district.  
    (d) Sectional structures must be valued and assessed as an 
improvement to real property if the owner of the structure holds 
title to the land upon which it is located or is a qualifying 
lessee of the land under the provisions of this section.  For 
purposes of this paragraph "sectional structure" means a 
building or structural unit which has been in whole or 
substantial part manufactured or constructed at an off site 
location to be wholly or partially assembled on site alone or 
with other units and attached to a permanent foundation.  
    (e) The commissioner of revenue may adopt rules pursuant to 
the administrative procedure act for the purpose of establishing 
additional criteria for the classification of manufactured homes 
and sectional structures under this subdivision. 
    Sec. 78.  Minnesota Statutes 1984, section 275.50, 
subdivision 5, is amended to read: 
    Subd. 5.  Notwithstanding any other law to the contrary for 
taxes levied in 1983 payable in 1984 and subsequent years, 
"special levies" means those portions of ad valorem taxes levied 
by governmental subdivisions to: 
    (a) satisfy judgments rendered against the governmental 
subdivision by a court of competent jurisdiction in any tort 
action, or to pay the costs of settlements out of court against 
the governmental subdivision in a tort action when substantiated 
by a stipulation for the dismissal of the action filed with the 
court of competent jurisdiction and signed by both the plaintiff 
and the legal representative of the governmental subdivision, 
but only to the extent of the increase in levy for such 
judgments and out of court settlements over levy year 1970, 
taxes payable in 1971; 
    (b) pay the costs of complying with any written lawful 
order initially issued prior to January 1, 1977 by the state of 
Minnesota, or the United States, or any agency or subdivision 
thereof, which is authorized by law, statute, special act or 
ordinance and is enforceable in a court of competent 
jurisdiction, or any stipulation agreement or permit for 
treatment works or disposal system for pollution abatement in 
lieu of a lawful order signed by the governmental subdivision 
and the state of Minnesota, or the United States, or any agency 
or subdivision thereof which is enforceable in a court of 
competent jurisdiction.  The commissioner of revenue shall in 
consultation with other state departments and agencies, develop 
a suggested form for use by the state of Minnesota, its agencies 
and subdivisions in issuing orders pursuant to this subdivision; 
      (c) pay the costs to a governmental subdivision for their 
minimum required share of any program otherwise authorized by 
law for which matching funds have been appropriated by the state 
of Minnesota or the United States, excluding the administrative 
costs of public assistance programs, to the extent of the 
increase in levy over the amount levied for the local share of 
the program for the taxes payable year 1971.  This clause shall 
apply only to those programs or projects for which matching 
funds have been designated by the state of Minnesota or the 
United States on or before September 1, of the previous year and 
only when the receipt of these matching funds is contingent upon 
the initiation or implementation of the project or program 
during the year in which the taxes are payable or those programs 
or projects approved by the commissioner; 
      (d) pay the costs not reimbursed by the state or federal 
government, of payments made to or on behalf of recipients of 
aid under any public assistance program authorized by law, and 
the costs of purchase or delivery of social services.  Except 
for the costs of general assistance as defined in section 
256D.02, subdivision 4, general assistance medical care under 
section 256D.03 and the costs of hospital care pursuant to 
section 261.21, the aggregate amounts levied pursuant to this 
clause are subject to a maximum increase of 18 percent over the 
amount levied for these purposes in the previous year; 
    (e) pay the costs of principal and interest on bonded 
indebtedness or to reimburse for the amount of liquor store 
revenues used to pay the principal and interest due in the year 
preceding the year for which the levy limit is calculated on 
municipal liquor store bonds; 
    (f) pay the costs of principal and interest on certificates 
of indebtedness, except tax anticipation or aid anticipation 
certificates of indebtedness, issued for any corporate purpose 
except current expenses or funding an insufficiency in receipts 
from taxes or other sources or funding extraordinary 
expenditures resulting from a public emergency; and to pay the 
cost for certificates of indebtedness issued pursuant to 
sections 298.28 and 298.282;  
    (g) fund the payments made to the Minnesota state armory 
building commission pursuant to section 193.145, subdivision 2, 
to retire the principal and interest on armory construction 
bonds; 
    (h) provide for the bonded indebtedness portion of payments 
made to another political subdivision of the state of Minnesota; 
    (i) pay the amounts required to compensate for a decrease 
in manufactured homes property tax receipts to the extent that 
the governmental subdivision's portion of the total levy in the 
current levy year, pursuant to section 273.13 274.19, 
subdivision 3 8, as amended, is less than the distribution of 
the manufactured homes tax to the governmental subdivision 
pursuant to Minnesota Statutes 1969, section 273.13, subdivision 
3, in calendar year 1971; 
    (j) pay the amounts required, in accordance with section 
275.075, to correct for a county auditor's error of omission but 
only to the extent that when added to the preceding year's levy 
it is not in excess of an applicable statutory, special law or 
charter limitation, or the limitation imposed on the 
governmental subdivision by sections 275.50 to 275.56 in the 
preceding levy year; 
    (k) pay amounts required to correct for an error of 
omission in the levy certified to the appropriate county auditor 
or auditors by the governing body of a city or town with 
statutory city powers in a levy year, but only to the extent 
that when added to the preceding year's levy it is not in excess 
of an applicable statutory, special law or charter limitation, 
or the limitation imposed on the governmental subdivision by 
sections 275.50 to 275.56 in the preceding levy year; 
    (l) pay the increased cost of municipal services as the 
result of an annexation or consolidation ordered by the 
Minnesota municipal board but only to the extent and for the 
levy years as provided by the board in its order pursuant to 
section 414.01, subdivision 15.  Special levies authorized by 
the board shall not exceed 50 percent of the levy limit base of 
the governmental subdivision and may not be in effect for more 
than three years after the board's order; 
       (m) pay the increased costs of municipal services provided 
to new private industrial and nonresidential commercial 
development, to the extent that the extension of such services 
are not paid for through bonded indebtedness or special 
assessments, and not to exceed the amount determined as 
follows.  The governmental subdivision may calculate the 
aggregate of: 
       (1) The increased expenditures necessary in preparation for 
the delivering of municipal services to new private industrial 
and nonresidential commercial development, but limited to one 
year's expenditures one time for each such development; 
       (2) The amount determined by dividing the overall levy 
limitation established pursuant to sections 275.50 to 275.56, 
and exclusive of special levies and special assessments, by the 
total taxable value of the governmental subdivision, and then 
multiplying this quotient times the total increase in assessed 
value of private industrial and nonresidential commercial 
development within the governmental subdivision.  For the 
purpose of this clause, the increase in the assessed value of 
private industrial and nonresidential commercial development is 
calculated as the increase in assessed value over the assessed 
value of the real estate parcels subject to such private 
development as most recently determined before the building 
permit was issued.  In the fourth levy year subsequent to the 
levy year in which the building permit was issued, the increase 
in assessed value of the real estate parcels subject to such 
private development shall no longer be included in determining 
the special levy. 
       The aggregate of the foregoing amounts, less any costs of 
extending municipal services to new private industrial and 
nonresidential commercial development which are paid by bonded 
indebtedness or special assessments, equals the maximum amount 
that may be levied as a "special levy" for the increased costs 
of municipal services provided to new private industrial and 
nonresidential commercial development.  In the levy year 
following the levy year in which the special levy made pursuant 
to this clause is discontinued, one-half of the amount of that 
special levy made in the preceding year shall be added to the 
permanent levy base of the governmental subdivision; 
      (n) recover a loss or refunds in tax receipts incurred in 
non-special levy funds resulting from abatements or court action 
in the previous year pursuant to section 275.48; 
      (o) pay amounts required by law to be paid to pay the 
interest on and to reduce the unfunded accrued liability of 
public pension funds in accordance with the actuarial standards 
and guidelines specified in sections 356.215 and 356.216 reduced 
by 106 percent of the amount levied for that purpose in 1976, 
payable in 1977.  For the purpose of this special levy, the 
estimated receipts expected from the state of Minnesota pursuant 
to sections 69.011 to 69.031 or any other state aid expressly 
intended for the support of public pension funds shall be 
considered as a deduction in determining the required levy for 
the normal costs of the public pension funds.  No amount of 
these aids shall be considered as a deduction in determining the 
governmental subdivision's required levy for the reduction of 
the unfunded accrued liability of public pension funds; 
      (p) the amounts allowed under section 174.27 to establish 
and administer a commuter van program; 
      (q) pay the costs of financial assistance to local 
governmental units and certain administrative, engineering, and 
legal expenses pursuant to Laws 1979, chapter 253, section 3; 
      (r) compensate for revenue lost as a result of abatements 
or court action pursuant to sections 270.07, 270.17 or 278.01 
due to a reassessment ordered by the commissioner of revenue 
pursuant to section 270.16;  
      (s) pay the total operating cost of a county jail as 
authorized in section 641.01.  If the county government utilizes 
this special levy, then any amount levied by the county 
government in the previous year for operating its county jail 
and included in its previous year's levy limitation computed 
pursuant to section 275.51 shall be deducted from the current 
levy limitation; 
      (t) pay the costs of implementing section 18.023, including 
sanitation and reforestation; and 
      (u) pay the estimated cost for the following calendar year 
of the county's share of funding the Minnesota cooperative soil 
survey. 
    Sec. 79.  Minnesota Statutes 1984, section 276.04, is 
amended to read: 
    276.04 [NOTICE OF RATES; PROPERTY TAX STATEMENTS.] 
    On receiving the tax lists from the county auditor, the 
county treasurer shall, if directed by the county board, give 
three weeks' published notice in a newspaper specifying the 
rates of taxation for all general purposes and the amounts 
raised for each specific purpose.  He shall, whether or not 
directed by the county board, cause to be printed on all tax 
statements, or on an attachment, a tabulated statement of the 
dollar amount due to each taxing authority from the parcel of 
real property for which a particular tax statement is prepared.  
The dollar amounts due the county, township or municipality and 
school district shall be separately stated but the amounts due 
other taxing districts, if any, may be aggregated.  The dollar 
amounts, including the dollar amount of any special assessments, 
may be rounded to the nearest even whole dollar.  For purposes 
of this section whole odd-numbered dollars may be adjusted to 
the next higher even-numbered dollar.  The statement shall 
include the following sentence, printed in upper case letters in 
bold face print:  "THE STATE OF MINNESOTA DOES NOT RECEIVE ANY 
PROPERTY TAX REVENUES.  THE STATE OF MINNESOTA REDUCES YOUR 
PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS 
OF GOVERNMENT."  The property tax statements for class 
2a manufactured homes and sectional structures taxed as personal 
property shall contain the same information that is required on 
the tax statements for real property.  The county treasurer 
shall mail to taxpayers statements of their personal property 
taxes due, such statements to be mailed not later than February 
15 (except in the case of Class 2a manufactured homes and 
sectional structures taxed as personal property), statements of 
the real property taxes due shall be mailed not later than 
January 31; provided, that the validity of the tax shall not be 
affected by failure of the treasurer to mail such statement.  
The taxpayer is defined as the owner who is responsible for the 
payment of the tax.  Such real and personal property tax 
statements shall contain the market value, as defined in section 
272.03, subdivision 8, used in determining the tax.  The 
statement shall show the amount attributable to section 124.2137 
as "state paid agricultural credit" and the amount attributable 
to section 273.13, subdivisions 6 and 7 22 and 23 as "state paid 
homestead credit."  The statement shall show the reduction 
attributable to the aid given pursuant to section 273.139 and 
shall indicate that the reduction is paid by the state of 
Minnesota.  If so directed by the county board, the treasurer 
shall visit places in the county as he deems expedient for the 
purpose of receiving taxes and the county board is authorized to 
pay the expenses of such visits and of preparing duplicate tax 
lists.  Failure to mail the tax statement shall not be deemed a 
material defect to affect the validity of any judgment and sale 
for delinquent taxes.  
    Sec. 80.  Minnesota Statutes 1984, section 278.01, 
subdivision 2, is amended to read:  
    Subd. 2.  [HOMESTEADS.] Any person having any estate, 
right, title or interest in or lien upon any parcel which is 
classified as homestead under the provisions of section 273.13, 
subdivisions 6, 6a, 7, 7b, 10 or 12 22 or 23, who claims that 
said parcel has been assessed at a valuation which exceeds by 
ten percent or more the valuation which the parcel would have if 
it were valued at the average assessment/sales ratio for real 
property in the same class, in that portion of the county in 
which that parcel is located, for which the commissioner is able 
to establish and publish a sales ratio study as determined by 
the applicable real estate assessment/sales ratio study 
published by the commissioner of revenue, may have the validity 
of his claim, defense, or objection determined by the district 
court of the county in which the tax is levied or by the tax 
court by serving two copies of a petition for such determination 
upon the county auditor and one copy each on the county 
treasurer and the county attorney and filing the same, with 
proof of such service, in the office of the clerk of the 
district court before the 16th day of May of the year in which 
such tax becomes payable.  The county auditor shall immediately 
forward one copy of the petition to the appropriate governmental 
authority in a home rule charter or statutory city or town in 
which the property is located if that city or town employs its 
own certified assessor.  A copy of the petition shall also be 
sent to the school board of the school district in which the 
property is located.  A petition for determination under this 
section may be transferred by the district court to the tax 
court. 
    Sec. 81.  Minnesota Statutes 1984, section 278.05, 
subdivision 5, is amended to read:  
    Subd. 5.  Any time after the filing of the petition and 
before the trial of the issues raised thereby, when the defense 
or claim presented is that the property has been partially, 
unfairly, or unequally assessed, or that the parcel has been 
assessed at a valuation greater than its real or actual value, 
or that a parcel which is classified as homestead under the 
provisions of section 273.13, subdivisions 6, 6a, 7, 7b, 10 or 
12 22 or 23, has been assessed at a valuation which exceeds by 
ten percent or more the valuation which the parcel would have if 
it were valued at the average assessment/sales ratio for real 
property in the same class in that portion of the county in 
which the parcel is located, for which the commissioner is able 
to establish and publish a sales ratio study, the attorney 
representing the state, county, city or town in the proceedings 
may serve on the petitioner, or his attorney, and file with the 
clerk of the district court, an offer to reduce the valuation of 
any tract or tracts to a valuation set forth in the offer.  If, 
within ten days thereafter, the petitioner, or his attorney, 
gives notice in writing to the county attorney, or the attorney 
for the city or town, that the offer is accepted, he may file 
the offer with proof of notice, and the clerk shall enter 
judgment accordingly.  Otherwise, the offer shall be deemed 
withdrawn and evidence thereof shall not be given; and, unless a 
lower valuation than specified in the offer is found by the 
court, no costs or disbursements shall be allowed to the 
petitioner, but the costs and disbursements of the state, 
county, city or town, including interest at six percent on the 
tax based on the amount of the offer from and after the 16th day 
of October of the year the taxes are payable, shall be taxed in 
its favor and included in the judgment and when collected shall 
be credited to the county revenue fund, unless the taxes were 
paid in full before the 16th day of October of the year in which 
the taxes were payable, in which event interest shall not be 
taxable. 
    Sec. 82.  Minnesota Statutes 1984, section 279.01, 
subdivision 1, as amended by Laws 1985, chapter 300, section 12, 
is amended to read: 
    Subdivision 1.  On May 16, of each year, with respect to 
property actually occupied and used as a homestead by the owner 
of the property, a penalty of three percent shall accrue and 
thereafter be charged upon all unpaid taxes on real estate on 
the current lists in the hands of the county treasurer, and a 
penalty of seven percent on nonhomestead property, except that 
this penalty shall not accrue until June 1 of each year on 
commercial use real property used for seasonal residential 
recreational purposes and classified as class 3 or 3a 1c, 2c, or 
6a, and on other commercial use real property classified as 
class 4c 3a, provided that over 60 percent of the gross income 
earned by the enterprise on the class 4c 3a property is earned 
during the months of May, June, July, and August.  Any property 
owner of such class 4c 3a property who pays the first half of 
the tax due on the property after May 15 and before June 1 shall 
attach an affidavit to his payment attesting to compliance with 
the income provision of this subdivision.  Thereafter, for both 
homestead and nonhomestead property, on the 16th day of each 
month, up to and including October 16 following, an additional 
penalty of one percent for each month shall accrue and be 
charged on all such unpaid taxes.  When the taxes against any 
tract or lot exceed $50, one-half thereof may be paid prior to 
May 16; and, if so paid, no penalty shall attach; the remaining 
one-half shall be paid at any time prior to October 16 
following, without penalty; but, if not so paid, then a penalty 
of four percent shall accrue thereon for homestead property and 
a penalty of four percent on nonhomestead property.  Thereafter, 
for homestead property, on the 16th day of each month up to and 
including December 16 following, an additional penalty of two 
percent for each month shall accrue and be charged on all such 
unpaid taxes.  Thereafter, for nonhomestead property, on the 
16th day of each month up to and including December 16 
following, an additional penalty of four percent for each month 
shall accrue and be charged on all such unpaid taxes.  If 
one-half of such taxes shall not be paid prior to May 16, the 
same may be paid at any time prior to October 16, with accrued 
penalties to the date of payment added, and thereupon no penalty 
shall attach to the remaining one-half until October 16 
following; provided, also, that the same may be paid in 
installments as follows:  One-fourth prior to March 16; 
one-fourth prior to May 16; one-fourth prior to August 16; and 
the remaining one-fourth prior to October 16, subject to the 
aforesaid penalties.  Where the taxes delinquent after October 
16 against any tract or parcel exceed $100, upon resolution of 
the county board, they may be paid in installments of not less 
than 25 percent thereof, together with all accrued penalties and 
costs, up to the next tax judgment sale, and after such payment, 
penalties, interest, and costs shall accrue only on the sum 
remaining unpaid.  Any county treasurer who shall make out and 
deliver or countersign any receipt for any such taxes without 
including all of the foregoing penalties therein, shall be 
liable to the county for the amount of such penalties.  
    Sec. 83.  Minnesota Statutes 1984, section 279.06, is 
amended to read: 
     279.06 [COPY OF LIST AND NOTICE.] 
      Within five days after the filing of such list, the clerk 
shall return a copy thereof to the county auditor, with a notice 
prepared and signed by him, and attached thereto, which may be 
substantially in the following form: 
   State of Minnesota        )                            
                             ) ss.                        
   County of ............... )                            
                                            District Court
                             .......... Judicial District.
     The state of Minnesota, to all persons, companies, or 
corporations who have or claim any estate, right, title, or 
interest in, claim to, or lien upon, any of the several parcels 
of land described in the list hereto attached: 
     The list of taxes and penalties on real property for the 
county of ............................... remaining delinquent 
on the first Monday in January, 19....., has been filed in the 
office of the clerk of the district court of said county, of 
which that hereto attached is a copy.  Therefore, you, and each 
of you, are hereby required to file in the office of said clerk, 
on or before the 20th day after the publication of this notice 
and list, your answer, in writing, setting forth any objection 
or defense you may have to the taxes, or any part thereof, upon 
any parcel of land described in the list, in, to, or on which 
you have or claim any estate, right, title, interest, claim, or 
lien, and, in default thereof, judgment will be entered against 
such parcel of land for the taxes on such list appearing against 
it, and for all penalties, interest, and costs.  Based upon said 
judgment, the land shall be sold to the state of Minnesota on 
the second Monday in May, 19...  The period of redemption for 
all lands sold to the state at a tax judgment sale shall be 
three years from the date of sale to the state of Minnesota if 
the land is within an incorporated area unless it is:  (a) 
homesteaded land as defined in section 273.13, subdivision 7 22; 
(b) homesteaded agricultural land as defined in section 273.13, 
subdivision 6 23, paragraph (a); or (c) seasonal recreational 
land as defined in section 273.13, subdivision 4 22, paragraph 
(c) or subdivision 27, paragraph (a), in which event the period 
of redemption is five years from the date of sale to the state 
of Minnesota.  
    The period of redemption for all other lands sold to the 
state at a tax judgment sale shall be five years from the date 
of sale.  
    Inquiries as to the proceedings set forth above can be made 
to the county auditor of ..... county whose address is ..... .  
                  (Signed) ..............................., 
                  Clerk of the District Court of the County 
                  of ...................................... 
                  (Here insert list.) 
    The list referred to in the notice shall be substantially 
in the following form: 
    List of real property for the county of 
......................., on which taxes remain delinquent on the 
first Monday in January, 19...: 

                          Town of (Fairfield), 

                       Township (40), Range (20), 
 Names (and 
 Current Filed 
 Addresses) for 
 the Taxpayers 
 and Fee Owners 
 and in Addition 
 Those Parties 
 Who Have Filed 
 Their Addresses                            Tax 
 Pursuant to     Subdivision of            Parcel   Total Tax 
 section 276.041    Section       Section  Number  and Penalty
                                                     $ cts.
 John Jones  S.E. 1/4 of S.W. 1/4    10    23101       2.20  
 (825 Fremont  
 Fairfield, MN 
 55000) 
 Bruce Smith  That part of N.E. 1/4 
 (2059 Hand   of S.W. 1/4 desc. as 
 Fairfield,   follows:  Beg. at the 
 MN 55000)    S.E. corner of said 
 and          N.E. 1/4 of S.W. 1/4;  
 Fairfield    thence N. along the E.  
 State Bank   line of said N.E. 1/4 
 (100 Main    of S.W. 1/4 a distance 
 Street       of 600 ft.; thence W. 
 Fairfield,   parallel with the S. 
 MN 55000)    line of said N.E. 1/4 
              of S.W. 1/4 a distance 
              of 600 ft.; thence S. 
              parallel with said E. 
              line a distance of 600 
              ft. to S. line of said 
              N.E. 1/4 of S.W. 1/4;
              thence E. along said S. 
              line a distance of 600 
              ft. to the point of 
              beg. ...............    21    33211       3.15  
    As to platted property, the form of heading shall conform 
to circumstances and be substantially in the following form:  

                          City of (Smithtown) 

                    Brown's Addition, or Subdivision 
 Names (and 
 Current Filed 
 Addresses) for 
 the Taxpayers 
 and Fee Owners 
 and in Addition 
 Those Parties 
 Who have Filed 
 Their Addresses                         Tax 
 Pursuant to                            Parcel      Total Tax 
 section 276.041     Lot     Block      Number     and Penalty
                                                     $ cts 
 John Jones           15         9      58243          2.20 
 (825 Fremont 
 Fairfield, 
 MN 55000) 
 Bruce Smith          16         9      58244          3.15 
 (2059 Hand 
 Fairfield, 
 MN 55000) 
 and 
 Fairfield 
 State Bank 
 (100 Main Street 
 Fairfield, 
 MN 55000) 
     The names, descriptions, and figures employed in 
parentheses in the above forms are merely for purposes of 
illustration. 
    The name of the town, township, range or city, and addition 
or subdivision, as the case may be, shall be repeated at the 
head of each column of the printed lists as brought forward from 
the preceding column.  
    Errors in the list shall not be deemed to be a material 
defect to affect the validity of the judgment and sale. 
    Sec. 84.  Minnesota Statutes 1984, section 281.17, is 
amended to read: 
    281.17 [PERIOD FOR REDEMPTION.] 
    The period of redemption for all lands sold to the state at 
a tax judgment sale shall be three years from the date of sale 
to the state of Minnesota if the land is within an incorporated 
area unless it is:  (a) nonagricultural homesteaded land as 
defined in section 273.13, subdivision 7 22, (b) homesteaded 
agricultural land as defined in section 273.13, subdivision 6 
23, paragraph (a), or (c) seasonal recreational land as defined 
in section 273.13, subdivision 4 27, paragraph (a), or 
subdivision 22, paragraph (c), in which event the period of 
redemption is five years from the date of sale to the state of 
Minnesota. 
    The period of redemption for all other lands sold to the 
state at a tax judgment sale shall be five years from the date 
of sale. 
    Sec. 85.  Minnesota Statutes 1984, section 290A.03, 
subdivision 6, is amended to read: 
    Subd. 6.  [HOMESTEAD.] "Homestead" means the dwelling 
occupied by a claimant as his principal residence and so much of 
the land surrounding it, not exceeding ten acres, as is 
reasonably necessary for use of the dwelling as a home and any 
other property used for purposes of a homestead as defined in 
section 273.13, subdivision 7 22, except for agricultural land 
assessed as part of a homestead pursuant to section 273.13, 
subdivision 6 23, "homestead" is limited to 320 acres or, where 
the farm homestead is rented, one acre.  The homestead may be 
owned or rented and may be a part of a multi-dwelling or 
multi-purpose building and the land on which it is built.  A 
manufactured home, as defined in section 168.011, subdivision 8, 
assessed as personal property may be a dwelling for purposes of 
this subdivision. 
    Sec. 86.  Minnesota Statutes 1984, section 290A.03, 
subdivision 12, is amended to read: 
    Subd. 12.  [GROSS RENT.] "Gross rent" means rental paid for 
the right of occupancy, at arms-length, of a homestead, 
exclusive of charges for any medical services furnished by the 
landlord as a part of the rental agreement, whether expressly 
set out in the rental agreement or not.  If the landlord and 
tenant have not dealt with each other at arms-length and the 
commissioner determines that the gross rent charged was 
excessive, he may adjust the gross rent to a reasonable amount 
for purposes of this chapter. 
    Any amount paid by a claimant residing in property assessed 
pursuant to section 273.133 273.13, subdivisions 3, 4, 5, or 6 
for occupancy in that property shall be excluded from gross rent 
for purposes of this chapter.  However, property taxes imputed 
to the homestead of the claimant or the dwelling unit occupied 
by the claimant that qualifies for homestead treatment pursuant 
to section 273.133 273.13, subdivisions 3, 4, 5, or 6 shall be 
included within the term "property taxes payable" as defined in 
subdivision 13, notwithstanding the fact that ownership is not 
in the name of the claimant. 
    Sec. 87.  Minnesota Statutes 1984, section 290A.03, 
subdivision 13, is amended to read: 
    Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
payable" means the property tax exclusive of special 
assessments, penalties, and interest payable on a claimant's 
homestead before reductions made pursuant to section 273.13, 
subdivisions 6, 7 and 14a 22 and 23, but after deductions made 
pursuant to sections 124.2137, 273.115, 273.116, 
273.135, 273.139, 273.1391, 273.42, subdivision 2, and any other 
state paid property tax credits in any calendar year.  In the 
case of a claimant who makes ground lease payments, "property 
taxes payable" includes the amount of the payments directly 
attributable to the property taxes assessed against the parcel 
on which the house is located.  No apportionment or reduction of 
the "property taxes payable" shall be required for the use of a 
portion of the claimant's homestead for a business purpose if 
the claimant does not deduct any business depreciation expenses 
for the use of a portion of the homestead in the determination 
of federal adjusted gross income.  For homesteads which are 
manufactured homes as defined in section 168.011, subdivision 8, 
"property taxes payable" shall also include the amount of the 
gross rent paid in the preceding year for the site on which the 
homestead is located, which is attributable to the net tax paid 
on the site.  The amount attributable to property taxes shall be 
determined by multiplying the net tax on the parcel by a 
fraction, the numerator of which is the gross rent paid for the 
calendar year for the site and the denominator of which is the 
gross rent paid for the calendar year for the parcel.  When a 
homestead is owned by two or more persons as joint tenants or 
tenants in common, such tenants shall determine between them 
which tenant may claim the property taxes payable on the 
homestead.  If they are unable to agree, the matter shall be 
referred to the commissioner of revenue and his decision shall 
be final.  Property taxes are considered payable in the year 
prescribed by law for payment of the taxes. 
    In the case of a claim relating to "property taxes 
payable," the claimant must have owned and occupied the 
homestead on January 2 of the year in which the tax is payable 
and (i) the property must have been classified as homestead 
property pursuant to section 273.13, subdivisions 6, 7, or 14a 
subdivisions 22 or 23 on or before June 1 of the year in which 
the "property taxes payable" were levied; or (ii) the claimant 
must provide documentation from the local assessor that 
application for homestead classification has been made prior to 
October 1 of the year in which the "property taxes payable" were 
payable and that the assessor has approved the application.  
    Sec. 88.  Minnesota Statutes 1984, section 290A.03, 
subdivision 14, is amended to read: 
    Subd. 14.  [NET TAX.] "Net tax" means 
    (a) the property tax, exclusive of special assessments, 
interest, and penalties, and after reduction for any state paid 
property tax credits as required in subdivision 13 except for 
the reduction pursuant to section 273.13, subdivisions 6, 7, and 
14a 22 and 23, or 
    (b) the payments made in lieu of ad valorem taxes, 
including payments of special assessments imposed in lieu of ad 
valorem taxes, 
    for the calendar year in which the rent was paid.  If a 
portion of the property is occupied as a homestead or is used 
for other than rental purposes, the net tax shall be the amount 
of tax reduced by the percentage that the nonrental use 
comprises of the total square footage of the building.  If a 
portion of the property is used for purposes other than for 
residential rental and none of the property is occupied as a 
homestead, the net tax shall be the amount of the tax of the 
parcel multiplied by a fraction, the numerator of which is the 
assessed value of the residential rental portion and the 
denominator of which is the total assessed value of the parcel. 
If a portion of the property is used for other than rental 
residential purposes, the county treasurer shall list on the 
property tax statement the amount of net tax pertaining to the 
rental residential portion of the property.  
    The amount of the net tax shall not be reduced by an 
abatement or a court ordered reduction in the property tax on 
the property made after the certificate of rent constituting 
property tax has been provided to the renter.  
    Sec. 89.  Minnesota Statutes 1984, section 290A.04, 
subdivision 2, is amended to read: 
    Subd. 2.  A claimant whose property taxes payable or rent 
constituting property taxes are in excess of the percentage of 
the household income stated below shall pay an amount equal to 
the percent of income shown for the appropriate household income 
level and the state refund will be equal to an amount up to the 
state refund amount shown below.  
                               Percent         State
     Household Income         of Income       Refund 
    Net loss and 
     up to $2,999            0.5 percent        $13
     3,000 to 3,499          0.6 percent        $15
     3,500 to 3,999          0.6 percent        $18
     4,000 to 4,499          0.7 percent        $20
     4,500 to 4,999          0.7 percent        $23
     5,000 to 5,999          0.8 percent        $40
     6,000 to 6,999          0.9 percent        $54
     7,000 to 7,999          1.0 percent        $70
     8,000 to 8,999          1.1 percent        $88
     9,000 to 9,999          1.2 percent        $108
     10,000 to 10,999        1.3 percent        $130
     11,000 to 11,999        1.4 percent        $154
     12,000 to 12,999        1.5 percent        $180
     13,000 to 13,999        1.5 percent        $195
     14,000 to 14,999        1.5 percent        $210
     15,000 to 15,999        1.5 percent        $225
     16,000 to 16,999        1.5 percent        $240
     17,000 to 17,999        1.5 percent        $255
     18,000 to 18,999        1.5 percent        $270
     19,000 to 19,999        1.5 percent        $285
     20,000 to 20,999        1.6 percent        $320
     21,000 to 21,999        1.6 percent        $336
     22,000 to 22,999        1.6 percent        $352
     23,000 to 23,999        1.8 percent        $414
     24,000 to 24,999        1.8 percent        $432
     25,000 to 25,999        1.8 percent        $450
     26,000 to 26,499        2.0 percent        $520
     26,500 to 26,999        2.0 percent        $530
     27,000 to 27,499        2.0 percent        $540
     27,500 to 27,999        2.0 percent        $550
     28,000 to 28,499        2.0 percent        $560
     28,500 to 28,999        2.0 percent        $570
     29,000 to 29,499        2.0 percent        $580
     29,500 to 29,999        2.0 percent        $590
     30,000 to 30,499        2.0 percent        $600
     30,500 to 30,999        2.0 percent        $610
     31,000 to 31,499        2.2 percent        $620
     31,500 to 31,999        2.2 percent        $630
     32,000 to 32,499        2.2 percent        $640
     32,500 to 32,999        2.2 percent        $650
     33,000 to 33,999        2.2 percent        $700
     34,000 to 34,999        2.2 percent        $600
     35,000 to 35,999        2.2 percent        $500
     36,000 to 36,999        2.4 percent        $400
     37,000 to 37,999        2.4 percent        $300
     38,000 to 38,999        2.4 percent        $200
     39,000 to 39,999        2.4 percent        $100
    The payment made to a claimant shall be the amount of the 
state refund calculated pursuant to this subdivision, less the 
homestead credit given pursuant to section 273.13, 
subdivisions 6, 7 and 14a 22 and 23. 
    Sec. 90.  Minnesota Statutes 1984, section 297A.01, 
subdivision 14, is amended to read:  
    Subd. 14.  "Handicapped" means a permanent and total 
disability as defined in section 273.13, subdivision 7 22. 
    Sec. 91.  Minnesota Statutes 1984, section 360.301, 
subdivision 1, is amended to read: 
    Subdivision 1.  The commissioner of finance shall maintain 
in the state bond fund a separate account, designated as the 
Minnesota aeronautics bond account, showing all taxes levied for 
such fund pursuant to this section and all moneys transferred to 
the fund pursuant to section 360.306 for the payment of 
Minnesota aeronautics bonds issued under section 360.302.  The 
auditor shall levy each year on all taxable property within the 
state a tax sufficient, with all moneys then and theretofore 
transferred under section 360.306, to pay all such bonds and 
interest thereon which are due and to become due within the then 
ensuing year and to and including July 1 in the second ensuing 
year.  Such tax shall be levied upon all real property used for 
the purposes of a homestead, as well as other taxable property, 
notwithstanding the provisions of section 273.13, subdivisions 6 
and 7, and shall be and remain subject to no limitation of rate 
or amount until all such bonds and all interest thereon are 
fully paid.  All proceeds of such taxes are appropriated and 
shall be credited to the state bond fund, and the principal and 
interest of state bonds shall be payable from the proceeds of 
such taxes, and so much thereof as may be necessary is hereby 
appropriated for such payments; provided that such principal and 
interest, if any, as may become due at any time when there is 
not on hand a sufficient amount from the proceeds of such taxes 
to pay the same, shall be paid out of the general fund in the 
state treasury, and the amount necessary therefor is hereby 
appropriated, to be reimbursed from the proceeds of such taxes 
when received.  
    Sec. 92.  Minnesota Statutes 1984, section 473F.02, 
subdivision 3, is amended to read: 
    Subd. 3.  "Commercial-industrial property" means the 
following categories of property, as defined in section 273.13, 
excluding that portion of such property (a) (1) which may, by 
law, constitute the tax base for a tax increment pledged 
pursuant to section 462.585 or 474.10, certification of which 
was requested prior to August 1, 1979, to the extent and while 
such tax increment is so pledged; (b) (2) which may, by law, 
constitute the tax base for tax revenues set aside and paid over 
for credit to a sinking fund pursuant to direction of the city 
council in accordance with Laws 1963, chapter 881, as amended, 
to the extent that such revenues are so treated in any year; 
or (c) (3) which is exempt from taxation pursuant to section 
272.02:  
    (a) That portion of class 3 property defined in Minnesota 
Statutes 1971, section 273.13, consisting of stocks of 
merchandise and furniture and fixtures used therewith; 
manufacturers' materials and manufactured articles; and tools, 
implements and machinery, whether fixtures or otherwise.  
    (b) Class 3h property.  
    (c) Class 3j property.  
    (d) That portion of class 4 property defined in Minnesota 
Statutes 1971, section 273.13, which is either used or zoned for 
use for any commercial or industrial purpose, except for such 
property which is, or, in the case of property under 
construction, will when completed be used exclusively for 
residential occupancy and the provision of services to 
residential occupants thereof.  Property shall be considered as 
used exclusively for residential occupancy only if each of not 
less than 80 percent of its occupied residential units is, or, 
in the case of property under construction, will when completed 
be occupied under an oral or written agreement for occupancy 
over a continuous period of not less than 30 days.  
    If the classification of property prescribed by section 
273.13 is modified by legislative amendment, the references in 
this subdivision shall be to such successor class or classes of 
property, or portions thereof, as embrace the kinds of property 
designated in this subdivision.  
    Sec. 93.  Minnesota Statutes 1984, section 473F.02, 
subdivision 4, is amended to read: 
    Subd. 4.  "Residential property" means the following 
categories of property, as defined in section 273.13, excluding 
that portion of such property exempt from taxation pursuant to 
section 272.02: 
    (a) Class 3b 1a, 1b, 2a, 4a, 5a, 5b, 7a, 7b, 7c, and 7d 
property 
    (b) Class 3c property 
    (c) Class 3cc property 
    (d) Class 3f property 
    (e) And that portion of class 4 3a, 3b, and 10 property 
used exclusively for residential occupancy. 
    (f) That property valued and assessed under section 273.13, 
subdivision 17. 
    Sec. 94.  Minnesota Statutes 1984, section 475.754, is 
amended to read: 
    475.754 [DISASTERS OR PUBLIC EMERGENCIES, CERTIFICATES OF 
INDEBTEDNESS.] 
    If in any fiscal year the receipts from taxes or other 
sources are insufficient to meet the expenses incurred or to be 
incurred in said year by any city however organized, county or 
town by reason of any natural disaster or other public emergency 
requiring the making of extraordinary expenditures, the 
governing body of any such city, county or town may authorize 
the sale of certificates of indebtedness to mature within three 
years and to bear interest at a rate not to exceed the amount 
prescribed in this chapter.  The certificates may be issued with 
or without advertising for bids on such terms and conditions as 
the governing body may determine and shall be in such form as 
the state auditor in cooperation with the commissioner of 
commerce shall prescribe.  All certificates and interest thereon 
shall be payable from taxes levied within existing limitations 
or from other available revenue.  Certificates of indebtedness 
issued under the provisions of this section shall not be 
considered bonded indebtedness for the purposes of sections 
273.13, subdivisions 6 and 7; and section 275.50, subdivision 5, 
clause (h).  The certificates shall not be included in the net 
debt of the issuing city, county or town.  
    Sec. 95.  Minnesota Statutes 1984, section 475A.06, 
subdivision 6, is amended to read: 
    Subd. 6.  On or before December 1 in each year the state 
auditor shall levy on all taxable property within the state 
whatever tax may be necessary to produce an amount sufficient, 
with all money then and theretofore credited to the Minnesota 
state municipal aid bond account, to pay the entire amount of 
principal and interest then and theretofore due and principal 
and interest to become due on or before July 1 in the second 
year thereafter on Minnesota state municipal aid bonds.  This 
tax shall be levied upon all real property used for the purposes 
of a homestead, as well as other taxable property, 
notwithstanding the provisions of section 273.13, subdivisions 6 
and 7, and shall be subject to no limitation of rate or amount 
until all such bonds and interest thereon are fully paid.  The 
proceeds of this tax are appropriated and shall be credited to 
the state bond fund, and the principal of and interest on the 
bonds are payable from such proceeds, and the whole thereof, or 
so much as may be necessary, is appropriated for such payments.  
If at any time there is insufficient money from the proceeds of 
such taxes to pay the principal and interest when due on 
Minnesota state municipal aid bonds, such principal and interest 
shall be paid out of the general fund in the state treasury, and 
the amount necessary therefor is hereby appropriated.  
    Sec. 96.  Minnesota Statutes 1984, section 514.03, 
subdivision 3, is amended to read: 
    Subd. 3.  The lien shall extend to all the interest and 
title of the owner in and to the premises improved, not 
exceeding 80 acres, except in the case of homesteaded 
agricultural land as used in section 273.13, subdivision 6 23, 
where the lien shall be limited to 40 acres. 
    Sec. 97.  Minnesota Statutes 1984, section 583.02, is 
amended to read: 
    583.02 [DEFINITIONS.] 
    As used in sections 583.01 to 583.12, the term "homestead" 
means residential or agricultural real estate, a portion or all 
of which is entitled to receive homestead credit classification 
under section 273.13, subdivision 15a 22 or 23.  
    Sec. 98.  [REPEALER.] 
    Minnesota Statutes 1984, sections 273.1105; 273.13, 
subdivisions 2, 2a, 3, 4, 5a, 6, 6a, 7, 7b, 7c, 7d, 8a, 9, 10, 
11, 12, 14a, 16, 17, 17a, 17b, 17c, 17d, 19, 20, and 21; 
273.133; and 273.15, are repealed. 
    Sec. 99.  [EFFECTIVE DATE.] 
     This article is effective for taxes levied in 1986, payable 
in 1987 and thereafter, provided that sections 2, 7, 8, 13, 14, 
22, 25 to 27, 29, 91, and 95 are effective for bonds issued 
after the date of final enactment of this act. 

                               ARTICLE 5 

                          PROPERTY TAX REFUND 
    Section 1.  Minnesota Statutes 1984, section 290A.03, 
subdivision 3, as amended by Laws 1985, chapter 210, article 2, 
section 9, is amended to read: 
    Subd. 3.  [INCOME.] (1) "Income" means the sum of the 
following: 
    (a) federal adjusted gross income as defined in the 
Internal Revenue Code of 1954 as amended through December 31, 
1983 May 25, 1985; and 
    (b) the sum of the following amounts to the extent not 
included in clause (a): 
    (i) additions to federal adjusted gross income as provided 
in Minnesota Statutes, section 290.01, subdivision 20a, clauses 
(1), (2), (4), (9), (10), and (14); 
    (ii) all nontaxable income; 
    (iii) recognized net long term capital gains; 
    (iv) dividends and interest excluded from federal adjusted 
gross income under sections 116 or 128 of the Internal Revenue 
Code of 1954; 
    (v) cash public assistance and relief; 
    (vi) any pension or annuity (including railroad retirement 
benefits, all payments received under the federal social 
security act, supplemental security income, and veterans 
benefits), which was not exclusively funded by the claimant or 
spouse, or which was funded exclusively by the claimant or 
spouse and which funding payments were excluded from federal 
adjusted gross income in the years when the payments were made; 
    (vii) nontaxable interest received from the state or 
federal government or any instrumentality or political 
subdivision thereof; 
    (viii) workers' compensation; 
    (ix) unemployment benefits; 
    (x) nontaxable strike benefits;  
    (xi) the gross amounts of payments received in the nature 
of disability income or sick pay as a result of accident, 
sickness, or other disability, whether funded through insurance 
or otherwise; and 
    (xii) the ordinary income portion of a lump sum 
distribution under section 402(e) of the Internal Revenue Code 
of 1954; and 
    (xiii) contributions made by the claimant to an individual 
retirement account, including a qualified voluntary employee 
contribution; simplified employee pension plan; self-employed 
retirement plan; cash or deferred arrangement plan under section 
401(k) of the Internal Revenue Code of 1954; or deferred 
compensation plan under section 457 of the Internal Revenue Code 
of 1954. 
    In the case of an individual who files an income tax return 
on a fiscal year basis, the term "federal adjusted gross income" 
shall mean federal adjusted gross income reflected in the fiscal 
year ending in the calendar year.  Federal adjusted gross income 
shall not be reduced by the amount of a net operating loss 
carryback. 
    (2) "Income" does not include 
    (a) amounts excluded pursuant to the Internal Revenue Code, 
Sections 101(a), 102, 117, and 121; 
    (b) amounts of any pension or annuity which was exclusively 
funded by the claimant or spouse and which funding payments were 
not excluded from federal adjusted gross income in the years 
when the payments were made; 
    (c) surplus food or other relief in kind supplied by a 
governmental agency; 
    (d) relief granted under this chapter; 
    (e) child support payments received under a temporary or 
final decree of dissolution or legal separation; or 
     (f) federal adjusted gross income shall be reduced by wage 
or salary expense which is not allowed as a deduction under 
provisions of section 280C of the Internal Revenue Code of 1954; 
or 
    (g) the first $2,000 of household income if the claimant 
was disabled on or before June 1 or attained the age of 65 prior 
to June 1 of the year following the year for which the taxes 
were levied or in which the rent was paid. 
    Sec. 2.  Minnesota Statutes 1984, section 290A.04, 
subdivision 1, is amended to read:  
    Subdivision 1.  A credit refund shall be allowed each 
claimant in the amount that property taxes payable or rent 
constituting property taxes exceed the percentage of the 
household income of the claimant specified in subdivision 2 in 
the year for which the taxes were levied or in the year in which 
the rent was paid as specified in subdivision 2.  If the amount 
of property taxes payable or rent constituting property taxes is 
equal to or less than the percentage of the household income of 
the claimant specified in subdivision 2 in the year for which 
the taxes were levied or in the year in which the rent was paid, 
the claimant shall not be eligible for a state refund pursuant 
to this section.  For purposes of claiming this credit refund, a 
claimant who owns his own homestead part of the year and rents 
part of the year may add his rent constituting property taxes to 
the qualifying tax on his homestead.  
    Sec. 3.  Minnesota Statutes 1984, section 290A.04, 
subdivision 2, is amended to read: 
    Subd. 2.  A claimant whose property taxes payable or rent 
constituting property taxes are in excess of the percentage of 
the household income stated below shall pay an amount equal to 
the percent of income shown for the appropriate household income 
level and along with the percent to be paid by the claimant of 
the remaining amount of property taxes payable or rent 
constituting property taxes.  The state refund will be equal to 
an the amount of property taxes payable or rent constituting 
property taxes that remain, up to the state refund amount shown 
below.  
                     Percent      State   Percent    Maximum
Household Income    of Income     Refund  Paid by     State
                                          Claimant    Refund
Net loss and 
 up to $2,999     0.5 1.0 percent  $13    5 percent  $1,125
 3,000 to 3,499   0.6 1.0 percent  $15    6 percent  $1,125
 3,500 to 3,999   0.6 1.0 percent  $18    7 percent  $1,125
 4,000 to 4,499   0.7 1.0 percent  $20    8 percent  $1,125
 4,500 to 4,999   0.7 1.0 percent  $23    9 percent  $1,125
 5,000 to 5,999   0.8 1.0 percent  $40   10 percent  $1,125
 6,000 to 6,999   0.9 1.0 percent  $54   11 percent  $1,125
 7,000 to 7,999   1.0 percent      $70   12 percent  $1,125
 8,000 to 8,999   1.1 percent      $88   13 percent  $1,125
 9,000 to 9,999   1.2 percent      $108  14 percent  $1,125
10,000 to 10,999  1.3 percent      $130  15 percent  $1,125
11,000 to 11,999  1.4 percent      $154  16 percent  $1,125
12,000 to 12,999  1.5 percent      $180  17 percent  $1,125
13,000 to 13,999  1.5 percent      $195  18 percent  $1,125
14,000 to 14,999  1.5 percent      $210  19 percent  $1,125
15,000 to 15,999  1.5 percent      $225  20 percent  $1,125
16,000 to 16,999  1.5 percent      $240  21 percent  $1,125
17,000 to 17,999  1.5 percent      $255  22 percent  $1,125
18,000 to 18,999  1.5 percent      $270  23 percent  $1,125
19,000 to 19,999  1.5 percent      $285  24 percent  $1,125
20,000 to 20,999  1.6 percent      $320  25 percent  $1,125
21,000 to 21,999  1.6 percent      $336  27 percent  $1,125
22,000 to 22,999  1.6 percent      $352  29 percent  $1,125
23,000 to 23,999  1.8 percent      $414  31 percent  $1,125
24,000 to 24,999  1.8 percent      $432  33 percent  $1,105
25,000 to 25,999  1.8 percent      $450  35 percent  $1,080
26,000 to 26,499  2.0 percent      $520
26,500 to 26,999  2.0 percent      $530  38 percent  $1,050
27,000 to 27,499  2.0 percent      $540
27,500 to 27,999  2.0 percent      $550  41 percent  $1,020
28,000 to 28,499  2.0 percent      $560
28,500 to 28,999  2.0 percent      $570  44 percent  $  990
29,000 to 29,499  2.0 percent      $580
29,500 to 29,999  2.0 percent      $590  47 percent  $  960
30,000 to 30,499  2,0 percent      $600
30,500 to 30,999  2.0 percent      $610  50 percent  $  930
31,000 to 31,499  2.2 percent      $620
31,500 to 31,999  2.2 percent      $630  50 percent  $  900
32,000 to 32,499  2.0 percent      $640
32,500 to 32,999  2.2 percent      $650  50 percent    $800
33,000 to 33,999  2.2 percent      $700  50 percent    $700
34,000 to 34,999  2.2 percent      $600  50 percent    $600
35,000 to 35,999  2.2 percent      $500  50 percent    $500
36,000 to 36,999  2.4 percent      $400  50 percent    $400
37,000 to 37,999  2.4 percent      $300  50 percent    $300
38,000 to 38,999  2.4 percent      $200  50 percent    $200
39,000 to 39,999  2.4 percent      $100  50 percent    $100
40,000 and over   2.4 percent            50 percent     -0-
    The payment made to a claimant shall be the amount of the 
state refund calculated pursuant to this subdivision, less the 
homestead credit given pursuant to section 273.13, subdivisions 
6, 7 and 14a.  No payment is allowed if the claimant's household 
income is $40,000 or more.  
    Sec. 4.  Minnesota Statutes 1984, section 290A.04, 
subdivision 3, is amended to read:  
    Subd. 3.  The commissioner of revenue shall construct and 
make available to taxpayers a comprehensive table showing the 
property taxes to be paid and credit refund allowed at various 
levels of income and assessment.  The table shall follow the 
schedule of income percentages, maximums and other provisions 
specified in subdivisions subdivision 2, 2a, and 2b, except that 
the commissioner may graduate the transition between income 
brackets.  All refunds shall be computed in accordance with 
tables prepared and issued by the commissioner of revenue.  
    Sec. 5.  Minnesota Statutes 1984, section 290A.06, is 
amended to read: 
    290A.06 [FILING TIME LIMIT, LATE FILING.] 
    Any claim for property taxes payable shall be filed with 
the department of revenue on or before August 31 15 of the year 
in which the property taxes are due and payable.  Any claim for 
rent constituting property taxes shall be filed with the 
department of revenue on or before August 31 15 of the year 
following the year in which the rent was paid.  The commissioner 
may extend the time for filing these claims for a period not to 
exceed six months in the case of sickness, absence, or other 
disability, or when in his judgment other good cause exists. 
    A claim filed after the original or extended due date shall 
be allowed, but the amount of credit shall be reduced by five 
percent of the amount otherwise allowable, plus an additional 
five percent for each month of delinquency, not exceeding a 
total reduction of 25 percent which may be cancelled or reduced 
by the commissioner in the case of sickness, absence, or other 
disability, or when in his judgment other good cause exists.  In 
any event no claim shall be allowed if the initial claim is 
filed two years one year after the original due date for filing 
the claim. 
    The time limit on redetermination of claims for refund and 
examination of records shall be governed by sections 290.49, 
290.50, and 290.56 and for purposes of computing the time limit 
as provided in these sections the due date of the property tax 
refund return shall be the same as the due date contained in 
section 290.42 for an income tax return covering the year in 
which the rent was paid or the year preceding the year in which 
the property taxes are payable. 
    Sec. 6.  Minnesota Statutes 1984, section 290A.19, as 
amended by Laws 1985, chapter 210, article 1, section 20, is 
amended to read: 
     290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 
CERTIFICATE; PENALTY.] 
     (a) The owner or managing agent of any property for which 
rent is paid for occupancy as a homestead shall furnish a 
certificate of rent constituting property tax to each person who 
is a renter on December 31, in the form prescribed by the 
commissioner.  If the renter moves prior to December 31, the 
owner or managing agent shall at his option either provide the 
certificate to the renter at the time he moves, or mail the 
certificate to the forwarding address if an address has been 
provided by the renter.  The certificate shall be made available 
to the renter not later than January 31 of the year following 
the year in which the rent was paid.  Any owner or managing 
agent who willfully fails to furnish a certificate as provided 
herein shall be liable to the commissioner for a penalty of $20 
for each act or failure to act.  The penalty shall be assessed 
and collected in the manner provided in chapter 290 for the 
assessment and collection of income tax. 
     (b) If the owner or managing agent elects to provide the 
renter with the certificate at the time he moves, rather than 
after December 31, the amount of rent constituting property 
taxes shall be computed as follows: 
     (i) The net tax shall be reduced by 1/12th for each month 
remaining in the calendar year. 
     (ii) In calculating the denominator of the fraction 
pursuant to section 290A.03, subdivision 11, the gross rent paid 
through the last month of claimant's occupancy shall be 
substituted for "the gross rent paid for the calendar year for 
the property in which the unit is located." 
    (c) The certificate of rent constituting property taxes 
shall include the address of the property, including the county, 
and the property tax parcel identification number and any 
additional information which the commissioner determines is 
appropriate. 
    (d) If the owner or managing agent fails to provide the 
renter with a certificate of rent constituting property taxes, 
the commissioner shall allocate the net tax on the building to 
the unit on a square footage basis or other appropriate basis as 
the commissioner determines.  The renter shall supply the 
commissioner with a statement from the county treasurer which 
gives the amount of property tax on the parcel, the address and 
property tax parcel identification number of the property, and 
the number of units in the building. 
    (e) Notwithstanding the provisions of section 290A.17, the 
commissioner shall provide to the commissioner of energy and 
economic development a copy of all certificates of rent 
constituting property taxes that have been filed with the 
department.  No certificates of rent constituting property taxes 
for any county need be given to the commissioner of energy and 
economic development by the commissioner if a book has been 
published detailing the property taxes for each parcel in the 
county for the given year.  The copies of the certificates shall 
be provided by February 1 of the year following the year in 
which the property tax refund return was filed.  
    Sec. 7.  [REPEALER.] 
    Minnesota Statutes 1984, section 290A.04, subdivisions 2a 
and 2b are repealed. 
    Sec. 8.  [EFFECTIVE DATE.] 
    This article is effective for claims based on rent paid in 
1985 and thereafter and for property taxes payable in 1986 and 
thereafter, except that section 6 and the change in section 5 
reducing the time to file an initial claim to one year are 
effective the day after final enactment.  

                                ARTICLE 6

                          LOCAL GOVERNMENT AIDS
    Section 1.  Minnesota Statutes 1984, section 477A.011, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [CITY.] City means a statutory or home rule 
charter city. 
    Sec. 2.  Minnesota Statutes 1984, section 477A.011, 
subdivision 3, is amended to read: 
    Subd. 3.  [POPULATION.] Population means the population 
established by the most recent federal census, by a special 
census conducted under contract with the United States bureau of 
the census, by a population estimate made by the metropolitan 
council, or by a population estimate of the state demographer 
made pursuant to section 116K.04, subdivision 4, clause (10), 
whichever is the most recent as to the stated date of the count 
or estimate.  The term "per capita" refers to population as 
defined by this subdivision. 
    Sec. 3.  Minnesota Statutes 1984, section 477A.011, 
subdivision 10, is amended to read: 
    Subd. 10.  [MAXIMUM AID AMOUNT.] For the 1984 aid 
distribution, a municipality's maximum aid amount shall be 106 
percent of the amount it was certified to receive in 1983 
pursuant to sections 477A.011 to 477A.03, plus any amounts 
certified in 1983 pursuant to Minnesota Statutes 1982, sections 
273.138 and 273.139, including any amount certified by a 
district as defined by section 273.73, subdivision 9, or which 
qualifies for exemption pursuant to section 273.78, which lies 
totally within the municipality, and including any amount which 
would have been received in 1983 pursuant to section 273.139 by 
a district as defined by section 273.73, subdivision 9, lying 
totally within the municipality, for a project approved by the 
Minnesota housing finance agency or the United States department 
of housing and urban development prior to March 1, 1983, had the 
project been completed and subject to taxation based upon full 
market value for taxes payable in 1983.  
    For any subsequent calendar year aid distribution, a 
municipality's city's maximum aid amount shall be 106 percent of 
the amount received in the previous year pursuant to sections 
477A.011 to 477A.03 its previous year aid amount, provided that 
its previous year aid amount exceeded $150 per capita.  If its 
previous year aid amount was less than $150 per capita, its 
maximum aid amount shall be the lesser of:  (a) 112 percent of 
its previous year aid amount, or (b) $159 multiplied by the 
population figure used in determining its previous year aid.  
    Sec. 4.  Minnesota Statutes 1984, section 477A.011, is 
amended by adding a subdivision to read: 
    Subd. 12.  [PREVIOUS YEAR AID AMOUNT.] For any calendar 
year aid distribution, a municipality's previous year aid amount 
means the amount that it was certified to receive for the 
previous calendar year pursuant to sections 477A.011 to 477A.03. 
    Sec. 5.  Minnesota Statutes 1984, section 477A.011, is 
amended by adding a subdivision to read: 
    Subd. 13.  [FISCAL NEED FACTOR.] For any calendar year aid 
distribution, a city's fiscal need factor means the three-year 
average of the sum of its municipal levy including its fiscal 
disparities distribution amount, and its local government aid 
distribution amount, for taxes payable and distribution amounts 
receivable in the three years immediately preceding the aid 
distribution year. 
     The fiscal need factor of any city that issued general 
obligation bonds in 1982 to pay for the construction or 
reconstruction of water wells which replaced a municipal water 
supply found to be an environmental health hazard by the state 
department of health shall be increased by one-fourth of the 
amount of the bonds issued. 
    For any city which received more than $70 per capita in 
attached machinery aids in 1983 pursuant to Minnesota Statutes 
1982, section 273.138, the local government aid amounts for 1984 
and 1985 used in the calculation of the fiscal need factor shall 
be reduced by the amount of attached machinery aids received in 
1983. 
    Sec. 6.  Minnesota Statutes 1984, section 477A.011, is 
amended by adding a subdivision to read: 
    Subd. 14.  [LOCAL EFFORT MILL RATE.] For any calendar year 
aid distribution, a city's local effort mill rate means its 
fiscal need factor per capita divided by $16 per capita per mill 
for the first $300 of its fiscal need factor per capita; plus 
its fiscal need factor per capita divided by $14 per capita per 
mill on that part of its fiscal need factor per capita, if any, 
in excess of $300.  In no case shall a city's local effort mill 
rate be less than eight mills. 
    Sec. 7.  Minnesota Statutes 1984, section 477A.012, is 
amended to read: 
    477A.012 [COUNTY GOVERNMENT DISTRIBUTIONS.] 
    In each calendar year 1986, every each county government 
shall receive a distribution equal to 60 percent of the aid 
amount certified for 1983 pursuant to sections 477A.011 to 
477A.03.  
     Sec. 8.  Minnesota Statutes 1984, section 477A.013, is 
amended to read: 
    477A.013 [MUNICIPAL GOVERNMENT DISTRIBUTIONS.] 
    Subdivision 1.  [TOWNS.] (a) In 1984, each town shall 
receive a distribution equal to 50 percent of the amount 
received in 1983 pursuant to Minnesota Statutes 1982, sections 
273.138, 273.139, and 477A.011 to 477A.03.  
    (b) In 1985 and each succeeding calendar year 1986, each 
town which had levied for taxes payable in the previous year at 
least one mill on the dollar of the assessed value of the town 
shall receive a distribution equal to 50 the greater of:  (a) 60 
percent of the amount received in 1983 pursuant to Minnesota 
Statutes 1982, sections 273.138, 273.139, and 477A.011 to 
477A.03. 
    Subd. 2.  [CITIES AND TOWNS.] In each calendar year, each 
statutory and home rule charter city shall receive a 
distribution equal to the amount obtained by subtracting ten 
mills multiplied by the municipality's equalized assessed value 
from the adjusted local revenue base. 
    An aid amount shall be computed in the same manner for all 
towns which had levied for taxes payable in the previous year at 
least one mill on the dollar of the assessed value of the town.  
A town's final aid amount shall be determined by either the 
subdivision 1 or the subdivision 2 calculation, whichever is 
greater.  
    Subd. 3.  [AID LIMITATION.] The aid amount determined 
pursuant to subdivision 2 shall be limited so that it is not 
greater than the municipality's maximum aid amount; or (b) 106 
percent of the amount received in 1985 pursuant to Minnesota 
Statutes 1984, sections 477A.011 to 477A.03.  
    Subd. 2.  [CITIES.] In calendar year 1986, each city shall 
receive a local government aid distribution as determined by the 
following steps. 
    (1) A preliminary aid amount shall be computed for each 
city equal to the amount obtained by subtracting its local 
effort mill rate multiplied by its equalized assessed value from 
its fiscal need factor, except that its preliminary aid amount 
may not be less than its previous year aid amount. 
    For any city which received more than $70 per capita in 
attached machinery aids in 1983 pursuant to Minnesota Statutes 
1982, section 273.138, an amount equal to the amount of attached 
machinery aids received in 1983 shall be added to the 
preliminary aid amount. 
    (2) For each city, an aid increase amount equal to the 
amount by which its preliminary aid amount exceeds its previous 
year aid amount shall be determined.  Each city's aid increase 
amount shall be reduced by a uniform percentage as determined by 
the commissioner of revenue, to make the sum of the final aid 
distributions for all cities equal the aid limitation imposed by 
subdivision 3.  
    (3) Each city's final aid amount shall be equal to the sum 
of its aid increase amount, as adjusted, and its previous year 
aid amount; provided, however, that no city's aid shall exceed 
its maximum aid amount, and further provided that no city which 
is a city of the first class shall have a final aid amount which 
is less than 102 percent of its previous year aid. 
    Subd. 3.  [AID LIMITATION.] The total amount available for 
distribution to cities pursuant to subdivision 2 shall be 
$286,000,000 for calendar year 1986. 
    Sec. 9.  [PAYMENT DATE EXCEPTION.] 
    Notwithstanding the provisions of Minnesota Statutes, 
section 477A.015, any city containing property which qualifies 
for reductions pursuant to Minnesota Statutes, section 273.1391, 
subdivision 2, clause (b), may apply to the commissioner of 
revenue to have the entire amount of its local government aid 
distribution paid on July 15, for the calendar year 1985 
distribution only.  Applications pursuant to this section must 
be received by the commissioner no later than July 1, 1985. 
    Sec. 10.  [REPEALER.] 
    Minnesota Statutes 1984, section 477A.0131, is repealed. 
    Sec. 11.  [EFFECTIVE DATE.] 
     This article is effective for local government aid 
distributions in calendar year 1986, except for section 9 which 
is effective the day following final enactment. 

                               ARTICLE 7 

                  HENNEPIN COUNTY PARK RESERVE DISTRICT
    Section 1.  Laws 1967, chapter 721, section 2, as amended 
by Laws 1969, chapter 885, section 1; Laws 1971, chapter 954, 
section 1; Laws 1973, chapter 473, section 1; and Laws 1979, 
chapter 288, section 1, is amended to read: 
    Sec. 2.  [HENNEPIN COUNTY; PARK RESERVE DISTRICT; TAX 
LEVY.] 
    Subdivision 1.  [LEVY.] To provide funds for the purposes 
of the Hennepin county park reserve district as set forth in its 
annual budget, in lieu of the levies authorized by any other 
special law for such purposes, the board of county park district 
commissioners of Hennepin county upon approval of each annual 
budget may levy taxes on all the taxable property in the county 
and park district at a rate not exceeding 1.0 mill 1.3 mills on 
the assessed valuation thereof.  Notwithstanding Minnesota 
Statutes, section 398.16, on or before October 1 of each year, 
after public hearing, the board of park district commissioners 
shall adopt a budget for the ensuing year and shall determine 
the total amount necessary to be raised from ad valorem tax 
levies to meet its budget.  The board of park district 
commissioners shall submit the budget to the county board.  The 
county board may veto or modify an item contained in the budget. 
If the county board determines to veto or to modify an item in 
the budget, it must, within 15 days after the budget was 
submitted by the district board, state in writing the specific 
reasons for its objection to the item vetoed or the reason for 
the modification.  The park reserve district board, after 
consideration of the county board's objections and proposed 
modifications, may reapprove a vetoed item or the original 
version of an item with respect to which a modification has been 
proposed, by a two-thirds majority.  If the district board does 
not reapprove a vetoed item, the item shall be deleted from the 
budget.  If the district board does not reapprove the original 
version of a modified item, the item shall be included in the 
budget as modified by the county board.  After adoption of the 
final budget and no later than October 1, the superintendent of 
the park district shall certify to the office of the Hennepin 
county director of tax and public records exercising the 
functions of the county auditor the total amount to be raised 
from ad valorem tax levies to meet its budget for the ensuing 
year.  The director of tax and public records shall add the 
amount of any levy certified by the district to other tax levies 
on the property of the county within the district for collection 
by the director of tax and public records with other taxes.  
When collected, the director shall make settlement of such taxes 
with the district in the same manner as other taxes are 
distributed to the other political subdivisions in Hennepin 
county.  The levy authorized by this section shall be in 
addition to any other taxes authorized by law.  
    Subd. 2.  [BONDS.] To provide funds for the acquisition and 
betterment of park properties and facilities of the district in 
accordance with plans filed by it under Minnesota Statutes, 
section 398.19, upon request of the board of park district 
commissioners by a resolution or resolutions regularly adopted 
by a majority of all members thereof, the board of county 
commissioners of Hennepin county may, prior to the effective 
date of this article, in addition to bonds issued by the county 
for this purpose before January 1, 1973, by resolution issue and 
sell general obligation bonds of the county in the manner 
provided in Minnesota Statutes, sections 475.60 to 475.753, in 
an aggregate amount not exceeding $2,500,000.  Taxes for the 
payment of the principal of and interest on such bonds shall be 
assessed and extended upon all taxable property in the county.  
Such bonds shall not be subject to the limitations of Minnesota 
Statutes, sections 475.51 to 475.59, but the maturity years and 
amounts and interest rates of each series of bonds shall be 
fixed so that the maximum amount of principal and interest to 
become due in any year on the bonds authorized by this law and 
all bonds issued by the county for the purposes of the district 
before January 1, 1973, shall not exceed an amount equal to 
three tenths of one mill times the assessed value of all taxable 
property in the county as last finally equalized before the 
issuance of the new series.  Taxes for the payment of principal 
and interest on bonds issued after the effective date of this 
article shall be assessed and extended upon all taxable property 
in the park district. 
    Sec. 2.  Laws 1979, chapter 288, section 2, subdivision 2, 
is amended to read: 
    Subd. 2.  Three Two park district commissioners shall be 
appointed by the park and recreation board of the city of 
Minneapolis from among its membership board of commissioners of 
Hennepin county.  An appointee must be a resident of the 
Hennepin county park reserve district in order to qualify and 
serve as a park district commissioner.  Each park district 
commissioner appointed pursuant to this subdivision shall serve 
for a four-year term coinciding with his term on the park and 
recreation board of the city of Minneapolis, and until a 
successor is appointed and qualifies.  If a vacancy occurs among 
the commissioners appointed pursuant to this subdivision, 
the park and recreation board of the city of Minneapolis 
commissioners of Hennepin county shall appoint a successor. 
    Sec. 3.  Laws 1979, chapter 288, section 2, subdivision 3, 
is amended to read: 
    Subd. 3.  Four Five park district commissioners shall be 
elected as provided in this subdivision to represent those 
portions of Hennepin county outside of the city of Minneapolis.  
One park district commissioner shall be elected without party 
designation from each of the districts established pursuant to 
subdivision 4.  Elections under this subdivision shall be held 
at the same time and in the same manner as elections for the 
office of county commissioner beginning at the 1986 general 
election.  Each park district commissioner elected pursuant to 
this subdivision shall be a resident of the district he 
represents and shall serve for a term of four years and until a 
successor is elected and qualifies, except that the term of 
office of each park district commissioner elected at the general 
election held in the year of a federal census shall be only two 
years and until a successor is elected and qualifies.  At the 
general election following redistricting as required in 
subdivision 4, the three commissioners from odd-numbered 
districts shall be elected for four-year terms and the two 
commissioners from even-numbered districts shall be elected for 
two-year terms.  If a vacancy occurs in the office of any 
commissioner elected pursuant to this subdivision, the board of 
park district commissioners shall appoint a successor residing 
in that district to fill the unexpired term. 
    Sec. 4.  Laws 1979, chapter 288, section 2, subdivision 4, 
is amended to read: 
    Subd. 4.  By no later than August 1, 1980 After September 
1, 1985, and after at least 30 days notice and public hearing, 
the board of park district commissioners of the Hennepin county 
park reserve district shall divide the territory of Hennepin 
county outside the city of Minneapolis into four five districts, 
which constitute the Hennepin county park reserve district.  
Each district shall be composed of contiguous territory as 
regular and compact in form as practicable and as nearly equal 
in population as possible, provided that no district shall vary 
in population more than ten percent from the average of all the 
districts, unless compliance with this requirement requires 
division of a voting precinct.  After each federal census and by 
not later than 120 days before the next ensuing general 
election, after at least 30 days notice and public hearing, the 
board of park district commissioners of the Hennepin county park 
reserve district shall redistrict the territory of the Hennepin 
county outside the city of Minneapolis park reserve district 
into new commissioner districts as necessary to comply with the 
provisions of this subdivision.  The districts established 
pursuant to this subdivision shall remain effective until new 
districts are established.  Any person aggrieved by a 
districting plan established pursuant to this subdivision may 
challenge the plan in the same manner as a county commissioner 
districting plan may be challenged pursuant to Minnesota 
Statutes, section 375.025.  The district court in reviewing any 
challenge to a districting plan under this subdivision shall 
proceed in the manner prescribed by Minnesota Statutes, section 
375.025.  Each districting plan established pursuant to this 
subdivision shall be filed in the office of the director of 
finance of Hennepin county or any successor office and shall be 
effective 31 days after its publication in a newspaper of 
general circulation in the county. 
    Sec. 5.  Laws 1979, chapter 288, section 3, is amended to 
read: 
    Sec. 3.  [TRANSITION TO ELECTED BOARD.] Notwithstanding any 
law to the contrary, until January 1, 1983, The park district 
commissioners of the Hennepin county park reserve 
district appointed by the Minneapolis park and recreation board 
shall continue to be appointed and vacancies shall continue to 
be filled as provided in Laws 1963, Chapter 883, Section 1 serve 
until September 1, 1985, when their terms expire.  After 
September 1, 1985, the board of park district commissioners 
shall appoint one commissioner from the residents of the park 
district to serve at large until January 1, 1987.  The board of 
commissioners of Hennepin county shall appoint two commissioners 
from the park reserve district to serve at large beginning after 
September 1, 1985.  One appointee shall serve until January 1, 
1987, and the other until January 1, 1989.  The county board 
shall designate the terms of the two appointees.  On January 
1, 1983 1987, the terms of office of all commissioners appointed 
pursuant to Laws 1963, Chapter 883, Section 1, then serving on 
the park reserve district board, except the appointee of the 
county board designated to serve until January 1, 1989, shall 
expire and the first commissioners appointed or elected as 
provided in section 2 shall take office, except that the three 
commissioners from odd-numbered districts shall be elected for 
four-year terms and the two commissioners from even-numbered 
districts shall be elected for two-year terms at the 1986 
general election.  Thereafter the park district commissioners of 
the Hennepin county park reserve district shall be appointed or 
elected and vacancies shall be filled as provided in section 2. 
    Sec. 6.  [DEPOSITORIES.] 
    Notwithstanding Minnesota Statutes, section 398.18, the 
Hennepin county park reserve district may exercise the powers of 
a municipality under chapter 118. 
    Sec. 7.  [DISTRICT RENAMING.] 
    The Hennepin county park reserve district, a local 
government unit organized and existing under the provisions of 
Minnesota Statutes, sections 398.01 to 398.36, is renamed the 
suburban Hennepin regional park district.  The district so named 
is the legal successor in all respects of the Hennepin county 
park reserve district as originally named and constituted.  All 
bonds, resolutions, contracts, and liabilities of the Hennepin 
county park reserve district are the bonds, resolutions, 
contracts, and liabilities of the suburban Hennepin regional 
park district as so renamed and reconstituted. 
    Sec. 8.  [EFFECTIVE DATE.] 
    This article is effective the day after approval by the 
board of park district commissioners of the Hennepin county park 
reserve district and the board of commissioners of Hennepin 
county and upon compliance with Minnesota Statutes, section 
645.021, provided that this article is effective only if 
compliance with Minnesota Statutes, section 645.021, is 
completed by August 1, 1985. 

                                ARTICLE 8

                          ECONOMIC DEVELOPMENT
    Section 1.  Minnesota Statutes 1984, section 37.17, 
subdivision 1, is amended to read: 
    Subdivision 1.  [LICENSE, REGULATION.] The society may 
license and regulate all shows, exhibitions, performances, and 
privileges on the fairgrounds, revoke any licenses, and 
prohibit, remove, and summarily stop all exhibitions, 
performances, or privileges which violate society rules or which 
are otherwise contrary to law.  If the society includes in a 
contract governing a show or performance on the fairgrounds a 
condition prohibiting the performer from performing elsewhere in 
the state, the prohibition may apply only to performances 
occurring within 100 miles of the fairgrounds and within 30 days 
of the date of the performance at the fairgrounds. 
    Sec. 2.  Minnesota Statutes 1984, section 116M.03, is 
amended by adding a subdivision to read: 
    Subd. 28.  [QUALIFIED DIVERSIFICATION PROJECT.] A qualified 
economic diversification project means the provision of special 
assistance under section 116M.07, subdivision 11, paragraph (d) 
to a business, if the following criteria are satisfied. 
    (1) If the business is located outside of a distressed 
county, the following conditions must be satisfied:  
    (a) the business is principally engaged in manufacturing; 
    (b) the primary market for the product of the business is 
national or international in scope; 
    (c) the business would not locate or expand or continue to 
expand in Minnesota if special assistance were not provided; 
    (d) the project will result in the addition of at least 50 
permanent employees; 
    (e) the total capital investment for the project exceeds 
$3,000,000; 
    (f) the provision of special assistance to the business 
will result in diversification of the state's economy by 
expanding the types of products produced or technologies by 
establishing new markets for Minnesota products or technologies; 
and 
    (g) the project will not directly result in a reduction in 
the employment of other Minnesota businesses. 
    (2) If the business is located in a distressed county, the 
following conditions must be satisfied:  
     (a) The business is principally engaged in manufacturing or 
in selling of tangible personal property or services in response 
to orders received by mail or telephone or in providing business 
services by mail or electronic data transmission. 
     (b) The business would not locate in the distressed county 
or an adjacent Minnesota county if special assistance were not 
provided; 
     (c) The total capital investment for the project exceeds 
$3,000,000 and the business will increase employment by 25 
permanent positions or the total capital investment for the 
project exceeds $1,000,000 and the business will increase 
employment by 50 additional positions.  
    (d) For purposes of this subdivision, "manufacturing" has 
the meaning given in section 474.16, subdivision 6, except that 
the provisions of clause (b) do not apply. 
    Sec. 3.  Minnesota Statutes 1984, section 116M.06, 
subdivision 2, is amended to read: 
    Subd. 2.  [USE OF FUNDS.] The authority may use the energy 
loan insurance fund as provided in section 116M.11.  The 
authority may use the economic development fund in connection 
with small business loans, pollution control loans, and farm 
loans to provide financial assistance to eligible small 
businesses; it may use the economic development fund in 
connection with business loans when the loans are made as a part 
of the special assistance program under section 116M.07, 
subdivision 11; and the authority may use the energy development 
fund in connection with energy loans to provide financial 
assistance to businesses; as follows: 
    (a) to provide loan guarantees or insurance, in whole or in 
part, to businesses in connection with business loans, small 
business loans, energy loans, farm loans, or pollution control 
loans;  
    (b) to provide direct loans to businesses in connection 
with business loans, small business loans, energy loans, farm 
loans, or pollution control loans;  
    (c) to participate in other investment programs as 
appropriate under the terms of this chapter and chapters 472 and 
474;  
    (d) to purchase loan packages made to businesses by 
financial institutions in the state in connection with business 
loans, small business loans, energy loans, farm loans, or 
pollution control loans;  
    (e) to enter into or to pay fees on insurance contracts, 
letters of credit, municipal bond insurance, surety bonds, or 
similar obligations and other agreements or contracts with 
financial institutions or providers of similar services;  
    (f) to guarantee or insure bonds and notes issued by the 
authority, in whole or in part; 
    (g) to make interest subsidy payments on behalf of eligible 
small businesses to be applied to the payment of interest on 
bonds or notes of the authority equal to the difference in 
interest payable on loans and the interest payable on bonds or 
notes of the authority where the proceeds of these bonds or 
notes are used to make or participate in making these loans;  
    (h) for any legal purpose or program of the authority, 
including without limitation the payment of the cost of issuing 
authority bonds and notes and authority administrative costs and 
expenses; 
    (i) to pay tax reimbursements for qualified economic 
diversification projects under the special assistance program 
pursuant to section 116M.07, subdivision 11, paragraph (d).  
    In addition, the authority may use the economic development 
fund to purchase, lease, or license technology-related products 
for education or training or to participate in programs where 
technology-related products are purchased, leased, or licensed.  
    The authority may create separate accounts within any of 
the funds for use in accordance with the separate purposes 
listed in this section and may irrevocably pledge and allocate 
moneys on deposit in any of the funds to the accounts for the 
purposes.  The authority may make contracts with note and bond 
holders, trustees for them, financial institutions, or other 
persons interested in the disposition of moneys in the funds or 
their accounts with respect to the conditions upon which money 
in any fund or its accounts is to be held, invested, applied, 
and disposed of and the use of the fund and its accounts and the 
termination of accounts.  The authority may determine to 
leverage amounts in accounts to be used to guarantee or insure 
bonds and notes of the authority or loans to businesses and may 
covenant as to the rate of leveraging with holders of the 
authority's bonds and notes or any trustee for them, financial 
institutions, or other persons.  Money in the funds and their 
accounts shall, consistent with contracts with holders of the 
authority's bonds and notes or any trustee for them, financial 
institutions, or other interested persons, be invested in 
accordance with section 116M.08, subdivision 15, and the 
investment income from them, absent contractual provisions to 
the contrary, shall be added to and retained in the funds or 
their accounts if provided by the authority.  The repayments to 
the authority of any direct loans made by the authority from 
money in the funds or their accounts shall be paid by the 
authority into the particular fund that was used in conjunction 
with the loan being repaid, or, as provided by the authority, 
into an account.  The authority may collect fees, initially or 
from time to time, or both, with respect to any direct loan it 
extends or any insurance or guarantee it grants.  The authority 
may enter into contracts and security instruments with 
businesses, with bond and note holders or any trustee for them, 
or financial institutions or other persons to provide for and 
secure the repayment to the authority of money provided by the 
authority from the funds or their accounts for direct loans or 
which have been paid by the authority from the fund or accounts 
pursuant to an authority guarantee or insurance.  
     The state covenants with all holders of the authority's 
bonds and notes, financial institutions, and other persons 
interested in the disposition of money in the funds or their 
accounts, which money the authority has irrevocably pledged and 
allocated for any authorized purpose described in this 
subdivision, that the state will not take any action to limit 
the effect of the pledge and allocation and will not take any 
action to limit the effect of contracts entered into as 
authorized in this subdivision with respect to the pledge and 
allocation and will not limit or alter the rights vested in the 
authority or the state to administer the application of money 
pursuant to the pledge and allocation and to perform its 
obligations under the contracts.  The authority may include and 
recite this covenant of the state in any of its bonds or notes 
benefitting from the pledge and allocation or contracts or 
related documents or resolutions. 
    Sec. 4.  Minnesota Statutes 1984, section 116M.06, 
subdivision 3, is amended to read: 
    Subd. 3.  [ECONOMIC DEVELOPMENT FUNDS; PREFERENCES.] (a) 
The following eligible small businesses have preference among 
all business applicants for financial assistance from the 
economic development fund:  
    (1) businesses located in areas of the state that are 
experiencing the most severe unemployment rates in the state;  
    (2) businesses that are likely to expand and provide 
additional permanent employment;  
    (3) businesses located in border communities that 
experience a competitive disadvantage due to location;  
    (4) businesses that have been unable to obtain traditional 
financial assistance due to a disadvantageous location, minority 
ownership, or other factors rather than due to the business 
having been considered a poor financial risk;  
    (5) businesses that utilize state resources, thereby 
reducing state dependence on outside resources, and that produce 
products or services consistent with the long-term social and 
economic needs of the state;  
    (6) businesses located in designated enterprise zones, as 
described in section 273.1312, subdivision 4; and 
    (7) business located in federally designated economically 
distressed areas.  
    (b) Except in connection with the issuance of authority 
bonds or notes, the authority may not invest the funds in a 
program that does not have financial participation from the 
private sector, as determined by the authority.  
    (c) The provisions of this subdivision do not apply to 
economic diversification projects. 
    Sec. 5.  Minnesota Statutes 1984, section 116M.07, is 
amended by adding a subdivision to read: 
    Subd. 7a.  [HEALTH CARE EQUIPMENT LOANS; AUTHORITY.] The 
authority may make or participate in making health care 
equipment loans in any amount and may enter into commitments 
therefor.  The loans may be made only from the proceeds of bonds 
or notes issued pursuant to subdivision 7b.  Before making a 
commitment for a loan, the authority shall forward the 
application to the commissioner of health for review under 
subdivision 7c.  The authority must not approve or enter into a 
commitment for a loan unless the application has been approved 
by the commissioner of health. 
    Sec. 6.  Minnesota Statutes 1984, section 116M.07, is 
amended by adding a subdivision to read: 
    Subd. 7b.  [HEALTH CARE EQUIPMENT LOANS; BONDS AND 
NOTES.] The authority may issue its bonds and notes to provide 
money for the purposes specified in subdivision 7a.  For this 
purpose, the authority may exercise all of the powers conferred 
on it by sections 116M.03 and 116M.06 to 116M.08 with respect to 
business loans, except as limited by subdivisions 7a to 7c.  The 
principal amount of bonds and notes issued and outstanding under 
this subdivision at any time, computed as specified in section 
116M.08, subdivision 11, may not exceed $95,000,000.  This 
authorization is in addition to the authorization contained in 
section 116M.08, subdivision 11.  The bonds and notes issued to 
make the loans may not be insured by the authority but shall be 
insured by a letter of credit or bond insurance issued by a 
private insurer. 
    Sec. 7.  Minnesota Statutes 1984, section 116M.07, is 
amended by adding a subdivision to read: 
    Subd. 7c.  [HEALTH CARE EQUIPMENT LOANS; 
ADMINISTRATION.] (a) The commissioner of health shall review 
each loan application received from the authority to determine 
whether the application is an approvable application.  An 
application is approvable if the following criteria are 
satisfied: 
    (1) the hospital is owned and operated by a county, 
district, municipality or nonprofit corporation;  
    (2) the loan would not be used to refinance existing debt;  
    (3) the hospital was unable to obtain suitable financing 
from other sources;  
    (4) the loan is necessary to establish or maintain patient 
access to an essential health care service that would not 
otherwise be available within a reasonable distance from that 
facility; and 
    (5) the project to be financed by the loan is 
cost-effective and efficient.  
    (b) The commissioner shall determine whether the allocation 
available for the health care equipment loan program for a 
period of time specified in a rule is sufficient for all 
approvable applications received during the period of time.  If 
the allocations are sufficient, the commissioner shall approve 
all approvable applications.  If the allocations are not 
sufficient, the commissioner shall compare the relative merits 
of the approvable applications in relation to the criteria in 
clauses (4) and (5), rank the applications in order of priority, 
and approve the applications in order of priority to the extent 
possible within the available allocation.  
    (c) The commissioner of energy and economic development may 
charge a reasonable fee under section 16A.128 to an applicant 
for the costs of the departments of health and energy and 
economic development in the review of the application.  The 
commissioner of energy and economic development shall transfer 
to the commissioner of health from the fees collected an amount 
sufficient to pay the costs of the commissioner of health in the 
review of applications effective July 1, 1985.  The commissioner 
of health may adopt permanent rules to implement subdivisions 7a 
to 7c of this section.  The commissioner of energy and economic 
development may adopt permanent rules to implement subdivisions 
7a to 7c. 
    Sec. 8.  Minnesota Statutes 1984, section 116M.07, 
subdivision 11, is amended to read: 
    Subd. 11.  [SPECIAL ASSISTANCE PROGRAM.] (a) The authority 
may operate a special assistance program and may designate 
certain businesses as being in need of special assistance.  In 
connection with the special assistance program the authority may 
borrow money and may issue negotiable bonds and notes in 
accordance with section 116M.08, subdivisions 11 and 12.  
Notwithstanding any provision to the contrary in section 
116M.08, subdivision 11, the aggregate principal amount of the 
authority's bonds and notes outstanding at any one time and 
issued in connection with the special assistance program, 
excluding the amount satisfied and discharged by payment and 
deducting amounts held in debt service reserve funds and amounts 
used to make loans guaranteed or insured by the federal 
government or a department, agency, or instrumentality of the 
federal government or by a private insurer or guarantor 
authorized to do business in the state of Minnesota and 
acceptable to the authority, shall not exceed 
$10,000,000 $25,000,000.  This authorization is in addition to 
the authorization contained in section 116M.08, subdivision 11. 
    (b) No business shall be eligible to receive special 
assistance unless the authority has first passed a resolution 
designating the business as being in need of special 
assistance.  The resolution shall include findings that the 
designation and receipt of the special assistance will be of 
exceptional benefit to the state of Minnesota in that at least 
three of the following criteria are met:  
    (1) in order to expand or remain in Minnesota, the business 
has demonstrated that it is unable to obtain suitable financing 
from other sources;  
    (2) special assistance will enable a business not currently 
located in Minnesota to locate a facility within Minnesota which 
directly increases the number of jobs within the state;  
    (3) the business will create or retain significant numbers 
of jobs within a community in Minnesota;  
    (4) the business has a significant potential for growth in 
jobs or economic activities within Minnesota within the ensuing 
five-year period; and 
    (5) the business will maintain a significant level of 
productivity within Minnesota within the ensuing five-year 
period.  
    (c) Special assistance may include:  
    (1) a business loan;  
    (2) a small business loan; or 
    (3) use of moneys in the economic development fund to 
provide financial assistance to businesses in accordance with 
section 116M.06, subdivision 2, except that section 116M.06, 
subdivision 2, clause (g), shall apply only to eligible small 
businesses. 
    (d) In the case of a qualified economic diversification 
project, special assistance may include, in addition: 
    (1) reimbursement of expenses paid or to be paid by the 
business for property or sales taxes for a period not to exceed 
five years; or 
    (2) use of moneys in the economic development fund to 
provide interest subsidy payments under section 116M.06, 
subdivision 2, clause (g) without regard to whether the business 
is an eligible small business. 
     In the case of an economic diversification project, the 
total amount of special assistance provided to a business may 
not exceed 20 percent of the total capital investment in the 
project.  If special assistance is provided for a project 
located in an enterprise zone, the sum of the amount of special 
assistance and the tax reductions provided under section 
273.1314, subdivision 9, may not exceed 30 percent of the total 
capital investment in the project.  The amount of special 
assistance provided for an economic diversification project may 
not exceed $20,000 for each permanent job to be created by the 
project. 
    Sec. 9.  Minnesota Statutes 1984, section 116M.08, 
subdivision 11, is amended to read: 
    Subd. 11.  It may borrow money to carry out and effectuate 
its purposes and may issue its negotiable bonds or notes as 
evidence of any such borrowing in accordance with sections 
462A.08 to 462A.13, 462A.16 and 462A.17, all with the force and 
effect stated and the incidental powers granted and duties 
imposed in those sections.  The bonds and notes may be issued 
pursuant to a trust indenture that is substantially identical to 
a resolution pursuant to which the authority issues bonds and 
notes as provided in sections 462A.08 to 462A.13, 462A.16, and 
462A.17, except that the authority may pledge money and 
securities to a trustee for the security of the holders of bonds 
and notes.  The authority may refund bonds and notes and may 
guarantee or insure its bonds and notes in whole or in part with 
money from the funds or an account created by the authority for 
that purpose.  The aggregate principal amount of the authority's 
bonds and notes outstanding at any one time, excluding the 
amount satisfied and discharged by payment or provision for 
payment in accordance with their terms, and deducting amounts 
held in debt service reserve funds therefor and amounts used to 
make loans guaranteed or insured by the federal government or a 
department, an agency or instrumentality of the federal 
government or by a private insurer or guarantor authorized to do 
business in the state of Minnesota and acceptable to the 
authority, shall not exceed $30,000,000 $50,000,000 unless 
authorized by another law.  
    Sec. 10.  [272.026] [TAX STATUS OF PROPERTY MANAGED BY A 
HOUSING REDEVELOPMENT AUTHORITY OR PUBLIC HOUSING AGENCY.] 
    Any property that is under the direct management and 
control of, but is not owned by, a housing redevelopment 
authority or public housing agency, and is used in a manner 
authorized and contemplated by chapter 462, and for which the 
authority or agency is eligible for assistance payments under 
federal law, is public property used for essential public and 
governmental purposes, and the property and the authority or 
agency is exempt from all taxes and special assessments of the 
city, the county, the state, or any political subdivision of the 
state in the same manner as property referred to in section 
462.575, subdivision 1.  Payments in lieu of taxes for the 
property shall remain as provided in section 272.68 or 462.575, 
subdivision 3. 
    Sec. 11.  Minnesota Statutes 1984, section 273.1313, is 
amended by adding a subdivision to read:  
    Subd. 6.  [ECONOMIC DIVERSIFICATION 
PROJECTS.] Notwithstanding any provision of sections 273.1312 to 
273.1314 to the contrary, a municipality may classify the 
property of a business provided special assistance as a 
qualified economic diversification project pursuant to section 
116M.07, subdivision 11, clause (d), as employment property 
under provisions of this section. 
    Sec. 12.  Minnesota Statutes 1984, section 273.1314, 
subdivision 8, is amended to read: 
    Subd. 8.  [FUNDING LIMITATIONS.] The maximum amount of the 
tax reductions which may be authorized pursuant to designations 
of enterprise zones under section 273.1312 and this section is 
limited to $35,600,000 $36,400,000.  The maximum amount of this 
total which may be authorized by the commissioner for tax 
reductions pursuant to subdivision 9 that will reduce tax 
revenues which otherwise would have been received during fiscal 
years 1984 and 1985 is limited to $9,000,000.  Of the total 
limitation and the 1984-1985 biennial limitation the 
commissioner shall allocate to enterprise zones designated under 
section 273.1312, subdivision 4, paragraph (c), clause (3), an 
amount equal to $16,610,940 and $5,000,000 respectively.  These 
funds shall be allocated among such zones on a per capita basis 
except that the maximum allocation to any one city is $6,610,940 
and no city's allocation shall exceed $210 on a per capita 
basis.  An amount sufficient to fund the state funded property 
tax credits, the refundable income tax credits, and the sales 
tax exemption, as authorized pursuant to this section is 
appropriated to the commissioner of revenue.  Upon designation 
of an enterprise zone the commissioner shall certify the total 
amount available for tax reductions in the zone for its 
duration.  The amount certified shall reduce the amount 
available for tax reductions in other enterprise zones.  If 
subsequent estimates indicate or actual experience shows that 
the approved tax reductions will result in amounts of tax 
reductions in excess of the amount certified for the zone, the 
commissioner shall implement a plan to reduce the available tax 
reductions in the zone to an amount within the sum certified for 
the zone.  If subsequent estimates indicate or actual experience 
shows that the approved tax reductions will result in amounts of 
tax reductions below the amount certified, the difference shall 
be available for certification in other zones or used in 
connection with an amended plan of tax reductions for the zone 
as the commissioner determines appropriate.  If the tax 
reductions authorized result in reduced revenues for a dedicated 
fund, the commissioner of finance shall transfer equivalent 
amounts to the dedicated fund from the general fund as 
necessary.  Of the $36,400,000 in tax reductions authorized 
under this subdivision, an additional $800,000 in tax reductions 
may be authorized within an enterprise zone located within five 
municipalities which was designated by the commissioner in 1984. 
    Sec. 13.  Minnesota Statutes 1984, section 273.1314, 
subdivision 16a, is amended to read: 
    Subd. 16a.  [ZONE BOUNDARY REALIGNMENT.] The commissioner 
may approve specific applications by a municipality to amend the 
boundaries of a zone or of an area or areas designated pursuant 
to section 273.1314, subdivision 9, paragraph (e) at any time. 
Boundaries of a zone may not be amended to create noncontiguous 
subdivisions.  If the commissioner approves the amended 
boundaries, the change is effective on the date of 
approval.  Notwithstanding the area limitation under section 
273.1312, subdivision 4, paragraph (b), the commissioner may 
approve a specific application to amend the boundaries of an 
enterprise zone which is located within five municipalities and 
was designated in 1984, to increase its area to not more than 
800 acres.  
    Sec. 14.  Minnesota Statutes 1984, section 273.74, 
subdivision 2, is amended to read: 
    Subd. 2.  [CONSULTATIONS; COMMENT AND FILING.] Before 
formation of a tax increment financing district, the authority 
shall provide an opportunity to the members of the county boards 
of commissioners of any county in which any portion of the 
proposed district is located and the members of the school board 
of any school district in which any portion of the proposed 
district is located to meet with the authority.  The authority 
shall present to the members of the county boards of 
commissioners and the school boards its estimate of the fiscal 
and economic implications of the proposed tax increment 
financing district.  The members of the county boards of 
commissioners and the school boards may present their comments 
at the public hearing on the tax increment financing plan 
required by subdivision 3.  The county auditor shall not certify 
the original assessed value of a district pursuant to section 
273.76, subdivision 1, until the county board of commissioners 
has presented its written comment on the proposal to the 
authority, or 30 days has passed from the date of the 
transmittal by the authority to the board of the information 
regarding the fiscal and economic implications, whichever occurs 
first.  Upon adoption of the tax increment financing plan, the 
authority shall file a copy of the same plan with the 
commissioner of energy and economic development.  The authority 
must also file with the commissioner a copy of the development 
plan for the project area. 
    Sec. 15.  Minnesota Statutes 1984, section 273.74, is 
amended by adding a subdivision to read: 
    Subd. 6.  [FINANCIAL REPORTING.] (a) The state auditor 
shall develop a uniform system of accounting and financial 
reporting for tax increment financing districts.  The system of 
accounting and financial reporting shall, as nearly as possible: 
    (1) provide for full disclosure of the sources and uses of 
public funds in the district; 
    (2) permit comparison and reconciliation with the affected 
local government's accounts and financial reports; 
    (3) permit auditing of the funds expended on behalf of a 
district, including a single district that is part of a 
multidistrict project or that is funded in part or whole through 
the use of a development account funded with tax increments from 
other districts or with other public moneys; 
    (4) be consistent with generally accepted accounting 
principles. 
    (b) The authority must annually submit to the state 
auditor, on or before July 1, a financial report in compliance 
with paragraph (a).  Copies of the report must also be provided 
to the county and school district boards and to the governing 
body of the municipality, if the authority is not the 
municipality.  To the extent necessary to permit compliance with 
the requirement of financial reporting, the county and any other 
appropriate local government unit or private entity must provide 
the necessary records or information to the authority or the 
state auditor as provided by the system of accounting and 
financial reporting developed pursuant to paragraph (a). 
    (c) The annual financial report must also include the 
following items: 
    (1) the original assessed value of the district; 
    (2) the captured assessed value of the district, including 
the amount of any captured assessed value shared with other 
taxing districts; 
    (3) the outstanding principal amount of bonds issued or 
other loans incurred to finance project costs in the district; 
    (4) for the reporting period and for the duration of the 
district, the amount budgeted under the tax increment financing 
plan, and the actual amount expended for, at least, the 
following categories: 
    (A) acquisition of land and buildings through condemnation 
or purchase; 
    (B) site improvements or preparation costs; 
    (C) installation of public utilities or other public 
improvements; 
    (D) administrative costs, including the allocated cost of 
the authority; 
    (5) for properties sold to developers, the total cost of 
the property to the authority and the price paid by the 
developer; 
    (6) the amount of tax exempt obligations, other than those 
reported under clause (3), that were issued on behalf of private 
entities for facilities located in the district. 
    (d) The reporting requirements imposed by this subdivision 
are in lieu of the annual disclosure required by subdivision 5. 
    Sec. 16.  Minnesota Statutes 1984, section 273.75, 
subdivision 4, is amended to read: 
    Subd. 4.  [LIMITATION ON USE OF TAX INCREMENT.] All 
revenues derived from tax increment shall be used in accordance 
with the tax increment financing plan.  The revenues shall be 
used solely for the following purposes:  (a) to pay the 
principal of and interest on bonds issued to finance a project; 
(b) by a rural development financing authority for the purposes 
stated in section 362A.01, subdivision 2, by a port authority or 
municipality exercising the powers of a port authority to 
finance or otherwise pay the cost of redevelopment pursuant to 
chapter 458, by a housing and redevelopment authority to finance 
or otherwise pay public redevelopment costs pursuant to chapter 
462, by a municipality to finance or otherwise pay the capital 
and administration costs of a development district pursuant to 
chapter 472A, by a municipality or redevelopment agency to 
finance or otherwise pay premiums for insurance or other 
security guaranteeing the payment when due of principal of and 
interest on the bonds pursuant to chapters 462C, 474, or both 
chapters, or to accumulate and maintain a reserve securing the 
payment when due of the principal of and interest on the bonds 
pursuant to chapters 462C, 474, or both chapters, which revenues 
in the reserve shall not exceed, subsequent to the fifth 
anniversary of the date of issue of the first bond issue secured 
by the reserve, an amount equal to 20 percent of the aggregate 
principal amount of the outstanding and nondefeased bonds 
secured by the reserve.  Revenues derived from tax increment may 
be used to finance the costs of an interest reduction program 
operated pursuant to section 462.445, subdivisions 10 to 13, or 
pursuant to other law granting interest reduction authority and 
power by reference to those subdivisions only under the 
following conditions:  (a) tax increments may not be collected 
for a program for a period in excess of 12 years after the date 
of the first interest rate reduction payment for the program, 
(b) tax increments may not be used for an interest reduction 
program, if the proceeds of bonds issued pursuant to section 
273.77 after December 31, 1985, have been or will be used to 
provide financial assistance to the specific project which would 
receive the benefit of the interest reduction program, and (c) 
not more than 50 percent of the estimated tax increment derived 
from a project may be used to finance an interest reduction 
program for owner-occupied single-family dwellings unless a 
project is located either in an area which would qualify as a 
redevelopment district or within a city designated as an 
enterprise zone pursuant to section 273.1312, subdivision 4, 
clause (c)(3).  These revenues shall not be used to circumvent 
existing levy limit law.  No revenues derived from tax increment 
shall be used for the construction or renovation of a 
municipally owned building used primarily and regularly for 
conducting the business of the municipality; this provision 
shall not prohibit the use of revenues derived from tax 
increments for the construction or renovation of a parking 
structure, a commons area used as a public park or a facility 
used for social, recreational or conference purposes and not 
primarily for conducting the business of the municipality.  
    Sec. 17.  Minnesota Statutes 1984, section 297A.15, 
subdivision 5, is amended to read: 
    Subd. 5.  [REFUND; APPROPRIATION.] Notwithstanding the 
provisions of section sections 297A.02, subdivision 2, and 
297A.257 the tax on sales of capital equipment shall be imposed 
and collected as if the rate under section 297A.02, subdivision 
1, applied.  Upon application by the purchaser, on forms 
prescribed by the commissioner, a refund equal to the reduction 
in the tax due as a result of the application of the rates under 
section 297A.02, subdivision 2, or the exemption under section 
297A.257 shall be paid to the purchaser.  The application shall 
include information necessary for the commissioner initially to 
verify that the purchases qualified as capital equipment under 
section 297A.02, subdivision 2, or 297A.257.  No more than two 
applications for refunds may be filed under this subdivision in 
a calendar year.  Unless otherwise specifically provided by this 
subdivision, the provisions of section 297A.34 apply to the 
refunds payable under this subdivision.  There is annually 
appropriated to the commissioner of revenue the amount required 
to make the refunds.  
    Sec. 18.  [297A.257] [DISTRESSED COUNTIES; CAPITAL 
EQUIPMENT EXEMPTION.] 
    Subdivision 1.  [DESIGNATION OF DISTRESSED COUNTIES.] (a) 
The commissioner of energy and economic development shall 
annually on June 1 designate those counties which are 
distressed.  A county is distressed if it satisfies either of 
the following two criteria: 
    (1) The county has an average unemployment rate of ten 
percent or more for the one-year period ending on April 30 of 
the year in which the designation is made; or 
    (2) the unemployment rate for the entire county was greater 
than 110 percent of the state average for the 12-month period 
ending the previous April 30, and 20 percent or more of the 
county's economy, as determined by the commissioner of economic 
security, is dependent upon agriculture. 
    If, as a result of a plant closing, layoffs or another 
similar event affecting a significant number of employees in the 
county, the commissioner has reason to believe that the average 
unemployment in the county will exceed ten percent during the 
one-year period beginning April 30, the commissioner may 
designate the county as distressed, notwithstanding clause (1).  
    (b) The commissioner shall designate a portion of a county 
containing a city of the first class located outside of the 
metropolitan area as a distressed county if: 
    (1) that portion of the county has an unemployment rate of 
ten percent or more for the one-year period ending on April 30 
of the year in which the designation is made; and 
    (2) that portion of the county has a population of at least 
50,000 as determined by the 1980 federal census. 
    (c) A county or the portion of a county designated pursuant 
to this subdivision shall be considered a distressed county for 
purposes of this section and chapter 116M.  
    (d) Except as otherwise specifically provided, the 
determination of whether a county is distressed must be made 
using the most current data available from the state 
demographer.  The designation of a distressed county is 
effective for the 12-month period beginning July 1.  A county 
may be designated as distressed as often as it qualifies. 
    (e) The authority to designate counties as distressed 
expires on June 30, 1989. 
    Subd. 2.  [SALES TAX EXEMPTION.] Purchase and use of 
capital equipment is exempt from the sales and use tax imposed 
by chapter 297A if the capital equipment is placed in service in 
connection with the construction of a new or an expansion of an 
existing manufacturing facility in a distressed county.  
Purchase or use of equipment for use in an existing plant 
qualifies under this section and section 297A.01, subdivision 
16, as an expansion if either the production capacity of the 
plant is increased by at least 20 percent as a result or if the 
total capital investments made within a 12-month period exceed 
$25,000,000.  Purchases of capital equipment are exempt under 
this section only to the extent that the purchases of capital 
equipment for the project during the calendar year exceed 
$100,000.  The county is a distressed county for purposes of 
this subdivision if it was designated as a distressed county for 
the time period during which the contract to purchase the 
equipment was executed. 
    Subd. 3.  [RULEMAKING AUTHORITY.] In order to carry out the 
purposes of this section, the commissioner of energy and 
economic development may adopt administrative rules under 
chapter 14.  The commissioner may adopt emergency rules 
effective through December 31, 1986. 
    Sec. 19.  Minnesota Statutes 1984, section 462.445, 
subdivision 13, is amended to read: 
    Subd. 13.  [INTEREST REDUCTION PROGRAM.] The authority to 
authorize payment of interest reduction assistance pursuant to 
subdivisions 10, 11 and 12 shall expire on January 1, 1986 1987. 
Interest reduction assistance payments authorized prior to 
January 1, 1986 1987 may be paid after January 1, 1986 1987.  
    Sec. 20.  Minnesota Statutes 1984, section 462A.22, 
subdivision 1, as amended by Laws 1985, chapter 6, section 1, is 
amended to read: 
    Subdivision 1.  The aggregate principal amount of bonds and 
notes which are outstanding at any time, excluding the principal 
amount of any bonds and notes refunded by the issuance of new 
bonds or notes, shall not exceed the sum of $1,620,000,000 
$1,990,000,000.  
    Sec. 21.  Minnesota Statutes 1984, section 462C.02, is 
amended by adding a subdivision to read: 
    Subd. 10.  "Mortgage credit certificate" means any 
certificate which satisfies the definition of such term as 
contained in section 25(c)(1) of the Internal Revenue Code of 
1954, as amended through July 18, 1984. 
    Sec. 22.  Minnesota Statutes 1984, section 462C.02, is 
amended by adding a subdivision to read:  
    Subd. 11.  "Qualified mortgage credit certificate program" 
means any program which satisfies the definition of such term as 
contained in section 25(c)(2) of the Internal Revenue Code of 
1954, as amended through July 18, 1984. 
    Sec. 23.  Minnesota Statutes 1984, section 462C.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  The housing plan shall at a minimum set 
forth: 
    (a) the housing needs of the city and the data 
demonstrating those needs; 
    (b) the plan of the city to meet identified housing needs, 
and the specific methods to be used to carry out the plan; 
    (c) target areas, if any, of the city for each method; 
    (d) The financing a general description of the program or 
programs to be included in implemented to meet the housing needs 
identified in the plan; 
    (e) The number and qualifications of lenders eligible to 
participate in the program; 
    (f) The estimated amount of mortgage or rehabilitation 
loans to be made or purchased in each program and the estimated 
amounts and timing of the sale of revenue bonds required to 
finance such loans, fund appropriate reserves, and pay costs of 
issuance; 
    (g) (e) methods for monitoring the implementation by 
participants to insure that the programs will be consistent with 
the plan and its objectives; and 
    (h) (f) the administrative capacity of the city to monitor 
and supervise housing finance programs; 
    (i) The cost to the city, including administrative costs; 
and 
    (j) An analysis of how the programs will meet the needs of 
low and moderate income families in the city. 
    Sec. 24.  Minnesota Statutes 1984, section 462C.03, is 
amended by adding a subdivision to read: 
    Subd. 1a.  In addition to the requirements provided in 
subdivisions 2 and 3, if applicable, each program to be 
developed and administered by a city under a housing plan shall, 
at a minimum, set forth: 
    (a) a general description of the program; 
    (b) a designation of the geographic location to which the 
program will be limited; 
    (c) in the case of a program for single family housing, the 
number and qualifications of lenders eligible to participate in 
the program; 
    (d) in the case of a program for single family housing, the 
estimated amount of mortgage or rehabilitation loans to be made 
or purchased in the program; 
    (e) the estimated amounts and timing of the sale of revenue 
bonds required to finance the program, including the funding of 
appropriate reserves, and paying costs of issuance; 
    (f) methods for monitoring the implementation by 
participants to insure that the program will be consistent with 
the plan and its objectives; 
    (g) the portion, if any, of the state ceiling for qualified 
mortgage bonds needed for the program; 
    (h) an analysis of how the program will meet the needs of 
low and moderate income families; and 
    (i) for mortgage credit certificate programs the program 
shall additionally set forth, or contain as an exhibit, the 
following: 
    (1) the range of credit certificate rates to be used and 
how the rates are assigned to certificate recipients; 
    (2) the nonissued bond amount as that term is used in 
section 25(d)(2)(B) of the Internal Revenue Code of 1954, as 
amended through July 18, 1984; 
    (3) the form used to elect under section 25(c)(2)(A)(ii) of 
the Internal Revenue Code of 1954, as amended through July 18, 
1984; 
    (4) the plan submitted to the secretary of the treasury 
pursuant to section 25(d)(3) of the Internal Revenue Code of 
1954, as amended through July 18, 1984; and 
    (5) how the city will ensure compliance with all of the 
requirements of section 25 of the Internal Revenue Code of 1954, 
as amended through July 18, 1984. 
    Sec. 25.  Minnesota Statutes 1984, section 462C.04, 
subdivision 2, is amended to read: 
    Subd. 2.  A public hearing shall be held on each program 
after one publication of notice in a newspaper circulating 
generally in the city, at least 15 days before the hearing, 
after which the program may be adopted with or without 
amendment.  On or before the day on which notice of the public 
hearing is published, the city shall submit the program to the 
metropolitan council, if the city is located in the metropolitan 
area as defined in section 473.121, subdivision 2, or to the 
regional development commission for the area in which the city 
is located, if any, for review and comment.  The appropriate 
reviewing agency shall comment on:  
    (a) whether the program is consistent with the housing plan 
of the city; and 
    (b) whether the program is consistent with the metropolitan 
development guide, if the city is located in the metropolitan 
area, or adopted policies of the regional development commission.
    Review of the program may be conducted either by the board 
of the reviewing agency or by the staff of the agency.  Any 
comment submitted by the reviewing agency to the city must be 
presented to the body considering the proposed program at the 
public hearing held on the program. 
    A member or employee of the reviewing agency shall be 
permitted to present the comments of the reviewing agency at the 
public hearing.  After conducting the public hearing, the 
program may be adopted with or without amendment, provided that 
any amendments must not be inconsistent with the comments, if 
any, of the reviewing agency and must not contain any material 
changes from the program submitted to the reviewing agency other 
than changes in the financial aspects of any proposed issue of 
bonds or obligations.  If any material change other than a 
change in the financial aspects of a proposed issue of bonds or 
obligations, or any change which is inconsistent with the 
comments of the reviewing agency is adopted, the amended program 
shall be resubmitted to the appropriate reviewing agency for 
review and comment, and a public hearing shall be held on the 
amended program after one publication of notice in a newspaper 
circulating generally in the city at least 15 days before the 
hearing.  The amended program shall be considered after the 
public hearing in the same manner as consideration of the 
initial program.  Each program shall be submitted to the 
Minnesota housing finance agency for review and approval.  The 
agency shall determine reject any program that: 
    (a) whether the program furthers does not comply with 
statewide housing policies; 
    (b) whether the program is capable of implementation 
without if implemented will cause a material adverse effect on 
financing programs of the agency, without subjecting will 
subject the interest on future bonds of the agency to federal 
income tax under any limitations imposed at the time by federal 
law; 
    (c) whether the program provides for administrative and 
bond issuance costs that are reasonable; and unreasonable; or 
    (d) whether the program complies does not comply with all 
other requirements of sections 462C.01 to 462C.08. 
    The agency shall have 30 days from submission to complete 
its review and shall notify the city of its decision within 30 
days.  A failure to notify within 30 days constitutes 
approval reject a program.  Submission shall be the date on 
which a complete document describing the program is submitted to 
the agency.  If the agency rejects a program it shall 
communicate the fact of that rejection, in writing, to the city 
with 15 days of the rejection.  If the agency fails to reject a 
program within 30 days of submission, or fails to communicate a 
rejection, in writing, to the city within 15 days of the 
rejection, then the agency is precluded from rejecting the 
program.  For purposes of sections 462C.01 to 462C.08, the 
agency's failure to reject a program is considered an approval 
of the program.  The agency may collect reasonable fees and 
charges in connection with its review of a city's housing 
program.  The fees and charges shall be limited to the amounts 
required to pay the actual costs to the agency. 
     The Minnesota housing finance agency, in cooperation with 
the metropolitan council and the regional development 
commissions, shall report annually to the legislature on the 
number and amounts of bond issues and the number of housing 
programs established pursuant to sections 462C.01 to 462C.08. 
    Sec. 26.  Minnesota Statutes 1984, section 462C.09, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [1985 CITY ALLOCATION.] Notwithstanding the 
allocation provisions of subdivision 2, this subdivision applies 
to the January 1985 allocations.  Unless otherwise authorized by 
law, a city that intends to issue during the any calendar year 
1985 mortgage revenue bonds that are subject to the volume 
limitation imposed by section 103A(g) of the Internal Revenue 
Code of 1954, as amended through March 1, 1983, shall by January 
2, 1985 of that year submit to the Minnesota housing finance 
agency a program that will use a portion of the state mortgage 
revenue bond ceiling.  The total amount of bonds included in all 
programs submitted pursuant to this subdivision by a city may 
not exceed $10,000,000.  Each program shall be accompanied by a 
certificate from the city that states that the revenue bond 
issue is feasible.  By February 1, the Minnesota housing finance 
agency shall review each program pursuant to section 462C.04, 
subdivision 2.  The Minnesota housing finance agency shall 
approve all programs that the agency determines are consistent 
with this chapter, and that meet the following conditions:  
    (a) all of the loans must be reserved for a period of not 
less than six months for persons and families whose adjusted 
family income is below 80 percent of the limits on adjusted 
gross income provided in section 462C.03, subdivision 2; and 
    (b) loans must be made only to finance homes that are 
serviced by municipal water and sewer utilities; provided that 
if the approval of all programs would result in an allocation to 
cities in excess of 27-1/2 percent of the state ceiling for the 
calendar year 1985, reduced by the amount of bonds that are 
allocated by law to specified cities, the Minnesota housing 
finance agency shall approve programs that are submitted by a 
city which meets any of the following three criteria:  (1) a 
city of the first class, or (2) a city that did not receive an 
allocation under this subdivision or subdivision 2 during the 
preceding two calendar years, or (3) a group of cities that plan 
to jointly issue bonds for the program provided further that if 
approval of all of the programs submitted by cities that meet 
one or more of the criteria in (1), (2), or (3) would result in 
a total allocation to cities in excess of the portion of the 
state ceiling available for allocation, then from among those 
programs the agency shall select by lot the programs to be 
approved.  If a portion of the state ceiling remains unallocated 
after the agency has approved all programs submitted by cities 
that meet one or more of the criteria in (1), (2), or (3), the 
Minnesota housing finance agency shall select by lot from among 
the remaining programs the programs to be approved.  The 
Minnesota housing finance agency shall determine if a program 
meets the conditions in clauses (a) and (b) based solely upon 
the program with accompanying information submitted to the 
agency.  Approval of a program shall constitute an allocation of 
a portion of the state ceiling for mortgage revenue bonds equal 
to the proposed bond issue or issues contained in the program, 
provided that the allocation for the last selected program that 
receives an allocation may be equal to or less than the amount 
of the bond issue or issues proposed in the program.  
      If a city which received an allocation pursuant to this 
subdivision, or which has been allocated a portion of the state 
ceiling by law and has received approval of one or more 
programs, has not issued bonds by September 1 in an amount equal 
to the allocation, and the city intends to issue mortgage 
revenue bonds prior to the end of the calendar year, the city 
shall by September 1 submit to the Minnesota housing finance 
agency for each program a letter that states the city's intent 
to issue the mortgage revenue bonds prior to the end of the 
calendar year.  If the Minnesota housing finance agency does not 
receive the letter from the city, then the allocation of the 
state ceiling for that program shall expire on September 1, and 
the applicable limit for the Minnesota housing finance agency 
shall be increased by an amount equal to the unused portion of 
the allocation to the city.  A city referred to in subdivision 
1, clause (i), shall not be required to apply under this 
subdivision with respect to bonds allocated by law to any such 
city.  Nothing in this subdivision shall prevent any such city 
from applying for an additional allocation of bonds under this 
subdivision.  
    Sec. 27.  Minnesota Statutes 1984, section 462C.09, 
subdivision 3, is amended to read: 
    Subd. 3.  [ADDITIONAL CITY ALLOCATION.] On or before 
September 1 of each year, the Minnesota housing finance agency 
shall identify the amount, if any, of its applicable limit for 
housing mortgage bonds for that calendar year that it does not 
intend to issue.  Any city that intends to issue mortgage 
revenue bonds prior to the end of the calendar year for which it 
has not received an allocation of the state ceiling may submit a 
program for approval on or before September 1 to the Minnesota 
housing finance agency for a portion of the amount of the 
Minnesota housing finance agency's applicable limit as provided 
in subdivision 1 which the agency does not intend to issue.  The 
total amount of bonds included in all programs of any city 
submitted pursuant to this subdivision shall not exceed 
$10,000,000.  The program shall be accompanied by the same 
certificate required by subdivision 2 2a.  The Minnesota housing 
finance agency shall allocate the amount of the state ceiling to 
be allocated pursuant to this subdivision using the same factors 
listed in subdivision 2 2a, provided that a program for any city 
receiving an allocation pursuant to subdivision 2 2a during the 
calendar year shall be ranked below all other programs if the 
bonds proposed in the program, when added to the bonds included 
in programs approved pursuant to subdivision 2 2a, exceed 
$10,000,000.  A city that submitted a program pursuant to 
subdivision 2 2a but that did not receive an allocation may 
renew its application with a letter of intent to issue.  Nothing 
in this subdivision shall prevent any city referred to in 
subdivision 1, clause (i), from applying for an additional 
allocation of bonds under this subdivision.  
    Sec. 28.  Minnesota Statutes 1984, section 462C.09, is 
amended by adding a subdivision to read: 
    Subd. 6.  [CORRECTION AMOUNTS FOR MORTGAGE CREDIT 
CERTIFICATE PROGRAMS.] A reduction in the state ceiling for 
qualified mortgage bonds caused by the failure of a mortgage 
credit certificate program to comply with a federal statute or 
regulation shall be assessed against the amount of qualified 
mortgage bonds allocated by law, other than by way of this 
section, to the city which adopted the program; provided that if 
no such allocation exists or it is less than the correction 
amount determined by the secretary of the treasury, then the 
amount of the correction amount in excess of the allocation 
shall be assessed against the 27-1/2 percent of the state 
ceiling allocated to the cities under subdivision 2a. 
    Sec. 29.  [462C.11] [MORTGAGE CREDIT CERTIFICATE PROGRAMS.] 
    Subdivision 1.  [CITY PROGRAM.] A city may include in the 
housing plan a program to issue and administer mortgage credit 
certificates, under a qualified mortgage credit certificate 
program, to assist in the acquisition, qualified rehabilitation, 
or qualified home improvement of the recipient's principal 
residence. 
    Subd. 2.  [PROGRAM REQUIREMENTS.] Mortgage credit 
certificate programs adopted by the city shall comply with all 
of the provisions of section 25 of the Internal Revenue Code of 
1954, as amended through July 18, 1984. 
    Subd. 3.  [CORRECTION AMOUNTS.] Correction amounts 
determined by the secretary of the treasury because of the 
failure of a mortgage credit certificate program to comply with 
a federal statute or regulation shall be assessed pursuant to 
section 28. 
    Sec. 30.  [462C.12] [MINNEAPOLIS/ST. PAUL HOUSING FINANCE 
BOARD; POWERS; JURISDICTION.] 
    Subdivision 1.  [ESTABLISHMENT OF HOUSING BOARD 
RATIFIED.] The establishment of the Minneapolis/St. Paul housing 
finance board in accordance with a joint powers agreement 
entered into between the Minneapolis community development 
agency and the housing and redevelopment authority of the city 
of St. Paul, and accepted by the cities of Minneapolis and St. 
Paul under section 471.59, is ratified and approved.  
    Subd. 2.  [POWERS.] The board is granted the following 
powers:  
    (a) The board may issue obligations and other forms of 
indebtedness under this section, subject to the terms and 
conditions set forth in the joint powers agreement, as may be 
from time to time amended. 
    (b) The board is authorized to exercise the powers 
conferred upon the cities of Minneapolis and St. Paul and their 
designated housing and redevelopment authorities, or the powers 
of an agency exercising the powers of a housing and 
redevelopment authority by chapters 462 and 462C and any other 
general or special law of the state of Minnesota relating to 
housing or housing finance.  The powers which may be exercised 
by the board include, without limitation, the power to undertake 
and implement projects, developments, or programs, the power to 
issue and sell obligations and other forms of indebtedness 
payable exclusively from the revenues of the programs, projects, 
or developments undertaken by the board, or any of the powers 
the Minnesota housing finance agency may exercise under chapter 
462A, provided that the obligations and other forms of 
indebtedness may be sold upon terms and conditions as the board 
may from time to time determine.  The board may exercise the 
powers conferred by this section only with respect to projects, 
programs, or developments within the corporate limits of the 
cities of Minneapolis and St. Paul, except as may be otherwise 
provided in a joint powers agreement entered into under section 
471.59 between the board and any other city, housing and 
redevelopment authority, or port authority in the state of 
Minnesota.  
    (c) For the purposes of section 462C.09, the board may be 
authorized by the cities of Minneapolis and St. Paul, or by any 
other city with which the board enters into a joint powers 
agreement, to issue revenue bonds or obligations in an amount 
not to exceed the amount of bonds allocated by general or 
special law to such cities, or the board may issue mortgage 
credit certificates in lieu thereof.  
    Subd. 3.  [JURISDICTION.] Notwithstanding any other 
provision of law, the territorial jurisdiction of the board 
shall extend to all of the area within the corporate limits of 
the cities of Minneapolis and St. Paul and shall for the 
purposes of any particular project, development, or program 
undertaken in whole or part for any other city include all of 
the area within the corporate limits of the city.  For the 
purposes of any provision of law intended to apply within a 
particular jurisdiction, the provision shall be construed to 
apply to the entire area within the corporate limits of the 
cities of Minneapolis and St. Paul, together with the entire 
area within the corporate limits of any other city with which 
the board has entered into a joint powers agreement and on whose 
behalf a project, development, or program is undertaken or 
implemented, or on whose behalf obligations or other forms of 
indebtedness are issued by the board.  
    Subd. 4.  [POWERS SUPPLEMENTARY.] The powers granted by 
this section are in addition and supplemental to the powers 
granted by section 471.59, or the law under which a project, 
development, or program is undertaken or implemented by the 
board, or under which the board issues obligations or other 
forms of indebtedness. 
    Sec. 31.  Minnesota Statutes 1984, section 474.16, 
subdivision 3, is amended to read: 
    Subd. 3.  "Entitlement issuer" means a local an issuer with 
an average annual previous use of $1,000,000 or more based on 
the highest annual use in three of the calendar years from 1980 
to 1983 provided an allocation under section 474.17.  
    Sec. 32.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read: 
    Subd. 6.  "Manufacturing project" means properties, real or 
personal, used in connection with a revenue producing enterprise 
in connection with assembling, fabricating, manufacturing, 
mixing, or processing any products of agriculture, forestry, 
mining, or manufacture.  Properties used for storing, 
warehousing, or distributing qualify under this definition (a) 
if they are used as part of or in connection with an assembly, 
fabricating, manufacturing, mixing, or processing facility or 
(b) if they are used for the storing of agricultural products 
and are located outside of the metropolitan area, as defined in 
section 473.121, subdivision 2.  Manufacturing project includes 
properties, real or personal, used in connection with research 
and development activity to develop or improve products, 
production processes, or materials.  For purposes of this 
subdivision, "a product of manufacture" includes information and 
directions which dictate the functions to be performed by data 
processing equipment, commonly called computer software, 
regardless of whether they are embodied in or recorded on 
tangible personal property.  A project qualifies as a 
manufacturing project only if 75 percent of the proceeds of the 
proposed obligations will be used for construction, acquisition, 
installation, or addition of properties described in this 
subdivision. 
    Sec. 33.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read: 
    Subd. 7.  "Pollution control project" means properties, 
real or personal, used in the abatement or control of noise, 
air, or water pollution, or in the disposal of solid waste, in 
connection with a revenue producing enterprise, engaged in or to 
be engaged in any business or industry.  A project qualifies as 
a pollution control project only: 
    (a) if 75 percent of the proceeds of the obligations will 
be used for the construction, acquisition, installation, or 
addition of properties described in this subdivision; or 
    (b) if it is not a manufacturing project and 75 percent of 
the proceeds of the obligations will be used for the 
construction, acquisition, installation, or addition of 
properties described in this subdivision and in subdivision 6. 
    Sec. 34.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read: 
    Subd. 8.  "Waste management project" means a project which 
is authorized by chapter 115A or 400, or sections 473.801 to 
473.834. 
    Sec. 35.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read: 
    Subd. 9.  "Commercial redevelopment project" means a 
project as defined in section 474.02, if it is not a 
manufacturing or pollution control project and one of the 
following conditions is met: 
    (a) The project site would qualify as a redevelopment 
district as defined in section 273.73, subdivision 10.  To 
qualify the project need not be included in a tax increment 
financing district. 
    (b) Seventy-five percent of the proceeds of the obligations 
will be used to acquire and rehabilitate or replace an existing 
structure which is functionally obsolete or contains structural 
or other defects justifying substantial renovation or clearance. 
    (c) The project will be undertaken and the obligations 
issued pursuant to a written program administered by the local 
issuer and the financing provides for a substantial commitment 
of local public funds. 
    (d) Substantially all of the proceeds of the obligations 
will be used to finance facilities with respect to which an 
urban development action grant has been made under section 119 
of the federal Housing and Community Development Act of 1974.  
    Sec. 36.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read: 
    Subd. 10.  "Written development program" or "program" means 
a written economic development plan that contains at least 
substantially all of the following: 
    (a) a description of the area subject to the plan, which 
may not exceed 20 percent of the total acreage of the issuer; 
    (b) a statement of the objectives for the development of 
the area subject to the plan; 
    (c) a statement of the development plan for the area 
subject to the plan, including the property within the area, if 
any, which is to be acquired by a governmental unit; 
    (d) a description of the type of specific development 
reasonably expected to take place within the area subject to the 
plan; and 
    (e) a description of the kind and an estimate of the amount 
of public funds, including local public funds, expected to be 
spent in connection with the development of the area subject to 
the plan. 
    Sec. 37.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read: 
    Subd. 11.  "Substantial commitment of local public funds" 
means that either of the following two conditions is satisfied. 
    (a) Under the project financing the governmental unit 
appropriates, pledges, guarantees, or otherwise provides local 
public funds to pay part of the cost of financing the 
obligations, including bond issuance, debt service, loan 
origination, and carrying expenses, or of the facility financed 
with the proceeds of the obligations.  This condition is 
satisfied only if at the time the obligations are issued, the 
issuer reasonably expects that the aggregate value of the local 
public funds will exceed the lesser of $1,000,000 or one percent 
of the face amount of the obligations.  No provision may be made 
for a nonexempt person to reimburse the governmental unit for 
the local public funds. 
    (b) The governmental unit appropriates, pledges, 
guarantees, or otherwise provides a program contribution of 
local public funds or governmental services to the program or a 
facility financed with the proceeds of the obligations.  This 
condition is satisfied only if the issuer reasonably expects at 
the time the obligations are issued that the aggregate value of 
the local public funds will exceed $5,000,000 or five percent of 
the aggregate face amount of the obligations.  The issuer must 
value the services at the reasonable cost of delivering them.  
The program contribution must be used for one or more of the 
following purposes: 
    (i) reducing the cost of financing the obligations, as 
described in paragraph (a); 
    (ii) securing the payment of debt service on obligations 
issued pursuant to the program; 
    (iii) financing public improvements under a comprehensive 
redevelopment or renewal program, if the costs are reasonably 
allocable to a facility financed with the proceeds of the 
obligations and if the improvements are made no earlier than 
three years prior to issuance of the obligations to which the 
contribution applies or more than one year after issuance; or 
    (iv) other costs reasonably related to the program. 
If the governmental unit is reimbursed by a nonexempt person for 
any part of the program within five years after the contribution 
was made, the reimbursement must be applied for one or more of 
the purposes described in this paragraph. 
    For purposes of this subdivision, "governmental unit" means 
the local issuer that issues the obligations for the project or 
the governmental unit that approves the obligations for purposes 
of section 103(k)(2) of the Internal Revenue Code of 1954, as 
amended through December 31, 1984, or both. 
    Sec. 38.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read: 
    Subd. 12.  "Local public funds" means the funds of a 
governmental unit except the following: 
    (a) the proceeds of an obligation subject to a federal 
limitations act; 
    (b) payments or property furnished by a nonexempt person to 
repay or secure the loan of proceeds of an obligation subject to 
a federal limitations act or other payments made in 
consideration of the issuance of an obligation subject to a 
federal limitations act; 
    (c) payments furnished by a nonexempt person for its right 
to use in its trade or business a facility financed with the 
proceeds of obligations subject to a federal limitations act; 
    (d) tax increments, as defined in section 273.76; or 
    (e) tax reductions provided pursuant to sections 273.1312 
to 273.1314. 
    Sec. 39.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read:  
    Subd. 13.  "Nonexempt person" means a person or entity 
other than an exempt person as defined in section 103(b)(3) of 
the Internal Revenue Code of 1954, as amended through December 
31, 1984.  
    Sec. 40.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read: 
    Subd. 14.  "Preliminary resolution" means a resolution 
adopted by the governing body of the issuer or in the case of 
the iron range resources and rehabilitation board by the 
commissioner of the board.  The resolution must express a 
preliminary intention of the issuer to issue obligations for a 
specific project and must identify the proposed project, the 
proposed site for the project, and the proposed amount of the 
obligations to be issued.  The resolution for a waste management 
project need not include the site for the project if the 
resolution identifies a specific process and a deadline for site 
selection. 
    Sec. 41.  Minnesota Statutes 1984, section 474.16, is 
amended by adding a subdivision to read: 
    Subd. 15.  "Issuer" means any entity authorized by state 
law to issue obligations subject to a federal limitation act and 
specifically includes the higher education coordinating board, 
the energy and economic development authority, the commissioner 
of the iron range resources and rehabilitation board, and any 
local issuer. 
    Sec. 42.  Minnesota Statutes 1984, section 474.17, is 
amended to read: 
    474.17 [ALLOCATION OF PRIVATE ACTIVITY BONDS.] 
    Subdivision 1.  [HIGHER EDUCATION COORDINATING BOARD 
ALLOCATION.] $30,000,000 for calendar year 1984 and $10,000,000 
for calendar year 1985 and $25,000,000 for each subsequent 
calendar year of the aggregate limit of bond issuance authority 
allocated to the state pursuant to a federal limitation act is 
allocated to the higher education coordinating board for the 
issuance of obligations pursuant to chapter 136A.  On September 
1, 1985, any unused portion of the bonding authority allocated 
to the higher education coordinating board pursuant to this 
subdivision shall be canceled and the authority shall be 
allocated pursuant to section 474.19.  If the energy and 
economic development authority determines that pursuant to a 
federal limitation act, the higher education coordinating board 
cannot issue obligations whose interest is exempt from inclusion 
in gross income for purposes of federal income taxation pursuant 
to section 103(a) of the Internal Revenue Code of 1954, as 
amended, this allocation shall cancel and the allocation 
provided in subdivision 3 shall be increased to $55,000,000 for 
calendar year 1984 and to $65,000,000 for calendar year 1985.  
    Subd. 2.  [IRON RANGE RESOURCES AND REHABILITATION 
ALLOCATION.] From January 1 to August 31 of each calendar 
year, $25,000,000 $30,000,000 of the aggregate limit of bond 
issuance authority allocated to the state for any calendar year 
pursuant to a federal limitation act is allocated to the iron 
range resources and rehabilitation commissioner.  From September 
1 to October 31 of each year, the iron range resources and 
rehabilitation commissioner may retain his allocation or a 
portion of it only if he has submitted to the energy and 
economic development authority on or before September 1 a letter 
which states (a) his intent to issue obligations pursuant to his 
allocation or a portion of it before the end of the calendar 
year or within the time period permitted by a federal limitation 
act and (b) a description of the specific project or projects 
for which the obligations will be issued, together with an 
application deposit in the amount of one percent of the amount 
of the remaining unused allocation or the portion of it pursuant 
to which he intends to issue obligations.  If the iron range 
resources and rehabilitation commissioner does not submit the 
required letter of intent and the application deposit, the 
amount originally allocated to the iron range resources and 
rehabilitation commissioner or the portion not already used not 
subject to a letter of intent shall be canceled and subject to 
reallocation in accordance with section 474.19.  If the iron 
range resources and rehabilitation commissioner returns for 
reallocation all or any part of his allocation on or before 
October 31, that portion of his application deposit equal to one 
percent of the amount returned shall be refunded within 30 
days.  The iron range resources and rehabilitation commissioner 
may enter into a joint powers agreement with any other state or 
municipal entity which has authority to issue obligations 
subject to a federal limitation act whereby the other entity 
issues the bonds on behalf of the iron range resources and 
rehabilitation commissioner.  
    Upon the request of a statutory city located in the 
taconite tax relief area which received an entitlement 
allocation under Minnesota Statutes, section 474.18 of 
$5,000,000 or more for calendar year 1985, the iron range 
resources and rehabilitation commissioner shall enter into an 
agreement with the city whereby the commissioner issues 
obligations, in an amount requested by the city but not to 
exceed $5,000,000, on behalf of the city. 
    Subd. 3.  [ENERGY AND ECONOMIC DEVELOPMENT AUTHORITY 
ALLOCATION.] From January 1 to August 31 of calendar year 1984, 
$40,000,000 and for calendar year 1985 $60,000,000 of the 
aggregate limit of bond issuance authority allocated for each 
calendar year to the state pursuant to a federal limitation act 
is allocated to the department of energy and economic 
development authority for use or allocation pursuant to section 
116J.58, clause (2) subdivision 4.  From September 1 to October 
After August 31 of each year, the energy and economic 
development authority or any entity which receives an allocation 
from the department of energy and economic development authority 
pursuant to section 116J.58, clause (2) subdivision 4, may 
retain its allocation or a portion of it only if it has 
submitted to the division department of the energy and economic 
development authority responsible for administering Laws 1984, 
chapter 582, on or before September 1 a letter which states (a) 
its intent to issue obligations pursuant to its allocation or a 
portion of it before the end of the calendar year or within the 
time period permitted by a federal limitation act, and (b) a 
description of the specific project or projects for which the 
obligations will be issued, together with an application deposit 
in the amount of one percent of the amount of its remaining 
unused allocation or the portion of it pursuant to which it 
intends to issue obligations.  If the energy and economic 
development authority or any entity which receives an allocation 
from the department of energy and economic development authority 
pursuant to section 116J.58, clause (2) subdivision 4, does not 
submit the required letter of intent and the application 
deposit, the amount originally allocated to the energy and 
economic development authority or any entity which receives an 
allocation from the department of energy and economic 
development authority pursuant to section 116J.58, clause (2) 
subdivision 4, or the portion not already used and not subject 
to a letter of intent shall be canceled and subject to 
reallocation in accordance with section 472.09, subdivision 
8 474.19.  If the energy and economic development authority or 
any entity which receives an allocation from the energy and 
economic development authority pursuant to section 
116J.58, clause (2) subdivision 4, returns for reallocation all 
or any part of its allocation on or before October 31, that 
portion of its application deposit equal to one percent of the 
amount returned shall be refunded within 30 days. 
    Subd. 3a.  [ENTITLEMENT CITIES.] From January 1 to August 
31 of each calendar year an amount of bond issuance authority 
shall be allocated to (a) cities of the first class and (b) the 
largest Minnesota city located in a standard metropolitan 
statistical area that does not contain a city of the first 
class, if the city has a population of 25,000 or more.  The 
amount allocated to a first class city shall be an amount equal 
to $200 multiplied by the city's population.  The amount 
allocated to each city qualifying under clause (b) is $5,000,000.
After August 31 of each year, a local issuer receiving an 
allocation under this subdivision may retain all or a portion of 
its allocation only if it has submitted to the department of 
energy and economic development by September 1 a letter stating 
its intent to issue obligations pursuant to its allocation 
before the end of the calendar year or within the time permitted 
by a federal limitation act and an application deposit equal to 
one percent of the amount of the unused allocation for which it 
intends to issue obligations.  The portion of any unused 
issuance authority for which an application deposit and letter 
of intent has not been received by the department on September 
1, is cancelled and must be reallocated under section 474.19.  
If a local issuer returns for reallocation all or part of its 
allocation under this subdivision by October 31, the application 
deposit for the amount of the returned authority must be 
refunded to the local issuer. 
    For purposes of this subdivision, "city" means a statutory 
or home rule charter city and "population" means the population 
determined under section 477A.011, subdivision 3. 
    Subd. 3b.  [ENTITLEMENT TRANSFERS.] An entitlement issuer 
may enter into an agreement with another entitlement issuer 
whereby the recipient entitlement issuer issues bonds pursuant 
to issuance authority allocated to the original entitlement 
issuer under section 474.17. 
    Subd. 4.  [LOCAL ISSUER POOL ALLOCATION.] Any amount of the 
aggregate limit of bond issuance authority allocated to the 
state for any calendar year pursuant to a federal limitation act 
which is not allocated pursuant to subdivisions 1 to 3a shall be 
allocated among local issuers pursuant to sections 474.18 474.19 
to 474.23.  
    Sec. 43.  Minnesota Statutes 1984, section 474.19, is 
amended to read: 
    474.19 [ALLOCATION OF POOL AMOUNT.] 
    Subdivision 1.  [POOL AMOUNT.] From January 1 to August 31 
of each year, 20 percent of the amount determined pursuant to do 
not qualify as entitlement issuers and shall be allocated as 
provided in this section.  From September 1 to October 31 of any 
calendar year, any the amounts remaining available for 
allocation or reallocation pursuant to section 474.18 474.17 or 
this section shall be allocated among all local issuers and the 
energy and economic development authority and the iron range 
resources and rehabilitation commissioner, pursuant to this 
section.  An entitlement issuer, the energy and economic 
development authority or the iron range resources and 
rehabilitation commissioner may apply for an allocation pursuant 
to this section after August 15 and only if the applicant has 
issued adopted a final resolution authorizing the sale of bonds 
equal to any allocation received pursuant to section 474.17 or 
474.18 or has returned any remaining allocation for reallocation 
pursuant to this section.  A city of the first class may apply 
for an allocation for a manufacturing project at any time, 
notwithstanding the preceding sentence.  
    Subd. 2.  [APPLICATION.] A local issuer that is not An 
entitlement issuer may apply for an allocation of bond issuance 
authority pursuant to this section by submitting to 
the department of energy and economic development authority on 
or before the 20th 10th or the 25th day of any month from 
December to September or on or before the tenth of October an 
application on forms provided by the department of energy and 
economic development authority, accompanied by (i) a preliminary 
resolution of the local issuer expressing a preliminary 
intention to issue obligations adopted in accordance with 
section 474.01, subdivision 7b, if applicable, which identifies 
the proposed project and the proposed amount of the obligations 
to be issued; and (ii) an application deposit in the amount of 
one percent of the requested allocation.  A local issuer may 
enter into a joint powers agreement with any other state or 
municipal entity which has authority to issue obligations 
subject to a federal limitation act whereby the other entity 
issues the bonds on behalf of the local issuer for the project 
for which an allocation was received by the local issuer.  A 
local issuer may request an allocation for obligations issued 
prior to the effective date of this subdivision.  A local issuer 
may elect not to submit an application for an allocation of bond 
issuance authority for a project for which the local issuer 
previously adopted a preliminary resolution.  
    After July 31 of any year, an entitlement issuer may also 
apply for an allocation under this section.  Its application 
need not comply with clause (i).  
    Subd. 3.  [ALLOCATION CRITERIA.] The department of energy 
and economic development authority shall rank each application 
on the basis of the number of points awarded to it, with one 
point being awarded for each of the following criteria satisfied:
     (1) The current rate of unemployment for the applicant is 
at or above 110 percent of the statewide average unemployment 
rate for the previous year most recently available reporting 
period, as determined by the department of economic security.  
The unemployment rate for the applicant shall be the greater of 
(i) the most recent estimate available for the smallest 
jurisdiction which wholly includes the jurisdiction of the 
applicant, as reported by the department of economic security, 
or (ii) another estimate supplied by the applicant with respect 
to its jurisdiction, which is documented by the applicant. 
     (2) The number of individuals employed in the applicant's 
jurisdiction declined from the second calendar year before the 
application, to the first calendar year before the application. 
The estimate of the number of individuals employed for each year 
shall be based on the same source, and shall be (i) the most 
recent estimate available for the smallest jurisdiction which 
wholly includes the applicant, as reported by the department of 
economic security, or (ii) another estimate supplied by the 
applicant with respect to its jurisdiction, which is documented 
by the applicant.  
    (3) The number of jobs to be created by the project 
described in the application is at least 1/10 of one percent of 
the number of individuals employed in the applicant's 
jurisdiction in the first calendar year before the application 
as determined in the manner provided in clause (2) The project 
will provide additional general tax revenue to the taxing 
jurisdictions in which the project is located beginning not 
later than three years after issuance and sale of the 
obligations. 
      (4) The number of jobs to be created by the project 
described in the application is at least two jobs for each 
$100,000 of issuance authority requested for the project.  
      (5) As of the date of application the total market value of 
all taxable property in the applicant's jurisdiction, as based 
on the most recent certification of assessed value to the 
commissioner of revenue, has either (i) declined in relation to 
the first calendar year before the certification, or (ii) 
increased in relation to the first calendar year before the 
certification at a rate which is not in excess of 90 percent of 
the rate of increase of the state average market value over the 
same period. 
    (6) The estimated market value of the project described in 
the application is at least one-half of one percent of the total 
market value of all taxable property in the applicant's 
jurisdiction as based on the most recent certification of 
assessed value to the commissioner of revenue The total capital 
expenditures for the project exceed by ten percent the amount of 
the proceeds of the obligations to be issued for the project.  
      (7) The project is wholly located in an enterprise zone 
designated pursuant to section 273.1312. 
      (8) The project site meets the criteria necessary to 
qualify as a tax increment redevelopment district as defined in 
section 273.73, subdivision 10.  To qualify under this clause 
the project need not be included in a tax increment financing 
district.  
      (9) The project meets one of the following energy 
conservation criteria:  (i) the project is eligible for the 
additional federal investment tax credits for energy property, 
(ii) the project involves construction or expansion of a 
district heating system as defined in section 116J.36, or (iii) 
the project involves construction of an alternative energy 
source as described in section 116J.26, clause (a), (b), or (d), 
or 116J.922, subdivision 6 or 7 116M.03, subdivisions 23 and 26. 
    (10) Ninety percent or more of the proceeds of the proposed 
obligations will be used for construction, installation, or 
addition of equipment used primarily to abate or control 
pollutants to meet or exceed state laws, rules, or standards. 
    (11) The project consists of the renovation, 
rehabilitation, or reconstruction of an existing building which 
is (i) located in a historic district designated under section 
138.73, or on a site listed in the state registry of historical 
sites under sections 138.53 to 138.5819; or (ii) designated in 
the National Register pursuant to United States Code, title 16, 
section 470a.  
    (12) Ninety percent or more of the proceeds of the proposed 
obligations will be used to finance facilities for waste 
management as defined in section 115A.03, subdivision 36, or 
solid waste as defined in section 116.06, subdivision 10.  
    (13) (11) Service connections to sewer and water systems 
are available to the project at the time the application is 
submitted.  
    (14) The minority population in the applicant's 
jurisdiction is at least 110 percent of the statewide average as 
determined by the affirmative action division of the department 
of economic security according to the most recent census data.  
    (12) As provided by a binding agreement with the 
municipality, at least ten percent of the individuals employed 
by the principal user or users of the project will be minority 
or low income individuals. 
    (15) (13) When the application is submitted either (a) 
neither the anticipated owner of the project, nor any party of 
which the owner was a controlling partner or shareholder, or 
which was a controlling shareholder or partner of the owner, 
owned or operated a substantially similar business within the 
state or (b) the project is an expansion of the operations of an 
existing business which is not likely to have the effect of 
transferring existing employment from one or more other 
municipalities within the state to the municipality in which the 
project is located.  
    (16) (14) A controlling interest in the project will be 
owned by one or more women or minority persons.  
    (17) (15) Seventy-five percent or more of the proceeds of 
the proposed issue will be used to rehabilitate an existing 
structure.  
    (18) At the time of application, the property on which the 
project is to be located is properly zoned for the proposed use. 
    (19) The bond issue involves a credit enhancement device 
providing additional security for bondholders involving 
commitments or fees to be paid by the issuer other than from 
bond proceeds.  No points shall be awarded for credit 
enhancement devices financed directly or indirectly by a 
private, for-profit party which has a financial interest in or 
is related to any party which has a financial interest in the 
project.  
    Subd. 4.  [ALLOCATION PROCEDURE.] (a) The department of 
energy and economic development authority shall allocate 
available issuance authority to applications by the fifth tenth 
day of the month succeeding each application deadline specified 
in subdivision 2 in the following order of priority and 
available issuance authority may not be allocated to any other 
project: 
    (i) applications for manufacturing projects; 
    (ii) applications for pollution control projects or waste 
management projects; and 
    (iii) applications for commercial redevelopment projects. 
    Within each category of applications available authority 
shall be assigned on the basis of the numerical rank determined 
pursuant to this section, but (i) no allocation shall be awarded 
to an application demonstrating less than four points, (ii) any 
project which is authorized by chapter 115A, chapter 400, or 
sections 473.801 to 473.834, shall receive an allocation of 
issuance authority without regard to its numerical rank to the 
extent that the amount of issuance authority allocated to the 
project when added to the issuance authority previously 
allocated during the calendar year pursuant to this clause does 
not exceed 49 percent of the amount provided in subdivision 1, 
provided that if obligations for any project described in this 
clause are not subject to a federal limitation act, no 
allocation shall be made pursuant to this clause, (iii) if on or 
before September 1, the energy and economic development 
authority returns a portion of its allocation for reallocation 
pursuant to this section, and the iron range resources and 
rehabilitation commissioner has issued obligations in an amount 
equal to its allocation or has submitted a letter of intent for 
any amount not issued, applications from the iron range 
resources and rehabilitation commissioner which demonstrate four 
or more points shall receive an allocation up to an amount equal 
to $10,000,000 or the amount returned for reallocation by the 
energy and economic development authority or the amount 
remaining to be allocated, whichever is less, (iv) if on or 
before September 1, the iron range resources and rehabilitation 
commissioner returns a portion of his allocation for 
reallocation pursuant to this section, and the energy and 
economic development authority has issued obligations in an 
amount equal to its allocation or has submitted a letter of 
intent for any amount not issued, applications from the energy 
and economic development authority which demonstrate four or 
more points shall receive an allocation up to an amount equal to 
$10,000,000 or the amount returned for reallocation by the iron 
range resources and rehabilitation commissioner or the amount 
remaining to be allocated, whichever is less, and (v).  In the 
case of an application for issuance authority that includes more 
than one project to be financed by one issue of obligations, the 
points assigned to the application shall be computed on the 
basis of the weighted average of points for the projects.  The 
projects must all be of the same category of projects to be 
submitted as a multiproject application.  If two or more 
applications have the same numerical rank, the allocation of 
issuance authority as between the applications shall be by lot 
unless otherwise agreed by the respective local issuers.  If an 
application is rejected, the department of energy and economic 
development authority shall return the application deposit to 
the applicant within 30 days. 
    (b)(i) From January 1 through October 31, no more than 35 
percent of the total amount of issuance authority available for 
allocation during the calendar year pursuant to this section may 
be allocated to pollution control and waste management projects. 
    (ii) From January 1 through October 31, no more than 20 
percent of the total amount of issuance authority available for 
allocation during the calendar year pursuant to this section may 
be allocated to commercial redevelopment projects.  This amount 
is increased to 30 percent of the total available authority for 
the next month's allocation if the following two conditions 
occur.  (A) On or after June 30 the total amount of issuance 
authority available under this section which has not been 
allocated or has been allocated to but was returned by an issuer 
exceeds 45 percent of the total amount of issuance authority 
available for allocation under this section for the calendar 
year.  (B) The entire amount of issuance authority available 
under this subparagraph for commercial redevelopment projects 
has been allocated. 
    Subd. 5.  [LETTER OF INTENT.] A local issuer which has 
received an allocation pursuant to this section prior to 
September 1 and which intends to issue obligations pursuant to 
it after August 31 of the year in which the allocation was 
received, shall submit to the department of energy and economic 
development authority on or before September 1 a letter stating 
its intent to issue bonds before the end of the calendar year or 
within the time period permitted by a federal limitation act.  
If the letter of intent is not submitted to the department of 
energy and economic development authority, the one percent 
application deposit shall be returned to the local issuer, the 
issuance authority shall be canceled, and the issuance authority 
previously allocated to the local issuer will be available for 
reallocation pursuant to this section.  If a local issuer 
returns for reallocation all or any part of its allocation on or 
before October 31, that portion of its application deposit equal 
to one percent of the amount returned shall be refunded within 
30 days. 
    Subd. 6.  [FINAL ALLOCATION.] From November 1 to December 
31 of each year any amount determined pursuant to section 
474.17, which is not both previously allocated and subject to a 
preliminary resolution for a specific project, whether or not 
committed pursuant to a letter of intent, is available for 
allocation or reallocation and shall be allocated among local 
issuers based on a ranking of points for criteria as set forth 
in subdivisions 3 and 4.  No minimum number of points shall be 
required for allocation.  If two or more applications receive an 
equal number of points, allocation among them shall be made by 
lot unless otherwise agreed by the respective 
applicants.  Applications for an allocation under this 
subdivision must be submitted on or before the tenth day prior 
to the following allocation dates:  November 5, December 5, and 
December 20.  An application for this allocation shall be 
submitted by October 20, shall must include evidence of passage 
of a preliminary resolution giving approval to a specific 
project and stating state that it is the intent of the applicant 
that the obligations will be issued by the end of the year or 
within the time period permitted by a federal limitation act, 
and shall must be accompanied by an application deposit in the 
amount of one percent of the requested allocation.  
The department of energy and economic development authority 
shall notify applicants of their allocation on or 
before November 5 the fifth day after the allocation date.  
    Any amounts of authority which may become available for 
reallocation after November 5 shall be allocated among issuers 
which filed an application by October 20, pursuant to the 
criteria stated in subdivision 3.  
    Authority may be allocated under this subdivision to any 
project, notwithstanding the percentage limits and other 
restrictions contained in subdivision 4.  Applications must be 
ranked and authority allocated first according to the order of 
priority and ranking of points under subdivisions 3 and 4.  The 
remaining authority must be allocated according to the ranking 
of points under subdivision 3.  If two or more applications 
receive an equal number of points, allocations among them must 
be made by lot unless otherwise agreed by the respective 
applicants.  
     If issuance authority remains or becomes available 
following the final December 20th allocation, the department of 
energy and economic development must allocate the available 
authority to the higher education coordinating board. 
    Subd. 7.  [RETURN OF ALLOCATION.] If prior to December 20 
of any year, an issuer determines that it will not issue 
obligations pursuant to authority allocated to it pursuant to 
this section or section 459.35 or 462.556 474.17 by the end of 
that year or within the time period permitted by a federal 
limitation act, the issuer may notify the department of energy 
and economic development authority and such amount will be 
available for reallocation pursuant to this subdivision.  In 
such case, the department of energy and economic development 
authority shall refund to the issuer within 30 days that portion 
of any application deposit equal to one-third of one percent of 
the amount returned for reallocation.  The amounts available for 
reallocation shall be allocated on or before December 31 of each 
year among issuers which have submitted an application by 
December 10, and which have certified that the project to which 
the application relates qualifies for carryover treatment of 
allocated authority according to the terms of a federal 
limitation act, such that obligations may be issued pursuant to 
such allocation of authority after the end of the year, without 
expiration of such authority.  If there is insufficient 
authority for allocation among applications received pursuant to 
this subdivision, allocation among them shall be made by lot 
unless otherwise agreed by the respective applicants pursuant to 
subdivision 6.  
    Sec. 44.  Minnesota Statutes 1984, section 474.20, is 
amended to read: 
    474.20 [NOTICES REQUIRED.] 
    Subdivision 1.  [NOTICE OF ISSUE.] Any issuer of 
obligations subject to limitation under a federal limitation act 
shall give a notice of issue stating the date of issuance of the 
obligations, the allocation under which the obligations are 
issued, and the principal amount of the obligations to the 
department of energy and economic development authority within 
five days after the obligations are issued.  If obligations are 
to be issued as a series of obligations, the notice of issue 
must be filed within five days after each of the series of 
obligations is issued.  If the notice of issue is not filed 
within five days after the obligations are issued or within five 
days after each of the series of obligations are issued that are 
a part of obligations to be issued as a series of obligations, 
the obligations shall be void unless this provision is waived by 
the department of energy and economic development authority.  
Within 30 days after receipt of the notice, the department of 
energy and economic development authority shall refund a portion 
of any application deposit equal to one percent of the principal 
amount of the obligations issued.  
    Subd. 2.  [NOTICE OF AVAILABLE AUTHORITY.] The department 
of energy and economic development authority shall as soon as 
possible after the fifth day of each month publish in the State 
Register a notice of the amount of authority available for 
allocation or reallocation in the following month as of the 
fifth day of the month during which the notice is published, 
after allocation of authority pursuant to section 474.19.  
    Sec. 45.  Minnesota Statutes 1984, section 474.22, is 
amended to read: 
    474.22 [LEGISLATIVE REVIEW.] 
    On March 1, 1986, the department of energy and economic 
development authority shall deliver a comprehensive report to 
the secretary of the senate and the clerk of the house which 
provides detailed information concerning the allocation of 
issuing authority pursuant to sections 474.16 to 474.20.  
    Sec. 46.  Minnesota Statutes 1984, section 474.23, is 
amended to read: 
    474.23 [ADDITIONAL CONDITIONS.] 
    Subdivision 1.  [PROJECTS NOT INCLUDED.] If a federal 
limitation act as defined in section 474.16, subdivision 5, is 
adopted, Action under chapter 474 with respect to any project 
which is to be financed by obligations which are subject 
to volume limitation of a federal limitation act shall be 
subject to the following conditions:  
    (a) No municipality or redevelopment agency shall undertake 
any project, except a project referred to in section 474.02, 
subdivision 1f, unless its governing body finds that the project 
would not be undertaken but for the availability of industrial 
development bond financing. 
    (b) Notwithstanding any provision of this chapter, the term 
"project" shall not include:  an airplane; a private luxury box; 
a facility primarily used for gambling; or a store the principal 
business of which is the sale of alcoholic beverages for 
consumption off premises.  
    (c) No more than ten percent of the proceeds of revenue 
bonds may be used to finance movable equipment not constituting 
a fixture, No more than 25 percent of the proceeds of revenue 
bonds may be used to finance the acquisition of land, and not 
more than $10,000,000 in revenue bonds which are industrial 
development bonds subject to the exemption described in section 
103(b)(6) of the Internal Revenue Code of 1954, as amended 
through December 31, 1983, may be issued with respect to any one 
building which is used for commercial, office or industrial 
purposes, without regard to ownership of condominium units 
within the building.  
     Subd. 2.  [WAREHOUSE PROJECTS PROHIBITED.] Notwithstanding 
any provision of this chapter, proceeds of obligations which are 
subject to volume limitation of a federal limitation act may not 
be used for the financing of a warehouse project.  For the 
purposes of this section, "warehouse project" means any building 
or structure that is used primarily for the self storage by an 
individual of goods, wares, or merchandise for compensation.  
"Warehouse project" does not include a safe deposit box or a 
storage area on the grounds of, and maintained primarily for the 
convenience of the occupants of, residential housing structures. 
    This section takes effect 90 days after the federal 
limitation act is signed by the president or passed over his 
veto.  
    Sec. 47.  [474.26] [APPROPRIATION.] 
    The amount necessary to pay the return or refund of 
application deposits required by sections 474.17 and 474.19 is 
annually appropriated to the department of energy and economic 
development from the general fund. 
    Sec. 48.  [RATIFICATION.] 
    All actions of the department taken in allocating bond 
issuance authority under the 1984 federal limitations act are 
ratified, confirmed, and approved. 
    Sec. 49.  Minnesota Statutes 1984, section 475.52, 
subdivision 6, is amended to read: 
    Subd. 6.  [CERTAIN PURPOSES.] Any municipality may issue 
bonds for paying judgments against it; for refunding outstanding 
bonds; or for funding floating indebtedness; or for funding all 
or part of the municipality's current and future unfunded 
liability for a pension or retirement fund or plan referred to 
in section 356.20, subdivision 2, as those liabilities are most 
recently computed pursuant to sections 356.215 and 356.216 by 
purchasing one or more insurance policies or annuity contracts 
to pay all or a specified part of the liability within the 
period required by law.  The board of trustees or directors of a 
pension fund or relief association referred to in section 69.77 
or chapter 422A must consent and must be a party to any contract 
made under this section with respect to the fund held by it for 
the benefit of and in trust for its members. 
    Sec. 50.  Minnesota Statutes 1984, section 475.54, 
subdivision 1, is amended to read: 
    Subdivision 1.  Except as provided in subdivision 3 or 5a, 
or as expressly authorized in another law, all 
obligations authorized under this chapter of each issue shall 
mature serially or be subject to mandatory sinking fund 
redemption in annual or semiannual installments., the first 
installment shall mature not later than three years from the 
date of the obligations and the last installment shall mature 
not more later than 30 years from such the date of the issue.  
No amount of principal of any obligations the issue payable in 
any calendar year shall exceed five times the amount of the 
smallest amount payable in any preceding calendar year ending 
three years or more after date of the issue date.  
    Sec. 51.  Minnesota Statutes 1984, section 475.54, is 
amended by adding a subdivision to read: 
    Subd. 5a.  Any obligation may be issued giving its owner 
the right to tender, or the municipality to demand tender of, 
the obligation to the municipality or another person designated 
by it, for purchase at a specified time or times, if the 
municipality has first entered into an agreement with a suitable 
financial institution obligating the financial institution to 
provide funds on a timely basis for purchase of bonds tendered.  
The obligation shall not be deemed to mature on any tender date, 
within the meaning of subdivision 1, and the purchase of a 
tendered obligation shall not be deemed a payment or discharge 
of the obligation by the municipality.  Obligations tendered for 
purchase may be remarketed by or on behalf of the municipality 
or any other purchaser.  The municipality may enter into 
agreements deemed appropriate to provide for the purchase and 
remarketing of tendered obligations, including provisions under 
which undelivered obligations may be deemed tendered for 
purchase and new obligations may be substituted for them, 
provisions for the payment of charges of tender agents, 
remarketing agents, and financial institutions extending lines 
of credit or letters of credit assuring repurchase, and for 
reimbursement of advances under letters of credit, which charges 
and reimbursements may be paid from the proceeds of the 
obligations or from tax and other revenues appropriated for the 
payment and security of the obligations, and similar or related 
provisions. 
    Sec. 52.  Minnesota Statutes 1984, section 475.56, is 
amended to read:  
    475.56 [INTEREST RATE.] 
    (a) Any municipality issuing obligations under any law may 
issue obligations bearing interest at a single rate or at rates 
varying from year to year which may be lower or higher in later 
years than in earlier years.  Such higher rate for any period 
prior to maturity may be represented in part by separate coupons 
designated as additional coupons, extra coupons, or B coupons, 
but the highest aggregate rate of interest contracted to be so 
paid for any period shall not exceed the maximum rate authorized 
by law.  Such higher rate may also be represented in part by the 
issuance of additional obligations of the same series, over and 
above but not exceeding two percent of the amount otherwise 
authorized to be issued, and the amount of such additional 
obligations shall not be included in the amount required by 
section 475.59 to be stated in any bond resolution, notice, or 
ballot, or in the sale price required by section 475.60 or any 
other law to be paid; but if the principal amount of the entire 
series exceeds its cash sale price, such excess shall not, when 
added to the total amount of interest payable on all obligations 
of the series to their stated maturity dates, cause the average 
annual rate of such interest to exceed the maximum rate 
authorized by law.  This section does not authorize a provision 
in any such obligations for the payment of a higher rate of 
interest after maturity than before. 
     (b) Any obligation of an issue of obligations otherwise 
subject to section 475.55, subdivision 1, may bear interest at a 
rate varying periodically at the time or times and on the terms, 
including convertibility to a fixed rate of interest, determined 
by the governing body of the municipality, but the rate of 
interest for any period shall not exceed the maximum rate of 
interest for the obligations determined in accordance with 
section 475.55, subdivision 1.  For purposes of section 475.61, 
subdivisions 1 and 3, the interest payable on variable rate 
obligations for their term shall be determined as if their rate 
of interest is the maximum rate permitted for the obligations 
under section 475.55, subdivision 1, or the lesser maximum rate 
of interest payable on the obligations in accordance with their 
terms, but if the interest rate is subsequently converted to a 
fixed rate the levy may be modified to provide at least five 
percent in excess of amounts necessary to pay principal of and 
interest at the fixed rate on the obligations when due.  For 
purposes of computing debt service or interest pursuant to 
section 475.67, subdivision 12, interest throughout the term of 
bonds issued pursuant to this subdivision is deemed to accrue at 
the rate of interest first borne by the bonds.  The provisions 
of this paragraph do not apply to obligations issued by a 
statutory or home rule charter city with a population of less 
than 10,000, as defined in section 477A.011, subdivision 3, or 
to obligations that are not rated A or better, or an equivalent 
subsequently established rating, by Standard and Poor's 
Corporation, Moody's Investors Service or other similar 
nationally-recognized rating agency. 
    Sec. 53.  Minnesota Statutes 1984, section 475.58, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPROVAL BY MAJORITY OF ELECTORS; 
EXCEPTIONS.] Obligations authorized by law or charter may be 
issued by any municipality upon obtaining the approval of a 
majority of the electors voting on the question of issuing the 
obligations, but an election shall not be required to authorize 
obligations issued: 
    (1) to pay any unpaid judgment against the municipality; 
    (2) for refunding obligations; 
    (3) for an improvement, which obligation is payable wholly 
or partly from the proceeds of special assessments levied upon 
property specially benefited by the improvement, or of taxes 
levied upon the increased value of property within a district 
for the development of which the improvement is undertaken, 
including obligations which are the general obligations of the 
municipality, if the municipality is entitled to reimbursement 
in whole or in part from the proceeds of such special 
assessments or taxes and not less than 20 percent of the cost of 
the improvement is to be assessed against benefited property or 
is estimated to be received from such taxes within the district; 
    (4) payable wholly from the income of revenue producing 
conveniences; 
    (5) under the provisions of a home rule charter which 
permits the issuance of obligations of the municipality without 
election; and 
    (6) under the provisions of a law which permits the 
issuance of obligations of a municipality without an election; 
and 
    (7) to fund pension or retirement fund liabilities pursuant 
to section 475.52, subdivision 6. 
    Sec. 54.  Minnesota Statutes 1984, section 475.60, 
subdivision 2, is amended to read: 
    Subd. 2.  [REQUIREMENTS WAIVED.] The requirements as to 
public sale shall not apply to: 
    (1) Obligations issued under the provisions of a home rule 
charter or of a law specifically authorizing a different method 
of sale, or authorizing them to be issued in such manner or on 
such terms and conditions as the governing body may determine; 
    (2) Obligations sold by an issuer in an amount not 
exceeding the total sum of $300,000 in any three month period; 
    (3) Obligations issued by a governing body other than a 
school board in anticipation of the collection of taxes or other 
revenues appropriated for expenditure in a single year, if sold 
in accordance with the most favorable of two or more proposals 
solicited privately; and 
    (4) Obligations sold to any board, department, or agency of 
the United States of America or of the state of Minnesota, in 
accordance with rules or regulations promulgated by such board, 
department, or agency; and 
    (5) Obligations issued to fund pension and retirement fund 
liabilities under section 475.52, subdivision 6, obligations 
issued with tender options under section 475.54, subdivision 5a, 
crossover refunding obligations referred to in section 475.67, 
subdivision 13, and any issue of obligations comprised in whole 
or in part of obligations bearing interest at a rate or rates 
which vary periodically referred to in section 475.56. 
    Sec. 55.  Minnesota Statutes 1984, section 475.67, 
subdivision 8, is amended to read: 
    Subd. 8.  Securities purchased for the escrow account shall 
be limited to: 
    (a) general obligations of the United States, securities 
whose principal and interest payments are guaranteed by the 
United States, and securities issued by the following agencies 
of the United States:  Banks for Cooperatives, Federal Home Loan 
Banks, Federal Intermediate Credit Banks, Federal Land Banks, 
and the Federal National Mortgage Association; or 
    (b) obligations issued or guaranteed by any state or any 
political subdivision of a state, which at the date of purchase 
are rated the highest or the next highest rating given by 
Standard and Poor's Corporation, Moody's Investors Service, or a 
similar nationally recognized rating agency, but not less than 
the rating on the refunded bonds immediately prior to the 
refunding. 
    Sec. 56.  Minnesota Statutes 1984, section 475.67, is 
amended by adding a subdivision to read: 
    Subd. 13.  Crossover refunding obligations may be issued by 
a municipality without regard to the limitations in subdivisions 
4 to 10.  The proceeds of crossover refunding obligations, less 
any proceeds applied to payment of the costs of their issuance, 
shall be deposited in a debt service fund irrevocably 
appropriated to the payment of principal of and interest on the 
refunding obligations until the date the proceeds are applied to 
payment of the obligations to be refunded.  The debt service 
fund shall be maintained as an escrow account with a suitable 
financial institution within or without the state and amounts in 
it shall be invested in securities described in subdivision 8. 
Excess proceeds, if any, of the tax levy pursuant to section 
475.61, subdivision 1, made with respect to the obligations to 
be refunded, and any other available amounts, may be deposited 
in the escrow account.  In the resolution authorizing the 
issuance of crossover refunding obligations, the governing body 
may pledge to their payment any source of payment of the 
obligations to be refunded.  Subdivisions 11 and 12 shall not 
apply to any crossover refunding obligations, or the obligations 
to be refunded.  Subject to section 475.61, subdivision 3, in 
the case of general obligiation bonds, taxes shall be levied 
pursuant to section 475.61 and appropriated to the debt service 
fund in the amounts needed, together with estimated investment 
income of the debt service fund and any other revenues available 
upon discharge of the obligations refunded, to pay when due the 
principal of and interest on the refunding obligations.  The 
levy so imposed may be reduced by earnings to be received from 
investments on hand in the debt service fund to the extent the 
applicable recording officer certifies to the county auditor 
that the earnings are expected to be received in amounts and at 
such times as to be sufficient, together with the remaining 
levy, to satisfy the purpose of the levy requirements under 
section 475.61. 
    Sec. 57.  Laws 1981, chapter 223, section 4, subdivision 2, 
is amended to read: 
    Subd. 2.  [INSTALLMENT PAYMENTS.] Alternatively, the city 
may accept payment by a promissory note in a principal amount 
equal to the contract price, repayable in equal periodic 
installments, including both principal and interest on the 
declining principal balance, payable on the due dates of bills 
for utility service furnished by the city and made available to 
the home from the completion date until the principal and 
interest are fully paid, and matching as closely as possible the 
estimated reduction in current home energy cost resulting from 
the project; with such provisions as may be agreed, permitting 
or restricting prepayment.  The installments shall be added 
to and deemed a part of the charges for municipal utility 
service to the premises, but shall be deposited when received in 
a special fund or funds separate from other utility or municipal 
funds and used only for the payment and security of revenue 
bonds or notes issued by the city to finance the cost of 
projects to be paid as provided in this subdivision.  
    Sec. 58.  Laws 1981, chapter 223, section 4, subdivision 3, 
is amended to read:  
    Subd. 3.  [LIEN FOR COLLECTION OF UNPAID INSTALLMENTS.] The 
resolutions establishing a home energy conservation program may 
provide that the payment of note installments may be enforced in 
the same manner as other utility charges. The and that the 
installments are a first and prior lien on the property improved 
as provided in Minnesota Statutes, section 514.67, and if not 
paid when due shall be entered upon the tax rolls and collected 
with and as a part of the taxes on the property, with the same 
interest and penalties, or that the lien is subject to mortgages 
or other encumbrances of record. 
    Sec. 59.  Laws 1984, chapter 502, article 5, section 19, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPROPRIATION.] The sum of $3,400,000 is 
appropriated from the general fund to the commissioner of energy 
and economic development for the purpose of providing grants to 
industrial operations that are substantially renovating their 
facilities, provided that the renovation enables the operation 
to continue to provide a substantial portion of the industrial 
employment of the community in which it is located.  The grant 
is intended to help meet the cost of property tax increases due 
to plant expansion or renovation and the cost of sales tax or 
equipment purchased to replace obsolete, inadequate, or 
inefficient equipment in the plant. 
    Of the sum appropriated, up to $1,000,000 may be granted to 
a meat processing and packing facility that, at the time when 
renovation or expansion of the facility begins, provides over 20 
percent of the industrial employment in the city.  The entire 
amount of this grant may be paid on or after July 1, 1984. 
    Up to $2,400,000 may be granted to a manufacturer of 
internal combustion engines, generators, electrical generating 
sets, and switchgear that, at the time when renovation or 
expansion of the facility begins, provides over ten percent of 
the industrial employment in the city.  This grant is to be 
disbursed as follows.  The recipient must annually certify to 
the commissioner the following amounts paid during the year:  
(a) the additional property taxes paid as a result of the 
expansion and (b) one-third of the sales tax paid on replacement 
capital equipment that does not qualify for the four percent 
sales tax rate under Minnesota Statutes, section 297A.02, 
subdivision 2.  The commissioner shall pay the lesser of the 
amount certified for the year or $480,000.  If in a year the 
amount certified is less than $480,000, the excess shall 
carryforward and may be paid in a succeeding year.  The 
commissioner may not pay an amount in excess of that certified.  
The appropriation for this grant does not cancel. 
    An additional sum of $100,000 is appropriated to the 
commissioner of energy and economic development to provide a 
grant to a home rule city or statutory city which is selected as 
the site for a foreign manufacturing development facility.  This 
grant is not subject to the limitations contained in the first 
paragraph of this subdivision.  A foreign manufacturing 
development project is a production and office facility 
financed, in whole or part, by an agency of a foreign government 
or a foreign corporation for the purpose of testing and 
developing the expertise of foreign firms in manufacturing 
products in the United States.  The home rule city or statutory 
city may use the grant moneys to provide assistance to the 
foreign manufacturing development facility in the manner it 
determines appropriate. 
    Designation of grant recipients is not subject to the 
provisions of chapter 14. 
    Sec. 60.  [APPROPRIATION.] 
    The sum of $8,800,000 is appropriated from the general fund 
to the economic development fund to provide special assistance 
for qualified economic diversification projects.  Of this 
amount, $4,400,000 must be used for projects located in 
distressed counties.  Notwithstanding the provisions of 
Minnesota Statutes, section 16A.28, the amounts appropriated by 
this section shall not lapse or cancel. 
    Sec. 61.  [LAKEVILLE AND FERGUS FALLS BOND APPLICATION 
DEPOSIT REFUNDS.] 
    The department of energy and economic development shall 
refund to the city of Fergus Falls and the city of Lakeville the 
application deposits received during calendar year 1984 from the 
city of Fergus Falls and the city of Lakeville under Minnesota 
Statutes, section 474.19 and retained by the department.  
$46,060 is appropriated from the general fund to the department 
of energy and economic development to refund the industrial 
development bond allocation application deposits to the city of 
Lakeville and the city of Fergus Falls. 
    Sec. 62.  [EMERGENCY RULES.] 
    The energy and economic development authority may adopt 
emergency rules under Minnesota Statutes, chapter 14, for 
purposes of the special assistance program for economic 
diversification projects under Minnesota Statutes, section 
116M.07, subdivision 11. 
    Sec. 63.  [REPEALER.] 
    Minnesota Statutes 1984, sections 462C.09, subdivision 2; 
474.16, subdivision 4; 474.18; 474.24; and Laws 1984, chapter 
582, section 23, are repealed.  Laws 1984, chapter 582, sections 
1, 6, and 9 to 22 remain in effect until provided otherwise by 
other law. 
    Sec. 64.  [EFFECTIVE DATE.] 
    Section 15 is effective August 1, 1985.  Section 16 is 
effective for interest reduction programs established after 
December 31, 1985, and for tax increment financing districts if 
the authority submits the request for certification of the 
original assessed value after December 31, 1985.  Sections 17 
and 18 are effective for sales made after August 1, 1985, and 
the commissioner of energy and economic development is 
authorized to designate distressed counties for the period from 
August 1, 1985 to June 30, 1986, on or before August 1, 1985.  
Sections 23 to 25 are effective for all plans and programs 
submitted for review after August 1, 1985.  Section 30 is 
effective the day after compliance by the governing bodies of 
the cities of Minneapolis and St. Paul with the provisions of 
Minnesota Statutes, section 645.021, subdivision 3.  Sections 31 
to 39, and 42 to 44 are effective beginning with the calendar 
year 1986 allocation of private activity bond issuance 
authority, provided however, that section 31 and subdivision 3b 
of section 42 are effective the day following final enactment 
for purposes of the powers of the commissioner of iron range 
resources and rehabilitation and for the 1985 allocation permit 
transfer of issuance authority to any other issuer of private 
activity bonds.  Sections 40, 41, 45 to 56, and 59 are effective 
the day following final enactment.  The amendments contained in 
section 43 to Minnesota Statutes 1984, section 474.19, 
subdivisions 2, 6, and 7 are effective August 1, 1985, except 
that for purposes of the calendar year 1985 allocation under 
subdivision 6, no minimum number of points is required, 
allocations among applications with an equal number of points 
shall be made by lot unless otherwise agreed to by the 
applicants, and the next to the last paragraph of the amended 
subdivision 6 does not apply to the calendar year 1985 
allocations.  The amendments contained in subdivision 1 of 
section 46 apply to obligations issued pursuant to an allocation 
of the state ceiling whether issued before or after the 
effective date of the section, and no obligation is invalid for 
failure to comply with the provisions of Minnesota Statutes 
1984, section 474.23, subdivision 1, paragraph (c).  Sections 57 
and 58 are effective the day after compliance by the Duluth city 
council with Minnesota Statutes, section 645.021, subdivision 3. 

                               ARTICLE 9 

                                  JOBS 
    Section 1.  [PURPOSE.] 
    The legislature finds that, to maximize productivity of 
human resources and economic opportunity within the state of 
Minnesota, it is necessary to streamline and coordinate the 
state's employment, training, and income maintenance programs 
and to set new priorities so that state government might better 
achieve its goal of helping its citizens realize the dignity of 
a paycheck and achieve economic independence.  Further, the 
legislature finds it necessary to act swiftly and decisively to 
achieve the dual goal of lowering the unemployment rate among 
the people of this state and decreasing the income maintenance 
caseload that is at once a reflection of the difficulties 
challenging some and a burden that must be borne by all.  
    Sec. 2.  Minnesota Statutes 1984, section 15A.081, 
subdivision 1, is amended to read: 
    Subdivision 1.  The governor shall set the salary rate 
within the ranges listed below for positions specified in this 
subdivision, upon approval of the legislative commission on 
employee relations and the legislature as provided by section 
43A.18, subdivisions 2 and 5: 
                                                Salary Range 
                                                  Effective 
                                                July 1, 1983 
Commissioner of education;                   $57,500-$70,000 
Commissioner of finance; 
Commissioner of transportation; 
Commissioner of human services; 
Chancellor, community college system; 
Chancellor, state university system; 
Director, vocational technical
  education;
Executive director, state board of 
  investment; 
Commissioner of administration;              $50,000-$60,000 
Commissioner of agriculture; 
Commissioner of commerce;
Commissioner of corrections;  
Commissioner of economic security  
  jobs and training;
Commissioner of employee relations;  
Commissioner of energy and economic 
  development;  
Commissioner of health;  
Commissioner of labor and industry;  
Commissioner of natural resources;  
Commissioner of revenue;
Commissioner of public safety;  
Chairperson, waste management board; 
Chief administrative law judge; office of
  administrative hearings;
Director, pollution control agency;
Director, state planning agency;
Executive director, higher education  
  coordinating board;  
Executive director, housing finance 
  agency;  
Executive director, teacher's 
  retirement association;  
Executive director, state retirement  
  system;
Coordinator of full productivity 
  and opportunity;
Commissioner of human rights;                $40,000-$52,500
Director, department of public service; 
Commissioner of veterans' affairs; 
Director, bureau of mediation services; 
Commissioner, public utilities commission; 
Member, transportation regulation board; 
Director, zoological gardens.
    Sec. 3.  Minnesota Statutes 1984, section 86.33, is amended 
to read:  
    86.33 [APPROVAL OF PROJECT BY GOVERNOR.] 
    Subdivision 1.  [MANNER OF APPROVAL.] All such projects 
shall be first approved by the governor upon the recommendation 
of the commissioner of natural resources and after consultation 
with the legislative advisory commission in the same manner as 
he consults with such commission in making expenditures from the 
general contingent fund as provided by section 3.30. 
    Subd. 2.  [PROJECT COORDINATION.] The commissioner of 
natural resources shall consult with the full productivity and 
opportunity coordinator and develop a plan that establishes:  a 
priority for unemployed youths who are economically, socially, 
physically, or educationally disadvantaged; the ways in which 
participants will be assisted in gaining ongoing employment or 
training upon completing the projects; the ways in which 
exclusive bargaining representatives are to be consulted in 
regard to the positions and job duties of persons employed in 
projects; and how the projects are coordinated with other 
publicly authorized or subsidized programs. 
    The commissioner shall submit the plan to the full 
productivity and opportunity coordinator in each even-numbered 
year, according to standards established by the coordinator for 
use in developing a biennial statewide employment and training 
plan. 
    Subd. 3.  [REPORTING; CORPS MEMBER STATUS; FEES.] The 
commissioner of natural resources shall cooperate with the full 
productivity and opportunity coordinator in developing and 
implementing any evaluation and reporting systems for employment 
and training programs.  All camp staff except camp directors in 
the young adult program are corps members.  Corps members are 
not eligible for unemployment compensation or other benefits 
except workers' compensation, and they are not employees of the 
state of Minnesota within the meaning of section 43A.02, 
subdivision 21.  The commissioner may charge a fee for any 
service performed by the corps. 
    Sec. 4.  Minnesota Statutes 1984, section 116J.035, is 
amended by adding a subdivision to read: 
    Subd. 3.  [PLAN.] The commissioner shall prepare a plan 
that must cover economic development, the community development 
corporation, and community development program activities, and 
shall submit the plan to the full productivity and opportunity 
coordinator in each even-numbered year, according to standards 
established by the coordinator, for use in developing a biennial 
statewide employment and training plan. 
    Sec. 5.  Minnesota Statutes 1984, section 116L.03, 
subdivision 7, is amended to read:  
    Subd. 7.  [OFFICES.] The commissioner of administration 
jobs and training shall, upon request, provide office space and 
support services for the board within the capitol area complex.  
    Sec. 6.  Minnesota Statutes 1984, section 116L.04, is 
amended by adding a subdivision to read:  
    Subd. 3.  [PLAN.] The board shall prepare a plan and submit 
it to the full productivity and opportunity coordinator in each 
even-numbered year, according to standards established by the 
coordinator, for use in developing a biennial statewide 
employment and training plan. 
    Sec. 7.  Minnesota Statutes 1984, section 129A.02, 
subdivision 2, is amended to read:  
    Subd. 2.  [COMMISSIONER.] The commissioner is the chief 
executive officer of the department of jobs and training and is 
the successor to the powers and duties of the former assistant 
commissioner of vocational rehabilitation.  The commissioner 
shall be appointed by the governor and serve under the 
provisions of section 15.06.  The commissioner shall be a person 
having substantial experience in the administration and 
financing of vocational rehabilitation programs. 
    Sec. 8.  Minnesota Statutes 1984, section 136.63, is 
amended by adding a subdivision to read: 
    Subd. 1b.  [PLAN.] Before prescribing a program involving 
training in semiprofessional and technical fields or adult 
education, the board shall consult with the full productivity 
and opportunity coordinator.  The board shall prepare a plan and 
submit it to the full productivity and opportunity coordinator 
in each even-numbered year, according to standards established 
by the coordinator, for use in developing a biennial statewide 
employment and training plan. 
    Sec. 9.  Minnesota Statutes 1984, section 136C.06, is 
amended to read: 
    136C.06 [SOLE STATE AGENCY.] 
    The state board of vocational technical education is the 
sole state agency to receive and disburse federal funds 
authorized by the Vocational Education Act of 1963, as amended 
in the education amendments of 1976, Public Law Number 94-482, 
and Code of Federal Regulations, title 34, part 400.  The state 
board shall develop and submit the state plan for vocational 
technical education.  The state board shall develop the state 
plan according to terms of agreement with the state board of 
education.  Before developing and submitting the state plan, the 
state board shall consult with the full productivity and 
opportunity coordinator.  The state board shall submit the state 
plan to the full productivity and opportunity coordinator for 
use in developing a biennial statewide employment and training 
plan. 
    Sec. 10.  Minnesota Statutes 1984, section 178.03, is 
amended by adding a subdivision to read:  
    Subd. 5.  [COORDINATION AND PLANNING.] The commissioner of 
labor and industry, after consulting with the apprenticeship 
advisory council and the apprenticeship committees, shall 
prepare a plan for preparing, recruiting, and placing 
economically disadvantaged, chronically unemployed, minority, 
and female individuals in apprenticeship programs.  The 
commissioner shall submit the plan to the full productivity and 
opportunity coordinator in each even-numbered year, according to 
standards established by the coordinator, for use in developing 
a biennial statewide employment and training plan. 
    Sec. 11.  Minnesota Statutes 1984, section 245.87, is 
amended to read:  
    245.87 [ALLOCATIONS.] 
    For the purposes of section 245.84, subdivision 2, the 
commissioner shall allocate money appropriated between the 
metropolitan area, comprising the counties of Anoka, Carver, 
Dakota, Hennepin, Ramsey, Scott and Washington, and the area 
outside the metropolitan area so that no more than 55 percent of 
the total fund goes to either area after excluding allocations 
for migrant day care services, administrative costs and 
statewide projects.  At least ten percent of the total program 
allocation under section 245.84, subdivision 1 shall be 
designated for interim financing.  The commissioner is further 
instructed that the allocation in each area be based on a need 
and population basis. 
    Sec. 12.  Minnesota Statutes 1984, section 248.07, is 
amended to read:  
    248.07 [COMMISSIONER OF HUMAN SERVICES JOBS AND TRAINING, 
DUTIES.] 
    Subdivision 1.  [COOPERATION.] It shall be the duty of the 
commissioner of human services jobs and training, referred to in 
sections 248.07, 248.08, and 248.085 as the commissioner, to 
cooperate with state and local boards and agencies, both public 
and private, in preventing loss of sight, in alleviating the 
condition of blind persons and persons of failing sight, in 
extending and improving the education, advisement, training, 
placement, and conservation of the blind, and in promoting their 
personal, economic, social, and civic well being.  The 
commissioner shall create a distinct organizational unit, 
separate from the vocational rehabilitation unit and with its 
own activity budget, within the department of jobs and training 
to provide and coordinate services to the blind. 
    Subd. 2.  [STATISTICS.] The commissioner of human services 
shall collect statistics of the blind, including their present 
physical and mental condition, causes of blindness, capacity for 
education and industrial training, and any further information 
looking toward the improvement of their condition that may be 
desired. 
    Subd. 3.  [SPECIAL ATTENTION.] The commissioner of human 
services shall give special attention to the cases of 
handicapped youth who are eligible to attend the Minnesota 
Braille and sight-saving school, the Minnesota school for the 
deaf, or the public school classes for handicapped children, but 
are not in attendance thereat, or are not receiving adequate 
instruction elsewhere.  The commissioner shall report all such 
cases to the school district of the individual's residence and 
to the state board of education. 
    Subd. 4.  [VOCATIONAL TRAINING.] The commissioner of human 
services shall endeavor to secure for the adult blind of the 
state and youths of legal working age such vocational training, 
labor, and employment as may be adapted to their respective 
capacity, and shall so far as may be feasible aid such persons 
in securing any provisions which may be made by the school for 
the blind or other state agencies for the betterment of their 
lot.  When vocational training under the division of vocational 
rehabilitation is secured, such aid may take the form of 
payments for the maintenance of persons in training, under rules 
to be adopted by the commissioner of human services.  Any person 
who shall be entitled to training under this subdivision shall 
have the right to choose from available programs such training 
as in his opinion would be suitable and practical for him. 
    Subd. 5.  [AIDS.] The commissioner of human services shall 
further be empowered to aid the blind:  (1) By home instruction 
and training; (2) by assisting them in securing tools, 
appliances, and supplies; (3) by aid in marketing the products 
of their labors; (4) by care and relief for blind persons who 
are not capable of self-support; and, (5) in any other 
practicable means of alleviating their condition. 
    Subd. 7.  [BLIND, VENDING STANDS AND MACHINES ON 
GOVERNMENTAL PROPERTY.] Notwithstanding any other law, for the 
rehabilitation of blind persons the commissioner of human 
services shall have exclusive authority to establish and to 
operate vending stands and vending machines in all buildings and 
properties owned or rented exclusively by any department of the 
state of Minnesota except the department of natural resources 
properties operated directly by the Division of State Parks and 
not subject to private leasing.  The merchandise to be dispensed 
by such vending stands and machines may include soft drinks, 
(except 3.2 beer), milk, food, candies, tobacco, souvenirs, 
notions and related items.  Such vending stands and vending 
machines herein authorized shall be operated on the same basis 
as other vending stands for the blind established and supervised 
by the commissioner of human services.  The commissioner of 
human services may waive this authority to displace any present 
private individual concessionaire in any state-owned or rented 
building or property.  With the consent of the governing body of 
a governmental subdivision of the state, the commissioner may 
establish and supervise vending stands and vending machines for 
the blind in any building or property exclusively owned or 
rented by the governmental subdivision. 
    Subd. 8.  [USE OF REVOLVING FUND, LICENSES FOR OPERATION OF 
VENDING MACHINES.] The revolving fund created by Laws 1947, 
Chapter 535, Section 5, is continued as provided in this 
subdivision and shall be known as the revolving fund for 
vocational rehabilitation of the blind.  It shall be used for 
the purchase of equipment and supplies for establishing and 
operating of vending stands by blind persons.  All income, 
receipts, earnings, and federal grants due to the operation 
thereof shall also be paid into the fund.  All equipment, 
supplies, and expenses for setting up these stands shall be paid 
for from the fund.  Authority is hereby given to the 
commissioner of human services to use the moneys available in 
the revolving fund for the establishment, operation and 
supervision of vending stands by blind persons for the following 
purposes:  (1) purchase, upkeep and replacement of equipment; 
(2) purchase of initial and replacement stock of supplies and 
merchandise; (3) expenses incidental to the setting up of new 
stands and improvement of old stands; (4) purchase of general 
liability insurance as deemed advisable for any vending stand by 
the commissioner; (5) reimbursement to individual blind vending 
operators for reasonable travel and maintenance expenses 
incurred in attending supervisory meetings as called by the 
commissioner of human services; (6) purchase of fringe benefits 
for blind vending operators and their employees such as group 
health insurance, retirement program, vacation or sick leave 
assistance provided that the purchase of any fringe benefit is 
approved by a majority vote of blind vending operators licensed 
pursuant to this subdivision after the commissioner provides to 
each blind vending operator information on all matters relevant 
to the fringe benefits.  Fringe benefits shall be paid only from 
assessments of operators for specific benefits, gifts to the 
fund for fringe benefit purposes, and vending income which is 
not assignable to an individual stand. 
     The commissioner shall issue each license for the operation 
of a vending stand or vending machine for an indefinite period 
but he may terminate any license in the manner provided.  In 
granting licenses for new or vacated stands preference on the 
basis of seniority of experience in operating stands under the 
control of the commissioner shall be given to capable operators 
who are deemed competent to handle the enterprise under 
consideration.  Application of this preference shall not 
prohibit the commissioner from selecting an operator from the 
community in which the stand is located. 
    Subd. 9.  [TRAINING OF SELECTED APPLICANTS.] Each applicant 
selected by the commissioner for a license to operate a vending 
stand or vending machine shall be given training in the 
operation and conduct of such vending stand or vending machine. 
    Subd. 10.  [REVOCATION OF LICENSES; HEARING.] The 
commissioner shall not revoke any license except for good cause 
shown.  An opportunity for a fair hearing shall be afforded any 
operator within 30 days after revocation of license. 
    Subd. 11.  [POLICY CHANGES; NOTICE AND HEARING.] Any major 
changes in policies made by the commissioner in the conduct of 
this program will be preceded by a public hearing.  Each 
operator shall be given 30 days notice of such hearing. 
    Subd. 12.  [REIMBURSEMENT OUT OF STATE DISTRIBUTION OF 
BRAILLE AND TALKING BOOKS.] The commissioner of human services 
shall obtain reimbursement from other states for the estimated 
cost of handling of Braille books and talking books for the 
blind distributed by the department of human services jobs and 
training to users in such other states and may contract with the 
appropriate authorities of such states to effect such 
reimbursement.  All money received hereunder shall be paid to 
the state treasurer and placed in the general fund. 
    Subd. 13.  [REHABILITATION FACILITIES.] From the funds 
appropriated for vocational rehabilitation of the blind and 
matching federal funds available for the purpose, the 
commissioner of human services may make grants, upon such terms 
as he may determine, to public or nonprofit organizations for 
the establishment, maintenance or improvement of rehabilitation 
facilities or sheltered workshops for the blind. 
    Subd. 14.  [TRAINING OF WORKERS FOR REHABILITATION OF 
BLIND.] From funds provided by the state or the United States 
for the rehabilitation of blind persons, the commissioner of 
human services may make provision for: 
    (1) Specialized supplementary training of professional 
workers employed by services for the blind, which shall consist 
of selected courses of study designed to improve worker 
techniques in providing assistance with adjustment to blindness, 
guidance, training and vocational placement services to blind 
children and adults; 
    (2) The employment of student trainees enrolled in graduate 
school programs.  Such trainees to be employed on a one-third 
time basis during the regular school term and on a full time 
basis during the extra school term.  Student trainees shall not 
be counted against the regular staff complement and shall not 
exceed eight in number employed concurrently. 
    Subd. 14a.  [RULES.] The commissioner of human services 
shall, no later than February 1, 1985, adopt rules to set 
standards for the provision of rehabilitative services to blind 
and visually handicapped persons.  The rules shall, at a 
minimum, contain program definitions and set standards for basic 
eligibility, including financial need eligibility and 
definitions of legal blindness.  
    The rules shall provide for the development of formal 
rehabilitation plans for eligible clients and shall govern the 
provision of direct rehabilitative services to clients, 
including placement in training programs, and providing tools 
and equipment.  In addition, the rules shall set standards for 
appeals filed under subdivision 15, and include specific 
requirements for timely responses by the agency. 
    Subd. 15.  [APPEALS FROM AGENCY ACTION.] An applicant for 
or recipient of rehabilitation service who is dissatisfied with 
an agency's action with regard to the furnishing or denial of 
services may:  
    (1) File a request for an administrative review and 
redetermination of that action to be made by a member or members 
of the supervisory staff of the state agency the commissioner. 
    (2) When an individual is dissatisfied with the findings of 
this administrative review, he shall be granted an opportunity 
for a fair hearing before the state administrator or his 
designee. 
    (3) If further appeal is deemed necessary by the applicant 
or recipient, his grievance shall be considered and relief if 
any recommended by an appeal committee.  The committee shall be 
composed of one person nominated by the applicant or recipient, 
one person nominated by the agency, and a third person nominated 
jointly by the applicant or recipient and the agency.  If the 
third person cannot be mutually agreed upon within ten days of 
the applicant's or recipient's request for a committee hearing, 
the judge of the district court in the applicant's or 
recipient's county of residence shall make the third appointment.
    Sec. 13.  Minnesota Statutes 1984, section 248.08, is 
amended to read: 
    248.08 [PAYMENTS BY COMMISSIONER OF HUMAN SERVICES.] 
    The commissioner of human services is hereby authorized to 
may defray the necessary expenses of the work from the 
appropriation for the current expenses of the commissioner of 
human services; provided, that in any county of this state now 
or hereafter having a population of over 150,000, and an 
assessed valuation of over $200,000,000, including money and 
credits, the county board is hereby authorized to may defray 
part or all of the necessary expenses of maintaining the work 
within the county from the general revenue fund of the county, 
not exceeding the total sum of $3,600, in any one calendar year; 
and, in carrying on this work, may appoint and employ an 
assistant to the regular field agent for the blind in the 
county, who shall work under the direction of the agent in the 
county.  The portion of the salary of the field agent, and of 
any assistant to be paid by the county, shall be fixed by the 
county board at its first meeting in January in each year; and 
such salary of the field agent and assistant shall be paid in 
the same manner as the salary of other county officers and 
employees are paid.  All necessary expenses of the agent and 
assistant in carrying on this work in the county, not paid by 
the commissioner of human services, shall be paid by the county 
board as other claims against the county are paid.  
    Sec. 14.  [248.10] [COUNCIL FOR THE BLIND.] 
    Subdivision 1.  [MEMBERSHIP.] The Minnesota council for the 
blind consists of seven members appointed by the commissioner.  
At least four of the council members must be blind or visually 
handicapped.  Council members are appointed for four-year terms, 
except for the members first appointed, of whom three are 
appointed for a term ending December 31, 1990, two for terms 
ending December 31, 1989, and two for terms ending December 31, 
1988. 
    Subd. 2.  [REMOVAL; VACANCIES.] The compensation, removal 
of members, and filling of vacancies on the council are as 
provided in section 15.0575. 
    Subd. 3.  [DUTIES.] The council shall: 
    (1) advise the commissioner on the qualifications for the 
director of services for the blind; 
    (2) advise the commissioner on the development of policies, 
programs, and services affecting the blind and visually 
impaired, and on the use of appropriate federal money; 
    (3) advise the commissioner on policies relating to 
eligibility determinations; 
    (4) create a public awareness of the special needs and 
potential of blind and visually impaired persons; and 
    (5) provide the commissioner with a review of ongoing 
services, programs, and proposed legislation affecting the blind 
and visually impaired. 
    Sec. 15.  Minnesota Statutes 1984, section 256.01, 
subdivision 4, is amended to read: 
    Subd. 4.  [DUTIES AS STATE AGENCY.] The state agency shall: 
    (1) Supervise the administration of assistance to dependent 
children under Laws 1937, chapter 438, by the county agencies in 
an integrated program with other service for dependent children 
maintained under the direction of the state agency; 
    (2) May subpoena witnesses and administer oaths, make rules 
and regulations, and take such action as may be necessary, or 
desirable for carrying out the provisions of Laws 1937, Chapter 
438.  All rules and regulations made by the state agency shall 
be binding on the counties and shall be complied with by the 
respective county agencies; 
    (3) Establish adequate standards for personnel employed by 
the counties and the state agency in the administration of Laws 
1937, Chapter 438, and make the necessary rules and regulations 
to maintain such standards; 
    (4) Prescribe the form of and print and supply to the 
county agencies blanks for applications, reports, affidavits, 
and such other forms as it may deem necessary and advisable; 
    (5) Cooperate with the federal government and its public 
welfare agencies in any reasonable manner as may be necessary to 
qualify for federal aid for aid to dependent children and in 
conformity with the provisions of Laws 1937, Chapter 438, 
including the making of such reports and such forms and 
containing such information as the Federal Social Security Board 
may from time to time require, and comply with such provisions 
as such board may from time to time find necessary to assure the 
correctness and verification of such reports; and 
    (6) May cooperate with other state agencies in establishing 
reciprocal agreements in instances where a child receiving aid 
to dependent children moves or contemplates moving into or out 
of the state, in order that such child may continue to receive 
supervised aid from the state from which he has moved until he 
shall have resided for one year in the state to which he has 
moved; and 
    (7) On or before October 1 in each even-numbered year make 
a biennial report to the governor concerning the activities of 
the agency; and 
    (8) Prepare a plan and submit it to the full productivity 
and opportunity coordinator in each even-numbered year, 
according to standards established by the coordinator, for use 
in developing a biennial statewide employment and training plan; 
and 
    (9) Enter into agreements with other departments of the 
state as necessary to meet all requirements of the federal 
government. 
    Sec. 16.  Minnesota Statutes 1984, section 256.736, 
subdivision 1, is amended to read:  
    256.736 [WORK INCENTIVE PROGRAM EMPLOYMENT AND TRAINING 
PROGRAMS.] 
    Subdivision 1.  [CREATION COMMISSIONER.] There is hereby 
established a program to help appropriate recipients of aid to 
families with dependent children become self-supporting members 
of society To the extent permitted by law, the commissioner of 
jobs and training shall administer, on behalf of the 
commissioner of human services, the aspects of the aid to 
families with dependent children program, excluding categorical 
and financial eligibility, that directly relate to: 
    (1) recipients' participation in employment and training 
services; 
    (2) requirements for and conditions of participating in 
employment and training services; 
    (3) the design and administration of employment and 
training services;  and 
    (4) the supervision of county boards in carrying out 
responsibilities related to employment and training services. 
    The commissioner of jobs and training and the commissioner 
of human services may implement those programs and authorities, 
including supported work programs, employment search, and 
demonstration projects authorized under federal regulations to 
increase services or federal reimbursement available to provide 
employment and training services for recipients of aid to 
families with dependent children.  Before a demonstration 
project is implemented, the conditions under section 256.01, 
subdivision 2, clause 12, must be met. 
    Sec. 17.  Minnesota Statutes 1984, section 256.736, 
subdivision 3, is amended to read: 
    Subd. 3.  [OPERATION OF PROGRAM PROGRAMS.] To determine who 
shall be designated as an appropriate individual for 
certification to the commissioner of economic security for 
employment and training services, the commissioner of human 
services jobs and training shall provide, by rule, standards for 
county welfare agencies and human services boards consistent 
with the standards promulgated by the secretary of health and 
human services.  County welfare agencies boards shall certify 
appropriate individuals to the commissioner of economic security 
for employment and training services, shall notify the 
commissioner of human services, and shall require that every 
individual certified, as a condition of receiving aid to 
families with dependent children, register for employment 
services, training, and employment, unless such individual is: 
    (1) a child who is under age 16, a child age 16 or 17 who 
is attending elementary or secondary school or a secondary level 
vocational or technical school full time, or a full-time student 
age 18 who is attending a secondary school or a secondary level 
vocational or technical program and who is expected to complete 
the school or program before reaching age 19; 
    (2) a person who is ill, incapacitated or of advanced age; 
    (3) a person so remote from a work incentive project an 
employment and training service and where transportation is not 
reasonably available that his effective participation is 
precluded; 
    (4) a person whose presence in the home is required because 
of illness or incapacity of another member of the household; 
    (5) a parent or other caretaker relative of a child under 
the age of six who personally provides full-time care for the 
child;  
    (6) a parent or other caretaker if another adult relative 
in the house is registered and has not, without good cause, 
failed or refused to participate or accept employment; or 
    (7) a pregnant woman in the last trimester of pregnancy; or 
    (8) a parent who is not the principal earner if the parent 
who is the principal earner is not exempt under clauses (1) to 
(6) (7). 
    Any individual referred to in clause clauses (5) to (8) 
shall must be advised of the option to register for employment 
services, training services, and employment if the individual so 
desires, and shall must be informed of the child care and other 
services, if any, which will be available if the individual 
decides to register. 
    If, after planning with a recipient, a decision is made 
that the recipient must register for employment services, 
training, and employment, the county welfare department board 
shall give notice in writing to the recipient stating that he or 
she must register with the commissioner of economic security for 
participation in a work incentive program an employment and 
training service and that the recipient has a right to a fair 
hearing under section 256.045 with respect to the 
appropriateness of the registration. 
    Sec. 18.  Minnesota Statutes 1984, section 256.736, 
subdivision 4, is amended to read: 
    Subd. 4.  [CONDITIONS OF CERTIFICATION.] The commissioner 
of human services shall: 
    (1) Arrange for or provide any relative or child certified 
to the commissioner of economic security required to register 
for employment and training services pursuant to this section 
with child-care services, transportation, and other necessary 
family services; 
    (2) Pay ten percent of the cost of programs of training and 
employment established by the commissioner of economic security 
for persons certified hereunder the work incentive program and 
any other costs that are required of that agency by federal 
regulation for employment and training services for recipients 
of aid to families with dependent children; 
    (3) Provide that in determining a recipient's needs any 
monthly incentive training payment made to the recipient by the 
department of economic security jobs and training is disregarded 
and the additional expenses attributable to his participation in 
a program are taken into account in grant determination to the 
extent permitted by federal regulations; and 
    (4) Provide that when it has been certified by the 
commissioner of economic security jobs and training, 
certification to be binding upon the commissioner of human 
services, that a relative or child certified under the work 
incentive an employment and training program to the commissioner 
of economic security jobs and training has been found by the 
commissioner, after a hearing conducted in the manner prescribed 
by section 268.10, subdivision 3, with the right of review in 
accordance with the provisions of section 268.10, subdivision 8, 
to have refused without good cause to participate under a work 
incentive program in appropriate employment and training 
services or to have refused without good cause to accept a bona 
fide offer of public or other employment, the county welfare 
departments board shall provide that: 
    (a) If the relative makes the refusal, the relative's needs 
shall not be taken into account in making the grant 
determination, and aid for any dependent child in the family 
will be made in the form of protective or vendor payments, 
except that when protective payments are made, the local agency 
may continue payments to the relative if a protective payee 
cannot reasonably be found. 
    (b) Aid with respect to a dependent child will be denied if 
a child who makes the refusal is the only child receiving aid in 
the family. 
    (c) If there is more than one child receiving aid in the 
family, aid for the child who makes the refusal will be denied 
and his or her needs will not be taken into account in making 
the grant determination. 
    (d) If the assistance unit's eligibility is based on 
the nonexempt principal earner's unemployment and the principal 
earner fails or refuses without good cause to participate or to 
accept employment, the entire assistance unit is ineligible for 
benefits under sections 256.72 to 256.87, if the family is 
subject to requirements of the work incentive program. 
    Sec. 19.  Minnesota Statutes 1984, section 256.736, 
subdivision 5, is amended to read: 
    Subd. 5.  [EXTENSION OF WORK INCENTIVE EMPLOYMENT AND 
TRAINING OPPORTUNITIES.] The commissioner of human services 
shall cooperate with the commissioner of economic security jobs 
and training to promote extend the availability of training and 
employment opportunities on a state wide basis. 
    Sec. 20.  Minnesota Statutes 1984, section 256.736, 
subdivision 7, is amended to read: 
    Subd. 7.  [COMPLIANCE WITH FEDERAL CHANGES RULEMAKING.] The 
commissioner of human services is authorized to promulgate such, 
in cooperation with the commissioner of jobs and training, may 
make rules and regulations as are necessary to qualify for any 
federal funds available under this section and to carry out this 
section. 
    Sec. 21.  Minnesota Statutes 1984, section 256.736, is 
amended by adding a subdivision to read: 
    Subd. 8.  [SPECIAL NEEDS.] The commissioner of human 
services shall amend the state plan for aid to families with 
dependent children to provide, as special needs payments, money 
for the costs of child care, transportation, tuition, and items 
associated with education or seeking employment to the extent 
allowed under federal regulations and state appropriations.  
    Sec. 22.  Minnesota Statutes 1984, section 256.736, is 
amended by adding a subdivision to read: 
    Subd. 9.  [CHANGES IN STATE PLAN AND RULES; WAIVERS.] The 
commissioner of human services shall make changes in the state 
plan and rules or seek any waivers or demonstration authority 
necessary to minimize barriers to participation in the 
employment and training services or to employment.  Changes must 
be sought in at least the following areas:  allowances, child 
care, work expenses, the amount and duration of earnings 
incentives, medical care coverage, limitations on the hours of 
employment, and administrative standards and procedures.  The 
commissioner shall implement each change as soon as possible.  
Before implementing any demonstration project or a program that 
is a result of a waiver, the conditions under section 256.01, 
subdivision 1, clause (12), must be met, and the chair of the 
senate health and human services committee and the chair of the 
house of representatives health and human services committee 
must be notified. 
    Sec. 23.  Minnesota Statutes 1984, section 256.737, is 
amended to read: 
    256.737 [COMMUNITY WORK EXPERIENCE PROGRAM.] 
    Subdivision 1.  [PILOT PROGRAMS.] In order that persons 
receiving aid under this chapter may be assisted in achieving 
self-sufficiency by enhancing their employability through 
meaningful work experience and training and the development of 
job search skills, the commissioner of human services may 
continue the pilot community work experience demonstration 
programs that were approved by January 1, 1984.  No new pilot 
community work experience demonstration programs may be 
established under this subdivision.  The commissioner shall:  
(a) assist counties in the design, implementation, and 
evaluation of these demonstration programs; (b) promulgate, in 
accordance with chapter 14, emergency rules necessary for the 
implementation of this section, except that the time 
restrictions of section 14.35 shall not apply and the rules may 
be in effect until the termination of the demonstration 
programs; and (c) seek any federal waivers necessary for proper 
implementation of this section in accordance with federal law.  
The commissioner shall prohibit use of participants in the 
programs to do work that was part or all of the duties or 
responsibilities of an authorized public employee position 
established as of January 1, 1983 1985.  The exclusive 
bargaining representative shall be notified no less than 14 days 
in advance of any placement by the community work experience 
program.  Concurrence with respect to job duties of persons 
placed under the community work experience program shall be 
obtained from the appropriate exclusive bargaining 
representative.  The appropriate oversight committee shall be 
given monthly lists of all job placements under a community work 
experience program. 
    Projects shall end no later than June 30, 1985 1987, and a 
preliminary report shall be made to the legislature by February 
15, 1985 1987, on the feasibility of permanent implementation 
and on the cost effectiveness of each of the demonstration 
programs.  
     Subd. 2.  [ADDITIONAL PROGRAMS.] In addition to the pilot 
programs established in subdivision 1, the commissioner may 
approve the application of up to eight additional counties to 
enter into a community work experience program.  The programs 
under this subdivision are governed by subdivision 1 except as 
in paragraphs (a) and (b).  
    (a) As a condition to placing a person receiving aid to 
families with dependent children in a program under this 
subdivision, the county shall first provide the recipient the 
opportunity to participate in the following services:  
    (1) placement in suitable subsidized or unsubsidized 
employment; or 
    (2) basic educational or vocational or occupational 
training for an identifiable job opportunity.  
    (b) If the recipient refuses suitable employment and a 
training program, the county may require the recipient to 
participate in a community work experience program as a 
condition of eligibility. 
    Sec. 24.  Minnesota Statutes 1984, section 256C.24, is 
amended to read: 
    256C.24 [REGIONAL SERVICE CENTERS.] 
    Subdivision 1.  [LOCATION.] The commissioner of economic 
security human services shall establish up to eight regional 
service centers for hearing impaired persons.  The centers shall 
be co-located with existing vocational rehabilitation field 
offices and be distributed regionally to provide access for 
hearing impaired persons in all parts of the state.  The center 
shall maintain a current registry of those persons having or 
suspected of having a hearing impairment who live in that 
region.  A special task of the registry is to assure that 
referrals and follow-up services are completed with respect to 
persons in the register.  
    Subd. 2.  [RESPONSIBILITIES.] The regional service center 
shall:  
    (a) Serve as the central entry point for hearing impaired 
persons in need of human services and make referrals to the 
services needed;  
    (b) Employ staff trained to work with hearing impaired 
persons;  
    (c) Provide to all hearing impaired persons interpreter 
services which are necessary to help them obtain human services; 
    (d) Serve as the regional interpreter referral center for 
hearing impaired persons and human services agencies;  
    (e) Loan equipment and resource materials to hearing 
impaired persons; and 
    (f) Cooperate with the department of human services 
responsible departments and administrative authorities to 
provide access for hearing impaired persons to services provided 
by state, county and regional human services agencies.  
    Subd. 3.  [ADVISORY COMMITTEE.] The commissioner of 
economic security, in consultation with the commissioner of 
human services shall appoint an advisory committee of eight 
persons for each regional service center.  Members shall include 
four persons who are hearing impaired persons or who are the 
parents of a hearing impaired child and four representatives of 
county and regional human services, including representatives of 
private service providers.  Members shall serve without payment 
by the state of per diem or expense.  The commissioner of 
economic security human services shall designate one member as 
chairperson.  The commissioners of economic security and 
commissioner of human services shall assign staff to serve as ex 
officio members of the committee.  
    Sec. 25.  Minnesota Statutes 1984, section 256C.25, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ESTABLISHMENT.] The commissioner of 
economic security human services shall supervise the development 
and implementation of a statewide interpreter referral service.  
The commissioner of economic security human services shall 
contract with appropriate organizations to provide this 
centralized service.  
    Sec. 26.  Minnesota Statutes 1984, section 256C.26, is 
amended to read: 
    256C.26 [EMPLOYMENT SERVICES.] 
    The commissioner of economic security jobs and training 
shall develop and implement a include in the biennial 
plan submitted to the full productivity and opportunity 
coordinator a method to deal with the underemployment of hearing 
impaired persons.  The plan shall provide for training regarding 
the nature of hearing handicaps for department staff who consult 
with prospective employers or who provide job placement services.
    Sec. 27.  [256C.28] [COUNCIL FOR THE HEARING IMPAIRED.] 
    Subdivision 1.  [MEMBERSHIP.] The Minnesota council for the 
hearing impaired consists of seven members appointed by the 
commissioner of human services and a member from each advisory 
council established under section 256C.24, subdivision 3.  At 
least four of the members appointed by the commissioner must be 
hearing impaired.  Council members appointed by the commissioner 
serve four-year terms, except for the members first appointed, 
of whom three are appointed for a term ending December 31, 1990, 
two for terms ending December 31, 1989, and two for terms ending 
December 31, 1988. 
    Subd. 2.  [REMOVAL; VACANCIES.] The compensation, removal 
of members, and filling of vacancies on the council are as 
provided in section 15.0575. 
    Subd. 3.  [DUTIES.] The council shall: 
    (1) advise the commissioner on the development of policies, 
programs, and services affecting the hearing impaired, and on 
the use of appropriate federal and state money; 
    (2) create a public awareness of the special needs and 
potential of hearing impaired persons; and 
    (3) provide the commissioner with a review of ongoing 
services, programs, and proposed legislation affecting the 
hearing impaired. 
    Sec. 28.  Minnesota Statutes 1984, section 256D.02, 
subdivision 13, is amended to read:  
    Subd. 13.  "Suitable employment" means an appropriate 
income producing job including, but not limited to, all public 
publicly subsidized jobs procured through the work equity 
program services administered by or coordinated with the 
commissioner of jobs and training.  
    Sec. 29.  Minnesota Statutes 1984, section 256D.03, 
subdivision 2, is amended to read:  
    Subd. 2.  After December 31, 1980, state aid shall be paid 
to local agencies for 75 percent of all general assistance 
grants up to the standards of section 256D.01, subdivision 1 1a, 
and according to procedures established by the commissioner.  
    After December 31, 1986, state aid must be paid to local 
agencies for 65 percent of work readiness assistance paid under 
section 256D.051 if the county does not have an approved and 
operating community investment program.  
    Any local agency may, from its own resources, make payments 
of general assistance:  (a) at a standard higher than that 
established by the commissioner without reference to the 
standards of section 256D.01, subdivision 1; or, (b) to persons 
not meeting the eligibility standards set forth in section 
256D.05, subdivision 1, but for whom the aid would further the 
purposes established in the general assistance program in 
accordance with rules promulgated by the commissioner pursuant 
to the administrative procedure act. 
    Sec. 30.  Minnesota Statutes 1984, section 256D.09, 
subdivision 3, is amended to read:  
    Subd. 3.  [EMPLOYMENT PAYMENTS FUNDED BY GRANT DIVERSION.] 
Notwithstanding the provisions of subdivision 1, the 
commissioner may of jobs and training shall establish by rule or 
emergency rule a grant diversion program process for payment of 
all or a part of a recipient's grant or work readiness 
assistance payment to a private, or nonprofit, or public 
employer who agrees to employ the recipient in a permanent job 
or to a public employer who agrees to employ the recipient in a 
permanent job or an approved community investment program.  The 
commissioner of jobs and training shall design the program to 
provide, to the extent possible, employment or 
employment-related training that will enable recipients to 
become self-supporting.  A recipient shall be eligible for 
general assistance medical care during the term of the grant 
diversion contract to the extent that medical care coverage is 
not provided by the employer.  Any rule adopted by the 
commissioner of jobs and training:  
    (a) Shall require the local agencies to administer the and 
deliver the grant diversion program diversions directly or to 
delegate administration contract for the delivery of the program 
to another unit of government according to section 268.871; 
    (b) Shall require that grants or work readiness assistance 
payments paid to employers be paid pursuant to a written grant 
diversion contract;  
    (c) Shall determine the amount of the grant or work 
readiness assistance payment to be paid to the employer and the 
term of the grant diversion contract;  
    (d) Shall establish standards to ensure that recipients 
hired pursuant to grant diversion contracts do not displace 
other workers;  
    (e) Shall provide for the amount of the wage to be paid to 
the recipient, which shall not be less than the minimum wage for 
jobs with nonprofit and public employers and shall be the usual 
and customary wage for comparable jobs with private the 
employers;  
    (f) Shall provide for require that the minimum number of 
hours per month the recipient must work, which shall be job 
provide sufficient hours of work each month to provide a net 
monthly wage equal to or exceeding the difference between the 
amount of the grant or work readiness assistance payment 
retained by the recipient and 150 percent of the recipient's 
monthly grant or work readiness assistance payment standard if 
the recipient were not employed; and 
    (g) May establish other terms and conditions for the 
operation of the grant diversion program process.  
    Sec. 31.  [256D.113] [EMPLOYMENT EXPERIENCE PROGRAM.] 
    Subdivision 1.  [CREATION AND PURPOSE.] A county that does 
not have an approved community investment program may, in 
cooperation with the commissioner of jobs and training, 
establish a locally administered employment experience program 
for persons receiving work readiness assistance.  The purpose of 
the program is to help recipients achieve self-sufficiency by 
enhancing their employability through training and work 
experience. 
    Subd. 2.  [COMMISSIONER OF JOBS AND TRAINING.] The 
commissioner of jobs and training shall assist counties in the 
design, implementation, and evaluation of the employment 
experience program.  The commissioner of jobs and training may 
make emergency and permanent rules to carry out this section. 
    Subd. 3.  [RESPONSIBILITY; COUNTY BOARDS OF COMMISSIONERS.] 
A county may establish an employment experience program and may 
assign work to the recipient that he or she is able to perform.  
Work performed through this program must not displace persons 
currently employed or fill an established vacant position.  The 
county must provide workers' compensation or other comparable 
protection for an employment experience participant.  A 
participant is not eligible for unemployment compensation, and 
is not an employee of the state of Minnesota within the meaning 
of section 43A.02, subdivision 21. 
    Subd. 4.  [PARTICIPATION REQUIREMENTS.] A county may 
require a registrant under section 256D.051 to participate in an 
employment experience program.  If possible, the recipient must 
be placed in other employment and training services, including 
grant diversion or training, before placement in an employment 
experience program.  The county may terminate assistance 
payments provided for by this chapter for a recipient who may be 
required to participate in an employment experience program but 
who refuses to participate in an employment experience program 
or other employment and training services. 
    Subd. 5.  [PARTICIPANT REIMBURSEMENT.] A participant is 
required to participate in an employment experience program for 
no more than the number of hours equal to the work readiness 
assistance payment divided by the state minimum wage.  A county 
shall provide transportation, child care, and work related 
expenses according to standards prescribed by the commissioner 
of jobs and training. 
    Sec. 32.  [267.01] [PURPOSE.] 
    The legislature finds that changes in the state economy and 
the structure of federal support have altered the role of state 
government in the planning, development, and delivery of 
employment, job training, job creation, income maintenance, and 
human services programs; that the proliferation of these 
programs, coupled with the changing characteristics and 
requirements of people seeking employment, has produced a need 
for the state to coordinate the delivery of services and 
programs; that there exists no office with interagency and 
intergovernmental focus sufficient to develop a plan to achieve 
full economic productivity and opportunity in Minnesota and 
effectively coordinate the delivery of services and programs for 
the purpose of simultaneously reducing unemployment rates and 
welfare caseloads. 
    Sec. 33.  [267.02] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] For purposes of sections 
267.02 to 267.06, the following terms have the meanings given 
them. 
    Subd. 2.  [COORDINATOR.] "Coordinator" means the full 
productivity and opportunity coordinator. 
    Subd. 3.  [EMPLOYMENT AND TRAINING SERVICES.] "Employment 
and training services" means programs, activities, and services 
related to job training, job placement, and job creation 
including job service programs, job training partnership act 
programs, wage subsidies, work incentive programs, work 
readiness programs, employment search, counseling, community 
work experience programs, displaced homemaker programs, 
disadvantaged job training programs, grant diversion, employment 
experience programs, youth employment programs, conservation 
corps, apprenticeship programs, community investment programs, 
supported work programs, community development corporations, 
economic development programs, and opportunities 
industrialization centers. 
    Subd. 4.  [INCOME MAINTENANCE AND SUPPORT SERVICES.] 
"Income maintenance and support services" means programs through 
which the state or its subdivisions provide direct financial or 
in-kind support to unemployed or underemployed persons, 
including unemployment compensation, aid to families with 
dependent children, general assistance, work readiness 
assistance, food stamps, energy assistance, disability 
determinations, and child care.  "Income maintenance and support 
services" does not include medical assistance, aging services, 
social services, community social services, mental health 
services, or services for the emotionally disturbed, the 
mentally retarded, or residents of nursing homes. 
    Subd. 5.  [LOCAL SERVICE UNIT.] "Local service unit" means 
a county, counties operating under a joint powers agreement, one 
or more counties and one or more cities of the first class 
operating under a joint powers agreement, or a city of the first 
class. 
    Subd. 6.  [PUBLIC ASSISTANCE.] "Public assistance" means 
aid to families with dependent children, general assistance, and 
work readiness. 
    Subd. 7.  [SERVICE PROVIDER.] "Service provider" means a 
public, private, or nonprofit agency that is capable of 
providing one or more of the services or administering one or 
more of the programs for which the full productivity and 
opportunity coordinator has responsibility under this section. 
    Subd. 8.  [WAGE SUBSIDIES.] "Wage subsidies" means the 
issuing of payments to employers to offset the costs of wages, 
fringe benefits, and training for eligible employees under the 
limitations in sections 268.672 to 268.682, and may be referred 
to as Minnesota employment and economic development (MEED) wage 
subsidies. 
    Sec. 34.  [267.03] [OFFICE OF FULL PRODUCTIVITY AND 
OPPORTUNITY; COORDINATOR.] 
    Subdivision 1.  [FULL PRODUCTIVITY AND OPPORTUNITY 
COORDINATOR.] The governor, with the advice and consent of the 
senate, shall appoint a full productivity and opportunity 
coordinator to serve at the pleasure of the governor in the 
unclassified service.  The salary of the coordinator is set 
under section 15A.081.  The coordinator is head of the office of 
full productivity and opportunity and chairs the full 
productivity and opportunity council.  In addition to the powers 
granted by this chapter, the coordinator has the powers listed 
in section 15.06, subdivision 6.  The coordinator shall 
administer sections 267.03 to 267.06. 
    Subd. 2.  [POWERS.] The coordinator of full productivity 
and opportunity may: 
    (1) appoint a deputy, a confidential secretary, and up to 
two additional employees, in the unclassified service; 
    (2) appoint other employees under chapter 43A; 
    (3) make rules under chapter 14; 
    (4) enter into contracts;  
    (5) further the objectives of the biennial plan by 
recommending to the governor interdepartmental transfer of 
employment and training services or income maintenance and 
support services, which the commissioner of administration, if 
so ordered by the governor, shall carry out as provided in 
section 16B.37, subdivisions 1, 2, and 3, and implement so as 
not to lead to a reduction of federal money to the state or its 
political subdivisions; 
    (6) further the objectives of the biennial plan by 
recommending to the governor transfer of one or more employment 
and training services or income maintenance and support services 
to a certified service provider other than a state agency; 
    (7) initiate emergency wage subsidies, consider the 
recommendations of the commissioner of jobs and training for the 
use of the discretionary portion of wage subsidy appropriations, 
and allocate the discretionary portion of wage subsidy 
appropriations; 
    (8) require the commissioners of jobs and training, human 
services, energy and economic development, and administration, 
and the state planning director, to furnish technical, 
administrative, and financial services to the coordinator upon 
request; 
    (9) require agencies to submit to the coordinator for 
approval or disapproval within 20 days any rule that relates to 
employment and training services or income maintenance and 
support services before the publication of the notice of intent 
required by section 14.22 or 14.30, and, if it is disapproved, 
require that the rule be amended and resubmitted to the 
coordinator; 
    (10) establish the standards by which the commissioner of 
jobs and training shall certify service providers; 
    (11) decertify service providers after consultation with 
the commissioner; 
    (12) contract with another local service unit or certified 
service provider for employment and training services in that 
local service unit if the coordinator, after consultation with 
the commissioner of jobs and training, finds that a local 
service unit consistently fails to provide service of sufficient 
quantity and quality to satisfy criteria established for the 
receipt of state money; and 
    (13) ratify or disapprove the commissioner of jobs and 
training's decisions regarding the approval or disapproval of 
local service unit plans and community investment program plans. 
    Sec. 35.  [267.04] [DUTIES AND RESPONSIBILITIES.] 
    Subdivision 1.  [DUTIES.] The coordinator shall: 
    (1) coordinate the policies and administration of 
employment and training programs and income maintenance and 
support services among state agencies; 
    (2) review the delivery, operating performance, 
effectiveness, and degree of integration of income maintenance 
and support services and employment and training services; 
    (3) consult with the governor on income maintenance, 
employment, and training; provide assistance to the governor 
related to income maintenance and employment and training; and 
recommend to the governor and the legislature improvements in 
delivery of employment and training services and income 
maintenance and support services; 
    (4) confer with and advise state agencies and local service 
units that are responsible for income maintenance and support 
services and employment and training services; 
    (5) ensure coordination and cooperation among state and 
federal agencies, county and local governments, and private 
service providers serving on a contract basis; 
    (6) prepare and oversee the implementation of the biennial 
plan; 
    (7) review criteria established by state agencies for 
receipt of state money designated for employment and training 
services and income maintenance and support services; 
    (8) monitor and evaluate the performance and effectiveness 
of local service units' income maintenance and support services 
and their employment and training services; 
    (9) report to the legislature regarding changes needed to 
more adequately serve the needs of those who are unemployed, 
underemployed, or untrained; 
    (10) design and monitor the development and administration 
of the intake, referral, and inventory system; 
    (11) enhance the delivery of employment and training 
services and income maintenance and support services by working 
with the commissioner of administration to coordinate data bases 
and information systems among state agencies, including the 
departments of energy and economic development, jobs and 
training, human services, transportation, natural resources, and 
public safety, and the state planning agency; 
    (12) review and make recommendations concerning plans of 
the commissioner of jobs and training and the commissioner of 
human services for federally sponsored programs and 
demonstration projects; 
    (13) develop standards for plans required of state agencies;
    (14) review and approve standards for the local service 
unit plans established by the commissioner of jobs and training; 
    (15) recommend to individual service units annual 
performance objectives that include realistic goals for reducing 
or managing unemployment rates and welfare caseloads, for use in 
preparing their local service unit plans; 
    (16) seek input from representatives of local service 
units, business, and labor on the delivery and development of 
employment and training services and income maintenance and 
support services; 
    (17) monitor the administration of wage subsidies; and 
    (18) develop a method to identify the county that has 
financial responsibility for a client's public assistance. 
    Subd. 2.  [BIENNIAL PLAN.] (a) The coordinator shall submit 
a biennial plan to the governor by July 1 of each even-numbered 
year.  Upon approval by the governor, the plan serves as a basis 
for the development of the governor's budget proposal for 
employment and training services, income maintenance and support 
services.  After the legislature has acted, and before July 1 of 
each odd-numbered year, the coordinator shall revise the 
biennial plan to incorporate legislative action.  Upon approval 
by the governor, the revised plan governs the administration and 
delivery of all employment and training services and income 
maintenance and support services. 
    (b) The plan must provide at least the following: 
    (1) a strategy for achieving full productivity and 
opportunity in Minnesota that specifies priorities among 
employment and training services, income maintenance and support 
services, and economic development programs; 
    (2) unemployment reduction goals; 
    (3) income maintenance caseload reduction goals; 
    (4) a review and comment on the state's post-secondary 
vocational programs as administered by the vocational technical 
education system and the community colleges; 
    (5) a strategy for efficient integration of federal, state, 
local, and private resources; 
    (6) a strategy to encourage local and private involvement 
in the full productivity and opportunity program; and 
    (7) recommendations to maximize the effectiveness of 
appropriated money. 
    Subd. 3.  [INTAKE, REFERRAL, AND INVENTORY SYSTEM.] Within 
90 days of appointment, the coordinator shall develop guidelines 
and a timetable for the development of an intake, referral, and 
inventory system and determine which state agency is responsible 
for the administration of the system.  The goal of the system 
must be to provide localized, single-point client intake with 
direct access to a statewide data base.  The system must include 
information on all available public and private programs for 
employment and training services and income maintenance and 
support services.  The system must be designed to match client 
needs with employment opportunities, appropriate services, 
programs, providers, funding sources, and other sources of 
assistance and to provide for client tracking.  The system must 
be coordinated with other state data bases.  Access to the 
system, within federal and state data practices requirements, 
must be available in each public income maintenance and 
employment and training office.  The system is not subject to 
sections 16B.40 to 16B.45.  In developing the system, the 
coordinator shall consult with local service units, service 
providers, employers, and clients. 
    Subd. 4.  [DUTIES WITH RESPECT TO COMMUNITY INVESTMENT 
PROGRAMS.] The coordinator shall: 
    (1) confer with the commissioners of jobs and training, 
energy and economic development, human services, education, 
agriculture, public safety, natural resources, and health, the 
directors of the state planning agency and of vocational 
technical education, and representatives of local governments to 
determine the kinds of activities valuable to the state and 
local communities and the kinds of jobs that would provide 
valuable training, skills, and work experience to part-time 
program employees; 
    (2) review and approve standards governing community 
investment programs; 
    (3) monitor the administration and results of community 
investment programs; and 
    (4) arbitrate disputes among local service units, 
employers, exclusive representatives, or state agencies 
regarding community investment programs. 
    Subd. 5.  [JOB DISPLACEMENT DISPUTES.] Disputes involving 
the displacement of jobs because individuals are placed in 
subsidized employment, including community investment programs, 
summer youth employment, the youth conservation corps, community 
work experience programs, employment experience programs, and 
wage subsidies, must be resolved, within ten days of the filing 
of a complaint with the coordinator, by a review panel 
consisting of the coordinator, a statewide public employee 
representative appointed by the governor, and a representative 
of the counties appointed by the governor. 
    Sec. 36.  [267.05] [FULL PRODUCTIVITY AND OPPORTUNITY 
COUNCIL.] 
    Subdivision 1.  [MEMBERSHIP.] The full productivity and 
opportunity council consists of the coordinator; the 
commissioners of education, jobs and training, finance, energy 
and economic development, and human services; the chancellors of 
the community college and state university systems; the 
directors of the state planning agency, the job skills 
partnership, and the vocational technical education system; the 
president of the University of Minnesota or the president's 
designee; a representative of organized labor; and a 
representative of business.  The coordinator shall appoint the 
representatives of organized labor and business. 
    Subd. 2.  [DUTIES.] The council shall provide information 
to and advise the coordinator in the preparation of the biennial 
plan and regarding employment and training services and income 
maintenance and support services. 
    Sec. 37.  [267.06] [COOPERATION OF STATE AGENCIES AND 
COUNTY AND LOCAL GOVERNMENTS.] 
    All state agencies, counties, and units of local government 
shall cooperate fully with the full productivity and opportunity 
coordinator to achieve the goals of the biennial plan. 
    Sec. 38.  [268.0111] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] The definitions in this 
section apply to chapter 268. 
    Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
commissioner of jobs and training. 
    Subd. 3.  [COORDINATOR.] "Coordinator" means the full 
productivity and opportunity coordinator. 
    Subd. 4.  [EMPLOYMENT AND TRAINING SERVICES.] "Employment 
and training services" means programs, activities, and services 
related to job training, job placement, and job creation 
including job service programs, job training partnership act 
programs, wage subsidies, work incentive programs, work 
readiness programs, employment search, counseling, community 
work experience programs, displaced homemaker programs, 
disadvantaged job training programs, grant diversion, employment 
experience programs, youth employment programs, conservation 
corps, apprenticeship programs, community investment programs, 
supported work programs, community development corporations, 
economic development programs, and opportunities 
industrialization centers. 
    Subd. 5.  [INCOME MAINTENANCE AND SUPPORT 
SERVICES.] "Income maintenance and support services" means 
programs through which the state or its subdivisions provide 
direct financial or in-kind support to unemployed or 
underemployed persons, including unemployment compensation, aid 
to families with dependent children, general assistance, work 
readiness assistance, food stamps, energy assistance, disability 
determinations, and child care.  Income maintenance and support 
services do not include medical assistance, aging services, 
social services, community social services, mental health 
services, or services for the emotionally disturbed, the 
mentally retarded, or residents of nursing homes. 
    Subd. 6.  [LOCAL SERVICE UNIT.] "Local service unit" means 
a county, counties operating under a joint powers agreement, one 
or more counties and one or more cities of the first class 
operating under a joint powers agreement, or a city of the first 
class. 
    Subd. 7.  [PUBLIC ASSISTANCE.] "Public assistance" means 
aid to families with dependent children, general assistance, and 
work readiness.  
    Subd. 8.  [SERVICE PROVIDER.] "Service provider" means a 
public, private, or nonprofit agency that is capable of 
providing one or more of the services or administering one or 
more of the programs for which the full productivity and 
opportunity coordinator has responsibility under this section.  
    Subd. 9.  [WAGE SUBSIDIES.] "Wage subsidies" means issuing 
of payments to employers to offset the costs of wages, fringe 
benefits, and training for eligible employees under the 
limitations established in sections 268.672 to 268.682, and may 
be referred to as Minnesota employment and economic development 
(MEED) wage subsidies.  
    Sec. 39.  [268.0121] [CREATION.] 
    Subdivision 1.  [PURPOSE.] The department of jobs and 
training has broad responsibility to increase the economic 
independence of Minnesotans with special effort toward those who 
are currently unemployed or who face special disadvantages in 
the labor market.  The department shall develop employment 
policies and link training and employment-related services with 
temporary income replacement and income maintenance programs, 
veterans' programs, workers' compensation, vocational and 
post-secondary education, federal income insurance programs, and 
economic development programs. 
    Subd. 2.  [COMMISSIONER.] The governor shall appoint the 
commissioner of jobs and training with the advice and consent of 
the senate. 
    Subd. 3.  [UNCLASSIFIED POSITIONS.] The commissioner may 
establish positions in the unclassified service in accordance 
with section 43A.08.  The commissioner may appoint and define 
the duties of other subordinate officers and employees as the 
commissioner deems necessary to discharge the functions of the 
department. 
    Subd. 4.  [DELEGATION OF POWERS.] The commissioner may 
delegate, in written orders filed with the secretary of state, 
any powers or duties subject to the commissioner's control to 
officers and employees in the department.  Notwithstanding any 
other law, the commissioner may delegate the execution of 
specific contracts or specific types of contracts to the 
commissioner's deputies, an assistant commissioner, or a program 
director if the delegation has been approved by the commissioner 
of administration and filed with the secretary of state. 
    Subd. 5.  [RECEIPT OF GIFTS, MONEY.] The commissioner may 
accept gifts, bequests, grants, payments for services, and other 
public and private money to help finance the activities of the 
department. 
    Sec. 40.  [268.0122] [POWERS AND DUTIES.] 
    Subdivision 1.  [STATE AGENCY.] The commissioner of jobs 
and training is designated the "state agency" as defined by 
United States Code, title 29, section 49c, the Wagner-Peyser 
Act, as amended through December 31, 1984.  
    Subd. 2.  [SPECIFIC POWERS.] The commissioner of jobs and 
training shall: 
    (1) administer and supervise all forms of unemployment 
insurance provided for under federal and state laws that are 
vested in the commissioner; 
    (2) administer and supervise all employment and training 
services assigned to the department of jobs and training under 
federal or state law; 
    (3) review and comment on local service unit plans and 
community investment program plans and, with the concurrence of 
the coordinator, approve or disapprove the plans; 
    (4) establish and maintain administrative units necessary 
to perform administrative functions common to all divisions of 
the department; 
    (5) supervise the county boards of commissioners, local 
service units, and any other units of government designated in 
federal or state law as responsible for employment and training 
programs; 
    (6) establish administrative standards and payment 
conditions for providers of employment and training services; 
    (7) act as the agent of, and cooperate with, the federal 
government in matters of mutual concern, including the 
administration of any federal funds granted to the state to aid 
in the performance of functions of the commissioner; and 
    (8) obtain reports from local service units and service 
providers for the purpose of evaluating the performance of 
employment and training services. 
    Subd. 3.  [DUTIES AS A STATE AGENCY.] The commissioner 
shall: 
    (1) administer the unemployment insurance laws and related 
programs; 
    (2) administer the aspects of aid to families with 
dependent children, general assistance, work readiness, and food 
stamps that relate to employment and training services, subject 
to the limitations of federal regulations; 
    (3) administer wage subsidies and recommend to the 
coordinator the use of the discretionary portion of wage subsidy 
appropriations; 
    (4) administer a national system of public employment 
offices as prescribed by United States Code, title 29, chapter 
4B, the Wagner-Peyser Act, and other federal employment and 
training programs; 
    (5) cooperate with the federal government and its 
employment and training agencies in any reasonable manner as 
necessary to qualify for federal aid for employment and training 
services and money; 
    (6) enter into agreements with other departments of the 
state and local units of government as necessary; 
    (7) certify competent service providers and, with the 
concurrence of the coordinator, decertify service providers that 
fail to comply with performance criteria according to standards 
established by the coordinator; 
    (8) provide consistent, integrated employment and training 
services across the state; 
    (9) establish the standards for all employment and training 
services administered under this chapter; 
    (10) develop standards for the contents and structure of 
the county plans;  
    (11) provide current state and substate labor market 
information and forecasts, in cooperation with other agencies; 
    (12) prepare a plan and submit it to the coordinator in 
each even-numbered year, according to standards established by 
the coordinator, for use in developing a statewide employment 
and training plan; 
    (13) identify underserved populations, unmet service needs, 
and funding requirements; 
    (14) consult with the council for the blind on matters 
pertaining to programs and services for the blind and visually 
impaired; and 
    (15) submit to the governor, the coordinator, the 
commissioners of human services and finance, and the chairs of 
the senate finance and house appropriations committees a 
semiannual report that: 
    (a) reports, by client classification, an unduplicated 
count of the kinds and number of services furnished through each 
program administered or supervised by the department or 
coordinated with it; 
    (b) reports on the number of job openings listed, 
developed, available, and obtained by clients; 
    (c) identifies the number of cooperative agreements in 
place, the number of individuals being served, and the kinds of 
service provided them; 
    (d) evaluates the performance of services, such as wage 
subsidies, community investments, work readiness, and grant 
diversions; and 
    (e) explains the effects of current employment levels, 
unemployment rates, and program performance on the unemployment 
insurance fund and general assistance, work readiness, and aid 
to families with dependent children caseloads and program 
expenditures. 
    Subd. 4.  [DEMONSTRATION PROJECTS.] The commissioner may 
conduct and administer demonstration projects to test methods 
and procedures for providing employment and training services.  
The demonstration must provide new methods and procedures of 
administration and must not conflict with the basic purposes, 
coverage, or benefits provided by law.  No demonstration project 
authorized by this section is effective until the following 
conditions are met: 
    (a) a comprehensive plan, including the estimated project 
costs, is filed with the secretary of the senate and the chief 
clerk of the house of representatives at least 60 days before 
its effective date; 
    (b) any required approval by a federal agency is obtained; 
and 
    (c) the comprehensive plan, including the estimated project 
costs, is approved by the legislative advisory commission and 
filed with the commissioner of administration.  
    Subd. 5.  [RULEMAKING.] The commissioner may make emergency 
and permanent rules to carry out this chapter. 
    Sec. 41.  Minnesota Statutes 1984, section 268.31, is 
amended to read: 
    268.31 [DEVELOPMENT OF YOUTH EMPLOYMENT OPPORTUNITIES.] 
    To the extent of available funding, the commissioner of 
economic security jobs and training shall hire establish a 
program to employ individuals from the ages of 14 years up to 22 
years.  Available money must be used to support employment under 
this section for a maximum of 12 weeks, not to exceed 40 hours 
per week per individual, during the summer for the purpose of 
placing such individuals in service with the department of 
economic security and with other departments, agencies and 
instrumentalities of the state, county, local governments, 
school districts and with nonprofit organizations and for job 
related support services not to exceed ten percent of the 
allocation for eligible youths placed in public or nonprofit 
sector summer employment.  Priority for employment shall be 
given to those young individuals between the ages of 16 years up 
to 22 years.  The commissioner shall cooperate with the 
commissioner of human services in determining and implementing 
the most effective means of disregarding a youth's earnings from 
family income for purposes of the aid to families with dependent 
children program, to the extent permitted by the federal 
government. 
    Sec. 42.  Minnesota Statutes 1984, section 268.32, is 
amended to read: 
    268.32 [RATE OF PAY.] 
    Persons hired employed pursuant to sections 268.31 to 
268.36 shall be compensated at the federal minimum wage rate.  
Persons hired in a supervisory capacity shall be compensated at 
a rate according to criteria established by the commissioner by 
rule. 
    Sec. 43.  Minnesota Statutes 1984, section 268.33, is 
amended to read: 
    268.33 [ELIGIBILITY FOR EMPLOYMENT AND PLACEMENT.] 
    Subdivision 1.  The department of economic security 
commissioner of jobs and training shall promulgate make rules 
determining the priority and eligibility for employment and 
placement pursuant to sections 268.31 to 268.36.  The department 
shall have commissioner has emergency powers and permanent 
rulemaking authority to implement rules for carrying out 
sections 268.31 to 268.36. 
    Subd. 2.  The department of economic security commissioner 
of jobs and training shall, for the purposes of sections 268.31 
to 268.36, be exempt from complying with any law relating to 
hiring by departments, agencies or instrumentalities of the 
state. 
    Sec. 44.  Minnesota Statutes 1984, section 268.34, is 
amended to read: 
    268.34 [EMPLOYMENT CONTRACTS.] 
    The commissioner may enter into arrangements with existing 
public and private nonprofit organizations and agencies with 
experience in administering summer youth employment programs for 
the purpose of providing employment opportunities in furtherance 
of sections 268.31 to 268.36 and to advance up to 20 percent of 
a summer youth employment contract to any participating 
organization or agency.  The department of economic security 
jobs and training shall retain ultimate responsibility for the 
administration of this employment program, including but not 
limited to, approval of summer job opportunities, review 
eligibility of job applicants therefor, placement of youth in 
jobs, and the disbursement of funds.  
    Sec. 45.  Minnesota Statutes 1984, section 268.36, is 
amended to read: 
    268.36 [REPORT TO THE GOVERNOR COORDINATOR AND THE 
LEGISLATURE.] 
    The commissioner, after consultation with the CETA prime 
sponsors local service units and providers of employment and 
training services, shall evaluate the effectiveness of the youth 
employment program programs, taking into account the extent 
of other all programs which are providing summer employment 
opportunities for youth covered under sections 268.31 to 268.36, 
and shall report to the governor coordinator and the legislature 
no later than January 15 of each even even-numbered year with an 
evaluation of the program this and other programs and any 
recommendations for improvements. 
    Sec. 46.  [268.65] [APPROVED TRAINING.] 
    Subdivision 1.  [CREATION.] The commissioner of jobs and 
training shall establish a training program for structurally 
unemployed workers under which individuals may be enrolled in an 
on-the-job training program, and an additional 1,000 individuals 
may be enrolled in classroom training, in accordance with this 
section.  Nothing in this section limits or adversely affects 
the approved training provisions applicable to an individual 
under section 268.08, subdivision 1, clause (3).  An individual 
approved under this section is eligible for tuition aid under 
the provisions of chapter 136A.  The commissioner shall report 
to the legislature annually regarding the status of the training 
program. 
    Subd. 2.  [APPROVAL OF TRAINING.] An individual's 
enrollment in a training course must be approved for the 
purposes of this subdivision if the commissioner finds that: 
    (1) the individual is not unemployed due to the seasonal 
nature of the work or a temporary work shortage; 
    (2) the individual's separation or notice of layoff from 
most recent employment was caused by job obsolescence, plant 
shutdown, regional decline in the individual's customary 
occupation, or industry slowdown, and the individual is unlikely 
to return to work for that employer or in that occupation within 
12 months following separation from employment; 
    (3) reasonable and suitable work opportunities for which 
the individual is fitted by training, experience, and physical 
capabilities do not exist within the local labor market; 
    (4) the training course is designed to provide preparation 
for available employment within the local labor market or in an 
area to which the individual is willing to relocate; 
    (5) the training is conducted by an agency, educational 
institution, or employing unit that is approved by the 
commissioner of education or state board for vocational 
technical education or higher education coordinating board to 
conduct training programs; except that an agency, educational 
institution, or employing unit that is not subject to regulation 
and approval by one of the agencies in this clause may be 
approved by the commissioner if it is determined that the 
institution's curriculum, facilities, staff, and other 
essentials are adequate to achieve the training objective; and 
    (6) the training consists of a full course load, as defined 
by the training provider, necessary to achieve the approved 
training objective, and the individual is making satisfactory 
progress in the course.  The department may require the training 
provider to periodically certify to the individual's attendance 
and progress. 
    Subd. 3.  [ON-THE-JOB TRAINING.] An individual who meets 
the criteria in subdivision 2 is eligible for participation in a 
full-time on-the-job training program if: 
    (1) the on-the-job training position is in an occupation 
for which the commissioner has determined a demand exists or 
will exist; in making this determination, the commissioner shall 
consider labor market information as contained in state and 
national occupational outlook publications, as well as other 
generally accepted authoritative sources with verifiable 
validity; 
    (2) the employer pays an hourly wage during training of at 
least the state minimum wage; 
    (3) the employer guarantees to provide at least 12 
consecutive months of employment to the trainee after the 
completion of training at the prevailing area labor market wage 
for a trained individual in that occupation; 
    (4) the employer will not terminate the trainee during the 
period of training or guaranteed employment except for 
misconduct or demonstrated substandard performance; and 
    (5) the employer will not terminate, lay off, or reduce the 
hours of any employee for the purpose of hiring an individual 
with money available, and will not hire an individual if another 
person is on layoff from the same or a substantially equivalent 
job. 
    Subd. 4.  [TRAINING ALLOWANCE.] During participation in an 
approved on-the-job training program, the trainee shall maintain 
satisfactory progress and attendance.  During the period of 
training specified in the agreement between the commissioner and 
the employer, individuals participating in an approved 
on-the-job training program must be paid a training allowance 
for each week claimed during the benefit year, until benefits 
are exhausted, equal to the weekly benefit amount calculated 
under section 268.07, subdivision 2, less the part of the 
earnings, including holiday pay, in excess of $100.  The 
training allowance is computed by rounding down to the nearest 
dollar amount.  Notwithstanding any other provision, an 
individual participating in on-the-job training on a full-time 
basis is not employed for purposes of benefit eligibility. 
    Subd. 5.  [EMPLOYER PENALTY.] An employer who enters into 
an on-the-job training agreement with the commissioner and who 
terminates the trainee in a manner other than provided in this 
subdivision shall repay 70 percent of the amount of unemployment 
insurance benefits paid to the individual while in the training 
program with that employer if the termination occurs during the 
training period.  If the termination occurs during the 12-month 
period of guaranteed employment, the employer receives a 
proportional reduction in the amount it must repay.  The 
commissioner shall use any money collected under this paragraph 
for job search and relocation expenses of structurally 
unemployed workers participating in the training program. 
    Sec. 47.  [268.66] [FIRST SOURCE AGREEMENTS.] 
    Subdivision 1.  [LIST OF VACANCIES.] A business or private 
enterprise receiving grants or loans from the state in amounts 
over $200,000 a year shall as part of the grant or loan agree to 
list any vacant or new positions with the job services of the 
commissioner of jobs and training or the local service units. 
    Subd. 2.  [GRANT AND LOAN AGREEMENTS.] The commissioner of 
energy and economic development shall incorporate the provisions 
of this section into grant and loan agreements and assist the 
commissioner of jobs and training and the local service units to 
promote private sector listings with job services and to 
evaluate their effect on employers and individuals who are 
referred. 
    Sec. 48.  Minnesota Statutes 1984, section 268.672, 
subdivision 6, is amended to read: 
    Subd. 6.  [ELIGIBLE JOB APPLICANT.] "Eligible job 
applicant" means a person who:  (1) has been a resident of this 
state for at least one month, (2) is unemployed, (3) is not 
receiving and is not qualified to receive unemployment 
compensation or workers' compensation, and (4) is determined by 
the employment administrator to be likely to be available for 
employment by an eligible employer for the duration of the job.  
    In addition For the purposes of this subdivision, a farmer 
who resides in a county qualified under Federal Disaster Relief 
and or any member of a farm family household who can demonstrate 
severe household financial need may must be considered 
unemployed under this subdivision.  
    Sec. 49.  Minnesota Statutes 1984, section 268.672, 
subdivision 12, is amended to read: 
    Subd. 12.  [ELIGIBLE LOCAL SERVICE DELIVERY AREA UNIT.] 
"Eligible local service delivery area unit" means an area 
designated as a local service delivery area by the 
coordinator unit that is not operating an employment experience 
program.  After February 15, 1986, an eligible local service 
unit means a local service unit with an approved community 
investment program and includes a city of the first class in a 
county with an approved community investment program.  
    Sec. 50.  Minnesota Statutes 1984, section 268.673, 
subdivision 3, is amended to read: 
    Subd. 3.  [DEPARTMENT OF ECONOMIC SECURITY JOBS AND 
TRAINING.] The coordinator commissioner shall administer 
supervise the program within the department of economic security.
The commissioner of economic security wage subsidies and shall 
provide administrative support services technical assistance to 
the coordinator eligible local service units for the purposes 
purpose of the program delivering wage subsidies.  
    Sec. 51.  Minnesota Statutes 1984, section 268.673, 
subdivision 4, is amended to read: 
    Subd. 4.  [ENFORCEMENT.] (a) The coordinator commissioner 
shall ensure that all eligible employers and employment 
administrators comply compliance with sections 268.671 268.672 
to 268.686 and all other applicable state and federal laws, 
including those relating to:  (1) affirmative action; (2) 
occupational health and safety standards; (3) environmental 
standards; and (4) fair labor practices 268.682.  
    (b) The coordinator commissioner may:  
    (1) make public or private investigations within or without 
this state necessary to determine whether any person has 
violated or is about to violate sections 268.671 268.672 to 
268.686 268.682, a contract entered into under them, or any rule 
or order adopted under them, or to aid in the enforcement of 
sections 268.671 268.672 to 268.686 268.682 or in rules and 
forms adopted under them;  
    (2) require or permit any person to file a written 
statement under oath or otherwise, as the commissioner 
determines, as to all the facts and circumstances concerning the 
matter being investigated; and 
    (3) publish information contained in any order issued by 
the coordinator;  
    (4) hold hearings, upon reasonable notice, on any matter 
arising out of the administration of sections 268.671 268.672 to 
268.686; and 
    (5) conduct investigations and hold hearings for the 
purpose of compiling information with a view to recommending 
changes in sections 268.671 to 268.686 to the 
legislature 268.682.  
    (c) The attorney general shall assign from his staff one or 
more assistant attorneys general to the coordinator commissioner 
and shall conduct all proceedings involving the violation of 
sections 268.671 268.672 to 268.686 268.682 and all other 
enforcement proceedings.  
    (d) Whenever it appears to the coordinator commissioner 
that any person has violated a provision of sections 268.671 
268.672 to 268.686 268.682, a contract entered into under them, 
or a rule or order adopted under them:  
    (1) He may issue and cause to be served upon the person an 
order requiring the person to cease and desist from the 
violation.  The order must be calculated to give reasonable 
notice of the right of the person to request a hearing on it and 
must state the reasons for the entry of the order.  A hearing 
must be held not later than seven days after a request for the 
hearing is received by the coordinator commissioner, after which 
and within 20 days of the date of the hearing the coordinator 
commissioner shall issue a further order vacating the cease and 
desist order or making it permanent as the facts require.  If no 
hearing is requested within 30 days of service of the order, the 
order becomes final and remains in effect until it is modified 
or vacated by the coordinator commissioner.  If the person to 
whom a cease and desist order is issued fails to appear at the 
hearing after being duly notified, the person shall be deemed in 
default, and the proceeding may be determined against him upon 
consideration of the cease and desist order, the allegations of 
which may be deemed to be true; 
    (2) He may bring an action in the district court of the 
appropriate county to enjoin the violation and to enforce 
compliance with the provisions of sections 268.671 268.672 to 
268.686 268.682, a contract entered into under them, or any rule 
or order adopted under them, and he may refer the matter to the 
attorney general.  Upon a proper showing, a permanent or 
temporary injunction, restraining order, or writ of mandamus 
shall be granted.  The court may not require the coordinator 
commissioner to post a bond.  
    Any injunction proceeding under the provisions of sections 
268.671 268.672 to 268.686 268.682 may be brought on for hearing 
and disposition upon an order to show cause returnable upon not 
more than eight days notice to the defendant.  The case has 
precedence over other cases upon the court calendar and may not 
be continued without the consent of the state, except upon good 
cause shown to the court, and then only for a reasonable length 
of time necessary in the opinion of the court to protect the 
rights of the defendant.  
    Sec. 52.  Minnesota Statutes 1984, section 268.673, 
subdivision 5, is amended to read: 
    Subd. 5.  [REPORT.] The coordinator Each eligible local 
service unit shall report to the legislative advisory 
commission, the chairpersons of the house and senate 
governmental operations committees, the chairperson of the 
health, welfare, and corrections division of the house 
appropriations committee, the chairperson of the health and 
human services subcommittee of the senate finance committee, and 
the governor commissioner and the coordinator on a quarterly 
basis:  (1) the number of persons employed; (2) the number and 
type of employers under the program; (3) the amount of money 
spent in each service delivery area eligible local service unit 
for wages for each type of employment and each type of other 
expense; (4) the number of persons who have completed 
participation in the program and their current employment, 
educational, or training status; (5) the specific allocation of 
discretionary funds; and (6) (5) any other information requested 
by the commission commissioner or the governor or deemed 
pertinent by the coordinator.  Each report must include 
cumulative information, as well as information for each quarter. 
    Sec. 53.  Minnesota Statutes 1984, section 268.673, 
subdivision 6, is amended to read: 
    Subd. 6.  [RULES.] The commissioner of economic security 
may adopt rules necessary to implement Laws 1983, chapter 312, 
article 7.  These rules are not subject to chapter 14, the 
Administrative Procedure Act sections 268.672 to 268.682.  
    Sec. 54.  [268.6751] [ALLOCATION OF WAGE SUBSIDY MONEY.] 
    Subdivision 1.  [WAGE SUBSIDIES.] Wage subsidy money must 
be allocated to eligible local service units in the following 
manner: 
    (a) The commissioner shall allocate 70 percent of the funds 
available for allocation to eligible local service units for 
wage subsidy programs as follows:  the proportion of the wage 
subsidy money available to each eligible local service unit must 
be based on the number of unemployed persons in the eligible 
local service unit for the most recent six-month period and the 
number of work readiness assistance cases and aid to families 
with dependent children cases in the eligible local service unit 
for the most recent six-month period. 
    (b) Thirty percent of the money available for wage subsidy 
programs must be allocated at the direction and discretion of 
the coordinator.  The commissioner shall distribute the 
discretionary portion of wage subsidy appropriations at the 
request of the coordinator.  For the biennium ending June 30, 
1987, up to 25 percent of the discretionary portion of the wage 
subsidy appropriation may be used to support the office of full 
productivity and opportunity and the development of an intake, 
referral, and inventory system.  In allocating the remaining 
discretionary portion of the wage subsidy appropriation, the 
coordinator shall give priority to eligible local service units 
that have: 
    (1) high numbers of farmers who can demonstrate severe 
household financial need; 
    (2) demonstrated success in placing public assistance 
applicants in private sector jobs; 
    (3) demonstrated need beyond the allocation distributed 
under paragraph (a); 
    (4) maximized use of money through coordination with other 
programs and state, local, and federal agencies, and through the 
use of matching money from private and nonprofit sources; 
    (5) demonstrated need to provide special assistance in 
order to serve unemployed persons who incur unusual costs such 
as necessary relocation expenses; or 
     (6) areas with high unemployment rates.  
    Subd. 2.  [EMERGENCY WAGE SUBSIDIES.] (a) The coordinator 
shall monitor local and statewide unemployment rates.  Upon 
determining that an economic emergency exists in one or more 
local service units, the coordinator may implement an emergency 
wage subsidy program and recommend to the governor to pursue 
ways to increase the wage subsidy money available to local 
service units in the affected area or areas from sources other 
than the appropriation allocated under subdivision 1.  
    (b) When the unemployment rate for the state of Minnesota 
equals or exceeds nine percent, the coordinator shall implement 
a statewide emergency wage subsidy program and shall recommend 
to the governor to pursue ways to increase money available for 
wage subsidies.  
    Sec. 55.  Minnesota Statutes 1984, section 268.676, is 
amended to read: 
    268.676 [ALLOCATION WITHIN SERVICE DELIVERY AREAS ELIGIBLE 
LOCAL SERVICE UNITS; PRIORITIES.] 
    Subdivision 1.  [AMONG JOB APPLICANTS.] Allocation of funds 
among eligible job applicants within a service delivery area 
shall be determined by the employment administrator in each 
service delivery area.  The employment administrator eligible 
local service unit shall give priority to: 
    (1) applicants living in households with no other income 
source; and 
    (2) applicants who would otherwise be eligible to receive 
whose incomes and resources are less than the standards for 
eligibility for general assistance.; 
    In service delivery areas where the unemployment rate for 
the 12-month period ending the most recent March 31 is below the 
statewide unemployment rate at that time, the employment 
administrator shall give higher priority to applicants described 
in clause (2) than to those described in clause (1).  
    (3) applicants who are eligible for aid to families with 
dependent children; and 
    (4) applicants who live in a farm household who demonstrate 
severe household financial need. 
    Subd. 2.  [AMONG EMPLOYERS.] Allocation of funds among 
eligible employers within a service area shall be determined by 
the employment administrator within each service delivery area 
according to the priorities in sections 268.68 and 268.681.  The 
employment administrator an eligible local service unit shall 
give priority to funding private sector jobs to the extent that 
eligible businesses apply for funds.  If possible, no more 
than 40 25 percent of the statewide funds available for wages 
may be allocated for temporary jobs with eligible government and 
nonprofit agencies during the biennium.  
    Subd. 3.  [AMONG EMPLOYMENT ADMINISTRATORS.] If the 
coordinator designates more than one employment administrator in 
a service delivery, the coordinator shall determine the 
allocation of funds to be distributed by each employment 
administrator in the service delivery area. 
    Sec. 56.  Minnesota Statutes 1984, section 268.677, is 
amended to read: 
    268.677 [USE OF FUNDS.] 
    Funds appropriated for the purposes of sections 268.671 to 
268.686 may be used as follows:  
    (a) To provide a state contribution for wages and fringe 
benefits for eligible job applicants for a maximum of 1,040 
hours over a maximum period of 26 weeks per job applicant.  For 
eligible job applicants participating in a job training program, 
the state contribution for wages may be used for a maximum 
period of 52 weeks per job applicant.  The state contribution 
for wages shall be up to $4 per hour for each eligible job 
applicant employed.  The state contribution for fringe benefits 
may be up to $1 per hour for each eligible job applicant 
employed.  However, the employer may use funds from other 
sources to provide increased wages to the applicants it 
employs.  At least 75 percent of the funds appropriated for the 
program must be used to pay wages for eligible job applicants; 
    (b) To reimburse the commissioner of economic security in 
an amount not to exceed one percent of the funds appropriated 
for the actual cost of administering sections 268.671 to 
268.686, and to reimburse the employment administrators in an 
amount not to exceed 4-1/2 percent of the funds appropriated for 
their actual cost of administering sections 268.671 to 268.686.  
The commissioner of economic security and the employment 
administrators shall reallocate funds from other sources to 
cover the administrative costs of this program whenever possible;
    (c) To provide child care services or subsidies to 
applicants employed under sections 268.671 to 268.686;  
    (d) To provide workers' compensation coverage to applicants 
employed by government or nonprofit agencies under sections 
268.671 to 268.686;  
    (e) To provide job search assistance, labor market 
orientation, job seeking skills, and referral for other services;
    (f) To purchase supplies and materials for projects 
creating permanent improvements to public property in an amount 
not to exceed one percent of the funds appropriated.  
    The employment administrator of each service delivery area 
shall submit to the coordinator a spending plan establishing 
that funds allocated to the service delivery area will be used 
in the manner required by sections 268.671 to 268.686.  Any 
funds allocated to the service delivery area for which there is 
no spending plan approved by the coordinator shall cancel back 
to the Minnesota emergency employment development account and 
may be reallocated by the coordinator to other employment 
administrators. Subdivision 1.  To the extent allowable under 
federal and state law, wage subsidy money must be pooled and 
used in combination with money from other employment and 
training services or income maintenance and support services.  
At least 75 percent of the money appropriated for wage subsidies 
must be used to pay wages for eligible job applicants.  For each 
eligible job applicant employed, the maximum state contribution 
from any combination of public assistance grant diversion and 
employment and training services governed under this chapter, 
including wage subsidies, is $4 per hour for wages and $1 per 
hour for fringe benefits.  In addition, wage subsidies are 
limited as follows:  
    (a) For each eligible job applicant placed in private or 
nonprofit employment, the state may subsidize wages for a 
maximum of 1,040 hours over a period of 26 weeks.  Employers are 
encouraged to use money from other sources to provide increased 
wages to applicants they employ.  
    (b) For each eligible job applicant participating in a job 
training program and placed in private sector employment, the 
state may subsidize wages for a maximum of 1,040 hours over a 
period of 52 weeks.  
    (c) For each eligible job applicant placed in a community 
investment program, the state may provide wage subsidies for a 
maximum of 780 hours over a maximum of 26 weeks.  For an 
individual placed in a community investment program, the county 
share of the wage subsidy shall be 25 percent.  Counties may use 
money from sources other than public assistance and wage 
subsidies, including private grants, contributions from 
nonprofit corporations and other units of government, and other 
state money, to increase the wages or hours of persons employed 
in community investment programs.  
    (d) Notwithstanding the limitations of paragraphs (a) and 
(b), money may be used to provide a state contribution for wages 
and fringe benefits in private sector jobs for eligible 
applicants who had previously held temporary jobs with eligible 
government and nonprofit agencies or who had previously held 
community investment program jobs for which a state contribution 
had been made, and who are among the priority groups established 
in section 268.676, subdivision 1.  The use of money under this 
paragraph shall be for a maximum of 1,040 hours over a maximum 
period of 26 weeks per job applicant. 
    Subd. 2.  Reimbursement to the commissioner for the costs 
of administering wage subsidies must not exceed one-half percent 
of the money appropriated.  Reimbursement to an eligible local 
service unit for the costs of administering wage subsidies must 
not exceed five percent and for the purchase of supplies and 
materials necessary to create permanent improvements to public 
property must not exceed one percent of the money allocated to 
that local service unit.  The commissioner and the eligible 
local service units shall reallocate money from other sources to 
cover the costs of administering wage subsidies whenever 
possible.  
    Subd. 3.  Eligible local service units may use up to 25 
percent of their wage subsidy allocations to provide eligible 
applicants with job search assistance, labor market orientation, 
job seeking skills, necessary child care services, relocation, 
and transportation, and to subsidize fringe benefits.  
    Sec. 57.  Minnesota Statutes 1984, section 268.678, 
subdivision 1, is amended to read: 
    Subdivision 1.  [IN GENERAL POWERS.] The employment 
administrator for each service delivery area has Eligible local 
service units have the powers and duties given in this section 
and any additional duties given by the coordinator or the 
commissioner.  
    Sec. 58.  Minnesota Statutes 1984, section 268.678, 
subdivision 3, is amended to read: 
    Subd. 3.  [OUTREACH.] Each employment administrator 
eligible local service unit shall publicize the program 
availability of wage subsidies within his service delivery its 
area to seek maximum participation by eligible job applicants 
and employers.  
    Sec. 59.  Minnesota Statutes 1984, section 268.678, 
subdivision 4, is amended to read: 
    Subd. 4.  [CONTRACTS.] Each employment administrator 
eligible local service unit shall may enter into contracts with 
eligible employers setting forth the terms of their 
participation in the program as required by sections 268.671 to 
268.686 certified service providers to deliver wage subsidies. 
    Sec. 60.  Minnesota Statutes 1984, section 268.678, 
subdivision 5, is amended to read: 
    Subd. 5.  [SCREENING AND COORDINATION.] Each employment 
administrator eligible local service unit shall screen provide 
for the screening of job applicants and employers to achieve the 
best possible placement of eligible job applicants with eligible 
employers.  
    Sec. 61.  Minnesota Statutes 1984, section 268.678, 
subdivision 6, is amended to read: 
    Subd. 6.  [ELIGIBLE JOB APPLICANT PRIORITY LISTS.] Each 
employment administrator eligible local service unit shall 
maintain provide for the maintenance of a list of eligible job 
applicants unable to secure employment under the program at the 
time of application.  The list shall prioritize eligible job 
applicants and shall be used to fill jobs with eligible 
employers as they become available.  
    Sec. 62.  Minnesota Statutes 1984, section 268.679, is 
amended to read: 
    268.679 [DUTIES OF OTHER AGENCIES COMMISSIONER OF HUMAN 
SERVICES.] 
    Subd. 3.  [DEPARTMENT OF HUMAN SERVICES.] The commissioner 
of human services shall provide to each employment administrator 
local service unit lists of currently licensed local day care 
facilities, updated quarterly, to be available to all 
persons employed under sections 268.671 to 268.686 who receive 
wage subsidies.  
    Sec. 63.  Minnesota Statutes 1984, section 268.681, is 
amended to read: 
    268.681 [BUSINESS EMPLOYMENT.] 
    Subdivision 1.  [ELIGIBLE BUSINESSES.] A business employer 
is an eligible employer if it enters into a written contract, 
signed and subscribed to under oath, with the employment 
administrator in its service delivery area an eligible local 
service unit or its contractor, containing assurances that:  
    (a) funds received by a business shall be used only as 
permitted under sections 268.671 268.672 to 268.686 268.682;  
    (b) the business has submitted a plan information to the 
employment administrator eligible local service unit or its 
contractor (1) describing the duties and proposed compensation 
of each employee proposed to be hired under the program; and (2) 
demonstrating that, with the funds provided under 
sections 268.671 268.672 to 268.686 268.682, the business is 
likely to succeed and continue to employ persons hired under the 
program using wage subsidies;  
    (c) the business will use funds exclusively for 
compensation and fringe benefits of eligible job applicants and 
will provide employees hired with these funds with fringe 
benefits and other terms and conditions of employment comparable 
to those provided to other employees of the business who do 
comparable work;  
    (d) the funds are necessary to allow the business to begin, 
or to employ additional people, but not to fill positions which 
would be filled even in the absence of funds from this program 
wage subsidies;  
    (e) the business will cooperate with the coordinator 
eligible local service unit and the employment administrator 
commissioner in collecting data to assess the result of the 
program wage subsidies; and 
    (f) the business is in compliance with all applicable 
affirmative action, fair labor, health, safety, and 
environmental standards.  
    Subd. 2.  [PRIORITIES.] In allocating funds among eligible 
businesses, the employment administrator eligible local service 
unit or its contractor shall give priority to businesses which 
best satisfy the following criteria: 
    (a) have a high potential for growth and long-term job 
creation;  
    (b) are labor intensive;  
    (c) meet the definition of a small business as defined in 
section 645.445;  
    (d) make high use of local and Minnesota resources;  
    (e) are under ownership of women and minorities;  
    (f) make high use of new technology;  
    (g) produce energy conserving materials or services or are 
involved in development of renewable sources of energy; and 
    (h) have their primary place of business in Minnesota.  
    Subd. 3.  [PAYBACK.] A business receiving funds under this 
program wage subsidies shall repay 70 percent of the amount 
initially received for each eligible job applicant employed, if 
the employee does not continue in the employment of the business 
beyond the six-month subsidized period.  If the employee 
continues in the employment of the business for one year or 
longer after the six-month subsidized period, the business need 
not repay any of the funds received for that employee's wages.  
If the employee continues in the employment of the business for 
a period of less than one year after the expiration of the 
six-month subsidized period, the business shall receive a 
proportional reduction in the amount it must repay.  If an 
employer dismisses an employee for good cause and works in good 
faith with the program administrator eligible local service unit 
or its contractor to employ and train another person referred by 
the employment administrator eligible local service unit or its 
contractor, the payback formula shall apply as if the original 
person had continued in employment.  
    A repayment schedule shall be negotiated and agreed to by 
the employment administrator eligible local service unit and the 
business prior to the disbursement of the funds and is subject 
to renegotiation.  The employment administrator eligible local 
service unit shall forward payments received under this 
subdivision to the coordinator commissioner on a monthly basis.  
The coordinator commissioner shall deposit these payments in the 
Minnesota emergency employment development wage subsidy account 
created by subdivision 4.  
    Subd. 4.  [MINNESOTA EMERGENCY EMPLOYMENT DEVELOPMENT WAGE 
SUBSIDY ACCOUNT.] The Minnesota emergency employment development 
wage subsidy account is created in the state treasury.  All 
payments from businesses pursuant to subdivision 3 shall be 
deposited in this account, and all funds in the account are 
appropriated to the commissioner of economic security for the 
purpose of making disbursements pursuant to section 
268.675 268.6751.  
    Sec. 64.  Minnesota Statutes 1984, section 268.682, is 
amended to read: 
    268.682 [WORKER DISPLACEMENT PROHIBITED.] 
    Subdivision 1.  [LAYOFFS; WORK REDUCTIONS.] An eligible 
employer may not terminate, lay off, or reduce the working hours 
of an employee for the purpose of hiring an individual with 
funds available under sections 268.671 268.672 to 268.686 
268.682.  
    Subd. 2.  [HIRING DURING LAYOFFS.] An eligible employer may 
not hire an individual with funds available under sections 
268.671 268.672 to 268.686 268.682 if any other person is on 
layoff from the same or a substantially equivalent job. 
    Subd. 3.  [EMPLOYER CERTIFICATION.] In order to qualify as 
an eligible employer, a government or nonprofit agency or 
business must certify to the employment administrator eligible 
local service unit that each job created and funded under 
sections 268.671 268.672 to 268.686 268.682:  
    (a) will result in an increase in employment opportunities 
over those which would otherwise be available;  
    (b) will not result in the displacement of currently 
employed workers, including partial displacement such as 
reduction in hours of nonovertime work, wages, or employment 
benefits; and 
    (c) will not impair existing contracts for service or 
result in the substitution of program wage subsidy funds for 
other funds in connection with work that would otherwise be 
performed.  
    Sec. 65.  [268.85] [SERVICE PRIORITIES.] 
    Subdivision 1.  [GROUPS WITH SEVERE DISADVANTAGES.] To the 
extent that the state has the authority to establish priority 
groups to be served through employment and training services, 
greatest consideration must be given to client groups identified 
as experiencing the most severe disadvantages to employment.  
Individuals volunteering for employment, regardless of whether 
they are required to register, must also be given preference to 
avoid the effects of long-term unemployment or dependence on 
public assistance. 
    Subd. 2.  [ORDER OF PRIORITY.] (a) The priority for 
services to be provided is: 
    (1) permanent, unsubsidized, full-time private or nonprofit 
sector employment and, where possible, in conjunction with 
targeted jobs tax credits as defined at 26 United States Code, 
section 44B, as amended by Public Law 98-369; 
    (2) permanent, subsidized, full-time private sector 
employment; 
    (3) permanent, subsidized, full-time nonprofit sector 
employment; 
    (4) training; 
    (5) relocation; and 
    (6) part-time, subsidized, nonprofit, or public employment 
with continued employment assistance. 
    (b) Individuals receiving any of the priority services in 
paragraph (a) must be provided with child care, transportation, 
or other support services as necessary and in relation to their 
eligibility and the availability of funds. 
    (c) In delivering employment and training services, local 
service units shall distribute their available resources in a 
manner that provides greater incentives to clients in permanent 
private or nonprofit sector employment than in public sector 
jobs. 
    Sec. 66.  [268.86] [EMPLOYMENT AND TRAINING PROGRAMS.] 
    Subdivision 1.  [DEVELOPMENT.] The commissioner shall 
develop and administer employment and training services to 
assist appropriate recipients of public assistance and persons 
eligible to receive wage subsidies to become economically 
independent.  The services must have as their objective the 
improvement of clients' opportunities for economic independence 
through permanent employment.  The services must provide 
sufficient employment and training options to allow local 
service units to effectively meet the support services, 
educational, and training needs of their public assistance and 
wage subsidy clients. 
    Subd. 2.  [ADMINISTRATION.] Under agreements necessary to 
comply with federal regulations, the commissioner, on behalf of 
the commissioner of human services, shall administer employment 
and training services for applicants for or recipients of aid to 
families with dependent children and food stamps.  The 
commissioner shall administer employment and training services 
for general assistance and work readiness recipients in 
consultation with the commissioner of human services. 
    Subd. 3.  [REGISTRATION.] The commissioner shall ensure 
that public assistance recipients are registered within time 
limits necessary to avoid delaying a recipient's receipt of 
assistance, denying benefits, or reducing the amount of benefits.
    Subd. 4.  [EMPLOYABILITY PLANS.] The commissioner shall 
require that a public assistance recipient's employment status 
is appraised within 30 days and that a written employability 
plan is prepared for appropriate public assistance recipients in 
consultation with the recipients.  The plan must be designed to 
help the recipient obtain suitable employment, or training and 
work skills necessary to secure suitable employment, and may 
include an arrangement with another service provider or agency 
for specialized employment, education, training, or support 
services.  A copy of the plan must be given to the recipient at 
the time it is prepared; an additional copy must be given to the 
local agency for its files. 
    Subd. 5.  [PARTICIPATION.] The commissioner shall 
establish, by rule, the conditions under which individuals 
participate in services, their rights and responsibilities while 
participating, and the standards by which the services must be 
administered, and shall provide fair hearing procedures 
governing participation. 
    Subd. 6.  [COORDINATION.] In developing employment and 
training services, the commissioner shall identify and 
incorporate, to the extent possible, money from both federal and 
state income maintenance, employment and training, and 
educational programs. 
    Subd. 7.  [WORK INCENTIVE PROGRAM.] In administering the 
work incentive program under section 256.736, the commissioner 
shall insure that no later than July 1, 1986, at least 25 
percent of all state and federal money appropriated to that 
program must be spent for direct client services, including 
child care, transportation, institutional training, and 
on-the-job training.  Seventy-five percent or less of the money 
must be spent for services provided directly by state or county 
staff. 
    Subd. 8.  [GRANT DIVERSION.] The commissioner shall develop 
grant diversion processes for recipients of aid to families with 
dependent children and work readiness assistance payments and 
shall supervise the counties in the administration of the 
employment and training services to meet the needs and 
circumstances of public assistance recipients. 
    Subd. 9.  [SUPPORTED WORK PROGRAM.] The commissioner shall 
establish a supported work program for recipients of aid to 
families with dependent children who have received public 
assistance for more than three years and who are residents of 
counties that have had more than three percent of their aid to 
families with dependent children recipients on such assistance 
for three years or longer.  The goals of the supported work 
program are to help individuals who are making a transition from 
prolonged economic dependence to independence through employment.
    Sec. 67.  [268.871] [LOCAL DELIVERY.] 
    Subdivision 1.  [RESPONSIBILITY AND CERTIFICATION.] Unless 
prohibited by federal law or otherwise determined by state law 
or the coordinator, a local service unit is responsible for the 
delivery of employment and training services.  After February 1, 
1986, employment and training services must be delivered by 
public, nonprofit, or private service providers that are 
certified to provide the services.  
     Subd. 2.  [CONTRACTING PREFERENCE.] In contracting, a local 
service unit must give preference, whenever possible, to 
existing employment and training providers including the job 
service, opportunities industrialization centers, displaced 
homemaker providers, work incentive providers, Minnesota 
emergency employment development act providers, post-secondary 
educational institutions, and job training partnership act 
programs.  
    Subd. 3.  [ENFORCEMENT.] The local service units shall 
provide for the enforcement of employment and training 
requirements for appropriate recipients of public assistance, 
and must include provisions for enforcing the requirements in 
any contracts with providers under subdivisions 1 and 2. 
    Subd. 4.  [LOCATION OF STAFF.] (a) In establishing a 
contract, the county shall agree to co-locate, where feasible, 
income maintenance and social service staff as necessary to 
accept applications and determine eligibility, monitor ongoing 
client eligibility, and authorize services and grants available 
under programs administered by the county or local service unit 
that are related to employment and training or the client's 
successful participation in employment and training activities. 
    (b) The commissioner shall co-locate, where feasible, 
sufficient staff to make the services provided through the 
department of jobs and training and the programs it administers 
or supervises available to clients being served by the local 
service unit or the contract agency. 
    (c) The commissioner has emergency and permanent rulemaking 
authority to implement this section and shall establish the 
circumstances under which the requirements for co-location may 
be waived. 
    Sec. 68.  [268.872] [STATE FUNDING OF EMPLOYMENT AND 
TRAINING PROGRAMS.] 
     Subdivision 1.  [AVAILABLE MONEY.] The commissioner and 
local service units are not required to provide employment and 
training services that exceed the levels permitted by available 
federal, state, and local funds subject to the requirements or 
limitations of each program. 
     Subd. 2.  [MAINTENANCE OF EFFORT.] A local service unit 
shall certify to the commissioner that it has not reduced funds 
from other federal, state, and county sources which would, in 
the absence of this section, have been available for employment 
and training services and child care services and related 
administrative costs. 
    Subd. 3.  [ALLOCATION.] The commissioner shall pay 
administrative aid to local service units for employment and 
training services according to the formula established by rule.  
Seventy-five percent of the money must be allocated among local 
service units based on the number of work readiness assistance 
recipients and aid to families with dependent children caseloads 
of individuals not exempt from work requirements as forecast by 
the commissioner of human services; 25 percent must be allocated 
in a way that encourages full-time, private-sector job 
placement, program completion by public assistance recipients, 
and other performance characteristics.  This subdivision does 
not apply to the administrative aid for the work readiness 
program.  
    Sec. 69.  [268.88] [LOCAL SERVICE UNIT PLANS.] 
    (a) Local service units shall prepare and submit to the 
commissioner by October 15 of each year an annual plan for the 
subsequent calendar year.  The commissioner shall notify each 
local service unit by December 1 of each year if its plan has 
been approved or disapproved.  The plan must include: 
    (1) a statement of objectives for the employment and 
training services the local service unit administers; 
    (2) the establishment of public assistance caseload 
reduction goals and the strategies that will be used to achieve 
these goals; 
    (3) a statement of whether the goals from the preceding 
year were met and an explanation if the local service unit 
failed to meet the goals; 
    (4) the amount proposed to be allocated to each employment 
and training service; 
    (5) the proposed types of employment and training services 
the local service unit plans to utilize; 
    (6) a report on the use of wage subsidies, grant 
diversions, community investment programs, sliding fee day care, 
and other services administered under this chapter; 
    (7) an annual update of the community investment program 
plan according to standards established by the commissioner; and 
    (8) a performance review of service providers delivering 
employment and training services. 
    (b) In counties with a city of the first class, the county 
and the city shall develop and submit a joint plan.  The plan 
may not be submitted until agreed to by both the city and the 
county.  The plan must provide for the direct allocation of 
employment and training money to the city and the county unless 
waived by either.  If the county and the city cannot concur on a 
plan, the coordinator shall resolve their dispute. 
     (c) The commissioner may withhold the distribution of 
employment and training money from a local service unit that 
does not submit a plan to the commissioner by the date set by 
this section, and shall withhold the distribution of employment 
and training money from a local service unit whose plan has been 
disapproved by the coordinator until an acceptable amended plan 
has been submitted.  
    (d) For 1985, local service unit plans must be submitted by 
November 1, 1985 and must include:  
    (1) a statement of objectives for the employment and 
training services the local service unit administers;  
    (2) the establishment of public assistance caseload 
reduction goals and the strategies that will be used to achieve 
these goals;  
    (3) the amount proposed to be allocated to each employment 
and training service;  
    (4) the proposed employment and training services and 
service providers the local service unit plans to utilize; and 
    (5) a statement of intent regarding the establishment of 
either a community investment program or an employment 
experience program.  
    If the local service unit provides a statement of intent 
for the establishment of a community investment program under 
clause (5), the local service unit must submit a preliminary 
community investment program plan by February 1, 1986.  
    Sec. 70.  [268.89] [JOBS TRAINING PARTNERSHIP ACT; 
ADMINISTRATION.] 
    Subdivision 1.  [COORDINATION OF STATE AND FEDERAL 
PROGRAMS.] The commissioner shall act as the governor's agent in 
administering the federal jobs training partnership act.  To the 
extent permitted under federal regulation, this program must be 
administered in conjunction with a comprehensive state 
employment and training strategy and its resources used in 
coordination with state programs and to further state objectives.
    Subd. 2.  [BIENNIAL PLAN.] The commissioner shall recommend 
to the governor the priorities, performance standards, and 
special projects that are consistent with the coordinator's 
biennial plan. 
    Subd. 3.  [OTHER PLANS.] Strong consideration for income 
maintenance recipients must be included in the goals, 
objectives, and criteria of the governor's coordination and 
special services plan under section 121 of the jobs training 
partnership act, United States Code, title 29, section 1531.  
Local service delivery area plans and job service plans must 
describe methods of complying with the coordination criteria 
under the governor's coordination and special services plan as 
required under United States Code, title 29, sections 49g and 
1514.  
    Sec. 71.  [268.90] [COMMUNITY INVESTMENT PROGRAMS.] 
    Subdivision 1.  Community investment programs provide 
temporary employment to people who are experiencing prolonged 
unemployment and economic hardship.  Community investment 
programs consist of one or more projects.  Community investment 
programs must be beneficial to the state and the communities in 
which they are located and must provide program employees with 
training and work experience.  The projects must include 
activities that: 
    (1) expand or improve services, including education, 
health, social services, recreation, and safety; 
    (2) improve or maintain natural resources, including 
rivers, streams and lakes, forest lands and roads, and soil 
conservation; 
    (3) make permanent improvements to lands and buildings; or 
    (4) weatherize public buildings and private residential 
dwellings. 
    Community investment programs may not include job 
placements that replace work that was part or all of the duties 
or responsibilities of an authorized public employee position 
established as of January 1, 1985. 
    Community investment programs that include other sources of 
money or authorized programs may provide employment for the 
groups eligible for the included programs under the terms and 
conditions of those programs.  These programs include the 
Minnesota conservation corps, Minnesota summer youth program, 
county emergency jobs program, and the jobs training partnership 
act. 
    Subd. 2.  [EMPLOYMENT CONDITIONS.] (a) An eligible 
nonprofit or public employer may not terminate, lay off, or 
reduce the regular working hours of an employee for the purpose 
of hiring an individual with money available under this 
program.  An eligible employer may not hire an individual with 
money available through this program if any other person is on 
layoff from the same or a substantially equivalent job. 
    (b) Community investment program participants are employees 
of the project employer within the meaning of workers' 
compensation laws, personal income tax, and the federal 
insurance contribution act, but not retirement or civil service 
laws. 
    (c) Each project and job must comply with all applicable 
affirmative action, fair labor, health, safety, and 
environmental standards. 
    (d) Individuals employed under the community investment 
program must be paid a wage at the same wage rates as work site 
or employees doing comparable work in that locality, unless 
otherwise specified in law. 
    (e) Recipients of aid to families with dependent children 
who are eligible on the basis of an unemployed parent may not 
have available more than 100 hours a month.  All employees are 
limited to 32 hours or four days a week, so that they can 
continue to seek full-time private sector employment, unless 
otherwise specified in law. 
    (f) The commissioner shall establish, by rule, the terms 
and conditions governing the participation of appropriate public 
assistance recipients.  The rules must, at a minimum, establish 
the procedures by which the minimum and maximum number of work 
hours and maximum allowable travel distances are determined, the 
amounts and methods by which work expenses will be paid, and the 
manner in which support services will be provided.  The rules 
must also provide for periodic reviews of clients continuing 
employment in community investment programs. 
     (g) Participation in a community investment program by a 
recipient of aid to families with dependent children or general 
assistance is voluntary; however, work readiness registrants may 
be required to participate.  
    Subd. 3.  [COMMISSIONER OF JOBS AND TRAINING.] The 
commissioner shall: 
    (1) make emergency or permanent rules governing plan 
content, criteria for approval, and administrative standards; 
    (2) refer community investment program administrators to 
the appropriate state agency for technical assistance in 
developing and administering community investment programs; 
    (3) establish the method by which community investment 
programs will be approved or disapproved through the community 
investment program plan and the annual update component of the 
county plan;  
     (4) review and comment on community investment program 
plans;  
     (5) institute ongoing methods to monitor and evaluate 
community investment programs; and 
    (6) inform the commissioner of human services of the 
counties that do not have an approved plan. 
    Subd. 4.  [COUNTY BOARDS OF COMMISSIONERS.] The county 
boards of commissioners shall: 
    (1) be encouraged to establish community investment 
programs that are administered jointly according to section 
471.59, or through multicounty human service boards under 
chapter 402; 
     (2) develop community investment programs in consultation 
with the exclusive representatives of their employees;  
    (3) plan community investment programs by involving 
nonprofit organizations and other governmental units, community 
action agencies, community-based organizations, local union 
representatives, and representatives of client groups; 
     (4) submit to the commissioner a community investment 
program plan, before the initiation of a community investment 
program, for approval according to standards established by the 
commissioner; 
    (5) plan community investment projects that, whenever 
possible, utilize existing programs that are administered under 
contract by nonprofit organizations and governmental units, 
including departments and agencies of cities, counties, towns, 
school districts, state and federal agencies, park reserve 
districts, and other special districts; 
    (6) include in their local service unit plans an annual 
update to their community investment program plans for approval 
according to standards established by the commissioner; 
    (7) submit reports and meet administrative standards 
established by rule; 
    (8) monitor the performance of entities under contract to 
administer individual community investment projects; 
    (9) enter into contracts with other governmental and 
private bodies to jointly fund or jointly administer approvable 
projects when agreements expand the resources available, the 
scope of people employed, or further recognized public purposes; 
and 
    (10) be encouraged to enter into contracts with businesses 
or individuals for eligible projects under subdivision 1 and 
charge a fee for the completion of a project. 
    Subd. 5.  [STATE FINANCIAL PARTICIPATION.] The statutorily 
established state rates of financial participation or available 
state appropriations or grants are not affected by their 
incorporation into a community investment program. 
    Sec. 72.  [268.91] [CHILD CARE SLIDING FEE PROGRAM.] 
    Subdivision 1.  [DEFINITIONS.] For the purposes of this 
section the following terms have the meanings given. 
    (a) "Child care services" means family day care homes, 
group day care homes, nursery schools, day nurseries, child day 
care centers, play groups, head start, parent cooperatives, and 
in-home child care as defined in the Minnesota plan for social 
services to families and children. 
    (b) "Child" means a person 14 years old or younger. 
    (c) "Commissioner" means the commissioner of jobs and 
training. 
    Subd. 2.  [DUTIES OF COMMISSIONER.] The commissioner shall 
develop standards for county boards to provide child care 
services to enable eligible families to participate in 
employment or training programs.  The commissioner shall 
distribute money to counties to reduce the costs of child care 
for eligible families.  The commissioner shall adopt rules to 
govern the program in accordance with this section.  The rules 
must establish a sliding schedule of fees for parents receiving 
child care services.  The commissioner shall require counties to 
collect and report data that the commissioner deems necessary to 
evaluate the effectiveness of the program in preventing and 
reducing participants' dependence on public assistance and in 
providing other benefits, including improvement in the care 
provided to children.  The commissioner shall report to the full 
productivity and opportunity coordinator in each even-numbered 
year on the effectiveness of the program. 
    Subd. 3.  [ALLOCATION.] (a) By June 1 of each odd-numbered 
year, the commissioner shall notify all county boards of the 
allocation and the procedures used for the sliding fee program.  
Allocations must be made by July 1 of each odd-numbered year.  
If the appropriation is insufficient to meet the needs in all 
counties, the amount must be prorated among the counties. 
    (b) For the purposes of this section, the commissioner 
shall allocate money appropriated between the metropolitan area, 
comprising the counties of Anoka, Carver, Dakota, Hennepin, 
Ramsey, Scott, and Washington, and the area outside the 
metropolitan area so that no more than 55 percent of the total 
appropriation goes to either area after excluding allocations 
for statewide administrative costs.  The commissioner shall 
allocate 50 percent of the money among counties on the basis of 
the number of families below the poverty level, as determined 
from the most recent special census, and 50 percent on the basis 
of caseloads of aid to families with dependent children for the 
preceding fiscal year, as determined by the commissioner of 
human services. 
    Subd. 4.  [FINANCIAL ELIGIBILITY.] (a) Child care services 
must be available to families who need child care to find or 
keep employment or to obtain the training or education necessary 
to find employment and who: 
    (1) receive aid to families with dependent children; 
    (2) have household income below the eligibility levels for 
aid to families with dependent children; or 
    (3) have household income within a range established by the 
commissioner. 
    (b) Child care services for the families receiving aid to 
families with dependent children must be made available as 
in-kind services, to cover any difference between the actual 
cost and the amount disregarded under the aid to families with 
dependent children program.  Services to families whose incomes 
are below the threshold of eligibility for aid to families with 
dependent children, but that are not receiving aid to families 
with dependent children, must be made available without cost to 
the families. 
    (c) Child care services to families with incomes in the 
commissioner's established range must be made available on a 
sliding fee basis.  The lower limit of the sliding fee range 
must be the eligibility limit for aid to families with dependent 
children.  The upper limit of the range must be neither less 
than 70 percent nor more than 90 percent of the state median 
income for a family of four, adjusted for family size.  
    (d) If a disproportionate amount of the available money is 
provided to any one of the groups described in subdivision 4, 
paragraph (a), of this section, the county board shall document 
to the commissioner the reason the group received a 
disproportionate share. 
    Subd. 5.  [EMPLOYMENT OR TRAINING ELIGIBILITY.] (a) Persons 
who are seeking employment and who are eligible for assistance 
under this section are eligible to receive the equivalent of one 
month of child care.  Employed persons who work at least ten 
hours a week and receive at least a minimum wage for all hours 
worked are eligible for child care assistance. 
    (b) Persons eligible under this section for child care 
assistance for education or training must receive assistance for 
the length of the program or 24 months, whichever is shorter.  
An education or training program with demonstrated effectiveness 
may be approved by the commissioner of education and accredited 
by the appropriate agency as an eligible program including high 
school or an equivalent program, an English competency program, 
technical or vocational training, or a four-year or associate 
degree program. 
    Subd. 6.  [COUNTY CONTRIBUTION.] In addition to payments 
from parents, the program must be funded by county contributions.
Counties shall contribute five percent of the cost of the 
program in the program's first year and 15 percent in the second 
and subsequent years.  The commissioner may require by rule that 
a county pay the commissioner the portion of sliding fee 
allocations paid by the state for which the county is 
responsible.  The county shall advance its portion of sliding 
fee costs, based upon allocations made by the commissioner for 
that county for expenditures in the succeeding month.  
Adjustments of any overestimate or underestimate based on actual 
expenditures must be made by the commissioner by adjusting the 
estimate for any succeeding month. 
    A county shall certify to the commissioner that the county 
has not reduced allocations from other federal, state, and 
county sources, which, in the absence of child care sliding fee 
or wage subsidy money, would have been available for child care 
services. 
    Subd. 7.  [SLIDING FEE SCALE.] In setting the sliding fee 
schedule, the commissioner shall exclude from the amount of 
income used to determine eligibility an amount for federal and 
state income and social security taxes attributable to that 
income level according to federal and state standardized tax 
tables.  The fee schedule must be designed to use any available 
tax credits and to progress smoothly from appropriated 
assistance to assistance through tax credits. 
     Subd. 8.  [MAXIMUM COUNTY RATE.] The county board may limit 
the subsidy allowed by setting a maximum on the provider child 
care rate that the county shall subsidize.  The rate set by any 
county shall not be lower than 110 percent of the median rate 
for like care arrangements in that county. 
    Subd. 9.  [LIMITS ON USE OF STATE FUNDS.] The state's 
payment is limited to the difference between the fee set by the 
commissioner and the provider's charge for care.  When the 
provider of child care services charges more than 125 percent of 
the median charge for similar care arrangements in the 
geographic area defined by the commissioner of human services 
for the purpose of ascertaining the median charge, the state's 
payment is limited to the difference between 125 percent of the 
median charge for similar care arrangements in the geographic 
area and the parents' fee. 
    Subd. 10.  [EXTENSION OF EMPLOYMENT OPPORTUNITIES.] The 
county board shall insure that child care services available to 
county residents are well advertised and that everyone who 
receives or applies for aid to families with dependent children 
is informed of training and employment opportunities and 
programs, including child care services. 
    Subd. 11.  [ADMINISTRATIVE EXPENSES.] A county must not use 
more than seven percent of its allocation for its administrative 
expenses under this section.  
    Sec. 73.  [268.95] [INDIVIDUAL ENTERPRISE.] 
    Subdivision 1.  [COORDINATION.] The commissioner may 
coordinate state activities related to self-employment 
enterprises, including home-based businesses, individual 
self-employment initiatives, and collective and cooperative 
efforts involving individual entrepreneurs. 
    Subd. 2.  [MARKETING.] The commissioner may undertake 
activities to expand the marketing of goods or services produced 
by the state's independent entrepreneurs.  
    Subd. 3.  [TECHNICAL ASSISTANCE.] The commissioner may 
provide or arrange for the provision of information, technical 
assistance, and support as necessary to help individuals 
determine whether they wish to become self-employed, to obtain 
needed training, to develop business plans and financing, and to 
sustain the initiatives. 
    Subd. 4.  [PILOT PROGRAM.] The commissioner shall develop a 
pilot program, in cooperation with the commissioners of energy 
and economic development and human services, to enable 
low-income persons to start or expand self-employment 
opportunities or home-based businesses that are designed to make 
the individual entrepreneurs economically independent.  The 
commissioner of human services shall seek necessary waivers from 
federal regulations to allow recipients of aid to families with 
dependent children to participate and retain eligibility while 
establishing a business. 
    Subd. 5.  [STUDY.] The commissioner shall study the needs 
of individual entrepreneurs and beginning businesses and 
recommend to the governor how state programs and resources can 
provide further assistance. 
    Sec. 74.  [POSITIONS ABOLISHED.] 
    Positions in the unclassified service in the department of 
economic security are abolished. 
    Sec. 75.  [REVISOR'S INSTRUCTION.] 
    The revisor of statutes shall change the references 
"commissioner of economic security" and "department of economic 
security" wherever they appear in Minnesota Statutes to 
"commissioner of jobs and training" and "department of jobs and 
training," in subsequent editions of Minnesota Statutes except 
as otherwise specified by this article. 
    Sec. 76.  [TRANSFER.] 
    The commissioner of finance shall transfer, according to 
section 15.039, positions and appropriations for existing 
programs and agencies as required by this act. 
     Sec. 77.  [TRANSITION.] 
     Subdivision 1.  Except as provided in subdivision 2, wage 
subsidies are governed by sections 268.672 to 268.684 until 
September 30, 1985.  Between July 1, 1985, and September 30, 
1985, the Minnesota emergency employment development coordinator 
may encumber up to $4,000,000 of the jobs program appropriation 
for fiscal year 1986 to pay wage subsidies for eligible 
applicants placed in private-sector employment. 
     Subd. 2.  The commissioner of jobs and training may deliver 
wage subsidies for a local service unit that is not prepared to 
accept responsibility for the delivery of wage subsidies on 
October 1, 1985, and may do so until the local service unit is 
prepared to accept responsibility for the delivery of wage 
subsidies, or until December 31, 1985, whichever comes first. 
    Subd. 3.  In fiscal years 1986 and 1987, money appropriated 
to the jobs program, or the Minnesota employment and economic 
development program, is the wage subsidy appropriation.  
    Subd. 4.  Rules adopted by the commissioner of economic 
security under section 268.673, subdivision 6, remain in effect 
notwithstanding the repeal of the authority removing those rules 
from the governance of chapter 14. 
    Sec. 78.  [REPEALER.] 
    Subdivision 1.  Minnesota Statutes 1984, sections 129A.02, 
subdivision 4; 245.84, subdivision 2; 256.736, subdivisions 1 
and 2; 256D.02, subdivision 8a; 256D.111, subdivision 1a; 
256D.112; 268.011; 268.012; 268.013; 268.12, subdivisions 1 and 
1a; 268.671; 268.685; 268.80; 268.81; 268.82; 268.83; and 268.84 
are repealed. 
    Subd. 2.  Minnesota Statutes 1984, sections 268.672, 
subdivisions 2, 8, 10, and 11; 268.673, subdivisions 1 and 2; 
268.674; 268.675; 268.676, subdivision 3; 268.678, subdivisions 
2, 7, and 8; 268.679, subdivisions 1 and 2; 268.68; 268.683; 
268.684; and 268.686, are repealed October 1, 1985.  
    Sec. 79.  [EFFECTIVE DATES.] 
    Subdivision 1.  Sections 1 to 47, 65 to 76, and 78, 
subdivision 1, are effective August 1, 1985, except that:  
    (a) departments or agencies whose functions, powers, or 
duties are transferred to the department of jobs and training or 
are repealed by this article, or in which positions are 
abolished by this article, shall exercise those functions, 
powers, or duties and retain those positions until the 
commissioner of jobs and training notifies the commissioner of 
administration that the department of jobs and training is ready 
to begin operation; and 
    (b) a new program established by this article is not 
effective until the full productivity and opportunity 
coordinator and the commissioner of jobs and training have been 
appointed and have taken office. 
    Subd. 2.  Sections 48 to 64 and 78, subdivision 2, are 
effective October 1, 1985. 
    Subd. 3.  Notwithstanding subdivision 1, all sections of 
this article must be effective by October 1, 1985. 

                               ARTICLE 10 

                              MINING TAXES 
    Section 1.  Minnesota Statutes 1984, section 15A.081, 
subdivision 8, is amended to read: 
    Subd. 8.  [EXPENSE ALLOWANCE.] Notwithstanding any law to 
the contrary, positions listed in subdivision 1, constitutional 
officers, the president of each community college, the 
commissioner of iron range resources and rehabilitation, and the 
director of vocational-technical education are authorized an 
annual expense allowance not to exceed $1,500 for necessary 
expenses in the normal performance of their duties for which no 
other reimbursement is provided.  However, expense allowances 
for the chancellor of the state university system and the 
president of each state university shall be governed only by 
section 136.063.  The expenditures under this subdivision are 
subject to any laws and rules relating to budgeting, allotment 
and encumbrance, preaudit and post-audit.  The commissioner of 
finance may promulgate rules to assure the proper expenditure of 
these funds, and to provide for reimbursement.  
    Sec. 2.  Minnesota Statutes 1984, section 16A.128, 
subdivision 2, is amended to read: 
    Subd. 2.  [NO RULEMAKING.] The kinds of fees that need not 
be fixed by rule unless specifically required by law are:  
    (1) fees based on actual direct costs of a service;  
    (2) one-time fees;  
    (3) fees that produce insignificant revenues;  
    (4) fees billed within or between state agencies; or 
    (5) fees exempt from commissioner approval; or 
    (6) fees for admissions to or use of facilities operated by 
the iron range resources and rehabilitation board, if the fees 
are set according to prevailing market conditions to recover 
operating costs. 
    Sec. 3.  Minnesota Statutes 1984, section 273.136, 
subdivision 1, is amended to read: 
    Subdivision 1.  Payment from the taconite property tax 
relief account county shall be made as provided herein for the 
purpose of replacing revenue lost as a result of the reduction 
of property taxes provided in section 273.135.  
    Sec. 4.  Minnesota Statutes 1984, section 273.136, 
subdivision 2, is amended to read: 
    Subd. 2.  The commissioner of revenue shall determine, not 
later than May 1 of each year, commencing in 1974, the amount of 
reduction resulting from section 273.135 in each county 
containing a tax relief area as defined by section 273.134, 
basing his determinations on a review of abstracts of tax lists 
submitted by the county auditors pursuant to section 275.29.  He 
may make such changes in the abstracts of tax lists as he deems 
necessary.  The commissioner of revenue, after such review, 
shall submit to the commissioner of finance St. Louis county 
auditor, on or before June 1, the amount of the first half 
payment payable hereunder and on or before October 15 the amount 
of the second half payment.  
    Sec. 5.  Minnesota Statutes 1984, section 273.136, 
subdivision 3, is amended to read:  
    Subd. 3.  The commissioner of finance St. Louis county 
auditor shall pay out of the taconite property tax relief 
account to each county treasurer one-half of the amount 
certified under subdivision 2 not later than July June 15 and 
the remaining half not later than November 15 of each 
year commencing in 1982. 
    Sec. 6.  Minnesota Statutes 1984, section 273.136, 
subdivision 4, is amended to read:  
    Subd. 4.  The county treasurer shall distribute the funds 
received by him under subdivision 3 as if they had been 
collected as a part of the property tax reduced by section 
273.135.  
    Sec. 7.  Minnesota Statutes 1984, section 298.01, 
subdivision 1, as amended by Laws 1985, chapter 300, section 20, 
is amended to read: 
    Subdivision 1.  Every person engaged in the business of 
mining or producing iron ore or other ores in this state shall 
pay to the state of Minnesota an occupation tax equal to 15 
percent of the valuation of all ores mined or produced before 
January 1, 1986, 14.5 percent of the valuation of all ores 
produced after December 31, 1985 and before January 1, 1987, and 
14 percent of the valuation of all ores produced after December 
31, 1986.  Said tax shall be in addition to all other taxes 
provided for by law and shall be due and payable from such 
person on or before June 15 of the year next succeeding the 
calendar year covered by the report thereon to be filed as 
hereinafter provided.  
    Sec. 8.  Minnesota Statutes 1984, section 298.03, is 
amended to read: 
    298.03 [VALUE OF ORE; HOW ASCERTAINED.] 
    The valuation of iron or other ores for the purposes of 
determining the amount of tax to be paid under the provisions of 
section 298.01 shall be ascertained by subtracting from the 
value of such ore, at the place where the same is brought to the 
surface of the earth, such value to be determined by the 
commissioner of revenue: 
    (1) The reasonable cost of supplies used and labor 
performed at the mine in separating the ore from the ore body, 
including hoisting, elevating, or conveying the same to the 
surface of the earth; 
    (2) If the ore is taken from an open pit mine, an amount 
for each ton of ore mined or produced during the year equal to 
the cost of removing the overburden, divided by the number of 
tons of ore uncovered, the number of tons of ore uncovered in 
each case to be determined by the commissioner of revenue; 
    (3) If the ore is taken from an underground mine, an amount 
for each ton of ore mined or produced during the year equal to 
the cost of sinking and constructing shafts and running drifts, 
divided by the number of tons of ore that can be advantageously 
taken out through such shafts and drifts, the number of tons of 
ore that can be advantageously taken out in each case to be 
determined by the commissioner of revenue; 
    (4) The amount of royalties paid on the ore mined or 
produced during the year; 
    (5) For persons mining or producing iron ore the mining or 
production of which is subject to the occupation tax imposed by 
section 298.01, subdivision 1, the amount of the ad valorem 
taxes levied and paid for the year against the realty in which 
the ore is deposited; for all others a percentage of the ad 
valorem taxes levied and paid for such year against the realty 
in which the ore is deposited equal to the percentage that the 
tons mined or produced during such year bears to the total 
tonnage in the mine; 
    (6) In the case of taconite, semi-taconite and iron 
sulphide operations, the tax payable under section 298.24, but 
not exceeding 25 cents per taxable ton, and that payable under 
section 298.35, on the concentrates produced in said year and 
any taxes paid under Laws 1955, Chapters 391, 429, 514, 576 or 
540, or any other law imposing on such taconite operations a 
specific tax for school or other governmental purposes; 
    (7) The amount or amounts of all the foregoing subtractions 
shall be ascertained and determined by the commissioner of 
revenue.  Deductions for interest on plant investment shall not 
exceed the greater of (a) four percent of book value, or (b) the 
amount actually paid but not exceeding six percent of book 
value.  No subtraction shall be allowed for shrinkage of iron 
ore. 
    Sec. 9.  Minnesota Statutes 1984, section 298.031, 
subdivision 2, is amended to read: 
    Subd. 2.  [VALUE OF CERTAIN ORE; HOW ASCERTAINED.] (1) The 
taxpayer shall be given a credit in each taxable year upon the 
occupation tax assessed in such year under Minnesota Statutes 
1957, Chapter 298, against a given mine after credit for labor 
credits has been given, in an amount equal to the occupation tax 
under said chapter 298 upon an amount produced by multiplying 
the number of tons of ore sold at a discount by the amount of 
such discount. 
    (2) The aggregate amount of all credits allowed under this 
section to all mines shall not exceed one four percent of the 
aggregate amount of all occupation taxes imposed under section 
298.01, subdivision 1, assessed against all mines in the state 
for said year prior to the deduction of the credit allowed by 
this section. 
    (3) The amount of the foregoing subtraction shall be 
ascertained and determined by the commissioner. 
    (4) If ore stockpiled from previous years operations is 
sold at a discount, the discount credit shall be allowed against 
all ore currently being produced by the same company to the 
extent that the discount credit is available.  Any unused credit 
may be carried forward and utilized with future years production 
of ore from the stockpiled property or other properties operated 
by the same company.  
    Sec. 10.  Minnesota Statutes 1984, section 298.031, 
subdivision 3, is amended to read: 
    Subd. 3.  [CREDIT, APPLICATION.] The credit provided by 
this section shall not be applicable with respect to any mine 
operated by a mining company or an operating agent 
    (a) if the net marketable tonnage of iron ores, exclusive 
of taconite and semi-taconite, produced from all mines operated 
by such mining company or operating agent exceeds one and 
one-half three percent of the net marketable tonnage of iron 
ores or concentrates including taconite and semi-taconite, 
produced in this state during the year for which the tax is 
being determined, or 
    (b) if such mining company or operating agent is also 
engaged in the manufacture of steel, or 
    (c) if any company manufacturing steel has an interest, 
either directly or indirectly, through stock ownership in such 
mining company or operating agent. 
    The taxpayer shall have the burden of proving its right to 
the credit provided by this section. 
    Sec. 11.  Minnesota Statutes 1984, section 298.09, 
subdivision 4, is amended to read: 
    Subd. 4.  If the amount of tax determined by the 
commissioner is subsequently found to be erroneous, the 
commissioner may, at any time within three years from the date 
the tax is certified as provided in section 298.10, redetermine 
the amount thereof.  No such redetermination shall be made 
increasing the tax unless the person from whom the additional 
amount is due is given ten days written notice thereof and an 
opportunity to be heard thereon.  If an order is made increasing 
the tax, the same proceedings shall be had as provided for 
occupation taxes originally determined and certified.  Any 
person who has paid an occupation tax may apply to the 
commissioner within the time herein limited for a 
redetermination of the tax, and if the commissioner determines 
that the tax has been overpaid, he shall make and file an order 
determining the amount of such overpayment, and credit it 
against occupation taxes otherwise payable by pay a refund of 
that amount to the person who has overpaid the amount as so 
determined.  If the tax is increased, interest at the rate 
specified in section 270.75 from the date payment should have 
been made shall be determined and paid; if the tax is reduced, 
interest at the rate of six percent per annum from the date of 
overpayment shall be allowed. 
    Sec. 12.  [298.2212] [INVESTMENT OF FUNDS.] 
    All funds credited to the iron range resources and 
rehabilitation board account in the special revenue fund for the 
purposes of section 298.22 must be invested pursuant to law.  
The net interest and dividends from the investments are included 
and become part of the funds available for purposes of section 
298.22. 
    Sec. 13.  Minnesota Statutes 1984, section 298.223, is 
amended to read: 
     298.223 [TACONITE AREA ENVIRONMENTAL PROTECTION FUND.] 
     A fund called the taconite environmental protection fund is 
created for the purpose of reclaiming, restoring and enhancing 
those areas of northeast Minnesota located within a tax relief 
area defined in section 273.134 that are adversely affected by 
the environmentally damaging operations involved in mining 
taconite and iron ore and producing iron ore concentrate and for 
the purpose of promoting the economic development of northeast 
Minnesota.  The taconite environmental protection fund shall be 
used for the following purposes: 
     (a) to initiate investigations into matters the Iron Range 
Resources and Rehabilitation Board determines are in need of 
study and which will determine the environmental problems 
requiring remedial action; 
     (b) reclamation, restoration or reforestation of minelands 
not otherwise provided for by state law; 
     (c) local economic development projects including 
construction of sewer and water systems, and other public works 
located within a tax relief area defined in section 273.134; 
     (d) monitoring of mineral industry related health problems 
among mining employees. 
     The taconite environmental protection fund shall be 
administered by the commissioner of the Iron Range Resources and 
Rehabilitation Board.  The commissioner shall by September 1 of 
each year prepare a list of projects to be funded from the 
taconite environmental protection fund, with such supporting 
information including description of the projects, plans, and 
cost estimates as may be necessary.  Upon recommendation of the 
Iron Range Resources and Rehabilitation Board, this list shall 
be submitted to the legislative advisory commission for its 
review.  This list with the recommendation of the legislative 
advisory commission shall then be transmitted to the governor by 
November 1 of each year.  By December 1 of each year, the 
governor shall approve or disapprove, or return for further 
consideration, each individual project.  Funds for a project may 
be expended only upon approval of the project by the governor. 
    There is hereby annually appropriated to the commissioner 
of the Iron Range Resources and Rehabilitation Board such funds 
as are necessary to carry out the projects approved and such 
funds as are necessary for administration of this section.  
Annual administrative costs, not including detailed engineering 
expenses for the projects, shall not exceed five percent of the 
amount annually expended from the fund. 
    Funds for the purposes of this section are provided by 
section 298.28, subdivision 1, clause (10) (9) relating to the 
taconite environmental protection fund. 
    Sec. 14.  Minnesota Statutes 1984, section 298.225, as 
amended by Laws 1985, chapter 300, section 22, is amended to 
read: 
    298.225 [APPROPRIATION.] 
    Subdivision 1.  For distribution of taconite production tax 
in 1985 and thereafter with respect to production in 1984 and 
thereafter, the recipients of the taconite production tax as 
provided in section 298.28, subdivision 1, clauses (1) to (4) 
and (5)(b), (7) (6), and (8) (7)(a), shall receive distributions 
equal to the amount distributed to them pursuant to sections 
298.225 and 298.28, subdivision 1, with respect to 1983 
production if the production for the year prior to the 
distribution year is no less than 42,000,000 taxable tons.  If 
the production is less than 42,000,000 taxable tons, the amount 
of the distributions shall be reduced proportionately at the 
rate of two percent for each 1,000,000 tons, or part of 
1,000,000 tons by which the production is less than 42,000,000 
tons.  
    Subd. 2.  There is hereby appropriated to the commissioner 
of revenue The money necessary for funding the difference 
between the initial distribution made pursuant to section 298.28 
and the amount guaranteed in subdivision 1 is appropriated in 
equal proportions from the initial current year distributions to 
the taconite environmental protection fund and to the northeast 
Minnesota economic protection trust pursuant to section 298.28.  
If the initial distributions to the taconite environmental 
protection fund and the northeast Minnesota economic protection 
trust are insufficient to fund the difference, the commissioner 
of iron range resources and rehabilitation shall make the 
payments of any remaining difference from the corpus of the 
taconite environmental protection fund and the corpus of the 
northeast Minnesota economic protection trust fund in equal 
proportions the amount needed to make the above payments as 
directed by the commissioner of revenue.  
    If a taconite producer ceases beneficiation operations 
permanently and is required by a special law to make bond 
payments for a school district, the northeast Minnesota economic 
protection trust fund shall assume the payments of the taconite 
producer if the producer ceases to make the needed payments.  
There is hereby appropriated The commissioner of iron range 
resources and rehabilitation shall make these school bond 
payments from the corpus of the northeast Minnesota economic 
protection trust fund to the commissioner of revenue in the 
amounts needed to make these school bond payments certified by 
the commissioner of revenue.  
    Sec. 15.  Minnesota Statutes 1984, section 298.24, 
subdivision 4, is amended to read:  
    Subd. 4.  A credit shall be allowed against the tax imposed 
by subdivision 1, in the amount of $250,000 per year to any 
taconite producer that builds a water filtration and treatment 
plant in 1984 at a cost in excess of $1,000,000 in order to 
alleviate the contamination of water resulting from the disposal 
of taconite tailings on land.  This credit shall be available 
against taxes paid in 1985, 1986, and 1987.  The amount 
sufficient to commissioner of iron range resources and 
rehabilitation shall pay these credits is appropriated from the 
taconite environmental protection fund created in section 
298.223 to the commissioner of revenue.  
    Sec. 16.  Minnesota Statutes 1984, section 298.27, is 
amended to read: 
    298.27 [COLLECTION AND PAYMENT OF TAX.] 
    The taxes provided by section 298.24 shall be collected and 
paid in the same manner as provided by law for the payment of 
the occupation tax, except that directly to each eligible county 
and the iron range resources and rehabilitation board.  The 
commissioner of revenue shall notify each producer of the amount 
to be paid each recipient prior to February 8.  The report 
required by section 298.05 shall be filed on or before 
February 15 together with 1.  A remittance equal to 90 percent 
of the total tax required to be paid hereunder shall be paid on 
or before April February 15.  On or before February 25, 
the commissioner of revenue county auditor shall make 
distribution of the payment received by the county in the manner 
provided by section 298.28.  The commissioner of revenue shall 
determine the amount of tax due on or before March 15.  The 
balance due shall be paid on or before April 15 following the 
production year, and shall be distributed by the county auditor 
as provided in section 298.28 by May 15.  Reports shall be made 
and hearings held upon the determination of the tax in 
accordance with procedures established by the commissioner of 
revenue.  The commissioner of revenue shall have authority to 
make reasonable regulations as to the form and manner of filing 
reports necessary for the determination of the tax hereunder, 
and by such regulations may require the production of such 
information as may be reasonably necessary or convenient for the 
determination and apportionment of the tax.  All the provisions 
of the occupation tax law with reference to the assessment, and 
determination, and collection of the occupation tax, including 
all provisions for appeals from or review of the orders of the 
commissioner of revenue relative thereto, but not including 
provisions for refunds, are hereby made applicable to the taxes 
imposed by section 298.24 except in so far as inconsistent 
herewith.  If any person subject to section 298.24 shall fail to 
make the report provided for in this section at the time and in 
the manner herein provided, the commissioner of revenue shall in 
such case, upon such information as he may possess or obtain, 
ascertain the kind and amount of ore mined or produced and 
thereon find and determine the amount of the tax due from such 
person.  There shall be added to the amount of tax due a penalty 
for failure to report on or before February 15 1, which penalty 
shall equal ten percent of the tax imposed and be treated as a 
part thereof. 
     If any person responsible for making a partial tax payment 
at the time and in the manner herein provided fails to do so, 
there shall be imposed a penalty equal to ten percent of the 
amount so due, which penalty shall be treated as part of the tax 
due. 
     In the case of any underpayment of the partial tax payment 
required herein, there may be added and be treated as part of 
the tax due a penalty equal to ten percent of the amount so 
underpaid. 
     If any portion of the taxes provided for in section 298.24 
is not paid before the fifteenth day of April of the year in 
which due and payable, a penalty of ten percent of such unpaid 
portion shall immediately accrue, and thereafter one percent per 
month shall be added to such tax and penalty while such tax 
remains unpaid. 
    Sec. 17.  Minnesota Statutes 1984, section 298.28, 
subdivision 1, as amended by Laws 1985, chapter 300, section 23, 
is amended to read:  
    Subdivision 1.  [DISTRIBUTION FROM GENERAL FUND.] The 
proceeds of the taxes collected under section 298.24, except the 
tax collected under section 298.24, subdivision 2, shall, upon 
certificate certification of the commissioner of revenue to the 
general fund of the state, be paid by the commissioner of 
revenue allocated as follows: 
    (1) 2.5 cents per gross ton of merchantable iron ore 
concentrate, hereinafter referred to as "taxable ton," to the 
city or town in the county in which the lands from which 
taconite was mined or quarried were located or within which the 
concentrate was produced.  If the mining, quarrying, and 
concentration, or different steps in either thereof are carried 
on in more than one taxing district, the commissioner shall 
apportion equitably the proceeds of the part of the tax going to 
cities and towns among such subdivisions upon the basis of 
attributing 40 percent of the proceeds of the tax to the 
operation of mining or quarrying the taconite, and the remainder 
to the concentrating plant and to the processes of 
concentration, and with respect to each thereof giving due 
consideration to the relative extent of such operations 
performed in each such taxing district.  His order making such 
apportionment shall be subject to review by the tax court at the 
instance of any of the interested taxing districts, in the same 
manner as other orders of the commissioner. 
    (2) (a) 12.5 cents per taxable ton, less any amount 
distributed under clause (8) (7), paragraph (a), to the taconite 
municipal aid account in the apportionment fund of the state 
treasury and paragraph (b) of this clause, to be distributed as 
provided in section 298.282. 
    (b) An amount annually certified by the county auditor of a 
county containing a taconite tax relief area within which there 
is an organized township if, as of January 2, 1982, more than 75 
percent of the assessed valuation of the township consists of 
iron ore.  The amount will be the portion of a township's 
certified levy equal to the proportion of (1) the difference 
between 50 percent of the township's January 2, 1982, assessed 
value and its current assessed value to (2) the sum of its 
current assessed value plus the difference determined in (1). 
The county auditor shall extend the township's levy against the 
sum of the township's current assessed value plus the difference 
between 50 percent of its January 2, 1982, assessed value and 
its current assessed value.  If the current assessed value of 
the township exceeds 50 percent of the township's January 2, 
1982, assessed value, this clause shall not apply.  
    (3) 29 cents per taxable ton plus the increase provided in 
paragraph (c) to qualifying school districts to be distributed, 
based upon the certification of the commissioner of revenue, as 
follows: 
    (a) Six cents per taxable ton to the school districts in 
which the lands from which taconite was mined or quarried were 
located or within which the concentrate was produced.  The 
commissioner shall follow distribution must be based on the 
apportionment formula prescribed in clause (1). 
      (b) 23 cents per taxable ton, less any amount distributed 
under part (d), shall be distributed to a group of school 
districts comprised of those school districts wherein the 
taconite was mined or quarried or the concentrate produced or in 
which there is a qualifying municipality as defined by section 
273.134 in direct proportion to school district tax levies as 
follows:  each district shall receive that portion of the total 
distribution which its certified levy for the prior year, 
computed pursuant to sections 124A.03, 124A.06, subdivision 3a, 
124A.08, subdivision 3a, 124A.10, subdivision 3a, 124A.12, 
subdivision 3a, 124A.14, subdivision 5a, and 275.125, comprises 
of the sum of certified levies for the prior year for all 
qualifying districts, computed pursuant to sections 124A.03, 
124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, 
subdivision 3a, 124A.12, subdivision 3a, 124A.14, subdivision 
5a, and 275.125.  For purposes of distributions pursuant to this 
part, certified levies for the prior year computed pursuant to 
sections 124A.03, 124A.06, subdivision 3a, 124A.08, subdivision 
3a, 124A.10, subdivision 3a, 124A.12, subdivision 3a, 124A.14, 
subdivision 5a, and 275.125 shall not include the amount of any 
increased levy authorized by referendum pursuant to section 
124A.03, subdivision 2. 
    (c) On July 15, in years prior to 1988, an amount equal to 
the increase derived by increasing the amount determined by 
clause (3)(b) in the same proportion as the increase in the 
steel mill products index over the base year of 1977 as provided 
in section 298.24, subdivision 1, clause (a), shall be 
distributed to any school district described in clause (3)(b) 
where a levy increase pursuant to section 124A.03, subdivision 
2, is authorized by referendum, according to the following 
formula.  On July 15, 1988 and subsequent years, the increase 
over the amount established for the prior year shall be 
determined according to the increase in the implicit price 
deflator as provided in section 298.24, subdivision 1, paragraph 
(a).  Each district shall receive the product of: 
     (i) $150 times the pupil units identified in section 
124.17, subdivision 1, clauses (1) and (2), enrolled in the 
second previous school year, less the product of two mills times 
the district's taxable valuation in the second previous year; 
times 
     (ii) the lesser of: 
     (A) one, or 
     (B) the ratio of the amount certified pursuant to section 
124A.03, subdivision 2, in the previous year, to the product of 
two mills times the district's taxable valuation in the second 
previous year. 
    If the total amount provided by clause (3)(c) is 
insufficient to make the payments herein required then the 
entitlement of $150 per pupil unit shall be reduced uniformly so 
as not to exceed the funds available.  Any amounts received by a 
qualifying school district in any fiscal year pursuant to clause 
(3)(c) shall not be applied to reduce foundation aids which the 
district is entitled to receive pursuant to section 124A.02 or 
the permissible levies of the district.  Any amount remaining 
after the payments provided in this paragraph shall be paid to 
the commissioner of finance iron range resources and 
rehabilitation who shall deposit the same in the taconite 
environmental protection fund and the northeast Minnesota 
economic protection trust fund as provided in section 298.28, 
subdivision 1, clause 10 (9). 
      (d) There shall be distributed to any school district the 
amount which the school district was entitled to receive under 
section 298.32 in 1975. 
      (4) 19.5 cents per taxable ton to counties to be 
distributed, based upon certification by the commissioner of 
revenue, as follows: 
    (a) 15.5 cents per taxable ton shall be distributed to the 
county in which the taconite is mined or quarried or in which 
the concentrate is produced, less any amount which is to be 
distributed pursuant to part (b).  The commissioner shall follow 
the apportionment formula prescribed in clause (1) is the basis 
for the distribution. 
    (b) If an electric power plant owned by and providing the 
primary source of power for a taxpayer mining and concentrating 
taconite is located in a county other than the county in which 
the mining and the concentrating processes are conducted, one 
cent per taxable ton of the tax distributed to the counties 
pursuant to part (a) and imposed on and collected from such 
taxpayer shall be distributed by the commissioner of revenue 
paid to the county in which the power plant is located. 
      (c) Four cents per taxable ton shall be paid to the county 
from which the taconite was mined, quarried or concentrated to 
be deposited in the county road and bridge fund.  If the mining, 
quarrying and concentrating, or separate steps in any of those 
processes are carried on in more than one county, the 
commissioner shall follow the apportionment formula prescribed 
in clause (1). 
     (5) (a) 17.75 cents per taxable ton, less any amount 
required to be distributed under part (b), to the taconite 
property tax relief account in the apportionment fund in the 
state treasury St. Louis county acting as the counties' fiscal 
agent, to be distributed as provided in sections 273.134 to 
273.136. 
      (b) If an electric power plant owned by and providing the 
primary source of power for a taxpayer mining and concentrating 
taconite is located in a county other than the county in which 
the mining and the concentrating processes are conducted, .75 
cent per taxable ton of the tax imposed and collected from such 
taxpayer shall be distributed by the commissioner of revenue 
paid to the county and school district in which the power plant 
is located as follows:  25 percent to the county and 75 percent 
to the school district. 
    (6) One cent per taxable ton to the state for the cost of 
administering the tax imposed by section 298.24. 
    (7) Three cents per taxable ton shall be deposited in the 
state treasury paid to the credit of the iron range resources 
and rehabilitation board account in the special revenue fund for 
the purposes of section 298.22.  The amount determined in this 
clause shall be increased in 1981 and subsequent years prior to 
1988 in the same proportion as the increase in the steel mill 
products index as provided in section 298.24, subdivision 1 and 
shall be increased in 1988 and subsequent years according to the 
increase in the implicit price deflator as provided in section 
298.24, subdivision 1.  The amount distributed pursuant to this 
clause shall be expended within or for the benefit of a tax 
relief area defined in section 273.134.  No part of the fund 
provided in this clause may be used to provide loans for the 
operation of private business unless the loan is approved by the 
governor and the legislative advisory commission. 
    (8) (7) (a) .20 cent per taxable ton shall be paid to the 
range association of municipalities and schools, for the purpose 
of providing an area wide approach to problems which demand 
coordinated and cooperative actions and which are common to 
those areas of northeast Minnesota affected by operations 
involved in mining iron ore and taconite and producing 
concentrate therefrom, and for the purpose of promoting the 
general welfare and economic development of the cities, towns 
and school districts within the iron range area of northeast 
Minnesota. 
    (b) 1.5 cents per taxable ton shall be paid to the 
northeast Minnesota economic protection trust fund.  
    (9) (8) the amounts determined under clauses (4)(a), 
(4)(c), (5), and (8) (7)(b) shall be increased in 1979 and 
subsequent years prior to 1988 in the same proportion as the 
increase in the steel mill products index as provided in section 
298.24, subdivision 1.  Those amounts shall be increased in 1988 
and subsequent years in the same proportion as the increase in 
the implicit price deflator as provided in section 298.24, 
subdivision 1.  
    (10) (9) the proceeds of the tax imposed by section 298.24 
which remain after the distributions and payments in clauses (1) 
to (9) (8), as certified by the commissioner of revenue, and 
parts (a) and (b) of this clause have been made, together with 
interest earned on all money distributed under this subdivision 
prior to distribution, shall be divided between the taconite 
environmental protection fund created in section 298.223 and the 
northeast Minnesota economic protection trust fund created in 
section 298.292 as follows:  Two-thirds to the taconite 
environmental protection fund and one-third to the northeast 
Minnesota economic protection trust fund.  The proceeds shall be 
placed in the respective special accounts in the general fund. 
    (a) There shall be distributed to each city, town, school 
district, and county the amount that they received under section 
294.26 in calendar year 1977; provided, however, that the amount 
distributed in 1981 to the unorganized territory number 2 of 
Lake County and the town of Beaver Bay based on the 
between-terminal trackage of Erie Mining Company will be 
distributed in 1982 and subsequent years to the unorganized 
territory number 2 of Lake County and the towns of Beaver Bay 
and Stony River based on the miles of track of Erie Mining 
Company in each taxing district. 
    (b) There shall be distributed to the iron range resources 
and rehabilitation board the amounts it received in 1977 under 
section 298.22. 
    On or before October 10 of each calendar year each producer 
of taconite or iron sulphides subject to taxation under section 
298.24 (hereinafter called "taxpayer") shall file with the 
commissioner of revenue an estimate of the amount of tax which 
would be payable by such taxpayer under said law for such 
calendar year; provided such estimate shall be in an amount not 
less than the amount due on the mining and production of 
concentrates up to September 30 of said year plus the amount 
becoming due because of probable production between September 30 
and December 31 of said year, less any credit allowable as 
hereinafter provided.  The commissioner of revenue shall 
annually on or before October 10 report an estimated 
distribution amount to each taxing district and the officers 
with whom such report is so filed shall use the amount so 
indicated as being distributable to each taxing district in 
computing the permissible tax levy of such county or city in the 
year in which such estimate is made, and payable in the next 
ensuing calendar year, except that one cent per taxable ton of 
the amount distributed under clause (4)(c) shall not be deducted 
in calculating the permissible levy.  In any calendar year in 
which a general property tax levy subject to sections 275.50 to 
275.59 has been made, if the taxes distributable to any such 
county or city are greater than the amount estimated by the 
commissioner to be paid to any such county or city in such year, 
the excess of such distribution shall be held in a special fund 
by the county or city and shall not be expended until the 
succeeding calendar year, and shall be included in computing the 
permissible levies under sections 275.50 to 275.59, of such 
county or city payable in such year.  If the amounts 
distributable to any such county or city after final 
determination by the commissioner of revenue under this section 
are less than the amounts by which a taxing district's levies 
were reduced pursuant to this section, such county or city may 
issue certificates of indebtedness in the amount of the 
shortage, and may include in its next tax levy, in excess of the 
limitations of sections 275.50 to 275.59 an amount sufficient to 
pay such certificates of indebtedness and interest thereon, or, 
if no certificates were issued, an amount equal to such shortage.
    There is hereby annually appropriated to such taxing 
districts as are stated herein, to the taconite property tax 
relief account and to the taconite municipal aid account in the 
apportionment fund in the state treasury, to the department of 
revenue, to the iron range resources and rehabilitation board, 
to the range association of municipalities and schools, to the 
taconite environmental protection fund, and to the northeast 
Minnesota economic protection trust fund, from any fund or 
account in the state treasury to which the money was credited, 
an amount sufficient to make the payment or transfer.  The 
payment of the amount appropriated to such taxing districts 
shall be made by the commissioner of revenue on or before May 15 
annually. 
    Sec. 18.  Minnesota Statutes 1984, section 298.28, 
subdivision 2, is amended to read:  
    Subd. 2.  In distributing determining the distributions and 
payments of the proceeds of the tax collected under section 
298.24, the commissioner of revenue shall deduct the amount of 
any credits authorized under section 298.24, subdivision 3, 
against the tax imposed under subdivision 1 of said section, 
from the amount which would otherwise have been distributed paid 
to the iron range resources and rehabilitation board for credit 
to the northeast Minnesota economic protection trust fund in the 
apportionment fund in the state treasury under subdivision 1 of 
this section.  
    Sec. 19.  Minnesota Statutes 1984, section 298.282, 
subdivision 1, is amended to read:  
    Subdivision 1.  The amount deposited to the credit of the 
taconite municipal aid account in the apportionment fund of the 
state treasury with the county as provided in section 298.28, 
subdivision 1, clause (2) shall be distributed as provided by 
this section, among the municipalities comprising a tax relief 
area under section 273.134, as amended hereby, each being herein 
referred to as a qualifying municipality. 
    Sec. 20.  Minnesota Statutes 1984, section 298.282, 
subdivision 4, is amended to read:  
    Subd. 4.  On or before August 15, 1972, and On or before 
August September 15 of each year thereafter, the commissioner of 
finance county auditor shall issue his warrant in favor of the 
treasurer of each qualifying municipality in the amount 
determined by the commissioner of revenue to be due and payable 
to such qualifying municipality in such year.  In 1975 and 
subsequent years, such payment shall be made by the commissioner 
of revenue on or before September 15. 
    Sec. 21.  Minnesota Statutes 1984, section 298.282, 
subdivision 5, is amended to read:  
    Subd. 5.  Commencing in 1977, The commissioner of revenue 
county auditor shall annually on September 15 make a payment 
from the taconite municipal aid fund to cities and towns for the 
purpose of replacing the revenue loss to them resulting from 
Laws 1975, Chapter 437, Article XI, Section 7.  The amount of 
aid to be paid annually to each city and town is the amount they 
were entitled to receive for 1975 under the provisions of 
Minnesota Statutes 1974, Section 298.32. 
    Sec. 22.  Minnesota Statutes 1984, section 298.292, is 
amended to read: 
    298.292 [POLICY.] 
    The legislature is cognizant of the severe economic 
dislocations and widespread unemployment that result when a 
single industry on which an area is largely dependent, 
experiences a drastic reduction in activity.  The northeast 
Minnesota economic protection trust fund is hereby created to be 
devoted to economic rehabilitation and diversification of 
industrial enterprises where these conditions ensue as the 
result of the decline of such a single industry.  Priority shall 
be given to using the northeast Minnesota economic protection 
trust fund for the following purposes:  
    (a) projects and programs that are designed to create and 
maintain productive, permanent, skilled employment, including 
employment in technologically innovative businesses;  
    (b) projects and programs to encourage diversification of 
the economy and to promote the development of minerals, 
alternative energy sources utilizing indigenous fuels, forestry, 
small business, and tourism;  
    (c) projects and programs for which technological and 
economic feasibility have been demonstrated; 
    (d) loans, loan guarantees, interest buy-downs and other 
forms of participation with private sources of financing, but a 
loan to a private enterprise shall be for a principal amount not 
to exceed one-half of the cost of the project for which 
financing is sought, and the rate of interest on a loan shall be 
no less than eight percent; and 
    (e) funding reserve accounts established to secure the 
payment when due of the principal of and interest on bonds 
issued pursuant to section 298.2211; and 
    (f) to pay in periodic payments or in a lump sum payment 
any or all of the interest on bonds issued pursuant to chapter 
474 for the purpose of constructing, converting, or retrofitting 
heating facilities in connection with district heating systems 
or systems utilizing alternative energy sources. 
    Money from the trust fund shall be expended only in or for 
the benefit of the tax relief area defined in section 273.134.  
    Sec. 23.  Minnesota Statutes 1984, section 298.293, is 
amended to read: 
    298.293 [EXPENDING FUNDS.] 
    The funds provided by section 298.28, subdivision 1, clause 
(10) (9), relating to the northeast Minnesota economic 
protection trust fund, except money expended pursuant to Laws 
1982, Second Special Session, chapter 2, sections 8 to 14, shall 
be expended only in an amount that does not exceed the sum of 
the net interest, dividends, and earnings arising from the 
investment of the trust for the preceding 12 calendar months 
from the date of the authorization plus, for fiscal year 1983, 
$10,000,000 from the corpus of the fund.  The funds may be spent 
only in or for the benefit of those areas that are tax relief 
areas as defined in section 273.134.  If during any year the 
taconite property tax account under sections 273.134 to 273.136 
does not contain sufficient funds to pay the property tax relief 
specified in Laws 1977, chapter 423, article X, section 4, there 
is appropriated from this trust fund to the relief account 
sufficient funds to pay the relief specified in Laws 1977, 
chapter 423, article X, section 4. 
    Sec. 24.  Minnesota Statutes 1984, section 299.01, 
subdivision 1, as amended by Laws 1985, chapter 300, section 24, 
is amended to read: 
    Subdivision 1.  There shall be levied and collected upon 
all royalty received during each calendar year for permission to 
explore, mine, take out and remove ore from land in this state, 
a tax of 15 percent before January 1, 1986, a tax of 14.5 
percent after December 31, 1985, and before January 1, 1987, and 
a tax of 14 percent after December 31, 1986. 
    Sec. 25.  [TRANSFER OF FUNDS.] 
    The unencumbered balance in the taconite property tax 
relief account in the apportionment fund in the state treasury 
on February 15, 1986, is appropriated to the commissioner of 
finance to be paid on that date to the St. Louis county auditor, 
to be distributed as provided in sections 273.134 to 273.136.  
    Sec. 26.  Laws 1982, chapter 523, article XXX, section 4, 
subdivision 1, as amended by Laws 1982, Second Special Session, 
chapter 2, section 15, is amended to read:  
    Subdivision 1.  Commencing with taxes payable in 1983 1986, 
the commissioner of revenue iron range resources and 
rehabilitation shall deduct and annually pay to Independent 
School District 710 an amount equal to four cents per gross ton 
of taxable iron concentrate produced but not less than $240,000 
annually from the taxes paid pursuant to sections 298.23 to 
298.28 by a person, corporation, partnership, operator, joint 
venture or other owner of a taconite plant and taconite 
properties located within the school district.  The deduction 
shall be made from the amount which would otherwise have been 
distributed to the northeast Minnesota economic protection trust 
fund in the apportionment fund in the state treasury under 
section 298.28, subdivision 1.  A sum is annually appropriated 
to the commissioner from the proceeds of the taxes sufficient to 
make the payments required by this section.  
    Sec. 27.  [EFFECTIVE DATE.] 
    Sections 1, 2, 12, and 22 are effective July 1, 1985.  
Sections 3 to 6, 13 to 21, and 23 are effective for taxes 
payable in 1986 and thereafter.  Sections 8 to 10 are effective 
for ores produced in 1985 and thereafter.  Section 11 is 
effective for refunds of overpayments of taxes payable in 1985 
and thereafter. 

                               ARTICLE 11

                  MORTGAGE REGISTRATION AND DEED TAXES
    Section 1.  Minnesota Statutes 1984, section 287.05, 
subdivision 1, is amended to read: 
    Subdivision 1.  A tax of 15 cents is imposed upon each 
$100, or fraction thereof, of the principal debt or obligation 
which is or may be secured by any mortgage of real property 
situated within the state executed, delivered, and recorded or 
registered; provided, however, that the tax shall be imposed but 
once upon any mortgage and extension thereof.  If the mortgage 
describes real estate situated outside of this state, the tax 
shall be imposed upon that proportion of the whole debt secured 
thereby as the value of the real estate therein described 
situated in this state bears to the value of the whole of the 
real estate described therein, as the value is determined by the 
commissioner of revenue upon application of the mortgagee.  The 
tax imposed by this section shall not apply to a contract for 
the conveyance of real estate or any interest in real estate 
recorded or registered on or after January 1, 1984.  
    Sec. 2.  Minnesota Statutes 1984, section 287.08, is 
amended to read: 
    287.08 [TAX, HOW PAYABLE; RECEIPTS.] 
    The tax imposed by sections 287.01 to 287.12 shall be paid 
to the treasurer of the county in which the mortgaged land or 
some part thereof is situated at or before the time of filing 
the mortgage for record or registration.  The treasurer shall 
endorse his receipt on the mortgage, countersigned by the county 
auditor, who shall charge the amount to the treasurer and such 
receipt shall be recorded with the mortgage, and such receipt of 
the record thereof shall be conclusive proof that the tax has 
been paid to the amount therein stated and authorize any county 
recorder to record the mortgage.  Its form, in substance, shall 
be "registration tax hereon of ..................... dollars 
paid."  If the mortgages be exempt from taxation the endorsement 
shall be "exempt from registration tax," to be signed in either 
case by the treasurer as such, and in case of payment to be 
countersigned by the auditor.  In case the treasurer shall be 
unable to determine whether a claim of exemption should be 
allowed, the tax shall be paid to the clerk of the district 
court of the county to abide the order of such court made upon 
motion of the county attorney, or of the claimant upon notice as 
required by the court.  When any such mortgage covers real 
property situate in more than one county in this state the whole 
of such tax shall be paid to the treasurer of the county where 
the mortgage is first presented for record or registration, and 
the payment shall be receipted and countersigned as above 
provided.  When the amount of the tax is $100 or more, The tax 
shall be divided and paid over by the county treasurer receiving 
the same, on or before the tenth day of each month after receipt 
thereof, to the county or counties entitled thereto in the ratio 
which the market value of the real property covered by the 
mortgage in each county bears to the market value of all the 
property described in the mortgage.  In making such division and 
payment the county treasurer shall send therewith a statement 
giving the description of the property described in the mortgage 
and the market value of the part thereof situate in each 
county.  For the purpose aforesaid, the treasurer of any county 
may require the treasurer of any other county to certify to him 
the market valuation of any tract of land in any such mortgage. 
    Sec. 3.  Minnesota Statutes 1984, section 287.09, is 
amended to read: 
    287.09 [MORTGAGE ON EXEMPT PROPERTY; PROPERTY NOT DIRECTLY 
TAXED; RECEIPT; APPORTIONMENT OF TAX.] 
    When any real estate situate in this state and described in 
any such mortgage is exempt from taxation under the Constitution 
of the State of Minnesota, Article 10, Section 1, the tax herein 
provided shall be paid to the treasurer of the county in which 
such real estate is situate in the same manner as if such real 
estate was not exempt from taxation.  When any real estate 
situate in this state and described in such mortgage is not 
exempt from taxation under such section, but is not taxed by 
direct tax upon the assessed valuation thereof, then the tax 
herein provided shall be paid to the commissioner of revenue for 
deposit in the state treasury and credited to the general fund. 
The receipt thereof shall be endorsed upon the mortgage by the 
commissioner of revenue and thereupon such mortgage shall be 
recorded or registered, as to such real estate, in any office in 
this state.  When any such mortgage shall describe any real 
estate, part of which is not taxed by direct tax upon the 
assessed valuation thereof and part of which is so taxed or is 
exempt from taxation, the proportionate amount of the tax to be 
paid to the commissioner of revenue and to the county treasurer 
shall be determined in accordance with the proportionate value 
of the real estate included therein as such valuation shall be 
determined by the commissioner of revenue upon application of 
the mortgagee.  The amount of the tax payable to the 
commissioner of revenue shall thereupon be paid to him, who 
shall endorse upon such mortgage that the proportionate amount 
of the tax payable to him has been paid and the balance of such 
tax shall be paid to the treasurer of the county where the 
mortgage is first presented for record or registration and shall 
be divided and paid to the treasurers of the other counties 
entitled thereto, as provided by section 287.08 county.  Real 
estate taxed under sections 298.23 to 298.28, relating to 
taconite and taconite operations or under sections 294.21 to 
294.28, relating to railroads transporting taconite or taconite 
concentrates other than as a common carrier, shall not be 
considered to be real estate not taxed by direct tax upon the 
assessed valuation thereof within the meaning of this section. 
    Sec. 4.  Minnesota Statutes 1984, section 287.12, is 
amended to read: 
    287.12 [TAXES, HOW APPORTIONED.] 
    All taxes paid to the county treasurers treasurer on or 
after July 1, 1985, under the provisions of sections 287.01 to 
287.12 shall be apportioned, 95 percent to the general fund of 
the state, and five percent credited to the county revenue fund. 
    On or before the tenth day of each month the county 
treasurer shall determine and pay to the commissioner of revenue 
the state's portion of the receipts from the mortgage 
registration tax during the preceding month.  The commissioner 
shall deposit the receipts in the state treasury to the credit 
of the general fund treasurer shall report to the county welfare 
agency on or before the tenth day of each month 95 percent of 
the receipts attributable to the statutory rate in section 
287.05.  That amount, in addition to 97 percent of the amount 
determined under section 287.29, must be shown as a deduction 
from the report filed with the department of human services as 
required by section 256.82. 
    Sec. 5.  Minnesota Statutes 1984, section 287.21, 
subdivision 2, is amended to read: 
    Subd. 2.  The proceeds of the taxes levied and collected 
under sections 287.21 to 287.36 on or after July 1, 1985, shall 
be credited to the general county revenue fund.  
    Sec. 6.  Minnesota Statutes 1984, section 287.23, is 
amended to read: 
    287.23 [REAL ESTATE OUTSIDE STATE.] 
    If any deed, instrument, or writing shall describe any real 
estate situate outside of this state, the tax imposed by section 
287.21 shall be measured upon such proportion of the 
consideration (exclusive of the value of any lien or encumbrance 
remaining thereon at the time of sale) as the value of the real 
estate therein described situate in this state bears to the 
value of the whole of the real estate described therein as 
determined by the commissioner of revenue upon application of 
any party to the deed, instrument, or writing.  
    Sec. 7.  Minnesota Statutes 1984, section 287.25, is 
amended to read: 
    287.25 [PAYMENT OF TAX; STAMPS.] 
    The tax imposed by section 287.21 shall be paid by the 
affixing of a documentary stamp or stamps in the amount of the 
tax to the document or instrument with respect to which the tax 
is paid, provided that the commissioner of revenue county board 
may, in exceptional cases, permit the payment of the tax without 
the affixing of the documentary stamps and in such cases shall, 
upon receipt of the tax, direct the treasurer to endorse his a 
receipt for such tax upon the face of the document or 
instrument.  In such case the commissioner of revenue shall 
deposit the amount received in payment of the tax with the state 
treasurer to the credit of the general fund.  
     Sec. 8.  Minnesota Statutes 1984, section 287.27, is 
amended to read: 
    287.27 [STAMPS; PRINTING AND SALE-METERS.] 
    Subdivision 1.  The commissioner of revenue shall cause The 
county board may have documentary stamps to be printed and shall 
furnish such stamps as may be necessary them to the county 
treasurers of the state without charge treasurer.  Documentary 
stamps may be purchased only from any the county treasurer and 
may be used in payment of a tax imposed by section 287.21 or may 
be resold by the owner at any time not be sold for use in any 
county other than the county in which the property is located.  
    Subd. 2.  The commissioner may authorize any county 
treasurer to utilize a tax meter machine approved by the 
commissioner which shall be provided by the county.  
    The commissioner county board may authorize any person to 
utilize such a tax meter machine upon the filing of a corporate 
surety bond, in a suitable amount to guarantee the payment of 
the tax, such amount to be determined by the commissioner county 
board.  
    The commissioner county board may provide rules for the use 
of such a machine, supervise its operation and provide for the 
payment of the tax on any deed or document so stamped.  
    Sec. 9.  Minnesota Statutes 1984, section 287.28, is 
amended to read: 
    287.28 [REFUNDMENTS OR REDEMPTION.] 
    The commissioner of revenue county treasurer may order the 
refundment in whole or in part of any tax which has been 
erroneously or unjustly paid and may allow for or redeem such of 
the stamps, issued under the authority of sections 287.21 to 
287.36 as may have been spoiled, destroyed, or rendered useless 
or unfit for the purpose intended or for which the owner may 
have no use or which through mistake may have been improperly or 
unnecessarily used.  Such order shall be made only upon written 
application of the taxpayer and shall, if the refundment exceeds 
$500, be valid only if approved by the attorney general upon 
approval of the county board.  Refunds therefor shall be paid 
out of the general fund of the state and moneys therefor are 
hereby annually appropriated from the general fund for such 
purpose county.  
    Sec. 10.  Minnesota Statutes 1984, section 287.29, 
subdivision 1, is amended to read: 
    Subdivision 1.  On or before the tenth day of August 1985, 
and each month thereafter, the county treasurer shall determine 
and pay report to the commissioner of revenue county welfare 
agency the receipts from the sale of documentary stamps 
attributable to the tax imposed during the preceding month.  The 
report must accompany the report required in section 287.12.  
The commissioner receipts shall deposit such receipts be 
deposited in the state county treasury and credited to the 
credit of the general county revenue fund. 
    Sec. 11.  Minnesota Statutes 1984, section 287.33, is 
amended to read: 
    287.33 [EXPENSES OF ADMINISTRATION.] 
    Expenses of administration of sections 287.21 to 287.34 to 
be paid out of appropriations to the commissioner of revenue 
shall county funds include fees and expenses incurred by the 
attorney general and any county attorney in connection with 
sections 287.21 to 287.34 and all other costs and expenses.  
    Sec. 12.  Minnesota Statutes 1984, section 287.35, is 
amended to read: 
    287.35 [DOCUMENTARY STAMPS DEFINED.] 
    The term "documentary stamps" means all stamps issued by 
the commissioner of revenue county for use in payment of the 
taxes imposed by sections 287.21 to 287.36.  
    Sec. 13.  [REPEALER.] 
    Minnesota Statutes 1984, sections 287.27, 287.29, 
subdivision 3, and 287.32 are repealed. 
    Sec. 14.  [EFFECTIVE DATE.] 
    Sections 1 to 13 are effective July 1, 1985. 

                               ARTICLE 12

                          RAILROAD ABATEMENTS 
    Section 1.  [APPROPRIATION.] 
    There is appropriated from the general fund to the 
commissioner of revenue the amounts necessary to reimburse local 
taxing districts for certain abatements of property taxes 
received by railroads for assessment year 1983 as a result of a 
change in the assessed valuation of railroad property.  For 
purposes of this section, the term "property taxes" excludes any 
interest which is required to be paid to the railroads; and the 
term "abatement" includes only reductions in property tax made 
from the original assessment certified by the commissioner of 
revenue, as the result of a court order. 
    The county auditor shall certify to the commissioner of 
revenue the dollar amount of the abatements received by the 
railroads from the county and each city, town, school district, 
and special taxing district or portion thereof which is located 
within the county.  The certification must be made on the forms 
and completed by the date prescribed by the commissioner.  The 
commissioner of revenue shall review the certification and make 
changes in the certification that he determines are necessary.  
The amounts of the abatements for a taxing district which is 
located in more than one county shall be aggregated.  The 
commissioner shall determine the amount to be paid to each 
county, city, town, and special taxing district which shall be 
equal to the amount of the abatement in excess of 20 cents per 
capita for each county, city, town, and special taxing 
district.  The commissioner shall determine the amount to be 
paid to each school district which shall be equal to the amount 
of the abatement in excess of $1 per pupil unit for the school 
district.  The 20 cents per capita and the $1 per pupil unit 
shall relate to the combined abatement amount for all railroads 
for 1983 for each county, city, town, school district, and 
special taxing district.  The commissioner shall pay each taxing 
district as soon as practicable after certification, but not 
before January 1, 1986. 
    This appropriation is available the day after final 
enactment until expended. 
    A county, city, town, school district, and special taxing 
district may include an additional amount in its property tax 
levy for taxes payable in 1986 equal to the difference between 
the amount of tax and interest included in the abatement to a 
railroad company whose valuation was ordered reduced by the tax 
court and the amount reimbursed to the taxing district by the 
state pursuant to this section.  Amounts levied for this purpose 
shall be considered outside of any levy limitations applicable 
to the taxing district.  In the case of a school district, only 
the amount of abatement not reimbursed under this section may be 
considered in the computation of abatement aid under Minnesota 
Statutes, section 124.214, subdivision 2. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day after final enactment and 
applies to assessment year 1983.  

                               ARTICLE 13 

                               ESTATE TAX 
    Section 1.  Minnesota Statutes 1984, section 290.01, 
subdivision 20e, is amended to read: 
    Subd. 20e.  [MODIFICATION IN COMPUTING TAXABLE INCOME OF 
THE ESTATE OF A DECEDENT.] Amounts allowable under 
section 291.07, subdivision 1, clause (2) 2053 or 2054 of the 
Internal Revenue Code of 1954 in computing Minnesota inheritance 
or federal estate tax liability shall not be allowed as a 
deduction (or as an offset against the sales price of property 
in determining gain or loss) in computing the taxable income of 
the estate or any person unless there is filed within the time 
and in the manner and form prescribed by the commissioner a 
statement that the amounts have not been allowed as a deduction 
under section 291.07 and a waiver of the right to have the 
amounts allowed at any time as deductions under section 291.07. 
The provisions of this paragraph shall not apply with respect to 
deductions allowed under section 290.077 (relating to income in 
respect of decedents) an election is made for federal income tax 
purposes under section 642(g) of the Internal Revenue Code of 
1954.  The election made for federal tax purposes under section 
642(g) of the Internal Revenue Code of 1954 is binding for 
Minnesota tax purposes. 
    Sec. 2.  Minnesota Statutes 1984, section 291.005, 
subdivision 1, is amended to read:  
    Subdivision 1.  Unless the context otherwise clearly 
requires, the following terms used in this chapter shall have 
the following meanings: 
    (1) "Federal gross estate" means the gross estate of a 
decedent as valued and otherwise determined for federal estate 
tax purposes by federal taxing authorities pursuant to the 
provisions of the Internal Revenue Code. 
    (2) "Minnesota gross estate" means the federal gross estate 
of a decedent after (a) excluding therefrom any property 
included therein which has its situs outside Minnesota and (b) 
including therein any property omitted from the federal gross 
estate which is includable therein, has its situs in Minnesota, 
and was not disclosed to federal taxing authorities.  The 
Minnesota gross estate shall be valued pursuant to the 
provisions of section 291.215, subdivision 1. 
    (3) "Personal representative" means the executor, 
administrator or other person appointed by the court to 
administer and dispose of the property of the decedent.  If 
there is no executor, administrator or other person appointed, 
qualified, and acting within this state, then any person in 
actual or constructive possession of any property having a situs 
in this state which is included in the federal gross estate of 
the decedent shall be deemed to be a personal representative to 
the extent of the property and the Minnesota estate tax due with 
respect to the property. 
      (4) "Resident decedent" means an individual whose domicile 
at the time of his death was in Minnesota. 
    (5) "Nonresident decedent" means an individual whose 
domicile at the time of his death was not in Minnesota. 
    (6) "Situs of property" means, with respect to real 
property, the state or country in which it is located; with 
respect to tangible personal property, the state or country in 
which it was normally kept or located at the time of the 
decedent's death; and with respect to intangible personal 
property, the state or country in which the decedent was 
domiciled at death. 
    (7) "Commissioner" means the commissioner of revenue or any 
person to whom the commissioner has delegated functions under 
this chapter. 
    (8) "Internal Revenue Code" means the United States 
Internal Revenue Code of 1954 as amended through March 12, 
1983 December 31, 1984. 
    Sec. 3.  Minnesota Statutes 1984, section 291.03, 
subdivision 1, is amended to read:  
    Subdivision 1.  [GENERALLY TAX AMOUNT.] The tax imposed 
shall be an amount equal to the greater of: 
    (1) A tax computed by applying to the Minnesota taxable 
estate the following prescribed rates: 
    10 percent on the first $100,000, 
    11 percent on the next $500,000 or part thereof, 
    12 percent on the excess, or 
    (2) A tax equal to the same proportion of the maximum 
credit allowable under section 2011 of the Internal Revenue Code 
for state death taxes described herein as the Minnesota gross 
estate bears to the value of the federal gross estate.  For a 
resident decedent, the tax shall be the maximum credit allowable 
under section 2011 of the Internal Revenue Code reduced by the 
amount of the death tax paid the other state and credited 
against the federal estate tax if this results in a larger 
amount of tax than the proportionate amount of the credit.  The 
tax determined under this paragraph shall not be greater than 
the maximum credit allowable under section 2011 of the Internal 
Revenue Code.  
    Sec. 4.  Minnesota Statutes 1984, section 291.075, is 
amended to read:  
    291.075 [SPECIAL USE VALUATION OF QUALIFIED PROPERTY.] 
    When property subject to the tax imposed by this chapter 
qualifies for valuation based on its use pursuant to section 
2032A of the Internal Revenue Code, it shall have the same value 
for Minnesota estate tax purposes as it has for federal estate 
tax purposes.  If, after the final determination of the tax 
imposed by this chapter, the property valued pursuant to section 
2032A of the Internal Revenue Code is disposed of or fails to 
qualify and an additional tax is imposed pursuant to section 
2032A(c), any increase in the credit for state death taxes shall 
be reported to the commissioner within 90 days after final 
determination of the increased credit.  Upon notification the 
commissioner may assess an additional tax in accordance with 
section 291.03, subdivision 1, clause (2).  No additional 
Minnesota estate tax computed in accordance with section 291.03, 
subdivision 1, clause (1) will be imposed nor will an additional 
deduction for federal estate taxes paid be allowed under section 
291.07 or 291.08.  
    Sec. 5.  Minnesota Statutes 1984, section 291.09, 
subdivision 1a, is amended to read:  
    Subd. 1a.  In all instances in which a decedent dies after 
December 31, 1979 and before January 1, 1981 leaving a federal 
gross estate in excess of $161,000 and in all instances in which 
a decedent dies after December 31, 1980 and before January 1, 
1982 leaving a federal gross estate in excess of $175,000, and 
the decedent has an interest in property with a situs in 
Minnesota, the personal representative shall submit to the 
commissioner, on a form prescribed by the commissioner, a 
Minnesota estate tax return. 
    In the case of a decedent dying after December 31, 1981 
1985 who has an interest in property with a situs in Minnesota, 
the personal representative shall submit to the commissioner, on 
a form prescribed by the commissioner, a Minnesota estate tax 
return in the following all instances:  
          In the case of a decedent     A Minnesota estate
          dying in                      tax return shall be
                                        filed if the federal
                                        gross estate equals
                                        or exceeds
          1982 . . . . . . . . . . . . .$225,000
          1983 . . . . . . . . . . . . . 275,000
          1984 . . . . . . . . . . . . . 325,000
          1985 . . . . . . . . . . . . . 400,000
          1986 . . . . . . . . . . . . . 500,000
          1987 and thereafter. . . . . . 600,000
in which a federal estate tax return is required to be filed. 
    The return shall be accompanied by a federal estate tax 
return, a schedule of all assets in the estate at their date of 
death values, and shall contain a computation of the Minnesota 
estate tax due.  The return shall be signed by the personal 
representative. 
    Sec. 6.  Minnesota Statutes 1984, section 291.09, 
subdivision 2a, is amended to read: 
    Subd. 2a.  The commissioner may designate on the return the 
documents that are required to be filed together with the return 
in order to determine the proper valuation of assets and 
computation of tax.  The commissioner shall not be bound by any 
item on the return unless he has received all required documents 
and unless all items of information on the return have been 
completed.  
    Sec. 7.  Minnesota Statutes 1984, section 291.09, 
subdivision 3a, is amended to read:  
    Subd. 3a.  (1) The commissioner may challenge matters of 
valuation or taxability of any assets reported on the return, or 
any deductions claimed, or the computation of tax, only if 
within 180 days from the due date of the return or the receipt 
of the return and all documents required to be filed with the 
return, whichever is later, the commissioner mails or delivers a 
written notice to the personal representative objecting to the 
return as filed and specifying the reasons for the objection. 
    (2) If the personal representative disagrees with the 
objection or does not wish to fully comply with the objection, 
he may request that the commissioner hold a hearing on the 
objection.  Within 30 days of receipt of a request, the 
commissioner shall set a time and place for hearing.  Unless 
otherwise agreed upon, the hearing date shall not be earlier 
than 30 days nor later than 60 days from the date of the notice 
setting the hearing.  The notice of hearing shall set forth the 
rights available to the personal representative under chapter 
14.  Not later than 30 days after the commissioner receives the 
report and recommendation of the administrative law judge, or a 
written waiver of his hearing rights by the personal 
representative, the commissioner shall issue an order 
determining the tax.  Any such determination made by the 
commissioner may be appealed to the tax court as provided in 
section 271.09. 
    (3) At any time together with or after the objection, the 
commissioner, on his own initiative, may set a time and place 
for a hearing in accordance with (2) above. 
    (4) In his objection, or at any time thereafter, the 
commissioner may assess any additional tax as the facts may 
warrant, subject to the right of the personal representative to 
demand a hearing under chapter 15 14.  If the personal 
representative does not demand a hearing within 90 days of the 
date of the assessment, the tax so assessed shall be legally due 
and the commissioner may proceed to collect any the unpaid tax 
after one year from the date of death.  If the commissioner 
later finds the tax assessment to be erroneous, he may adjust 
the assessment prior to collection. 
    (5) The commissioner shall not be required to object to any 
subsequent original, amended or supplemental return in order to 
preserve his rights.  The commissioner shall not be precluded 
from objecting to a subsequent original, amended or supplemental 
return even though an original return was accepted as filed.  If 
the commissioner had accepted an original return showing no tax 
due and a subsequent original, amended or supplemental return 
discloses additional assets not disclosed on the original 
return, the commissioner may object to any matter of valuation, 
taxability, deduction or computation of tax on the original 
return within 180 days of receipt of the subsequent original, 
amended or supplemental return. 
    (6) Subject to the provisions of sections 291.11 and 
291.215, the Minnesota estate tax liability shall be considered 
as finally determined on the date notification of acceptance is 
issued to the personal representative or, if no objection is 
filed, on the day following 180 days from the due date of the 
return or the receipt of the return, together with all other 
documents required to be filed with the return, whichever is 
later. 
    (7) Subject to the time limits imposed elsewhere in this 
chapter, the commissioner may refund an overpayment of tax, 
penalty or interest even though the personal representative has 
not made an application for refund.  
    Sec. 8.  Minnesota Statutes 1984, section 291.11, 
subdivision 1, is amended to read: 
    Subdivision 1.  (1) All taxes imposed by this chapter shall 
take effect at and upon the death of the person whose estate is 
subject to taxation and shall be due and payable at the 
expiration of nine months from such death, except as otherwise 
provided in this chapter.  Where an extension to file the 
federal estate tax return has been granted under the provision 
of section 6081 of the Internal Revenue Code, the time for 
filing the estate tax return or making payment of the tax 
without penalty, is extended for the same period.  Provided, 
that any taxpayer who owes at least $5,000 in taxes may choose 
to pay these taxes in five equal installments over a period of 
time not to exceed five years from the death of the person whose 
estate is subject to taxation or five years from the expiration 
of the extension granted by the commissioner pursuant to section 
291.132, whichever is later and who, under section 6161 or 6166 
of the Internal Revenue Code, has been granted an extension for 
payment of the tax shown on the return, may elect to pay the 
commissioner the amount of tax due in equal amounts at the same 
time as required for federal purposes.  When a taxpayer elects 
to pay the tax in installments, he shall notify the commissioner 
in writing no later than nine months after the death of the 
person whose estate is subject to taxation.  If the taxpayer 
fails to pay an installment on time, unless it is shown that 
such failure is due to reasonable cause, the election shall be 
revoked and the entire amount of unpaid tax plus accrued 
interest shall be due and payable 90 days after the date on 
which the installment was payable. 
    (2) (a) False return - in the case of a false or fraudulent 
return with the intent to evade tax, any additional tax 
resulting therefrom may be assessed at any time. 
    (b) No return - in the case of failure to file a return, 
the tax may be assessed at any time. 
    (c) Omissions - in the case where there is omitted from the 
estate items subject to tax under this chapter the tax on such 
omitted items may be assessed at any time. 
    In determining the items omitted, there shall not be taken 
into account any item which has been disclosed in the return or 
in a statement attached to the return in a manner adequate to 
apprise the commissioner of the nature and amount of such item. 
    (3) Where, before the expiration of the time prescribed in 
this chapter for the determination or adjustment of the tax, the 
commissioner and the taxpayer shall consent in writing to the 
extension of time for such determination or adjustment the tax 
may be determined at any time prior to the expiration agreed 
upon and in the manner agreed upon.  The period so agreed upon 
may be extended by subsequent agreements in writing made before 
the expiration of the period previously agreed upon. 
     Sec. 9.  Minnesota Statutes 1984, section 291.15, 
subdivision 1, is amended to read: 
    Subdivision 1.  If the tax is not paid within nine months 
from the accruing thereof, the time specified for payment, the 
unpaid tax and any penalty imposed under section 291.131 shall 
bear interest shall be charged and collected thereon at the rate 
specified in section 270.75 from the due date until the date the 
tax is paid.  Unpaid tax includes the unpaid tax when the 
taxpayer elects to pay the tax in installments and the due date 
is the date the tax was due without regard to any extension that 
is granted or an election to pay the tax in installments.  In 
the event a person or corporation upon proper authorization 
makes a payment to be applied against the tax thereafter, no 
interest shall accrue on the amount so paid. All payments shall 
be applied first to penalties, next to interest and then upon 
principal. 
    Sec. 10.  Minnesota Statutes 1984, section 291.15, 
subdivision 3, is amended to read:  
    Subd. 3.  Interest shall be paid on installment payments of 
the tax authorized under section 291.11, subdivision 1, or 
291.132, subdivision 2, at the rate of interest in effect 
pursuant to section 270.75 nine months following the date of 
death. 
    Sec. 11.  Minnesota Statutes 1984, section 291.215, 
subdivision 1, is amended to read: 
    Subdivision 1.  All property includable in the Minnesota 
gross estate of a decedent shall be valued in accordance with 
the provisions of sections 2031 or 2032 and, if applicable, 
2032A, of the Internal Revenue Code and any elections made in 
valuing the federal gross estate shall be applicable in valuing 
the Minnesota gross estate.  Except as otherwise provided in 
section 291.075, the value of all property includable in the 
Minnesota gross estate of a decedent may be independently 
determined under said sections for Minnesota estate tax purposes.
Values for purposes of the estate tax on both probate and 
nonprobate assets shall be the same as those finally determined 
for purposes of the federal estate tax on a decedent's estate. 
    Sec. 12.  Minnesota Statutes 1984, section 291.32, is 
amended to read: 
    291.32 [REFUNDING OF TAX.] 
    Subdivision 1.  Whenever, If under the provisions of this 
chapter any person or corporation shall be is entitled to a 
return of any part of a tax, penalty, or interest previously 
paid in excess of the amount legally due, he may make 
application apply to the commissioner for a determination of the 
amount which he is entitled to have returned, and on such 
application shall.  The applicant must furnish the commissioner 
with affidavits and other evidence showing the facts which 
entitled him to such return and the amount he is entitled to 
have returned.  Upon the filing of such application, The 
commissioner shall must examine the same application and shall 
make a written order thereon denying or allowing deny or allow, 
in a written order, the application in whole or in part and 
shall mail.  A copy of such order by certified mail the order 
must be mailed to the applicant at the address stated on the 
application.  If such application is allowed in whole or in 
part, the commissioner shall cause such pay the refund to be 
paid in the manner provided by law.  It shall be the duty of the 
state treasurer to pay warrants therefor out of any funds in the 
state treasury not otherwise appropriated.  The amount of taxes, 
penalty, and interest in excess of the amount legally due must 
be paid with interest at the rate specified in article 15, 
section 3, from the date of payment or from the date beginning 
nine months after the death of the decedent, whichever is 
later.  The moneys necessary to pay such warrants the amounts 
are hereby appropriated to the commissioner out of any moneys in 
the state treasury not otherwise appropriated the general fund. 
    Subd. 2.  All applications for refunds must be made within 
two years from the date of final determination or adjustment of 
any part of the tax, penalty, or interest by the taxpayer, the 
commissioner, or the tax court, as applicable.  If the 
application is denied in whole or in part the taxpayer may 
commence an action against the commissioner to recover any 
overpayments of taxes claimed to be refundable but for which the 
commissioner has issued no order of refundment.  Such action may 
be brought in the District Court of the district in which lies 
the county of his residence or principal place of business if an 
estate or trust, of the principal place of its administration, 
or in the district court for Ramsey County.  Such action may be 
commenced after the expiration of six months after the 
application is filed if the commissioner has not taken final 
action thereon and shall be commenced within 18 months after the 
date of the order denying the application.  If the commissioner 
has not acted within two years after the application is filed, 
it shall be considered denied. 
    Sec. 13.  Minnesota Statutes 1984, section 524.3-1202, is 
amended to read: 
    524.3-1202 [EFFECT OF AFFIDAVIT.] 
    The person paying, delivering, transferring, or issuing 
personal property or the evidence thereof pursuant to affidavit 
shall submit a copy of the affidavit to the commissioner of 
revenue within five days of its receipt and then is discharged 
and released to the same extent as if he dealt with a personal 
representative of the decedent.  He is not required to see to 
the application of the personal property or evidence thereof or 
to inquire into the truth of any statement in the affidavit.  If 
any person to whom an affidavit is delivered refuses to pay, 
deliver, transfer, or issue any personal property or evidence 
thereof, it may be recovered or its payment, delivery, transfer, 
or issuance compelled upon proof of their right in a proceeding 
brought for the purpose by or on behalf of the persons entitled 
thereto.  Any person to whom payment, delivery, transfer or 
issuance is made is answerable and accountable therefor to any 
personal representative of the estate or to any other person 
having a superior right. 
    Sec. 14.  [REPEALER.] 
    (a) Minnesota Statutes 1984, sections 55.10, subdivision 2; 
270.75, subdivision 7; 291.015; 291.03, subdivisions 3, 4, 5, 6, 
and 7; 291.05; 291.051; 291.06; 291.065; 291.07; 291.08; 291.09, 
subdivision 5; 291.111; 291.131, subdivision 6; 291.132; 291.15, 
subdivision 2; 291.18; 291.20; and 385.36 are repealed. 
    (b) Minnesota Statutes 1984, sections 291.131, subdivision 
5; and 291.29, subdivision 5, are repealed. 
    Sec. 15.  [EFFECTIVE DATE.] 
    Sections 1 to 12 and 14, paragraph (a), are effective for 
estates of persons dying after December 31, 1985, except that 
the update of the Internal Revenue Code in section 2 is 
effective for estates of persons dying after December 31, 1984. 
Sections 13 and 14, paragraph (b), are effective the day after 
final enactment. 

                               ARTICLE 14

                        TELEPHONE GROSS EARNINGS
    Section 1.  Minnesota Statutes 1984, section 295.01, 
subdivision 10, is amended to read: 
    Subd. 10.  [TELEPHONE COMPANY.] The term "telephone 
company" as used in this chapter means any person, firm, 
association or corporation, excluding municipal telephone 
companies, owning or operating any telephone line or telephone 
exchange for hire wholly or partly within this state, including 
radio and other advancements in the art of telephony but 
excluding cellular radio.  
    Sec. 2.  Minnesota Statutes 1984, section 295.34, 
subdivision 1, is amended to read: 
    Subdivision 1.  Except as provided in subdivision 2 every 
telephone company shall file a return with the commissioner of 
revenue on or before April 15 of each year, and submit payment 
therewith, of the following percentages of its gross earnings of 
the preceding calendar year derived from business within this 
state: 
    (a) 4 percent of its for gross earnings from service to 
rural subscribers; (b) 4 percent of its gross earnings and from 
exchange business of all cities of the fourth class and 
statutory cities having a population of 10,000 or less 
    for calendar years beginning before December 31, 1986, 4 
percent, 
    for calendar year 1987, 3 percent, 
    for calendar year 1988, 1.5 percent, 
    for calendar year 1989, 1 percent, and 
    for calendar years beginning after December 31, 1989, 
exempt; and (c) 7 percent of its 
    (b) for gross earnings derived from all other business; 
which shall be 
    for calendar years beginning before December 31, 1986, 7 
percent, 
    for calendar year 1987, 5.5 percent, 
    for calendar year 1988, 3 percent, 
    for calendar year 1989, 2.5 percent, and 
    for calendar years beginning after December 31, 1989, 
exempt. 
    Beginning January 1, 1986, a tax shall not be imposed on 
the gross earnings of a telephone company from business 
originating or terminating outside of Minnesota. 
    The tax imposed is in lieu of all other taxes, except the 
taxes imposed by chapter 290, property taxes assessed beginning 
in 1987, payable in 1988, and sales and use taxes imposed as a 
result of article 2, section 5.  All moneys paid by a company 
for connecting fees and switching charges to any other company 
shall be reported as earnings by the company to which they are 
paid, but shall not be deemed earnings of the collecting and 
paying company.  For the purposes of this section, the 
population of any statutory city shall be considered as that 
stated in the latest federal census. 
    Sec. 3.  [REPEALER] 
    Minnesota Statutes 1984, section 295.34, is repealed. 
    Sec. 4.  [EFFECTIVE DATE.] 
    Section 1 is effective for tax years after December 31, 
1985.  Section 3 is effective beginning for calendar year 1990. 

                               ARTICLE 15 

                        INTEREST ON OVERPAYMENTS 
    Section 1.  Minnesota Statutes 1984, section 60A.15, 
subdivision 12, is amended to read: 
    Subd. 12.  [OVERPAYMENTS, CLAIMS FOR REFUND.] (1) 
[PROCEDURE, TIME LIMIT, APPROPRIATION.] A company who has paid, 
voluntarily or otherwise, or from whom there has been collected 
an amount of tax for any year in excess of the amount legally 
due for that year, may file with the commissioner of revenue a 
claim for a refund of the excess.  Except as provided in 
subdivision 11, no claim or refund shall be allowed or made 
after 3-1/2 years from the date prescribed for filing the return 
(plus any extension of time granted for filing the return but 
only if filed within the extended time) or after two years from 
the date of overpayment, whichever period is longer, unless 
before the expiration of the period a claim is filed by the 
company.  For this purpose, a return or amended return claiming 
an overpayment constitutes a claim for refund. 
    Upon the filing of a claim, the commissioner shall examine 
it and shall make and file written findings denying or allowing 
the claim in whole or in part.  He shall mail a notice thereof 
to the company at the address stated upon the return.  If the 
claim is allowed in whole or in part, the commissioner shall 
issue his certificate for the refundment of the excess paid by 
the company, with interest at the rate of six percent per annum 
specified in section 3 computed from the date of the payment of 
the tax until the date the refund is paid or the credit is made 
to the company.  The commissioner of finance shall pay the 
refund out of the proceeds of the taxes imposed by this section, 
as other state moneys are expended.  As much of the proceeds of 
the taxes as necessary are appropriated for that purpose. 
     (2) [DENIAL OF CLAIM, COURT PROCEEDINGS.] If the claim is 
denied in whole or in part, the commissioner shall mail an order 
of denial to the company in the manner prescribed in subdivision 
8.  An appeal from this order may be taken to the Minnesota tax 
court in the manner prescribed in section 271.06, or the company 
may commence an action against the commissioner to recover the 
denied overpayment.  The action may be brought in the district 
court of the district in the county of its principal place of 
business, or in the district court for Ramsey county.  The 
action in the district court must be commenced within 18 months 
following the mailing of the order of denial to the company.  If 
a claim for refund is filed by a company and no order of denial 
is issued within six months of the filing, the company may 
commence an action in the district court as in the case of a 
denial, but the action must be commenced within two years of the 
date that the claim for refund was filed. 
     (3) [CONSENT TO EXTEND TIME.] If the commissioner and the 
company have, within the periods prescribed in clause (1), 
consented in writing to any extension of time for the assessment 
of the tax, the period within which a claim for refund may be 
filed, or a refund may be made or allowed, if no claim is filed, 
shall be the period within which the commissioner and the 
company have consented to an extension for the assessment of the 
tax and six months thereafter.  The period within which a claim 
for refund may be filed shall not expire prior to two years 
after the tax was paid. 
    (4) [OVERPAYMENTS; REFUNDS.] If the amount determined to be 
an overpayment exceeds the taxes imposed by this section, the 
amount of excess shall be considered an overpayment.  An amount 
paid as tax constitutes an overpayment even if in fact there was 
no tax liability with respect to which the amount was paid. 
    Notwithstanding any other provision of law to the contrary, 
in the case of any overpayment, the commissioner, within the 
applicable period of limitations, shall refund any balance of 
more than one dollar to the company if the company requests the 
refund. 
     Sec. 2.  Minnesota Statutes 1984, section 60A.199, 
subdivision 8, is amended to read: 
    Subd. 8.  [REFUND PROCEDURE; TIME LIMIT; APPROPRIATION.] A 
company which has paid, voluntarily or otherwise, or from which 
there was collected an amount of tax for any year in excess of 
the amount legally due for that year, may file with the 
commissioner of revenue a claim for a refund of the excess. 
Except as provided in subdivision 3, no claim or refund shall be 
allowed or made after 3-1/2 years from the date prescribed for 
filing the return (plus any extension of time granted for filing 
the return but only if filed within the extended time) or after 
two years from the date of overpayment, whichever period is 
longer, unless before the expiration of the period a claim is 
filed by the company.  For this purpose, a return or amended 
return claiming an overpayment constitutes a claim for refund.  
    Upon the filing of a claim the commissioner shall examine 
the same and shall make and file written findings thereon 
denying or allowing the claim in whole or in part.  He shall 
mail a notice thereof to the company at the address stated upon 
the return.  If the claim is allowed in whole or in part, the 
commissioner shall issue his certificate for a refund of the 
excess paid by the company, with interest at the rate of six 
percent per annum specified in section 3 computed from the date 
of the payment of the tax until the date the refund is paid or 
credit is made to the company.  The commissioner of finance 
shall cause the refund to be paid as other state moneys are 
expended.  So much of the proceeds of the taxes as is necessary 
are appropriated for that purpose.  
    Sec. 3.  [270.76] [INTEREST ON REFUNDS.] 
    When any tax payable to the commissioner of revenue or to 
the department of revenue is overpaid and an amount is due the 
taxpayer as a refund of the overpayment, the overpayment shall 
bear interest from the date of payment of the tax until the date 
the refund is paid or credit is made, unless another period for 
computing interest is provided by law.  The interest rate per 
annum on overpayments shall be 80 percent of the interest rate 
contained in section 270.75, subdivision 5; the rate shall be 
adjusted annually and become effective as provided in section 
270.75, subdivision 5; and the result of the adjustment in the 
rate shall be rounded to the nearest full percent.  The 
determination of the commissioner pursuant to this subdivision 
is not a "rule" and is not subject to the administrative 
procedure act contained in chapter 14. 
    Sec. 4.  Minnesota Statutes 1984, section 270A.07, 
subdivision 5, is amended to read: 
    Subd. 5.  [INTEREST ON REFUNDS.] Any refund wrongfully or 
incorrectly applied to a debt and transferred to a claimant 
agency shall be paid by the agency to the debtor.  The sum 
wrongfully or incorrectly withheld shall bear interest at six 
percent per year the rate specified in section 3, computed from 
the date when the refund would begin to bear interest under 
section 290.92, subdivision 13, clause (1), regardless of 
whether the refund is payable under chapter 290 or 290A.  If the 
claimant agency is a state agency, the payment shall be made out 
of the agency's appropriation.  
    Sec. 5.  Minnesota Statutes 1984, section 271.12, is 
amended to read: 
    271.12 [WHEN ORDER EFFECTIVE.] 
    No order for refundment by the commissioner of revenue, the 
appropriate unit of government, or the tax court shall take 
effect until the time for appeal therefrom or review thereof by 
all parties entitled thereto has expired.  Otherwise every order 
of the commissioner, the appropriate unit of government, or the 
tax court shall take effect immediately upon the filing thereof, 
and no appeal therefrom or review thereof shall stay the 
execution thereof or extend the time for payment of any tax or 
other obligation unless otherwise expressly provided by law; 
provided, that in case an order which has been acted upon, in 
whole or in part, shall thereafter be set aside or modified upon 
appeal, the determination upon appeal or review shall supersede 
the order appealed from and be binding upon all parties affected 
thereby, and such adjustments as may be necessary to give effect 
thereto shall be made accordingly.  If it be finally determined 
upon such appeal or review that any person is entitled to 
refundment of any amount which has been paid for a tax or other 
obligation, such amount, unless otherwise provided by law, shall 
be paid to him by the state treasurer, or other proper officer, 
out of funds derived from taxes of the same kind, if available 
for the purpose, or out of other available funds, if any, with 
interest at six percent the rate specified in section 3 from the 
date of payment of the tax, unless a different rate of interest 
is otherwise provided by law, in which case such other rate 
shall apply, upon certification by the commissioner of revenue, 
the appropriate unit of government, the tax court or the supreme 
court.  If any tax, assessment, or other obligation be increased 
upon such appeal or review, the increase shall be added to the 
original amount, and may be enforced and collected therewith. 
    Sec. 6.  Minnesota Statutes 1984, section 290.50, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PROCEDURE, TIME LIMIT.] (a) A taxpayer who 
has paid or from whom there has been collected an amount of tax 
for any year in excess of the amount legally due for that year, 
may file with the commissioner a claim for a refund of such 
excess.  Except as otherwise provided in this section, no claim 
or refund shall be allowed or made after three and one-half 
years from the date prescribed for filing the return (plus any 
extension of time granted for filing the return, but only if 
filed within the extended time) or after two years from the date 
of overpayment, whichever period is longer, unless before the 
expiration of the period a claim is filed by the taxpayer.  For 
this purpose an income tax return or amended return claiming an 
overpayment shall constitute a claim for refund. 
     (b) If no claim was filed, the credit or refund shall not 
exceed the amount which would be allowable if a claim was filed 
on the date the credit or refund is allowed. 
     (c) If a claim relates to an overpayment on account of a 
failure to deduct a loss due to a bad debt or to a security 
becoming worthless, the claim shall be allowed if filed within 
seven years from the date prescribed in section 290.42 for the 
filing of the return, and the refund or credit shall be limited 
to the amount of overpayment attributable to the loss. 
     (d) For purposes of this section, the prepayment of tax 
made through the withholding of tax at the source, or payment of 
estimated tax, prior to the due date of the tax are considered 
as having been paid on the last day prescribed by law for the 
payment of the tax by the taxpayer.  A return filed before the 
due date shall be considered as filed on the due date. 
    (e) Except as provided in sections 290.92, subdivision 13, 
290.93, subdivision 9, and 290.936, interest on the overpayment 
refunded or credited to the taxpayer shall be allowed at the 
rate of six percent per annum specified in section 3 computed 
from the date of payment of the tax until the date the refund is 
paid or credit is made to the taxpayer.  However, to the extent 
that the basis for the refund is a net operating loss carryback 
or a capital loss carryback, interest shall be computed only 
from the end of the taxable year in which the loss occurs. 
    (f) If a taxpayer reports a change in his federal gross 
income, items of tax preference, deductions, credits, or a 
renegotiation, or files a copy of his amended federal return, 
within 90 days as provided by section 290.56, subdivision 2, a 
refund may be made of any overpayment within one year after such 
report or amended return is filed except as provided in 
subdivision 2. 
    (g) There is hereby appropriated from the general fund to 
the commissioner of revenue the amounts necessary to make 
payments of refunds allowed pursuant to this section. 
    Sec. 7.  Minnesota Statutes 1984, section 290.92, 
subdivision 11, is amended to read: 
    Subd. 11.  [REFUNDS.] Where there has been an overpayment 
of tax imposed by this section, refund of such overpayment or 
credit shall be made to the employer in accordance with 
regulations rules prescribed by the commissioner, but only to 
the extent that the amount of such overpayment was not deducted 
and withheld under subdivision 2a or subdivision 3 by the 
employer.  Any overpayment which is refunded shall bear interest 
at the rate of six percent per annum specified in section 3, 
computed from the date of payment until the date the refund is 
paid to the employer.  The commissioner of finance shall cause 
any such refund of tax and interest to be paid out of the 
general fund in accordance with the provisions of section 290.62 
and so much of said fund as may be necessary is hereby 
appropriated for that purpose.  Notwithstanding the provisions 
of section 290.50, written findings by the commissioner, notice 
by mail to the taxpayer, and certificate for refundment by the 
commissioner, shall not be necessary.  The provisions of section 
270.10, shall not be applicable. 
    Sec. 8.  Minnesota Statutes 1984, section 290.92, 
subdivision 13, is amended to read: 
    Subd. 13.  [REFUNDS.] (1) Where the amount of the tax 
withheld at the source under subdivision 2a or subdivision 3 
exceeds by $1 or more the taxes (and any added penalties and 
interest) reported in the return of the employee taxpayer or 
imposed upon him by this chapter, the amount of such excess 
shall be refunded to the employee taxpayer.  If the amount of 
such excess is less than $1 the commissioner shall not be 
required to refund that amount.  Where any amount of such excess 
to be refunded exceeds $10, such amount on the original return 
shall bear interest at the rate of six percent per annum 
specified in section 3, computed from 90 days after (a) the due 
date of the return of the employee taxpayer or (b) the date on 
which his return is filed, whichever is later, to the date the 
refund is paid to the taxpayer.  A return shall not be treated 
as filed until it is in processible form.  A return is in 
processible form when it is filed on a permitted form containing 
the taxpayer's name, address, social security account number, 
the required signature, and sufficient required information 
(whether on the return or on required attachments) to permit the 
mathematical verification of tax liability shown on the return.  
Notwithstanding the provisions of section 290.50, written 
findings by the commissioner, notice by mail to the taxpayer, 
and certificate for refundment by the commissioner, shall not be 
necessary.  The provisions of section 270.10, shall not be 
applicable. 
    (2) Any action of the commissioner in refunding the amount 
of such excess shall not constitute a determination of the 
correctness of the return of the employee taxpayer within the 
purview of section 290.46. 
    (3) The commissioner of finance shall cause any such refund 
of tax and interest, to be paid out of the general fund in 
accordance with the provisions of section 290.62, and so much of 
said fund as may be necessary is hereby appropriated for that 
purpose.  
    Sec. 9.  Minnesota Statutes 1984, section 290.93, 
subdivision 9, is amended to read: 
    Subd. 9.  [OVERPAYMENT OF ESTIMATED TAX.] (1) Where the 
amount of an installment payment of estimated tax exceeds the 
amount determined to be the correct amount of such installment 
payment, the overpayment shall be credited against the unpaid 
installments, if any.  Where the total amount of the estimated 
tax payments plus (a) the total amount of tax withheld at the 
source under section 290.92, subdivision 2a or subdivision 3 (if 
any) and (b) and other payments (if any) exceeds by $1 or more 
the taxes (and any added penalties and interest) reported in the 
return of the taxpayer or imposed upon him by this chapter, the 
amount of such excess shall be refunded to the taxpayer.  If the 
amount of such excess is less than $1 the commissioner shall not 
be required to refund that amount.  Where any amount of such 
excess to be refunded exceeds $10, such amount on the original 
return shall bear interest at the rate of six percent per 
annum specified in section 3, computed from 90 days after (a) 
the due date of the return of the taxpayer or (b) the date on 
which his return is filed, whichever is later, until the date 
the refund is paid to the taxpayer.  A return shall not be 
treated as filed until it is in processible form.  A return is 
in processible form when the return is filed on a permitted 
form, and the return contains the taxpayer's name, address, 
social security account number, the required signature, and 
sufficient required information (whether on the return or on 
required attachments) to permit the mathematical verification of 
tax liability shown on the return.  Notwithstanding the 
provisions of section 290.50, written findings by the 
commissioner, notice by mail to the taxpayer, and certificate 
for refundment by the commissioner, shall not be necessary.  The 
provisions of section 270.10, shall not be applicable. 
    (2) Any action of the commissioner in refunding the amount 
of such excess shall not constitute a determination of the 
correctness of the return of the taxpayer within the purview of 
section 290.46. 
    (3) The commissioner of finance shall cause any such refund 
of tax and interest to be paid out of the general fund in 
accordance with the provisions of section 290.62, and so much of 
said fund as may be necessary is hereby appropriated for that 
purpose.  
    Sec. 10.  Minnesota Statutes 1984, section 290.936, is 
amended to read: 
    290.936 [OVERPAYMENT OF ESTIMATED TAX.] 
    (1) Where the amount of an installment payment of estimated 
tax exceeds the amount determined to be the correct amount of 
such installment payment, the overpayment shall be credited 
against the unpaid installments, if any.  Where the total amount 
of the estimated tax payments and other payments, if any, 
exceeds by $1 or more the taxes (and any added penalties and 
interest) reported in the return of the taxpayer or imposed upon 
him by this chapter, the amount of such excess shall be refunded 
to the taxpayer.  If the amount of such excess is less than $1, 
the commissioner shall not be required to refund.  Where any 
amount of such excess to be refunded exceeds $10, such amount on 
the original return shall bear interest at the rate of six 
percent per annum specified in section 3, computed from 90 days 
after (a) the due date of the return of the taxpayer or (b) the 
date on which his return is filed, whichever is later, until the 
date the refund is paid to the taxpayer.  Notwithstanding the 
provisions of section 290.50, written findings by the 
commissioner, notice by mail to the taxpayer, and certificate 
for refundment by the commissioner, shall not be necessary.  The 
provisions of section 270.10, shall not be applicable. 
    (2) Any action of the commissioner in refunding the amount 
of such excess shall not constitute a determination of the 
correctness of the return of the taxpayer within the purview of 
section 290.46. 
     (3) The commissioner of finance shall cause any such refund 
of tax and interest to be paid out of the general fund in 
accordance with the provisions of section 290.62, and so much of 
said fund as may be necessary is hereby appropriated for that 
purpose.  
    Sec. 11.  Minnesota Statutes 1984, section 290A.07, 
subdivision 2a, is amended to read: 
    Subd. 2a.  A claimant who is a renter shall receive full 
payment after August 1 and prior to August 15 or 60 days after 
receipt of the application, whichever is later.  Interest shall 
be added at six percent per annum the rate specified in section 
3 from August 15 or 60 days after receipt of the application 
whichever is later. 
    Sec. 12.  Minnesota Statutes 1984, section 290A.07, 
subdivision 3, is amended to read: 
    Subd. 3.  Any claimant not included in subdivision 2a shall 
receive full payment after September 15 and prior to September 
30.  Interest shall be added at six percent per annum the rate 
specified in section 3 from September 30 or 60 days after 
receipt of the application, whichever is later.  Interest will 
be computed until the date the claim is paid. 
    Sec. 13.  Minnesota Statutes 1984, section 294.09, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PROCEDURES; TIME LIMIT.] A company, joint 
stock association, copartnership, corporation, or individual who 
has paid, voluntarily or otherwise, or from whom there has been 
collected (other than by proceedings instituted by the attorney 
general under sections 294.06 and 294.08, subdivision 3) an 
amount of gross earnings tax for any year in excess of the 
amount legally due for that year, may file with the commissioner 
of revenue a claim for a refund of such excess.  Except as 
provided in subdivision 4, no such claim shall be entertained 
unless filed within two years after such tax was paid or 
collected, or within three and one-half years from the filing of 
the return, whichever period is the longer.  Upon the filing of 
a claim the commissioner shall examine the same and shall make 
and file written findings thereon denying or allowing the claim 
in whole or in part and shall mail a notice thereof to such 
company, joint stock association, copartnership, corporation, or 
individual at the address stated upon the return.  If such claim 
is allowed in whole or in part, the commissioner shall credit 
the amount of the allowance against any tax due the state from 
the claimant and for the balance of said allowance, if any, the 
commissioner shall issue his certificate for the refundment of 
the excess paid.  The commissioner of finance shall cause such 
refund to be paid out of the proceeds of the gross earnings 
taxes imposed by Minnesota Statutes 1967, Chapters 294 and 295 
as other state moneys are expended.  So much of the proceeds as 
may be necessary are hereby appropriated for that purpose.  Any 
allowance so made by the commissioner shall include interest at 
the rate of six percent specified in section 3 computed from the 
date of payment or collection of the tax until the date the 
refund is paid to the claimant.  
    Sec. 14.  Minnesota Statutes 1984, section 297A.35, 
subdivision 1, is amended to read: 
    Subdivision 1.  A person who has, pursuant to the 
provisions of this chapter, paid to the commissioner an amount 
of tax for any period in excess of the amount legally due for 
that period, may file with the commissioner a claim for a refund 
of such excess subject to the conditions specified in 
subdivision 5.  Except as provided in subdivision 4 no such 
claim shall be entertained unless filed within two years after 
such tax was paid, or within three years from the filing of the 
return, whichever period is the longer.  The commissioner shall 
examine the claim and make and file written findings thereon 
denying or allowing the claim in whole or in part and shall mail 
a notice thereof to such person at the address stated upon the 
claim.  Any allowance shall include interest on the excess 
determined at a rate of six percent per annum specified in 
section 3 from the date such excess was paid or collected until 
the date it is refunded or credited.  If such claim is allowed 
in whole or in part, the commissioner shall credit the amount of 
the allowance against any taxes under sections 297A.01 to 
297A.44 due from the claimant and for the balance of said 
allowance, if any, the commissioner shall issue his certificate 
for the refundment of the excess paid, and the commissioner of 
finance shall cause such refund to be paid out of the proceeds 
of the taxes imposed by sections 297A.01 to 297A.44, as other 
state moneys are expended.  So much of the proceeds of such 
taxes as may be necessary are hereby appropriated for that 
purpose. 
    Sec. 15.  Minnesota Statutes 1984, section 298.09, 
subdivision 4, is amended to read: 
    Subd. 4.  If the amount of tax determined by the 
commissioner is subsequently found to be erroneous, the 
commissioner may, at any time within three years from the date 
the tax is certified as provided in section 298.10, redetermine 
the amount thereof.  No such redetermination shall be made 
increasing the tax unless the person from whom the additional 
amount is due is given ten days written notice thereof and an 
opportunity to be heard thereon.  If an order is made increasing 
the tax, the same proceedings shall be had as provided for 
occupation taxes originally determined and certified.  Any 
person who has paid an occupation tax may apply to the 
commissioner within the time herein limited for a 
redetermination of the tax, and if the commissioner determines 
that the tax has been overpaid, he shall make and file an order 
determining the amount of such overpayment, and credit it 
against occupation taxes otherwise payable by the person who has 
overpaid the amount as so determined.  If the tax is increased, 
interest at the rate specified in section 270.75 from the date 
payment should have been made shall be determined and paid; if 
the tax is reduced, interest at the rate of six percent per 
annum specified in section 3 from the date of overpayment shall 
be allowed. 
    Sec. 16.  Minnesota Statutes 1984, section 299.05, is 
amended to read: 
    299.05 [ASSESSMENT BY COMMISSIONER.] 
    Upon receipt of the report provided for in section 299.03, 
the commissioner of revenue shall determine, from information as 
may be possessed, or obtained, whether the report is correct, or 
incorrect; and, if found correct, the commissioner shall 
determine the amount of tax due from the person, enter the 
amount of the tax in department records, make assessment of 
taxes due from the person, and the amount that has been paid; 
and, on or before June 30, of each year, demand payment from the 
person.  The commissioner of revenue shall have power, in case 
he shall deem the report incorrect, or in case the report is not 
made and filed with the commissioner as provided in section 
299.03, to make findings as to the amount of taxes due after 
hearing upon notice to the person interested, and the findings 
shall have the same effect as the determination of the amount of 
such taxes upon a report made as hereinbefore provided. 
    A person subletting land for the use of which is received 
royalty shall be required to pay taxes only on the difference 
between the amount of royalty paid by him or her and the amount 
received.  
    If the amount of tax determined by the commissioner is 
subsequently found to be erroneous, the commissioner may, at any 
time within three years from the date allowed above for the 
original assessment, redetermine the amount of the tax.  No 
redetermination shall be made increasing the tax unless the 
person from whom the additional amount is due is given ten days 
written notice of the proposed increase and the person's right 
to a hearing pursuant to chapter 14.  Any person who has paid a 
royalty tax may apply to the commissioner within three years 
from the date allowed above for the original assessment for a 
redetermination of the tax and if the commissioner determines 
that the tax has been overpaid, he or she shall make and file an 
order determining the amount of the overpayment and credit the 
overpayment against the royalty taxes otherwise payable by the 
person who overpaid the tax.  If the tax is increased, interest 
at the rate specified in section 270.75 from the date payment 
should have been made shall be determined and added to the tax.  
If the tax is reduced, interest at the rate of six percent per 
annum specified in section 3 from the date of the overpayment 
shall be allowed.  
    Sec. 17.  Minnesota Statutes 1984, section 299F.26, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PROCEDURE, TIME LIMIT, APPROPRIATION.] A 
company which has paid, voluntarily or otherwise, or from which 
there was collected an amount of tax for any year in excess of 
the amount legally due for that year, may file with the 
commissioner of revenue a claim for a refund of the excess.  
Except as provided in subdivision 4, no claim or refund shall be 
allowed or made after 3-1/2 years from the date prescribed for 
filing the return (plus any extension of time granted for filing 
the return but only if filed within the extended time) or after 
two years from the date of overpayment, whichever period is 
longer, unless before the expiration of the period a claim is 
filed by the company.  For this purpose a return or amended 
return claiming an overpayment constitutes a claim for refund. 
    Upon the filing of a claim the commissioner shall examine 
the same and shall make and file written findings thereon 
denying or allowing the claim in whole or in part and shall mail 
a notice thereof to the company at the address stated upon the 
return.  If such claim is allowed in whole or in part, the 
commissioner shall issue his certificate for the refundment of 
the excess paid by the company, with interest at the rate of six 
percent per annum specified in section 3 computed from the date 
of the payment of the tax until the date the refund is paid or 
the credit is made to the company, and the commissioner of 
finance shall cause the refund to be paid as other state moneys 
are expended.  So much of the proceeds of the taxes as is 
necessary are appropriated for that purpose. 
     Sec. 18.  [EFFECTIVE DATE.] 
     Sections 1 to 17 are effective for interest earned on 
overpayments after December 31, 1985.  

                              ARTICLE 16 

                    REVENUE DEPARTMENT ENFORCEMENT 
    Section 1.  [270.062] [ACCESS TO CRIMINAL JUSTICE DATA.] 
    The commissioner of revenue may enter into an agreement 
with the commissioner of public safety allowing designated 
employees of the revenue department to have access to the 
criminal justice datacommunications network provided in section 
299C.46.  For purposes of that section, the special 
investigation unit of the revenue department is considered a 
criminal justice agency. 
    Sec. 2.  [270.064] [REQUESTING ASSISTANCE IN CRIMINAL TAX 
INVESTIGATIONS.] 
    If the commissioner of revenue has reason to believe that a 
criminal violation of the state tax laws has occurred, the 
commissioner may request the attorney general or the prosecuting 
authority of any county to assist in a criminal tax 
investigation and may disclose return information to the 
prosecuting authority relevant to the investigation 
notwithstanding the provisions of section 290.61, 291.48, 
297A.43, or 297B.12. 
    Sec. 3.  Minnesota Statutes 1984, section 290.53, 
subdivision 11, is amended to read: 
    Subd. 11.  [ASSISTING IN FRAUD AND FALSE STATEMENTS; 
CRIMINAL PROVISIONS.] Any person who willfully aids or assists 
in, or procures, counsels, or advises the preparation or 
presentation under, or in connection with any matter arising 
under this chapter, of a return, affidavit, claim, or other 
document, which is fraudulent or false as to any material 
matter, where whether or not the falsity or fraud is with the 
knowledge or consent of the person authorized or required to 
present the return, affidavit, claim, or document, is guilty of 
a gross misdemeanor unless the tax involved exceeds $300, in 
which event he is guilty of a felony.  Any criminal offense 
under this subdivision may be prosecuted in the same manner and 
within the same period of limitations provided in subdivision 4. 
    Sec. 4.  Minnesota Statutes 1984, section 290.92, 
subdivision 15, is amended to read: 
    Subd. 15.  [PENALTIES.] (1) In the case of any failure to 
withhold a tax on wages, make and file quarterly returns or make 
payments to or deposits with the commissioner of amounts 
withheld, as required by this section, within the time 
prescribed by law, there shall be added to the tax a penalty 
equal to ten percent of the amount of tax that should have been 
properly withheld and paid over to or deposited with the 
commissioner if the failure is for not more than 30 days with an 
additional five percent for each additional 30 days or fraction 
thereof during which the failure continues, not exceeding 25 
percent in the aggregate.  The amount of the tax together with 
this amount shall bear interest at the rate specified in section 
270.75 from the time the tax should have been paid until paid.  
The amount added to the tax shall be collected at the same time 
and in the same manner and as a part of the tax unless the tax 
has been paid before the discovery of the negligence, in which 
case the amount added shall be collected in the same manner as 
the tax. 
     (2) If any employer required to withhold a tax on wages, 
make deposits, make and file quarterly returns and make payments 
to the commissioner of amounts withheld, as required by sections 
290.92 to 290.97, willfully fails to withhold the tax or make 
the deposits, files a false or fraudulent return, willfully 
fails to make the payment or deposit, or willfully attempts in 
any manner to evade or defeat the tax or the payment or deposit 
of it, there shall also be imposed on the employer as a penalty 
an amount equal to 50 percent of the amount of tax, less any 
amount paid or deposited by the employer on the basis of the 
false or fraudulent return or deposit, that should have been 
properly withheld and paid over or deposited with the 
commissioner.  The amount of the tax together with this amount 
shall bear interest at the rate specified in section 270.75 from 
the time the tax should have been paid until paid.  The penalty 
imposed by this paragraph shall be collected as a part of the 
tax, and shall be in addition to any other penalties civil and 
criminal, prescribed by this subdivision. 
     (3) If any person required under the provisions of 
subdivision 7 to furnish a statement to an employee or payee and 
a duplicate statement to the commissioner, or to furnish a 
reconciliation of the statements, and quarterly returns, to the 
commissioner, willfully furnishes a false or fraudulent 
statement to an employee or payee or a false or fraudulent 
duplicate statement or reconciliation of statements, and 
quarterly returns, to the commissioner, or willfully fails to 
furnish a statement or the reconciliation in the manner, at the 
time, and showing the information required by the provisions of 
subdivision 7, or rules prescribed by the commissioner 
thereunder, there shall be imposed on the person a penalty of 
$50 for each act or failure to act, but the total amount imposed 
on the delinquent person for all such failures during any 
calendar year shall not exceed $25,000.  The penalty imposed by 
this paragraph is due and payable within ten days after the 
mailing of a written demand therefor, and may be collected in 
the manner prescribed in subdivision 6, paragraph (8). 
     (4) In addition to any other penalties prescribed, any 
person required to withhold a tax on wages, make and file 
quarterly returns and make payments or deposits to the 
commissioner of amounts withheld, as required by this section, 
who willfully fails to withhold the tax or truthfully make and 
file the quarterly return or make the payment or deposit, or 
attempts to evade or defeat the tax is guilty of a gross 
misdemeanor unless the tax involved exceeds $300, in which event 
he is guilty of a felony. 
     (5) In lieu of any other penalty provided by law, except 
the penalty provided by paragraph (3), any person required under 
the provisions of subdivision 7 to furnish a statement of wages 
to an employee and a duplicate statement to the commissioner, 
who willfully furnishes a false or fraudulent statement of wages 
to an employee or a false or fraudulent duplicate statement of 
wages to the commissioner, or who willfully fails to furnish a 
statement in the manner, at the time, and showing the 
information required by the provisions of subdivision 7, or 
rules prescribed by the commissioner thereunder, is guilty of a 
gross misdemeanor. 
     (6) Any employee required to supply information to his 
employer under the provisions of subdivision 5, who willfully 
fails to supply information or willfully supplies false or 
fraudulent information thereunder which would require an 
increase in the tax to be deducted and withheld under 
subdivision 2a or subdivision 3, is guilty of a gross 
misdemeanor. 
     (7) The term "person," as used in this section, includes an 
officer or employee of a corporation, or a member or employee of 
a partnership, who as an officer, employee, or member is under a 
duty to perform the act in respect of which the violation occurs.
     (8) All payments received may, in the discretion of the 
commissioner of revenue, be credited first to the oldest 
liability not secured by a judgment or lien, but in all cases 
shall be credited first to penalties, next to interest, and then 
to the tax due. 
     (9) In addition to any other penalty provided by law, any 
employee who furnishes a withholding exemption certificate to 
his employer which the employee has reason to know contains a 
materially incorrect statement is liable to the commissioner of 
revenue for a penalty of $500 for each instance.  The penalty is 
immediately due and payable and may be collected in the same 
manner as any delinquent income tax. 
     (10) In addition to any other penalty provided by law, any 
employer who fails to submit a copy of a withholding exemption 
certificate required by subdivision 5a, clause (1)(a), (1)(b), 
or (2) is liable to the commissioner of revenue for a penalty of 
$50 for each instance.  The penalty is immediately due and 
payable and may be collected in the manner provided in 
subdivision 6, paragraph (8).  
    (11) Any person who willfully aids or assists in, or 
procures, counsels, or advises the preparation or presentation 
under, or in connection with any matter arising under this 
section, of a return, affidavit, claim, or other document, which 
is fraudulent or false as to any material matter, where whether 
or not the falsity or fraud is with the knowledge or consent of 
the person authorized or required to present the return, 
affidavit, claim, or document, is guilty of a gross misdemeanor, 
unless the tax involved exceeds $300, in which event he is 
guilty of a felony.  
    (12) Notwithstanding the provisions of section 628.26, or 
any other provision of the criminal laws of this state, an 
indictment may be found and filed, upon any criminal offense 
specified in this subdivision, in the proper court within six 
years after the commission of the offense.  
    Sec. 5.  Minnesota Statutes 1984, section 297A.39, 
subdivision 8, is amended to read: 
    Subd. 8.  [PENALTY; FALSE CLAIM.] Any person who willfully 
aids or assists in, or procures, counsels, or advises the 
preparation or presentation under, or in connection with any 
matter arising under this section, of a return, affidavit, 
claim, or other document, which is fraudulent or false as to any 
material matter, where whether or not the falsity or fraud is 
with the knowledge or consent of the person authorized or 
required to present the return, affidavit, claim, or document, 
is guilty of a gross misdemeanor unless the tax involved exceeds 
$300, in which event he is guilty of a felony.  Any criminal 
offense under this subdivision may be prosecuted in the same 
manner and within the same period of limitations provided in 
subdivision 4. 
    Sec. 6.  [EFFECTIVE DATE.] 
    Sections 1 to 5 are effective the day after final enactment.

                               ARTICLE 17 

                              LEASED LANDS
    Section 1.  Minnesota Statutes 1984, section 92.46, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PUBLIC CAMP GROUNDS.] (a) The director may 
designate suitable portions of the state lands so withdrawn from 
sale and not reserved, as provided in section 92.45, as 
permanent state public camp grounds and cause the same to be 
surveyed and platted into lots of convenient size, and may lease 
and let such lots for cottage and camp purposes under such terms 
and conditions as he may prescribe, subject to the provisions of 
this section.  
    (b) No A lease shall may not be made for a term longer 
term than ten 20 years, with the privilege of renewal, from time 
to time, for additional terms of not to exceed ten 20 years 
each.  The lease may be canceled by the commissioner 90 days 
after giving the person leasing the land written notice of 
violation of lease conditions.  The lease rate shall be based on 
the appraised value of leased land as determined by the 
commissioner of natural resources.  The appraised value shall be 
the value of the leased land without any private improvements 
and must be comparable to similar land without any improvements 
within the same county.  
    (c) By July 1, 1986, the commissioner of natural resources 
shall adopt rules under chapter 14 to establish procedures for 
leasing land under this section.  The rules shall be subject to 
review and approval by the commissioners of revenue and 
administration prior to the initial publication pursuant to 
chapter 14 and prior to their final adoption.  The rules must 
address at least the following: 
    (1) method of appraising the property; 
    (2) determination of lease rates; and 
    (3) an appeal procedure for both the appraised values and 
lease rates. 
    (d) All moneys received from these leases of state lands so 
withdrawn from sale shall be credited to the fund to which the 
proceeds of the land belong.  Notwithstanding section 16A.125 or 
any other law to the contrary, 50 percent of the money received 
from the lease of permanent school fund lands leased pursuant to 
this subdivision shall be deposited into the permanent school 
trust fund. 
    Sec. 2.  Minnesota Statutes 1984, section 272.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  All property described in this section to 
the extent herein limited shall be exempt from taxation: 
    (1) All public burying grounds; 
    (2) All public schoolhouses; 
    (3) All public hospitals; 
    (4) All academies, colleges, and universities, and all 
seminaries of learning; 
    (5) All churches, church property, and houses of worship; 
    (6) Institutions of purely public charity except parcels of 
property containing structures and the structures assessed 
pursuant to section 273.13, subdivisions 17, 17b, 17c or 17d; 
    (7) All public property exclusively used for any public 
purpose; 
    (8) Except for the taxable personal property enumerated 
below, all personal property and the property described in 
section 272.03, subdivision 1, clause (c) shall be exempt.  
      The following personal property shall be taxable:  
     (a) personal property which is part of an electric 
generating, transmission, or distribution system or a pipeline 
system transporting or distributing water, gas, or petroleum 
products or mains and pipes used in the distribution of steam or 
hot or chilled water for heating or cooling buildings and 
structures;  
     (b) railroad docks and wharves which are part of the 
operating property of a railroad company as defined in section 
270.80;  
     (c) personal property defined in section 272.03, 
subdivision 2, clause (3);  
     (d) leasehold or other personal property interests which 
are taxed pursuant to section 272.01, subdivision 2; 273.13, 
subdivision 7b or 7d; or 273.19, subdivision 1; or any other law 
providing the property is taxable as if the lessee or user were 
the fee owner;  
     (e) property classified as class 2a property; and 
     (f) flight property as defined in section 270.071.  
     (9) Real and personal property used primarily for the 
abatement and control of air, water, or land pollution to the 
extent that it is so used, other than real property used 
primarily as a solid waste disposal site. 
     Any taxpayer requesting exemption of all or a portion of 
any equipment or device, or part thereof, operated primarily for 
the control or abatement of air or water pollution shall file an 
application with the commissioner of revenue.  The equipment or 
device shall meet standards, regulations or criteria prescribed 
by the Minnesota Pollution Control Agency, and must be installed 
or operated in accordance with a permit or order issued by that 
agency.  The Minnesota Pollution Control Agency shall upon 
request of the commissioner furnish information or advice to the 
commissioner.  If the commissioner determines that property 
qualifies for exemption, he shall issue an order exempting the 
property from taxation.  The equipment or device shall continue 
to be exempt from taxation as long as the permit issued by the 
Minnesota Pollution Control Agency remains in effect. 
     (10) Wetlands.  For purposes of this subdivision, 
"wetlands" means (1) land described in section 105.37, 
subdivision 15, or (2) land which is mostly under water, 
produces little if any income, and has no use except for 
wildlife or water conservation purposes, provided it is 
preserved in its natural condition and drainage of it would be 
legal, feasible, and economically practical for the production 
of livestock, dairy animals, poultry, fruit, vegetables, forage 
and grains, except wild rice.  "Wetlands" shall include adjacent 
land which is not suitable for agricultural purposes due to the 
presence of the wetlands.  "Wetlands" shall not include woody 
swamps containing shrubs or trees, wet meadows, meandered water, 
streams, rivers, and floodplains or river bottoms.  Exemption of 
wetlands from taxation pursuant to this section shall not grant 
the public any additional or greater right of access to the 
wetlands or diminish any right of ownership to the wetlands. 
     (11) Native prairie.  The commissioner of the department of 
natural resources shall determine lands in the state which are 
native prairie and shall notify the county assessor of each 
county in which the lands are located.  Pasture land used for 
livestock grazing purposes shall not be considered native 
prairie for the purposes of this clause and section 273.116.  
Upon receipt of an application for the exemption and credit 
provided in this clause and section 273.116 for lands for which 
the assessor has no determination from the commissioner of 
natural resources, the assessor shall refer the application to 
the commissioner of natural resources who shall determine within 
30 days whether the land is native prairie and notify the county 
assessor of his decision.  Exemption of native prairie pursuant 
to this clause shall not grant the public any additional or 
greater right of access to the native prairie or diminish any 
right of ownership to it. 
     (12) Property used in a continuous program to provide 
emergency shelter for victims of domestic abuse, provided the 
organization that owns and sponsors the shelter is exempt from 
federal income taxation pursuant to section 501(c)(3) of the 
Internal Revenue Code of 1954, as amended through December 31, 
1982, notwithstanding the fact that the sponsoring organization 
receives funding under section 8 of the United States Housing 
Act of 1937, as amended. 
    (13) If approved by the governing body of the municipality 
in which the property is located, property not exceeding one 
acre which is owned and operated by any senior citizen group or 
association of groups that in general limits membership to 
persons age 55 or older and is organized and operated 
exclusively for pleasure, recreation, and other nonprofit 
purposes, no part of the net earnings of which inures to the 
benefit of any private shareholders; provided the property is 
used primarily as a clubhouse, meeting facility or recreational 
facility by the group or association and the property is not 
used for residential purposes on either a temporary or permanent 
basis. 
    (14) To the extent provided by section 295.44, real and 
personal property used or to be used primarily for the 
production of hydroelectric or hydromechanical power on a site 
owned by the state or a local governmental unit which is 
developed and operated pursuant to the provisions of section 
105.482, subdivisions 1, 8 and 9. 
     (15) If approved by the governing body of the municipality 
in which the property is located, and if construction is 
commenced after June 30, 1983:  
     (a) a "direct satellite broadcasting facility" operated by 
a corporation licensed by the federal communications commission 
to provide direct satellite broadcasting services using direct 
broadcast satellites operating in the 12-ghz. band;  
     (b) a "fixed satellite regional or national program service 
facility" operated by a corporation licensed by the federal 
communications commission to provide fixed satellite-transmitted 
regularly scheduled broadcasting services using satellites 
operating in the 6-ghz. band; and 
     (c) a facility at which a licensed Minnesota manufacturer 
produces distilled spirituous liquors, liqueurs, cordials, or 
liquors designated as specialties regardless of alcoholic 
content, but not including ethyl alcohol, distilled with a 
majority of the ingredients grown or produced in Minnesota.  
An exemption provided by paragraph (15) shall apply for a period 
not to exceed five years.  When the facility no longer qualifies 
for exemption, it shall be placed on the assessment rolls as 
provided in subdivision 4.  Before approving a tax exemption 
pursuant to this paragraph, the governing body of the 
municipality shall provide an opportunity to the members of the 
county board of commissioners of the county in which the 
facility is proposed to be located and the members of the school 
board of the school district in which the facility is proposed 
to be located to meet with the governing body.  The governing 
body shall present to the members of those boards its estimate 
of the fiscal impact of the proposed property tax exemption.  
The tax exemption shall not be approved by the governing body 
until the county board of commissioners has presented its 
written comment on the proposal to the governing body, or 30 
days has passed from the date of the transmittal by the 
governing body to the board of the information on the fiscal 
impact, whichever occurs first. 
    The exemptions granted by this subdivision shall be subject 
to the limits contained in the other subdivisions of this 
section, section 272.025, or section 273.13, subdivisions 17, 
17b, 17c, or 17d.  
    (16) Real and personal property owned and operated by a 
private, nonprofit corporation exempt from federal income 
taxation pursuant to United States Code, title 26, section 
501(c)(3), primarily used in the generation and distribution of 
hot water for heating buildings and structures.  
    (17) Notwithstanding section 273.19, state lands that are 
leased from the department of natural resources under section 
92.46. 
    Sec. 3.  [92.46] [Subd. 3.] [LEASE RATE INCREASES.] 
    State land leased under Minnesota Statutes, section 92.46, 
subdivision 1, that have increased lease rates effective on or 
after January 1, 1986, shall phase in the increased lease rates 
by three equal annual increments, except that the lease rates 
shall be adjusted to reflect changes in the lease rates 
resulting from rules adopted under section 1. 
    Sec. 4.  [REPORT.] 
    The commissioner of natural resources shall inventory the 
lakeshore leases and prepare a report on any leased land that 
should be sold.  The report must be submitted by January 1, 
1987, to the senate agriculture and natural resources and house 
of representatives environment and natural resources committees. 
    Sec. 5.  [92.46] [Subd. 4.] [ROAD EXPENDITURES.] 
     A county where state lands are leased under Minnesota 
Statutes, section 92.46, may spend money raised from the levy of 
property taxes for the maintenance and upgrading of roads 
serving the leased property regardless of whether the roads are 
part of the county highway system.  
    Sec. 6.  [EFFECTIVE DATE.] 
    Section 1 is effective January 1, 1986, except section 1, 
subdivision 1, paragraph (c), is effective the day following 
final enactment.  Sections 2 and 5 are effective for property 
taxes levied in 1985 and thereafter, payable in 1986 and 
thereafter. 

                               ARTICLE 18

                             BUDGET RESERVE
    Section 1.  Minnesota Statutes 1984, section 16A.15, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REDUCTION.] (a) If the commissioner 
determines that probable receipts for an appropriation, the 
general fund, or item will be less than anticipated, and that 
the amount available for the remainder of the biennium will be 
less than needed, the commissioner shall, with the approval of 
the governor, and after consulting the legislative advisory 
commission, transfer from the budget and cash flow reserve 
account established in subdivision 6 to the general fund the 
money needed to balance expenditures with revenue.  An 
additional deficit shall, with the approval of the governor, and 
after consulting the legislative advisory commission, be made up 
by reducing allotments.  
    (b) If the commissioner determines that probable receipts 
for any other fund, appropriation, or item will be less than 
anticipated, and that the amount available for the remainder of 
the term of the appropriation or for any allotment period will 
be less than needed, the commissioner shall notify the agency 
concerned and then reduce the amount allotted or to be allotted 
so as to prevent a deficit. 
    (c) In reducing allotments, the commissioner may consider 
other sources of revenue available to recipients of state 
appropriations and may apply allotment reductions based on all 
sources of revenue available.  
    (d) In like manner, the commissioner shall reduce 
allotments to an agency by the amount of any saving that can be 
made over previous spending plans through a reduction in prices 
or other cause. 
    Sec. 2.  Minnesota Statutes 1984, section 16A.15, 
subdivision 6, is amended to read: 
    Subd. 6.  [BUDGET AND CASH FLOW RESERVE ACCOUNT.] A budget 
and cash flow reserve account is created in the general fund in 
the state treasury.  The commissioner of finance on July 1, 
1983, shall transfer $250,000,000 to the budget reserve 
account.  The commissioner of finance on July 1, 1984, shall 
transfer an additional $125,000,000 to the budget reserve 
account in the general fund.  The commissioner on July 1, 1985, 
shall transfer an additional $75,000,000 to the account.  The 
amounts transferred shall remain in the budget reserve account 
until expended under subdivision 1.  When an amount has been 
expended under subdivision 1, but the commissioner later 
determines during the same biennium that there will probably be 
a positive undesignated balance in the general fund at the end 
of the biennium, the commissioner shall transfer from the 
undesignated fund balance to the budget and cash flow reserve 
account the amount needed to restore the balance in the account 
to $450,000,000. 
    Sec. 3.  [16A.154] [AID PAYMENT DEFERRAL.] 
    If in any calendar year the commissioner determines that it 
is necessary to avoid cash flow borrowing by the state, the 
commissioner may order that the November 15 payment to taxing 
districts of property tax reduction aids and local government 
aids will be paid by December 15.  The order applies only to aid 
payments made during that calendar year.  The commissioner of 
revenue shall make payments in accordance with the order of the 
commissioner, notwithstanding the provisions of sections 273.13, 
subdivision 15a, and 477A.015.  If aid payments are to be 
deferred pursuant to this section, the commissioner of revenue 
must notify the affected taxing districts by the immediately 
preceding October 15.  This section does not apply to aid 
payments made to school districts. 
    Sec. 4.  [16A.1541] [ADDITIONAL REVENUES; PRIORITY.] 
    If a forecast of general fund revenues and expenditures 
indicates that there will be an unobligated general fund balance 
at the close of the biennium, money must be allocated in the 
following order of priority:  
    (1) allocate an amount, if any, necessary to restore the 
budget and cash flow reserve account as provided by section 
16A.15, subdivision 6; 
    (2) pay the refund of occupation taxes under section 7; 
    (3) reduce property tax levy recognition percent under 
section 121.904, subdivision 4c; and 
    (4) increase the school aids payment current year 
percentage under section 121.904, subdivision 4d. 
    Sec. 5.  Minnesota Statutes 1984, section 121.904, 
subdivision 4c, is amended to read: 
    Subd. 4c.  [PROPERTY TAX SHIFT REDUCTION.] (a) For the 
purpose of this subdivision, "combined fund balance" means the 
sum of the fund balance determined by the commissioner of 
finance pursuant to section 9 of this article, after transfers 
to the education aids increase account, plus the balance in the 
education aids increase account.  
    (b) If the combined fund balance exceeds $58,000,000, If 
the most recent forecast of general fund revenues and 
expenditures prepared by the commissioner of finance as of 
December 1 indicates a projected unobligated general fund 
balance at the close of the biennium in excess of $10,000,000, 
the levy recognition percent specified in subdivision 4a, 
clauses (b)(2) and (b)(3), shall be reduced for taxes payable in 
1985 and thereafter the succeeding calendar year, according to 
the provisions of this subdivision and section 4.  
    (c) (b) The levy recognition percent shall equal the result 
of the following computation:  32 24 percent, times the ratio of 
    (1) the statewide total amount of levy recognized in June 
1985 of the year in which the taxes are payable pursuant to 
subdivision 4a, clause (b), reduced by the amount of 
the combined projected general fund balance in excess of 
$50,000,000, to 
    (2) the statewide total amount of the levy recognized in 
June 1985 of the year in which the taxes are payable pursuant to 
subdivision 4a, clause (b).  
    The result shall be rounded up to the nearest whole percent.
However, in no case shall the levy recognition percent be 
reduced below 24 percent zero.  
    (c) The commissioner of finance must certify to the 
commissioner of education the levy recognition percent computed 
under this subdivision by January 5 of each year.  The 
commissioner of education must notify school districts of a 
change in the levy recognition percent by January 15. 
    (d) The commissioner of finance shall transfer from the 
general fund to the education aids appropriations specified by 
the commissioner of education, the amounts needed to finance the 
additional payments required because of the reduction pursuant 
to this subdivision of the levy recognition percent.  Payments 
to a school district of additional state aids resulting from a 
reduction in the levy recognition percent must be included in 
the cash metering of payments made according to section 124.195 
after January 15, and must be paid in a manner consistent with 
the percent specified in that section. 
    Sec. 6.  Minnesota Statutes 1984, section 121.904, is 
amended by adding a subdivision to read: 
    Subd. 4d.  [AID PAYMENT PERCENTAGE INCREASE.] (a) Subject 
to the provisions of section 4, if the most recent forecast of 
general fund revenues and expenditures prepared by the 
commissioner of finance indicates a projected unobligated 
general fund balance at the close of the biennium, the fund 
balance must be used to increase the aid payment percentage 
specified in section 124.195, subdivisions 7 and 10.  The 
increased aid payment percentage shall be rounded to the nearest 
whole percent above 85 percent but shall not exceed 90 percent. 
    (b) The commissioner of finance must certify to the 
commissioner of education the amount available for computing the 
aid payment percentage.  The commissioner of education must 
determine the method for increasing the aid payment percentage.  
The commissioner of finance must transfer from the general fund 
to the education aids, grants, and credits appropriations 
specified by the commissioner of education the amounts needed to 
make the additional payments required by this subdivision.  The 
additional payments must be included in the cash metering of 
payments made according to section 124.195.  The commissioner of 
education must notify school districts of an increase in the 
percentage payment of current year school aids under this 
subdivision within 30 days.  
     Sec. 7.  [CONTINGENT APPROPRIATION; OCCUPATION TAX 
REFUNDS.] 
     (a) Subject to the conditions of section 4, there is 
appropriated effective July 1, 1986, to the commissioner of 
revenue from the general fund an amount equal to one-half of any 
credits due as a result of a recomputation of occupation taxes 
for production year 1984 and previous years based on the 
limitations prescribed in section 298.40, subdivision 1, and 
established by the commissioner as an account payable on or 
before May 1, 1985.  The commissioner shall refund to the 
taxpayers the amount computed plus interest at the rate 
established in Minnesota Statutes, section 298.09, subdivision 
4, from the date of the overpayment. 
    (b) Subject to the conditions of section 4, there is 
appropriated effective July 1, 1987, to the commissioner of 
revenue from the general fund the remainder of the amount 
computed pursuant to paragraph (a).  The commissioner shall 
refund to the taxpayers the amount computed plus interest at the 
rate established in Minnesota Statutes, section 298.09, 
subdivision 4, from the date of the overpayment. 
    Sec. 8.  [APPROPRIATION; OCCUPATION TAX REFUNDS.] 
    (a) There is appropriated effective July 1, 1988, to the 
commissioner of revenue from the general fund an amount equal to 
one-half of any credits due as a result of a recomputation of 
occupation taxes for production year 1984 and previous years 
based on the limitations prescribed in section 298.40, 
subdivision 1, and established by the commissioner as an account 
payable on or before May 1, 1985, to the extent the refunds were 
not paid pursuant to section 7.  The commissioner shall refund 
to the taxpayers the amount computed plus interest at the rate 
established in Minnesota Statutes, section 298.09, subdivision 
4, from the date of the overpayment. 
    (b) There is appropriated effective July 1, 1989, to the 
commissioner of revenue from the general fund the remainder of 
the amount computed pursuant to paragraph (a).  The commissioner 
shall refund to the taxpayers the amount computed plus interest 
at the rate established in Minnesota Statutes, section 298.09, 
subdivision 4, from the date of the overpayment. 

                               ARTICLE 19

                              CIGARETTE TAX
    Section 1.  Minnesota Statutes 1984, section 116.16, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PURPOSE.] A Minnesota state water 
pollution control fund is created as a separate bookkeeping 
account in the general books of account of the state, to record 
receipts of the proceeds of state bonds and other money 
appropriated to the fund and disbursements of money appropriated 
or loaned from the fund to agencies and subdivisions of the 
state for the acquisition and betterment of public land, 
buildings, and improvements of a capital nature needed for the 
prevention, control, and abatement of water pollution in 
accordance with the long range state policy, plan, and program 
established in sections 115.41 to 115.63, and in accordance with 
standards adopted pursuant to law by the Minnesota pollution 
control agency.  It is determined that state financial 
assistance for the construction of water pollution prevention 
and abatement facilities for municipal disposal systems and 
combined sewer overflow is a public purpose and a proper 
function of state government, in that the state is trustee of 
the waters of the state and such financial assistance is 
necessary to protect the purity of state waters, and to protect 
the public health of the citizens of the state, which is 
endangered whenever pollution enters state waters at one point 
and flows to other points in the state. 
    Sec. 2.  Minnesota Statutes 1984, section 116.16, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEFINITIONS.] In this section and sections 
116.17 and 116.18: 
    (1) Agency means the Minnesota pollution control agency 
created by this chapter; 
    (2) Municipality means any county, city, and town, the 
metropolitan waste control commission established in chapter 473 
and the metropolitan council when acting under the provisions of 
that chapter or an Indian tribe or an authorized Indian tribal 
organization, and any other governmental subdivision of the 
state responsible by law for the prevention, control, and 
abatement of water pollution in any area of the state; 
    (3) Pollution control fund means the Minnesota state water 
pollution control fund created by subdivision 1; 
    (4) Bond account means the Minnesota state water pollution 
control bond account created in the state bond fund by section 
116.17, subdivision 4; 
    (5) Terms defined in section 115.01 have the meanings 
therein given them; 
    (6) The eligible cost of any municipal project, except as 
otherwise provided in clauses (7) and (8), includes (a) 
preliminary planning to determine the economic, engineering, and 
environmental feasibility of the project; (b) engineering, 
architectural, legal, fiscal, economic, sociological, project 
administrative costs of the agency and the municipality, and 
other investigations and studies; (c) surveys, designs, plans, 
working drawings, specifications, procedures, and other actions 
necessary to the planning, design, and construction of the 
project; (d) erection, building, acquisition, alteration, 
remodeling, improvement, and extension of disposal systems; (e) 
inspection and supervision of construction; and (f) all other 
expenses of the kinds enumerated in section 475.65. 
    (7) For state independent grant and matching grant purposes 
hereunder, the eligible cost for grant applicants shall be the 
eligible cost as determined by the United States environmental 
protection agency under the Federal Water Pollution Control Act, 
as amended, 33 U.S.C. 1314, et seq. 
    (8) Notwithstanding clause (7), for state grants under the 
state independent grants program, the eligible cost includes the 
acquisition of land for stabilization ponds, the construction of 
collector sewers for totally unsewered statutory and home rule 
charter cities and towns described under section 368.01, 
subdivision 1 or subdivision 1a, that are in existence on 
January 1, 1985, and the provision of reserve capacity 
sufficient to serve the reasonable needs of the municipality for 
20 years in the case of treatment works and 40 years in the case 
of sewer systems.  Notwithstanding clause (7), for state grants 
under the state independent grants program, the eligible cost 
does not include the provision of collector sewers as defined in 
agency rules, the provision of service to seasonal homes, or 
cost increases from contingencies that exceed three percent of 
as-bid costs or cost increases from unanticipated site 
conditions that exceed an additional two percent of as-bid costs.
    Sec. 3.  [116.162] [STATE FINANCIAL ASSISTANCE PROGRAM FOR 
COMBINED SEWER OVERFLOW.] 
    Subdivision 1.  [DEFINITIONS.] (a) Except as otherwise 
provided in this section, the terms used in this section have 
the meanings given in section 116.16, subdivision 2. 
    (b) "Combined sewer" means a sewer that is designed and 
intended to serve as a sanitary sewer and a storm sewer, or as 
an industrial sewer and a storm sewer. 
    (c) "Combined sewer overflow" means a discharge of a 
combination of storm and sanitary wastewater or storm and 
industrial wastewater directly or indirectly into the waters of 
the state, occurring when the volume of wastewater flow exceeds 
the conveyance or storage capacity of a combined sewer system. 
    Subd. 2.  [PROGRAM PURPOSE.] The agency shall administer a 
state financial assistance program to assist eligible recipients 
to abate combined sewer overflow to the Mississippi river from 
its confluence with the Rum river to its confluence with the St. 
Croix river. 
     Subd. 3.  [ELIGIBLE RECIPIENTS.] A statutory or home rule 
charter city is eligible for financial assistance under the 
program if the city has a permit, stipulation agreement, consent 
decree, or order issued by the agency requiring construction to 
abate combined sewer overflow and if the city adopts an approved 
plan to abate combined sewer overflow. 
    Subd. 4.  [ELIGIBLE COSTS.] The eligible costs under this 
section include the costs listed in section 116.16, subdivision 
2, paragraph (6), as determined by the agency, using as 
guidelines the regulations promulgated by the United States 
environmental protection agency under the Federal Water 
Pollution Control Act, United States Code, title 33, sections 
1314 to 1328, except that the eligible costs include easements 
necessary for implementing the combined sewer overflow abatement 
plan and do not include: 
     (1) the preparation of combined sewer overflow abatement 
plans; 
     (2) acquisition of interests in real property other than 
easements; 
     (3) storm water treatment facilities; 
     (4) costs for a program to disconnect any structures or 
devices, excluding catch basins on public property, constructed 
to direct or convey storm water, snow melt, or surface water 
from private or public property into a public sanitary or 
combined sewer; 
     (5) costs incurred before the effective date of this 
section; and 
     (6) costs incurred after the effective date of this section 
but without prior written approval of the agency. 
    Subd. 5.  [FINANCIAL ASSISTANCE PROGRAM.] The agency shall 
annually provide financial assistance to eligible recipients for 
combined sewer overflow projects.  The agency shall determine 
eligible costs for each eligible recipient and compare those 
individual costs to the total eligible cost required to abate 
combined sewer overflows.  This comparison determines each 
eligible recipient's proportionate share of the costs, and the 
appropriation for the program must be distributed among eligible 
recipients according to their proportionate share. 
    Subd. 6.  [REPAYMENTS.] A city of the first class that 
receives assistance under this section shall repay one-half of 
each assistance payment ten years after the date when the 
recipient received the assistance payment.  The repayment must 
be deposited in the Minnesota state water pollution control fund.
    Subd. 7.  [CONDITIONS; ADMINISTRATION.] (a) A recipient of 
financial assistance under this section shall construct the 
combined sewer overflow abatement facilities in accordance with 
the construction schedule contained in the permit, stipulation 
agreement, consent decree, or order issued by the agency.  The 
agency shall require that, with federal, state, and local funds, 
the construction schedule would complete abatement of combined 
sewer overflow within ten years of the issuance of the permit, 
agreement, decree, or order.  As a condition of receiving 
financial assistance, the recipient shall implement a program 
approved by the agency to disconnect any structures or devices, 
excluding catch basins on public property, constructed to direct 
or convey storm water, snow melt, or surface water from private 
or public property into a public sanitary or combined sewer.  
The deadlines for submittance of facilities plans, plans and 
specifications, and other documents to the agency for financial 
assistance are governed by the construction schedule contained 
in the permit, stipulation agreement, consent decree, or order 
issued by the agency requiring combined sewer overflow abatement 
construction. 
    (b) A recipient of financial assistance under this section 
is not eligible to receive a grant to abate combined sewer 
overflow under the state independent grants program.  
    Subd. 8.  [RULES.] The agency shall promulgate permanent 
rules and may promulgate emergency rules for the administration 
of the financial assistance program established by this 
section.  The rules must contain as a minimum: 
    (1) procedures for application; 
    (2) criteria for eligibility of combined sewer overflow 
abatement projects; 
    (3) conditions for use of the financial assistance; 
    (4) procedures for the administration of financial 
assistance; and 
    (5) other matters that the agency finds necessary for the 
proper administration of the program. 
    Sec. 4.  Minnesota Statutes 1984, section 116.18, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPROPRIATION FROM THE FUND.] The sum of 
$167,000,000, or so much thereof as may be necessary, is 
appropriated from the Minnesota state water pollution control 
fund in the state treasury to the pollution control agency, for 
the period commencing on July 23, 1971 and ending June 30, 1985, 
to be granted and disbursed to municipalities and agencies of 
the state in aid of the construction of projects conforming to 
section 116.16, in accordance with the rules, priorities, and 
criteria therein described.  
    Sec. 5.  Minnesota Statutes 1984, section 116.18, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [STATE MATCHING GRANTS PROGRAM BEGINNING OCTOBER 
1, 1984.] For projects tendered, on or after October 1, 1984, a 
grant of federal money under section 201(g), section 202, 203, 
or 206(f) of the Federal Water Pollution Control Act, as 
amended, United States Code, title 33, sections 1251 to 1376, at 
55 percent or more of the eligible cost for construction of the 
treatment works, state money appropriated under subdivision 1 
must be expended for up to 15 30 percent of the eligible cost of 
construction for municipalities for which the construction would 
otherwise impose significant financial hardship; provided, that 
not less than 25 ten percent of the eligible cost must be paid 
by the municipality or agency constructing the project.  If a 
municipality is tendered federal and state grants in a 
percentage cumulatively exceeding 75 90 percent of the eligible 
cost of construction, the state pollution control agency shall 
reduce the grant to the municipality under this chapter to the 
extent necessary to ensure that not less than 25 ten percent of 
the eligible cost will be paid by the municipality.  The amounts 
of the matching grants must be based on per connection capital 
cost, median household income, and per capita adjusted assessed 
valuation. 
    Sec. 6.  Minnesota Statutes 1984, section 116.18, 
subdivision 3a, is amended to read: 
    Subd. 3a.  [STATE INDEPENDENT GRANTS PROGRAM.] (a) The 
agency may award independent grants for projects for 50 percent 
or, if the agency requires advanced treatment, 65 percent of the 
eligible cost of construction.  The agency may award independent 
grants for up to an additional 15 30 percent or, if the agency 
requires advanced treatment, up to an additional ten 25 percent 
of the eligible cost of construction to municipalities for which 
the construction would otherwise impose significant financial 
hardship; the amounts of the additional grants shall be based on 
per connection capital cost, median household income, and per 
capita adjusted assessed valuation.  These grants may be awarded 
in separate steps for planning and design in addition to actual 
construction.  Not more than 20 percent of the total amount of 
grants awarded under this subdivision in any single fiscal year 
may be awarded for projects for the control of combined sewer 
overflow as defined by federal regulation.  Until December 31, 
1990, not more than 20 percent of the total amount of grants 
awarded under this subdivision in any single fiscal year may be 
awarded to a single grantee.  
    (b) Up to ten percent of the money to be awarded as grants 
under this subdivision in any single fiscal year shall be set 
aside for municipalities having substantial economic development 
projects that cannot come to fruition without municipal 
wastewater treatment improvements.  The agency shall forward its 
municipal needs list to the commissioner of energy and economic 
development at the beginning of each fiscal year, and the 
commissioner shall review the list and identify those 
municipalities having substantial economic development 
projects.  After the first 90 percent of the total available 
money is allocated to municipalities in accordance with agency 
priorities, the set-aside shall be used by the agency to award 
grants to remaining municipalities that have been identified.  
    (c) Grants may also be awarded under this subdivision to 
reimburse municipalities willing to proceed with projects and 
apply to be reimbursed in the a subsequent year conditioned upon 
appropriation of sufficient money under subdivision 1 for that 
year.  The maximum amount of the reimbursement the agency may 
commit in any single fiscal year is equal to the amount newly 
appropriated under subdivision 1 to the state grants programs 
for that year. 
    Sec. 7.  [116.19] [MUNICIPAL POWERS.] 
    Subdivision 1.  [PURPOSE.] Notwithstanding a statute or 
home rule charter to the contrary, a recipient of financial 
assistance from the agency under section 3 may exercise the 
authority provided in this section to abate combined sewer 
overflow or provide money to pay all or part of the costs of the 
abatement and of making improvements to any utility required to 
effect the abatement. 
    Subd. 2.  [GENERAL.] A recipient may acquire real or 
personal property by purchase, including installment purchase, 
lease, including a financing lease, condemnation, gift, or 
grant, or may sell real or personal property at its fair market 
value determined by the recipient and simultaneously enter into 
an installment purchase or lease, including a financing lease, 
for purposes of reacquiring real or personal property.  A 
recipient may construct, enlarge, improve, replace, repair, 
maintain, and operate a public sewer system, including storm 
sewers, sanitary sewers, and facilities for separating storm 
sewers from combined storm and sanitary sewers, or any other 
public utilities combined with the public sewer system as 
provided in this section.  To accomplish these purposes, a 
recipient may exercise the powers granted a municipality by 
chapters 115, 117, 412, 429, 435, 444, 471, and 475, and may 
combine the public sewer system, for purposes of operation or 
revenue collection or both or for other purposes the city 
council determines, with one or more other public utilities.  
Charges for the services provided by a combined utility may be 
determined in any reasonable manner. 
    Subd. 3.  [DEBT.] A recipient may incur indebtedness and 
may issue and sell bonds or other obligations, including notes, 
an installment purchase contract, or obligations to make 
payments under a financing lease, and pledge the full faith and 
credit of the city to its payment for storm and sanitary sewers 
and systems without submitting the question of issuing the 
bonds, or otherwise incurring the obligations, to the electors.  
The bonds or other obligations may be issued in one or more 
series, may bear interest at the rate or rates, including 
floating rates, and may be sold at public or private sale and at 
the price the recipient determines.  A recipient may, in 
addition to or in substitution for the pledge of its full faith 
and credit, pledge the revenues or net revenues of its public 
sewer system or a combined utility or a part of it, or mortgage 
the assets of the system or combined utility.  A recipient may 
vest in a trustee or trustees, located within or outside the 
state, the right to enforce any covenants made to secure or to 
pay the bonds or other obligations, and may determine the powers 
and duties of the trustee or trustees.  Except as provided in 
this section, the bonds or other obligations must be issued and 
sold according to chapter 475. 
    Subd. 4.  [PROPERTY TAX.] In addition and supplemental to 
the grants of authority in subdivisions 2 and 3, the governing 
body may establish a special taxing district or districts within 
the corporate limits of the city that include some or all of the 
real or personal property served by a combined sewer separated 
after the effective date of this section, and may levy and 
collect ad valorem taxes in the district or districts for the 
purposes of this section.  The taxes must be collected by the 
county and paid over to the city as are other taxes.  The taxes 
are not restricted by any other tax levy limitations imposed 
upon the city by any other law or charter provision. 
    Subd. 5.  [ASSESSMENTS.] The governing body of the city may 
divide the city into drainage districts or areas, and may levy 
and collect assessments based on benefit to property, and the 
assessments so levied may be based upon the existing or highest 
and best land usage, square footage, front footage or area.  The 
assessments may be levied in accordance with the procedures set 
forth in the city's home rule charter, if any, or chapter 429, 
as the council determines.  The assessments may be levied and 
collected from all property whether public or private, and in 
the case of public property the agency of government responsible 
for the property must provide the necessary money in its budget 
request. 
    Subd. 6.  [PRIVATE FINANCE.] To secure financing for the 
purposes of this section, the governing body of the city may use 
private financing methods, such as private ownership and 
construction by any means available to the owner of new 
facilities to benefit the city under a lease, financing lease, 
installment purchase agreement or service contract, or the sale 
or mortgaging of all or part of the city's existing public sewer 
system, combined utility including the public sewer system, or 
water utility, to benefit the city under a lease, financing 
lease, installment purchase agreement or service contract.  The 
private financing methods are not subject to any limitations 
impos