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Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1986 

                        CHAPTER 441-S.F.No. 2280 
           An act relating to taxation; exempting certain 
          construction materials from the sales tax; imposing 
          levy limits on certain towns and cities; altering 
          provisions governing distribution of certain taconite 
          tax proceeds; reducing the taconite railroad gross 
          earnings tax rate; providing for the deduction of 
          taconite production taxes and transportation costs; 
          providing for a loan guarantee; appropriating money; 
          amending Minnesota Statutes 1984, sections 275.125, 
          subdivision 9; 275.50, subdivision 2; 275.51, 
          subdivisions 3f and 3i; 294.23; 298.225, by adding a 
          subdivision; 298.24, subdivision 1; and 298.282, 
          subdivision 2; Minnesota Statutes 1985 Supplement, 
          sections 294.22; 297A.15, subdivision 5; 297A.257, by 
          adding a subdivision; 298.03; 298.225, subdivision 1; 
          and 298.28, subdivision 1.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1984, section 275.125, 
subdivision 9, is amended to read: 
    Subd. 9.  [LEVY REDUCTIONS; TACONITE.] (1) Reductions in 
levies pursuant to subdivision 10 of this section, and section 
273.138, shall be made prior to the reductions in clause (2). 
    (2) Notwithstanding any other law to the contrary, 
districts which received payments pursuant to sections 294.21 to 
294.26; 298.23 to 298.28, except an amount distributed under 
section 298.28, subdivision 1, paragraph (3)(b)(ii); 298.34 to 
298.39; 298.391 to 298.396; 298.405; 298.51 to 298.67; 477A.15; 
and any law imposing a tax upon severed mineral values, or under 
any other law distributing proceeds in lieu of ad valorem tax 
assessments on copper or nickel properties, or recognized 
revenue pursuant to section 477A.15; shall not include a portion 
of these aids in their permissible levies pursuant to those 
sections, but instead shall reduce the permissible levies 
authorized by this section and sections 124A.03, 124A.06, 
subdivision 3a, 124A.08, subdivision 3a, 124A.10, subdivision 
3a, 124A.12, subdivision 3a, and 124A.14, subdivision 5a by the 
greater of the following: 
    (a) an amount equal to 50 percent of the total dollar 
amount of the payments received pursuant to those sections or 
revenue recognized pursuant to section 477A.15 in the previous 
fiscal year; or 
    (b) an amount equal to the total dollar amount of the 
payments received pursuant to those sections or revenue 
recognized pursuant to section 477A.15 in the previous fiscal 
year less the product of the same dollar amount of payments or 
revenue times the ratio of the maximum levy allowed the district 
under section 124A.03, subdivision 1 sections 124A.03, 
subdivision 2, 124A.06, subdivision 3a, 124A.08, subdivision 3a, 
124A.10, subdivision 3a, 124A.12, subdivision 3a, and 124A.14, 
subdivision 5a, to the total levy allowed the district under 
this section and sections 124A.03, 124A.06, subdivision 3a, 
124A.08, subdivision 3a, 124A.10, subdivision 3a, 124A.12, 
subdivision 3a, and 124A.14, subdivision 5a, and 124A.20, 
subdivision 2, in the year in which the levy is certified. 
    (3) No reduction pursuant to this subdivision shall reduce 
the levy made by the district pursuant to section 124A.03, 
subdivision 1, to an amount less than the amount raised by a 
levy of 12.5 mills times the adjusted assessed valuation of that 
district for the preceding year as determined by the 
equalization aid review committee.  The amount of any increased 
levy authorized by referendum pursuant to section 124A.03, 
subdivision 2 shall not be reduced pursuant to this 
subdivision.  The amount of any levy authorized by subdivision 
4, to make payments for bonds issued and for interest thereon, 
shall not be reduced pursuant to this subdivision.  
    (4) Before computing the reduction pursuant to this 
subdivision of the capital expenditure levy authorized by 
subdivision 11a, and the community service levy authorized by 
subdivision 8, the commissioner shall ascertain from each 
affected school district the amount it proposes to levy for 
capital expenditures pursuant to subdivision 11a and for 
community services pursuant to subdivision 8.  The reduction of 
the capital expenditure levy and the community services levy 
shall be computed on the basis of the amount so ascertained. 
    (5) Notwithstanding any law to the contrary, any amounts 
received by districts in any fiscal year pursuant to sections 
294.21 to 294.26; 298.23 to 298.28; 298.34 to 298.39; 298.391 to 
298.396; 298.405; 298.51 to 298.67 except an amount distributed 
under section 298.28, subdivision 1, paragraph (3)(b)(ii); or 
any law imposing a tax on severed mineral values, or under any 
other law distributing proceeds in lieu of ad valorem tax 
assessments on copper or nickel properties; and not deducted 
from foundation aid pursuant to section 124A.035, subdivision 5, 
clause (2), and not applied to reduce levies pursuant to this 
subdivision shall be paid by the district to the commissioner of 
finance St. Louis county auditor in the following amount by 
March 15 of each year except 1986, the amount required to be 
subtracted from the previous fiscal year's foundation aid 
pursuant to section 124A.035, subdivision 5, which is in excess 
of the foundation aid earned for that fiscal year.  
The commissioner of finance county auditor shall deposit any 
amounts received pursuant to this clause in the taconite 
property tax relief fund in the state treasury, established 
pursuant to section 16A.70 St. Louis county treasury for 
purposes of paying the taconite homestead credit as provided in 
section 273.135. 
    Sec. 2.  Minnesota Statutes 1984, section 275.50, 
subdivision 2, is amended to read: 
    Subd. 2.  [GOVERNMENTAL SUBDIVISION.] (a) "Governmental 
subdivision" means a county, home rule charter city, or 
statutory city, except a home rule charter or statutory city 
that has a population of less than 5,000 according to the most 
recent federal census.  
     (b) "Governmental subdivision" also includes any city or 
town that receives a distribution from the taconite municipal 
aid account in the levy year. 
    Sec. 3.  Minnesota Statutes 1984, section 275.51, 
subdivision 3f, is amended to read: 
    Subd. 3f.  [LEVY LIMIT BASE.] (a) The property tax levy 
limit base for governmental subdivisions for taxes levied in 
1983 shall be calculated by adding the following amounts:  
    (1) the property tax permitted to be levied in 1982 for 
taxes payable in 1983 pursuant to Minnesota Statutes 1982, 
section 275.51, subdivision 3e; plus 
    (2) the amount of any payments the governmental subdivision 
was certified to receive in 1983 pursuant to Minnesota Statutes 
1982, sections 477A.011 to 477A.03; plus 
    (3) the amount of any payments certified to the 
governmental subdivision in 1983 pursuant to Minnesota Statutes 
1982, sections 298.28 and 298.282; plus 
    (4) the difference between the amount certified to the 
governmental subdivision in 1983 and the amount certified in 
1984 pursuant to section 273.138; plus 
    (5) any amount levied as a special assessment to cover the 
costs of municipal operation and maintenance activities for the 
taxes payable year 1983; and 
    (6) the amount of any base adjustment authorized by the 
commissioner of revenue pursuant to subdivision 3g.  
    (b) For taxes levied in 1984 and subsequent years, a 
governmental subdivision's levy limit base is equal to its 
adjusted levy limit base for the preceding year provided that, 
for taxes levied in 1984, the levy limit base of a county 
containing a city of the first class shall be increased by the 
amount paid to the county under section 273.138 in 1984 less the 
amount that will be paid to it under section 273.138 in 1985.  
    (c) The property tax levy limit base for cities and towns 
defined as a governmental subdivision only under section 275.50, 
subdivision 2, paragraph (b), for taxes levied in 1986 shall be 
calculated by adding the following amounts: 
    (1) the property tax levied in 1985 for taxes payable in 
1986, exclusive of any levies for debt service; plus 
    (2) the amount of any payments the governmental subdivision 
was certified to receive in 1986 pursuant to Minnesota Statutes 
1985 Supplement, sections 477A.011 to 477A.03; plus 
    (3) the amount of any payments certified to the 
governmental subdivision in 1986 pursuant to Minnesota Statutes 
1984, section 298.282, and Minnesota Statutes 1985 Supplement, 
section 298.28; plus 
    (4) any amount levied as a special assessment to cover the 
costs of municipal operation and maintenance activities for the 
taxes payable year 1986. 
For taxes levied in 1987 and subsequent years, the levy limit 
base of a governmental subdivision defined only in section 
275.50, subdivision 2, paragraph (b), is equal to its adjusted 
levy limit base for the preceding year.  
    Sec. 4.  Minnesota Statutes 1984, section 275.51, 
subdivision 3i, is amended to read: 
    Subd. 3i.  [LEVY LIMITATION.] The levy limitation for a 
governmental subdivision shall be equal to the adjusted levy 
limit base determined pursuant to subdivision 3h, reduced by (a) 
the total amount of local government aid that the governmental 
subdivision has been certified to receive pursuant to sections 
477A.011 to 477A.014; (b) taconite aids pursuant to sections 
298.28 and 298.282 including any aid received in the levy year 
which was required to be placed in a special fund for 
expenditure in the next succeeding year; (c) state 
reimbursements for wetlands and native prairie property tax 
exemptions pursuant to sections 273.115, subdivision 3 and 
273.116, subdivision 3; and (d) payments in lieu of taxes to a 
county pursuant to section 477A.12 which are required to be used 
to provide property tax levy reduction certified to be paid in 
the calendar year in which property taxes are payable.  If the 
sum of the taconite aids deducted exceeds the adjusted levy 
limit base, the excess must be used to reduce the amounts levied 
as special levies pursuant to section 275.50, subdivisions 5 and 
7.  The commissioner of revenue shall notify a governmental 
subdivision of any excess taconite aids to be used to reduce 
special levies.  
    As provided in section 298.28, subdivision 1, one cent per 
taxable ton of the amount distributed under section 298.28, 
subdivision 1, clause (4)(c) shall not be deducted from the levy 
limit base of the counties that receive that aid.  The resulting 
figure is the amount of property taxes which a governmental 
subdivision may levy for all purposes other than those for which 
special levies and special assessments are made.  
    For taxes levied in 1987 and subsequent years, the levy 
limit for a county as calculated under paragraph (b) shall be 
decreased by an additional amount equal to the reduction in the 
distribution to the county under Minnesota Statutes, section 
298.28, from the 1986 distribution to the 1987 distribution.  
    Sec. 5.  Minnesota Statutes 1985 Supplement, section 
294.22, is amended to read: 
    294.22 [GROSS EARNINGS TAX; COMPUTATION.] 
    Every company owning or operating any taconite railroad 
shall pay annually into the state treasury a sum of money equal 
to five 3.75 percent of the gross earnings derived from the 
operation of such taconite railway within the state.  The gross 
earnings of such a taconite railroad company from the 
transportation of taconite concentrates from the Mesabi Range to 
ports on Lake Superior, for all purposes hereof, shall be a sum 
of money equal to the amount which would be charged under 
established tariffs of common carriers for the transportation of 
an equal tonnage of iron ore or taconite concentrates, whichever 
is shipped from Mesabi Range points to ports at the head of Lake 
Superior, including the established charges for loading such ore 
on boats.  For all purposes of chapter 298 the rate of the gross 
earnings as so calculated shall be treated as the cost of 
transportation of such concentrates or iron ore between such 
points.  If such a taconite railroad company transports coal or 
any other commodity, except taconite concentrates, its gross 
earnings shall include an amount equal to the established 
tariffs of common carriers for the transportation of the same 
quantities of similar commodities for corresponding distances, 
not, however, including any such charges for any such 
commodities used or intended to be used in the construction, 
operation or maintenance of such railroad.  
    Sec. 6.  Minnesota Statutes 1984, section 294.23, is 
amended to read: 
    294.23 [COMPANIES LIABLE FOR TAX.] 
    If a company producing concentrates from taconite shall 
transport the taconite in the course of the concentrating 
process and before such concentrating process is completed to a 
concentrating plant located within the state over a railroad 
which is not a common carrier and shall not use a common carrier 
or taconite railroad company as defined in section 294.21 for 
the movement of the concentrate to a point of consumption or 
port for shipment beyond the state, then such company 
nevertheless shall pay annually into the state treasury a tax 
equal to five 3.75 percent of the amount which would be charged 
for the transportation of such concentrates produced by such 
taconite company as if such concentrates were transported by a 
common carrier under established tariffs of common carriers from 
the Mesabi Range or other iron range point nearest to the mine 
at which such taconite is quarried to ports at the head of Lake 
Superior, including established charges for loading such ore on 
boats.  For the purposes of sections 294.24 to 294.28, such a 
company shall be considered a taconite railroad company.  
    Sec. 7.  Minnesota Statutes 1985 Supplement, section 
297A.15, subdivision 5, is amended to read: 
    Subd. 5.  [REFUND; APPROPRIATION.] Notwithstanding the 
provisions of sections 297A.02, subdivision 2, and 297A.257 the 
tax on sales of capital equipment, and construction materials 
and supplies under section 297A.257, 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.  In the case of building 
materials qualifying under section 297A.257 where the tax was 
paid by a contractor, application must be made by the owner for 
the sales tax paid by all the contractors, subcontractors, and 
builders for the project.  The application must include 
sufficient information to permit the commissioner to verify the 
sales tax paid for the project.  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 capital equipment or construction 
materials and supplies under section 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. 8.  Minnesota Statutes 1985 Supplement, section 
297A.257, is amended by adding a subdivision to read: 
    Subd. 2a.  [EXEMPTION FOR CONSTRUCTION MATERIALS.] 
    Construction materials and supplies are exempt from the tax 
imposed under this chapter, regardless of whether purchased by 
the owner or a contractor, subcontractor, or builder, if all of 
the following conditions are met:  
    (1) the materials and supplies are used or consumed in 
constructing a new manufacturing facility or expanding an 
existing one in a distressed county; 
    (2) the total capital investment made within a three-year 
period exceeds $75,000,000.  
    A county is a distressed county for purposes of a project 
qualifying under this subdivision if it was designated as a 
distressed county at the time the initial contract to purchase 
the materials and supplies was executed.  
    Sec. 9.  Minnesota Statutes 1985 Supplement, section 
298.03, is amended to read: 
    298.03 [VALUE OF ORE; HOW ASCERTAINED.] 
    Subdivision 1.  [GENERAL RULES.] 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, semitaconite 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, chapter 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. 
    Subd. 2.  [SPECIAL TRANSPORTATION COSTS.] With respect to 
transportation costs incurred after June 30, 1986, if the ore is 
not transported using the Great Lakes Seaway system, the 
commissioner must allow, as a deduction in computing the 
valuation of the ore, the reasonable cost of transportation of 
the ore to its destination.  This subdivision does not affect 
the valuation of ore shipped using the Great Lakes Seaway system.
    Sec. 10.  Minnesota Statutes 1985 Supplement, section 
298.225, subdivision 1, is amended to read: 
    298.225 [APPROPRIATION.] 
    Subdivision 1.  For distribution of taconite production tax 
in 1985 1987 and thereafter with respect to production in 1984 
1986 and thereafter, the recipients distribution of the taconite 
production tax as provided in section 298.28, subdivision 1, 
clauses (1) to (4) and (5)(b), (5)(c), (6), and (7)(a), 
shall receive distributions equal to the lesser of the following 
amounts:  
    (1) the amount distributed to them pursuant to this section 
and section 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; or 
    (2)(i) for the distributions made pursuant to section 
298.28, subdivision 1, clauses (3)(a), (3)(b), and (5)(c), 50 
percent of the amount distributed pursuant to this section and 
section 298.28, subdivision 1, with respect to 1983 production.  
    (ii) for the distributions made pursuant to section 298.28, 
subdivision 1, clauses (4)(a) and (4)(b), 75 percent of the 
amount distributed pursuant to this section and section 298.28, 
subdivision 1, with respect to 1983 production.  
    Sec. 11.  Minnesota Statutes 1984, section 298.24, 
subdivision 1, is amended to read: 
    Subdivision 1.  (a) For concentrate produced in 1986 there 
is hereby imposed upon taconite and iron sulphides, and upon the 
mining and quarrying thereof, and upon the production of iron 
ore concentrate therefrom, and upon the concentrate so produced, 
a tax of $1.25 cents $1.90 per gross ton of merchantable iron 
ore concentrate produced therefrom.  The tax on concentrates 
produced in 1978 and subsequent years prior to 1985 shall be 
equal to $1.25 multiplied by the steel mill products index 
during the production year, divided by the steel mill products 
index in 1977.  The index stated in code number 1013, or any 
subsequent equivalent, as published by the United States 
Department of Labor, Bureau of Labor Statistics Wholesale Prices 
and Price Indexes for the month of January of the year in which 
the concentrate is produced shall be the index used in 
calculating the tax imposed herein.  In no event shall the tax 
be less than $1.25 per gross ton of merchantable iron ore 
concentrate.  The tax on concentrates produced in 1985 and 1986 
shall be at the rate determined for 1984 production.  
    (b) Except as provided in paragraph (c), for concentrates 
produced in 1987 and subsequent years, the tax rate shall be 
equal to the preceding year's tax rate plus an amount equal to 
the preceding year's tax multiplied by the percentage increase 
in the implicit price deflator from the fourth quarter of the 
second preceding year to the fourth quarter of the preceding 
year.  "Implicit price deflator" for the gross national product 
means the implicit price deflator prepared by the bureau of 
economic analysis of the United States department of commerce.  
    (b) On concentrates produced in 1984, an additional tax is 
imposed equal to eight-tenths of one percent of the total tax 
imposed by clause (a) per gross ton for each one percent that 
the iron content of such product exceeds 62 percent, when dried 
at 212 degrees Fahrenheit.  
    (c) The tax imposed by this subdivision on concentrates 
produced in 1984 shall be computed on the production for the 
current year.  The tax on concentrates produced in 1985 shall be 
computed on the average of the production for the current year 
and the previous year.  
    (c) The provisions of paragraph (b) will not be in effect 
for concentrates produced in 1987 if the 1987 production is not 
less than 33,000,000 tons, and will not be in effect for 
concentrates produced in 1988 if the 1988 production is not less 
than 34,000,000 tons.  If the provisions of paragraph (b) are 
not in effect for concentrates produced in a year, the rate of 
the tax for that year's production will be the rate of the tax 
imposed on the previous year's production.  The tax on 
concentrates produced in 1986 and thereafter shall be imposed on 
the average of the production for the current year and the 
previous two years.  The rate of the tax imposed will be the 
current year's tax rate.  This clause shall not apply in the 
case of the closing of a taconite facility if the property taxes 
on the facility would be higher if this clause and section 
298.25 were not applicable.  
    (d) If the tax or any part of the tax imposed by this 
subdivision is held to be unconstitutional, a tax of $1.25 $1.90 
per gross ton of merchantable iron ore concentrate produced 
shall be imposed.  
    Sec. 12.  Minnesota Statutes 1985 Supplement, section 
298.28, subdivision 1, is amended to read: 
    Subdivision 1.  [DISTRIBUTION.] The proceeds of the taxes 
collected under section 298.24, except the tax collected under 
section 298.24, subdivision 2, shall, upon certification of the 
commissioner of revenue, be 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 (7), paragraph (a), 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 (1) an organized township if, as of January 2, 1982, more 
than 75 percent of the assessed valuation of the township 
consists of iron ore or (2) a city if, as of January 2, 1980, 
more than 75 percent of the assessed valuation of the city 
consists of iron ore.  The amount will be the portion of a 
township's or city's certified levy equal to the proportion of 
(1) the difference between 50 percent of the township's January 
2, 1982, assessed value in the case of a township and 50 percent 
of the January 2, 1980, assessed value in the case of a city 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 or city's levy 
against the sum of the township's or city's current assessed 
value plus the difference between 50 percent of its January 2, 
1982, assessed value and its current assessed value in the case 
of a township and between 50 percent of its January 2, 1980, 
assessed value and its current assessed value in the case of a 
city.  If the current assessed value of the township exceeds 50 
percent of the township's January 2, 1982, assessed value, or if 
the current assessed value of the city exceeds 50 percent of the 
city's January 2, 1980, assessed value, this clause shall not 
apply.  
    (3) 29 27.5 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 5.5 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 
distribution must be based on the apportionment formula 
prescribed in clause (1). 
    (b) 23 (i) 22 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 in direct proportion to school district 
indexes as follows:  for each school district, its pupil units 
determined under section 124.17 for the prior school year shall 
be multiplied by the ratio of the average adjusted assessed 
value per pupil unit as calculated pursuant to chapter 124A for 
the school year ending prior to distribution to the adjusted 
assessed value per pupil unit of the district.  Each district 
shall receive that portion of the distribution which its index 
bears to the sum of the indices for all school districts that 
receive the distributions.  
     (ii) Notwithstanding clause (i), each school district shall 
receive a distribution under this paragraph (b) that is no less 
than the amount of its levy reduction under section 275.125, 
subdivision 9, for the second year prior to the year of the 
distribution; the amount necessary to make this minimum payment 
shall be derived from proportionate reductions in the initial 
distribution to other school districts under clause (i).  
    (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 year or the 1983-1984 school year, whichever is 
greater, less the product of 1-3/4 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 
1-3/4 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 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 clause (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 16.5 cents per taxable ton to counties to be 
distributed, based upon certification by the commissioner of 
revenue, as follows: 
    (a) 15.5 13 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 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 paid to the county in which the power plant is 
located. 
    (c) Four 3.5 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 22 cents per taxable ton, less any amount 
required to be distributed under part parts (b) and (c), to 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 .1875 cent per taxable ton of the tax imposed and 
collected from such taxpayer shall be 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. 
     (c) 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 school district other than a school 
district in which the mining and concentrating processes are 
conducted, .5625 cent per taxable ton of the tax imposed and 
collected from the taxpayer shall be paid to the school district.
    (6) Three cents per taxable ton shall be paid to the iron 
range resources and rehabilitation board 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. 
    (7) (a) .20 cent per taxable ton shall be paid to the range 
association of municipalities and schools, for the purpose of 
providing an areawide 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.  
    (8) the amounts determined under clauses (4)(a), (4)(c), 
(5),(a) and (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.  
    The amounts determined under clauses (4)(a), (4)(c), 
(5)(b), and (5)(c) for distribution in 1987 and subsequent years 
shall be the amount determined for distribution in 1986 under 
Minnesota Statutes 1985 Supplement, section 298.28, subdivision 
1, clauses (4)(a), (4)(c), and (5)(b). 
    (9) the proceeds of the tax imposed by section 298.24 which 
remain after the distributions and payments in clauses (1) to 
(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. 
    (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.
    Sec. 13.  Minnesota Statutes 1984, section 298.282, 
subdivision 2, is amended to read: 
    Subd. 2.  (a) Each year following the final determination 
of the amount of taxes payable under section 298.24, the 
commissioner of revenue shall determine the amount in the 
taconite municipal aid account as of July 1 of such year and the 
amount to be distributed to each qualifying municipality during 
such year.  The amount to be distributed to each qualifying 
municipality shall be determined by dividing the total amount in 
said account, after a reduction equal to the amount of the 
distribution in subdivision 5, as of July 1 by the total 
population according to the latest federal census of all 
qualifying municipalities to determine the per capita 
distributive share for such year and by multiplying the per 
capita distributive share by the population of such municipality 
determining an index for each qualifying municipality by 
subtracting its local effort mill rate, multiplied by its 
equalized assessed value, from its fiscal need factor.  For the 
purposes of this subdivision, the following terms have the 
meanings given them herein.  A municipality's "local effort mill 
rate" means its fiscal need factor per capita divided by $17 per 
capita per mill for the first $350 of its fiscal need factor per 
capita; plus its fiscal need factor per capita divided by $15 
per capita per mill on that part of its fiscal need factor per 
capita, if any, in excess of $350.  In no case shall a 
municipality's local effort mill rate be less than eight mills.  
A municipality's "equalized assessed value" means its previous 
year taxable valuation, less the captured value in any tax 
increment district, divided by the municipality's aggregate 
sales ratio covering the period ending two years prior to the 
year of aid distribution.  A municipality's "fiscal need factor" 
means the three-year average of the sum of its municipal levy, 
taconite aids received under sections 298.28, subdivision 1, 
clauses (1) and (10)(a) and 298.282 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 ratio of the resulting index for each qualifying 
municipality to the sum of all qualifying municipalities' 
indexes shall be multiplied by the total amount in the taconite 
municipal aid account less the amount distributed pursuant to 
subdivision 5.  For the distribution made in 1987, one-third of 
the distribution shall be distributed pursuant to this 
subdivision and two-thirds pursuant to Minnesota Statutes 1984, 
section 298.282, subdivision 2.  For the distribution made in 
1988, two-thirds shall be distributed pursuant to this 
subdivision and one-third pursuant to Minnesota Statutes 1984, 
section 298.282, subdivision 2.  
    (b) If the distribution under this section, sections 
273.138, 298.26 and 298.28, and chapter 477A, to any 
municipality would exceed that municipality's levy limit base 
for that year, computed pursuant to sections 275.50 to 275.59, 
the amount in excess of the levy limit base for that year shall 
reduce the amount distributed to the municipality under this 
section and this excess amount shall be distributed to the other 
qualifying municipalities on a per capita basis in the same 
manner as the distribution made pursuant to subdivision 2, 
except that the qualifying municipality receiving an initial 
distribution when added to that received pursuant to sections 
273.138, 298.26, 298.28, and chapter 477A in excess of the 
qualifying municipality's levy limit base, shall not receive a 
distribution nor shall its index be used in computing the 
distribution pursuant to this clause.  The distributions to be 
received in the year in which the taxes are payable shall be 
compared to the levy limit base for that same year.  Upon 
completion of such determination, the commissioner of revenue 
shall certify to the chief clerical officer of each qualifying 
municipality the amount which will be distributed to such 
municipality from the taconite municipal aid account that year. 
    Sec. 14.  [APPROPRIATION.] 
    $20,000,000 is appropriated to the commissioner of natural 
resources.  Notwithstanding Minnesota Statutes, section 298.293 
or 298.294 or any other law, this appropriation is from the 
corpus of the northeast Minnesota economic protection fund.  
This money is available only as a loan guarantee for the 
smelting project using the COREX process and is contingent upon 
receipt by the commissioner of natural resources of sufficient 
funding from other sources to complete the project.  If the 
project is approved by the United States department of energy 
prior to December 31, 1987, this appropriation does not cancel 
but is available until June 30, 1992, or the project is 
completed or abandoned, whichever occurs earlier.  On July 1, 
1992, $20,000,000 is appropriated from the general fund, to be 
taken from the proceeds of the taconite occupation tax imposed 
under Minnesota Statutes, section 298.01, to the commissioner of 
natural resources to be used only to continue the loan guarantee 
or to be drawn down to cover a default according to this 
subdivision.  If the general fund appropriation is used to cover 
a default in the loan, there shall be repaid from the northeast 
Minnesota economic protection trust fund to the general fund the 
amount of the default.  Payments shall be made in ten equal 
annual installments, with the first payment made one year from 
the date of the default.  No interest shall be paid on these 
payments.  An amount sufficient to make the repayments is 
appropriated from the northeast Minnesota economic protection 
trust fund.  The money appropriated from the northeast Minnesota 
economic protection trust fund shall be spent only in or for the 
benefit of tax relief areas as defined in Minnesota Statutes, 
section 273.134. 
    Sec. 15.  [EFFECTIVE DATE.] 
    Sections 1, 10, 12, and 13 are effective for distributions 
in 1987 and subsequent years, except that the changes in 
paragraph 3 of section 298.28, subdivision 1, are effective for 
distributors in 1988 and subsequent years.  Sections 2, 3, and 4 
are effective for taxes levied in 1986, payable in 1987, and 
thereafter.  Sections 5 and 6 are effective for gross earnings 
derived after December 31, 1986.  Sections 7 and 8 are effective 
for purchases and use made after May 1, 1986, provided that the 
first refunds for construction materials and supplies due as a 
result of the exemption under section 8 may not be paid by the 
commissioner before July 15, 1987.  Except as otherwise 
provided, section 9 is effective for ores mined or produced 
after December 31, 1986. 
    Approved March 24, 1986