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

 

             Laws of Minnesota 1986, First Special Session 

                          CHAPTER 1-H.F.No. 1 
          An act relating to government in this state; updating 
          the income tax law to conform with federal tax law 
          changes; making administrative and technical changes 
          in the income tax law; providing for direct payments 
          of fire and police state aids; requiring a one-year 
          sales ratio study; changing dates for payments of 
          certain state aids; delaying date for payment of 
          second half taxes on agricultural property; 
          authorizing reciprocal agreements with other states 
          regarding interstate vehicles; requiring a report on 
          the sales ratio study; eliminating a durational 
          restriction on a special levy in Clearwater county; 
          providing for delay of certain aid payments and 
          altering computations; adjusting the computation and 
          payment of local government aids; expanding tax 
          clearance authority; expanding tax collection 
          authority of the department of revenue; authorizing 
          the department to file tax liens against homestead 
          property; increasing the rate of interest to be paid 
          on tax refunds; changing times for payment of certain 
          taxes on liquor, cigarettes, tobacco products, and 
          insurance premiums; imposing certain requirements on 
          liquor wholesalers; altering enterprise zone 
          provisions; providing for certain examinations; 
          delaying transfer of motor vehicle excise taxes; 
          reinstating the bottle tax; reducing the ethanol 
          credit and providing payments to ethanol producers; 
          adjusting income and asset criteria for recipients of 
          medical assistance; repealing the provision for 
          suspension of income tax indexing; making technical 
          changes in property tax and other miscellaneous tax 
          laws; transferring certain positions within the 
          department of natural resources; establishing 
          priorities for expenditure of additional revenues; 
          reducing certain appropriations for education with 
          certain conditions; adjusting complements; setting the 
          foundation formula allowance and the amount to be 
          raised by the basic maintenance mill rate; altering 
          certain education aid and levy formulas and 
          requirements; authorizing levies in certain school 
          districts; making changes in certain pension, 
          retirement, and social security provisions; limiting 
          eligibility for school bus driver endorsements; 
          providing for insurance coverage, expense allowances, 
          board duties, office location, class days, building 
          construction, approval on certain capital improvements 
          involving certain post-secondary education systems; 
          providing for community emergency response hazardous 
          substance protection; transferring certain funds 
          between agencies; requiring certain studies and 
          reports; imposing penalties; appropriating money; 
          amending Minnesota Statutes 1984, sections 15.38, 
          subdivision 3; 60A.15, subdivision 2; 60A.17, by 
          adding a subdivision; 69.021, subdivisions 4, 5, 7, 
          and 9; 69.031, subdivision 3; 69.54; 82.22, 
          subdivision 3; 82.27, by adding a subdivision; 
          121.901, subdivision 2; 123.71, subdivision 1; 
          124.195, subdivisions 3, 5, and by adding a 
          subdivision; 124.32, subdivision 1c; 124.573, 
          subdivision 3; 124.71, subdivision 2; 136.14; 148.10, 
          by adding a subdivision; 150A.08, by adding a 
          subdivision; 162.06, subdivision 1; 162.12, 
          subdivision 1; 270.12, subdivision 2; 270.69, by 
          adding a subdivision; 270.72, subdivisions 1, 2, and 
          3; 270A.03, subdivision 5; 273.072, subdivision 1; 
          273.1391, subdivision 3; 275.125, subdivision 9, and 
          by adding a subdivision; 276.09; 276.10; 276.11; 
          278.03; 279.01, as amended; 290.067, subdivision 2; 
          290.281, subdivision 5; 290.34, subdivision 2; 290.36; 
          290.50, subdivision 3; 290.53, subdivision 2; 290.56, 
          subdivision 3; 290.61; 290A.03, subdivision 8; 296.16, 
          subdivision 1; 296.17, subdivision 6, and by adding a 
          subdivision; 297.07, subdivisions 1 and 4; 297.23, 
          subdivision 1; 297.35, subdivisions 5 and 8; 297A.27, 
          by adding a subdivision; 297A.43; 297B.09, subdivision 
          2; 298.24, subdivision 1; 299F.21; 326.20, by adding a 
          subdivision; 364.09; and 477A.015; Minnesota Statutes 
          1985 Supplement, sections 15A.081, subdivision 8; 
          16A.15, subdivisions 1 and 6; 16A.1541; 60A.17, 
          subdivision 1a; 69.031, subdivision 1; 116C.63, 
          subdivision 4; 121.904, subdivision 4c; 124.155, 
          subdivision 2; 124.17, subdivision 1a; 124.195, 
          subdivision 11; 124.2131, subdivision 3; 124.2161, 
          subdivision 6; 124.2162, subdivision 2; 124.2163, 
          subdivision 2; 124.225, subdivisions 7b and 10; 
          124.245, subdivisions 1 and 3; 124.271, subdivision 
          2b; 124.573, subdivision 2; 124A.02, subdivisions 9 
          and 15; 124A.03, subdivision 1a; 129B.38, subdivision 
          1; 136C.07, subdivision 5a; 136C.35; 147.021, by 
          adding a subdivision; 256B.06, subdivision 1; 270.063; 
          270.69, subdivisions 2, 3, and 4; 270.76; 270.77; 
          273.11, subdivision 8; 273.124, subdivisions 6, 8, 9, 
          10, 11, and by adding a subdivision; 273.13, 
          subdivisions 15a, 26, 28, and 30; 273.1314, 
          subdivisions 6 and 16a, as amended; 273.136; 273.42, 
          subdivision 2; 274.19, subdivisions 1 and 8; 275.125, 
          subdivisions 8, 11a, and 11c; 278.05, subdivision 5; 
          279.06; 287.12; 287.29, subdivision 1; 290.01, 
          subdivision 20; 290.06, subdivision 3g; 290.068, 
          subdivision 3; 290.079, subdivision 1; 290.089, 
          subdivision 3; 290.09, subdivision 7; 290.091, 
          subdivision 2; 290.095, subdivisions 9 and 11; 290.10; 
          290.12, subdivision 2; 290.13, subdivision 1; 290.132, 
          subdivision 1; 290.14; 290.16, subdivisions 7 and 15; 
          290.17, subdivision 2; 290.21, subdivisions 4 and 8; 
          290.41, subdivision 1; 290.92, subdivision 2a; 290.93, 
          subdivision 10; 290A.03, subdivisions 3, 6, and 13; 
          296.02, subdivision 7; 296.22, subdivision 13; 297.35, 
          subdivision 1; 297C.02, by adding a subdivision; 
          297C.03, subdivision 1; 297C.04; 297C.05, subdivision 
          2; 298.28, subdivision 1; 354.43, subdivision 3; 
          354A.12, subdivision 2; 355.208; 355.287; 355.46, 
          subdivision 3; 477A.011, subdivisions 10 and 14; 
          477A.012; 477A.013; and 609.101; Laws 1985, chapter 
          289, section 5, subdivision 2; and section 7; Laws 
          1985, First Special Session chapter 12, article 1, 
          section 36, subdivision 3; article 2, section 15, 
          subdivision 2; article 3, section 28, subdivisions 9 
          and 10; article 4, section 11, subdivision 6; article 
          5, section 10, subdivisions 2 and 4; article 6, 
          section 28, subdivisions 11, 16, 17, and 20, article 
          8, section 60, subdivisions 1 and 4; section 62, 
          subdivisions 2, 3, 4, 6, 8, 9, 12, 13, 14, 15, and 17; 
          section 63, subdivisions 2 and 3; section 64, 
          subdivision 2; article 9, section 3, subdivisions 2 
          and 3; article 11, section 21, subdivision 3; chapter 
          14, article 11, section 13; proposing coding for new 
          law in Minnesota Statutes, chapters 41A; 135A; 256; 
          270; 276; 297A; and 299F; 458; repealing Minnesota 
          Statutes 1984, sections 69.031, subdivision 4; 121.495;
          124A.031, subdivision 2; 136.063; 270.72, subdivision 
          5; 275.125, subdivision 16; 290.06, subdivision 15; 
          290.39, subdivision 1a; and 290A.04, subdivision 2f; 
          Minnesota Statutes 1985 Supplement, sections 16A.154; 
          124.245, subdivisions 2 and 5; 129B.38; 275.125, 
          subdivision 11b; and 290.06, subdivision 2f; Laws 
          1985, First Special Session chapter 14, article 21, 
          sections 16 and 17. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                               ARTICLE 1 

                           INCOME TAX UPDATE 
    Section 1.  Minnesota Statutes 1985 Supplement, section 
290.01, subdivision 20, 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, 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, Public Law Number 96-223.  The 
provisions of Public Law Number 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. 
     (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. 
         (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. 
    (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 sections 
13, 17, 25(b), 31, 32, 41 to 43, 52, 55, 56, 71 to 74, 77, 81, 
82, 91, 92, 94, 101 to 103, 105 to 108, 111 to 113, 147(c), 171, 
172, 174, 175, 179(a), 221, 223, 224, 421(b), 432, 481, 491, 
512, 522 to 524, 554 to 557, 561, 611(a), 621 to 623, 626 to 
628, 711(c), 712(d), 713(b), (e), (g), and (h), 721(a), (b), 
(d), (g), (i), (o), (p), (r), (t), and (w), 722(e), 1001, 1026, 
1061 to 1064, 1066, 1076, 1078, and 2638(b) of the Deficit 
Reduction Act of 1984, Public Law Number 98-369, and section 1 
of Public Law Number 98-611 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.  The provisions of sections 101, 102, 
103, 201, and 202 of Public Law Number 99-121 shall be effective 
at the same time that they become effective for federal income 
tax purposes.  
    (vi) The Internal Revenue Code of 1954, as amended through 
December 31, 1985, shall be in effect for taxable years 
beginning after December 31, 1985. 
    References to the Internal Revenue Code of 1954 in 
subdivisions 20a, 20b, 20e, and 20f mean the code in effect for 
the purpose of defining gross income for the applicable taxable 
year.  
    Sec. 2.  Minnesota Statutes 1985 Supplement, section 
290.079, subdivision 1, is amended to read: 
    Subdivision 1.  [AMOUNT CONSTITUTING INTEREST.] For 
purposes of this chapter, in the case of any contract for the 
sale or exchange of property there shall be treated as interest 
that part of a payment to which section 483 of the Internal 
Revenue Code of 1954, as amended through December 31, 1984 1985, 
applies.  The treatment of loans with below-market interest 
rates shall be the same as is provided in section 7872 of the 
Internal Revenue Code of 1954, as amended through December 31, 
1984 1985. 
    Sec. 3.  Minnesota Statutes 1985 Supplement, 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, 
1984 1985, 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 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, 1984 1985, 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, 1984 1985, 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, 1984 1985:  
    (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 or, 18, or 19 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), (f)(12), or (j)(1) or a method provided in 
section 168(e)(2) of the Internal Revenue Code of 1954, as 
amended through December 31, 1984 1985.  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, 1984 1985 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 and, 18, and 19 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, 1984 1985, 
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, 1984 1985, 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, 1984 1985.  
    The provisions of section 168(i)(4) of the Internal Revenue 
Code of 1954, as amended through December 31, 1984 1985 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 provisions of section 280F of the Internal Revenue Code 
of 1954, as amended through May 25 December 31, 1985, shall 
apply to limit the depreciation deductions, (including the first 
year depreciation deduction provided in paragraph (B)), for 
luxury automobiles and other property as provided in that 
section, and provided that if that section applies, the taxpayer 
shall be allowed to deduct the same amount of depreciation as 
was deducted for federal income tax purposes. 
      (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, 1984 1985.  
    Sec. 4.  Minnesota Statutes 1985 Supplement, section 
290.091, subdivision 2, is amended to read: 
    Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
this section, the following 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) 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.  
    (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.  
    (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.  
    (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. 
    (c) "Internal Revenue Code" means the Internal Revenue Code 
of 1954, as amended through December 31, 1984 1985. 
    (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.  
    Sec. 5.  Minnesota Statutes 1985 Supplement, section 
290.132, subdivision 1, is amended to read: 
    Subdivision 1.  [TAXABILITY OF CORPORATION ON 
DISTRIBUTION.] No gain or loss shall be recognized to a 
corporation on the distribution, with respect to its stock as 
provided in section 311 of the Internal Revenue Code of 1954, as 
amended through December 31, 1984 1985. 
    The effect on earnings and profits shall be determined 
according to the provisions of section 312 of the Internal 
Revenue Code of 1954, as amended through December 31, 1984 1985. 
However, when determining earnings and profits in section 312(f) 
and (g), the date December 31, 1932 shall be substituted for 
February 28, 1913, and January 1, 1933 shall be substituted for 
March 1, 1913.  
    Sec. 6.  Minnesota Statutes 1985 Supplement, section 
290.16, subdivision 7, is amended to read: 
    Subd. 7.  [BONDS, OTHER EVIDENCES OF INDEBTEDNESS.] For the 
purpose of this section, the treatment of bonds and other debt 
instruments shall be governed by the provisions of sections 1271 
to 1288 of the Internal Revenue Code of 1954, as amended through 
December 31, 1984 1985. 
    Sec. 7.  Minnesota Statutes 1985 Supplement, section 
290.16, subdivision 15, is amended to read: 
    Subd. 15.  [GAIN FROM DISPOSITIONS OF CERTAIN DEPRECIABLE 
PROPERTY.] For purposes of this subdivision "depreciable 
property" shall mean "Section 1245 property" or "Section 1245 
recovery property" as those phrases are defined in section 
1245(a) (3) or (5) of the Internal Revenue Code of 1954, as 
amended through December 31, 1984 1985. 
    In determining net income of any corporate taxpayer, the 
gain realized from the disposition of "depreciable property" 
shall be treated in the same manner as is provided by section 
1245 of the Internal Revenue Code of 1954, as amended through 
December 31, 1984 1985 and regulations adopted pursuant thereto 
except that the determination shall be made using the basis 
computed under this chapter. 
    Sec. 8.  Minnesota Statutes 1985 Supplement, section 
290A.03, subdivision 3, 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 May 25 December 
31, 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 section 290.01, subdivision 20a, clauses (1), (2), (3), and 
(4); 
    (ii) all nontaxable income; 
    (iii) recognized net long-term capital gains; 
    (iv) dividends excluded from federal adjusted gross income 
under section 116 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;  
     (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) 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. 9.  [INSTRUCTIONS TO REVISOR.] 
    In the next edition of Minnesota Statutes, the revisor of 
statutes shall substitute the phrase "Internal Revenue Code of 
1954, as amended through December 31, 1985" for the words 
"Internal Revenue Code of 1954, as amended through December 31, 
1984" or "Internal Revenue Code of 1954, as amended through May 
25, 1985" wherever the phrase occurs in chapter 290, except 
sections 290.01, subdivision 20, and 290.068. 
    Sec. 10.  [EFFECTIVE DATE.] 
     Section 1 is effective for taxable years beginning after 
December 31, 1985, except as otherwise provided in clause (v) of 
that section.  Sections 2 to 7 are effective at the same time as 
the federal changes are effective in 1985, as provided in Public 
Law Number 99-121.  Section 8 is effective for claims based on 
rent paid in 1985 and thereafter and property taxes payable in 
1986 and thereafter.  Section 9 is effective for taxable years 
beginning after December 31, 1985. 

                              ARTICLE 2   

                       INCOME TAX ADMINISTRATIVE 
    Section 1.  Minnesota Statutes 1985 Supplement, 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 of the property is its adjusted basis for federal income 
tax purposes, except as otherwise provided in this chapter.  In 
addition to other adjustments provided in this chapter, the 
adjusted basis of property for federal income tax purposes shall 
be increased by the amount of accelerated cost recovery system 
depreciation which was allowed for federal income tax purposes 
but not allowed for Minnesota income tax purposes under sections 
290.01, subdivision 20f or 290.09, subdivision 7, paragraph 
(A)(c).  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.  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 the basis of 
the property is its adjusted basis for federal income tax 
purposes, except as otherwise provided in this chapter. 
     Sec. 2.  Minnesota Statutes 1985 Supplement, section 
290.17, subdivision 2, is amended to read: 
    Subd. 2.  [OTHER TAXPAYERS.] In the case of an individual 
who is not a full year resident, this subdivision applies to 
determine what income is assignable to Minnesota for purposes of 
determining the numerator of the fraction used in section 
290.06, subdivision 2c.  In the case of taxpayers not subject to 
the provisions of subdivision 1, items of gross income shall be 
assigned to this state or other states or countries in 
accordance with the following principles: 
    (1)(a) The entire income of all resident or domestic 
taxpayers from compensation for labor or personal services, or 
from a business consisting principally of the performance of 
personal or professional services, shall be assigned to this 
state, and the income of nonresident taxpayers from such sources 
shall be assigned to this state if, and to the extent that, the 
labor or services are performed within it; all other income from 
such sources shall be treated as income from sources without 
this state.  
    (b) In the case of an individual who is a nonresident of 
Minnesota and who is an athlete or entertainer, income from 
compensation for labor or personal services performed within 
this state shall be determined in the following manner.  
    (i) The amount of income to be assigned to Minnesota for an 
individual who is a nonresident salaried athletic team employee 
shall be determined by using a fraction in which the denominator 
contains the total number of days in which the individual is 
under a duty to perform for the employer, and the numerator is 
the total number of those days spent in Minnesota.  In order to 
eliminate the need to file state or provincial income tax 
returns in several states or provinces, Minnesota will exclude 
from income any income assigned to Minnesota under the 
provisions of this clause for a nonresident athlete who is 
employed by an athletic team whose operations are not based in 
this state and for a nonresident salaried entertainer who is 
employed by an entertainment organization whose operations are 
not based in this state if the state or province in which the 
athletic team or entertainment organization is based provides a 
similar income exclusion.  If the state or province in which the 
athletic team's or the entertainment organization's operations 
are based does not have an income tax on an individual's 
personal service income, it will be deemed that that state or 
province has a similar income exclusion.  As used in the 
preceding sentence, the term "province" means a province of 
Canada.  
    (ii) The amount of income to be assigned to Minnesota for 
an individual who is a nonresident, and who is an athlete or 
entertainer not listed in clause (i), or who is an entertainer, 
for that person's athletic or entertainment performance in 
Minnesota shall be determined by assigning to this state all 
income from performances or athletic contests in this state.  
    (2) Income from the operation of a farm shall be assigned 
to this state if the farm is located within this state and to 
other states only if the farm is not located in this state.  
Income from winnings on Minnesota pari-mutuel betting tickets 
shall be assigned to this state.  Income and gains received from 
tangible property not employed in the business of the recipient 
of such income or gains, and from tangible property employed in 
the business of such recipient if such business consists 
principally of the holding of such property and the collection 
of the income and gains therefrom, shall be assigned to this 
state if such property has a situs within it, and to other 
states only if it has no situs in this state.  Income or gains 
from intangible personal property not employed in the business 
of the recipient of such income or gains, and from intangible 
personal property employed in the business of such recipient if 
such business consists principally of the holding of such 
property and the collection of the income and gains therefrom, 
wherever held, whether in trust, or otherwise, shall be assigned 
to this state if the recipient thereof is domiciled within this 
state or is a resident trust or estate. 
        (3) Income derived from carrying on a trade or business, 
including in the case of a business owned by natural persons the 
income imputable to the owner for his services and the use of 
his property therein, shall be assigned to this state if the 
trade or business is conducted wholly within this state, and to 
other states if conducted wholly without this state.  This 
provision shall not apply to business income subject to the 
provisions of clause (1). 
        (4) When a trade or business is carried on partly within 
and partly without this state, the entire income derived from 
such trade or business, including income from intangible 
property employed in such business and including, in the case of 
a business owned by natural persons, the income imputable to the 
owner for his services and the use of his property therein, 
shall be governed, except as otherwise provided in sections 
290.35 and 290.36, by the provisions of section 290.19, 
notwithstanding any provisions of this subdivision to the 
contrary.  This shall not apply to business income subject to 
the provisions of clause (1), nor shall it apply to income from 
the operation of a farm which is subject to the provisions of 
clause (2).  For the purposes of this clause, a trade or 
business located in Minnesota is carried on partly within and 
partly without this state if tangible personal property is sold 
by such trade or business and delivered or shipped to a 
purchaser located outside the state of Minnesota. 
     If the trade or business carried on wholly or partly in 
Minnesota is part of a unitary business, the entire income of 
that unitary business shall be subject to apportionment under 
section 290.19 except for business income subject to the 
provisions of clause (1) and farm income subject to the 
provisions of clause (2).  The term "unitary business" shall 
mean business activities or operations which are of mutual 
benefit, dependent upon, or contributory to one another, 
individually or as a group.  Unity shall be presumed whenever 
there is unity of ownership, operation, and use, evidenced by 
centralized management or executive force, centralized 
purchasing, advertising, accounting, or other controlled 
interaction but the absence of these centralized activities will 
not necessarily evidence a nonunitary business.  Unity of 
ownership will not be deemed to exist when a corporation is 
involved unless that corporation is a member of a group of two 
or more corporations more than 50 percent of the voting stock of 
each member of the group is directly or indirectly owned by a 
common owner or by common owners, either corporate or 
noncorporate, or by one or more of the member corporations of 
the group.  
       The entire income of a unitary business shall be subject to 
apportionment as provided in section 290.19.  None of the income 
of a unitary business shall be considered as derived from any 
particular source and none shall be allocated to any particular 
place except as provided by the applicable apportionment formula.
       In determining whether or not intangible property is 
employed in a unitary business carried on partly within and 
partly without this state so that income derived therefrom is 
subject to apportionment under section 290.19 the following 
rules and guidelines shall apply. 
       (a) Intangible property is employed in a business if the 
business entity owning intangible property holds it as a means 
of furthering the business operation of which a part is located 
within the territorial confines of this state. 
    (b) Where a business operation conducted in Minnesota, is 
owned by a business entity which carries on business activity 
outside of the state different in kind from that conducted 
within this state, and such other business is conducted entirely 
outside the state, it will be presumed that the two business 
operations are unitary in nature, interrelated, connected and 
interdependent unless it can be shown to the contrary. 
    (5) For purposes of this section, amounts received by a 
nonresident from the United States, its agencies or 
instrumentalities, the Federal Reserve Bank, the state of 
Minnesota or any of its political or governmental subdivisions, 
or a Minnesota volunteer fireman's relief association, by way of 
payment as a pension, public employee retirement benefit, or any 
combination thereof, or as a retirement or survivor's benefit 
made from a plan qualifying under section 401, 403, 404, 408, or 
409 of the Internal Revenue Code of 1954, as amended through 
December 31, 1984, are not considered income derived from 
carrying on a trade or business or from performing personal or 
professional services in Minnesota, and are not taxable under 
this chapter. 
    (6) All other items of gross income shall be assigned to 
the taxpayer's domicile. 
    Sec. 3.  Minnesota Statutes 1985 Supplement, section 
290.21, subdivision 4, is amended to read: 
    Subd. 4.  (a) 85 percent of dividends received by a 
corporation during the taxable year from another corporation, 
when the corporate stock with respect to which dividends are 
paid does not constitute the stock in trade of the taxpayer or 
would not be included in the inventory of the taxpayer, or does 
not constitute property held by the taxpayer primarily for sale 
to customers in the ordinary course of his trade or business, or 
when the trade or business of the taxpayer does not consist 
principally of the holding of the stocks and the collection of 
the income and gains therefrom.  The remaining 15 percent shall 
be allowed if the recipient owns 80 percent or more of all the 
voting stock of the other corporation and the dividends were 
paid from income arising out of business done in this state by 
the corporation paying the dividends.  If the dividends were 
declared from income arising out of business done within and 
without this state, then a proportion of the remainder shall be 
allowed as a deduction.  The proportion must be that which the 
amount of the taxable net income of the corporation paying the 
dividends assignable or allocable to this state bears to the 
entire net income of the corporation.  The amounts must be 
determined by the returns under this chapter of the corporation 
paying the dividends for the taxable year preceding their 
distribution.  The burden is on the taxpayer to show that the 
amount of remainder claimed as a deduction has been received 
from income arising out of business done in this state.  
    (b) If the trade or business of the taxpayer consists 
principally of the holding of the stocks and the collection of 
the income and gains therefrom, dividends received by a 
corporation during the taxable year from another corporation, if 
the recipient owns 80 percent or more of all the voting stock of 
the other corporation, from income arising out of business done 
in this state by the corporation paying the dividends.  If the 
dividends were declared from income arising out of business done 
within and without this state, then a proportion of the 
dividends shall be allowed as a deduction.  The proportion must 
be that which the amount of the taxable net income of the 
corporation paying the dividends assignable or allocable to this 
state bears to the entire net income of the corporation.  The 
amounts must be determined by the returns under this chapter of 
the corporation paying the dividends for the taxable year 
preceding their distribution.  The burden is on the taxpayer to 
show that the amount of dividends claimed as a deduction has 
been received from income arising out of business done in this 
state.  
    (c) The dividend deduction provided in this subdivision 
shall be allowed only with respect to dividends that are 
included in a corporation's Minnesota taxable net income for the 
taxable year. 
    The dividend deduction provided in this subdivision does 
not apply to a dividend from a corporation which, for the 
taxable year of the corporation in which the distribution is 
made or for the next preceding taxable year of the corporation, 
is a corporation exempt from tax under section 501 of the 
Internal Revenue Code of 1954, as amended through December 31, 
1984.  
     The dividend deduction provided in this subdivision applies 
to the amount of regulated investment company dividends only to 
the extent determined under section 854(b) of the Internal 
Revenue Code of 1954, as amended through December 31, 1984. 
     The dividend deduction provided in this subdivision shall 
not be allowed with respect to any dividend for which a 
deduction is not allowed under the provisions of section 246(c) 
of the Internal Revenue Code of 1954, as amended through 
December 31, 1984.  
     (d) If dividends received by a corporation that does not 
have nexus with Minnesota under the provisions of Public Law 
Number 86-272 are included as income on the return of an 
affiliated corporation permitted or required to file a combined 
report under section 290.34, subdivision 2, then for purposes of 
this subdivision the determination as to whether the trade or 
business of the corporation consists principally of the holding 
of stocks and the collection of income and gains therefrom shall 
be made with reference to the trade or business of the 
affiliated corporation having a nexus with Minnesota. 
     (e) Dividends received by a corporation from another 
corporation which is organized under the laws of a foreign 
country or a political subdivision of a foreign country, if the 
dividends are paid from income arising from sources without the 
United States, the commonwealth of Puerto Rico, and the 
possessions of the United States.  The deduction provided by 
this clause does not apply if the corporate stock with respect 
to which dividends are paid constitutes the stock in trade of 
the taxpayer, or would be included in the inventory of the 
taxpayer, or constitutes property held by the taxpayer primarily 
for sale to customers in the ordinary course of the taxpayer's 
trade or business, or if the trade or business of the taxpayer 
consists principally of the holding of stocks and the collection 
of the income or gains therefrom.  No dividend may be deducted 
under this clause if it is deducted under clause (a).  
    Sec. 4.  Minnesota Statutes 1984, section 290.36, is 
amended to read: 
    290.36 [INVESTMENT COMPANIES; REPORT OF NET INCOME; 
COMPUTATION OF AMOUNT OF INCOME ALLOCABLE TO STATE.] 
    The taxable net income of investment companies shall be 
computed and be exclusively as follows: 
    Each investment company transacting business as such in 
this state shall report to the commissioner the net income 
returned by the company for the taxable year to the United 
States under the provisions of the Internal Revenue Code of 
1954, as amended through December 31, 1983, less the credits 
provided therein and subject to the adjustments required by this 
chapter.  The commissioner shall compute therefrom the taxable 
net income of the investment company by assigning to this state 
that proportion of such net income, less such credits which the 
aggregate of the gross payments collected by the company during 
the taxable year from old and new business upon investment 
contracts issued by the company and held by residents of this 
state, bears to the total amount of the gross payments collected 
during such year by the company from such business upon 
investment contracts issued by the company and held by persons 
residing within the state and elsewhere. 
    As used in this section, the term "investment company" 
means any person, co-partnership, association, or corporation, 
whether local or foreign, coming within the purview of section 
54.26, and who or which is registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1 and following), and who or 
which solicits or receives payments to be made to himself or 
itself and which issues therefor, or has issued therefor and has 
or shall have outstanding so-called bonds, shares, coupons, 
certificates of membership, or other evidences of obligation or 
agreement or pretended agreement to return to the holders or 
owners thereof money or anything of value at some future date; 
and as to whom the gross payments received during the taxable 
year in question upon outstanding investment contracts, plus 
interest and dividends earned on investment contracts determined 
by prorating the total dividends and interest for the taxable 
year in question in the same proportion that certificate 
reserves as defined by the Investment Company Act of 1940 is to 
total assets, shall be at least 50 percent of the company's 
gross payments upon investment contracts plus gross income from 
all other sources except dividends from subsidiaries for the 
taxable year in question.  The term "investment contract" shall 
mean any such so-called bonds, shares, coupons, certificates of 
membership, or other evidences of obligation or agreement or 
pretended agreement issued by an investment company.  
    Sec. 5.  Minnesota Statutes 1984, section 290.56, 
subdivision 3, is amended to read: 
    Subd. 3.  [FAILURE TO REPORT CHANGE OR CORRECTION OF 
FEDERAL RETURN.] If a taxpayer shall fail to report a change or 
correction or renegotiation by the Commissioner of Internal 
Revenue or other officer of the United States or other competent 
authority or shall fail to file a copy of an amended return 
within 90 days as required by subdivision 2, the commissioner 
may, within six years thereafter, recompute the tax, including a 
refundment thereof, based upon such information as may be 
available to him, notwithstanding any period of limitations to 
the contrary.  
    If a taxpayer reports the change, correction, or 
renegotiation, or files the amended return after the 90-day 
period required by subdivision 2 has expired, the time limit for 
the commissioner to recompute and reassess the tax due under 
this chapter, including making a refund, is the time limit 
provided in subdivision 4 determined from the date the report or 
amended return was filed with the commissioner. 
    Sec. 6.  [EFFECTIVE DATE.] 
    Section 1 is effective for taxable years beginning after 
December 31, 1980.  Section 3 is effective for taxable years 
beginning after June 30, 1985.  Sections 2 and 4 are effective 
for taxable years beginning after December 31, 1985.  Section 5 
is effective for reports or returns filed after the day of final 
enactment. 

                               ARTICLE 3

                          INCOME TAX TECHNICAL
    Section 1.  Minnesota Statutes 1985 Supplement, section 
270.77, is amended to read: 
    270.77 [SUBSTANTIAL UNDERSTATEMENT OF LIABILITY.] 
    (a) The commissioner of revenue shall impose a penalty for 
substantial understatement of liability of any tax payable to 
the commissioner.  Except as otherwise provided in this section, 
the penalty must be determined under section 6661 of the 
Internal Revenue Code of 1954, as amended through December 31, 
1984.  
    (b) The provisions of section 6661 (b)(3) of the Internal 
Revenue Code of 1954, as amended through December 31, 1984 do 
not apply.  
    (c) The penalty is not limited to taxes imposed by chapter 
290.  
    (d) A substantial understatement of liability for a tax not 
imposed by chapter 290 is an understatement that exceeds ten 
percent of the tax required to be shown on the return or $5,000, 
whichever is greater.  There must be added to the tax an amount 
equal to ten percent of the amount of any underpayment 
attributable to the understatement.  There is a substantial 
understatement of tax for the period if the amount of the 
understatement for the period exceeds the greater of:  (1) ten 
percent of the tax required to be shown on the return for the 
period; or (2)(a) $10,000 in the case of a corporation other 
than an S corporation as defined in section 290.9725 when the 
tax is imposed by chapter 290, or (b) $5,000 in the case of any 
other taxpayer, and in the case of a corporation any tax not 
imposed by chapter 290.  The term "understatement" means the 
excess of the amount of the tax required to be shown on the 
return for the period, over the amount of the tax imposed which 
is shown on the return.  The amount of the understatement shall 
be reduced by that portion of the understatement which is 
attributable to the tax treatment of any item by the taxpayer if 
there is or was substantial authority for the treatment, or any 
item with respect to which the relevant facts affecting the 
item's tax treatment are adequately disclosed in the return or 
in a statement attached to the return.  The special rules in 
cases involving tax shelters provided in section 6661(b)(2)(C) 
of the Internal Revenue Code of 1954, as amended through 
December 31, 1985, shall apply and shall apply to a tax shelter 
the principal purpose of which is the avoidance or evasion of 
state taxes.  The commissioner may abate all or any part of the 
addition to the tax provided by this section on a showing by the 
taxpayer that there was reasonable cause for the understatement, 
or part of it, and that the taxpayer acted in good faith.  
    Sec. 2.  Minnesota Statutes 1985 Supplement, section 
290.06, subdivision 3g, is amended to read: 
    Subd. 3g.  [INFLATION ADJUSTMENT OF CREDITS.] For taxable 
years beginning after December 31, 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 by 
the same percentage provided in subdivision 2d for the expansion 
of the tax rate brackets.  The resulting amount must be rounded 
to the nearest whole dollar amount. 
    Sec. 3.  Minnesota Statutes 1984, section 290.067, 
subdivision 2, is amended to read: 
    Subd. 2.  [LIMITATIONS.] The credit for expenses incurred 
for the care of each dependent shall not exceed $720 in any 
taxable year, and the total credit for all dependents of a 
claimant shall not exceed $1,440 in a taxable year.  The total 
credit shall be reduced according to the amount of the combined 
federal adjusted gross income, plus the ordinary income portion 
of any lump sum distribution under section 402(e) of the 
Internal Revenue Code of 1954, as amended through December 31, 
1983, of the claimant and his spouse, if any, as follows:  
    income up to $10,000, $720 maximum for one dependent, 
$1,440 for all dependents;  
    income of $10,001 to $11,000, $660 maximum for one 
dependent, $1,320 for all dependents;  
    income over $11,000, the maximum credit for one dependent 
shall be reduced by $10 for every $200 of additional income, $20 
for all dependents;  
    $24,001 and over, no credit.  
    A married claimant shall file his income tax return for the 
year for which he claims the credit either jointly or separately 
on one form with his spouse.  In the case of a married claimant 
only one spouse may claim the credit. 
    The commissioner shall construct and make available to 
taxpayers tables showing the amount of the credit at various 
levels of income and expenses.  The tables shall follow the 
schedule contained in this subdivision, except that the 
commissioner may graduate the transitions between expenses and 
income brackets.  
    Sec. 4.  Minnesota Statutes 1985 Supplement, 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 a corporation which is a partner in a 
partnership, 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 the corporation's interest in the trade or business or 
entity) equal to the amount of tax attributable to that portion 
of taxable income which is allocable or apportionable to the 
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 45th month following the end of the taxable year in which 
the research and experimental expenditure credit arises which 
results in the carryback, plus any extension of time granted for 
filing the return, but only if the return was filed within the 
extended time.  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 45th month following the end of the subsequent taxable year, 
plus any extension of time granted for filing the return, but 
only if the return was filed within the extended time.  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. 5.  Minnesota Statutes 1985 Supplement, 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 gross income of the taxpayer or the joint gross income of a 
married couple filing a joint return, up to a maximum deduction 
of $2,400.  
    In the case of a 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 by the same manner percentage as provided in 
section 290.06, subdivision 2d, for the expansion of the 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, and the 
personal credits.  The tax of any individual taxpayer whose 
gross income is less than $20,000 an amount determined by the 
commissioner 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. 6.  Minnesota Statutes 1985 Supplement, section 
290.091, subdivision 2, is amended to read: 
    Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
this section, the following 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; 
    (3) the amount of interest income as provided by section 
290.01, subdivision 20a, clauses (1), (3), and (4); less the sum 
of 
    (i) interest income as defined in section 290.01, 
subdivision 20b, clause (1); and 
    (ii) an overpayment of state income tax as provided by 
section 290.01, subdivision 20b, clause (4); and 
    (iii) 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 and reduced by the deductions allowed 
under sections 642(c), 651(a), and 661(a) 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) 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.  
    (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.  
    (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.  
    (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. 
    (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 and section 
290.032), reduced by the sum of the nonrefundable credits 
allowed under this chapter.  
    Sec. 7.  Minnesota Statutes 1985 Supplement, 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 1985, 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.," plus any 
extension of time granted for filing the return, but only if the 
return was filed within the extended time.  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. 8.  Minnesota Statutes 1985 Supplement, 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 for estates and trusts 
as required by section 290.17, subdivision 2. 
    (2) 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. 
    (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 (3). 
    (4) Interest, taxes, and other expenses not allowed under 
section 290.10, clause (9), for estates and trusts. 
     (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. 
     (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. 
    Sec. 9.  Minnesota Statutes 1985 Supplement, 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 persons as defined and as 
provided in section 267 of the Internal Revenue Code; 
    (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; 
    (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) 60 percent of the amount of taxes imposed on 
self-employment income under section 1401 of the Internal 
Revenue Code.  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; 
     (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. 10.  Minnesota Statutes 1985 Supplement, section 
290.13, subdivision 1, is amended to read: 
    Subdivision 1.  [TRANSACTIONS IN WHICH NO GAIN OR LOSS IS 
RECOGNIZED.] Gain or loss from transactions described in section 
1031, 1032, 1035, 1036, or 1042 of the Internal Revenue Code of 
1954, as amended through December 31, 1984 1985, shall be 
recognized at the time and in the manner, including the basis 
computation, provided in those sections. 
    Sec. 11.  Minnesota Statutes 1985 Supplement, 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 its adjusted basis for 
federal income tax purposes, 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 nonexercise 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 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. 
    (1) Corporations, partnerships, or individuals subject to 
the occupation tax under Minnesota Statutes, chapter 298, shall 
use the occupation tax basis; 
    (7) (2) The basis of property subject to the provisions of 
section 1034 of the Internal Revenue Code of 1954, as amended 
through December 31, 1983 1985 (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. 12.  Minnesota Statutes 1985 Supplement, section 
290.21, subdivision 4, is amended to read: 
    Subd. 4.  (a) 85 percent of dividends received by a 
corporation during the taxable year from another corporation, 
when the corporate stock with respect to which dividends are 
paid does not constitute the stock in trade of the taxpayer or 
would not be included in the inventory of the taxpayer, or does 
not constitute property held by the taxpayer primarily for sale 
to customers in the ordinary course of his trade or business, or 
when the trade or business of the taxpayer does not consist 
principally of the holding of the stocks and the collection of 
the income and gains therefrom.  The remaining 15 percent shall 
be allowed if the recipient owns 80 percent or more of all the 
voting stock of the other corporation.  
    (b) If the trade or business of the taxpayer consists 
principally of the holding of the stocks and the collection of 
the income and gains therefrom, dividends received by a 
corporation during the taxable year from another corporation, if 
the recipient owns 80 percent or more of all the voting stock of 
the other corporation.  
    (c) The dividend deduction provided in this subdivision 
shall be allowed only with respect to dividends that are 
included in a corporation's Minnesota taxable net income for the 
taxable year. 
    The dividend deduction provided in this subdivision does 
not apply to a dividend from a corporation which, for the 
taxable year of the corporation in which the distribution is 
made or for the next preceding taxable year of the corporation, 
is a corporation exempt from tax under section 501 of the 
Internal Revenue Code of 1954, as amended through December 31, 
1984.  
     The dividend deduction provided in this subdivision applies 
to the amount of regulated investment company dividends only to 
the extent determined under section 854(b) of the Internal 
Revenue Code of 1954, as amended through December 31, 1984. 
     The dividend deduction provided in this subdivision shall 
not be allowed with respect to any dividend for which a 
deduction is not allowed under the provisions of section 246(c) 
of the Internal Revenue Code of 1954, as amended through 
December 31, 1984.  
     (d) If dividends received by a corporation that does not 
have nexus with Minnesota under the provisions of Public Law 
Number 86-272 are included as income on the return of an 
affiliated corporation permitted or required to file a combined 
report under section 290.34, subdivision 2, then for purposes of 
this subdivision the determination as to whether the trade or 
business of the corporation consists principally of the holding 
of stocks and the collection of income and gains therefrom shall 
be made with reference to the trade or business of the 
affiliated corporation having a nexus with Minnesota. 
     (e) Dividends received by a corporation from another 
corporation which is organized under the laws of a foreign 
country or a political subdivision of a foreign country, if the 
dividends are paid from income arising from sources without the 
United States, the commonwealth of Puerto Rico, and the 
possessions of the United States.  The deduction provided by 
this clause does not apply if the corporate stock with respect 
to which dividends are paid constitutes the stock in trade of 
the taxpayer, or would be included in the inventory of the 
taxpayer, or constitutes property held by the taxpayer primarily 
for sale to customers in the ordinary course of the taxpayer's 
trade or business, or if the trade or business of the taxpayer 
consists principally of the holding of stocks and the collection 
of the income or gains therefrom, or if the dividends are paid 
by a FSC as defined in section 922 of the Internal Revenue Code 
of 1954, as amended through December 31, 1985.  No dividend may 
be deducted under this clause if it is deducted under clause (a).
    Sec. 13.  Minnesota Statutes 1985 Supplement, 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.  A corporation's gross income for purposes of 
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, or a FSC as 
defined in section 922 of the Internal Revenue Code of 1954, as 
amended through December 31, 1985.  
    (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. 14.  Minnesota Statutes 1984, section 290.281, 
subdivision 5, is amended to read: 
    Subd. 5.  [RETURN REQUIRED OF BANK.] Every bank maintaining 
a common trust fund shall make a return for each taxable year, 
stating specifically, with respect to such fund, the items of 
gross income and deductions allowed by this section, and shall 
include in the return the names and addresses of the 
participants who would be entitled to share in the net income if 
distributed and the amount of the proportionate share of each 
participant.  The return shall be sworn to as in the case of a 
return required to be filed by the bank under section 290.361.  
    Sec. 15.  Minnesota Statutes 1984, section 290.34, 
subdivision 2, is amended to read: 
    Subd. 2.  [AFFILIATED OR RELATED CORPORATIONS, COMBINED 
REPORT.] When a corporation which is required to file an income 
tax return is affiliated with or related to any other 
corporation through stock ownership by the same interests or as 
parent or subsidiary corporations, or has its income regulated 
through contract or other arrangement, the commissioner of 
revenue may permit or require such combined report as, in his 
opinion, is necessary in order to determine the taxable net 
income of any one of the affiliated or related corporations.  
For purposes of computing either the arithmetic average or 
weighted apportionment formulas under section 290.19, 
subdivision 1 for each corporation involved, the numerator of 
the fraction shall be that corporation's sales, property, and 
payroll in Minnesota and the denominator shall be the total 
sales, payroll, and property of all the corporations shown on 
the combined report.  The combined report shall reflect the 
income of the entire unitary business as provided in section 
290.17, subdivision 2, clause (4).  The combined report shall 
reflect income only from corporations created or organized in 
the United States or under the laws of the United States or of 
any state, the District of Columbia, the commonwealth of Puerto 
Rico, any possession of the United States, or any political 
subdivision of any of the foregoing and from a FSC as defined in 
section 922 of the Internal Revenue Code of 1954, as amended 
through December 31, 1985.  All intercompany transactions 
between companies which are contained on the combined report 
shall be eliminated.  This subdivision shall not apply to 
insurance companies whose income is determined under section 
290.35 or to investment companies whose income is determined 
under section 290.36. 
    Sec. 16.  Minnesota Statutes 1985 Supplement, section 
290.41, subdivision 1, is amended to read: 
    Subdivision 1.  [PARTNERSHIPS, FIDUCIARIES, AND S 
CORPORATIONS.] (a) Partnerships shall make a return for each 
taxable year which shall conform to the requirements of section 
290.31, and shall, in addition, include the names and addresses 
of all partners entitled to a distributive share in their 
taxable net income and the amount of such distributive share to 
which each is entitled.  The return shall contain or be verified 
by a written declaration that it is made under the penalties of 
criminal liability for willfully making a false return correct 
and complete.  Each partnership required to file a return for 
any partnership taxable year shall, on or before the day on 
which the return for the taxable year was filed, furnish to each 
person who is a partner at any time during the taxable year a 
copy of the information shown on the return as may be required.  
    (b) The fiduciary of any estate or trust making the return 
required to be filed under this chapter for any taxable year 
shall, on or before the date on which the return was filed, 
furnish to each beneficiary who receives a distribution from the 
estate or trust with respect to the taxable year or to whom any 
item with respect to the taxable year is allocated, a statement 
containing the information shown on the return as the 
commissioner may require.  
    (c) Each S corporation required to file a return under 
section 290.974 for any taxable year shall, on or before the day 
on which the return for the taxable year was filed, furnish to 
each person who is a shareholder at any time during the taxable 
year a copy of the information shown on the return.  
     (d) The statements required to be given to the partners, 
beneficiaries, or shareholders by this subdivision must be 
furnished at the time required by this subdivision, 
notwithstanding section 290.42, clause (7). 
    Sec. 17.  Minnesota Statutes 1984, section 290.50, 
subdivision 3, is amended to read: 
    Subd. 3.  [EXCEPTIONS.] This section shall not be construed 
so as to disallow: 
    (a) a net operating loss carryback to any taxable year 
authorized by section 290.095 or section 172 of the Internal 
Revenue Code of 1954, as amended through December 31, 1983, but 
the refund or credit shall be limited to the amount of 
overpayment arising from the carryback; 
    (b) a capital loss carryback by a corporation under section 
290.16, provided that the claim for refund or credit is made 
prior to the expiration of the 15th day of the 45th month 
following the end of the taxable year of the net capital loss 
which results in the carryback, plus any extension of time 
granted for filing the return, but only if the return was filed 
within the extended time, and the refund or credit is limited to 
the amount of overpayment arising from the carryback. 
    Sec. 18.  Minnesota Statutes 1985 Supplement, 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 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 
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 1985, 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 1985, 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.  
    (10) [VEHICLE FRINGE BENEFITS.] An employer may elect shall 
not to deduct and withhold any tax under this section with 
respect to any vehicle fringe benefit provided to an employee if 
the employer has so elected for federal purposes and the 
requirement of and the definition contained in section 3402(s) 
of the Internal Revenue Code of 1954, as amended through May 
25 December 31, 1985, are complied with. 
    Sec. 19.  Minnesota Statutes 1985 Supplement, section 
290.93, subdivision 10, is amended to read: 
    Subd. 10.  [UNDERPAYMENT OF ESTIMATED TAX.] (1) In the case 
of any underpayment of estimated tax by an individual, except as 
provided in paragraph (4), (5), or (6), there must be added to 
and become a part of the taxes imposed by this chapter, for the 
taxable year an amount determined at the rate specified in 
section 270.75 upon the amount of the underpayment for the 
period of the underpayment. 
    (2) For purposes of the preceding paragraph, the amount of 
underpayment shall be the excess of 
    (a) the amount of the installment which would be required 
to be paid if the estimated tax were equal to 80 percent (66-2/3 
percent in the case of farmers referred to in subdivision 5(2)) 
of the taxes shown on the return for the taxable year or 80 
percent (66-2/3 percent in the case of farmers referred to 
above) the taxes for such year if no return was filed, over 
    (b) the amount, if any, of the installment paid on or 
before the last day prescribed for such payment. 
    (3) The period of the underpayment shall run from the date 
the installment was required to be paid to whichever of the 
following dates is the earlier 
    (a) The 15th day of the fourth month following the close of 
the taxable year. 
    (b) With respect to any portion of the underpayment, the 
date on which such portion is paid.  For purposes of this 
subparagraph, a payment of estimated tax on any installment date 
shall be considered a payment of any unpaid required 
installments in the order in which the installments are required 
to be paid. 
    (4) The addition to the tax with respect to any 
underpayment of any installment shall not be imposed if the 
total amount of all payments of estimated tax made on or before 
the last date prescribed for the payment of such installment 
equals or exceeds the amount which would have been required to 
be paid on or before such date if the estimated tax were 
whichever of the following is the lesser The amount of any 
installment required to be paid shall be 25 percent of the 
required annual payment except as provided in paragraph (c).  
The term "required annual payment" means the lesser of 
    (a) 80 percent (66-2/3 percent in the case of farmers 
referred to in subdivision 5, paragraph (2)), of the tax shown 
on the return for the taxable year or 80 percent (66-2/3 percent 
in the case of farmers referred to above) of the tax for the 
year if no return is filed, or 
    (b) The total tax liability shown on the return of the 
individual for the preceding taxable year (if a return showing a 
liability for such taxes was filed by the individual for the 
preceding taxable year of 12 months), or 
    (b) (c) An amount equal to the applicable percentage of the 
tax for the taxable year (after deducting personal credits) 
computed by placing on an annualized basis the taxable income 
and alternative minimum taxable income for the months in the 
taxable year ending before the month in which the installment is 
required to be paid.  The applicable percentage of the tax is 20 
percent in the case of the first installment, 40 percent for the 
second installment, 60 percent for the third installment, and 80 
percent for the fourth installment.  For purposes of this 
subparagraph, the taxable income and alternative minimum taxable 
income shall be placed on an annualized basis by 
    (i) Multiplying by 12 (or in the case of a taxable year of 
less than 12 months, the number of months in the taxable year) 
the taxable income and alternative minimum taxable income 
computed for the months in the taxable year ending before the 
month in which the installment is required to be paid. 
     (ii) Dividing the resulting amount by the number of months 
in the taxable year ending before the month in which such 
installment date falls. 
     (5) No addition to the tax shall be imposed under this 
subdivision for any taxable year if:  
     (a) the individual did not have any liability for tax for 
the preceding taxable year, 
     (b) the preceding taxable year was a taxable year of 12 
months, and 
     (c) the individual was a resident of Minnesota throughout 
the preceding taxable year.  
     (6) No addition to the tax shall be imposed under this 
subdivision with respect to any underpayment to the extent the 
commissioner determines that the provisions of section 
6654(e)(3) of the Internal Revenue Code of 1954, as amended 
through December 31, 1984, apply. 
     (7) For the purposes of applying this subdivision, the 
estimated tax shall be computed without any reduction for the 
amount which the individual estimates as his credit under 
section 290.92, subdivision 12 (relating to tax withheld at 
source on wages), and any other refundable credits which are 
allowed against income tax liability, and the amount of such 
credits for the taxable year shall be deemed a payment of 
estimated tax, and an equal part of such amounts shall be deemed 
paid on each installment date (determined under subdivisions 6 
and 7) for such taxable year, unless the taxpayer establishes 
the dates on which all amounts were actually withheld, in which 
case the amounts so withheld shall be deemed payments of 
estimated tax on the dates on which such amounts were actually 
withheld. 
    Sec. 20.  Minnesota Statutes 1984, section 290A.03, 
subdivision 8, is amended to read: 
    Subd. 8.  [CLAIMANT.] (a) "Claimant" means a person, other 
than a dependent, who filed a claim authorized by this chapter 
and who was domiciled in this state during the calendar year for 
which the claim for relief was filed. 
     (b) In the case of a claim relating to rent constituting 
property taxes, the claimant shall have resided in a rented or 
leased unit on which ad valorem taxes or payments made in lieu 
of ad valorem taxes, including payments of special assessments 
imposed in lieu of ad valorem taxes, are payable at some time 
during the calendar year covered by the claim. 
     (c) "Claimant" shall not include a resident of a nursing 
home, intermediate care facility, or long term residential 
facility whose rent constituting property taxes is paid pursuant 
to the supplemental security income program under title XVI of 
the Social Security Act, the Minnesota supplemental aid program 
under sections 256D.35 to 256D.41, the medical assistance 
program pursuant to title XIX of the Social Security Act, or the 
general assistance medical care program pursuant to section 
256D.03, subdivision 3.  If only a portion of the rent 
constituting property taxes is paid by these programs, the 
resident shall be a claimant for purposes of this chapter, but 
the refund calculated pursuant to section 290A.04 shall be 
multiplied by a fraction, the numerator of which is income as 
defined in subdivision 3 reduced by the total amount of income 
from the above sources other than vendor payments under the 
medical assistance program or the general assistance medical 
care program and the denominator of which is income as defined 
in subdivision 3 plus vendor payments under the medical 
assistance program or the general assistance medical care 
program, to determine the allowable refund pursuant to this 
chapter.  For purposes of this paragraph and paragraph (d), 
household income or income as defined in subdivision 3 must not 
be reduced by the $2,000 reduction provided in subdivision 3, 
paragraph (2), clause (f), for claimants who are disabled or age 
65 or more. 
    (d) Notwithstanding paragraph (c), if the claimant was a 
resident of the nursing home, intermediate care facility or long 
term residential facility for only a portion of the calendar 
year covered by the claim, the claimant may compute rent 
constituting property taxes by disregarding the rent 
constituting property taxes from the nursing home, intermediate 
care facility, or long term residential facility and use only 
that amount of rent constituting property taxes or property 
taxes payable relating to that portion of the year when the 
claimant was not in the facility.  The claimant's household 
income is his income for the entire calendar year covered by the 
claim.  
    (e) In the case of a claim for rent constituting property 
taxes of a part year Minnesota resident, the income and rental 
reflected in this computation shall be for the period of 
Minnesota residency only.  Any rental expenses paid which may be 
reflected in arriving at federal adjusted gross income cannot be 
utilized for this computation.  When two individuals of a 
household are able to meet the qualifications for a claimant, 
they may determine among them as to who the claimant shall be. 
If they are unable to agree, the matter shall be referred to the 
commissioner of revenue and his decision shall be final.  If a 
homestead property owner was a part year Minnesota resident, the 
income reflected in the computation made pursuant to section 
290A.04 shall be for the entire calendar year, including income 
not assignable to Minnesota. 
     (f) If a homestead is occupied by two or more renters, who 
are not husband and wife, the rent shall be deemed to be paid 
equally by each, and separate claims shall be filed by each.  
The income of each shall be his household income for purposes of 
computing the amount of credit to be allowed. 
    Sec. 21.  [REPEALER.] 
    (a) Minnesota Statutes 1984, sections 290.06, subdivision 
15, and 290.39, subdivision 1a, are repealed. 
    (b) Laws 1985, First Special Session chapter 14, article 
21, sections 16 and 17, are repealed. 
    (c) Minnesota Statutes 1984, section 290A.04, subdivision 
2f, is repealed. 
    Sec. 22.  [EFFECTIVE DATE.] 
    Section 1 is effective for returns filed after June 30, 
1985.  Sections 2, 3, 5, paragraph (b), 8, 9, 14, 16, 19, and 
21, paragraph (b), are effective for taxable years beginning 
after December 31, 1984.  Sections 4, 7, 17, and 18 are 
effective the day after final enactment.  Section 5, paragraph 
(c), is effective for taxable years beginning after December 31, 
1981.  The amendment to paragraph (a) adding clause (3) and the 
new language in clause (3)(ii) in section 6 is effective for 
taxable years beginning after December 31, 1985.  The other 
amendments in section 6 are effective for taxable years 
beginning after December 31, 1984.  Sections 10, 11, and 21, 
paragraph (a), are effective for taxable years beginning after 
December 31, 1985.  Sections 12, 13, and 15 are effective for 
transactions after December 31, 1984, in tax years ending after 
such date.  Section 20 is effective for claims based on rent 
paid in 1985 and thereafter.  Section 21, paragraph (c), is 
effective for claims based on property taxes payable in 1985 and 
thereafter. 

                               ARTICLE 4 

                              PROPERTY TAX 
    Section 1.  Minnesota Statutes 1984, section 69.021, 
subdivision 4, is amended to read: 
    Subd. 4.  [DETERMINATION OF QUALIFIED STATE AID RECIPIENTS; 
CERTIFICATION TO COMMISSIONER OF FINANCE.] The commissioner 
shall determine which municipalities and independent nonprofit 
firefighting corporations are qualified to receive fire state 
aid and which municipalities and counties are qualified to 
receive police state aid.  Any municipality, independent 
nonprofit firefighting corporation or county which received 
state aid for the year immediately previous shall be presumed to 
be qualified to receive state aid for the year in question.  If 
subsequent examination reveals that the state aid recipient was 
not in fact qualified to receive state aid for any year, the 
commissioner shall retroactively disqualify the recipient and 
shall take any necessary steps to recover the state aid payments 
which had been made for the years of disqualification, plus 
interest at a rate equal to the maximum lawful interest rate for 
a state bank pursuant to section 48.195, as of the date of 
disqualification, compounded annually from the date on which the 
state aid payment was made until the date on which the payment 
is recovered.  The determination of qualification by the 
commissioner shall be based on information contained in the fire 
department, personnel and equipment certification required 
pursuant to section 69.011, the annual financial report required 
pursuant to section 69.051, any actuarial valuation or 
experience study report required pursuant to sections 69.77 or 
69.773, any audits conducted by the state auditor or an 
independent auditor, and any other relevant information which 
comes to the attention of the commissioner.  Upon completion of 
the determination, on or before June 1, the commissioner shall 
calculate pursuant to subdivision 6 the amount of fire state aid 
and police state aid which each county, municipality, or 
independent nonprofit firefighting corporation is to receive for 
subsequent apportionment pursuant to subdivision 7 and shall 
certify to the commissioner of finance the name of each county 
in which are located one or more qualified state aid recipients, 
municipality, or independent nonprofit firefighting corporation 
and the amount of state aid which each county is to receive for 
subsequent apportionment.  The commissioner shall also certify 
to each county auditor the name of each qualified state aid 
recipient located in the county and any other information deemed 
necessary for the county auditor to make the subsequent 
apportionment of state aid.  
     Sec. 2.  Minnesota Statutes 1984, section 69.021, 
subdivision 5, is amended to read: 
    Subd. 5.  [CALCULATION OF STATE AID.] The amount of state 
aid available for apportionment shall be two percent of the 
fire, lightning, sprinkler leakage and extended coverage 
premiums reported to the commissioner by insurers on the 
Minnesota Firetown Premium Report and two percent of the 
premiums reported to the commissioner by insurers on the 
Minnesota Aid to Police Premium Report.  The amount for 
apportionment in respect to firefighter's state aid shall not be 
greater or lesser than the amount of premium taxes paid to the 
state upon the premiums reported to the commissioner by insurers 
on the Minnesota Firetown Premium Report.  The total amount for 
apportionment in respect to police state aid shall not be 
greater or lesser than the amount of premium taxes paid to the 
state upon the premiums reported to the commissioner by insurers 
on the Minnesota Aid to Police Premium Report.  The total amount 
for apportionment in respect to police state aid shall be 
distributed to the counties for apportionment to municipalities 
maintaining police departments and to the county on the basis of 
the number of active peace officers, as certified pursuant to 
section 69.011, subdivision 2, clause (b).  The commissioner 
shall calculate the percentage of increase or decrease reflected 
in the apportionment over or under the previous year's available 
state aid using the same premiums as a basis for comparison. 
     Sec. 3.  Minnesota Statutes 1984, section 69.021, 
subdivision 7, is amended to read: 
    Subd. 7.  [APPORTIONMENT OF AID TO MUNICIPALITIES AND 
FIREFIGHTER'S RELIEF ASSOCIATIONS BY COUNTY AUDITOR.] (1) The 
county auditor commissioner shall apportion the state aid 
received by him relative to the premiums reported on the 
Minnesota Firetown Premium Reports filed pursuant to this 
chapter to each municipality and/or firefighter's relief 
association certified to him by the commissioner in the same 
manner that state aid is apportioned to the counties, one-half 
in proportion to the population and one-half in proportion to 
the assessed property valuation of the fire towns in the county 
for which aid is proportioned.  Necessary adjustments shall be 
made to subsequent apportionments.  
    In the case of municipalities or independent fire 
departments qualifying for the aid the county auditor 
commissioner shall calculate the state aid for the municipality 
or relief association on the basis of the population and the 
property valuation of the area furnished fire protection service 
by the fire department as evidenced by duly executed and valid 
fire service agreements filed with him.  If one or more fire 
departments are furnishing contracted fire service to a city, 
town or township only the population and valuation of the area 
served by each fire department shall be considered in 
calculating the state aid and the fire departments furnishing 
service shall enter into an agreement apportioning among 
themselves the percent of the population and the assessed 
property valuation of each service area.  Agreement shall be in 
writing and filed with the commissioner in duplicate.  The 
commissioner shall forward one copy of the agreement to the 
county auditor of the county wherein the fire department is 
located and retain one copy. 
    In the case of cities of the first and second class the 
state aid calculated shall be paid directly to the treasurer of 
the relief association.  In the case of all other municipalities 
and independent fire department relief associations or 
retirement plans the aid shall be paid to the treasurer of the 
municipality where the fire department is located and the 
treasurer of the municipality shall within 30 days transmit the 
aid to the relief association if the relief association has 
filed a financial report with the treasurer of the municipality 
and has met all other statutory provisions pertaining to the aid 
apportionment. 
    The county auditor and commissioner are is hereby empowered 
to make rules and regulations to permit the administration of 
the provisions of this section. 
    (2) The county auditor commissioner shall apportion the 
state police aid received by him to each municipality and to the 
county in the following manner: 
    (a) For all municipalities maintaining police departments 
and the county, the state aid shall be distributed by the county 
auditor in proportion to the total number of peace officers, as 
determined pursuant to section 69.011, subdivision 1, clause 
(g), and subdivision 2, clause (b), employed by each 
municipality and by the county for 12 calendar months and the 
proportional or fractional number who were employed less than 12 
months; 
    (b) For each municipality which contracts with the county 
for police service, a proportionate amount of the state aid 
distributed to the county based on the full time equivalent 
number of peace officers providing contract service shall be 
credited against the municipality's contract obligation; 
    (c) For each municipality which contracts with another 
municipality for police service, a proportionate amount of the 
state aid distributed to the municipality providing contract 
service based on the full time equivalent number of peace 
officers providing contract service on a full time equivalent 
basis shall be credited against the contract obligation of the 
municipality receiving contract service; 
    (d) No municipality entitled to receive police state aid 
shall be apportioned less police state aid for any year under 
Laws 1976, Chapter 315, than the amount which was apportioned to 
it for calendar year 1975 based on premiums reported to the 
commissioner for calendar year 1974; provided, the amount of 
police state aid to other municipalities within the county and 
to the county shall be adjusted in proportion to the total 
number of peace officers in the municipalities and the county, 
so that the amount of police state aid apportioned shall not 
exceed the amount of police state aid available for 
apportionment. 
    The county auditor and commissioner are hereby empowered to 
make rules and regulations to permit the administration of the 
provisions of this section. 
     Sec. 4.  Minnesota Statutes 1984, section 69.021, 
subdivision 9, is amended to read: 
    Subd. 9.  [APPEAL.] In the event that any fire or police 
department feels itself to be aggrieved, it may request 
the county board of the county wherein the fire or police 
department is located commissioner to review and adjust the 
apportionment of funds within the county and the decision of the 
county board commissioner shall be subject to appeal, review, 
and adjustment by the district court in the county in which the 
fire or police department is located. 
     Sec. 5.  Minnesota Statutes 1985 Supplement, section 
69.031, subdivision 1, is amended to read: 
    Subdivision 1.  [COMMISSIONER OF FINANCE'S WARRANT.] The 
commissioner of finance shall issue to the auditor of each 
county, municipality, or independent nonprofit firefighting 
corporation certified to him by the commissioner his warrant for 
an amount equal to the amount certified to by the commissioner 
pursuant to section 69.021.  The amount due to a county and not 
paid by September 1 accrues interest at the rate of one percent 
for each month or part of a month the amount remains unpaid, 
beginning the preceding June 1. 
     Sec. 6.  Minnesota Statutes 1984, section 69.031, 
subdivision 3, is amended to read: 
    Subd. 3.  [APPROPRIATIONS.] There is hereby appropriated 
annually from the state general fund to the counties who are 
entitled to payments under sections 69.021 and 
69.031 commissioner of revenue an amount sufficient to make the 
payments specified in these sections 69.021 and 69.031 not 
exceeding the tax collected. 
    Sec. 7.  Minnesota Statutes 1985 Supplement, section 
116C.63, subdivision 4, is amended to read: 
    Subd. 4.  When private real property defined as class 1a, 
1b, 1c, 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. 8.  Minnesota Statutes 1984, section 124.195, 
subdivision 5, is amended to read: 
    Subd. 5.  [COMMISSIONER'S ASSUMPTIONS.] For purposes of 
determining the amount of state general fund cash to be paid to 
school districts pursuant to subdivision 3, the commissioner of 
education shall:  
    (a) assume that the payments to school districts by the 
county treasurer of revenues accruing to the fiscal year of 
receipt pursuant to section 276.10 276.11 are made in the 
following manner: 
    (1) 50 percent within seven business days of each due date; 
and 
    (2) 100 percent within 14 business days of each due date;  
    (b) assume that the payments to school districts by the 
county treasurer of revenues accruing to the fiscal year of 
receipt pursuant to section 31 are made in the following manner: 
    (1) 50 percent within seven business days of the October 15 
due date; 
    (2) 100 percent within 14 business days of the October 15 
due date; and 
    (3) 100 percent within ten business days of the November 15 
due date. 
    (c) assume that the payments to school districts by county 
auditors pursuant to section 124.10, subdivision 2 are made at 
the end of the months indicated in that subdivision. 
    Sec. 9.  Minnesota Statutes 1985 Supplement, section 
124.2131, subdivision 3, is amended to read: 
    Subd. 3.  [DECREASE IN IRON ORE ASSESSED VALUE.] If in any 
year the assessed value of class 9a and 9b property, as defined 
in sections 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 9a and 9b property.  If subdivision 2, clause (a) 
is applicable to such a district, the decrease in class 9a and 
9b 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. 10.  Minnesota Statutes 1984, section 270.12, 
subdivision 2, is amended to read: 
    Subd. 2.  The board shall meet annually on August 15 at the 
office of the commissioner of revenue and examine and compare 
the returns of the assessment of the property in the several 
counties, and equalize the same so that all the taxable property 
in the state shall be assessed at its market value, subject to 
the following rules: 
    (1) The board shall add to the aggregate valuation of the 
real property of every county, which the board believes to be 
valued below its market value in money, such percent as will 
bring the same to its market value in money; 
    (2) The board shall deduct from the aggregate valuation of 
the real property of every county, which the board believes to 
be valued above its market value in money, such percent as will 
reduce the same to its market value in money; 
    (3) If the board believes the valuation of the real 
property of any town or district in any county, or the valuation 
of the real property of any county not in towns or cities, 
should be raised or reduced, without raising or reducing the 
other real property of such county, or without raising or 
reducing it in the same ratio, the board may add to, or take 
from, the valuation of any one or more of such towns or cities, 
or of the property not in towns or cities, such percent as the 
board believes will raise or reduce the same to its market value 
in money; 
    (4) The board shall add to the aggregate valuation of any 
class of personal property of any county, town, or city, which 
the board believes to be valued below the market value thereof, 
such percent as will raise the same to its market value in money;
    (5) The board shall take from the aggregate valuation of 
any class of personal property in any county, town or city, 
which the board believes to be valued above the market value 
thereof, such percent as will reduce the same to its market 
value in money; 
    (6) The board shall not reduce the aggregate valuation of 
all the property of the state, as returned by the several county 
auditors, more than one percent on the whole valuation thereof; 
and 
    (7) When it would be of assistance in equalizing values the 
board may require any county auditor to furnish statements 
showing assessments of real and personal property of any 
individuals, firms, or corporations within the county.  The 
board shall consider and equalize such assessments and may 
increase the assessment of individuals, firms, or corporations 
above the amount returned by the county board of equalization 
when it shall appear to be undervalued, first giving notice to 
such persons of the intention of the board so to do, which 
notice shall fix a time and place of hearing.  The board shall 
not decrease any such assessment below the valuation placed by 
the county board of equalization; and 
    (8) In equalizing values pursuant to this section, the 
board shall utilize a 12-month assessment/sales ratio study 
conducted by the department of revenue containing only sales 
that occurred between October 1 of the year immediately 
preceding the previous year to September 30 of the previous 
year.  The sales prices used in the study must be discounted for 
terms of financing.  The board shall use the median ratio as the 
statistical measure of the level of assessment for any 
particular category of property. 
    Sec. 11.  Minnesota Statutes 1984, section 273.072, 
subdivision 1, is amended to read: 
    Subdivision 1.  Any county and any city or town lying 
wholly or partially within the county and constituting a 
separate assessment district may, by agreement entered into 
under section 471.59 and approved by the commissioner of 
revenue, provide for the assessment of property in the 
municipality or town by the county assessor.  Any two or more 
cities or towns constituting separate assessment districts, 
whether their assessors are elective or appointive, may enter 
into an agreement under section 471.59 for the assessment of 
property in the contracting units by the assessor of one of the 
units or by an assessor who is jointly employed.  
    Sec. 12.  Minnesota Statutes 1985 Supplement, 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 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, whose income must 
not exceed 90 percent of the St. Paul-Minneapolis metropolitan 
area income as determined by the United States Department of 
Housing and Urban Development 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, 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 
section 273.124, subdivision 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. 13.  Minnesota Statutes 1985 Supplement, section 
273.124, subdivision 6, is amended to read: 
    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) to the extent permitted under state or federal law, 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 3, 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. 
    Sec. 14.  Minnesota Statutes 1985 Supplement, section 
273.124, subdivision 8, is amended to read: 
    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 1b or 
class 2a 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 1b or class 2a 
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. 
    Sec. 15.  Minnesota Statutes 1985 Supplement, section 
273.124, subdivision 9, is amended to read: 
    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 or class 2a 
to the extent of one-half of the valuation that would have been 
includable in class 1 or class 2a. 
    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.  
    Sec. 16.  Minnesota Statutes 1985 Supplement, section 
273.124, subdivision 10, is amended to read: 
    Subd. 10.  [REAL ESTATE PURCHASED FOR OCCUPANCY AS A 
HOMESTEAD.] Real estate purchased for occupancy as a homestead 
must be classified as class 1 or class 2a 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.  
    Sec. 17.  Minnesota Statutes 1985 Supplement, section 
273.124, subdivision 11, is amended to read: 
    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.  The 
limitation in this subdivision does not apply to buildings 
containing fewer than four residential units and for or to 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. 
    Sec. 18.  Minnesota Statutes 1985 Supplement, 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 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 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 certififed 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. 19.  Minnesota Statutes 1985 Supplement, section 
273.13, subdivision 26, is amended 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. 
    (c) Manufactured homes not classified under any other 
provision constitute class 5c.  Class 5c property is assessed at 
28 percent of market value. 
    Sec. 20.  Minnesota Statutes 1985 Supplement, section 
273.13, subdivision 28, is amended 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 or individuals.  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, and a lower income individual is an 
individual whose income does not exceed 65 percent of the median 
individual income for the area, as determined by the United 
States 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. 21.  Minnesota Statutes 1985 Supplement, section 
273.13, subdivision 30, is amended 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. 22.  Minnesota Statutes 1985 Supplement, section 
273.136, is amended to read: 
    273.136 [TACONITE PROPERTY TAX RELIEF FUND; REPLACEMENT OF 
REVENUE.] 
    Subdivision 1.  Payment from the 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.  
    Subd. 2.  The commissioner of revenue shall determine, not 
later than May April 1 of each year, 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 
changes in the abstracts of tax lists as he deems necessary.  
The commissioner of revenue, after such review, shall submit to 
the St. Louis county auditor, on or before June 1 April 15, the 
amount of the first half payment payable hereunder and on or 
before October September 15 the amount of the second half 
payment.  
    Subd. 3.  The 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 June May 15 and the remaining half not later than November 
October 15 of each year. 
    Subd. 4.  The county treasurer shall distribute as part of 
the May and October settlements the funds received by him as if 
they had been collected as a part of the property tax reduced by 
section 273.135.  
    Sec. 23.  Minnesota Statutes 1984, section 273.1391, 
subdivision 3, is amended to read: 
    Subd. 3.  Not later than December 1, each county auditor 
having jurisdiction over one or more tax relief areas defined in 
subdivision 2 shall certify to the commissioner of revenue his 
estimate of the total amount of the reduction, determined under 
subdivision 2, in taxes payable the next succeeding year with 
respect to all tax relief areas in his county.  The commissioner 
shall make payments to the county by May 15 and October 15 
annually.  The county treasurer shall distribute as part of the 
May and October settlements the funds received from the 
commissioner. 
    Sec. 24.  Minnesota Statutes 1985 Supplement, section 
273.42, subdivision 2, is amended to read: 
    Subd. 2.  Owners of land defined as class 1a, 1b, 1c, 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 
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. 25.  Minnesota Statutes 1985 Supplement, section 
274.19, subdivision 1, is amended to read: 
    Subdivision 1.  The provisions of subdivisions 1 to 7 apply 
to manufactured homes that are assessed under subdivision 8, 
clause (c).  Each manufactured home 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. 26.  Minnesota Statutes 1985 Supplement, section 
274.19, subdivision 8, is amended 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 
treated as a manufactured home personal property, 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 273.19.  
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. 27.  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; 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, 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 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; 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. 28.  Minnesota Statutes 1984, section 276.09, is 
amended to read: 
    276.09 [SETTLEMENT BETWEEN AUDITOR AND TREASURER.] 
    On the fifth day of March and the 20th day of May, and 
October of each year, the county treasurer shall make full 
settlement with the county auditor of all receipts collected by 
him for all purposes, from the date of the last settlement up to 
and including each day mentioned.  The county auditor shall, 
within 30 days after each settlement, send an abstract of same 
to the state auditor in the form prescribed by the state 
auditor.  At each settlement the treasurer shall make complete 
returns of the receipts on the current tax list, showing the 
amount collected on account of the several funds included in the 
list. 
    Settlement of receipts from May 20 to December 31 of each 
year shall be made as provided in section 31. 
    For purposes of this section, "receipts" shall include all 
tax payments received by the county treasurer on or before the 
settlement date.  
    Sec. 29.  Minnesota Statutes 1984, section 276.10, is 
amended to read: 
    276.10 [APPORTIONMENT AND DISTRIBUTION OF FUNDS.] 
    On the settlement day in March, and May, and October of 
each year, the county auditor and county treasurer shall 
distribute all undistributed funds in the treasury, apportioning 
them, as provided by law, and placing them to the credit of the 
state, town, city, school district, special district and each 
county fund.  Within 20 days after the distribution is 
completed, the county auditor shall make a report of it to the 
state auditor in the form prescribed by the state auditor.  The 
county auditor shall issue his warrant for the payment of moneys 
in the county treasury to the credit of the state, town, city, 
school district, or special districts on application of the 
persons entitled to receive them.  The county auditor may apply 
the mill rate from the year previous to the year of distribution 
when apportioning and distributing delinquent tax proceeds, 
provided that the composition of the previous year's mill rate 
between taxing districts is not significantly different than 
that which existed for the year of the delinquency.  
    Sec. 30.  Minnesota Statutes 1984, section 276.11, is 
amended to read: 
    276.11 [WHEN TREASURER SHALL PAY FUNDS FROM MARCH AND MAY 
SETTLEMENTS.] 
    As soon as practical after each settlement the March and 
May settlements the county treasurer shall pay over to the state 
treasurer or the treasurer of any town, city, school district, 
or special district, on the warrant of the county auditor, all 
receipts arising from taxes levied by and belonging to the 
state, or to such municipal corporation, or other body, and 
deliver up all orders and other evidences of indebtedness of 
such municipal corporation or other body, taking triplicate 
receipts therefor.  The treasurer shall file one of the receipts 
with the county auditor, and shall return one by mail on the day 
of its reception to the clerk of the town, city, school 
district, or special district to which payment was made.  The 
clerk shall preserve the receipt in the clerk's office.  Upon 
written request of the state, a municipal corporation or other 
public body, the county treasurer shall, to the extent 
practicable, make partial payments of amounts collected 
periodically in advance of the next settlement and 
distribution.  Accompanying each payment shall be a statement 
prepared by the county treasurer designating the years for which 
taxes included in the payment were collected and, for each year, 
the amount of the taxes and any penalties thereon.  The county 
treasurer shall pay, upon written request of the state, a 
municipal corporation or other public body except school 
districts, at least 70 percent of the estimated collection 
within 30 days after the March and May settlement date dates. 
Within seven business days after the due date, the county 
treasurer shall pay to the treasurer of the school districts 50 
percent of the estimated collections arising from taxes levied 
by and belonging to the school district and the remaining 50 
percent of the estimated collections shall be paid to the 
treasurer of the school district within the next seven business 
days.  The treasurer shall pay the balance of the amounts 
collected to the state or to a municipal corporation or other 
body within 60 days after the March and May settlement date 
dates, provided, however, that after 45 days interest shall 
accrue at a rate of eight percent per annum to the credit of and 
shall be paid to the state, municipal corporation or other 
body.  Interest shall be payable upon appropriation from the 
general revenue fund of the county and, if not paid, may be 
recovered by the state, municipal corporation, or other body, in 
a civil action. 
    Sec. 31.  [276.111] [DISTRIBUTIONS AND FINAL YEAR-END 
SETTLEMENT.] 
    Within seven business days after October 15, the county 
treasurer shall pay to the school districts 50 percent of the 
estimated collections arising from taxes levied by and belonging 
to the school district from May 20 to October 20 and the 
remaining 50 percent of the estimated tax collections must be 
paid to the school district within the next seven business days. 
Within ten business days after November 15, the county treasurer 
shall pay to the school district 100 percent of the estimated 
collections arising from taxes levied by and belonging to the 
school districts from October 20 to November 20. 
    Within ten business days after November 15, the county 
treasurer shall pay to each taxing district, except any school 
district, 100 percent of the estimated collections arising from 
taxes levied by and belonging to each taxing district from May 
20 to November 20. 
    On or before the fifth day of January, the county treasurer 
shall make full settlement with the county auditor of all 
receipts collected from the 20th day of May to December 31.  
After subtracting any tax distributions which have been made to 
the taxing districts in October and November, the treasurer 
shall pay to each of the taxing districts on or before January 
25, the balance of the tax amounts collected on behalf of each 
taxing district.  Interest shall accrue at a rate of eight 
percent per annum to the credit of and shall be paid to the 
taxing district if this final settlement amount is not paid by 
January 25.  Interest shall be payable upon appropriation from 
the general revenue fund of the county and, if not paid may be 
recovered by the state, municipal corporation, or other body, in 
a civil action. 
    Sec. 32.  Minnesota Statutes 1984, section 278.03, is 
amended to read: 
    278.03 [PAYMENT OF TAX.] 
    If the proceedings instituted by the filing of the petition 
have not been completed before the 16th day of May next 
following the filing, the petitioner shall pay to the county 
treasurer 50 percent of the tax levied for such year against the 
property involved, unless permission to continue prosecution of 
the petition without such payment is obtained as herein 
provided.  If the proceedings instituted by the filing of the 
petition have not been completed by the next October 16, or, in 
the case of class 3cc agricultural homestead, class 3b 
agricultural homestead, and class 3 agricultural nonhomestead 
property, November 16, the petitioner shall pay to the county 
treasurer 50 percent of the unpaid balance of the taxes levied 
for the year against the property involved if the unpaid balance 
is $2,000 or less and 80 percent of the unpaid balance if the 
unpaid balance is over $2,000, unless permission to continue 
prosecution of the petition without payment is obtained as 
herein provided.  The petitioner, upon ten days notice to the 
county attorney and to the county auditor, given at least ten 
days prior to the 16th day of May or the 16th day of 
October, or, in the case of class 3cc agricultural homestead, 
class 3b agricultural homestead, and class 3 agricultural 
nonhomestead property, the 16th day of November, may apply to 
the court for permission to continue prosecution of the petition 
without payment; and, if it is made to appear 
    (1) That the proposed review is to be taken in good faith; 
    (2) That there is probable cause to believe that the 
property may be held exempt from the tax levied or that the tax 
may be determined to be less than 50 percent of the amount 
levied; and 
    (3) That it would work a hardship upon petitioner to pay 
the taxes due, 
    the court may permit the petitioner to continue prosecution 
of the petition without payment, or may fix a lesser amount to 
be paid as a condition of continuing the prosecution of the 
petition. 
    Failure to make payment of the amount required when due 
shall operate automatically to dismiss the petition and all 
proceedings thereunder unless the payment is waived by an order 
of the court permitting the petitioner to continue prosecution 
of the petition without payment.  The county treasurer shall, 
upon request of the petitioner, issue duplicate receipts for the 
tax payment, one of which shall be filed by the petitioner in 
the proceeding. 
    Sec. 33.  Minnesota Statutes 1985 Supplement, 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, subdivision 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, or, in the 
case of class 3cc agricultural homestead, class 3b agricultural 
homestead, and class 3 agricultural nonhomestead property, the 
16th day of November, 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, or, 
in the case of class 3cc agricultural homestead, class 3b 
agricultural homestead, and class 3 agricultural nonhomestead 
property, the 16th day of November, of the year in which the 
taxes were payable, in which event interest shall not be taxable.
    Sec. 34.  Minnesota Statutes 1984, section 279.01, as 
amended by Laws 1985, chapter 300, section 12, and First Special 
Session chapter 14, article 4, section 82, is amended to read: 
    279.01 [DUE DATE; PENALTIES, INTEREST.] 
    Subdivision 1.  Except as provided in subdivision 3, 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 1c, 2c, or 6a, and on other commercial use real property 
classified as class 3a, provided that over 60 percent of the 
gross income earned by the enterprise on the class 3a property 
is earned during the months of May, June, July, and August.  Any 
property owner of such class 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.  
    Subd. 2.  In the case of any tax on class 3cc, 3b, and 3c 
homestead property paid within 30 days after the due date 
specified in this section or after the 30-day extension as 
specified in subdivision 3, the county board may, with the 
concurrence of the county treasurer, delegate to the county 
treasurer the power to abate the penalty provided for late 
payment.  Notwithstanding section 270.07, if any county board so 
elects, the county treasurer may abate the penalty if in his 
judgment the imposition of the penalty would be unjust and 
unreasonable.  
    Subd. 3.  In the case of class 3cc agricultural homestead, 
class 3b agricultural homestead property, and class 3 
agricultural nonhomestead property, no penalties shall attach to 
the second one-half property tax payment as provided in this 
section if paid by November 15.  Thereafter for class 3cc 
agricultural homestead and class 3b homestead property, on 
November 16 following, a penalty of six percent shall accrue and 
be charged on all such unpaid taxes and on December 16 
following, an additional two percent shall be charged on all 
such unpaid taxes.  Thereafter for class 3 agricultural 
nonhomestead property, on November 16 following, a penalty of 
eight percent shall accrue and be charged on all such unpaid 
taxes and on December 16 following, an additional four percent 
shall be charged on all such unpaid taxes. 
    If the owner of class 3cc agricultural homestead, class 3b, 
or class 3 agricultural property receives a consolidated 
property tax statement that shows only an aggregate of the taxes 
and special assessments due on that property and on other 
property not classified as class 3cc agricultural homestead, 
class 3b, or class 3 agricultural property, the aggregate tax 
and special assessments shown due on the property by the 
consolidated statement will be due on November 15 provided that 
at least 50 percent of the property's market value is classified 
class 3cc agricultural, class 3b, or class 3 agricultural. 
    Sec. 35.  Minnesota Statutes 1985 Supplement, 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) 
nonagricultural homesteaded land as defined in section 273.13, 
subdivision 22; (b) homesteaded agricultural land as defined in 
section 273.13, subdivision 23, paragraph (a); or (c) seasonal 
recreational land as defined in section 273.13, subdivision 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. 36.  Minnesota Statutes 1985 Supplement, section 
287.12, is amended to read: 
    287.12 [TAXES, HOW APPORTIONED.] 
    All taxes paid to the county treasurer on or after July 1, 
1985, under the provisions of sections 287.01 to 287.12 shall be 
credited to the county revenue fund. 
    On or before the tenth day of each month the county 
treasurer shall determine the receipts from the mortgage 
registration tax during the preceding month.  The 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.  The 
net receipts from the preceding month must be credited to the 
county welfare fund by the tenth day of each month. 
    Sec. 37.  Minnesota Statutes 1985 Supplement, 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 report to the county welfare agency the receipts 
attributable to the tax imposed during the preceding month.  The 
report must accompany the report required in section 287.12.  
The receipts shall be deposited in the county treasury and 
credited to the county revenue fund.  The net receipts from the 
preceding month must be credited to the county welfare fund by 
the tenth day of each month. 
    Sec. 38.  Minnesota Statutes 1985 Supplement, 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 22, except for agricultural land 
assessed as part of a homestead pursuant to section 273.13, 
subdivision 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 multidwelling or 
multipurpose building and the land on which it is built.  A 
manufactured home, as defined in section 168.011 274.19, 
subdivision 8, assessed as personal property may be a dwelling 
for purposes of this subdivision. 
    Sec. 39.  Minnesota Statutes 1985 Supplement, 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 22 and 23, but after deductions made pursuant to 
sections 124.2137, 273.115, 273.116, 273.135, 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 168.011 274.19, 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, subdivision 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. 40.  Minnesota Statutes 1984, section 296.16, 
subdivision 1, is amended to read: 
    Subdivision 1.  [INTENT.] All gasoline received in this 
state and all gasoline produced in or brought into this state 
except aviation gasoline and marine gasoline shall be determined 
to be intended for use in motor vehicles in this state.  
Approximately three-fourths of one percent of all gasoline 
received in this state and three-fourths of one percent of all 
gasoline produced or brought into this state, except gasoline 
used for aviation purposes, is being used as fuel for the 
operation of motor boats on the waters of this state and of the 
total revenue derived from the imposition of the gasoline fuel 
tax for uses other than in motor boats for aviation purposes, 
three-fourths of one percent of such revenues is the amount of 
tax on fuel used in motor boats operated on the waters of this 
state.  Approximately three-fourths of one percent of all 
gasoline received in and produced or brought into this state, 
except gasoline used for aviation purposes, is being used as 
fuel for the operation of snowmobiles in this state, and of the 
total revenue derived from the imposition of the gasoline fuel 
tax for uses other than in snowmobiles for aviation purposes, 
three-fourths of one percent of such revenues is the amount of 
tax on fuel used in snowmobiles operated in this state. 
    Sec. 41.  Minnesota Statutes 1984, section 296.17, 
subdivision 6, is amended to read: 
    Subd. 6.  [RECIPROCAL AGREEMENTS.] The commissioner is 
hereby empowered to of public safety or the commissioner of 
revenue may enter into reciprocal agreements with the 
appropriate officials of any other state under which he either 
commissioner may waive all or any part of the requirements 
imposed by this section upon those who use in Minnesota gasoline 
or other motor vehicle fuel upon which the tax has been paid to 
such other state, provided that the officials of such other 
state grant equivalent privileges with respect to gasoline or 
other motor vehicle fuel used in such other state but upon which 
the tax has been paid to Minnesota. 
    The commissioner is also hereby empowered to of public 
safety or the commissioner of revenue may enter into reciprocal 
agreements with the appropriate officials of other states, 
exempting vehicles licensed in such other states from the 
license and use tax provisions contained in this section, which 
otherwise would apply to vehicles licensed by such other state, 
provided that such other state grant equivalent privileges with 
respect to vehicles licensed by Minnesota. 
    Sec. 42.  Minnesota Statutes 1984, section 296.17, is 
amended by adding a subdivision to read: 
    Subd. 9a.  [MINNESOTA BASED INTERSTATE CARRIERS.] 
Notwithstanding the exemption contained in subdivision 9, as the 
commissioner of public safety enters into interstate fuel tax 
compacts which require base state licensing and filing and which 
eliminate filing in the nonresident compact states, the 
Minnesota based motor vehicles registered pursuant to section 
168.187 will be required to license under the fuel tax compact 
in Minnesota. 
    The commissioner of public safety will have all the powers 
granted to the commissioner of revenue under this section, 
including the authority to collect and issue licenses, to 
collect the tax due, and issue any refunds.  All license fees 
paid to the commissioner of public safety pursuant to 
subdivision 10 will be deposited in the general fund. 
    Sec. 43.  Minnesota Statutes 1984, section 298.24, 
subdivision 1, is amended to read: 
    Subdivision 1.  (a) 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 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.  For 
concentrates produced in 1987 and subsequent years, the tax 
shall be equal to the preceding year's tax 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" means the implicit 
price deflator for the gross national product 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.  The tax on concentrates produced in 1986 
and thereafter shall be 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 per 
gross ton of merchantable iron ore concentrate produced shall be 
imposed.  
    Sec. 44.  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 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 
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 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 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 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 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 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 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) 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), 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.  
          (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.  The amount distributed under this subclause (b) 
shall be expended within or for the benefit of the tax relief 
area defined in section 273.134. 
    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 
275.59 275.58 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 275.59 275.58, 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 275.59 275.58 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. 45.  [REPORT ON SALES RATIO STUDY.] 
    The department of revenue shall study alternative means of 
calculating the assessment/sales ratio for communities in which 
few sales occur and report its findings and recommendations to 
the legislature by January 15, 1987. 
    Sec. 46.  Laws 1985, chapter 289, section 5, subdivision 2, 
is amended to read: 
    Subd. 2.  [REVERSE REFERENDUM.] If the Clearwater county 
board proposes to increase the levy of the county pursuant to 
subdivision 1, it shall pass a resolution stating that fact.  
Thereafter, the resolution shall be published for two successive 
weeks in the official newspaper of the county or if there is no 
official newspaper, in a newspaper of general circulation in the 
county, together with a notice fixing a date for a public 
hearing on the matter.  The hearing shall be held not less than 
two weeks nor more than four weeks after the first publication 
of the resolution.  Following the public hearing, the county may 
determine to take no further action or, in the alternative, 
adopt a resolution confirming its intention to exercise the 
authority.  That resolution shall also be published in the 
official newspaper of the county or if there is no official 
newspaper, in a newspaper of general circulation in the county.  
If within 30 days thereafter a petition signed by voters equal 
in number to five percent of the votes cast in the county in the 
last general election requesting a referendum on the proposed 
resolution is filed with the county auditor the resolution shall 
not be effective until it has been submitted to the voters 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.  The referendum must 
be held at a special or general election prior to October 1, 
1985 of the year when a tax is initially proposed to be levied 
pursuant to this section.  
    Sec. 47.  Laws 1985, chapter 289, section 7, is amended to 
read: 
    Sec. 7.  [LOCAL APPROVAL.] 
    Sections 1, 2, 3, and 4 are effective the day after 
compliance with Minnesota Statutes, section 645.021, subdivision 
3, by the Hubbard county board.  Section 5 is effective the day 
after compliance with Minnesota Statutes, section 645.021, 
subdivision 3, by the Clearwater county board for taxes levied 
in 1985, 1986, 1987, and 1988 and subsequent years.  Section 6 
is effective the day after compliance with Minnesota Statutes, 
section 645.021, subdivision 3, by the Cass county board.  
    Sec. 48.  [REPEALER.] 
    Minnesota Statutes 1984, section 69.031, subdivision 4, is 
repealed. 
    Sec. 49.  Laws 1985, First Special Session chapter 14, 
article 11, section 13, is amended to read: 
    Sec. 13.  [REPEALER.] 
    Minnesota Statutes 1984, sections 287.27, 287.29, 
subdivision 3, and 287.32 are repealed.  
    Sec. 50.  [EFFECT OF PRIOR ACTION.] 
    Notwithstanding Minnesota Statutes, section 645.36, the 
repeal of Minnesota Statutes, section 287.27 by Laws 1985, First 
Special Session chapter 14, article 11, section 13, is of no 
effect, and section 287.27, remains in effect without 
interruption.  The amendment to section 287.27 by Laws 1985, 
First Special Session chapter 14, article 11, section 8, takes 
effect July 1, 1985. 
    Sec. 51.  [INSTRUCTION TO THE REVISOR.] 
    In the next edition of Minnesota Statutes, the revisor 
shall change class 3cc to class 1b, class 3b to class 2a, class 
3 to class 2c, and class 3c to class 1a, wherever they appear in 
sections 278.03, 278.05, subdivision 5, and 279.01. 
    Sec. 52.  [EFFECTIVE DATES.] 
    Sections 1 to 6 and 48 are effective for police and fire 
aids payable in 1986 and subsequent years.  Sections 7, 9, 11 to 
17, 19 to 26, 35, 38, and 39 are effective for property taxes 
levied in 1986 and subsequent years, payable in 1987 and 
subsequent years.  Section 18 is effective July 15, 1986.  
Section 27 is effective March 15, 1986.  Sections 8, and 28 to 
34 are effective for taxes paid in 1986 and subsequent years.  
Sections 36, 37, 41, and 42 are effective July 1, 1986.  
Sections 40, 43, 44, 46, and 47 are effective the day following 
final enactment.  Sections 49 and 50 are effective July 1, 1985. 

                               ARTICLE 5 

                  BUDGET RESERVE ACCOUNT AND CASH FLOW 
    Section 1.  Minnesota Statutes 1985 Supplement, section 
16A.15, subdivision 1, is amended to read: 
    Subdivision 1.  [REDUCTION.] (a) If the commissioner 
determines that probable receipts for the general fund 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 
reduce the amount in the budget and cash flow reserve account 
established in subdivision 6 to the general fund the money as 
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 1985 Supplement, 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 account.  The 
commissioner of finance on July 1, 1984, shall transfer an 
additional $125,000,000 to the account.  The commissioner on 
July 1, 1985, shall transfer an additional $75,000,000 to the 
account shall, as authorized from time to time by law, restrict 
part or all of the budgetary balance in the general fund for use 
as the budget and cash flow reserve account.  The 
amounts transferred restricted shall remain in the account until 
expended drawn down 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.  Minnesota Statutes 1985 Supplement, section 
16A.1541, is amended to read: 
    16A.1541 [ADDITIONAL REVENUES; PRIORITY.] 
    If on the basis of a forecast of general fund revenues and 
expenditures indicates the commissioner of finance determines 
that there will be an unobligated a positive unrestricted 
budgetary general fund balance at the close of the 
biennium, money the commissioner of finance must be allocated 
allocate money 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 Laws 1985, 
First Special Session chapter 14, article 18, section 7; 
    (3) (2) reduce property tax levy recognition percent under 
section 121.904, subdivision 4c; and 
    (4) (3) increase the school aids payment current year 
percentage under section 121.904, subdivision 4d. 
    The amounts necessary to meet the requirements of clauses 
(1), (2), and (3) are appropriated from the general fund. 
    Sec. 4.  Minnesota Statutes 1985 Supplement, section 
121.904, subdivision 4c, is amended to read: 
    Subd. 4c.  [PROPERTY TAX SHIFT REDUCTION.] (a) 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, Money made 
available under section 16A.1541 must be used to reduce the levy 
recognition percent specified in subdivision 4a, clauses (b)(2) 
and (b)(3), shall be reduced for taxes payable in the succeeding 
calendar year, according to the provisions of this subdivision 
and section 16A.1541.  
    (b) The levy recognition percent shall equal the result of 
the following computation:  24 the current levy recognition 
percent, times the ratio of 
    (1) the statewide total amount of levy recognized in June 
of the year in which the taxes are payable pursuant to 
subdivision 4a, clause (b), reduced by the amount of the 
projected general fund balance money made available under 
section 16A.1541, to 
    (2) the statewide total amount of the levy recognized in 
June 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 zero or increased above the current levy 
recognition percent.  
    (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. 5.  Minnesota Statutes 1985 Supplement, section 
124.155, subdivision 2, is amended to read: 
    Subd. 2.  [SUBTRACTION FROM ADJUSTMENT TO 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 defined in section 
124.212, subdivision 1 124A.01;  
    (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) interdistrict cooperation aid authorized in section 
124.272; 
    (i) summer program aid authorized in section 124A.033; 
    (j) transportation aid authorized in section 124.225;  
    (i) (k) community education programs aid authorized in 
section 124.271;  
    (j) (l) adult education aid authorized in section 124.26;  
    (m) early childhood family education aid authorized in 
section 124.2711; 
    (k) (n) capital expenditure equalization aid authorized in 
section 124.245;  
    (l) (o) homestead credit authorized in section 273.13, 
subdivisions 22 and 23;  
    (p) state school agricultural tax credit aid authorized in 
section 124.2137; 
    (m) (q) wetlands credit authorized in section 273.115;  
    (n) (r) native prairie credit authorized in section 273.116;
and 
    (o) (s) attached machinery aid authorized in section 
273.138, subdivision 3; and 
    (t) teacher retirement and F.I.C.A. aid authorized in 
sections 124.2162 and 124.2163.  
    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. 6.  Minnesota Statutes 1984, section 124.195, 
subdivision 3, is amended to read: 
    Subd. 3.  [PAYMENT DATES AND PERCENTAGES.] Beginning in 
fiscal year 1984 and thereafter, The commissioner of education 
shall pay to a school district on the dates indicated an amount 
computed as follows:  the cumulative amount guaranteed minus the 
sum of (a) the district's other district receipts through the 
current payment, and (b) the aid and credit payments through the 
immediately preceding payment.  For purposes of this 
computation, the payment dates and the cumulative disbursement 
percentages are as follows:  
                         Payment date               Percentage 
Payment 1    First business day prior to July 15:       2.25
Payment 2    First business day prior to July 30:       4.50 
Payment 3    First business day prior to August 15:     6.75 
Payment 4    First business day prior to August 30:     9.0 
Payment 5    First business day prior to September 15:  the
             greater of (a) one-half of the final adjustment 
             for the prior fiscal year for the state paid 
             property tax credits established in section 
             273.1392, or (b) the amount needed to provide
             12.75 percent 
Payment 6    First business day prior to September 30:  the 
             greater of (a) one-half of the final adjustment
             for the prior fiscal year for the state paid
             property tax credits established in section 
             273.1392, or (b) the amount needed to provide 16.5
             percent
Payment 7    First business day prior to October 15:  the
             greater of (a) one-half of the final adjustment
             for the prior fiscal year for all aid entitlements
             except state paid property tax credits, or 
             (b) the amount needed to provide 20.75 percent
Payment 8    First business day prior to October 30:  the
             greater of (a) one-half of the final adjustment
             for the prior fiscal year for all aid 
             entitlements except state paid property tax
             credits, or (b) the amount needed to provide
             25.0 percent
Payment 9    First business day prior to November 15:   31.0
Payment 10   First business day prior to November 30:   37.0
Payment 11   First business day prior to December 15:   40.0
Payment 12   First business day prior to December 30:   43.0
Payment 13   First business day prior to January 15:    47.25
Payment 14   First business day prior to January 30:    51.5
Payment 15   First business day prior to February 15:   56.0
Payment 16   First business day prior to February 28:   60.5
Payment 17   First business day prior to March 15:      65.25
Payment 18   First business day prior to March 30:      70.0
Payment 19   First business day prior to April 15:      74.0
                                                        73.0 
Payment 20   First business day prior to April 30:      85.0
                                                        79.0
Payment 21   First business day prior to May 15:        92.0
                                                        82.0
Payment 22   First business day prior to May 30:       100.0
                                                        90.0
Payment 23   First business day prior to June 20:      100.0
    Sec. 7.  Minnesota Statutes 1984, section 124.195, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [APPEAL.] The commissioner may revise the 
payment dates and percentages in subdivision 3 and section 9 for 
a district if it is determined that there is an emergency or 
there are serious cash flow problems in the district that cannot 
be resolved by issuing warrants or other forms of indebtedness.  
The commissioner shall establish a process and criteria for 
school districts to appeal the payment dates and percentages 
established in subdivision 3 and section 9. 
    Sec. 8.  [1987 BIENNIUM ADDITIONAL REVENUES; PRIORITY.] 
    Notwithstanding Minnesota Statutes 1985 Supplement, section 
16A.1541, as amended by section 3, if on the basis of a forecast 
of general fund revenues and expenditures the commissioner of 
finance determines that there will be a positive unrestricted 
budgetary general fund balance at the close of the biennium 
ending June 30, 1987, money must be allocated in the following 
order of priority:  
    (1) the first $100,000,000 must be restricted for use as 
the budget and cash flow reserve account;  
    (2) one-half of any excess over $100,000,000 must be used 
to restore the appropriation reductions to the state board of 
vocational technical education, state board for community 
colleges, state university board, and board of regents of the 
University of Minnesota enacted by the 1986 legislature, 
prorated among the boards in proportion to those appropriation 
reductions, but not to exceed the amount of those appropriation 
reductions; 
    (3) one-half of any excess over $100,000,000, and any 
amount remaining after the application of clause (2), must be 
used to restore the budget and cash flow reserve account to 
$450,000,000; and 
    (4) any amount remaining after the application of clauses 
(1), (2), and (3) shall be used as provided in section 3. 
    The amount necessary to meet the requirements of clause (2) 
is appropriated from the general fund.  
    Sec. 9.  [TEMPORARY CHANGE IN PAYMENT OF AIDS AND CREDITS 
TO SCHOOL DISTRICTS.] 
    If the commissioner of finance determines that 
modifications in the payment schedule are required to avoid 
state short-term borrowing, the commissioner of education shall 
modify payments to school districts according to this section.  
The modifications shall begin no sooner than September 1, 1986, 
and shall remain in effect until no later than May 30, 1987.  In 
calculating the payment to a school district pursuant to 
Minnesota Statutes, section 124.195, subdivision 3, the 
commissioner may subtract the sum specified in that subdivision, 
plus an additional amount no greater than the following: 
    (1) the net cash balance in the district's four operating 
funds on June 30, 1986; minus 
    (2) the product of $150 times the number of actual pupil 
units in the 1985-1986 school year; minus 
    (3) the amount of payments made by the county treasurer 
during fiscal year 1986, pursuant to Minnesota Statutes, section 
276.11, which is considered revenue for the 1986-1987 school 
year.  However, no additional amount shall be subtracted if the 
total of the net unappropriated fund balances in the district's 
four operating funds on June 30, 1986, is less than the product 
of $350 times the number of actual pupil units in the 1985-1986 
school year.  The net cash balance shall include all cash and 
investments, less certificates of indebtedness outstanding, and 
orders not paid for want of funds. 
    A district may appeal the payment schedule established by 
this section according to the procedures established in section 
7. 
    Sec. 10.  [LIMITATION ON ALLOTMENT REDUCTION.] 
    Notwithstanding the provisions of Minnesota Statutes, 
section 16A.15, subdivision 1, no allotment shall be reduced 
before August 15, 1986, pursuant to an appropriation for state 
aids, payments, or reimbursements to or on behalf of school 
districts, or for aids to local governments authorized in 
Minnesota Statutes, chapter 477A, or for property tax credits or 
property tax relief authorized in Minnesota Statutes, chapter 
273 or 290A.  No allotment for these purposes shall be reduced 
after August 15, 1986, unless reductions totaling at least 
$85,000,000 have already been made from allotments pursuant to 
other appropriations during calendar year 1986. 
    Sec. 11. [PAYMENT DELAYS.] 
    Notwithstanding any other law to the contrary, the 
commissioner of finance may delay payment of any type of state 
aids to local units of government, excluding school districts.  
The commissioner may exercise the authority granted in this 
section only to the extent necessary to avoid short-term 
borrowing by the state.  The delay may not extend beyond the end 
of the fiscal year of the recipient.  
    Sec. 12.  [REPEALER.] 
    (a) Minnesota Statutes 1984, section 124A.031, subdivision 
2 is repealed.  
     (b) Minnesota Statutes 1985 Supplement, section 16A.154, is 
repealed. 
     Sec. 13.  [EFFECTIVE DATE.] 
     Sections 1, 2, 3, 4, 8, 10, 11, and 12, paragraph (b), are 
effective the day following final enactment. 

                               ARTICLE 6

                         LOCAL GOVERNMENT AIDS
    Section 1.  Minnesota Statutes 1985 Supplement, section 
477A.011, subdivision 10, is amended to read: 
    Subd. 10.  [MAXIMUM AID AMOUNT.] For any calendar year aid 
distribution, a city's maximum aid amount shall be 106 104 
percent of its previous year aid amount, provided that its 
previous year aid amount exceeded $150 $200 per capita.  If its 
previous year aid amount was less than $150 $200 per capita, its 
maximum aid amount shall be the lesser of:  (a) 112 105.8 
percent of its previous year aid amount, or (b) $159 $208 
multiplied by the population figure used in determining its 
previous year aid.  
    Sec. 2.  Minnesota Statutes 1985 Supplement, section 
477A.011, subdivision 14, is amended 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 $17 per capita per 
mill for the first $300 $350 of its fiscal need factor per 
capita; plus its fiscal need factor per capita divided 
by $14 $15 per capita per mill on that part of its fiscal need 
factor per capita, if any, in excess of $300 $350.  In no case 
shall a city's local effort mill rate be less than eight mills. 
    Sec. 3.  Minnesota Statutes 1985 Supplement, section 
477A.012, is amended to read: 
    477A.012 [COUNTY GOVERNMENT DISTRIBUTIONS.] 
    In calendar year 1986 1987, each county government shall 
receive a distribution equal to 60 104 percent of the aid amount 
certified for 1983 1986 pursuant to sections 477A.011 to 
477A.03.  Each county government that received no distribution 
in 1986 pursuant to sections 477A.011 to 477A.03 shall receive a 
distribution in calendar year 1987 computed by multiplying the 
county's population by a factor equal to the total increase in 
aid certified to all other counties under this section in 1987 
over the total amount certified in 1986, divided by the total 
population of those counties.  
    Sec. 4.  Minnesota Statutes 1985 Supplement, section 
477A.013, is amended to read: 
    477A.013 [MUNICIPAL GOVERNMENT DISTRIBUTIONS.] 
    Subdivision 1.  [TOWNS.] In calendar year 1986 1987, 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 104 percent of 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; or (b) 106 percent of the amount received in 1985 
1986 pursuant to Minnesota Statutes 1984, sections 477A.011 to 
477A.03.  
    Subd. 2.  [CITIES.] In calendar year 1986 1987, 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 $297,440,000 for calendar year 1986 1987. 
    Sec. 5.  Minnesota Statutes 1984, section 477A.015, is 
amended to read: 
    477A.015 [PAYMENT DATES.] 
    The commissioner of revenue shall make the payments of 
local government aid to affected taxing authorities in six two 
installments on July 15, August 15, September 15, October 15, 
November 15, and December 15 annually.  
    For calendar year 1981 only, the commissioner shall make 
the payments in seven installments computed as follows:  
one-fourth of the calendar year 1981 aids shall be paid on March 
15; the remaining amounts shall be divided into six equal 
payments to be made on July 15, August 15, September 15, October 
15, November 15, and December 15.  The commissioner may pay all 
or part of the payment due on December 15 at any time after 
August 15 upon the request of a city that requests such payment 
as being necessary for meeting its cash flow needs. 
     Sec. 6.  [EFFECTIVE DATE.] 
     Section 5 is effective July 1, 1986. 

                               ARTICLE 7 

                               COMPLIANCE 
    Section 1.  Minnesota Statutes 1984, section 60A.15, 
subdivision 2, is amended to read: 
    Subd. 2.  [DOMESTIC MUTUAL INSURANCE COMPANIES.] On or 
before April 15, June 15, September 15 and December 15 of each 
year, every domestic mutual insurance company including township 
and farmers' insurance companies shall pay to the commissioner 
of revenue quarterly installments equal to one-third of the 
insurer's total estimated tax for the current year based on a 
sum equal to two percent of the gross direct fire, lightning, 
and sprinkler leakage premiums, less return premiums on all 
direct business, except auto and ocean marine fire business 
received by it, or by its agents for it, in cash or otherwise, 
on property located in this state, during such year.  If unpaid 
by such dates, there shall be added to the tax for the taxable 
year an amount determined pursuant to subdivisions 1a to 1c.  
Failure of a company to make quarterly payments of at least 
one-fourth one-third of either (a) the total tax paid during the 
previous calendar year or (b) 80 percent of the actual tax for 
the current calendar year shall subject the company to the 
penalty and interest provided in this subdivision. 
    Sec. 2.  Minnesota Statutes 1985 Supplement, section 
60A.17, subdivision 1a, is amended to read: 
    Subd. 1a.  [LICENSE APPLICATION.] (a) [PROCEDURE.] An 
application for a license to act as an insurance agent shall be 
made to the commissioner by the person who seeks to be 
licensed.  The application for license shall be accompanied by a 
written appointment from an admitted insurer authorizing the 
applicant to act as its agent under one or both classes of 
license.  The insurer must also submit its check payable to the 
state treasurer for the amount of the appointment fee prescribed 
by section 60A.14, subdivision 1, paragraph (c), clause (9) at 
the time the agent becomes licensed.  The application and 
appointment shall be on forms prescribed by the commissioner.  
    If the applicant is a natural person, no license shall be 
issued until that natural person has become qualified.  
    If the applicant is a partnership or corporation, no 
license shall be issued until at least one natural person who is 
a partner, director, officer, stockholder, or employee shall be 
licensed as an insurance agent.  
    (b) [RESIDENT AGENT.] The commissioner shall issue a 
resident insurance agent's license to a qualified resident of 
this state as follows:  
    (1) a person may qualify as a resident of this state if 
that person resides in this state or the principal place of 
business of that person is maintained in this state.  
Application for a license claiming residency in this state for 
licensing purposes, shall constitute an election of residency in 
this state.  Any license issued upon an application claiming 
residency in this state shall be void if the licensee, while 
holding a resident license in this state, also holds, or makes 
application for, a resident license in, or thereafter claims to 
be a resident of, any other state or jurisdiction or if the 
licensee ceases to be a resident of this state; provided, 
however, if the applicant is a resident of a community or trade 
area, the border of which is contiguous with the state line of 
this state, the applicant may qualify for a resident license in 
this state and at the same time hold a resident license from the 
contiguous state;  
     (2) the commissioner shall subject each applicant who is a 
natural person to a written examination as to the applicant's 
competence to act as an insurance agent.  The examination shall 
be held at a reasonable time and place designated by the 
commissioner;  
     (3) the examination shall be approved for use by the 
commissioner and shall test the applicant's knowledge of the 
lines of insurance, policies, and transactions to be handled 
under the class of license applied for, of the duties and 
responsibilities of the licensee, and pertinent insurance laws 
of this state;  
     (4) the examination shall be given only after the applicant 
has completed a program of classroom studies in a school, which 
shall include a school conducted by an admitted insurer.  The 
course of study shall consist of 30 hours of classroom study 
devoted to the basic fundamentals of insurance for those seeking 
a Minnesota license for the first time, 15 hours devoted to 
specific life and health topics for those seeking a life and 
health license, and 15 hours devoted to specific property and 
casualty topics for those seeking a property and casualty 
license.  The program of studies or study course shall have been 
approved by the commissioner in order to qualify under this 
clause.  If the applicant has been previously licensed for the 
particular line of insurance in the state of Minnesota, the 
requirement of a program of studies or a study course shall be 
waived.  A certification of compliance by the organization 
offering the course shall accompany the applicant's license 
application.  This program of studies in a school or a study 
course shall not apply to farm property perils and farm 
liability applicants, or to agents writing such other lines of 
insurance as the commissioner may exempt from examination by 
order;  
     (5) the applicant must pass the examination with a grade 
determined by the commissioner to indicate satisfactory 
knowledge and understanding of the class or classes of insurance 
for which the applicant seeks qualification.  The commissioner 
shall inform the applicant as to whether or not the applicant 
has passed;  
     (6) an applicant who has failed to pass an examination may 
take subsequent examinations.  Examination fees for subsequent 
examinations shall not be waived; and 
    (7) any applicant for a license covering the same class or 
classes of insurance for which the applicant was licensed under 
a similar license in this state, other than a temporary license, 
within the three years preceding the date of the application 
shall be exempt from the requirement of a written examination, 
unless the previous license was revoked or suspended by the 
commissioner.  An applicant whose license is not renewed under 
subdivision 20 is exempt from the requirement of a written 
examination.  
    (c) [NONRESIDENT AGENT.] The commissioner shall issue a 
nonresident insurance agent's license to a qualified person who 
is a resident of another state or country as follows:  
    (1) A person may qualify for a license under this section 
as a nonresident only if that person holds a license in another 
state, province of Canada, or other foreign country which, in 
the opinion of the commissioner, qualifies that person for the 
same activity as that for which a license is sought;  
    (2) The commissioner shall not issue a license to any 
nonresident applicant until that person files with the 
commissioner a designation of the commissioner and the 
commissioner's successors in office as the applicant's true and 
lawful attorney upon whom may be served all lawful process in 
any action, suit, or proceeding instituted by or on behalf of 
any interested person arising out of the applicant's insurance 
business in this state.  This designation shall constitute an 
agreement that this service of process is of the same legal 
force and validity as personal service of process in this state 
upon that applicant.  
        Service of process upon any licensee in any action or 
proceeding commenced in any court of competent jurisdiction of 
this state may be made by serving the commissioner with 
appropriate copies of the process along with payment of the fee 
pursuant to section 60A.14, subdivision 1, paragraph (c), clause 
(4).  The commissioner shall forward a copy of the process by 
registered or certified mail to the licensee at the last known 
address of record or principal place of business of the 
licensee; and 
       (3) A nonresident license shall terminate automatically 
when the resident license for that class of license in the 
state, province, or foreign country in which the licensee is a 
resident is terminated for any reason.  
       (d) [DENIAL.] (1) If the commissioner finds that an 
applicant for a resident or nonresident license has not fully 
met the requirements for licensing, the commissioner shall 
refuse to issue the license and shall promptly give written 
notice to both the applicant and the appointing insurer of the 
denial, stating the grounds for the denial.  All fees which 
accompanied the application and appointment shall be deemed 
earned and shall not be refundable.  
      (2) The commissioner may also deny issuance of a license 
for any cause that would subject the license of a licensee to 
suspension or revocation.  If a license is denied pursuant to 
this clause, the provisions of subdivision 6c, paragraph (c) 
apply.  
     (3) The applicant may make a written demand upon the 
commissioner for a hearing within 30 days of the denial of a 
license to determine whether the reasons stated for the denial 
were lawful.  The hearing shall be held pursuant to chapter 14.  
     (e) [TERM.] All licenses issued pursuant to this section 
shall remain in force until voluntarily terminated by the 
licensee, not renewed as prescribed in subdivision 1d, or until 
suspended or revoked by the commissioner.  A voluntary 
termination shall occur when the license is surrendered to the 
commissioner with the request that it be terminated or when the 
licensee dies, or when the licensee is dissolved or its 
existence is terminated.  In the case of a nonresident license, 
a voluntary termination shall also occur upon the happening of 
the event described in paragraph (c), clause (3).  
      Every licensed agent shall notify the commissioner within 
30 days of any change of name, address, or information contained 
in the application. 
      (f) [SUBSEQUENT APPOINTMENTS.] A person who holds a valid 
agent's license from this state may solicit applications for 
insurance on behalf of an admitted insurer with which the 
licensee does not have a valid appointment on file with the 
commissioner; provided, that the licensee has permission from 
the insurer to solicit insurance on its behalf and, provided 
further, that the insurer upon receipt of the application for 
insurance submits a written notice of appointment to the 
commissioner accompanied by its check payable to the state 
treasurer in the amount of the appointment fee prescribed by 
section 60A.14, subdivision 1, paragraph (c), clause (9).  The 
notice of appointment shall be on a form prescribed by the 
commissioner.  
     (g) [AMENDMENT OF LICENSE.] An application to the 
commissioner to amend a license to reflect a change of name, or 
to include an additional class of license, or for any other 
reason, shall be on forms provided by the commissioner and shall 
be accompanied by the applicant's surrendered license and a 
check payable to the state treasurer for the amount of fee 
specified in section 60A.14, subdivision 1, paragraph (c).  
     An applicant who surrenders an insurance license pursuant 
to this clause retains licensed status until an amended license 
is received.  
     (h) [EXCEPTIONS.] The following are exempt from the general 
licensing requirements prescribed by this section:  
     (1) agents of township mutuals who are exempted pursuant to 
subdivision 1b;  
     (2) fraternal beneficiary association representatives 
exempted pursuant to subdivision 1c;  
    (3) any regular salaried officer or employee of a licensed 
insurer, without license or other qualification, may act on 
behalf of that licensed insurer in the negotiation of insurance 
for that insurer; provided that a licensed agent must 
participate in the sale of any such insurance;  
    (4) employers and their officers or employees, and the 
trustees or employees of any trust plan, to the extent that the 
employers, officers, employees, or trustees are engaged in the 
administration or operation of any program of employee benefits 
for the employees of the employers or employees of their 
subsidiaries or affiliates involving the use of insurance issued 
by a licensed insurance company; provided, that the activities 
of the officers, employees and trustees are incidental to 
clerical or administrative duties and their compensation does 
not vary with the volume of insurance or applications therefor; 
    (5) employees of a creditor who enroll debtors for life or 
accident and health insurance; provided the employees receive no 
commission or fee therefor; and 
    (6) clerical or administrative employees of an insurance 
agent who take insurance applications or receive premiums in the 
office of their employer, if the activities are incidental to 
clerical or administrative duties and the employee's 
compensation does not vary with the volume of the applications 
or premiums. 
    Sec. 3.  Minnesota Statutes 1984, section 60A.17, is 
amended by adding a subdivision to read: 
    Subd. 20.  [TAX CLEARANCE CERTIFICATE.] (a) The 
commissioner may not issue or renew a license under this section 
if the commissioner of revenue notifies the commissioner and the 
licensee or applicant for a license that the licensee or 
applicant owes the state delinquent taxes in the amount of $500 
or more.  The commissioner may issue or renew the license only 
if (1) the commissioner of revenue issues a tax clearance 
certificate and (2) the commissioner of revenue or the licensee 
or applicant forwards a copy of the clearance to the 
commissioner.  The commissioner of revenue may issue a clearance 
certificate only if the licensee or applicant does not owe the 
state any uncontested delinquent taxes. 
    (b) For purposes of this subdivision, the following terms 
have the meanings given. 
    (1) "Taxes" are all taxes payable to the commissioner of 
revenue, including penalties and interest due on those taxes. 
    (2) "Delinquent taxes" do not include a tax liability if 
(i) an administrative or court action that contests the amount 
or validity of the liability has been filed or served, (ii) the 
appeal period to contest the tax liability has not expired, or 
(iii) the licensee or applicant has entered into a payment 
agreement to pay the liability and is current with the payments. 
    (c) In lieu of the notice and hearing requirements of 
subdivisions 6c and 6d, when a licensee or applicant is required 
to obtain a clearance certificate under this subdivision, a 
contested case hearing must be held if the licensee or applicant 
requests a hearing in writing to the commissioner of revenue 
within 30 days of the date of the notice provided in paragraph 
(a).  The hearing must be held within 45 days of the date the 
commissioner of revenue refers the case to the office of 
administrative hearings.  Notwithstanding any law to the 
contrary, the licensee or applicant must be served with 20 days' 
notice in writing specifying the time and place of the hearing 
and the allegations against the licensee or applicant.  The 
notice may be served personally or by mail. 
    (d) The commissioner shall require all licensees or 
applicants to provide their social security number and Minnesota 
business identification number on all license applications.  
Upon request of the commissioner of revenue, the commissioner 
must provide to the commissioner of revenue a list of all 
licensees and applicants, including the name and address, social 
security number, and business identification number.  The 
commissioner of revenue may request a list of the licensees and 
applicants no more than once each calendar year.  
Notwithstanding sections 290.61 and 297A.43, the commissioner of 
revenue may release information necessary to accomplish the 
purpose of this subdivision.  
    Sec. 4.  Minnesota Statutes 1984, section 69.54, is amended 
to read: 
    69.54 [SURCHARGE ON PREMIUMS TO RESTORE DEFICIENCY IN 
SPECIAL FUND.] 
    The commissioner shall order and direct a surcharge to be 
collected of two percent of the fire, lightning, and sprinkler 
leakage gross premiums, less return premiums, on all direct 
business received by any foreign or domestic fire insurance 
company on property in this city of the first class, or by its 
agents for it, in cash or otherwise.  This surcharge shall be 
due and payable from these companies to the state treasurer, in 
semiannual equal installments, on June 30th and December 31st 
March 15, May 15, and November 15 of each calendar year, and if 
not paid within 30 days after these dates, a penalty of ten 
percent shall accrue thereon and thereafter this sum and penalty 
shall draw interest at the rate of one percent per month until 
paid.  
    Sec. 5.  Minnesota Statutes 1984, section 82.22, 
subdivision 3, is amended to read: 
    Subd. 3.  [RE-EXAMINATIONS.] An examination may be required 
before the renewal of any license which has been suspended, or 
before the issuance of a license to any person whose license has 
been ineffective for a period of one year, except no 
re-examination shall be required of any individual who has 
failed to cause renewal of an existing license because of 
absence from the state while on active duty with the armed 
services of the United States of America, and no reexamination 
shall be required of an individual whose license has not been 
renewed under section 82.27, subdivision 7.  
    Sec. 6.  Minnesota Statutes 1984, section 82.27, is amended 
by adding a subdivision to read: 
    Subd. 7.  [TAX CLEARANCE CERTIFICATE.] (a) In addition to 
the provisions of subdivision 1, the commissioner may not issue 
or renew a license if the commissioner of revenue notifies the 
commissioner and the licensee or applicant for a license that 
the licensee or applicant owes the state delinquent taxes in the 
amount of $500 or more.  The commissioner may issue or renew the 
license only if (1) the commissioner of revenue issues a tax 
clearance certificate and (2) the commissioner of revenue or the 
licensee or applicant forwards a copy of the clearance to the 
commissioner.  The commissioner of revenue may issue a clearance 
certificate only if the licensee or applicant does not owe the 
state any uncontested delinquent taxes. 
    (b) For purposes of this subdivision, the following terms 
have the meanings given. 
    (1) "Taxes" are all taxes payable to the commissioner of 
revenue, including penalties and interest due on those taxes. 
    (2) "Delinquent taxes" do not include a tax liability if 
(i) an administrative or court action that contests the amount 
or validity of the liability has been filed or served, (ii) the 
appeal period to contest the tax liability has not expired, or 
(iii) the licensee or applicant has entered into a payment 
agreement to pay the liability and is current with the payments. 
    (c) In lieu of the notice and hearing requirements of 
subdivisions 3, 4, 5, and 6, when a licensee or applicant is 
required to obtain a clearance certificate under this 
subdivision, a contested case hearing must be held if the 
licensee or applicant requests a hearing in writing to the 
commissioner of revenue within 30 days of the date of the notice 
provided in paragraph (a).  The hearing must be held within 45 
days of the date the commissioner of revenue refers the case to 
the office of administrative hearings.  Notwithstanding any law 
to the contrary, the licensee or applicant must be served with 
20 days' notice in writing specifying the time and place of the 
hearing and the allegations against the licensee or applicant.  
The notice may be served personally or by mail. 
    (d) The commissioner shall require all licensees or 
applicants to provide their social security number and Minnesota 
business identification number on all license applications.  
Upon request of the commissioner of revenue, the commissioner 
must provide to the commissioner of revenue a list of all 
licensees and applicants, including the name and address, social 
security number and business identification number.  The 
commissioner of revenue may request a list of the licensees and 
applicants no more than once each calendar year.  
Notwithstanding sections 290.61 and 297A.43, the commissioner of 
revenue may release information necessary to accomplish the 
purpose of this subdivision.  
    Sec. 7.  Minnesota Statutes 1985 Supplement, section 
147.021, is amended by adding a subdivision to read: 
    Subd. 7.  [TAX CLEARANCE CERTIFICATE.] (a) In addition to 
the provisions of subdivision 1, the board may not issue or 
renew a license if the commissioner of revenue notifies the 
board and the licensee or applicant for a license that the 
licensee or applicant owes the state delinquent taxes in the 
amount of $500 or more.  The board may issue or renew the 
license only if (1) the commissioner of revenue issues a tax 
clearance certificate and (2) the commissioner of revenue or the 
licensee or applicant forwards a copy of the clearance to the 
board.  The commissioner of revenue may issue a clearance 
certificate only if the licensee or applicant does not owe the 
state any uncontested delinquent taxes. 
     (b) For purposes of this subdivision, the following terms 
have the meanings given. 
     (1) "Taxes" are all taxes payable to the commissioner of 
revenue, including penalties and interest due on those taxes. 
     (2) "Delinquent taxes" do not include a tax liability if 
(i) an administrative or court action that contests the amount 
or validity of the liability has been filed or served, (ii) the 
appeal period to contest the tax liability has not expired, or 
(iii) the licensee or applicant has entered into a payment 
agreement to pay the liability and is current with the payments. 
     (c) In lieu of the notice and hearing requirements of 
subdivision 1, when a licensee or applicant is required to 
obtain a clearance certificate under this subdivision, a 
contested case hearing must be held if the licensee or applicant 
requests a hearing in writing to the commissioner of revenue 
within 30 days of the date of the notice provided in paragraph 
(a).  The hearing must be held within 45 days of the date the 
commissioner of revenue refers the case to the office of 
administrative hearings.  Notwithstanding any law to the 
contrary, the licensee or applicant must be served with 20 days' 
notice in writing specifying the time and place of the hearing 
and the allegations against the licensee or applicant.  The 
notice may be served personally or by mail. 
    (d) The board shall require all licensees or applicants to 
provide their social security number and Minnesota business 
identification number on all license applications.  Upon request 
of the commissioner of revenue, the board must provide to the 
commissioner of revenue a list of all licensees and applicants, 
including the name and address, social security number, and 
business identification number.  The commissioner of revenue may 
request a list of the licensees and applicants no more than once 
each calendar year.  Notwithstanding sections 290.61 and 
297A.43, the commissioner of revenue may release information 
necessary to accomplish the purpose of this subdivision.  
    Sec. 8.  Minnesota Statutes 1984, section 148.10, is 
amended by adding a subdivision to read: 
    Subd. 5.  [TAX CLEARANCE CERTIFICATE.] (a) In addition to 
the grounds provided in subdivision 1, the board may not issue 
or renew a license to practice chiropractic if the commissioner 
of revenue notifies the board and the licensee or applicant for 
a license that the licensee or applicant owes the state 
delinquent taxes in the amount of $500 or more.  The board may 
issue or renew the license only if (1) the commissioner of 
revenue issues a tax clearance certificate and (2) the 
commissioner of revenue or the licensee or applicant forwards a 
copy of the clearance to the board.  The commissioner of revenue 
may issue a clearance certificate only if the licensee or 
applicant does not owe the state any uncontested delinquent 
taxes. 
     (b) For purposes of this subdivision, the following terms 
have the meanings given. 
     (1) "Taxes" are all taxes payable to the commissioner of 
revenue, including penalties and interest due on those taxes. 
     (2) "Delinquent taxes" do not include a tax liability if 
(i) an administrative or court action that contests the amount 
or validity of the liability has been filed or served, (ii) the 
appeal period to contest the tax liability has not expired, or 
(iii) the licensee or applicant has entered into a payment 
agreement to pay the liability and is current with the payments. 
     (c) In lieu of the notice and hearing requirements of 
subdivisions 3 and 4, when a licensee or applicant is required 
to obtain a clearance certificate under this subdivision, a 
contested case hearing must be held if the licensee or applicant 
requests a hearing in writing to the commissioner of revenue 
within 30 days of the date of the notice provided in paragraph 
(a).  The hearing must be held within 45 days of the date the 
commissioner of revenue refers the case to the office of 
administrative hearings.  Notwithstanding any law to the 
contrary, the licensee or applicant must be served with 20 days' 
notice in writing specifying the time and place of the hearing 
and the allegations against the licensee or applicant.  The 
notice may be served personally or by mail. 
    (d) The board shall require all licensees or applicants of 
a license to practice chiropractic to provide their social 
security number and Minnesota business identification number on 
all license applications.  Upon request of the commissioner of 
revenue, the board must provide to the commissioner of revenue a 
list of all licensees and applicants for a license to practice 
chiropractic, including the name and address, social security 
number, and business identification number.  The commissioner of 
revenue may request a list of the licensees and applicants no 
more than once each calendar year.  Notwithstanding sections 
290.61 and 297A.43, the commissioner of revenue may release 
information necessary to accomplish the purpose of this 
subdivision.  
    Sec. 9.  Minnesota Statutes 1984, section 150A.08, is 
amended by adding a subdivision to read: 
    Subd. 9.  [TAX CLEARANCE CERTIFICATE.] (a) In addition to 
the grounds provided in subdivision 1 and notwithstanding 
subdivision 3, the board may not issue or renew a license to 
practice dentistry if the commissioner of revenue notifies the 
board and the licensee or applicant for a license that the 
licensee or applicant owes the state delinquent taxes in the 
amount of $500 or more.  The board may issue or renew the 
license only if (1) the commissioner of revenue issues a tax 
clearance certificate and (2) the commissioner of revenue or the 
licensee or applicant forwards a copy of the clearance to the 
board.  The commissioner of revenue may issue a clearance 
certificate only if the licensee or applicant does not owe the 
state any uncontested delinquent taxes. 
     (b) For purposes of this subdivision, the following terms 
have the meanings given. 
     (1) "Taxes" are all taxes payable to the commissioner of 
revenue, including penalties and interest due on those taxes. 
     (2) "Delinquent taxes" do not include a tax liability if 
(i) an administrative or court action that contests the amount 
or validity of the liability has been filed or served, (ii) the 
appeal period to contest the tax liability has not expired, or 
(iii) the licensee or applicant has entered into a payment 
agreement to pay the liability and is current with the payments. 
     (c) In lieu of the notice and hearing requirements of 
subdivision 8, when a licensee or applicant is required to 
obtain a clearance certificate under this subdivision, a 
contested case hearing must be held if the licensee or applicant 
requests a hearing in writing to the commissioner of revenue 
within 30 days of the date of the notice provided in paragraph 
(a).  The hearing must be held within 45 days of the date the 
commissioner of revenue refers the case to the office of 
administrative hearings.  Notwithstanding any law to the 
contrary, the licensee or applicant must be served with 20 days' 
notice in writing specifying the time and place of the hearing 
and the allegations against the licensee or applicant.  The 
notice may be served personally or by mail. 
    (d) The board shall require all licensees or applicants for 
a license to practice dentistry to provide their social security 
number and Minnesota business identification number on all 
license applications.  Upon request of the commissioner of 
revenue, the board must provide to the commissioner of revenue a 
list of all licensees and applicants for a license to practice 
dentistry including the name and address, social security 
number, and business identification number.  The commissioner of 
revenue may request a list of the licensees and applicants no 
more than once each calendar year.  Notwithstanding sections 
290.61 and 297A.43, the commissioner of revenue may release 
information necessary to accomplish the purpose of this 
subdivision.  
    Sec. 10.  Minnesota Statutes 1985 Supplement, section 
270.063, is amended to read: 
    270.063 [COLLECTION OF DELINQUENT TAXES.] 
    For the purpose of collecting delinquent state tax 
liabilities from taxpayers who do not reside or are not located 
in Minnesota, there is appropriated to the commissioner of 
revenue an amount representing the cost of collection, not to 
exceed one-third of the amount collected by contract with 
collection agencies, revenue departments of other states, or 
attorneys to enable the commissioner to reimburse these 
agencies, departments, or attorneys for this service.  The 
commissioner shall report quarterly on the status of this 
program to the chairmen of the house tax and appropriation 
committees and senate tax and finance committees.  
    Notwithstanding section 16A.15, subdivision 3, the 
commissioner of revenue may authorize the prepayment of 
sheriff's fees, attorney fees, fees charged by revenue 
departments of other states, or court costs to be incurred in 
connection with the collection out of state of delinquent tax 
liabilities owed to the commissioner of revenue.  
    Sec. 11.  Minnesota Statutes 1985 Supplement, section 
270.69, subdivision 2, is amended to read: 
    Subd. 2.  [FILING OF LIENS NECESSARY FOR ENFORCEABILITY 
AGAINST CERTAIN PERSONS.] The lien imposed by subdivision 1 is 
not enforceable against any purchaser, mortgagee, pledgee, 
holder of a uniform commercial code security interest, 
mechanic's lienor, or judgment lien creditor, until a notice of 
lien has been filed by the commissioner of revenue in the office 
of the county recorder of the county in which the property is 
situated, or in the case of personal property belonging to an 
individual who is not a resident of this state, or which is a 
corporation, partnership, or other organization, in the office 
of the secretary of state.  The indexing of liens filed pursuant 
to this subdivision and, notwithstanding section 386.77, the 
fees charged for such filing and indexing, shall be as 
prescribed in sections 272.483 and 272.484.  Notwithstanding any 
other law to the contrary, the department of revenue is exempt 
from the payment of fees at the time the lien is offered for 
filing or recording.  The fee for filing or recording the lien 
must be paid at the time the release of lien is offered for 
filing or recording.  Notwithstanding any law to the contrary, 
the fee for filing or recording the lien or the release of lien 
is $15. 
    Sec. 12.  Minnesota Statutes 1985 Supplement, section 
270.69, subdivision 3, is amended to read: 
    Subd. 3.  [EXEMPT PROPERTY.] The lien imposed on personal 
property by this section, even though properly filed, is not 
enforceable against a purchaser with respect to tangible 
personal property purchased at retail, or against the personal 
property listed as exempt in sections 550.37, 550.38, and 
550.39, or against the homestead of the taxpayer as defined in 
chapter 510. 
    Sec. 13.  Minnesota Statutes 1985 Supplement, section 
270.69, subdivision 4, is amended to read: 
    Subd. 4.  [PERIOD OF LIMITATIONS.] The lien imposed by this 
section shall, notwithstanding any other provision of law to the 
contrary, be enforceable from the time the lien arises and for 
ten years from the date of filing the notice of lien, which must 
be filed by the commissioner within five years after the date of 
assessment of the tax.  A notice of lien filed in one county may 
be transcribed to any other county within ten years after the 
date of its filing, but the transcription shall not extend the 
period during which the lien is enforceable.  A notice of lien 
may be renewed by the commissioner before the expiration of the 
ten-year period for an additional ten years.  The taxpayer must 
receive written notice of the renewal. 
    Sec. 14.  Minnesota Statutes 1984, section 270.69, is 
amended by adding a subdivision to read: 
    Subd. 10.  [LIMITATION FOR HOMESTEAD PROPERTY.] A lien 
imposed under this section upon property defined as homestead 
property in chapter 510 may not be enforced against homestead 
property by levy under section 270.70, or by judgment lien under 
chapter 550. 
    Sec. 15.  Minnesota Statutes 1984, section 270.72, 
subdivision 1, is amended to read: 
    Subdivision 1.  [TAX CLEARANCE REQUIRED.] The state or a 
political subdivision of the state may not issue, transfer, or 
renew a license for the conduct of a profession, trade, or 
business, if the commissioner notifies the licensing authority 
that the applicant owes the state delinquent taxes, penalties, 
or interest.  The commissioner may not notify the licensing 
authority unless the applicant taxpayer owes $1,000 $500 or more 
in delinquent taxes.  A licensing authority that has received a 
notice from the commissioner may issue, transfer, or renew the 
applicant's license only if (a) the commissioner issues a tax 
clearance certificate and (b) the commissioner or the applicant 
forwards a copy of the clearance to the authority.  The 
commissioner may issue a clearance certificate only if the 
applicant does not owe the state any uncontested delinquent 
taxes, penalties, or interest.  
    Sec. 16.  Minnesota Statutes 1984, section 270.72, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
following terms have the meanings given.  
    (a) "Taxes" are limited to withholding tax as provided in 
section 290.92, sales and use tax as provided in chapter 297A, 
and motor vehicle excise tax as provided in chapter 297B. 
Penalties and interest are limited to penalties and interest due 
on taxes included in this definition. 
    (b) "Delinquent taxes" do not include a tax liability if 
(i) an administrative or court action which contests the amount 
or validity of the liability has been filed or served, (ii) the 
appeal period to contest the tax liability has not expired, or 
(iii) the applicant has entered into a payment agreement and is 
current with the payments.  
    (c) "Applicant" means an individual if the license is 
issued to or in the name of an individual or the corporation or 
partnership if the license is issued to or in the name of a 
corporation or partnership.  "Applicant" also means an officer 
of a corporation or a member of a partnership who is liable for 
the delinquent taxes pursuant to section 270.10, subdivision 4, 
either for the entity for which the license is at issue or for 
another entity for which the liability was incurred, or 
personally as a licensee.  
    Sec. 17.  Minnesota Statutes 1984, section 270.72, 
subdivision 3, is amended to read: 
    Subd. 3.  [NOTICE AND HEARING.] If the commissioner 
notifies a licensing authority pursuant to subdivision 1, he 
must send a copy of the notice to the applicant.  In the case of 
the renewal of a license If the applicant requests, in writing, 
within 30 days of the receipt date of the notice a hearing, a 
contested case hearing must be held.  The hearing must be held 
within 45 days of the date the commissioner refers the case to 
the office of administrative hearings.  The hearing must be held 
under the procedures provided by section 270A.09 and the 
administrative rules promulgated under chapter 
270A.  Notwithstanding any law to the contrary, the applicant 
must be served with 20 days' notice in writing specifying the 
time and place of the hearing and the allegations against the 
applicant.  The notice may be served personally or by mail.  
    Sec. 18.  Minnesota Statutes 1985 Supplement, section 
270.76, is amended to read: 
    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. 19.  Minnesota Statutes 1985 Supplement, section 
273.124, is amended by adding a subdivision to read: 
    Subd. 13.  [SOCIAL SECURITY NUMBER REQUIRED FOR HOMESTEAD 
APPLICATION.] Beginning with the January 2, 1987, assessment, 
every property owner applying for homestead classification must 
furnish to the county assessor that owner's social security or 
taxpayer identification number.  If the social security or 
taxpayer identification number is not provided, the county 
assessor shall classify the property as nonhomestead.  The 
social security numbers of the property owners are private data 
on individuals as defined by section 13.02, subdivision 12, but, 
notwithstanding that section, the private data may be disclosed 
to the commissioner of revenue. 
    At the request of the commissioner, each county must give 
the commissioner a listing that includes the name and social 
security or taxpayer identification number of each property 
owner applying for homestead classification.  
    If, in comparing the lists supplied by the counties, the 
commissioner finds that a property owner is claiming more than 
one homestead, the commissioner shall notify the appropriate 
counties.  Within 90 days of the notification, the county 
assessor shall investigate to determine if the homestead 
classification was properly claimed.  If the property owner does 
not qualify, the county assessor shall notify the county auditor 
who will determine the amount of homestead benefits that had 
been improperly allowed.  For the purpose of this section, 
"homestead benefits" means homestead credit, taconite homestead 
credit, supplemental homestead credit, and the agricultural 
school credit which is in excess of the credit which would be 
allowed if the property had been classified as nonhomestead 
property.  The county auditor shall send a notice to the owners 
of the affected property, demanding reimbursement of the 
homestead benefits plus a penalty equal to 25 percent of the 
homestead benefits.  The property owners may appeal the county's 
determination by filing a notice of appeal with the Minnesota 
tax court within 60 days of the date of the notice from the 
county. 
    If the amount of homestead benefits and penalty is not paid 
within 60 days, and if no appeal has been filed, the county 
auditor shall certify the amount to the succeeding year's tax 
list to be collected as part of the property taxes. 
    Any amount of homestead benefits recovered from the 
property owner must be transmitted to the commissioner by the 
end of each calendar quarter.  Any amount recovered attributable 
to taconite homestead credit shall be transmitted to the St. 
Louis county auditor to be deposited in the taconite property 
tax relief account.  The amount of penalty collected must be 
deposited in the county general fund. 
    The commissioner will provide suggested homestead 
applications to each county.  If a property owner has applied 
for more than one homestead and the county assessors cannot 
determine which property should be classified as homestead, the 
county assessors will refer the information to the commissioner. 
The commissioner shall make the determination and notify the 
counties within 60 days. 
    In addition to lists of homestead properties, the 
commissioner may ask the counties to furnish lists of all 
properties and the record owners. 
    Sec. 20.  Minnesota Statutes 1984, section 290.53, 
subdivision 2, is amended to read: 
    Subd. 2.  [FAILURE TO MAKE AND FILE RETURN.] In case of any 
failure to make and file a return as required by this chapter 
within the time prescribed by law or prescribed by the 
commissioner in pursuance of law, there shall be added to the 
tax or subtracted from the refund in lieu of the penalty 
provided in subdivision 1:  ten percent of the amount of tax 
unpaid 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 such failure continues, not exceeding 25 
percent in the aggregate; or ten percent of the amount of the 
refund claimed if the failure is for more than 60 but less than 
90 days (determined with regard to any extensions of time for 
filing), with an additional five percent for each additional 30 
days or fraction thereof during which such failure continues, 
not exceeding 25 percent in the aggregate.  
    In addition to the penalty imposed above, in the case of a 
failure to file a return of tax imposed by this chapter within 
60 days of the date prescribed for filing of the return 
(determined with regard to any extensions of time for filing), 
where the return has been demanded by the commissioner under the 
provisions of section 290.47, the amount there shall be added to 
the tax under this subdivision shall not be less than or 
subtracted from the refund the lesser of $50 (i) $100 or (ii) 
100 percent of either the amount required to be shown as the 
amount of tax which is due with the return or the amount of the 
refund.  
    The amount so added to any tax shall be collected at the 
same time and in the same manner and as a part of the tax, and 
the amount of said tax together with the amount so added shall 
bear interest at the rate specified in section 270.75 from the 
time such tax should have been paid until paid unless the tax 
has been paid before the discovery of the neglect, in which case 
the amount so added shall be collected in the same manner as the 
tax. 
    For the purposes of this subdivision the amount of any 
taxes required to be shown on the return shall be reduced by the 
amount of any part of the tax which is paid on or before the 
date prescribed for payment of the tax and by the amount of any 
credit against the tax which may be claimed upon the return. 
    Sec. 21.  Minnesota Statutes 1984, section 290.61, is 
amended to read: 
    290.61 [PUBLICITY OF RETURNS, INFORMATION.] 
    It shall be unlawful for the commissioner or any other 
public official or employee to divulge or otherwise make known 
in any manner any particulars set forth or disclosed in any 
report or return required by this chapter, or any information 
concerning, the taxpayer's affairs acquired from his or its 
records, officers, or employees while examining or auditing any 
taxpayer's liability for taxes imposed hereunder, except in 
connection with a proceeding involving taxes due under this 
chapter from the taxpayer making such return or to comply with 
the provisions of sections 256.978, 268.12, subdivision 12, 
270A.11, 273.1314, subdivision 16, 290.612 and 302A.821.  The 
commissioner may furnish a copy of any taxpayer's return, 
including audit documents and information, to any official of 
the United States or of any state having duties to perform in 
respect to the assessment or collection of any tax imposed upon 
or measured by income, if such taxpayer is required by the laws 
of the United States or of such state to make a return therein.  
Prior to the release of any information to any official of the 
United States or any other state under the provisions of this 
section, the person to whom the information is to be released 
shall sign an agreement which provides that he will protect the 
confidentiality of the returns and information revealed thereby 
to the extent that it is protected under the laws of the state 
of Minnesota.  The commissioner and all other public officials 
and employees shall keep and maintain the same secrecy in 
respect to any information furnished by any department, 
commission, or official of the United States or of any other 
state in respect to the income of any person as is required by 
this section in respect to information concerning the affairs of 
taxpayers under this chapter.  Nothing herein contained shall be 
construed to prohibit the commissioner from publishing 
statistics so classified as not to disclose the identity of 
particular returns or reports and the items thereof.  Upon 
request of a majority of the members of the senate tax committee 
or of the house tax committee or the tax study commission, the 
commissioner shall furnish abstracted financial information to 
those committees for research purposes from returns or reports 
filed pursuant to this chapter, provided that he shall not 
disclose the name, address, social security number, business 
identification number or any other item of information 
associated with any return or report which the commissioner 
believes is likely to identify the taxpayer.  The commissioner 
shall not furnish the actual return, or a portion thereof, or a 
reproduction or copy of any return or portion thereof.  
"Abstracted financial information" means only the dollar amounts 
set forth on each line on the form including the filing status. 
     Any person violating the provisions of this section shall 
be guilty of a gross misdemeanor. 
     In order to locate the named payee on state warrants issued 
pursuant to this chapter or chapter 290A and undeliverable by 
the United States postal service, the commissioner may publish 
in any newspaper of general circulation in this state or make 
available to radio or television stations a list of the name and 
last known address of the payee as shown on the reports or 
returns filed with the commissioner.  The commissioner may 
exclude the names of payees whose refunds are in an amount which 
is less than a minimal amount to be determined by the 
commissioner.  The list shall not contain any particulars set 
forth on any report or return.  The publication or announcement 
shall include instructions on claiming the warrants. 
     An employee of the department of revenue may, in connection 
with his official duties relating to any audit, collection 
activity, or civil or criminal tax investigation or any other 
offense under this chapter, disclose return information to the 
extent that such disclosure is necessary in obtaining 
information, which is not not otherwise reasonably available, 
with respect to the correct determination of tax, liability for 
tax, or the amount to be collected or with respect to the 
enforcement of any other provision of this chapter.  
     In order to facilitate processing of returns and payments 
of taxes required by this chapter, or to facilitate the 
development, implementation, and use of computer programs and 
automated procedures for purposes of administering this chapter 
or chapter 290A, the commissioner may contract with outside 
vendors and may disclose private and nonpublic data to the 
vendor.  The data disclosed will be administered by the vendor 
consistent with this section, and the vendor must agree to 
subject himself and his employees to the civil and criminal 
penalties provided by law for unlawful disclosure. 
    Information from a tax return required under this chapter 
on a holder of a license issued by the Minnesota racing 
commission or an owner of a horse may be provided by the 
commissioner to the Minnesota racing commission. 
    The commissioner may provide to the Minnesota supreme court 
and the board of professional responsibility information 
regarding the amount of any uncontested delinquent taxes due 
under this chapter or a failure to file a return due under this 
chapter by an attorney admitted to practice law in this state 
under chapter 481.  
    Sec. 22.  Minnesota Statutes 1984, section 297.07, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MONTHLY RETURN FILED WITH COMMISSIONER.] 
On or before the eighteenth twenty-fifth day of each calendar 
month every distributor with a place of business in this state 
shall file a return with the commissioner showing the quantity 
of cigarettes manufactured or brought in from without the state 
or purchased during the preceding calendar month and the 
quantity of cigarettes sold or otherwise disposed of in this 
state and outside this state during that month.  Every licensed 
distributor outside this state shall in like manner file a 
return showing the quantity of cigarettes shipped or transported 
into this state during the preceding calendar month.  Returns 
shall be made upon forms furnished and prescribed by the 
commissioner and shall contain such other information as the 
commissioner may require.  The return shall be accompanied by a 
remittance for the full unpaid tax liability shown by it. 
    Sec. 23.  Minnesota Statutes 1984, section 297.07, 
subdivision 4, is amended to read: 
    Subd. 4.  [MONTHLY TAX PAYMENTS; PENALTY FOR NONPAYMENT.] 
(a) Except as provided in paragraph (b), all taxes shall be due 
and payable not later than the eighteenth twenty-fifth day of 
the month following the calendar month in which they were 
incurred, and thereafter shall bear interest at the rate 
specified in section 270.75.  The commissioner in issuing his 
final assessment pursuant to subdivision 3 shall add to the 
amount of tax found due and unpaid a penalty of ten percent 
thereof, except that, if he finds that the distributor has made 
a false and fraudulent return with intent to evade the tax 
imposed by sections 297.01 to 297.13, the penalty shall be 25 
percent of the entire tax as shown by the corrected return.  If 
any such tax is not paid within the time herein specified for 
the payment thereof or within 30 days after final determination 
of an appeal to the Minnesota tax court relating thereto, there 
shall be added thereto a specific penalty equal to ten percent 
of the amount so remaining unpaid, but in no event shall the 
penalty for failure to pay such tax within the time provided for 
such payment be less than $10.  The commissioner is authorized 
to extend the time for paying such tax without penalty for good 
cause shown. 
    (b) Every distributor having a liability of $1,500 or more 
in May 1987 or in May of each subsequent year, shall remit the 
June liability in the manner required by this section.  
    On or before June 25, 1987, or June 25 of each subsequent 
year, the distributor shall remit the actual May liability and 
one-half of the estimated June liability to the commissioner and 
file the return on a form prescribed by the commissioner.  
    On or before August 25, 1987, or August 25 of each 
subsequent year, the distributor shall submit a return showing 
the actual June liability and paying any additional amount of 
tax not remitted in June.  A penalty is imposed equal to ten 
percent of the amount of June liability required to be paid in 
June less the amount remitted in June.  However, the penalty 
shall not be imposed if the amount remitted in June equals the 
lesser of (a) 45 percent of the actual June liability, or (b) 50 
percent of the preceding May's liability.  
    Sec. 24.  Minnesota Statutes 1984, section 297.23, 
subdivision 1, is amended to read: 
    Subdivision 1.  On or before the eighteenth twenty-fifth 
day of each calendar month, every consumer who during the 
preceding calendar month has acquired title to or possession of 
cigarettes for use or storage in this state, upon which 
cigarettes the tax imposed by sections 297.01 to 297.13 has not 
been paid, shall file a return with the commissioner showing the 
quantity of cigarettes so acquired.  The return shall be made 
upon a form furnished and prescribed by the commissioner, and 
shall contain such other information as the commissioner may 
require.  The return shall be accompanied by a remittance for 
the full unpaid tax liability shown by it.  
    Sec. 25.  Minnesota Statutes 1985 Supplement, section 
297.35, subdivision 1, is amended to read: 
    Subdivision 1.  On or before the eighteenth twenty-fifth 
day of each calendar month every distributor with a place of 
business in this state shall file a return with the commissioner 
showing the quantity and wholesale sales price of each tobacco 
product (1) brought, or caused to be brought, into this state 
for sale; and (2) made, manufactured or fabricated in this state 
for sale in this state, during the preceding calendar month.  
Every licensed distributor outside this state shall in like 
manner file a return showing the quantity and wholesale sales 
price of each tobacco product shipped or transported to 
retailers in this state to be sold by those retailers, during 
the preceding calendar month.  Returns shall be made upon forms 
furnished and prescribed by the commissioner and shall contain 
such other information as the commissioner may require.  Each 
return shall be accompanied by a remittance for the full tax 
liability shown therein, less two percent of such liability as 
compensation to reimburse the distributor for his expenses 
incurred in the administration of sections 297.31 to 297.39. 
    Sec. 26.  Minnesota Statutes 1984, section 297.35, 
subdivision 5, is amended to read: 
    Subd. 5.  (a) Except as provided in paragraph (b), all 
taxes shall be due and payable not later than the eighteenth 
twenty-fifth day of the month following the calendar month in 
which they were incurred, and thereafter shall bear interest at 
the rate specified in section 270.75.  If any tax required to be 
paid under the provisions of this section is not paid within the 
time herein specified, a penalty of five percent of the unpaid 
tax remaining each month up to a maximum of 25 percent is herein 
imposed but in no event shall the penalty for failing to pay 
such tax within the time so provided be less than $10.  The 
commissioner of revenue is authorized to extend the time for 
paying such tax without penalty for good cause shown. 
    Where, under the provisions of subdivisions 2 and 3, the 
amount of tax due for a given period is assessed without 
allocating it to any particular month or months, the interest 
shall commence to run from the date of such assessment. 
    The commissioner shall have power to reduce or abate the 
penalty or interest when in his opinion the facts warrant such 
reduction or abatement.  The exercise of this power shall be 
subject to the provisions of chapter 270 if the reduction or 
abatement exceeds $500. 
    (b) Every distributor having a liability of $1,500 or more 
in May 1987 or in May of each subsequent year, shall remit the 
June liability in the manner required by this section.  
    On or before June 25, 1987, or June 25 of each subsequent 
year, the distributor shall remit the actual May liability and 
one-half of the estimated June liability to the commissioner and 
file the return on a form prescribed by the commissioner.  
    On or before August 25, 1987, or August 25 of each 
subsequent year, the distributor shall submit a return showing 
the actual June liability and paying any additional amount of 
tax not remitted in June.  A penalty is imposed equal to ten 
percent of the amount of June liability required to be paid in 
June less the amount remitted in June.  However, the penalty is 
not imposed if the amount remitted in June equals the lesser of 
(a) 45 percent of the actual June liability, or (b) 50 percent 
of the preceding May's liability.  
    Sec. 27.  Minnesota Statutes 1984, section 297.35, 
subdivision 8, is amended to read: 
    Subd. 8.  On or before the eighteenth twenty-fifth day of 
each calendar month, every consumer who, during the preceding 
calendar month, has acquired title to or possession of tobacco 
products for use or storage in this state, upon which tobacco 
products the tax imposed by section 297.32 has not been paid, 
shall file a return with the commissioner showing the quantity 
of tobacco products so acquired.  The return shall be made upon 
a form furnished and prescribed by the commissioner, and shall 
contain such other information as the commissioner may require.  
The return shall be accompanied by a remittance for the full 
unpaid tax liability shown by it. 
    Sec. 28.  [REVENUE FROM ACCELERATION.] 
    Notwithstanding the provisions of Minnesota Statutes, 
sections 297.13, subdivision 1, and 297.32, subdivision 9, all 
revenue collected in June 1987 as a result of the acceleration 
under the provisions of sections 23 and 26 shall be deposited in 
the general fund. 
    Sec. 29.  [297A.151] [TAX ON LIQUOR AND BEER; DELINQUENCY.] 
    Subdivision 1.  [POSTING, NOTICE.] Notwithstanding section 
297A.43, the commissioner shall, by the 15th of each month, 
submit to the commissioner of public safety a list of all permit 
holders who are required to collect the tax imposed by section 
297A.02, subdivision 3, and who are 30 days or more delinquent 
in either filing a sales tax return or paying the sales tax.  At 
least ten days before notifying the commissioner of public 
safety, the commissioner of revenue shall notify the permit 
holder of the intended action. 
    The commissioner of public safety shall post the list in 
the same manner as provided in section 340A.318, subdivision 3.  
The list will prominently show the date of posting.  If a permit 
holder previously listed cures the delinquency by filing all 
returns and paying all taxes, the commissioner shall notify the 
commissioner of public safety within two business days that the 
delinquency was cured. 
    Subd. 2.  [SALES PROHIBITED.] Beginning the third business 
day after the list is posted, no wholesaler, manufacturer, or 
brewer may sell or deliver any product to a permit holder 
included on the posted list. 
    Subd. 3.  [PENALTY.] A wholesaler, manufacturer, or brewer 
of intoxicating liquor who violates subdivision 2 is subject to 
the penalties provided in section 340A.304.  
    Sec. 30.  Minnesota Statutes 1984, section 297A.27, is 
amended by adding a subdivision to read: 
    Subd. 1a.  Any person required to collect the tax imposed 
by section 297A.02, subdivision 3, on sales of intoxicating 
liquor and nonintoxicating malt liquor, shall report the total 
sales tax liability, including the sales tax on items other than 
intoxicating liquor and nonintoxicating malt liquor, on a 
distinct sales tax return prescribed by the commissioner.  The 
due date of the return will be as otherwise provided in this 
chapter. 
    Sec. 31.  Minnesota Statutes 1984, section 297A.43, is 
amended to read: 
    297A.43 [CONFIDENTIAL NATURE OF INFORMATION.] 
    It shall be unlawful for the commissioner or any other 
public official or employee to divulge or otherwise make known 
in any manner any particulars disclosed in any report or return 
required by sections 297A.01 to 297A.44, or any information 
concerning the affairs of the person making the return acquired 
from his records, officers, or employees while examining or 
auditing under the authority of sections 297A.01 to 297A.44, 
except in connection with a proceeding involving taxes due under 
this chapter from the taxpayer making such report or return or 
to comply with the provisions of section 297A.431 or where a 
question arises as to the proper tax applicable, that is, sales 
or use tax. In the latter instance, the commissioner may furnish 
information to a buyer and a seller with respect to the specific 
transaction in question.  Nothing herein contained shall be 
construed to prohibit the commissioner from publishing 
statistics so classified as not to disclose the identity of 
particular returns or reports and the contents thereof.  Any 
person violating the provisions of this section shall be guilty 
of a gross misdemeanor. 
    The commissioner may enter into an agreement with the 
commissioner or other taxing officials of another state for the 
interpretation and administration of the acts of their several 
states providing for the collection of a sales and/or use tax 
for the purpose of promoting fair and equitable administration 
of such acts and to eliminate double taxation. 
    Notwithstanding the above provisions of this section, the 
commissioner, at his discretion, in order to implement the 
purposes of this chapter, may furnish information on a 
reciprocal basis to the taxing officials of another state, or to 
the taxing officials of any municipality of the state of 
Minnesota which has a local sales and/or use tax.  The 
commissioner may furnish to the Minnesota supreme court and the 
board of professional responsibility information regarding the 
amount of any uncontested delinquent taxes due under this 
chapter or a failure to file a return due under this chapter by 
an attorney admitted to practice law in this state under chapter 
481.  
    In order to facilitate processing of returns and payments 
of taxes required by this chapter, the commissioner may contract 
with outside vendors and may disclose private and nonpublic data 
to the vendor.  The data disclosed will be administered by the 
vendor consistent with this section.  
    Sec. 32.  Minnesota Statutes 1985 Supplement, section 
297C.03, subdivision 1, is amended to read: 
    Subdivision 1.  [MANNER AND TIME OF PAYMENT; PENALTIES; 
DEPOSIT OF TAX PROCEEDS.] The tax on wines and distilled spirits 
on which the excise tax has not been previously paid must be 
paid to the commissioner by persons having on file with the 
commissioner a sufficient bond as provided in subdivision 2 on 
or before the tenth twenty-fifth day of the month following the 
month in which the first sale is made in this state by a 
licensed manufacturer or wholesaler.  Every person liable for 
the tax on wines or distilled spirits imposed by section 297C.02 
must file with the commissioner on or before the tenth 
twenty-fifth day of the month following first sale in this state 
by a licensed manufacturer or wholesaler a return in the form 
prescribed by rule of the commissioner, and must keep records 
and render reports required by rule of the commissioner.  A 
person liable for any tax on wines or distilled spirits not 
having on file a sufficient bond must pay the tax within 24 
hours after first sale in this state.  The commissioner may 
certify to the commissioner of public safety any failure to pay 
taxes when due as a violation of a statute relating to the sale 
of intoxicating liquor for possible revocation or suspension of 
license.  
    If a person fails to pay the tax within the time specified 
or within 30 days after final determination of an appeal to the 
Minnesota tax court relating thereto, there is added a penalty 
equal to ten percent of the remaining unpaid amount.  The 
penalty must be collected as part of the tax.  The amount of tax 
not timely paid, together with the penalty, must bear interest 
at the rate specified in section 270.75 from the time the tax 
should have been paid until it is paid. 
    Sec. 33.  Minnesota Statutes 1985 Supplement, section 
297C.04, is amended to read: 
    297C.04 [PAYMENT OF TAX; MALT LIQUOR.] 
    The commissioner shall by rule provide a reporting method 
for paying and collecting the excise tax on fermented malt 
beverages.  The rules must require reports to be filed with and 
the excise tax to be paid to the commissioner on or before the 
fifteenth twenty-fifth day of the month following the month in 
which the importation into or the first sale is made in this 
state, whichever first occurs.  The rules must also require 
payments in June of 1987 and subsequent years according to the 
provisions of section 297C.05, subdivision 2, paragraph (b).  If 
the excise tax is not paid when due, the amount due is increased 
by a penalty of ten percent thereof, and interest on the tax and 
penalty at an annual rate of 20 percent, adjusted as provided in 
section 270.75, from the date the tax became due until paid.  
    Sec. 34.  Minnesota Statutes 1985 Supplement, section 
297C.05, subdivision 2, is amended to read: 
    Subd. 2.  [MONTHLY TAX PAYMENTS; PENALTY FOR NONPAYMENT.] 
(a) Subject to paragraph (b), all taxes shall be due and payable 
as directed in this chapter, and taxes not paid shall bear 
interest at the rate specified in section 270.75.  The 
commissioner in issuing a final assessment shall add to the 
amount of tax found due and unpaid a penalty of ten percent 
thereof, except that, if the commissioner finds that the 
taxpayer has made a false and fraudulent return with intent to 
evade the tax imposed by this chapter, the penalty shall be 25 
percent of the entire tax as shown by the corrected return. If 
the tax is not paid within the time herein specified for the 
payment thereof or within 30 days after final determination of 
an appeal to the Minnesota tax court relating thereto, there 
shall be added thereto a specific penalty equal to ten percent 
of the amount so remaining unpaid, but in no event shall the 
penalty for failure to pay the tax within the time provided for 
payment be less than $10.  The commissioner may extend the time 
for paying the tax without penalty for good cause shown.  
    (b) Every person liable for tax under this chapter having a 
liability of $1,500 or more in May 1987 or in May of each 
subsequent year, shall remit the June liability in the manner 
required by this section.  
    On or before June 25, 1987, or June 25 of each subsequent 
year, the taxpayer shall remit the actual May liability and 
one-half of the estimated June liability to the commissioner and 
file the return on a form prescribed by the commissioner.  
    On or before August 25, 1987, or August 25 of each 
subsequent year, the taxpayer shall submit a return showing the 
actual June liability and paying any additional amount of tax 
not remitted in June.  A penalty is hereby imposed equal to ten 
percent of the amount of June liability required to be paid in 
June less the amount remitted in June.  However, the penalty 
shall not be imposed if the amount remitted in June equals the 
lesser of (a) 45 percent of the actual June liability, or (b) 50 
percent of the preceding May's liability.  
    Sec. 35.  Minnesota Statutes 1984, section 299F.21, is 
amended to read: 
    299F.21 [FIRE INSURANCE COMPANIES TO PAY COST OF 
MAINTENANCE.] 
    Subdivision 1.  [ESTIMATED INSTALLMENT PAYMENTS.] On or 
before April 15, June 15, and December 15 of each year, every 
insurance company, including reciprocals, interinsurance 
exchanges or Lloyds, doing business in the state, excepting 
farmers' mutual fire insurance companies and township mutual 
fire insurance companies, shall hereafter pay to the 
commissioner of revenue on or before March 1 annually 
installments equal to one-third of, a tax upon its fire premiums 
or assessments or both, as follows: 
    A sum equal to one-half of one percent of the estimated 
gross premiums and assessments, less return premiums, on all 
direct business received by it in this state, or by its agents 
for it, in cash or otherwise, during the preceding calendar 
year, including premiums on policies covering fire risks only on 
automobiles, whether written under floater form or otherwise.  
In the case of a mutual company or reciprocal exchange the 
dividends or savings paid or credited to members in this state 
shall be construed to be return premiums.  The money so received 
into the state treasury shall be credited to the general fund. 
    If the tax prescribed by this section is not paid by March 
1, annually those dates, penalties and interest as provided in 
section 290.53, subdivision 1, shall be imposed. 
    Subd. 2.  [ANNUAL RETURNS.] (a) Every insurer required to 
pay a premium tax under this section shall make and file a 
statement of estimated premium taxes for the period covered by 
the installment tax payment.  The statement shall be in the form 
prescribed by the commissioner of revenue.  
    (b) On or before March 1, annually every insurer subject to 
taxation under this section shall make an annual return for the 
preceding calendar year setting forth information the 
commissioner of revenue may reasonably require on forms 
prescribed by the commissioner.  
    (c) On March 1, the insurer shall pay any additional amount 
due for the preceding calendar year; if there has been an 
overpayment, the overpayment may be credited without interest on 
the estimated tax due April 15.  
    (d) If unpaid by this date, penalties and interest as 
provided in section 290.53, subdivision 1, shall be imposed. 
    Sec. 36.  Minnesota Statutes 1984, section 326.20, is 
amended by adding a subdivision to read: 
    Subd. 4.  [TAX CLEARANCE CERTIFICATE.] (a) Notwithstanding 
subdivisions 1 and 2, the board may not issue or renew a license 
under sections 326.165 to 326.231 if the commissioner of revenue 
notifies the board and the licensee or applicant for a license 
that the licensee or applicant owes the state delinquent taxes 
in the amount of $500 or more.  The board may issue or renew the 
license only if (1) the commissioner of revenue issues a tax 
clearance certificate and (2) the commissioner of revenue or the 
licensee or applicant forwards a copy of the clearance to the 
board.  The commissioner of revenue may issue a clearance 
certificate only if the licensee or applicant does not owe the 
state any uncontested delinquent taxes. 
    (b) For purposes of this subdivision, the following terms 
have the meanings given. 
    (1) "Taxes" are all taxes payable to the commissioner of 
revenue, including penalties and interest due on those taxes. 
    (2) "Delinquent taxes" do not include a tax liability if 
(i) an administrative or court action that contests the amount 
or validity of the liability has been filed or served, (ii) the 
appeal period to contest the tax liability has not expired, or 
(iii) the licensee or applicant has entered into a payment 
agreement to pay the liability and is current with the payments. 
    (c) When a licensee or applicant is required to obtain a 
clearance certificate under this subdivision, a contested case 
hearing must be held if the licensee or applicant requests a 
hearing in writing to the commissioner of revenue within 30 days 
of the date of the notice provided in paragraph (a).  The 
hearing must be held within 45 days of the date the commissioner 
of revenue refers the case to the office of administrative 
hearings.  Notwithstanding any law to the contrary, the licensee 
or applicant must be served with 20 days' notice in writing 
specifying the time and place of the hearing and the allegations 
against the licensee or applicant.  The notice may be served 
personally or by mail. 
    (d) The board shall require all licensees or applicants to 
provide their social security number and Minnesota business 
identification number on all license applications.  Upon request 
of the commissioner of revenue, the board must provide to the 
commissioner of revenue a list of all licensees and applicants, 
including the name and address, social security number, and 
business identification number.  The commissioner of revenue may 
request a list of the licensees and applicants no more than once 
each calendar year.  Notwithstanding sections 290.61 and 
297A.43, the commissioner of revenue may release information 
necessary to accomplish the purpose of this subdivision. 
    Sec. 37.  [REPEALER.] 
    Minnesota Statutes 1984, section 270.72, subdivision 5, is 
repealed. 
    Sec. 38.  [APPROPRIATION.] 
      Compliance Initiatives
       FY1986       FY1987 
      300,000    2,974,500 
             Summary by Fund 
                      FY1986      FY1987
General              216,600   1,895,400
Special               83,400   1,079,100
 The commissioner of revenue may use the 
general fund appropriation to fund any 
of the compliance initiatives in any 
program area except that this 
appropriation is not available for 
compliance initiatives in the corporate 
income tax area. 
 In addition to the amounts of corporate 
income tax receipts required to be 
credited to the special revenue fund 
pursuant to Laws 1985, First Special 
Session chapter 13, section 21, 
subdivision 3, an additional $83,400 of 
corporate income tax receipts in the 
first year and an additional $1,079,100 
of corporate income tax receipts in the 
second year must be credited to the 
special revenue fund to be used to fund 
compliance initiatives. 
    Sec. 39.  [EFFECTIVE DATES.] 
    Sections 1, 4, and 35 are effective for taxes on premiums 
paid after December 31, 1986.  Sections 2, 3, 5 to 9, 21, 31, 
36, and 37 are effective the day following final enactment.  
Sections 10 to 17 are effective July 1, 1986.  Section 18 is 
effective for interest earned on overpayments after December 31, 
1987.  Section 20 is effective for taxable years beginning after 
December 31, 1985.  Sections 22 to 28 and 32 to 34 are effective 
June 1, 1986. 

                               ARTICLE 8  

                             MISCELLANEOUS 
    Section 1.  [41A.09] [ETHANOL DEVELOPMENT FUND.] 
    Subdivision 1.  [FUND CREATED.] An ethanol development fund 
is created as a separate fund in the state treasury.  The 
department of revenue shall administer the fund.  The fund is 
annually appropriated from the general fund to the commissioner 
of revenue for the purposes of this section and all money so 
appropriated is available until expended. 
    Subd. 2.  [DEFINITION.] For purposes of this section 
"ethanol" means agriculturally derived fermentation ethyl 
alcohol 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 the following agricultural products:  potatoes, 
cereal, grains, cheese whey, or sugar beets. 
    Subd. 3.  [PAYMENTS FROM FUND.] The commissioner of revenue 
shall make cash payments from the development fund to producers 
of ethanol or agricultural grade alcohol, for use as a motor 
fuel, located in the state.  The amount of the payment for each 
producer's annual production shall be as follows: 
    (a) For each gallon of ethanol produced: 
    (1) For the period beginning July 1, 1986 and ending June 
30, 1987, 15 cents per gallon; 
    (2) For the period beginning July 1, 1987 and ending June 
30, 1992, 20 cents per gallon. 
    (b) For each gallon produced of agricultural grade alcohol 
of a purity of at least 50 percent but not more than 90 percent 
and designed to be used in conjunction with diesel fuel in an 
engine's internal combustion process, for the period beginning 
July 1, 1987 and ending June 30, 1992, 11 cents per gallon. 
    The total payments from the fund to all producers may not 
exceed $200,000 during the period beginning July 1, 1986 and 
ending June 30, 1987, and may not exceed $10,000,000 in any 
fiscal year during the period beginning July 1, 1987 and ending 
June 30, 1992.  Total payments to any producer from the fund in 
any fiscal year may not exceed $3,000,000. 
    By the last day of October, January, April, and July, each 
producer shall file a claim for payment for production during 
the preceding three calendar months.  The volume of production 
must be verified by a certified financial audit performed by an 
independent certified public accountant using generally accepted 
accounting procedures. 
    Payments shall be made November 15, February 15, May 15, 
and August 15.  
    Subd. 4.  [RULEMAKING AUTHORITY.] The commissioner shall 
adopt emergency and permanent rules to implement this section. 
    Subd. 5.  [EXPIRATION.] This section expires July 1, 1992 
and all money in the fund on that date reverts to the general 
fund. 
    Sec. 2.  Minnesota Statutes 1984, section 162.06, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ESTIMATE.] On or before the second Tuesday 
of January of each year the commissioner shall estimate the 
probable sum of money that will accrue to the county state-aid 
highway fund during the first six months of each year ending 
June 30.  To such estimated amounts he shall add the sum of 
money already accrued in the county state-aid highway fund for 
the last preceding six month period ending December 31 of each 
year, adjusted to reflect the amount by which actual receipts 
for the preceding January 1 to June 30 were different from 
estimated receipts.  The total of such sums except for 
deductions to be first made as provided herein shall be 
apportioned to the several counties as hereinafter provided. 
    Sec. 3.  Minnesota Statutes 1984, section 162.12, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ESTIMATE OF ACCRUALS.] On or before the 
second Tuesday of January of each year the commissioner shall 
estimate the probable sum of money that will accrue to the 
municipal state-aid street fund during the first six months of 
each year ending June 30.  To the estimated amount he shall add 
the sum of money already accrued in the municipal state-aid 
street fund for the last preceding six-month period ending 
December 31, adjusted to reflect the amount by which actual 
receipts for the preceding January 1 to June 30 were different 
from estimated receipts.  The total of such sums, except for 
deductions to be first made as provided herein, shall be 
apportioned by the commissioner to the cities having a 
population of 5,000 or more as hereinafter provided. 
     Sec. 4.  [256.014] [STATE AND COUNTY SYSTEMS.] 
     Subdivision 1.  [ESTABLISHMENT OF SYSTEMS.] The 
commissioner of human services shall establish and enhance 
computer systems necessary for the efficient operation of the 
programs the commissioner supervises, including: 
     (1) management and administration of the food stamp and 
income maintenance programs; 
     (2) the central clearinghouse project for the child support 
enforcement program; and 
     (3) administration of medical assistance and general 
assistance medical care. 
     The commissioner shall distribute the nonfederal share of 
the costs of operating and maintaining the systems to the 
commissioner and to the counties participating in the system in 
a manner that reflects actual system usage.  Development costs 
must not be assessed against local agencies. 
     Subd. 2.  [STATE SYSTEMS ACCOUNT CREATED.] A state systems 
account is created in the state treasury.  Money collected by 
the commissioner of human services for the programs in 
subdivision 1 must be deposited in the account.  Money in the 
state systems account and federal matching money is appropriated 
to the commissioner of human services for purposes of this 
section. 
     Subd. 3.  [REPORT.] The commissioner of human services 
shall report to the chair of the house appropriations committee 
and the chair of the senate finance committee on January 1 of 
each year detailing project expenditures to date, methods used 
to maximize county participation, and the fiscal impact on 
programs, counties, and clients. 
    Sec. 5.  Minnesota Statutes 1985 Supplement, section 
256B.06, subdivision 1, is amended to read: 
    Subdivision 1.  Medical assistance may be paid for any 
person: 
    (1) who is a child eligible for or receiving adoption 
assistance payments under Title IV-E of the Social Security Act, 
United States Code, title 42, sections 670 to 676 under 
Minnesota Statutes, section 259.40 or 259.431; or 
    (2) who is a child eligible for or receiving foster care 
maintenance payments under Title IV-E of the Social Security 
Act, United States Code, title 42, sections 670 to 676; or 
    (3) who is eligible for or receiving public assistance 
under the aid to families with dependent children program, the 
Minnesota supplemental aid program; or 
    (4) who is a pregnant woman, as certified in writing by a 
physician or nurse midwife, and who (a) meets the other 
eligibility criteria of this section, and (b) would be 
categorically eligible for assistance under the aid to families 
with dependent children program if the child had been born and 
was living with the woman; or 
    (5) who is a pregnant woman, as certified in writing by a 
physician or nurse midwife, who meets the other eligibility 
criteria of this section and whose unborn child would be 
eligible as a needy child under clause (9) if born and living 
with the woman; or 
     (6) who meets the categorical eligibility requirements of 
the supplemental security income program and the other 
eligibility requirements of this section; or 
     (7) who, except for the amount of income or resources, 
would qualify for supplemental security income for the aged, 
blind and disabled, or aid to families with dependent children, 
and who meets the other eligibility requirements of this 
section; or 
     (8) who is under 21 years of age and in need of medical 
care that neither he nor his relatives responsible under 
sections 256B.01 to 256B.26 are financially able to provide; or 
     (9) who is an infant less than one year of age born on or 
after October 1, 1984, whose mother was eligible at the time of 
birth and who remains in the mother's household.  Eligibility 
under this clause is concurrent with the mother's and does not 
depend on the father's income except as the income affects the 
mother's eligibility; or 
     (10) who is residing in a hospital for treatment of mental 
disease or tuberculosis and is 65 years of age or older and 
without means sufficient to pay the per capita hospital charge; 
and 
     (11) who resides in Minnesota, or, if absent from the 
state, is deemed to be a resident of Minnesota in accordance 
with the regulations of the state agency; and 
     (12) who alone, or together with his spouse, does not own 
real property other than the homestead.  For the purposes of 
this section, "homestead" means the house owned and occupied by 
the applicant or recipient as his primary place of residence, 
together with the contiguous land upon which it is situated.  
The homestead shall continue to be excluded for persons residing 
in a long-term care facility if it is used as a primary 
residence by the spouse, minor child, or disabled child of any 
age; or the applicant/recipient is expected to return to the 
home as a principal residence within six calendar months of 
entry to the long-term care facility.  Certification of expected 
return to the homestead shall be documented in writing by the 
attending physician.  Real estate not used as a home may not be 
retained unless it produces net income applicable to the 
family's needs or the family is making a continuing effort to 
sell it at a fair and reasonable price or unless the 
commissioner determines that sale of the real estate would cause 
undue hardship or unless the equity in the real estate when 
combined with the equity in the homestead totals $15,000 or 
less; and 
     (13) who individually does not own more than $3,000 in cash 
or liquid assets, or if a member of a household with two family 
members (husband and wife, or parent and child), does not own 
more than $6,000 in cash or liquid assets, plus $200 for each 
additional legal dependent.  In addition to these maximum 
amounts, an eligible individual or family may accrue interest on 
these amounts, but they must be reduced to the maximum at the 
time of an eligibility redetermination.  For residents of 
long-term care facilities, the accumulation of the clothing and 
personal needs allowance pursuant to section 256B.35 must also 
be reduced to the maximum at the time of the eligibility 
redetermination.  Cash and liquid assets may include a prepaid 
funeral contract and insurance policies with cash surrender 
value.  The value of the following shall not be included: 
    (a) the homestead, and (b) one motor vehicle licensed 
pursuant to chapter 168 and defined as:  (1) passenger 
automobile, (2) station wagon, (3) motorcycle, (4) motorized 
bicycle or (5) truck of the weight found in categories A to E, 
of section 168.013, subdivision 1e; and 
    (14) who has or anticipates receiving an annual income not 
in excess of the income standards by family size used in the aid 
to families with dependent children program, or who has income 
in excess of these maxima and in the month of application, or 
during the three months prior to the month of application, 
incurs expenses for medical care that total more than one-half 
of the annual excess income in accordance with the regulations 
of the state agency.  Notwithstanding any laws or rules to the 
contrary, in computing income to determine eligibility of 
persons who are not residents of long-term care facilities, the 
commissioner shall disregard increases in income due solely to 
increases in federal retiree, survivor's, and disability 
insurance benefits, veterans administration benefits, and 
railroad retirement benefits in the percentage amount 
established in the biennial appropriations law unless prohibited 
by federal law or regulation.  If prohibited, the commissioner 
shall first seek a waiver as required by Public Law No. 94-566, 
section 503.  In excess income cases, eligibility shall be 
limited to a period of six months beginning with the first of 
the month in which these medical obligations are first incurred; 
and 
    (15) who has continuing monthly expenses for medical care 
that are more than the amount of his excess income, computed on 
a monthly basis, in which case eligibility may be established 
before the total income obligation referred to in the preceding 
paragraph is incurred, and medical assistance payments may be 
made to cover the monthly unmet medical need.  In licensed 
nursing home and state hospital cases, income over and above 
that required for justified needs, determined pursuant to a 
schedule of contributions established by the commissioner of 
human services, is to be applied to the cost of institutional 
care.  The commissioner of human services may establish a 
schedule of contributions to be made by the spouse of a nursing 
home resident to the cost of care; and 
    (16) who has applied or agrees to apply all proceeds 
received or receivable by him or his spouse from automobile 
accident coverage and private health care coverage to the costs 
of medical care for himself, his spouse, and children.  The 
state agency may require from any applicant or recipient of 
medical assistance the assignment of any rights accruing under 
private health care coverage.  Any rights or amounts so assigned 
shall be applied against the cost of medical care paid for under 
this chapter.  Any assignment shall not be effective as to 
benefits paid or provided under automobile accident coverage and 
private health care coverage prior to receipt of the assignment 
by the person or organization providing the benefits.  
    Sec. 6.  [270.069] [COMMISSIONER TO COLLECT CERTAIN LOCAL 
TAXES.] 
    Subdivision 1.  [COSTS DEDUCTED; APPROPRIATION.] If the 
commissioner of revenue agrees to collect a locally imposed tax, 
the local unit of government must agree that all the direct and 
indirect costs of the department of revenue for collecting the 
tax and any other statewide indirect costs will be deducted from 
the amounts collected and paid to the local unit of government.  
The amounts deducted must be deposited in the state treasury and 
credited to a local tax collection account.  Money in the 
account is appropriated to the commissioner of revenue to 
collect the locally imposed tax. 
    Subd. 2.  [DEVELOPMENT COSTS.] If the commissioner 
determines that a new computer system will be required to 
collect the locally imposed taxes, the costs of development of 
the system will be charged to the first local units of 
government to be included in the system.  Any additional local 
units of government that by agreement are added to the system 
will be charged for a share of the development costs.  The 
charge will be determined by the commissioner who shall then 
refund to the original local units of government their portion 
of the development costs recovered from the additional users.  
The amounts necessary to make the refunds are appropriated from 
the local tax collection account to the commissioner of revenue. 
    Sec. 7.  Minnesota Statutes 1984, section 270A.03, 
subdivision 5, is amended to read: 
    Subd. 5.  "Debt" means a legal obligation of a natural 
person to pay a fixed and certain amount of money, which equals 
or exceeds $25 and which is due and payable to a claimant 
agency.  The term includes criminal fines imposed under section 
609.10.  A debt may arise under a contractual or statutory 
obligation, a court order, or other legal obligation, but need 
not have been reduced to judgment.  A debt does not include (1) 
any legal obligation of a current recipient of assistance which 
is based on overpayment of an assistance grant, or (2) any legal 
obligation to pay a claimant agency for medical care, including 
hospitalization if the debtor would have qualified for a low 
income credit equal to tax liability pursuant to Minnesota 
Statutes 1984, section 290.06, subdivision 3d, clause (1), at 
the time when the medical care was rendered, provided that, for 
purposes of this subdivision, the income amounts in that section 
shall be adjusted for inflation for debts incurred in calendar 
years 1987 and thereafter.  The dollar amount of each income 
level that applied to debts incurred in the prior year shall be 
increased in the same manner as provided in section 290.06, 
subdivision 2d, for the expansion of the tax rate brackets. 
    Sec. 8.  Minnesota Statutes 1985 Supplement, section 
273.1314, subdivision 6, is amended to read: 
    Subd. 6.  [LOCAL CONTRIBUTION.] No area may be designated 
as an enterprise zone unless the municipality agrees to make a 
qualifying local contribution in the form of a property tax 
reduction for employment property as provided by section 
273.1313 for any business qualifying for a state tax reduction 
pursuant to this section.  A qualifying local contribution may 
in the alternative be a local contribution or investment out of 
other municipal funds, but excluding any special federal grants 
or loans, equivalent to the property tax reduction.  In 
concluding the agreement with the municipality the commissioner 
may require that the local contribution will be made in a 
specified ratio to the amount of the state credits authorized.  
If the local contribution is to be used to fund additional 
reductions in state taxes, the commissioner and the governing 
body of the municipality shall enter an agreement for timely 
payment to the state to reimburse the state for the amount of 
tax revenue foregone as a result.  The qualifying local 
contribution for a special enterprise zone under section 
273.1312, subdivision 4, paragraph (c), clause (4), shall be the 
complete abatement of property taxes on property in the 
zone.  The qualifying local contribution for development within 
the portion of an enterprise zone that is located in a town that 
has been added by boundary amendment to an enterprise zone that 
is located within five municipalities and was designated in 1984 
shall be provided by the town. 
    Sec. 9.  Minnesota Statutes 1985 Supplement, section 
273.1314, subdivision 16a, as amended by Laws 1986, chapter 465, 
article 2, section 3, 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 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, and may approve an additional 
specific application to amend the boundaries of that enterprise 
zone to include a sixth municipality or to further increase its 
area to include all or part of the territory of a town that 
surrounds one of the five municipalities, or both. 
    Sec. 10.  Minnesota Statutes 1985 Supplement, section 
296.02, subdivision 7, is amended to read: 
    Subd. 7.  [TAX REDUCTION FOR AGRICULTURAL ALCOHOL 
GASOLINE.] 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 is as follows:  
    (a) For the fiscal year ending June 30, 1987, 25 cents. 
    (b) On and after July 1, 1987, 20 cents. 
    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. 11.  Minnesota Statutes 1985 Supplement, 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 
both sides of the dispenser and state that the gasoline 
"CONTAINS ETHANOL" or "CONTAINS METHANOL" or has 
been improved "WITH ETHANOL ENRICHMENT ENRICHED."  This 
subdivision does not prohibit the posting of other alcohol or 
additive information. 
    Sec. 12.  Minnesota Statutes 1984, section 297B.09, 
subdivision 2, is amended to read:  
    Subd. 2.  [HIGHWAY USER TAX DISTRIBUTION FUND AND TRANSIT 
ASSISTANCE FUND SHARE.] The proceeds collected under this 
chapter must be deposited in the highway user tax distribution 
fund and the transit assistance fund for apportionment in the 
following manner:  
    (a) None of the proceeds collected before July 1, 1984, or 
between July 1, 1985, and June 30, 1987, may be credited to 
either fund.  
    (b) 18.75 percent of the proceeds collected after June 30, 
1984, and before July 1, 1987 1985, must be credited to the 
highway user tax distribution fund for apportionment in the same 
manner and for the same purposes as other money in that fund.  
The remaining 6.25 percent of the proceeds must be credited to 
the transit assistance fund to be appropriated to the 
commissioner of transportation for transit assistance within the 
state.  
    (c) Except as provided in paragraph (f), 37.5 percent of 
the proceeds collected after June 30, 1987, and before July 1, 
1989, must be credited to the highway user tax distribution fund 
for apportionment in the same manner and for the same purposes 
as other money in that fund.  The remaining 12.5 percent of the 
proceeds must be credited to the transit assistance fund to be 
appropriated to the commissioner of transportation for transit 
assistance within the state.  
    (d) Except as provided in paragraph (f), 56.25 percent of 
the proceeds collected after June 30, 1989, and before July 1, 
1991, must be credited to the highway user tax distribution fund 
for apportionment in the same manner and for the same purposes 
as other money in that fund.  The remaining 18.75 percent of the 
proceeds must be credited to the transit assistance fund to be 
appropriated to the commissioner of transportation for transit 
assistance within the state.  
    (e) Except as provided in paragraph (f), 75 percent of the 
proceeds collected after June 30, 1991, must be credited to the 
highway user tax distribution fund for apportionment in the same 
manner and for the same purposes as other money in that fund.  
The remaining 25 percent of the proceeds must be credited to the 
transit assistance fund to be appropriated to the commissioner 
of transportation for transit assistance within the state. 
    (f) The distributions under paragraphs (c), (d), and (e) to 
the highway user tax distribution fund shall be reduced by the 
amount necessary to fund the appropriation under section 1, 
subdivision 1.  
    Sec. 13.  Minnesota Statutes 1985 Supplement, section 
297C.02, is amended by adding a subdivision to read: 
    Subd. 4.  [BOTTLE TAX.] A tax of one cent is imposed on 
each bottle or container of distilled spirits and wine.  The 
wholesaler is responsible for the payment of this tax when the 
bottles of distilled spirits and wine are removed from inventory 
for sale, delivery, or shipment. 
    The following are exempt from the tax: 
    (1) miniatures of distilled spirits; 
    (2) containers of fermented malt beverage; 
    (3) containers of intoxicating liquor or wine holding less 
than 200 milliliters; 
    (4) containers of wine intended exclusively for sacramental 
purposes; 
    (5) containers of alcoholic beverages sold to qualified, 
approved military clubs; 
    (6) containers of alcoholic beverages sold to common 
carriers engaged in interstate commerce; 
    (7) containers of alcoholic beverages sold to authorized 
food processors or pharmaceutical firms for use exclusively in 
the manufacturing of food products or medicines; 
    (8) containers of alcholic beverages sold and shipped to 
dealers, wineries, or distillers in other states; and 
    (9) containers of alcoholic beverages sold to other 
Minnesota wholesalers. 
    Sec. 14.  [458.091] [COMPLIANCE EXAMINATIONS; FINANCIAL 
AUDITS.] 
   Subdivision 1.  [COMPLIANCE EXAMINATIONS.] At the request 
of the city or upon the auditor's initiative, the state auditor 
may make a legal compliance examination of the authority for 
that city.  Each authority examined must pay the total cost of 
the examination, including the salaries paid to the examiners 
while actually engaged in making the examination.  The state 
auditor may bill monthly or at the completion of the audit.  All 
collections received must be deposited in the revolving fund of 
the state auditor.  For purposes of this section "authority" 
means a port authority created under chapter 458 or any other 
law. 
    Subd. 2.  [AUDITS.] The financial statements of the 
authority must be prepared, audited, filed, and published or 
posted in the manner required for the financial statements of 
the city that established the authority.  The financial 
statements must permit comparison and reconciliation with the 
city's accounts and financial reports.  The report must be filed 
with the state auditor by June 30 of each year.  The auditor 
shall review the report and may accept it or, in the public 
interest, audit the books of the authority. 
    Sec. 15.  Minnesota Statutes 1985 Supplement, section 
609.101, is amended to read: 
    609.101 [SURCHARGE ON FINES, ASSESSMENTS.] 
    When a court sentences a person convicted of a felony, 
gross misdemeanor, or misdemeanor, other than a petty 
misdemeanor such as a traffic or parking violation, and if the 
sentence does not include payment of a fine, the court shall 
impose an assessment of not less than $20 nor more than $40.  If 
the sentence for the felony, gross misdemeanor, or misdemeanor 
includes payment of a fine of any amount, including a fine of 
less than $100, the court shall impose a surcharge on the fine 
of ten percent of the fine.  This section applies whether or not 
the person is sentenced to imprisonment and when the sentence is 
suspended.  The court may, upon a showing of indigency or undue 
hardship upon the convicted person or his immediate family, 
waive payment or authorize payment of the assessment or 
surcharge in installments.  
    The court shall collect and forward to the commissioner of 
finance the total amount of the assessment or surcharge and the 
commissioner shall credit all money so forwarded to the general 
fund for the purposes of providing services, assistance, or 
reparations or a combination, to victims of crimes through 
programs established under sections 611A.21 to 611A.36, under 
chapters 256D and 299B a crime victim and witness account, which 
is established as a special account in the state treasury. 
    Money credited to the crime victim and witness account may 
be appropriated for but is not limited to the following purposes:
    (1) use for crime victim reparations under sections 611A.51 
to 611A.68; 
    (2) use by the crime victim and witness advisory council 
established under section 611A.71; and 
    (3) to supplement the federally funded activities of the 
crime victim ombudsman under section 611A.74.  
    If the convicted person is sentenced to imprisonment, the 
chief executive officer of the correctional facility in which 
the convicted person is incarcerated may collect the assessment 
or surcharge from any earnings the inmate accrues for work 
performed in the correctional facility and forward the amount to 
the commissioner of finance. 
    Sec. 16.  [MOTOR VEHICLE EXCISE TAX TRANSFER.] 
    Notwithstanding any law to the contrary, tax proceeds under 
chapter 297B and the investment earnings on those proceeds 
credited to the highway user tax distribution fund and the 
transit assistance fund for the period after June 30, 1985, and 
before July 1, 1986, must be returned to the general fund on 
June 30, 1986.  
    Sec. 17.  [APPROPRIATION.] 
    $120,000 is appropriated from the general fund for fiscal 
years 1986 and 1987 to the commissioner of revenue for purposes 
of contracting with a vendor to prepare and merge federal income 
tax, demographic, economic and other data with state income tax 
data to provide a comprehensive sample of data suitable for use 
in empirical tax policy research and to acquire computer 
programs or software or modifications to existing state computer 
software designed to be used with the data sample. 
    The data sample must be made available to legislative staff 
in a manner that complies with the requirements of Minnesota 
Statutes, section 290.61, except that a formal request of a 
majority of the members of the tax committees is not required. 
    The commissioner of revenue may enter into a contract to 
carry out the purposes of this section without publication of 
notice, the requirements of competitive bidding or other 
procedural requirements for state contracts, notwithstanding the 
provisions of Minnesota Statutes, chapter 16B or any other law 
to the contrary. 
    Sec. 18.  [MASS TRANSIT.] 
    $12,235,000 in fiscal year 1986 and $9,365,000 in fiscal 
year 1987 is appropriated from the general fund to the 
commissioner of transportation for transit assistance.  
    Sec. 19.  [REPEALER.] 
    Minnesota Statutes 1985 Supplement, section 290.06, 
subdivision 2f, is repealed.  
    Sec. 20.  [EFFECTIVE DATE.] 
    Section 7 is effective for medical care rendered after June 
28, 1985.  Sections 1, 10, and 11 are effective July 1, 1986.  
Section 13 is effective August 1, 1985.  Section 14 is effective 
the day following final enactment.  Section 16 is effective June 
30, 1986.  Section 19 is effective January 1, 1986.  Section 15 
is effective July 1, 1987.  

                               ARTICLE 9 

                   ELEMENTARY AND SECONDARY EDUCATION
    Section 1.  Minnesota Statutes 1984, section 123.71, 
subdivision 1, is amended to read: 
    Subdivision 1.  Every school board shall, no later than 
September 1 October 1, publish the revenue and expenditure 
budgets submitted to the commissioner of education in accordance 
with section 121.908, subdivision 4, for the current year and 
the actual revenues, expenditures, fund balances for the prior 
year and projected fund balances for the current year in a form 
prescribed by the state board of education after consultation 
with the advisory council on uniform financial accounting and 
reporting standards.  The forms prescribed shall be designed so 
that year to year comparisons of revenue, expenditures and fund 
balances can be made.  These budgets, reports of revenue, 
expenditures and fund balances shall be published in a qualified 
newspaper of general circulation in the district. 
    Sec. 2.  Minnesota Statutes 1985 Supplement, section 
124.17, subdivision 1a, is amended to read: 
    Subd. 1a.  [AFDC PUPIL UNITS.] In addition to the pupil 
units counted under subdivision 1, pupil units shall be counted 
as provided in this subdivision, beginning with the 1986-1987 
school year.  
    (1) Each pupil in subdivision 1 from a family receiving aid 
to families with dependent children or its successor program who 
is enrolled in the school district on October 1 of the previous 
school year shall be counted as an additional five-tenths pupil 
unit. 
    (2) In every district in which the number of pupils from 
families receiving aid to families with dependent children or 
its successor program equals six percent or more of the actual 
pupil units in the district for the same year as computed in 
subdivision 1, each such pupil shall be counted as an additional 
one-tenth of a pupil unit for each percent of concentration over 
five percent of such pupils in the district.  The percent of 
concentration shall be rounded down to the nearest whole percent 
for this paragraph.  In districts in which the percent of 
concentration is less than six, additional pupil units must not 
be counted under this paragraph for pupils from families 
receiving aid to families with dependent children or its 
successor program.  A pupil must not be counted as more than 
1-1/10 additional pupil units under this subdivision.  The 
weighting in this paragraph is in addition to the weighting 
provided in subdivision 1 and paragraph (1). 
    Sec. 3.  Minnesota Statutes 1985 Supplement, section 
124.195, subdivision 11, is amended to read: 
    Subd. 11.  [NONPUBLIC AIDS.] The state shall pay to each 
school district 85 percent, unless a higher rate has been 
established according to section 121.904, subdivision 4d, of its 
aid according to sections 123.931 to 123.947 for pupils 
attending nonpublic schools and nonpublic by October 31 of each 
fiscal year.  If a payment advance to meet cash flow needs is 
requested by a district and approved by the commissioner, the 
state shall pay basic transportation aid requested by a district 
and approved by the commissioner according to sections 123.931 
to 123.947 section 124.225, subdivision 8b attributable to 
pupils attending nonpublic schools by October 31.  The final aid 
distribution shall be made by October 31 of the following school 
year.  This subdivision applies to both the final adjustment 
payment for the prior fiscal year and the payment for the 
current fiscal year, as established in subdivision 10. 
    Sec. 4.  Minnesota Statutes 1985 Supplement, section 
124.2161, subdivision 6, is amended to read:  
    Subd. 6.  [F.I.C.A. INFLATION FACTOR.] "F.I.C.A. inflation 
factor" means a factor to be multiplied by a district's F.I.C.A. 
obligations for the base year.  For the base year of fiscal year 
1985, the F.I.C.A. inflation factor shall be 1.1806 1.1599.  For 
base years after fiscal year 1985, the F.I.C.A. inflation factor 
shall be equal to the foundation aid formula allowance for the 
current year, divided by the foundation aid formula allowance 
for the base year. 
    Sec. 5.  Minnesota Statutes 1985 Supplement, section 
124.2162, subdivision 2, is amended to read: 
    Subd. 2.  [AID.] Beginning in fiscal year 1987, the state 
shall pay each district for each fiscal year, teacher retirement 
and F.I.C.A. aid in the amount of the teacher retirement and 
F.I.C.A. aid allowance under subdivision 1 times the number of 
pupils in average daily membership in the district for the 
current school year.  However, in no case shall the amount of 
aid paid to a district for any fiscal year exceed the sum of the 
district's teacher retirement obligations and F.I.C.A. 
obligations for that year.  The revenue received from these 
payments shall be recognized in the appropriate funds of the 
district in proportion to the related expenditures from each 
fund. 
    Sec. 6.  Minnesota Statutes 1985 Supplement, section 
124.2163, subdivision 2, is amended to read: 
    Subd. 2.  [AID.] Each year beginning with fiscal year 1987, 
the state shall pay teacher retirement and F.I.C.A. aid to 
intermediate school districts, joint vocational technical school 
districts, and other employing units equal to the district's or 
employing unit's aid under subdivision 1.  However, in no case 
shall the amount of aid paid to an intermediate school district, 
joint vocational technical school district, or the employing 
unit exceed the sum of the intermediate school district, joint 
vocational technical school district, or other employing unit's 
teacher retirement obligations and F.I.C.A. obligations for that 
year.  The revenue received from these payments shall be 
recognized in the appropriate funds of the intermediate school 
districts, joint vocational technical school districts, and 
other employing units in proportion to the related expenditures 
from each fund. 
    Sec. 7.  Minnesota Statutes 1985 Supplement, section 
124.225, subdivision 7b, is amended to read:  
    Subd. 7b.  [INFLATION FACTORS.] The adjusted authorized 
predicted cost per FTE determined for a district under 
subdivision 7a for the base year shall be increased by 10.3 
percent to determine the district's aid entitlement per FTE for 
the 1984-1985 school year, by 8.9 percent to determine the 
district's aid entitlement per FTE for the 1985-1986 school 
year, and by 6.7 6.0 percent to determine the district's aid 
entitlement per FTE for the 1986-1987 school year. 
    Sec. 8.  Minnesota Statutes 1985 Supplement, section 
124.225, subdivision 10, is amended to read: 
    Subd. 10.  [DEPRECIATION.] Any school district which owns 
school buses or mobile units shall transfer annually from the 
unappropriated fund balance account in its transportation fund 
to the appropriated fund balance account for bus purchases in 
its transportation fund at least an amount equal to 12-1/2 
percent of the original cost of each type one or type two bus or 
mobile unit until the original cost of each type one or type two 
bus or mobile unit is fully amortized, plus 20 percent of the 
original cost of each type three bus included in the district's 
authorized cost under the provisions of subdivision 1, clause 
(b)(4), until the original cost of each type three bus is fully 
amortized, plus 33-1/3 percent of the cost to the district as of 
July 1 of each year for school bus reconditioning done by the 
department of corrections until the cost of the reconditioning 
is fully amortized; provided, if the district's transportation 
aid is reduced pursuant to subdivision 8a because the 
appropriation for that year is insufficient, this amount shall 
be reduced in proportion to the reduction pursuant to 
subdivision 8a as a percentage of the sum of 
    (1) the district's total transportation aid without the 
reduction pursuant to subdivision 8a, plus 
    (2) for fiscal years 1985 and 1986 an amount equal to 1.75 
mills times the adjusted assessed valuation of the district for 
the preceding year, and for fiscal year 1987 and thereafter, 
2.25 mills times the adjusted assessed valuation of the district 
for the preceding year, plus 
    (3) the district's contract services aid reduction under 
subdivision 8k, plus 
    (4) the district's nonregular transportation levy 
limitation under section 275.125, subdivision 5c.  
    Sec. 9.  Minnesota Statutes 1985 Supplement, section 
124.245, subdivision 1, is amended to read: 
    Subdivision 1.  [BASIC COMPUTATION.] (a) Each year the 
state shall pay a school district the difference by which an 
amount equal to $90 per $130 times the total pupil unit units in 
that school year or, in districts where the number of actual 
pupil units has increased from the prior year, $95 per pupil 
unit in that school year, exceeds the amount raised by seven 
nine mills times the adjusted assessed valuation of the taxable 
property in the district for the preceding used to compute the 
levy attributable to the same year.  To qualify for aid pursuant 
to this subdivision in any school year, a district must have 
levied seven EARC mills for use for capital expenditures in that 
year levy pursuant to section 275.125, subdivision 11a for use 
in that year. 
    (b) The aid under clause (a) for any district which 
operates an approved secondary vocational education program or 
an approved senior secondary industrial arts program shall be 
computed using a dollar amount per pupil unit which is $5 higher 
than the amount specified in clause (a). 
   (c) If the sum of a district's capital expenditure levy 
under section 275.125, subdivision 11a, attributable to any 
school year and its capital expenditure equalization aid, if 
any, under this subdivision for that school year exceeds $90 per 
pupil unit or, in districts where the number of actual pupil 
units has increased from the prior year, $95 per pupil unit, the 
amount of the excess may be expended only for the purpose of 
capital expenditures for equipment for secondary vocational 
education programs or senior secondary industrial arts programs. 
    Sec. 10.  Minnesota Statutes 1985 Supplement, section 
124.245, subdivision 3, is amended to read: 
    Subd. 3.  [HAZARDOUS SUBSTANCE COMPUTATION.] The state 
shall pay a school district the difference by which an amount 
equal to $25 per times the total pupil unit units exceeds the 
amount raised by two mills times the adjusted assessed valuation 
of the taxable property in the district for the preceding used 
to compute the levy attributable to the same year.  To qualify 
for aid pursuant to this subdivision in any school year, a 
district must levy pursuant to section 275.125, subdivision 11c 
for use in that year.  Aid paid pursuant to this subdivision may 
be used only for the purposes for which the proceeds of the levy 
authorized in section 275.125, subdivision 11c may be used.  
    Sec. 11.  Minnesota Statutes 1985 Supplement, section 
124.271, subdivision 2b, is amended to read: 
    Subd. 2b.  [AID; 1985, 1986, 1987, 1988 AND AFTER.] (1) 
Each fiscal year a district which is operating a community 
education program in compliance with rules promulgated by the 
state board shall receive community education aid.  For fiscal 
year 1985, the aid shall be an amount equal to the difference 
obtained by subtracting 
    (a) an amount equal to .8 mill times the adjusted assessed 
valuation used to compute the community education levy 
limitation for the levy attributable to that school year, from 
    (b) the greater of 
    $7,000, or 
    $5 times the population of the district.  
    For fiscal year 1986, the aid shall be an amount equal to 
the difference obtained by subtracting 
    (a) an amount equal to .8 mill times the adjusted assessed 
valuation used to compute the community education levy 
limitation for the levy attributable to that school year, from 
    (b) the greater of 
    $7,000, or 
    $5.25 times the population of the district.  
    For fiscal year 1987 and each year thereafter, the aid 
shall be an amount equal to the difference obtained by 
subtracting 
    (a) an amount equal to .8 mill times the adjusted assessed 
valuation used to compute the community education levy 
limitation for the levy attributable to that school year, from 
    (b) the greater of 
    $7,140, or 
    $5.35 times the population of the district. 
    For fiscal year 1988 and each year thereafter, the aid 
shall be an amount equal to the difference obtained by 
subtracting 
    (a) an amount equal to .8 mill times the adjusted assessed 
valuation used to compute the community education levy 
limitation for the levy attributable to that school year, from 
    (b) the greater of 
    $7,340, or 
    $5.50 times the population of the district. 
    (2) However, for any district which certifies less than the 
maximum permissible levy under the provisions of section 
275.125, subdivision 8, clause (1), the district's community 
education aid under clause (1) of this subdivision shall be 
reduced by multiplying the aid amount computed pursuant to 
clause (1) of this subdivision by the ratio of the district's 
actual levy under section 275.125, subdivision 8, clause (1), to 
its maximum permissible levy under section 275.125, subdivision 
8, clause (1).  For purposes of computing the aid reduction 
pursuant to this clause, the amount certified pursuant to 
section 275.125, subdivision 8, clause (1), shall not reflect 
reductions made pursuant to section 275.125, subdivision 9.  
    (3) In addition to the amount in clause (1), in fiscal year 
1985 a district which makes a levy for community education 
programs pursuant to section 275.125, subdivision 8, shall 
receive additional aid of 50 cents per capita.  
     Sec. 12.  Minnesota Statutes 1985 Supplement, section 
124.573, subdivision 2, is amended to read: 
    Subd. 2.  [SALARIES AND TRAVEL.] The eligible expenses for 
secondary vocational aid are:  (1) the salaries paid to 
essential, licensed personnel in that school year for services 
rendered in that district's or center's approved secondary 
vocational education programs; (2) the costs of necessary travel 
between instructional sites by secondary vocational education 
teachers; and (3) the costs of necessary travel by secondary 
vocational education teachers accompanying students to and from 
vocational student organization meetings held within the state 
for educational purposes.  The state shall pay to any district 
or cooperative center 41.5 percent of the eligible 
expenses incurred in an approved secondary vocational program 
for each school year.  The commissioner may withhold all or any 
portion of this aid for a secondary vocational education program 
which receives funds from any other source.  In no event shall a 
district or center receive a total amount of state aid pursuant 
to this section which, when added to funds from other sources, 
will provide the program an amount for salaries and travel which 
exceeds 100 percent of the amount of its expenditures for 
salaries and travel in the program. 
    Sec. 13.  Minnesota Statutes 1984, section 124.573, 
subdivision 3, is amended to read: 
    Subd. 3.  [COMPLIANCE WITH RULES.] This aid shall be paid 
only for services rendered or for the costs designated in 
subdivision 2 which are incurred in secondary vocational 
education programs approved by the state department of education 
and operated in accordance with rules promulgated by the state 
board of education.  These rules shall provide minimum 
student-staff ratios required for a secondary vocational 
education program in a cooperative center to qualify for this 
aid.  The rules shall not require any minimum number of 
administrative staff, any minimum period of coordination time or 
extended employment for secondary vocational education 
personnel, or the availability of vocational student activities 
or organizations for a secondary vocational education program to 
qualify for this aid.  The requirement in these rules that 
program components be available for a minimum number of hours 
shall not be construed to prevent pupils from enrolling in 
secondary vocational education courses on an exploratory basis 
for less than a full school year.  The state board of education 
shall not require a school district to offer more than four 
credits or 560 hours of vocational education course offerings in 
any school year.  Rules relating to secondary vocational 
education programs shall not incorporate the provisions of the 
state plan for vocational education by reference.  This aid 
shall be paid only for services rendered and for travel costs 
incurred by essential, licensed personnel who meet the work 
experience requirements for licensure pursuant to the rules of 
the state board of education.  Notwithstanding section 124.15, 
the commissioner may modify or withdraw the program or aid 
approval and withhold aid under this section without proceeding 
under section 124.15 at any time.  To do so, the commissioner 
must determine that the program does not comply with rules of 
the state board or that any facts concerning the program or its 
budget differ from the facts in the district's approved 
application. 
    Sec. 14.  Minnesota Statutes 1984, section 124.32, 
subdivision 1c, is amended to read: 
    Subd. 1c.  [FOUNDATION AID FORMULA ALLOWANCE.] For purposes 
of this section, "foundation aid formula allowance" shall have 
the meaning attributed to it in section 124A.02, subdivision 9, 
and "summer school revenue allowance" shall have the meaning 
attributed to it in section 124.201.  For the purposes of 
computing foundation aid formula allowances pursuant to this 
section, each handicapped child shall be counted as prescribed 
in section 124.17, subdivision 1, clause (1) or (2). 
    Sec. 15.  Minnesota Statutes 1985 Supplement, section 
124A.02, subdivision 9, is amended to read: 
    Subd. 9.  [FORMULA ALLOWANCE.] "Foundation aid formula 
allowance" or "formula allowance" means the amount of revenue 
per pupil unit used in the computation of foundation aid for a 
particular school year and in the computation of permissible 
levies for use in that school year.  The formula allowance shall 
be $1,475 for the 1983 payable 1984 levies and for foundation 
aid for the 1984-1985 school year.  The formula allowance shall 
be $1,585 for the 1984 payable 1985 levies and for foundation 
aid for the 1985-1986 school year.  The formula allowance shall 
be $1,690 for the 1985 payable 1986 levies and for foundation 
aid for the 1986-1987 school year.  The formula allowance is 
$1,700 for the 1986 payable 1987 levies and for foundation aid 
for the 1987-1988 school year. 
    Sec. 16.  Minnesota Statutes 1984, section 124A.02, 
subdivision 15, is amended to read: 
    Subd. 15.  [PUPIL UNITS, ACTUAL.] "Actual pupil units" 
means pupil units identified in section 124.17, subdivision 1, 
clauses (1) and (2).  
    Sec. 17.  Minnesota Statutes 1985 Supplement, section 
124A.03, subdivision 1a, is amended to read: 
    Subd. 1a.  [ESTABLISHMENT OF BASIC MAINTENANCE MILL RATE.] 
(a) The commissioner of revenue shall establish the basic 
maintenance mill rate and certify it to the commissioner of 
education by August 1 of each year for levies payable in the 
following year.  The established basic maintenance mill rate 
shall be a rate, rounded up to the nearest tenth of a mill, 
which when applied to the adjusted assessed valuation of taxable 
property for each school district under subdivision 1 or 3, as 
applicable, raises the total amount specified in this section.  
    (b) The basic maintenance mill rate for the 1985 payable 
1986 levies and for foundation aid for the 1986-1987 school year 
shall be established at a rate that raises a total of 
$702,000,000.  The basic maintenance mill rate for the 1986 
payable 1987 levies and for foundation aid for the 1987-1988 
school year shall be set at a rate that raises $692,000,000.  
The basic maintenance mill rate computed by the commissioner of 
revenue must not be recomputed due to changes or corrections 
made in a school district's adjusted assessed valuation after 
the mill rate has been certified to the department of education 
pursuant to paragraph (a). 
    Sec. 18.  Minnesota Statutes 1985 Supplement, section 
129B.38, subdivision 1, is amended to read: 
    Subdivision 1.  [AID AMOUNT.] A district that purchases or 
leases courseware packages that qualify as high quality 
according to section 129B.37 shall receive state aid for the 
1985-1986 school year.  The aid shall be equal to the lesser of: 
    (a) $1 50 cents times the number of pupils in average daily 
membership for the 1984-1985 school year; or 
    (b) 25 percent of the actual expenditures of the district 
for purchase or lease of the courseware packages between July 1, 
1985, and May 31, 1987 1986. 
    Sec. 19.  Minnesota Statutes 1985 Supplement, section 
275.125, subdivision 8, is amended to read: 
    Subd. 8.  [COMMUNITY EDUCATION LEVY.] (1) Each year, a 
district which has established a community education advisory 
council pursuant to section 121.88, may levy the amount raised 
by .8 mill times the most recent adjusted assessed valuation of 
the district, but no more than the greater of 
    $5.35 $5.50 times the population of the district, or 
    $7,140 $7,340.  
    (2) In addition to the levy authorized in clause (1), in 
1983 each year a district may levy an additional amount for 
community education programs equal to the difference obtained by 
subtracting 
    (a) the sum in fiscal year 1984 of 
    (i) the district's estimated maximum permissible revenue 
for fiscal year 1985 from community education aid under section 
124.271, subdivision 2b, clause (1), and 
    (ii) the community education levy authorized in clause (1) 
of this subdivision, from 
    (b) the sum in fiscal year 1983 of 
    (i) the district's maximum permissible revenue from 
community education aid under Minnesota Statutes 1984, section 
124.271, subdivision 2, excluding any reductions from community 
education aid made pursuant to Laws 1981, Third Special Session 
chapter 2, article 2, section 2, clause (mm), and Laws 1982, 
Third Special Session chapter 1, article 3, section 6, and 
    (ii) the maximum community education levy authorized in 
this subdivision for the district for the levy made in 1981, 
payable in 1982, before any reduction in the levy pursuant to 
subdivision 9.  
    (3) Each year, in addition to the levy authorized in clause 
(1), a district may levy an amount equal to the amount the 
district was entitled to levy pursuant to clause (2) in 1983 A 
district having an approved adult basic and continuing education 
program, according to section 124.26, may levy an amount not to 
exceed the amount raised by .1 mill times the adjusted assessed 
valuation of the district for the preceding year. 
    (4) In addition to the levy amounts authorized in this 
subdivision, A district having an approved program and budget 
may levy for a handicapped adult program.  The levy amount may 
not exceed the lesser of one-half of the amount of the approved 
budget for the program for the fiscal year beginning in the 
calendar year after the levy is certified or $25,000 for one 
program.  In the case of a program offered by a group of 
districts, the levy amount shall be divided among the districts 
according to the agreement submitted to the department.  The 
proceeds of the levy shall be used only for a handicapped adult 
program or, if the program is subsequently not offered, for 
community education programs.  For programs not offered, the 
department of education shall reduce the community education 
levy by the amount levied the previous year for handicapped 
adult programs. 
    (5) The levies authorized in this subdivision shall be used 
for community education, including nonvocational adult programs, 
recreation and leisure time activity programs, and programs 
authorized by sections 121.85 to 121.88 and 129B.06 to 129B.09, 
and 121.882.  A school district may levy pursuant to this 
subdivision only after it has filed a certificate of compliance 
with the commissioner of education.  The certificate of 
compliance shall certify that the governing boards of the 
county, municipality and township in which the school district 
or any part thereof is located have been sent 15 working days 
written notice of a meeting and that a meeting has been held to 
discuss methods of increasing mutual cooperation between such 
bodies and the school board.  The failure of a governing board 
of a county, municipality or township to attend the meeting 
shall not affect the authority of the school district to levy 
pursuant to this subdivision. 
    (6) The population of the district for purposes of this 
subdivision is the population determined as provided in section 
275.14 or as certified by the department of education from the 
most recent federal census. 
    Sec. 20.  Minnesota Statutes 1984, section 275.125, is 
amended by adding a subdivision to read: 
    Subd. 9c.  [1985 OPERATING DEBT LEVY.] (1) Each year, a 
district may levy to eliminate a deficit in the net 
unappropriated balance in the general fund of the district, 
determined as of June 30, 1985, and certified and adjusted by 
the commissioner.  Each year this levy may be an amount not to 
exceed the amount raised by a levy of 1.5 mills times the 
adjusted assessed valuation of the district for the preceding 
year.  However, the total amount of this levy for all years it 
is made shall not exceed the amount of the deficit in the net 
unappropriated balance in the general fund of the district as of 
June 30, 1985.  When the cumulative levies made pursuant to this 
subdivision equal the total amount permitted by this 
subdivision, the levy shall be discontinued.  
    (2) A district, if eligible, may levy under this 
subdivision or subdivision 9b but not both. 
    (3) The proceeds of this levy shall be used only for cash 
flow requirements and shall not be used to supplement district 
revenues or income for the purposes of increasing the district's 
expenditures or budgets.  
    (4) Any district that levies pursuant to this subdivision 
shall certify the maximum levy allowable under section 124A.03, 
subdivision 1 or 3 in that same year. 
    Sec. 21.  Minnesota Statutes 1985 Supplement, section 
275.125, subdivision 11a, is amended to read: 
    Subd. 11a.  [CAPITAL EXPENDITURE LEVY.] (a) Each year a 
school district may levy an amount not to exceed the amount 
equal to $90 per $130 times the total pupil unit, or $95 per 
total pupil unit in districts where the number of actual pupil 
units has increased from the prior year units in the year to 
which the levy is attributable.  No levy under this clause shall 
exceed seven nine mills times the adjusted assessed valuation of 
the taxable property in the district for the preceding year. 
    (b) The proceeds of the levy shall be placed in the 
district's capital expenditure fund and may be used only: 
    (1) to acquire land, to equip and reequip buildings and 
permanent attached fixtures, to rent or lease buildings for 
school purposes,; 
    (2) to purchase textbooks, to purchase and lease computer 
systems hardware, software, and related materials to support 
software, and; 
    (3) to purchase or lease photocopy machines and 
telecommunications equipment.  The proceeds may also be used; 
    (4) for capital improvement and repair of school sites, 
buildings and permanent attached fixtures, energy assessments, 
and; 
    (5) for energy audits on district-owned buildings and for 
funding those energy conservation and renewable energy measures 
that the energy audits indicate will reduce the use of 
nonrenewable sources of energy to the extent that the projected 
energy cost savings will amortize the cost of the conservation 
measures within a period of ten years or less; 
    (6) for the payment of any special assessments levied 
against the property of the district authorized pursuant to 
under section 435.19 or any other law or charter provision 
authorizing assessments against publicly owned property; 
provided that a district may not levy amounts to pay assessments 
for service charges, such as those described in section 429.101, 
whether levied pursuant to under that section or pursuant to any 
other law or home rule provision.  The proceeds may also be used;
    (7) for capital expenditures to reduce or eliminate 
barriers to or increase access to school facilities by 
handicapped individuals.  The proceeds may also be used; 
    (8) to make capital improvements to schoolhouses to be 
leased pursuant according to section 123.36, subdivision 10.  
The proceeds may also be used; 
    (9) to pay fees for capital expenditures assessed and 
certified to each participating school district by the 
educational cooperative service unit board of directors.  The 
proceeds may also be used; 
    (10) to pay principal and interest on loans from the state 
authorized by sections 116J.37 and 298.292 to 298.298; 
    (11) for capital expenditures to bring district facilities 
into compliance with the uniform fire code adopted according to 
chapter 299F; 
    (12) for expenditures for the removal of asbestos from 
school buildings or property, asbestos encapsulation, or 
asbestos-related repairs;  
    (13) for expenditures for the cleanup and disposal of 
polychlorinated biphenyls found in school buildings or property; 
and 
    (14) for the cleanup, removal, disposal, and repairs 
related to storing transportation fuels such as alcohol, 
gasoline, fuel oil, and special fuel, as defined in section 
296.01. 
    (c) Subject to the commissioner's approval, the proceeds 
may also be used to acquire or construct buildings.  The state 
board shall promulgate rules establishing the criteria to be 
used by the commissioner in approving and disapproving district 
applications requesting the use of capital expenditure tax 
proceeds for the acquisition or construction of buildings.  The 
approval criteria for purposes of building acquisition and 
construction shall include:  the appropriateness of the proposal 
for the district's long-term needs; the availability of adequate 
existing facilities; and the economic feasibility of bonding 
because of the proposed building's size or cost. 
    (d) The board shall establish a fund in which the proceeds 
of this tax shall be accumulated until 
expended.  Notwithstanding anything in paragraphs (b) and (c) to 
the contrary, for any year for which the sum of a district's 
levy under this subdivision and its aid for the same year under 
section 124.245, subdivision 1, exceeds $125 times the total 
pupil units in the same year, the amount by which the sum 
exceeds $125 times the total pupil units may be expended only 
for equipment for secondary vocational education programs or 
senior secondary industrial arts programs. 
    (e) The proceeds of the levy shall not be used for 
custodial or other maintenance services. 
    (f) Each year, subject to the mill limitation of clause 
(a), a school district which operates an approved secondary 
vocational education program or an approved senior secondary 
industrial arts program may levy an additional amount equal to 
$5 per total pupil unit for capital expenditures for equipment 
for these programs.  
    Sec. 22.  Minnesota Statutes 1985 Supplement, section 
275.125, subdivision 11c, is amended to read: 
    Subd. 11c.  [HAZARDOUS SUBSTANCE CAPITAL EXPENDITURE LEVY.] 
In addition to the levy authorized in subdivisions 11a and 11b, 
each year a school district may levy an amount not to exceed the 
amount equal to $25 per times the total pupil unit units in the 
year to which the levy is attributable.  No levy under this 
subdivision shall exceed two mills times the adjusted assessed 
valuation of the property in the district for the preceding 
year.  The proceeds of the tax shall be placed in the district's 
capital expenditure fund and may be used only for expenditures 
necessary for the removal or encapsulation of asbestos from 
school buildings or property, asbestos related repairs, cleanup 
and disposal of polychlorinated biphenyls found in school 
buildings or property, or the cleanup, removal, disposal, and 
repairs related to storing transportation fuels such as alcohol, 
gasoline, fuel oil, and special fuel, as defined in section 
296.01. 
    Sec. 23.  Minnesota Statutes 1985 Supplement, section 
354.43, subdivision 3, is amended to read: 
    Subd. 3.  Each school district, state university, community 
college and any other employing authority of members of the fund 
shall pay employer contributions at least once each month in 
accordance with the provisions of sections 354.42, subdivisions 
3 and 5, and 355.46, subdivision 3.  Payments for school 
district or area vocational technical institute employees who 
are paid from normal operating funds, shall be made from the 
district's or area vocational technical institute's general 
appropriate fund of the district or area vocational technical 
institute.  With respect to state employees, each department and 
agency shall pay the amounts required by section 354.42, 
subdivisions 3 and 5 from the accounts and funds from which each 
department or agency receives its revenue, including 
appropriations from the general fund and from any other fund, 
now or hereafter existing, for the payment of salaries and in 
the same proportion as it pays therefrom the amounts of the 
salaries.  The payments shall be charged as an administrative 
cost by these units of state government.  
    Sec. 24.  Minnesota Statutes 1985 Supplement, section 
354A.12, subdivision 2, is amended to read: 
    Subd. 2.  [EMPLOYER CONTRIBUTIONS.] Notwithstanding any law 
to the contrary, levies for teachers retirement fund 
associations in cities of the first class, including levies for 
any employer social security taxes for teachers covered by the 
Duluth teachers retirement fund association or the Minneapolis 
teachers retirement fund association or the St. Paul teachers 
retirement fund association, are disallowed. 
     The employing units shall make the following employer 
contributions to teachers retirement fund associations: 
     (a) For any coordinated member of a teachers retirement 
fund association in a city of the first class, the employing 
unit shall pay the employer social security taxes in accordance 
with section 355.46, subdivision 3, clause (b); 
     (b) For any coordinated member of one of the following 
teachers retirement fund associations in a city of the first 
class, the employing unit shall make a contribution to the 
respective retirement fund association in an amount equal to the 
designated percentage of the salary of the coordinated member as 
provided below: 
     Duluth teachers retirement
     fund association                        5.79 percent
     Minneapolis teachers retirement
     fund association                        4.50 percent
     St. Paul teachers retirement
     fund association                        4.50 percent
    (c) For any basic member of one of the following teachers 
retirement fund associations in a city of the first class, the 
employing unit shall make a contribution to the respective 
retirement fund in an amount equal to the designated percentage 
of the salary of the basic member as provided below: 
     Minneapolis teachers retirement
     fund association                        13.35 percent
     St. Paul teachers retirement
     fund association                        12.63 percent
    The employer contributions shall be remitted directly to 
each teachers retirement fund association each month. 
    Payments for school district or area vocational technical 
institute employees who are paid from normal operating funds, 
shall be made from the district's or area vocational technical 
institute's general appropriate fund of the district or area 
vocational technical institute. 
    Sec. 25.  Minnesota Statutes 1985 Supplement, section 
355.208, is amended to read: 
    355.208 [EMPLOYER CONTRIBUTIONS.] 
    Contributions required under the agreement or modification 
entered into pursuant to section 355.207 to be made by political 
subdivisions employing teachers, and payments required by 
section 355.49, which shall apply to political subdivisions 
employing teachers, shall be paid by the political 
subdivisions.  Payments for school district or area vocational 
technical institute employees who are paid from normal operating 
funds, shall be made from the district's or area vocational 
technical institute's general appropriate fund of the district 
or area vocational technical institute. 
    Sec. 26.  Minnesota Statutes 1985 Supplement, section 
355.287, is amended to read: 
    355.287 [EMPLOYER CONTRIBUTIONS.] 
    Contributions required under the agreement or modification 
entered into pursuant to section 355.286 to be made by political 
subdivisions employing teachers, and payments required by 
section 355.49, which shall apply to political subdivisions 
employing teachers, shall be paid by the political subdivision.  
Payments for school district or area vocational technical 
institute employees who are paid from normal operating funds, 
shall be made from the district's or area vocational technical 
institute's general appropriate fund of the district or area 
vocational technical institute. 
    Sec. 27.  Minnesota Statutes 1985 Supplement, section 
355.46, subdivision 3, is amended to read: 
    Subd. 3.  [SOCIAL SECURITY CONTRIBUTIONS.] The employer 
taxes due with respect to employment by educational employees 
who have made their selection pursuant to section 218(d) (6) (C) 
of the Social Security Act, shall be paid in the following 
manner: 
    (a) Contributions required to be made for current service 
by political subdivisions employing educational employees and 
payments required by section 355.49 shall be paid by the 
political subdivision.  Payments for school district or area 
vocational technical institute employees who are paid from 
normal operating funds, shall be made from the district's or 
area vocational technical institute's general appropriate fund 
of the district or area vocational technical institute.  The 
state shall make payments for services rendered prior to July 1, 
1986. 
    (b) Contributions required to be made with respect to 
educational employees of state departments and institutions and 
payments required by section 355.49 shall be paid by the 
departments and institutions in accordance with the provisions 
of sections 355.49 and 355.50. 
    Sec. 28.  Minnesota Statutes 1984, section 364.09, is 
amended to read: 
    364.09 [LAW ENFORCEMENT; EXCEPTION.] 
    This chapter shall not apply to the practice of law 
enforcement or, to eligibility for a family day care license or 
a family foster care license, or to eligibility for school bus 
driver endorsements.  Nothing in this section shall be construed 
to preclude the Minnesota police and peace officers training 
board from recommending policies set forth in this chapter to 
the attorney general for adoption in his discretion to apply to 
law enforcement. 
    Sec. 29.  Laws 1985, First Special Session chapter 12, 
article 1, section 36, subdivision 3, is amended to read: 
    Subd. 3.  [SUMMER PROGRAMS.] For summer program aid 
pursuant to Minnesota Statutes, section 124A.033, subdivision 3, 
and for summer instructional program aid pursuant to section 
124A.033, subdivision 3a, there is appropriated: 
     $7,878,600.....1986,
     $7,400,000 $3,145,100.....1987.
    The appropriation for fiscal year 1986 is for aid for 
programs in summer 1985.  The appropriation for fiscal year 1987 
is for aid for programs in summer 1986.  Summer educational 
improvement aid shall not be paid after fiscal year 1986. 
    Sec. 30.  Laws 1985, First Special Session chapter 12, 
article 2, section 15, subdivision 2, is amended to read: 
    Subd. 2.  [TRANSPORTATION AID.] For transportation aid 
there is appropriated: 
     $88,993,600.....1986,
     $84,587,100 $82,638,000.....1987.
    (a) The appropriation for 1986 includes $12,284,400 for aid 
for fiscal year 1985 payable in fiscal year 1986 and $76,709,200 
for fiscal year 1986 payable in fiscal year 1986. 
    (b) The appropriation for 1987 includes $13,536,900 for aid 
for fiscal year 1986 payable in fiscal year 1987 and 
$71,050,200 $69,101,100 for fiscal year 1987 payable in fiscal 
year 1987. 
    (c) The appropriations are based on aid entitlements of 
$90,246,100 for fiscal year 1986 and $83,588,400 $81,295,400 for 
fiscal year 1987. 
    Sec. 31.  Laws 1985, First Special Session chapter 12, 
article 3, section 28, subdivision 9, is amended to read: 
    Subd. 9.  [SECONDARY VOCATIONAL HANDICAPPED.] For aid for 
secondary vocational education for handicapped pupils according 
to section 124.574, there is appropriated: 
    $3,534,000.....1986, 
    $3,606,300.....1987. 
    The appropriation for 1986 includes $551,700 for aid for 
fiscal year 1985 payable in fiscal year 1986, and $2,982,300 for 
aid for fiscal year 1986 payable in fiscal year 1986.  This 
appropriation is based on the assumption that the state will 
spend for this purpose an amount at least equal to $230,000 in 
fiscal year 1986 of federal money received for vocational 
education programs pursuant to the vocational education act of 
1963, as amended. 
    The appropriation for 1987 includes $526,300 for aid for 
fiscal year 1986 payable in fiscal year 1987, and $3,080,000 for 
aid for 1987 payable in fiscal year 1987.  This appropriation is 
based on the assumption that the state will spend for this 
purpose an amount at least equal to $230,000 in fiscal year 1987 
of federal money received for vocational education programs 
pursuant to the vocational education act of 1963, as amended. 
    The appropriations are based on aid entitlements of 
$3,508,600 for fiscal year 1986 and $3,623,500 for fiscal year 
1987. 
    Sec. 32.  Laws 1985, First Special Session chapter 12, 
article 3, section 28, subdivision 10, is amended to read: 
    Subd. 10.  [OFFICE ON TRANSITION SERVICES.] For the 
interagency office on transition services there is appropriated: 
    $75,000.....1986, 
    $85,000 $77,000.....1987. 
    Sec. 33.  Laws 1985, First Special Session chapter 12, 
article 4, section 11, subdivision 6, is amended to read: 
    Subd. 6.  [DEPARTMENT ASSISTANCE FOR EARLY CHILDHOOD FAMILY 
EDUCATION.] For the department to provide assistance to 
districts in planning, implementing, and evaluating early 
childhood family education programs there is appropriated: 
    $35,000.....1986, 
    $35,000 $31,500.....1987. 
    The department shall use the appropriation for personnel 
service contracts and expenses of conferences and workshops. 
    Sec. 34.  Laws 1985, First Special Session chapter 12, 
article 5, section 10, subdivision 2, is amended to read: 
    Subd. 2.  [COMPREHENSIVE ARTS PLANNING PROGRAMS.] For 
comprehensive arts planning programs there is appropriated: 
    $100,000.....1986, 
    $100,000 $90,000.....1987. 
    The unencumbered balance remaining from fiscal year 1986 
shall not cancel but shall be available for fiscal year 1987.  
    Sec. 35.  Laws 1985, First Special Session chapter 12, 
article 5, section 10, subdivision 4, is amended to read: 
    Subd. 4.  [SCHOOL OF THE ARTS AND RESOURCE CENTER.] For the 
purpose of making a grant to the Minnesota school of the arts 
and resource center there is appropriated: 
     $  491,000.....1986, 
     $2,170,000 $2,037,000.....1987. 
    The unencumbered balance remaining from fiscal year 1986 
shall not cancel but shall be available for fiscal year 1987. 
    For fiscal years 1986 and 1987 a complement of 13 is 
authorized for the school of the arts and resource center.  Of 
this complement, eight are in the categories of director, 
coordinator, and department chairs.  
    Sec. 36.  Laws 1985, First Special Session chapter 12, 
article 6, section 28, subdivision 11, is amended to read: 
    Subd. 11.  [GIFTED STUDY.] For the gifted education program 
study there is appropriated: 
     $35,000 $33,300.....1986.
    The appropriation is available until June 30, 1987.  A 
portion of the appropriation may be used for administrative 
expenses. 
    Sec. 37.  Laws 1985, First Special Session chapter 12, 
article 6, section 28, subdivision 16, is amended to read: 
    Subd. 16.  [SECONDARY VOCATIONAL EDUCATION AID.] For 
secondary vocational education aid pursuant to Minnesota 
Statutes, section 124.573, there is appropriated: 
    $21,117,400.....1986, 
    $21,511,300 $19,965,500.....1987. 
    The appropriation for 1986 includes $3,422,400 for aid for 
fiscal year 1985 payable in fiscal year 1986.  This amount also 
includes $17,695,000 for aid for fiscal year 1986 payable in 
fiscal year 1986. 
    The appropriation for 1987 includes $3,122,700 for aid for 
fiscal year 1986 payable in fiscal year 1987.  This amount also 
includes $18,388,600 $16,842,800 for aid for fiscal year 1987 
payable in fiscal year 1987. 
    The appropriations are based on aid entitlements of 
$20,817,700 for fiscal year 1986 and $21,633,600 $19,815,100 for 
fiscal year 1987. 
    For the purposes of this subdivision, money appropriated 
for secondary vocational education programs may not be expended 
for the purpose of discontinuing or converting existing senior 
secondary school industrial arts education programs.  
    Sec. 38.  Laws 1985, First Special Session chapter 12, 
article 6, section 28, subdivision 17, is amended to read: 
    Subd. 17.  [COUNCIL ON QUALITY EDUCATION; VENTURE FUND 
GRANTS.] For the council on quality education venture fund 
grants pursuant to Minnesota Statutes, sections 129B.01 129B.02 
to 129B.05, there is appropriated: 
     $717,700.....1986,
     $450,000 $350,000.....1987.
    The appropriation for fiscal year 1986 includes $122,400 
for grants for fiscal year 1985 payable in fiscal year 1986 and 
$595,300 for grants for fiscal year 1986 payable in fiscal year 
1986. 
    The appropriation for fiscal year 1987 includes $105,100 
for grants for fiscal year 1986 payable in fiscal year 1987 and 
$344,900 $244,900 for grants for fiscal year 1987 payable in 
fiscal year 1987. 
    Any unexpended balance remaining from the appropriations in 
this subdivision for 1986 shall not cancel and shall be 
available for the second year of the biennium. 
    The appropriations are based on entitlements of $700,400 
for fiscal year 1986 and $405,800 $288,200 for fiscal year 1987. 
    The council may maintain a complement of up to three 
professionals and one clerical staff for fiscal year 1986 and 
two professionals and one clerical staff for fiscal year 1987. 
    Sec. 39.  Laws 1985, First Special Session chapter 12, 
article 6, section 28, subdivision 20, is amended to read: 
    Subd. 20.  [SECONDARY VOCATIONAL STUDENT ORGANIZATIONS.] 
    For aid for secondary vocational student organizations 
there is appropriated: 
    $60,000.....1986, 
    $60,000 $54,000.....1987. 
    The appropriations for fiscal years 1986 and 1987 are 
available for expenditure if the commissioner of education 
authorizes an additional $160,000 $144,300 for each of fiscal 
years 1986 and 1987 from the department's biennial 
appropriations for this purpose. 
    Sec. 40.  Laws 1985, First Special Session chapter 12, 
article 8, section 60, subdivision 1, is amended to read:  
    Subdivision 1.  [ESTABLISHMENT.] A task force on an 
academic high school league is established.  The task force 
shall consist of 15 members appointed by the academic excellence 
foundation.  The foundation shall appoint at least one member 
from the state committee of the north central association and 
one member from the advisory committee for programs of 
excellence.  The task force shall terminate by June 30 December 
31, 1986. 
    Sec. 41.  Laws 1985, First Special Session chapter 12, 
article 8, section 60, subdivision 4, is amended to read: 
    Subd. 4.  [REPORT.] The task force shall report its 
findings and recommendations to the academic excellence 
foundation and the education committees of the legislature by 
February 1 December 15, 1986. 
    Sec. 42.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 2, is amended to read: 
    Subd. 2.  [EDUCATIONAL EFFECTIVENESS.] For educational 
effectiveness programs according to sections 121.608 and 121.609 
there is appropriated: 
    $1,034,000.....1986, 
    $781,000 $690,300.....1987. 
    The commissioner shall assign one additional position, from 
the department's existing complement, to educational 
effectiveness programs.  The legislature intends that, beginning 
in fiscal year 1987, districts will pay the costs of educational 
effectiveness in-service for district staff. 
    Sec. 43.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 3, is amended to read: 
    Subd. 3.  [ACADEMIC EXCELLENCE FOUNDATION.] For support of 
the academic excellence foundation according to Minnesota 
Statutes, section 121.612, there is appropriated: 
    $89,000.....1986, 
    $84,000 $75,400.....1987.  
    $5,000 of the fiscal year 1986 appropriation shall be used 
for expenses related to the operation of the task force 
established in section 60, subdivision 1. 
    Any unexpended balance from the appropriation for the 
academic excellence foundation for fiscal year 1986 shall not 
cancel but shall be available until June 30, 1987. 
    Sec. 44.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 4, is amended to read: 
    Subd. 4.  [MANAGEMENT ASSISTANCE.] For management 
assistance to school districts according to section 4 there is 
appropriated: 
    $50,000.....1986, 
    $50,000 $45,000.....1987. 
    Sec. 45.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 6, is amended to read: 
    Subd. 6.  [ASSESSMENT ITEM BANK.] For development and 
implementation of the assessment item bank according to 
Minnesota Statutes, section 123.742, subdivision 5, there is 
appropriated: 
    $300,000.....1986, 
    $300,000 $270,000.....1987.  
    Sec. 46.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 8, is amended to read: 
    Subd. 8.  [PER ASSISTANCE.] For state assistance for 
planning, evaluation, and reporting, there is appropriated: 
    $120,000.....1986, 
    $120,000 $108,000.....1987. 
    $50,000 each year in fiscal year 1986 and $45,000 in fiscal 
year 1987 shall be used for assisting districts with the 
assurance of mastery program.  Up to $50,000 each year shall be 
used to develop and maintain model learner expectations.  Up to 
$20,000 each year shall be used for the state curriculum 
advisory committee; a portion of this money may be for 
administration.  
    Sec. 47.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 9, is amended to read: 
    Subd. 9.  [TECHNOLOGY SERVICES.] For the purposes of 
Minnesota Statutes, sections 129B.35, 129B.37, 129B.39, and 
129B.40, there is appropriated: 
    $649,000.....1986, 
    $649,000 $935,100.....1987. 
    $351,000 shall be used to increase the fiscal year 1987 
allocation for purchase of courseware package duplication rights 
according to Minnesota Statutes, section 129B.39. 
    Sec. 48.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 12, is amended to read: 
    Subd. 12.  [COURSEWARE PURCHASE SUBSIDY.] For subsidies for 
purchases of courseware packages according to Minnesota 
Statutes, section 129B.38 there is appropriated: 
    $351,000.....1986, 
    $351,000.....1987. 
    Sec. 49.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 13, is amended to read: 
    Subd. 13.  [MASTERY LEARNING PROGRAM.] For the purposes of 
section 42, subdivisions 3 and 10 and section 59, there is 
appropriated: 
    $160,000.....1986, 
    $1,290,000 $1,217,500.....1987. 
    $125,000 of the appropriation for fiscal year 1986 shall be 
used for a computerized mastery management system and support 
materials.  The remaining $35,000 in fiscal year 1986 shall be 
used for planning aid to districts under section 42, subdivision 
3. 
    $1,250,000 $1,187,500 of the appropriation in fiscal year 
1987 shall be used for mastery learning project grants.  The 
remaining $40,000 $30,000 for fiscal year 1987 may be used by 
the department to administer and evaluate the program. 
    Sec. 50.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 14, is amended to read: 
    Subd. 14.  [SCHOOL MANAGEMENT ASSESSMENT CENTER.] For 
support of the school management assessment center at the 
University of Minnesota, there is appropriated: 
    $25,900.....1986, 
    $26,900 $24,300.....1987.  
    Sec. 51.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 15, is amended to read: 
    Subd. 15.  [PROGRAMS OF EXCELLENCE.] For programs of 
excellence according to Minnesota Statutes, sections 126.60 to 
126.64, there is appropriated: 
    $25,000.....1986, 
    $25,000 $22,500.....1987. 
    Of this amount, the following sums may be used for the 
purposes indicated in each year:  $7,500 $6,750 for program 
administration including expenses of the programs of excellence 
committee, according to Minnesota Statutes, section 126.60, 
subdivision 3 and $17,500 $15,750 for incentive grants according 
to Minnesota Statutes, section 126.60, subdivision 4. 
    Sec. 52.  Laws 1985, First Special Session chapter 12, 
article 8, section 62, subdivision 17, is amended to read: 
    Subd. 17.  [INDUSTRIAL TECHNOLOGY PROGRAM.] For development 
of curriculum for the industrial technology program according to 
section 56 there is appropriated: 
    $30,000 $28,500......1986. 
    The sum is available until June 30, 1987. 
    Sec. 53.  Laws 1985, First Special Session chapter 12, 
article 8, section 63, subdivision 2, is amended to read: 
    Subd. 2.  [TEACHER EXAMINATIONS.] For duties related to 
teacher examinations there is appropriated: 
   $105,000.....1986, 
   $ 75,000 $66,000.....1987. 
    $30,000 of the fiscal year 1986 appropriation is to 
evaluate teaching skills of beginning teachers and $75,000 each 
year in fiscal year 1986 and $66,000 in fiscal year 1987 is for 
development of teacher examinations.  Funds not expended in 
fiscal year 1986 are available until June 30, 1987. 
    Sec. 54.  Laws 1985, First Special Session chapter 12, 
article 8, section 63, subdivision 3, is amended to read: 
    Subd. 3.  [EXEMPLARY TEACHER EDUCATION PROGRAMS.] For 
development of exemplary teacher education programs there is 
appropriated:  
    $150,000.....1986, 
    $150,000 $135,000.....1987. 
    Up to $30,000 of this sum may be used for evaluation.  The 
sum is available until June 30, 1987. 
    Sec. 55.  Laws 1985, First Special Session chapter 12, 
article 8, section 64, subdivision 2, is amended to read: 
    Subd. 2.  [SUMMER PROGRAM SCHOLARSHIPS.] For scholarship 
awards for 1986 and 1987 summer programs according to section 
22, there is appropriated: 
 $500,000 $475,000......1986. 
    Of this appropriation, the amount required may be used for 
the higher education coordinating board's costs of administering 
the program. 
    Sec. 56.  Laws 1985, First Special Session chapter 12, 
article 9, section 3, subdivision 2, is amended to read: 
    Subd. 2.  [BASIC SUPPORT GRANTS.] For basic support grants 
pursuant to sections 134.32 to 134.35 for the provision of 
library service there is appropriated: 
    $4,923,600.....1986, 
    $5,047,300 $4,548,800.....1987. 
    The appropriation for 1986 includes $695,000 for aid for 
fiscal year 1985 payable in fiscal year 1986, and $4,228,600 for 
aid for fiscal year 1986 payable in fiscal year 1986.  
    The appropriation for 1987 includes $746,200 for aid for 
fiscal year 1986 payable in fiscal year 1987 and 
$4,301,100 $3,802,600 for aid for fiscal year 1987 payable in 
fiscal year 1987.  
    The appropriations are based on aid entitlements of 
$4,974,800 for fiscal year 1986 and $5,060,100 $4,473,700 for 
fiscal year 1987. 
    Sec. 57.  Laws 1985, First Special Session chapter 12, 
article 9, section 3, subdivision 3, is amended to read: 
    Subd. 3.  [MULTI-COUNTY, MULTI-TYPE LIBRARY SYSTEMS.] For 
grants pursuant to sections 134.353 and 134.354 to multi-county, 
multi-type library systems there is appropriated: 
    $205,100.....1986, 
    $213,000 $192,100.....1987. 
    The appropriation for 1986 includes $30,000 for aid for 
fiscal year 1985 payable in fiscal year 1986, and $175,100 for 
aid for fiscal year 1986 payable in fiscal year 1986. 
    The appropriation for 1987 includes $30,900 for fiscal year 
1986 payable in fiscal year 1987, and $182,100 $161,200 for aid 
for fiscal year 1987 payable in fiscal year 1987. 
    The appropriations are based on aid entitlements of 
$206,000 for fiscal year 1986, and $214,200 $189,700 for fiscal 
year 1987. 
    Sec. 58.  Laws 1985, First Special Session chapter 12, 
article 11, section 21, subdivision 3, is amended to read: 
    Subd. 3.  [TO DEPARTMENT OF EDUCATION.] To the department 
of education to make the aid payments required by section 2, as 
amended by section 4 of this article, there is appropriated:  
 $195,462,000 $192,832,700.....1987. 
    This appropriation is for aid for fiscal year 1987 payable 
in fiscal year 1987.  The appropriation is based on an aid 
entitlement of $229,955,300 $226,862,000 for fiscal year 1987.  
    Sec. 59.  [AID FORMULA FOR 1986 SUMMER PROGRAMS.] 
    Notwithstanding Minnesota Statutes, section 124A.033, 
subdivision 3, a district that offers a summer instructional 
program in 1986, shall receive summer program aid equal to the 
difference between:  
    (1) the product of 
    (a) the ratio of the district's actual levy as adjusted by 
section 60 to its permitted levy as adjusted by section 60; 
times 
    (b) the district's summer program revenue allowance; and 
    (2) the levy certified by the district and adjusted by 
section 60 for 1986 summer programs.  
    Sec. 60.  [LEVY FORMULA FOR 1986 SUMMER PROGRAMS.] 
    Notwithstanding Minnesota Statutes, section 124A.03, 
subdivision 4, for any district that certified a levy in 1985 
according to that subdivision, that levy shall be recomputed 
according to the following provisions.  
    For 1986 summer programs, a district may levy an amount 
equal to the following product:  
    (a) the district's estimated summer program revenue 
allowance as defined in section 124A.033, subdivision 2, for the 
summer program session in 1986, times 
    (b) the lesser of 
    (1) one, or 
    (2) the ratio of 
    (i) the quotient derived by dividing the adjusted assessed 
valuation of the district in 1983 by the total pupil units in 
the district in the 1985-1986 school year, to 
    (ii) 60 percent of the equalizing factor for the 1985-1986 
school year.  
    (c) the levy limitation in 1986 shall be adjusted by the 
difference between the levy certified in 1985 and the result of 
the computation in this section. 
    Sec. 61.  [DEBT SERVICE LEVY; INDEPENDENT SCHOOL DISTRICT 
NO. 750, COLD SPRING.] 
    Notwithstanding Minnesota Statutes, section 475.61, 
independent school district No. 750, Cold Spring, may increase 
the levies it makes for debt service in 1986, for taxes payable 
in 1987, and in 1987, for taxes payable in 1988, over the amount 
the district is otherwise entitled to levy.  The amount by which 
the levies may be increased must not exceed the amount necessary 
to provide for an equal levy for payment of the district's debt 
service obligations for each of the next five years, beginning 
with the levy made in 1986.  The additional amount levied under 
this section must not be considered to be an excess amount for 
the purposes of section 475.61, subdivision 3.  Any surplus 
money remaining in the debt service fund when the obligations 
and interest thereon are paid shall be used to reduce the 
district's maintenance levy authorized pursuant to Minnesota 
Statutes, section 124A.03, subdivision 1, in the next levy 
certified.  This section does not authorize the district to 
incur additional indebtedness. 
    Sec. 62.  [SPECIAL LEVY; MAHTOMEDI.] 
    In addition to other levies authorized by law, independent 
school district No. 832, Mahtomedi, may levy in 1986 an amount 
up to $250,000 for capital expenditures.  The proceeds of the 
levy may be used only to renovate Wildwood school. 
    By July 30, 1986, the school board shall hold a public 
hearing on the need for the proposed levy.  Upon receipt, within 
30 days after the hearing, of a petition objecting to the levy 
signed by a number of qualified voters in the district equal to 
the greater of 50 voters or 15 percent of the number of voters 
who voted in the most recent school board election, the board 
shall hold a referendum on the proposed levy.  The referendum 
shall be held on the date set by the board but no later than 
October 1, 1986.  If a valid petition is not received by the 
school board, within 30 days after the hearing, no referendum 
need be held. 
    Sec. 63.  [EXCESS CAPITAL OUTLAY LEVY; MOOSE LAKE.] 
    Subdivision 1.  [1986.] Independent school district No. 97, 
Moose Lake, may levy up to $75,000 in 1986 for capital outlay 
purposes in addition to all other levies for capital outlay and 
other purposes. 
    Subd. 2.  [1987.] Independent school district No. 97, Moose 
Lake, may levy up to $70,000 in 1987 for capital outlay purposes 
in addition to all other levies for capital outlay and other 
purposes. 
    Subd. 3.  [REFERENDUM.] The authorization for the levy in 
subdivision 1 or 2 may be revoked or reduced as provided in this 
subdivision.  A referendum on the question of revoking or 
reducing the authorized amount shall be called on the written 
petition of a number of qualified voters in excess of 15 percent 
of the average number of voters of the two most recent 
district-wide school elections.  A petition to revoke or reduce 
the levy authorized by subdivision 1 must be received by 
September 1, 1986, and the referendum must be held by October 
10, 1986.  A petition to revoke or reduce the levy authorized by 
subdivision 2 must be received by September 1, 1987, and the 
referendum must be held by October 10, 1987.  The ballot must 
state the number of mills required to raise the authorized 
amount.  The ballot question must read substantially as follows: 
    "Shall the authority to make an extra capital levy in 
(year) granted to independent school district No. 97 in (this 
act) be (revoked/reduced from $..... to $.....)?" 
    In other respects, the referendum shall be conducted as 
other elections are conducted under sections 124A.03 and 123.32. 
    Sec. 64.  [REPEALER.] 
    Subdivision 1.  [JULY 1, 1986.] Minnesota Statutes 1984, 
section 275.125, subdivision 16, and Minnesota Statutes 1985 
Supplement, sections 124.245, subdivision 5, 129B.38, and 
275.125, subdivision 11b, are repealed. 
    Subd. 2.  [JUNE 30, 1987.] Minnesota Statutes 1985 
Supplement, section 124.245, subdivision 2, is repealed. 
    Sec. 65.  [EFFECTIVE DATES.] 
    Subdivision 1.  [IMMEDIATE.] Sections 3, 8, 10, 13, 14, 16, 
18, 22, 23, 24, 25, 26, 27, 28, 31, 36, 40, 43, 52, 53, 55, 59, 
and 60 are effective the day following final enactment. 
    Subd. 2.  [JUNE 30, 1987.] Sections 9 and 64, subdivision 
2, are effective June 30, 1987. 

                               ARTICLE 10 

        POST-SECONDARY EDUCATION BOARDS; DEPARTMENT OF EDUCATION 
    Section 1.  [APPROPRIATIONS.] 
    Subdivision 1.  The amounts shown in the columns marked 
"APPROPRIATIONS" are added to (or, if shown in parentheses, are 
subtracted from) the appropriations in Laws 1985, First Special 
Session chapter 11, to the specified agencies.  The figures 
"1986" or "1987," in this article, mean that the amounts listed 
under them are added to (or subtracted from) the appropriations 
for the fiscal year ending June 30, 1986, or June 30, 1987, 
respectively.  

                                SUMMARY 
                          1986          1987           TOTAL 
General Fund         $(31,101,200)  $(4,848,800)  $(35,950,000)
                                           APPROPRIATIONS
                                           1986        1987 
     Subd. 2.  Department of 
Education                               $(702,300) $(1,756,300)
 (a) The approved complement of the 
department of education is reduced by 
33 positions by June 30, 1987. 
 (b) Notwithstanding any law to the 
contrary, the duties and 
responsibilities of the council on 
quality education are suspended but 
shall instead be performed by the 
commissioner of education until June 
30, 1987.  The council on quality 
education shall immediately give all 
books, records, and other documents to 
the commissioner of education. 
 (c) Notwithstanding Minnesota Statutes, 
section 121.934, the commissioner of 
education is not required to pay 
compensation or expenses of the ESV 
computer council members for fiscal 
year 1987. 
 (d) Beginning July 1, 1986, basic 
skills services to school districts may 
be provided by contracts between the 
educational service units and each 
school district, if a school district 
desires the services. 
(e) When preparing the 1987-1989 
biennial budget request, the department 
of education and the department of 
finance shall include funding requests 
for regional management information 
centers in the education aids budget 
rather than the department of education 
budget. 
     Subd. 3.  Higher Education 
Coordinating Board                        (10,000)  (3,042,000) 
 (a) Notwithstanding Laws 1985, First 
Special Session chapter 11, sections 38 
and 82, the higher education 
coordinating board shall delay 
implementation of the four-year 
eligibility component of the state 
grant and scholarship program until 
July 1, 1987. 
 (b) The higher education coordinating 
board may transfer appropriations in 
Laws 1985, First Special Session 
chapter 11, section 3, among the 
subdivisions in that section.  The 
transfers must be made in accordance 
with Minnesota Statutes, section 3.30. 
 (c) The higher education coordinating 
board shall study the need for a loan 
forgiveness program for career teachers 
under improved learning programs as 
defined in Minnesota Statutes, section 
129B.46.  The board shall consult with 
the chairs of the education committees 
of the legislature prior to conducting 
the study.  The board shall report by 
January 1, 1987, to the education 
committees of the legislature. 
 (d) The higher education coordinating 
board may spend up to $500,000 of the 
projected unobligated balance in 
1986-1987 agency appropriations for 
supplemental scholarships and grants or 
additional state work study for 
students in economically depressed 
areas of the state.  The expenditure 
for these programs during the biennium 
is not subject to the rulemaking 
provisions of chapter 14.  Of the 
remaining projected unobligated 
balance, the board may supplement the 
1987 state scholarship and grant awards 
up to an amount equal to reductions in 
federal Pell grants.  Any action taken 
under this provision must first be 
submitted to the chairs of the 
education divisions of the 
appropriations and finance committees 
of the legislature for review. 
     Subd. 4.  State Board of 
Vocational Technical Education         (6,004,400)        -0- 
 (a) Intermediate school district No. 
287, suburban Hennepin, may construct a 
maintenance facility at the north 
campus of the AVTI.  The total cost of 
the facility must not exceed the amount 
approved by the state board of 
vocational technical education under 
Minnesota Statutes, section 136C.07, 
subdivision 5.  The entire project cost 
must be paid with local money. 
(b) If the appropriation in Laws 1985, 
First Special Session chapter 11, 
section 4, for fiscal year 1986 is 
insufficient to pay teacher retirement 
and FICA costs, the state director of 
vocational technical education may 
transfer the necessary amounts from 
fiscal year 1987 to pay those costs. 
 (c) The state board of vocational 
technical education may transfer any 
unencumbered balances among the 
appropriations in Laws 1981, chapter 
362, section 2; Laws 1984, chapter 597, 
section 13; and Laws 1985, First 
Special Session chapter 15, section 
13.  The transfers must be made 
according to Laws 1985, First Special 
Session chapter 15, section 24. 
     Subd. 5.  State Board for 
Community Colleges                     (2,887,300)        -0- 
 (a) Notwithstanding Minnesota Statutes, 
chapter 94, the commissioner of 
administration, upon request of the 
state board for community colleges, may 
enter into an agreement with the county 
of St. Louis to exchange parcels of 
land.  The conveyances must be made for 
no monetary consideration and by 
quitclaim deed in a form approved by 
the attorney general. 
 (b) The state board for community 
colleges in cooperation with the higher 
education facilities authority shall 
study the feasibility of constructing 
and operating student housing for 
Vermilion Community College.  The study 
may include:  methods of financing, 
such as higher education facilities 
authority revenue bonds guaranteed by 
the iron range resources and 
rehabilitation board, private sources, 
earnings from the student housing, and 
other methods; projected use of the 
facilities; and other pertinent 
information.  The study, following 
approval of the state board for 
community colleges, must be submitted 
to the governor, the chairs of the 
senate finance and house appropriations 
committees, and the higher education 
coordinating board by January 1, 1987.  
     Subd. 6.  State University 
Board                                  (5,758,400)        -0- 
 The state university board may include 
the remodeling of Phelps Hall in the 
appropriation in Laws 1985, First 
Special Session chapter 15, section 15, 
subdivision 6(a). 
     Subd. 7.  Board of Regents of
the University of Minnesota           (15,788,800)        -0- 
(a)  Operations and 
maintenance        $(13,368,000)  $ -0- 
(b)  Special 
appropriations     $ (2,420,800)  $ -0- 
     Subd. 8.  Mayo Medical 
Foundation                                   -0-       (50,500) 
     Subd. 9.  Governor                    50,000         -0- 
 The governor, after consulting with the 
Fond du Lac reservation and the higher 
education coordinating board, shall 
appoint a task force of 13 members to 
study the feasibility of establishing a 
coordinate campus of Arrowhead 
Community College on the Fond du Lac 
Indian reservation that would be open 
and available to all.  The task force 
shall report to the legislature on the 
results of its study by February 1, 
1987.  The task force shall provide 
copies of its report to the state board 
for community colleges and the higher 
education coordinating board.  Those 
boards shall respond to the legislature 
on the report of the task force by 
March 1, 1987.  The task force (1) is 
subject to Minnesota Statutes, section 
15.059, subdivision 6, (2) may accept 
money from nonstate sources to do its 
work, (3) shall cooperate with and 
invite the participation before it of 
the federal government, including the 
Bureau of Indian Affairs, and (4) shall 
report on, among other things, the 
availability of federal tribal 
community college funding. 
     Subd. 10.  Education Systems  
 (a) The changes in subdivisions 2 to 9 
may be transferred between fiscal years 
1986 and 1987, upon the advance 
approval of the commissioner of finance.
 (b) The changes in appropriations in 
this act must not be taken into account 
when calculating the 1987-1989 biennial 
budgets for post-secondary systems.  
Except for changes attributable to 
enrollment or internal reallocation of 
appropriated money, the fiscal year 
1987 instructional base used by each 
system in its respective 1987-1989 
biennial budget request must not differ 
from the spending level established by 
Laws 1985, First Special Session 
chapter 11. 
 (c) The reductions in subdivisions 4 to 
7 must not be implemented until each 
system has submitted its plan to the 
chairs of the senate finance and house 
appropriations committees. 
 (d) Notwithstanding any law to the 
contrary, if recommended by the average 
cost funding task force, the board of 
regents of the University of Minnesota, 
state university board, state board for 
community colleges, and state board of 
vocational technical education shall 
submit 1987-1989 biennial budget 
requests which:  (1) take into account 
fixed and variable instructional costs; 
(2) base calculation of instructional 
appropriations on enrollments other 
than those achieved two years earlier; 
and (3) include any other 
recommendations of the average cost 
funding task force. 
    Sec. 2.  Minnesota Statutes 1984, section 15.38, 
subdivision 3, is amended to read: 
    Subd. 3.  [STATE UNIVERSITIES.] The state university board 
may purchase insurance coverage as it deems necessary and 
appropriate to protect buildings and contents and for activities 
ancillary to the programs of the state universities.  
    Sec. 3.  Minnesota Statutes 1985 Supplement, 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, and 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 postaudit.  The commissioner of 
finance may promulgate rules to assure the proper expenditure of 
these funds, and to provide for reimbursement.  
    Sec. 4.  Minnesota Statutes 1984, section 121.901, 
subdivision 2, is amended to read: 
    Subd. 2.  The council shall expire, and the terms, 
compensation and removal of members shall be as provided in 
section 15.059.  The state board shall determine the length of 
terms of the initial members consistent with section 15.059. 
    Sec. 5.  Minnesota Statutes 1984, section 124.71, 
subdivision 2, is amended to read:  
    Subd. 2.  Commissioner as used in sections 124.71 to 124.76 
means the commissioner of education of the state of Minnesota 
or, for certificates for an area vocational technical institute, 
the state director of vocational technical education. 
    Sec. 6.  [135A.09] [EXPENSE ALLOWANCES.] 
    The state board of vocational technical education and the 
higher education coordinating board may each establish an annual 
expense allowance for the state director of vocational technical 
education and the executive director of the higher education 
coordinating board, respectively.  The state university board 
and the state board for community colleges may each establish an 
expense allowance for the chancellors and campus presidents.  
The allowances are not subject to chapter 16A, but each board 
shall report the allowances and expenditures annually to the 
chairs of the house appropriations and senate finance 
committees, and to the commissioner of finance. 
    Sec. 7.  Minnesota Statutes 1984, section 136.14, is 
amended to read: 
    136.14 [DUTIES OF BOARD.] 
    Subdivision 1.  [GENERAL.] The state university board shall 
have the educational management, supervision, and control of the 
state universities and of all related property appertaining 
thereto.  It shall appoint all presidents, teachers, and other 
necessary employees therein and fix their salaries.  It shall 
prescribe courses of study, conditions of admission, prepare and 
confer diplomas, report graduates of the state university 
department, and adopt suitable rules policies for the 
universities.  Sections 14.01 to 14.47 do not apply to policies 
and procedures of the board.  It shall, as a whole or by 
committee, visit each state university at least once in each 
year for the purpose of meeting with administrators, faculty, 
students and the community to discuss such matters as 
facilities, modes of instruction, curriculum, extracurricular 
programs and management. 
    Subd. 2.  [OFFICE LOCATION.] Notwithstanding chapter 16B, 
the state university board may select the location for its 
central office. 
    Sec. 8.  Minnesota Statutes 1985 Supplement, section 
136C.07, subdivision 5a, is amended to read: 
    Subd. 5a.  [REVIEW OF CAPITAL IMPROVEMENTS.] A school 
board, as defined in section 136C.02, subdivision 8, must not 
award final contracts for capital improvements until the state 
director has reviewed and approved the final plans, 
specifications, and cost estimates and made recommendations on 
them. 
    Sec. 9.  Minnesota Statutes 1984, section 136C.35, is 
amended to read: 
    136C.35 [LENGTH OF SCHOOL YEAR AND DAY.] 
    For an AVTI, the normal school year shall be at least 175 
session days.  In all AVTI's, the length of the school day for 
each pupil, exclusive of the noon intermission, shall be at 
least six hours.  Exceptions may be made by the district for 
approved AVTI programs provided on a part-time or extended day 
basis to meet the needs of individual students or classes.  
These exceptions are authorized only for programs originally 
provided on a full-time basis.  Notwithstanding section 126.12, 
an AVTI may conduct regularly scheduled classes on Saturdays. 
    Sec. 10.  [299F.091] [CITATION.] 
    Sections 10 to 18 may be cited as the "community emergency 
response hazardous substances protection act."  
    Sec. 11.  [299F.092] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE.] The terms used in sections 10 to 
18 have the meanings given them in this section. 
    Subd. 2.  [CLASSIFIED INFORMATION.] "Classified 
information" means information, data, or both that, for security 
reasons, has been given a special security classification such 
as "secret," "confidential," "private," or "nonpublic," by 
federal statute or rule and that, when so classified, is subject 
to handling, use, and storage in accordance with established 
standards to prevent unauthorized use or disclosure. 
    Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
commissioner of public safety.  
    Subd. 4.  [EMERGENCY RESPONSE PERSONNEL.] "Emergency 
response personnel" means personnel employed or authorized by 
the federal government, the state, or a political subdivision to 
provide fire suppression, police protection, emergency medical 
services, or emergency activities relating to health and safety. 
    Subd. 5.  [EMPLOYER.] "Employer" means an employer as 
defined in section 182.651, subdivision 7.  For the purposes of 
sections 10 to 18, "employer" also means a partnership or a 
self-employed person, whether or not the partnership or person 
has other employees.  "Employer" does not mean a farm that is a 
"small business." 
    Subd. 6.  [FIRE DEPARTMENT.] "Fire department" means a 
regularly organized fire department, fire protection district, 
or fire company as defined in the uniform fire code adopted 
under section 299F.011, regularly charged with the 
responsibility of providing fire protection to the state or a 
political subdivision.  
    Subd. 7.  [HAZARD CATEGORY.] "Hazard category" means a list 
or description of hazardous substances, as developed by rule by 
the commissioner of public safety, including human reproductive 
hazards, flammable substances, human carcinogens, explosives, 
corrosives, and reactive agents, that present similar hazards in 
an emergency, or individual hazardous substances of special 
concern to emergency response personnel. 
    Subd. 8.  [HAZARDOUS SUBSTANCE.] "Hazardous substance" 
means a substance or mixture as defined in section 182.651, 
subdivisions 14, 17, and 18, except that sections 10 to 18 do 
not apply to any hazardous substance while it is being 
transported in interstate or intrastate commerce.  
    Subd. 9.  [HAZARDOUS SUBSTANCE NOTIFICATION ADVISORY 
COMMITTEE.] "Hazardous substance notification advisory 
committee" is the committee established under section 16. 
    Subd. 10.  [HAZARDOUS SUBSTANCE NOTIFICATION 
REPORT.] "Hazardous substance notification report" means a 
written record submitted to a fire department, for each 
workplace, that contains the information required in section 13. 
    Subd. 11.  [LOCAL FIRE DEPARTMENT.] "Local fire department" 
means the fire department that would normally respond to a fire 
at a given workplace.  
    Subd. 12.  [MATERIAL SAFETY DATA SHEET.] "Material safety 
data sheet" means a completed form recognized by the 
occupational safety and health administration, equivalent 
manufacturer's literature, or another form containing 
substantially the same information pertaining to a specific 
hazardous substance or a mixture containing one or more 
hazardous substances.  
    Subd. 13.  [NONPUBLIC DATA.] "Nonpublic data" has the 
meaning given it in section 13.02, subdivision 9. 
    Subd. 14.  [SIGNIFICANT CHANGE.] "Significant change" means 
a change in the reportable quantity of a hazardous substance 
that places the substance in a different quantity range as 
specified on the hazardous substance notification report form.  
    Subd. 15.  [SMALL BUSINESS.] "Small business" means a 
business entity organized for profit, including any individual, 
partnership, corporation, joint venture, association, or 
cooperative that has 20 or fewer full-time employees, or 
equivalent full-time employees during the preceding fiscal year 
or not more than $1,000,000 in annual gross revenue in the 
preceding fiscal year, and that is not an affiliate or 
subsidiary of a business having more than 20 full-time or 
equivalent full-time employees and more than $1,000,000 in 
annual gross revenues.  For the purposes of this subdivision, 
"equivalent full-time employees" means part-time employees' work 
time combined to total 2,000 hours or the equivalent of one 
full-time employee.  
    Subd. 16.  [WORK AREA.] "Work area" means a defined space 
in a workplace where hazardous chemicals are stored, produced, 
or used and where employees are present. 
    Subd. 17.  [WORKPLACE.] "Workplace" means an establishment 
at one geographical location containing one or more work areas.  
    Sec. 12.  [299F.093] [POWERS AND DUTIES OF COMMISSIONER.] 
    Subdivision 1.  [DUTIES.] (a) The commissioner shall:  
    (1) adopt rules no later than July 1, 1987, with the advice 
of the hazardous substance notification advisory committee, 
establishing the form and content of the hazardous substance 
notification report form, as required by section 13, and 
describing one or more hazard categories with specified ranges 
of quantities in each hazard category, representing increments 
of substantially increased risk;  
    (2) print and provide to individual fire departments the 
requested number of hazardous substance notification reports, 
which must be made available to a fire department no more than 
90 days following its request, for the fire department to mail 
or otherwise make available to employers in the jurisdiction; 
    (3) report to the legislature, as needed, on the 
effectiveness of sections 10 to 18 and recommend amendments to 
sections 10 to 18 that are considered necessary;  
    (4) appoint a hazardous substance notification advisory 
committee as required in section 16;  
    (5) adopt rules to implement sections 10 to 18, compatible 
with the Minnesota Uniform Fire Code so as to not limit the 
authority of local fire officials under that code; and 
    (6) in consultation with the hazardous substance 
notification advisory committee, adopt rules that are based on 
the most recent standard 704, adopted by the National Fire 
Protection Association, and that allow a fire department to 
require employers within its jurisdiction to post signs 
conforming to standard 704, and indicating the presence of 
hazardous substances.  If the signs are required, a fire 
department shall supply the signs or provide information to 
assist an employer to obtain them.  
    (b) The commissioner shall adopt criteria and guidelines, 
with the concurrence of the hazardous substance notification 
advisory committee, for the disbursement of funds pursuant to 
section 20, subdivision 1.  These criteria and guidelines are 
exempt from the Minnesota administrative procedure act. 
    Subd. 2.  [INVESTIGATION POWERS.] The commissioner shall, 
at the request of a local fire department, investigate suspected 
violations of sections 10 to 18.  
    Sec. 13.  [299F.094] [REPORT REQUIRED; CONTENTS.] 
    Subdivision 1.  [EMPLOYER'S DUTY.] Except as provided in 
section 15, subdivision 2, an employer who receives a hazardous 
substance notification report shall submit to the local fire 
department a completed hazardous substance notification report 
form containing the information and in the manner required by 
this section and the rules of the commissioner, within two 
months after receiving a hazardous substance notification 
report.  As an alternative, an employer may, at the discretion 
of the local fire department, arrange with the local fire 
department for a date certain upon which that department may 
conduct an inspection of that employer's workplace in order for 
the employer to provide the information, or essentially the same 
information, as contained in the report form to the local fire 
department.  
    Subd. 2.  [CONTENTS OF FORM.] The hazardous substance 
notification report must be completed on a form developed by the 
commissioner of public safety and contain the following 
information:  (1) the range of maximum combined quantities of 
all hazardous substances contained in each designated hazard 
category that may reasonably be expected to be present in the 
workplace during normal operations; (2) the street address and 
any other special identifier of the workplace; and (3) the 
employer's name and street address with the telephone numbers of 
responsible persons in charge of the workplace who can be 
reached at all times.  
    Subd. 3.  [UPDATED INFORMATION.] If, after review of the 
hazardous substance notification report of an employer, a local 
fire department requires additional information, then the 
employer: 
    (1) shall provide, at the request of that fire department, 
a material safety data sheet, or any requested portion of it, 
for any hazardous substance contained in any designated hazard 
category covered by the hazardous substance notification report; 
and 
    (2) shall respond as soon as possible, but in no case later 
than 30 days, to a request by a local fire department for 
clarification of any information previously submitted or to a 
request for additional information under sections 10 to 18.  
    Subd. 4.  [PROMPT NOTIFICATION OF CHANGES.] An employer 
shall promptly notify the local fire department of significant 
changes in the information provided under this section, but not 
later than 30 days after each significant change.  
    Subd. 5.  [INSPECTIONS; EMERGENCY PLANS.] At the request of 
the local fire department, an employer shall permit the local 
fire department inspection and cooperate in the preparation of 
fire and emergency plans.  
    Sec. 14.  [299F.095] [POWERS AND DUTIES OF FIRE 
DEPARTMENTS.] 
    To the extent feasible, given the amount of funds and 
training available, the local fire department shall:  
    (1) mail or otherwise distribute hazardous substance 
notification report forms to employers within the jurisdiction 
of the fire department except for those employers for whom an 
inspection has been arranged or employers from whom a hazardous 
substance notification is considered not necessary by the fire 
department; 
    (2) retain and evaluate each hazardous substance 
notification report and notification of significant change 
submitted by each employer until the employer's workplace ceases 
to exist or the fire department determines retention of the 
hazardous substance notification report is no longer necessary; 
    (3) develop for fire department use appropriate fire and 
emergency procedures for the hazardous substance risks of each 
workplace based on the information received;  
    (4) investigate suspected violations of sections 10 to 18, 
and issue appropriate orders for compliance; and 
    (5) provide available material safety data sheets and 
hazardous substance notification reports at the request of other 
emergency response personnel.  
    Data collected under sections 10 to 18 is nonpublic data 
within the meaning of section 13.02, subdivision 9. 
    Sec. 15.  [299F.096] [DUTY TO SAFEGUARD PRIVATE 
INFORMATION.] 
    Subdivision 1.  [NONPUBLIC DATA.] Before a fire department 
and emergency response personnel may have access to information 
received under section 13, the department shall establish 
security procedures to prevent unauthorized use or disclosure of 
nonpublic data.  Nonpublic data must be made available in an 
emergency to emergency response personnel.  No liability results 
under sections 10 to 18 with respect to disclosure of nonpublic 
data if emergency response personnel, in response to an 
emergency, reasonably determine that the use or disclosure of 
the data is necessary to expedite medical services or to protect 
persons from imminent danger.  As soon as practicable after 
disclosure of nonpublic data is made by emergency response 
personnel, the circumstances necessitating the disclosure and 
the actual or estimated extent of the disclosure must be 
described in writing by the personnel and provided to the 
employer.  
    Subd. 2.  [CLASSIFIED INFORMATION.] When the notification 
required in section 13 involves classified information, the 
employer shall, without revealing the classified information, 
attempt to provide the local fire department with that 
information necessary to protect the department, emergency 
response personnel, and the public in an emergency.  The 
employer is also responsible for requesting changes in the 
classification of classified information or declassification of 
that material when it is considered necessary by a local fire 
department in advance of an emergency to protect emergency 
response personnel or the public.  An employer is not required 
to reveal classified information, except in an emergency, 
without prior governmental approval, and in an emergency, an 
employer shall disclose to emergency response personnel 
appropriate elements of classified information that are 
reasonably necessary to protect human life.  An employer may 
choose to make classified information available to the local 
fire department or emergency response personnel if necessary for 
emergency preplanning purposes.  In those cases, classified 
information (1) may be made available to a local fire department 
or emergency response personnel only after it has been 
demonstrated that the personnel intended to have access to the 
classified information meet access requirements applicable to 
the facilities and to personnel having access to classified 
information, and (2) must be protected from disclosure by the 
local fire department and emergency response personnel in 
accordance with applicable rules and statutes. 
    Sec. 16.  [299F.097] [HAZARDOUS SUBSTANCE NOTIFICATION 
ADVISORY COMMITTEE.] 
    The hazardous substance notification advisory committee is 
created.  The committee shall consist of 11 members to be 
appointed by the commissioner of public safety to advise on the 
development of rules to implement and enforce sections 10 to 18 
and to assist in the development of amendments to the hazardous 
substance notification report.  The advisory committee shall 
consist of representation from fire chiefs; professional 
firefighters; volunteer firefighters; fire marshals; law 
enforcement personnel; emergency medical personnel; an 
independent health professional with training in toxicology; and 
four representatives from business and industry, at least one of 
whom shall represent small business.  The committee must be 
appointed, serve, and be compensated in the manner provided in 
section 15.059, and shall serve at the pleasure of the 
commissioner.  
    Sec. 17.  [299F.098] [PENALTIES.] 
    (a) An employer who violates a provision of sections 10 to 
18 or a rule or order adopted or made under the authority of 
those sections, that is determined by rule not to be a violation 
of a serious nature, may be assessed a fine not to exceed $1,000.
    (b) An employer who violates a provision of sections 10 to 
18 or a rule or order adopted or made under the authority of 
those sections, that is determined by rule to be of a serious 
nature, must be assessed a fine not to exceed $1,000 for each 
violation. 
    (c) An employer who is convicted of knowingly making a 
false statement, representation, or certification in an 
application, record, report, plan, or other document filed or 
required to be maintained under sections 10 to 18 is guilty of a 
gross misdemeanor.  
    (d) An employer who is convicted of willfully or repeatedly 
violating the requirements of sections 10 to 18 or a rule or 
order adopted or made under those sections is guilty of a gross 
misdemeanor.  
    (e) The penalties provided by this section may be imposed 
in a criminal action in the name of the state brought in the 
district court of the county in which the violation is alleged 
to have occurred or the district court where the commissioner 
has an office.  Fines imposed under sections 10 to 18 must be 
paid to the commissioner of public safety and deposited in the 
general fund.  
    (f) No employer may be convicted for violating sections 10 
to 18 or a rule or order made or issued under those sections 
unless the employer was notified of the violation in writing and 
given a reasonable time to comply.  
    Sec. 18.  [299F.099] [LOCAL ORDINANCES.] 
    Sections 10 to 18 preempt and supersede any local ordinance 
or rule concerning the subject matter of those sections. 
    Sec. 19.  [136C.70] [HAZARDOUS SUBSTANCES TRAINING COURSES.] 
    The state board of vocational technical education shall 
provide courses in hazardous substances.  The commissioner of 
public safety, with the concurrence of the director of the state 
board of vocational education and with the advice of the 
hazardous substance notification advisory committee, shall 
certify the courses eligible for reimbursement.  Among the 
courses eligible for reimbursement are in-service training and 
refresher courses.  The state board shall develop policies for 
tuition subsidies in hazardous substance courses.  The subsidies 
shall only be applied to fire service personnel commencing and 
successfully completing training regarding the hazardous 
substances requirements. 
    Sec. 20.  [ALLOCATION.] 
    Subdivision 1.  $15,000 shall be transferred from the state 
board of vocational technical education for the fiscal year 
ending June 30, 1987, to the commissioner of public safety to 
otherwise administer the provisions of sections 10 to 18.  
    Subd. 2.  Any unencumbered balances remaining in the first 
fiscal year of any of these appropriations do not cancel but are 
available for the second year. 
    Subd. 3.  In this section, the definitions in section 11 
apply.  
    Sec. 21.  [STATE UNIVERSITY CONSTRUCTION.] 
    Notwithstanding Minnesota Statutes, chapter 16B, for the 
1986-1987 fiscal years, the Mankato State University Foundation 
Incorporated may construct a building not to exceed 4,200 square 
feet at a site on the Mankato State University campus that has 
been approved by the state board.  The building shall be donated 
or leased to Mankato State University, subject to the approval 
of the state board.  The board shall have approval authority for 
the design and lease.  Title to the building shall pass to the 
state immediately upon donation or when all the terms of the 
lease have been met.  Prior to any design, construction, or 
lease the state university board shall report its plans to the 
chairs of the senate finance and house appropriations committees.
    Sec. 22.  [AUDIT COMMISSION STUDY.] 
    The legislative audit commission is requested, according to 
Minnesota Statutes, section 3.97, subdivision 7, to evaluate the 
activities and programs of the department of education.  The 
study should include recommendations regarding the elimination, 
reduction, or expansion of the department activities and 
programs and their required complements.  The study should also 
examine department work assignments and make recommendations to 
improve the match of job requirements and employee skills 
pursuant to labor contracts and state law.  The legislative 
audit commission is advised to consult with the commissioner of 
employee relations.  The commission should report its results by 
January 15, 1987 to the chairs of the appropriations and finance 
committees of the legislature. 
    Sec. 23.  [REPEALER.] 
    Minnesota Statutes 1984, sections 121.495 and 136.063 are 
repealed. 
    Sec. 24.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                              ARTICLE 11 

                    DEPARTMENT OF NATURAL RESOURCES 
    Section 1.  [DEPARTMENT OF NATURAL RESOURCES 
REORGANIZATION.] 
    Subdivision 1.  [PURPOSES.] It is the intent of the 
legislature to further decentralize the department of natural 
resources. 
    Subd. 2.  [IMPLEMENTATION.] One-half but not less than 20 
full-time legislatively approved complement positions vacant as 
of March 1, 1986, in the St. Paul central office shall be 
transferred to the field by May 1, 1986. 
    Subd. 3.  [APPROPRIATIONS; STUDY.] Up to $200,000 is 
appropriated from the Minnesota resources fund to the 
legislative commission on Minnesota resources to contract with 
at least one consultant to conduct a study of the management and 
organization of the department of natural resources.  This 
appropriation is available until June 30, 1987.  The study must 
include an evaluation of, and contain recommendations for change 
where appropriate in, the following subjects relating to the 
department: 
    (1) establishing a ratio of regional staff to central 
office staff greater than the ratio established in the 1986-1987 
biennial budget (a) for employees included in the department's 
legislatively approved complement; and (b) for employees not 
included in the department's complement; 
    (2) the responsiveness of the department to public and 
resource needs; 
    (3) the distribution of decision-making authority for 
planning, policymaking, budgeting, including any saving or 
potential increased cost, and program implementation within the 
department; 
    (4) the personnel structure and career opportunities within 
the department; 
    (5) assistance to local units of government in the 
development, management, and funding of resource management 
programs; 
    (6) possible savings in expenditures for legal services and 
unemployment compensation that could be achieved through changes 
in management and organization of the department; 
    (7) coordination and cooperation within the department; and 
    (8) the relationship of new programs to present personnel 
structure and management objectives. 
    The legislative commission on Minnesota resources must 
submit a report on the study to the legislature by January 15, 
1987. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day after final enactment. 
    Approved April 9, 1986