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1995 Minnesota Session Laws

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

                            CHAPTER 264-H.F.No. 1864 
                  An act relating to the financing and operation of 
                  government in this state; adopting federal income tax 
                  law changes; modifying certain tax rates, credits, 
                  refunds, bases, and exemptions; modifying property tax 
                  exemption, valuation, and classification provisions; 
                  providing for deduction of property tax refunds from 
                  property taxes; modifying or restricting certain 
                  requirements or uses of tax increment financing; 
                  modifying certain motor vehicle registration taxes; 
                  establishing a sales tax advisory council; authorizing 
                  certain local taxes, special districts and other local 
                  authority; modifying provisions relating to local 
                  excise taxes; modifying certain duties imposed on 
                  local units of government and the department of 
                  revenue; authorizing issuance of bonds and tax 
                  anticipation certificates; modifying certain taconite 
                  occupation and production provisions; modifying the 
                  duties of the board of government innovation and 
                  cooperation; changing certain aids to local 
                  governments; modifying revenue recapture rules; 
                  changing the property tax treatment of certain wind 
                  property; adjusting the amount of the budget reserve; 
                  providing for dedication of certain revenues; making 
                  technical changes, corrections, and clarifications; 
                  making tax policy, collection, and administrative 
                  changes; requiring studies; imposing penalties; 
                  appropriating money; amending Minnesota Statutes 1994, 
                  sections 14.61; 14.62, by adding a subdivision; 
                  15.039, by adding a subdivision; 16A.152, subdivision 
                  1; 60A.15, subdivisions 1 and 12; 60A.199, 
                  subdivisions 8 and 10; 69.021, subdivisions 2 and 5; 
                  124.2131, by adding a subdivision; 124.918, 
                  subdivisions 1 and 2; 168.012, subdivision 9; 168.013, 
                  subdivision 1a; 168.017, subdivision 3, and by adding 
                  a subdivision; 216C.01, subdivisions 1a and 1b; 
                  246.18, subdivision 4, as amended, and by adding a 
                  subdivision; 270.47; 270.48; 270.485; 270.494; 270.50; 
                  270.52; 270.53; 270.69, subdivision 10; 270.72, 
                  subdivisions 1, 2, and 3; 270.79, subdivision 4; 
                  270A.03, subdivision 7; 270A.07, subdivision 2; 
                  270A.09, by adding a subdivision; 270A.11; 270B.03, 
                  subdivision 1; 270B.12, subdivision 2, and by adding a 
                  subdivision; 270B.14, subdivision 11; 272.02, 
                  subdivision 1; 272.115, subdivision 1; 272.121, 
                  subdivision 2; 273.11, subdivision 16; 273.124, 
                  subdivisions 1, 3, 6, 11, and 13; 273.13, subdivisions 
                  24 and 25; 273.1398, subdivision 1, and by adding a 
                  subdivision; 273.1399, subdivisions 1, 2, 6, and by 
                  adding subdivisions; 273.17, subdivision 2; 273.37, by 
                  adding a subdivision; 274.01, subdivision 1; 274.14; 
                  275.065, subdivisions 1, 3, and 6; 275.07, subdivision 
                  1; 275.08, subdivision 1b; 276.04, subdivision 2; 
                  276.09; 276.111; 276.131; 279.01, subdivision 1, and 
                  by adding a subdivision; 284.28, subdivision 2; 
                  289A.18, subdivisions 2 and 4; 289A.20, subdivision 2; 
                  289A.26, subdivision 2a; 289A.38, subdivision 7; 
                  289A.40, subdivision 1; 289A.43; 289A.50, subdivision 
                  1, and by adding a subdivision; 289A.55, subdivision 
                  7; 289A.60, subdivisions 2, 12, and by adding a 
                  subdivision; 290.01, subdivisions 7b and 19; 290.015, 
                  subdivision 1; 290.032, subdivisions 1 and 2; 290.067, 
                  subdivision 1, as amended; 290.191, subdivisions 1, 5, 
                  and 6; 290.92, subdivisions 1 and 23; 290.9201, 
                  subdivision 3; 290A.03, subdivisions 6 and 13; 
                  290A.04, subdivisions 2h, 3, and 6; 290A.07; 290A.15; 
                  290A.18; 294.09, subdivisions 1 and 4; 295.50, 
                  subdivisions 1 and 4; 295.53, subdivisions 1, 2, and 
                  5; 295.55, by adding a subdivision; 295.57; 296.01, 
                  subdivisions 30, 34, and by adding subdivisions; 
                  296.02, subdivisions 1, 1a, and 1b; 296.025, 
                  subdivisions 1, 1a, and by adding a subdivision; 
                  296.0261, by adding a subdivision; 296.12, 
                  subdivisions 3, 4, and 11; 296.141, subdivisions 1, 2, 
                  and 6; 296.17, subdivisions 1, 3, 5, and 11; 296.18, 
                  subdivisions 1, 2, and 5; 297.08, subdivisions 1 and 
                  3; 297.35, subdivision 1; 297.43, subdivision 2; 
                  297A.01, subdivision 3, and by adding a subdivision; 
                  297A.02, subdivision 4; 297A.135, subdivision 1; 
                  297A.15, by adding a subdivision; 297A.25, 
                  subdivisions 9, 11, 57, 59, and by adding 
                  subdivisions; 297A.45; 297B.01, subdivision 5; 
                  297B.02, subdivision 3; 297B.025, subdivision 2; 
                  297B.032; 297C.02, subdivision 2; 297C.07; 297C.14, 
                  subdivision 2; 297E.02, subdivisions 1, 6, and 11; 
                  297E.031, subdivision 1; 297E.11, subdivision 4; 
                  297E.12, subdivision 2; 297E.13, subdivision 5; 
                  298.01, subdivision 4; 298.227; 298.24, subdivision 1; 
                  298.25; 298.28, subdivision 9a; 298.296, subdivision 
                  4; 298.75, subdivision 2; 299F.26, subdivisions 1 and 
                  4; 325D.33, subdivision 4; 349.12, subdivision 25; 
                  349.163, subdivision 5; 349A.10, subdivision 5; 
                  375.192, by adding a subdivision; 375.83; 428A.01, 
                  subdivision 5; 428A.03, by adding a subdivision; 
                  428A.05; 465.795, subdivision 7; 465.796, subdivision 
                  2; 465.797, subdivision 5; 465.798; 465.799; 465.801; 
                  465.81, subdivision 1; 465.82, subdivision 2; 465.84; 
                  465.85; 465.87; 469.169, subdivision 9, and by adding 
                  a subdivision; 469.174, subdivisions 4, 19, 21, and by 
                  adding subdivisions; 469.175, subdivisions 1, 3, 5, 6, 
                  and 6a; 469.176, subdivisions 4b, 4c, 7, and by adding 
                  a subdivision; 469.1763, subdivisions 2 and 4; 
                  469.177, subdivisions 1, 1a, 2, 6, 9, and by adding a 
                  subdivision; 469.1771, subdivision 1; 473.446, 
                  subdivision 1; 473.711, subdivision 2; 477A.011, 
                  subdivision 36; 477A.0121, subdivision 4; 477A.0132; 
                  and 477A.03, subdivision 2; Laws 1985, chapter 302, 
                  section 2, subdivision 1, as amended; Laws 1986, 
                  chapter 400, section 44; Laws 1991, chapter 291, 
                  article 8, section 28, subdivision 1; Laws 1992, 
                  chapter 511, article 2, sections 45, subdivisions 1, 
                  7, and by adding a subdivision; and 46, subdivisions 
                  1, 7, and by adding a subdivision; Laws 1993, chapter 
                  375, article 5, sections 40, subdivision 3; and 44; 
                  Laws 1994, chapter 587, articles 1, section 27; 3, 
                  section 21; 5, section 27; and 9, section 10, 
                  subdivision 6; proposing coding for new law in 
                  Minnesota Statutes, chapters 16A; 270; 272; 276; 282; 
                  290A; 296; 340A; 410; 465; 469; and 473; repealing 
                  Minnesota Statutes 1994, sections 60A.15, subdivision 
                  7; 168.013, subdivision 1j; 245.48; 270.49; 270.493; 
                  270.70, subdivisions 8, 9, and 10; 290A.04, 
                  subdivision 2i; 296.0261; 297A.136; 297A.212; 297A.38; 
                  and 469.175, subdivision 7a; Laws 1988, chapter 698, 
                  section 5; and Laws 1989, First Special Session 
                  chapter 1, article 7, section 9. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1
                           INCOME AND FRANCHISE TAXES
           Section 1.  Minnesota Statutes 1994, section 289A.50, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [LIMITATION ON REFUND.] If an addition to 
        federal taxable income under section 290.01, subdivision 19a, 
        clause (1), is judicially determined to discriminate against 
        interstate commerce, the legislature intends that the 
        discrimination be remedied by adding interest on obligations of 
        Minnesota governmental units and Indian tribes to federal 
        taxable income.  This subdivision applies beginning with the 
        taxable years that begin during the calendar year in which the 
        court's decision is final.  Other remedies apply for previous 
        taxable years. 
           Sec. 2.  Minnesota Statutes 1994, section 290.01, 
        subdivision 19, is amended to read: 
           Subd. 19.  [NET INCOME.] The term "net income" means the 
        federal taxable income, as defined in section 63 of the Internal 
        Revenue Code of 1986, as amended through the date named in this 
        subdivision, incorporating any elections made by the taxpayer in 
        accordance with the Internal Revenue Code in determining federal 
        taxable income for federal income tax purposes, and with the 
        modifications provided in subdivisions 19a to 19f. 
           In the case of a regulated investment company or a fund 
        thereof, as defined in section 851(a) or 851(h) of the Internal 
        Revenue Code, federal taxable income means investment company 
        taxable income as defined in section 852(b)(2) of the Internal 
        Revenue Code, except that:  
           (1) the exclusion of net capital gain provided in section 
        852(b)(2)(A) of the Internal Revenue Code does not apply; and 
           (2) the deduction for dividends paid under section 
        852(b)(2)(D) of the Internal Revenue Code must be applied by 
        allowing a deduction for capital gain dividends and 
        exempt-interest dividends as defined in sections 852(b)(3)(C) 
        and 852(b)(5) of the Internal Revenue Code.  
           The net income of a real estate investment trust as defined 
        and limited by section 856(a), (b), and (c) of the Internal 
        Revenue Code means the real estate investment trust taxable 
        income as defined in section 857(b)(2) of the Internal Revenue 
        Code.  
           The net income of a designated settlement fund as defined 
        in section 468B(d) of the Internal Revenue Code means the gross 
        income as defined in section 468B(b) of the Internal Revenue 
        Code. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1986, shall be in effect for taxable years 
        beginning after December 31, 1986.  The provisions of sections 
        10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 
        10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 
        Omnibus Budget Reconciliation Act of 1987, Public Law Number 
        100-203, the provisions of sections 1001, 1002, 1003, 1004, 
        1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 
        1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 
        6277, and 6282 of the Technical and Miscellaneous Revenue Act of 
        1988, Public Law Number 100-647, and the provisions of sections 
        7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 
        1989, Public Law Number 101-239, shall be effective at the time 
        they become effective for federal income tax purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1987, shall be in effect for taxable years 
        beginning after December 31, 1987.  The provisions of sections 
        4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 
        6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 
        6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 
        Act of 1988, Public Law Number 100-647, the provisions of 
        sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 
        of 1989, Public Law Number 101-239, and the provisions of 
        section 11702 of the Revenue Reconciliation Act of 1990, Public 
        Law Number 101-508, shall become effective at the time they 
        become effective for federal tax purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1988, shall be in effect for taxable years 
        beginning after December 31, 1988.  The provisions of sections 
        7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 
        7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 
        7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 
        Reconciliation Act of 1989, Public Law Number 101-239, the 
        provision of section 1401 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 
        and the provisions of sections 11701 and 11703 of the Revenue 
        Reconciliation Act of 1990, Public Law Number 101-508, shall 
        become effective at the time they become effective for federal 
        tax purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1989, shall be in effect for taxable years 
        beginning after December 31, 1989.  The provisions of sections 
        11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 
        the Revenue Reconciliation Act of 1990, Public Law Number 
        101-508, and the provisions of sections 13224 and 13261 of the 
        Omnibus Budget Reconciliation Act of 1993, Public Law Number 
        103-66, shall become effective at the time they become effective 
        for federal purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1990, shall be in effect for taxable years 
        beginning after December 31, 1990. 
           The provisions of section 13431 of the Omnibus Budget 
        Reconciliation Act of 1993, Public Law Number 103-66, shall 
        become effective at the time they became effective for federal 
        purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1991, shall be in effect for taxable years 
        beginning after December 31, 1991.  
           The provisions of sections 1936 and 1937 of the 
        Comprehensive National Energy Policy Act of 1992, Public Law 
        Number 102-486, and the provisions of sections 13101, 13114, 
        13122, 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of 
        the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
        103-66, shall become effective at the time they become effective 
        for federal purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1992, shall be in effect for taxable years 
        beginning after December 31, 1992.  
           The provisions of sections 13116, 13121, 13206, 13210, 
        13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 
        the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
        103-66, shall become effective at the time they become effective 
        for federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1993, shall be in effect for taxable years 
        beginning after December 31, 1993. 
           The provision of section 741 of Legislation to Implement 
        Uruguay Round of General Agreement on Tariffs and Trade, Public 
        Law Number 103-465, and the provisions of sections 1, 2, and 3, 
        of the Self-Employed Health Insurance Act of 1995, Public Law 
        Number 104-7, shall become effective at the time they become 
        effective for federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1994, shall be in effect for taxable years 
        beginning after December 31, 1994. 
           Except as otherwise provided, references to the Internal 
        Revenue Code in subdivisions 19a to 19g mean the code in effect 
        for purposes of determining net income for the applicable year. 
           Sec. 3.  [FEDERAL CHANGES.] 
           The changes made by sections 721, 722, 723, and 744 of 
        Legislation to Implement Uruguay Round of General Agreement on 
        Tariffs and Trade, Public Law Number 103-465 and section 4 of 
        the Self-Employed Health Insurance Act of 1995, Public Law 
        Number 104-7, which affect the computation of the Minnesota 
        working family credit under Minnesota Statutes, section 
        290.0671, subdivision 1, and the computation of the substantial 
        understatement of liability penalty of Minnesota Statutes, 
        section 289A.60, subdivision 4, shall become effective at the 
        same time the changes become effective for federal purposes. 
           Sec. 4.  [INSTRUCTION TO REVISOR.] 
           In the next edition of Minnesota Statutes, the revisor of 
        statutes shall substitute the phrase "Internal Revenue Code of 
        1986, as amended through April 15, 1995," for the words 
        "Internal Revenue Code of 1986, as amended through December 31, 
        1993," wherever the phrase occurs in chapters 289A, 290, 290A, 
        291, 297, 298, and 469, except section 290.01, subdivision 19. 
           Sec. 5.  [EFFECTIVE DATE.] 
           Section 1 is effective the day following final enactment. 
                                   ARTICLE 2
                              SALES AND EXCISE TAX
           Section 1.  Minnesota Statutes 1994, section 15.039, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [TRANSFER OF PROPERTY; SALES TAX.] All transfers 
        of motor vehicles or other tangible personal property between 
        agencies or political subdivisions under this section are exempt 
        from the motor vehicle sales tax under chapter 297B and the 
        general sales tax under chapter 297A. 
           Sec. 2.  Minnesota Statutes 1994, section 168.013, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [PASSENGER AUTOMOBILES; HEARSES.] (a) On 
        passenger automobiles as defined in section 168.011, subdivision 
        7, and hearses, except as otherwise provided, the tax shall be 
        $10 plus an additional tax equal to 1.25 percent of the base 
        value.  
           (b) Subject to the classification provisions herein, "base 
        value" means the manufacturer's suggested retail price of the 
        vehicle including destination charge as reflected on the price 
        listing affixed to the vehicle in conformity with United States 
        Code, title 15, sections 1231 to 1233 (Public Law Number 85-506) 
        or otherwise suggested using list price information published by 
        the manufacturer or determined by the registrar if no suggested 
        retail price exists, and shall not include the cost of each 
        accessory or item of optional equipment separately added to the 
        vehicle and the suggested retail price. 
           (c) If the manufacturer's list price information contains a 
        single vehicle identification number followed by various 
        descriptions and suggested retail prices, the registrar shall 
        select from those listings only the lowest price for determining 
        base value. 
           (d) If unable to determine the base value because the 
        vehicle is specially constructed, or for any other reason, the 
        registrar may establish such value upon the cost price to the 
        purchaser or owner as evidenced by a certificate of cost but not 
        including Minnesota sales or use tax or any local sales or other 
        local tax. 
           (d) (e) The registrar shall classify every vehicle in its 
        proper base value class as follows: 
                              FROM                   TO
                              $  0                $199.99
                               200                 399.99
        and thereafter a series of classes successively set in brackets 
        having a spread of $200 consisting of such number of classes as 
        will permit classification of all vehicles. 
           (e) (f) The base value for purposes of this section shall 
        be the middle point between the extremes of its class. 
           (f) (g) The registrar shall establish the base value, when 
        new, of every passenger automobile and hearse registered prior 
        to the effective date of Extra Session Laws 1971, chapter 31, 
        using list price information published by the manufacturer or 
        any nationally recognized firm or association compiling such 
        data for the automotive industry.  If unable to ascertain the 
        base value of any registered vehicle in the foregoing manner, 
        the registrar may use any other available source or method.  The 
        tax on all previously registered vehicles shall be computed upon 
        the base value thus determined taking into account the 
        depreciation provisions of paragraph (g) (h). 
           (g) (h) Except as provided in paragraph (h) (i), the annual 
        additional tax computed upon the base value as provided herein, 
        during the first and second years of vehicle life shall be 
        computed upon 100 percent of the base value; for the third and 
        fourth years, 90 percent of such value; for the fifth and sixth 
        years, 75 percent of such value; for the seventh year, 60 
        percent of such value; for the eighth year, 40 percent of such 
        value; for the ninth year, 30 percent of such value; for the 
        tenth year, ten percent of such value; for the 11th and each 
        succeeding year, the sum of $25.  
           In no event shall the annual additional tax be less than 
        $25.  
           (h) (i) The annual additional tax under paragraph (g) (h) 
        on a motor vehicle on which the first annual tax was paid before 
        January 1, 1990, must not exceed the tax that was paid on that 
        vehicle the year before. 
           Sec. 3.  Minnesota Statutes 1994, section 168.017, 
        subdivision 3, is amended to read: 
           Subd. 3.  [EXCEPTIONS.] All vehicles subject to 
        registration under the monthly series system shall be registered 
        by the registrar for a period of 12 consecutive calendar months, 
        except as follows: 
           (a) if the application is an original rather than renewal 
        application; or, 
           (b) if the applicant is a licensed motor vehicle lessor 
        under section 168.27, in which case the applicant may apply for 
        original registration of a group of ten or more vehicles vehicle 
        for a period of four or more months, the month of expiration to 
        be designated by the applicant at the time of registration.  
        However, to qualify for this exemption, the applicant must 
        present the application to the registrar at St. Paul, or at 
        deputy registrar offices as the registrar may designate. 
           In any instance except that of a licensed motor vehicle 
        lessor, the registrar may register the vehicle which is the 
        subject of the application for a period of not less than three 
        nor more than 15 calendar months, when the registrar determines 
        that to do so will help to equalize the registration and renewal 
        work load of the department. 
           Sec. 4.  Minnesota Statutes 1994, section 168.017, is 
        amended by adding a subdivision to read: 
           Subd. 5.  (a) Notwithstanding subdivisions 3 and 4, a 
        person leasing for at least one year a vehicle registered under 
        this section may obtain an extension of the motor vehicle's 
        registration period for the unexpired portion of the lease 
        period, for a period not to exceed 11 months beyond the 
        expiration of the registration period. 
           (b) In order to obtain an extension under this subdivision 
        a lessee must 
           (1) apply to the registrar on a form the registrar 
        prescribes, 
           (2) submit to the registrar a copy of the lease, 
           (3) pay an administrative fee of $5, and 
           (4) pay a tax of one-twelfth of the tax for the 
        registration period being extended for each month of the 
        extension. 
           (c) On an applicant's compliance with paragraph (b) the 
        registrar shall issue the applicant a license plate tab or 
        sticker designating the new month of expiration of the 
        registration.  The extended registration expires on the tenth 
        day of the month following the month designated on the tab or 
        sticker. 
           (d) All fees collected under paragraph (b), clause (3), 
        must be deposited in the highway user tax distribution fund. 
           Sec. 5.  Minnesota Statutes 1994, section 216C.01, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [ALTERNATIVE FUEL.] "Alternative fuel" means 
        natural gas; liquefied petroleum gas; hydrogen; coal-derived 
        liquefied fuels; electricity; methanol, denatured ethanol, and 
        other alcohols; mixtures containing 85 percent or more, or other 
        percentage as may be set by regulation by the Secretary of the 
        United States Department of Energy, by volume of methanol, 
        denatured ethanol, and other alcohols with gasoline or other 
        fuels; fuels other than alcohol that are derived from biological 
        materials; and other fuel that the Secretary of the United 
        States Department of Energy determines by regulation to be an 
        alternative fuel within the meaning of section 301(2) of the 
        National Energy Policy Act of 1992 and intended for use in motor 
        vehicles. 
           Sec. 6.  Minnesota Statutes 1994, section 216C.01, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  [ALTERNATIVE FUEL VEHICLE.] "Alternative fuel 
        vehicle" means a dedicated, flexible, or a dual-fuel vehicle 
        operated primarily on an alternative fuel. 
           Sec. 7.  Minnesota Statutes 1994, section 296.01, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [ALTERNATIVE FUEL VEHICLE.] "Alternative fuel 
        vehicle" means a dedicated, flexible, or dual-fuel vehicle 
        operated primarily on alternative transportation fuel. 
           Sec. 8.  Minnesota Statutes 1994, section 296.01, is 
        amended by adding a subdivision to read: 
           Subd. 11a.  [COMPRESSED NATURAL GAS.] "Compressed natural 
        gas" or CNG means natural gas, primarily methane, condensed 
        under high pressure and stored in specially designed storage 
        tanks at between 2,000 and 3,600 pounds per square inch.  For 
        purposes of this chapter, the energy content of CNG will be 
        considered to be 1,000 BTUs per cubic foot. 
           Sec. 9.  Minnesota Statutes 1994, section 296.01, is 
        amended by adding a subdivision to read: 
           Subd. 15c.  [E85.] "E85" means a petroleum product that is 
        a blend of agriculturally derived denatured ethanol and gasoline 
        that typically contains 85 percent ethanol by volume, but at a 
        minimum must contain at least 60 percent ethanol by volume.  For 
        the purposes of this chapter, the energy content of E85 will be 
        considered to be 82,000 BTUs per gallon. 
           Sec. 10.  Minnesota Statutes 1994, section 296.01, is 
        amended by adding a subdivision to read: 
           Subd. 23a.  [LIQUEFIED NATURAL GAS.] "Liquefied natural gas"
        or LNG means natural gas, primarily methane, which has been 
        condensed through a cryogenic cooling process and is stored in 
        special pressurized and insulated storage tanks.  For purposes 
        of this chapter, the energy content of LNG will be considered to 
        be 69,000 BTUs per gallon. 
           Sec. 11.  Minnesota Statutes 1994, section 296.01, is 
        amended by adding a subdivision to read: 
           Subd. 23b.  [LIQUEFIED PETROLEUM GAS.] "Liquefied petroleum 
        gas" or LPG or propane means a product made of short hydrocarbon 
        chains and containing primarily propane and butane that is 
        stored in specialized tanks at moderate pressure.  For purposes 
        of this chapter, the energy content of LPG or propane will be 
        considered to be 86,000 BTUs per gallon. 
           Sec. 12.  Minnesota Statutes 1994, section 296.01, is 
        amended by adding a subdivision to read: 
           Subd. 24b.  [M85.] "M85" means a petroleum product that is 
        a liquid fuel blend of methanol and gasoline that contains at 
        least 85 percent methanol by volume.  For the purposes of this 
        chapter, the energy content of M85 will be considered to be 
        65,000 BTUs per gallon. 
           Sec. 13.  Minnesota Statutes 1994, section 296.01, 
        subdivision 30, is amended to read: 
           Subd. 30.  [PETROLEUM PRODUCTS.] "Petroleum products" means 
        all of the products defined in subdivisions 2, 7, 8, 10, 13, 14, 
        15c, and 17 to 22, and 24b. 
           Sec. 14.  Minnesota Statutes 1994, section 296.01, 
        subdivision 34, is amended to read: 
           Subd. 34.  [SPECIAL FUEL.] "Special fuel" means (1) all 
        combustible gases and liquid petroleum products or substitutes 
        therefor including clear diesel fuel, except gasoline, gasoline 
        blended with ethanol, and agricultural alcohol gasoline which 
        are delivered into the supply tank of a licensed motor vehicle 
        or into storage tanks maintained by an owner or operator of a 
        licensed motor vehicle as a source of supply for such vehicle; 
        (2) all combustible gases and liquid petroleum products or 
        substitutes therefor, except gasoline, gasoline blended with 
        ethanol, and agricultural alcohol gasoline, when delivered to a 
        licensed special fuel dealer or to the retail service station 
        storage of a distributor who has elected to pay the special fuel 
        excise tax as provided in section 296.12, subdivision 3; (3) all 
        combustible gases and liquid petroleum products or substitutes 
        therefor, except gasoline, which are used as aviation fuel; or 
        (4) dyed fuel that is being used illegally in a licensed motor 
        vehicle.  
           Sec. 15.  Minnesota Statutes 1994, section 296.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TAX IMPOSED; EXCEPTION FOR QUALIFIED 
        SERVICE STATION.] There is imposed an excise tax on gasoline, 
        gasoline blended with ethanol, and agricultural alcohol 
        gasoline, used in producing and generating power for propelling 
        motor vehicles used on the public highways of this state.  For 
        purposes of this section, gasoline is defined in section 296.01, 
        subdivisions 10, 15b, 18, 19, 20, and 24a.  This tax is payable 
        at the times, in the manner, and by persons specified in this 
        chapter.  The tax is payable at the rate specified in 
        subdivision 1b, subject to the exceptions and reductions 
        specified in this section.  
           (a) Notwithstanding any other provision of law to the 
        contrary, the tax imposed on special fuel sold by a qualified 
        service station may not exceed, or the tax on gasoline delivered 
        to a qualified service station must be reduced to, a rate not 
        more than three cents per gallon above the state tax rate 
        imposed on such products sold by a service station in a 
        contiguous state located within the distance indicated in clause 
        (b).  
           (b) A "qualifying service station" means a service station 
        located within 7.5 miles, measured by the shortest route by 
        public road, from a service station selling like product in the 
        contiguous state.  
           (c) A qualified service station shall be allowed a credit 
        by the supplier or distributor, or both, for the amount of 
        reduction computed in accordance with clause (a).  
           A qualified service station, before receiving the credit, 
        shall be registered with the commissioner of revenue.  
           Sec. 16.  Minnesota Statutes 1994, section 296.02, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [TRANSIT SYSTEMS AND ALTERNATIVE FUELS EXEMPT.] 
        The provisions of subdivision 1 do not apply to (1) gasoline 
        purchased by a transit system or transit provider receiving 
        financial assistance or reimbursement under section 174.24, 
        256B.0625, subdivision 17, or 473.384 or (2) sales of compressed 
        natural gas or propane for use in vehicles displaying a valid 
        annual alternate fuel permit.  
           Sec. 17.  Minnesota Statutes 1994, section 296.02, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  [RATES IMPOSED.] The gasoline excise tax is 
        imposed at the following rate rates: 
           (1) E85 is taxed at the rate of 14.2 cents per gallon; 
           (2) M85 is taxed at the rate of 11.4 cents per gallon; and 
           (3) For the period on and after May 1, 1988, all other 
        gasoline is taxed at the rate of 20 cents per gallon.  
           Sec. 18.  Minnesota Statutes 1994, section 296.025, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TAX IMPOSED.] There is hereby imposed an 
        excise tax of the same rate per gallon as the gasoline excise 
        tax on all special fuel at the rates specified in subdivision 1b.
        For clear diesel fuel, the tax is imposed on the first 
        distributor who received the product in Minnesota.  For dyed 
        fuel being used illegally in a licensed motor vehicle, the tax 
        is imposed on the owner or operator of the motor vehicle, or in 
        some instances, on the dealer who supplied the fuel.  For dyed 
        fuel used in a motor vehicle but subject to a federal exemption, 
        although no federal tax may be imposed, the fuel is subject to 
        the state tax.  For other fuels, including jet fuel, propane, 
        and compressed natural gas, the tax is imposed on the 
        distributor, special fuel dealer, or bulk purchaser.  This tax 
        is payable at the time and in the manner specified in this 
        chapter.  For purposes of this section, "owner or operator" 
        means the operation of licensed motor vehicles, whether loaded 
        or empty, whether for compensation or not for compensation, and 
        whether owned by or leased to the motor carrier who operates 
        them or causes them to be operated. 
           Sec. 19.  Minnesota Statutes 1994, section 296.025, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [TRANSIT SYSTEMS AND ALTERNATIVE FUELS EXEMPT.] 
        The provisions of subdivision 1 do not apply to (1) special fuel 
        purchased by a transit system or transit provider receiving 
        financial assistance or reimbursement under section 174.24, 
        256B.0625, subdivision 17, or 473.384 or (2) sales of compressed 
        natural gas or propane for use in vehicles displaying a valid 
        annual alternate fuel permit.  
           Sec. 20.  Minnesota Statutes 1994, section 296.025, is 
        amended by adding a subdivision to read: 
           Subd. 1b.  [TAX RATES.] The special fuel excise tax is 
        imposed at the following rates: 
           (1) Liquefied petroleum gas or propane is taxed at the rate 
        of 15 cents per gallon. 
           (2) Liquefied natural gas is taxed at the rate of 12 cents 
        per gallon. 
           (3) Compressed natural gas is taxed at the rate of $1.739 
        per thousand cubic feet; or 20 cents per gasoline equivalent, as 
        defined by the National Conference on Weights and Measures, 
        which is 5.66 pounds of natural gas. 
           (4) All other special fuel is taxed at the same rate as the 
        gasoline excise tax. 
           Sec. 21.  Minnesota Statutes 1994, section 296.0261, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [CREDIT; REFUNDS.] (a) A purchaser of an 
        alternative fuel vehicle permit under subdivisions 1 to 9, prior 
        to July 1, 1995, shall receive a credit for the unused portion 
        of the permit fee.  The amount of the credit shall be equal to 
        the original permit fee and prorated to the number of months 
        from July 1, 1995, until the expiration date of the permit.  The 
        credit shall reduce the amount of the vehicle's annual motor 
        vehicle registration tax as calculated under section 168.013.  
        The credit shall be applied to the first motor vehicle 
        registration tax payable after July 1, 1995. 
           (b) If the amount of the credit calculated under paragraph 
        (a) exceeds the amount of motor vehicle registration tax due, 
        the registrar shall pay to the vehicle owner a cash refund equal 
        to the difference between the motor vehicle registration tax and 
        the credit due.  The amount necessary to pay the refunds under 
        this paragraph is appropriated for fiscal year 1996 to the 
        commissioner of public safety from the highway user tax 
        distribution fund.  The appropriation is available until the 
        refunds have been paid. 
           Sec. 22.  Minnesota Statutes 1994, section 297A.01, 
        subdivision 3, is amended to read: 
           Subd. 3.  A "sale" and a "purchase" includes, but is not 
        limited to, each of the following transactions: 
           (a) Any transfer of title or possession, or both, of 
        tangible personal property, whether absolutely or conditionally, 
        and the leasing of or the granting of a license to use or 
        consume tangible personal property other than manufactured homes 
        used for residential purposes for a continuous period of 30 days 
        or more, for a consideration in money or by exchange or barter; 
           (b) The production, fabrication, printing, or processing of 
        tangible personal property for a consideration for consumers who 
        furnish either directly or indirectly the materials used in the 
        production, fabrication, printing, or processing; 
           (c) The furnishing, preparing, or serving for a 
        consideration of food, meals, or drinks.  "Sale" does not 
        include: 
           (1) meals or drinks served to patients, inmates, or persons 
        residing at hospitals, sanitariums, nursing homes, senior 
        citizens homes, and correctional, detention, and detoxification 
        facilities; 
           (2) meals or drinks purchased for and served exclusively to 
        individuals who are 60 years of age or over and their spouses or 
        to the handicapped and their spouses by governmental agencies, 
        nonprofit organizations, agencies, or churches or pursuant to 
        any program funded in whole or part through 42 USCA sections 
        3001 through 3045, wherever delivered, prepared or served; or 
           (3) meals and lunches served at public and private schools, 
        universities, or colleges.  Notwithstanding section 297A.25, 
        subdivision 2, taxable food or meals include, but are not 
        limited to, the following:  
           (i) heated food or drinks; 
           (ii) sandwiches prepared by the retailer; 
           (iii) single sales of prepackaged ice cream or ice milk 
        novelties prepared by the retailer; 
           (iv) hand-prepared or dispensed ice cream or ice milk 
        products including cones, sundaes, and snow cones; 
           (v) soft drinks and other beverages prepared or served by 
        the retailer; 
           (vi) gum; 
           (vii) ice; 
           (viii) all food sold in vending machines; 
           (ix) party trays prepared by the retailers; and 
           (x) all meals and single servings of packaged snack food, 
        single cans or bottles of pop, sold in restaurants and bars; 
           (d) The granting of the privilege of admission to places of 
        amusement, recreational areas, or athletic events, except a 
        world championship football game sponsored by the national 
        football league, and the privilege of having access to and the 
        use of amusement devices, tanning facilities, reducing salons, 
        steam baths, turkish baths, health clubs, and spas or athletic 
        facilities; 
           (e) The furnishing for a consideration of lodging and 
        related services by a hotel, rooming house, tourist court, motel 
        or trailer camp and of the granting of any similar license to 
        use real property other than the renting or leasing thereof for 
        a continuous period of 30 days or more; 
           (f) The furnishing for a consideration of electricity, gas, 
        water, or steam for use or consumption within this state, or 
        local exchange telephone service, intrastate toll service, and 
        interstate toll service, if that service originates from and is 
        charged to a telephone located in this state.  Telephone service 
        includes paging services and private communication service, as 
        defined in United States Code, title 26, section 4252(d), except 
        for private communication service purchased by an agent acting 
        on behalf of the state lottery.  The furnishing for a 
        consideration of access to telephone services by a hotel to its 
        guests is a sale under this clause.  Sales by municipal 
        corporations in a proprietary capacity are included in the 
        provisions of this clause.  The furnishing of water and sewer 
        services for residential use shall not be considered a sale.  
        The sale of natural gas to be used as a fuel in vehicles 
        propelled by natural gas shall not be considered a sale for the 
        purposes of this section; 
           (g) The furnishing for a consideration of cable television 
        services, including charges for basic service, charges for 
        premium service, and any other charges for any other 
        pay-per-view, monthly, or similar television services; 
           (h) Notwithstanding section 297A.25, subdivisions 9 and 12, 
        the sales of racehorses including claiming sales and fees paid 
        for breeding racehorses or horses previously used for racing 
        shall be considered a "sale" and a "purchase."  "Racehorse" 
        means a horse that is or is intended to be used for racing and 
        whose birth has been recorded by the Jockey Club or the United 
        States Trotting Association or the American Quarter Horse 
        Association.  "Sale" does not include fees paid for breeding 
        horses that are not racehorses; 
           (i) The furnishing for a consideration of parking services, 
        whether on a contractual, hourly, or other periodic basis, 
        except for parking at a meter; 
           (j) (i) The furnishing for a consideration of services 
        listed in this paragraph: 
           (i) laundry and dry cleaning services including cleaning, 
        pressing, repairing, altering, and storing clothes, linen 
        services and supply, cleaning and blocking hats, and carpet, 
        drapery, upholstery, and industrial cleaning.  Laundry and dry 
        cleaning services do not include services provided by coin 
        operated facilities operated by the customer; 
           (ii) motor vehicle washing, waxing, and cleaning services, 
        including services provided by coin-operated facilities operated 
        by the customer, and rustproofing, undercoating, and towing of 
        motor vehicles; 
           (iii) building and residential cleaning, maintenance, and 
        disinfecting and exterminating services; 
           (iv) services provided by detective agencies, security 
        services, burglar, fire alarm, and armored car services not 
        including services performed within the jurisdiction they serve 
        by off-duty licensed peace officers as defined in section 
        626.84, subdivision 1; 
           (v) pet grooming services; 
           (vi) lawn care, fertilizing, mowing, spraying and sprigging 
        services; garden planting and maintenance; tree, bush, and shrub 
        pruning, bracing, spraying, and surgery; tree, bush, shrub and 
        stump removal; and tree trimming for public utility lines.  
        Services performed under a construction contract for the 
        installation of shrubbery, plants, sod, trees, bushes, and 
        similar items are not taxable; 
           (vii) mixed municipal solid waste collection and disposal 
        management services as described in section 297A.45; 
           (viii) massages, except when provided by a licensed health 
        care facility or professional or upon written referral from a 
        licensed health care facility or professional for treatment of 
        illness, injury, or disease; and 
           (ix) the furnishing for consideration of lodging, board and 
        care services for animals in kennels and other similar 
        arrangements, but excluding veterinary and horse boarding 
        services. 
        The services listed in this paragraph are taxable under section 
        297A.02 if the service is performed wholly within Minnesota or 
        if the service is performed partly within and partly without 
        Minnesota and the greater proportion of the service is performed 
        in Minnesota, based on the cost of performance.  In applying the 
        provisions of this chapter, the terms "tangible personal 
        property" and "sales at retail" include taxable services and the 
        provision of taxable services, unless specifically provided 
        otherwise.  Services performed by an employee for an employer 
        are not taxable under this paragraph.  Services performed by a 
        partnership or association for another partnership or 
        association are not taxable under this paragraph if one of the 
        entities owns or controls more than 80 percent of the voting 
        power of the equity interest in the other entity.  Services 
        performed between members of an affiliated group of corporations 
        are not taxable.  For purposes of this section, "affiliated 
        group of corporations" includes those entities that would be 
        classified as a member of an affiliated group under United 
        States Code, title 26, section 1504, and who are eligible to 
        file a consolidated tax return for federal income tax purposes; 
           (k) (j) A "sale" and a "purchase" includes the transfer of 
        computer software, meaning information and directions that 
        dictate the function performed by data processing equipment.  A 
        "sale" and a "purchase" does not include the design, 
        development, writing, translation, fabrication, lease, or 
        transfer for a consideration of title or possession of a custom 
        computer program; and 
           (l) (k) The granting of membership in a club, association, 
        or other organization if: 
           (1) the club, association, or other organization makes 
        available for the use of its members sports and athletic 
        facilities (without regard to whether a separate charge is 
        assessed for use of the facilities); and 
           (2) use of the sports and athletic facilities is not made 
        available to the general public on the same basis as it is made 
        available to members.  
        Granting of membership includes both one-time initiation fees 
        and periodic membership dues.  Sports and athletic facilities 
        include golf courses, tennis, racquetball, handball and squash 
        courts, basketball and volleyball facilities, running tracks, 
        exercise equipment, swimming pools, and other similar athletic 
        or sports facilities.  The provisions of this paragraph do not 
        apply to camps or other recreation facilities owned and operated 
        by an exempt organization under section 501(c)(3) of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1992, for educational and social activities for young people 
        primarily age 18 and under.  
           Sec. 23.  Minnesota Statutes 1994, section 297A.01, is 
        amended by adding a subdivision to read: 
           Subd. 21.  [MIXED MUNICIPAL SOLID WASTE MANAGEMENT 
        SERVICES.] "Mixed municipal solid waste management services" or 
        "waste management services" means services relating to the 
        management of mixed municipal solid waste from collection to 
        disposal, including transportation and management at waste 
        facilities.  The definitions in section 115A.03 apply to this 
        subdivision. 
           Sec. 24.  Minnesota Statutes 1994, section 297A.02, 
        subdivision 4, is amended to read: 
           Subd. 4.  [MANUFACTURED HOUSING AND PARK TRAILERS.] 
        Notwithstanding the provisions of subdivision 1, for sales at 
        retail of new manufactured homes used for residential purposes 
        and new or used park trailers, as defined in section 168.011, 
        subdivision 8, paragraph (b), the excise tax is imposed upon 65 
        percent of the sales price of the home or park trailer.  
           Sec. 25.  Minnesota Statutes 1994, section 297A.135, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TAX IMPOSED.] A tax is imposed on the 
        lease or rental in this state for not more than 28 days of a 
        passenger automobile as defined in section 168.011, subdivision 
        7, a van as defined in section 168.011, subdivision 28, or a 
        pickup truck as defined in section 168.011, subdivision 29.  A 
        van designed or adapted primarily for transporting property 
        rather than passengers is exempt from the tax imposed under this 
        section.  The tax is imposed at the rate of 6.2 percent of the 
        sales price as defined for the purpose of imposing the sales and 
        use tax in this chapter.  The tax does not apply to the lease or 
        rental of a hearse or limousine used in connection with a burial 
        or funeral service.  It applies whether or not the vehicle is 
        licensed in the state. 
           Sec. 26.  Minnesota Statutes 1994, section 297A.15, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [REFUND; APPROPRIATION; ADULT AND JUVENILE 
        CORRECTIONAL FACILITIES.] (a) If construction materials and 
        supplies described in paragraph (b) are purchased by a 
        contractor, subcontractor, or builder as part of a lump-sum 
        contract or similar type of contract with a price covering both 
        labor and materials for use in the project, a refund equal to 20 
        percent of the taxes paid by the contractor, subcontractor, or 
        builder must be paid to the governmental subdivision.  An 
        application must be submitted by the governmental subdivision 
        and must include sufficient information to permit the 
        commissioner to verify the sales taxes paid for the project.  
        The contractor, subcontractor, or builder must furnish to the 
        governmental subdivision a statement of the cost of the 
        construction materials and supplies and the sales taxes paid on 
        them.  The amount required to make the refunds is annually 
        appropriated to the commissioner.  Interest must be paid on the 
        refund at the rate in section 270.76 from 60 days after the date 
        the refund claim is filed with the commissioner. 
           (b) Construction materials and supplies qualify for the 
        refund under this section if:  (1) the materials and supplies 
        are for use in a project to construct or improve an adult or 
        juvenile correctional facility in a county, home rule charter 
        city, or statutory city, and (2) the project is mandated by 
        state or federal law, rule, or regulation.  The refund applies 
        regardless of whether the materials and supplies are purchased 
        by the city or county, or by a contractor, subcontractor, or 
        builder under a contract with the city or county. 
           Sec. 27.  Minnesota Statutes 1994, section 297A.25, 
        subdivision 9, is amended to read: 
           Subd. 9.  [MATERIALS CONSUMED IN PRODUCTION.] The gross 
        receipts from the sale of and the storage, use, or consumption 
        of all materials, including chemicals, fuels, petroleum 
        products, lubricants, packaging materials, including returnable 
        containers used in packaging food and beverage products, feeds, 
        seeds, fertilizers, electricity, gas and steam, used or consumed 
        in agricultural or industrial production of personal property 
        intended to be sold ultimately at retail, whether or not the 
        item so used becomes an ingredient or constituent part of the 
        property produced are exempt.  Seeds, trees, fertilizers, and 
        herbicides purchased for use by farmers in the Conservation 
        Reserve Program under United States Code, title 16, section 
        590h, the Integrated Farm Management Program under section 1627 
        of Public Law Number 101-624, the Wheat and Feed Grain Programs 
        under sections 301 to 305 and 401 to 405 of Public Law Number 
        101-624, and the conservation reserve program under sections 
        103F.505 to 103F.531, are included in this exemption.  Sales to 
        a veterinarian of materials used or consumed in the care, 
        medication, and treatment of agricultural production animals and 
        horses used in agricultural production are exempt under this 
        subdivision.  Chemicals used for cleaning food processing 
        machinery and equipment are included in this exemption.  
        Materials, including chemicals, fuels, and electricity purchased 
        by persons engaged in agricultural or industrial production to 
        treat waste generated as a result of the production process are 
        included in this exemption.  Such production shall include, but 
        is not limited to, research, development, design or production 
        of any tangible personal property, manufacturing, processing 
        (other than by restaurants and consumers) of agricultural 
        products whether vegetable or animal, commercial fishing, 
        refining, smelting, reducing, brewing, distilling, printing, 
        mining, quarrying, lumbering, generating electricity and the 
        production of road building materials.  Such production shall 
        not include painting, cleaning, repairing or similar processing 
        of property except as part of the original manufacturing 
        process.  Machinery, equipment, implements, tools, accessories, 
        appliances, contrivances, furniture and fixtures, used in such 
        production and fuel, electricity, gas or steam used for space 
        heating or lighting, are not included within this exemption; 
        however, accessory tools, equipment and other short lived items, 
        which are separate detachable units used in producing a direct 
        effect upon the product, where such items have an ordinary 
        useful life of less than 12 months, are included within the 
        exemption provided herein.  Electricity used to make snow for 
        outdoor use for ski hills, ski slopes, or ski trails is included 
        in this exemption. 
           Sec. 28.  Minnesota Statutes 1994, section 297A.25, 
        subdivision 11, is amended to read: 
           Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
        all sales, including sales in which title is retained by a 
        seller or a vendor or is assigned to a third party under an 
        installment sale or lease purchase agreement under section 
        465.71, of tangible personal property to, and all storage, use 
        or consumption of such property by, the United States and its 
        agencies and instrumentalities, the University of Minnesota, 
        state universities, community colleges, technical colleges, 
        state academies, the Minnesota center for arts education, and 
        school districts are exempt. 
           As used in this subdivision, "school districts" means 
        public school entities and districts of every kind and nature 
        organized under the laws of the state of Minnesota, including, 
        without limitation, school districts, intermediate school 
        districts, education districts, educational cooperative service 
        units, secondary vocational cooperative centers, special 
        education cooperatives, joint purchasing cooperatives, 
        telecommunication cooperatives, regional management information 
        centers, technical colleges, joint vocational technical 
        districts, and any instrumentality of a school district, as 
        defined in section 471.59. 
           Sales exempted by this subdivision include sales under 
        section 297A.01, subdivision 3, paragraph (f), but do not 
        include sales under section 297A.01, subdivision 3, paragraph 
        (j), clause (vii).  
           Sales to hospitals and nursing homes owned and operated by 
        political subdivisions of the state are exempt under this 
        subdivision.  
           The sales to and exclusively for the use of libraries of 
        books, periodicals, audio-visual materials and equipment, 
        photocopiers for use by the public, and all cataloging and 
        circulation equipment, and cataloging and circulation software 
        for library use are exempt under this subdivision.  For purposes 
        of this paragraph "libraries" means libraries as defined in 
        section 134.001, county law libraries under chapter 134A, the 
        state library under section 480.09, and the legislative 
        reference library. 
           Sales of supplies and equipment used in the operation of an 
        ambulance service owned and operated by a political subdivision 
        of the state are exempt under this subdivision provided that the 
        supplies and equipment are used in the course of providing 
        medical care.  Sales to a political subdivision of repair and 
        replacement parts for emergency rescue vehicles and fire trucks 
        and apparatus are exempt under this subdivision.  
           Sales to a political subdivision of machinery and 
        equipment, except for motor vehicles, used directly for mixed 
        municipal solid waste collection and disposal management 
        services at a solid waste disposal facility as defined in 
        section 115A.03, subdivision 10, are exempt under this 
        subdivision.  
           Sales to political subdivisions of chore and homemaking 
        services to be provided to elderly or disabled individuals are 
        exempt. 
           Sales of telephone services to the department of 
        administration that are used to provide telecommunications 
        services through the intertechnologies revolving fund are exempt 
        under this subdivision. 
           This exemption shall not apply to building, construction or 
        reconstruction materials purchased by a contractor or a 
        subcontractor as a part of a lump-sum contract or similar type 
        of contract with a guaranteed maximum price covering both labor 
        and materials for use in the construction, alteration, or repair 
        of a building or facility.  This exemption does not apply to 
        construction materials purchased by tax exempt entities or their 
        contractors to be used in constructing buildings or facilities 
        which will not be used principally by the tax exempt entities. 
           This exemption does not apply to the leasing of a motor 
        vehicle as defined in section 297B.01, subdivision 5, except for 
        leases entered into by the United States or its agencies or 
        instrumentalities.  
           The tax imposed on sales to political subdivisions of the 
        state under this section applies to all political subdivisions 
        other than those explicitly exempted under this subdivision, 
        notwithstanding section 115A.69, subdivision 6, 116A.25, 
        360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
        469.127, 473.394, 473.448, 473.545, or 473.608 or any other law 
        to the contrary enacted before 1992. 
           Sales exempted by this subdivision include sales made to 
        other states or political subdivisions of other states, if the 
        sale would be exempt from taxation if it occurred in that state, 
        but do not include sales under section 297A.01, subdivision 3, 
        paragraphs (c) and (e). 
           Sec. 29.  Minnesota Statutes 1994, section 297A.25, 
        subdivision 57, is amended to read: 
           Subd. 57.  [HORSES.] The gross receipts from the sale of 
        horses other than, including racehorses taxable under section 
        297A.01, subdivision 3, paragraph (h), and all sales to persons 
        who raise or board horses, of all materials, including feed and 
        bedding, used or consumed in the breeding, raising, and keeping 
        of horses, are exempt.  Machinery, equipment, implements, tools, 
        appliances, furniture, and fixtures, used in the breeding, 
        raising, and keeping of horses, are not included within this 
        exemption. 
           Sec. 30.  Minnesota Statutes 1994, section 297A.25, 
        subdivision 59, is amended to read: 
           Subd. 59.  [FARM MACHINERY.] From July 1, 1994, until June 
        30, 1995 1996, the gross receipts from the sale of used farm 
        machinery are exempt. 
           Sec. 31.  Minnesota Statutes 1994, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 60.  [CONSTRUCTION MATERIALS; STATE CONVENTION 
        CENTER.] Construction materials and supplies are exempt from the 
        tax imposed under this chapter, regardless of whether purchased 
        by the owner or a contractor, subcontractor, or builder, if: 
           (1) the materials and supplies are used or consumed in 
        constructing improvements to a state convention center located 
        in a city located outside of the metropolitan area as defined in 
        section 473.121, subdivision 2, and the center is governed by an 
        11-person board of which four are appointed by the governor; and 
           (2) the improvements are financed in whole or in part by 
        nonstate resources including, but not limited to, revenue or 
        general obligations issued by the state convention center board 
        of the city in which the center is located. 
           The exemption provided by this subdivision applies to 
        construction materials and supplies purchased prior to December 
        31, 1998. 
           Sec. 32.  Minnesota Statutes 1994, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 61.  [CONSTRUCTION MATERIALS FOR INDOOR ICE ARENAS.] 
        The gross receipts from the sale of construction materials and 
        supplies are exempt if:  
           (1) the materials and supplies are to be used in 
        constructing an indoor ice arena intended to be used 
        predominantly for youth athletic activities; and 
           (2) a school district is a party to a joint powers 
        agreement that governs the ownership, operation, and maintenance 
        of the facility.  
           This exemption applies regardless of whether the purchases 
        are made by the owner of the facility or a contractor. 
           Sec. 33.  Minnesota Statutes 1994, section 297A.45, is 
        amended to read: 
           297A.45 [MIXED MUNICIPAL SOLID WASTE COLLECTION AND 
        DISPOSAL MANAGEMENT SERVICES.] 
           Subdivision 1.  [DEFINITIONS.] The definitions in sections 
        115A.03 and 297A.01 apply to this section.  
           Subd. 2.  [APPLICATION.] The taxes imposed by sections 
        297A.02 and 297A.021 apply to all public and private mixed 
        municipal solid waste collection and disposal management 
        services.  
           Notwithstanding section 297A.25, subdivision 11, a 
        political subdivision that purchases collection or disposal 
        waste management services on behalf of its citizens shall pay 
        the taxes. 
           If a political subdivision provides collection or disposal 
        services a waste management service to its residents at a cost 
        in excess of the total direct charge to the residents for the 
        service, the political subdivision shall pay the taxes based on 
        its cost of providing the service in excess of the direct 
        charges.  
           A person who transports mixed municipal solid waste 
        generated by that person or by another person without 
        compensation shall pay the taxes at the disposal or resource 
        recovery waste facility based on the disposal charge or tipping 
        fee. 
           Subd. 3.  [EXEMPTIONS.] (a) The cost of a service or the 
        portion of a service to collect and manage recyclable materials 
        separated from mixed municipal solid waste by the waste 
        generator is exempt from the taxes imposed in sections 297A.02 
        and 297A.021. 
           (b) The amount of a surcharge or fee imposed under section 
        115A.919, 115A.921, 115A.923, or 473.843 is exempt from the 
        taxes imposed in sections 297A.02 and 297A.021. 
           (c) Waste from a recycling facility that separates or 
        processes recyclable materials and that reduces the volume of 
        the waste by at least 85 percent is exempt from the taxes 
        imposed in sections 297A.02 and 297A.021.  To qualify for the 
        exemption under this paragraph, the waste exempted must be 
        collected and disposed of managed separately from other solid 
        waste. 
           (d) The following costs are exempt from the taxes imposed 
        in sections 297A.02 and 297A.021: 
           (1) costs of providing educational materials and other 
        information to residents; 
           (2) costs of managing solid waste other than mixed 
        municipal solid waste, including household hazardous waste; and 
           (3) costs of court litigation and associated damages. 
           (e) The cost of a waste management service is exempt from 
        the taxes imposed in sections 297A.02 and 297A.021 to the extent 
        that the cost was previously subject to the tax. 
           Subd. 4.  [CITY SALES TAX MAY NOT BE IMPOSED.] 
        Notwithstanding any other law or charter provision to the 
        contrary, a home rule charter or statutory city that imposes a 
        general sales tax may not impose the sales tax on solid waste 
        disposal and collection management services that are subject to 
        the tax under this section.  This subdivision does not apply to 
        a tax imposed under section 297A.021.  
           Subd. 5.  [SEPARATE ACCOUNTING.] The commissioner shall 
        account for revenue collected from public and private mixed 
        municipal solid waste collection and disposal management 
        services under this section separately from other tax revenue 
        collected under this chapter.  
           Sec. 34.  Minnesota Statutes 1994, section 297B.01, 
        subdivision 5, is amended to read: 
           Subd. 5.  [MOTOR VEHICLE.] "Motor vehicle" means any 
        self-propelled vehicle not operated exclusively upon railroad 
        tracks and any vehicle propelled or drawn by a self-propelled 
        vehicle for which registration is required by chapter 168.  
        Motor vehicle includes vehicles known as trackless trolleys 
        which are propelled by electric power obtained from overhead 
        trolley wires but not operated upon rails and motor vehicles 
        that are purchased on Indian reservations where the tribal 
        council has entered into a sales tax on motor vehicles refund 
        agreement with the state of Minnesota.  Motor vehicle does not 
        include snowmobiles or manufactured homes.  For purposes of 
        taxation only under this section, "motor vehicle" includes a 
        park trailer as defined in section 168.011, subdivision 8, 
        paragraph (b). 
           Sec. 35.  Minnesota Statutes 1994, section 297B.02, 
        subdivision 3, is amended to read: 
           Subd. 3.  [IN LIEU FOR COLLECTOR VEHICLES.] In lieu of the 
        tax imposed in subdivision 1, there is imposed a tax of $90 on 
        the purchase price of a passenger automobile or a fire truck 
        described in section 297B.025, subdivision 2. 
           Sec. 36.  Minnesota Statutes 1994, section 297B.025, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COLLECTOR VEHICLES.] A passenger automobile that 
        is registered under section 168.10, subdivision 1a, 1b, 1c, 1d, 
        or 1h, or a fire truck registered under section 168.10, 
        subdivision 1c, shall be taxed under section 297B.02, 
        subdivision 3, and the registrar shall not designate as an 
        above-market automobile a passenger automobile or a fire truck 
        registered under those subdivisions.  If the vehicle is 
        subsequently registered in another class not under section 
        168.10, subdivision 1a, 1b, 1c, 1d, or 1h, within one year of 
        the date of registration under those subdivisions, it shall be 
        subject to the full excise tax imposed under subdivision 1. 
           Sec. 37.  Minnesota Statutes 1994, section 297B.032, is 
        amended to read: 
           297B.032 [REFUND ON PARK TRAILERS; APPROPRIATION.] 
           Notwithstanding the provisions of section 297B.02, or any 
        other law to the contrary, a portion of the sales tax on motor 
        vehicles paid on park trailers, as defined in section 168.011, 
        subdivision 8, paragraph (b), under this chapter shall be 
        refunded by the commissioner of revenue provided the following 
        conditions are met: 
           (1) the park trailer is purchased after January 1, 1993, 
        and before January 1, 1997; 
           (2) the owner paid the sales tax on motor vehicles on the 
        park trailer; 
           (3) property taxes have been imposed upon the park trailer 
        for at least the last two taxes payable years; and 
           (4) property taxes on the park trailer for the years cited 
        in clause (3) have been paid by the owner of the park trailer. 
           Upon application by the purchaser, on forms prescribed by 
        the commissioner of revenue, a refund equal to 35 percent of the 
        actual taxes paid, shall be paid to the purchaser.  The 
        application must include sufficient information, including a 
        copy of the sales invoice for the park trailer, and the property 
        tax statements for the years cited in clause (3), or a 
        reproduction thereof, with a notation from the county treasurer 
        that the taxes have been paid on the park trailer. 
           The amounts required to make the refunds are annually 
        appropriated to the commissioner of revenue from the general 
        fund.  The amount to be refunded shall bear interest at the rate 
        in section 270.76 after 60 days after the refund claim was made 
        until the date the refund is paid. 
           Sec. 38.  Laws 1991, chapter 291, article 8, section 28, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORIZATION.] Notwithstanding Minnesota 
        Statutes, section 469.190, 477A.016, or other law, in addition 
        to the tax authorized in Minnesota Statutes, section 469.190, 
        the city of Winona may, by ordinance, impose a tax of up to one 
        percent on the gross receipts from the furnishing for 
        consideration of lodging at a hotel, motel, rooming house, 
        tourist court, or resort, other than the renting or leasing of 
        it for a continuous period of 30 days or more.  The city may, by 
        ordinance, impose the tax authorized under this section on the 
        camping site receipts of a municipal campground. 
           Fifty percent of the proceeds of this tax shall be used to 
        retire the indebtedness of the Julius C. Wilke Steamboat 
        Center and.  Upon retirement of the debt, 50 percent of the 
        proceeds shall be used as directed in Minnesota Statutes, 
        section 469.190, subdivision 3.  The balance shall be used in 
        the manner of the tax proceeds may be used to promote tourist 
        activities, as determined by resolution of the council, for the 
        following purposes: 
           (1) improvements to the levee and its adjacent area; 
           (2) improvements to Prairie Island shoreline; 
           (3) improvements to the municipal marina; or 
           (4) as directed in Minnesota Statutes, section 469.190, 
        subdivision 3.  Upon retirement of the debt, the council shall 
        by ordinance reduce the tax by one-half percent or dedicate the 
        entire one percent in the manner directed in Minnesota Statutes, 
        section 469.190, subdivision 3. 
           The tax shall be collected in the same manner as other 
        taxes authorized under Minnesota Statutes, section 469.190. 
           Sec. 39.  Laws 1986, chapter 400, section 44, is amended to 
        read: 
           Sec. 44.  [DOWNTOWN TAXING AREA.] 
           If a bill is enacted into law in the 1986 legislative 
        session which authorizes the city of Minneapolis to issue bonds 
        and expend certain funds including taxes to finance the 
        acquisition and betterment of a convention center and related 
        facilities, which authorizes certain taxes to be levied in a 
        downtown taxing area, then, notwithstanding the provisions of 
        that law "downtown taxing area" shall mean the geographic area 
        bounded by the portion of the Mississippi River between I-35W 
        and Washington Avenue, the portion of Washington Avenue between 
        the river and I-35W, the portion of I-35W between Washington 
        Avenue and 8th Street South, the portion of 8th Street South 
        between I-35W and Portland Avenue South, the portion of Portland 
        Avenue South between 8th Street South and I-94, the portion of 
        I-94 from the intersection of Portland Avenue South to the 
        intersection of I-94 and the Burlington Northern Railroad 
        tracks, the portion of the Burlington Northern Railroad tracks 
        from I-94 to Main Street and including Nicollet Island, and the 
        portion of Main Street to Hennepin Avenue and the portion of 
        Hennepin Avenue between Main Street and 2nd Street S.E., and the 
        portion of 2nd Street S.E. between Main Street and Bank Street, 
        and the portion of Bank Street between 2nd Street S.E. and 
        University Avenue S.E., and the portion of University Avenue 
        S.E. between Bank Street and I-35W, and by I-35W from University 
        Avenue S.E., to the river.  The downtown taxing area excludes 
        the area bounded on the south and west by Oak Grove Street, on 
        the east by Spruce Place, and on the north by West 15th Street. 
           Sec. 40.  [EVALUATION.] 
           The commissioner of revenue shall conduct an evaluation to 
        determine the accuracy of taxes paid by counties on solid waste 
        collection and disposal services as required by Minnesota 
        Statutes 1994, section 297A.45.  The commissioner shall report, 
        by January 1, 1996, the results of the evaluation, both in the 
        aggregate and by county, to the chairs of the house committee on 
        taxes and the senate committee on taxes and tax laws, and to the 
        co-chairs of the legislative commission on waste management.  
        The final results of the evaluation are classified as public 
        data.  The commissioner shall not initiate or continue any 
        action to collect any underpayment from counties, or to 
        reimburse any overpayment to counties, of taxes on solid waste 
        collection and disposal services pursuant to Minnesota Statutes 
        1994, section 297A.45, until June 1, 1996.  The statute of 
        limitations for assessing, collecting, or refunding taxes 
        subject to the provisions of this section is tolled from the 
        date of enactment until June 1, 1996. 
           Sec. 41.  [AGRICULTURE PROCESSING FACILITY MATERIALS; 
        EXEMPTION.] 
           Subdivision 1.  [EXEMPTION; DEFINITION.] Purchases of 
        construction materials and supplies are exempt from the sales 
        and use taxes imposed under this chapter, regardless of whether 
        purchased by the owner or a contractor, if the materials and 
        supplies are used or consumed in constructing an agriculture 
        processing facility that meets the requirements of this 
        section.  For purposes of this section, "agricultural processing 
        facility" means land, buildings, structures, fixtures, and 
        improvements used or operated primarily for the processing or 
        production of marketable products from agricultural crops, 
        including waste and residues from agricultural crops, but not 
        including livestock or livestock products, poultry or poultry 
        products, or wood or wood products.  For purposes of this 
        section, "agricultural processing facility" does not include an 
        ethanol production facility.  
           Subd. 2.  [QUALIFICATIONS.] An agricultural processing 
        facility qualifies for the exemption provided under this section 
        if it meets each of the following requirements: 
           (a) The total investment in the facility must be at least 
        $8,500,000. 
           (b) The facility must be located in a municipality that has 
        a median household income that does not exceed $18,000 according 
        to the 1990 federal census information on income and poverty 
        status in 1989. 
           (c) The total investment in the facility must exceed an 
        amount equal to $12,000 per resident of the municipality in 
        which the facility is located. 
           Subd. 3.  [COLLECTION AND REFUND OF TAX.] The tax shall be 
        imposed and collected as if the rates under sections 297A.02, 
        subdivision 1, and 297A.021, applied, and then refunded in the 
        manner provided in section 297A.15, subdivision 5. 
           Subd. 4.  [EFFECTIVE DATE.] This section is effective for 
        sales made after March 31, 1995, and before March 31, 1996. 
           Sec. 42.  [ADVISORY COUNCIL; SALES TAX.] 
           Subdivision 1.  [CREATION; MEMBERSHIP.] (a) A state 
        advisory council is established to study the general and motor 
        vehicle sales and use taxes under Minnesota Statutes 1994, 
        chapters 297A and 297B, and to make recommendations to the 1996 
        legislature.  The study shall be completed and findings reported 
        to the legislature by February 1, 1996. 
           (b) The advisory council consists of 17 members who serve 
        at the pleasure of the appointing authority as follows: 
           (1) ten legislators; five members of the senate, including 
        two members of the minority party, appointed by the subcommittee 
        on committees of the committee on rules and administration and 
        five members of the house of representatives, including two 
        members of the minority party, appointed by the speaker; 
           (2) the commissioner of revenue or the commissioner's 
        designee; and 
           (3) six members of the public; two appointed by the 
        subcommittee on committees of the committee on rules and 
        administration of the senate, two appointed by the speaker of 
        the house, and two appointed by the governor.  At least one 
        member of the public that is appointed by each entity must 
        represent a consumer interest group or other private citizen 
        group, public policy organization, or university department of 
        public policy or economics. 
           Subd. 2.  [SCOPE OF STUDY.] (a) The purpose of the advisory 
        council is to: 
           (1) develop a framework of appropriate tax policy goals, 
        including but not limited to goals related to issues of equity, 
        efficiency, and understandability, to be used in evaluating the 
        overall sales tax system; 
           (2) evaluate the current sales and use tax system as it 
        relates to these policy goals, including identification of 
        current inconsistencies in treatment of various industries, 
        problems with compliance and administration, and the economic 
        impact of the system; 
           (3) analyze changes in the global and regional economy and 
        the potential problems that might arise in sales tax collection 
        and administration due to these changes, including but not 
        limited to impacts of international trade agreements (GATT and 
        NAFTA), and changes in technology and telecommunications; 
           (4) suggest options for changing the sales tax system, 
        including eliminating or changing exemptions, broadening the tax 
        base, or replacing it with an alternative tax system such as 
        value added tax or another form of consumption tax.  The options 
        should be evaluated in terms of advancing the policy goals 
        established under clause (1). 
           (b) The advisory council's report to the legislature must 
        include recommendations for modifying the sales and use tax 
        system in light of the tax policy goals established by the 
        council.  The report must also establish a tax policy framework 
        for evaluating other proposed changes in the sales tax. 
           Subd. 3.  [STAFF.] The department of revenue and 
        legislative staff shall provide administrative and staff 
        assistance when requested by the advisory council. 
           Subd. 4.  [COOPERATION BY OTHER AGENCIES.] The 
        commissioners of the department of trade and economic 
        development, the department of finance, and any other state 
        department or agency shall, upon request by the advisory 
        council, provide data or other information that is collected or 
        possessed by their agencies and that is necessary or useful in 
        conducting the study and preparing the report required by this 
        section. 
           Sec. 43.  [REPEALER.] 
           (a) Minnesota Statutes 1994, section 296.0261, is repealed. 
           (b) Minnesota Statutes 1994, section 297A.136, is repealed. 
           Sec. 44.  [EFFECTIVE DATE.] 
           Section 1 is effective the day following final enactment. 
           Sections 3 and 4 are effective June 1, 1995.  Section 4 is 
        repealed June 1, 2000. 
           Sections 5 to 21 and 43, paragraph (a), are effective July 
        1, 1995. 
           Sections 23, 28, 33, 40, 42, and the part of section 22 
        amending language in paragraph (i), clause (vii), are effective 
        the day following final enactment. 
           Sections 24 and 34 are effective for sales made after 
        December 31, 1996. 
           Section 25 is effective beginning with leases or rentals 
        made after June 30, 1995. 
           Section 26 is effective retroactively for sales after May 
        31, 1992. 
           Section 27 is effective for sales made after June 30, 1995. 
           Section 29 and the part of section 22 striking the language 
        after paragraph (h) are effective for sales after June 30, 1995. 
           Section 32 is effective for sales made after June 30, 1995, 
        and before July 1, 1996. 
           Sections 35 and 36 are effective for sales or transfers 
        made after June 30, 1995. 
           Section 38 is effective the day after the governing body of 
        the city of Winona complies with Minnesota Statutes,section 
        645.021, subdivision 3. 
           Section 39 is effective upon compliance by the Minneapolis 
        city council with Minnesota Statutes, section 645.021, 
        subdivision 3. 
           Section 43, paragraph (b), is effective for sales of 900 
        information services made after June 30, 1995. 
                                   ARTICLE 3
                                 PROPERTY TAXES
           Section 1.  Minnesota Statutes 1994, section 124.918, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CERTIFY LEVY LIMITS.] By September 1 8, 
        the commissioner shall notify the school districts of their levy 
        limits.  The commissioner shall certify to the county auditors 
        the levy limits for all school districts headquartered in the 
        respective counties together with adjustments for errors in 
        levies not penalized pursuant to section 124.918, subdivision 3, 
        as well as adjustments to final pupil unit counts. A school 
        district may require the commissioner to review the 
        certification and to present evidence in support of modification 
        of the certification. 
           The county auditor shall reduce levies for any excess of 
        levies over levy limitations pursuant to section 275.16.  Such 
        reduction in excess levies may, at the discretion of the school 
        district, be spread over two calendar years. 
           Sec. 2.  Minnesota Statutes 1994, section 124.918, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NOTICE TO COMMISSIONER; FORMS.] By September 
        15 30 of each year each district shall notify the commissioner 
        of education of the proposed levies in compliance with the levy 
        limitations of this chapter and chapters 124A, 124B, 136C, and 
        136D.  By January 15 of each year each district shall notify the 
        commissioner of education of the final levies certified.  The 
        commissioner of education shall prescribe the form of these 
        notifications and may request any additional information 
        necessary to compute certified levy amounts. 
           Sec. 3.  Minnesota Statutes 1994, section 168.012, 
        subdivision 9, is amended to read: 
           Subd. 9.  [MANUFACTURED HOMES AND PARK TRAILERS.] 
        Manufactured homes and park trailers shall not be taxed as motor 
        vehicles using the public streets and highways and shall be 
        exempt from the motor vehicle tax provisions of this chapter.  
        Except as provided in section 273.125, manufactured homes and 
        park trailers shall be taxed as personal property.  The 
        provisions of Minnesota Statutes 1957, section 272.02 or any 
        other act providing for tax exemption shall be inapplicable to 
        manufactured homes and park trailers, except such manufactured 
        homes as are held by a licensed dealer and exempted as 
        inventory.  Travel trailers not conspicuously displaying current 
        registration plates on the property tax assessment date shall be 
        taxed as manufactured homes if occupied as human dwelling 
        places.  Park trailers not used on the highway during any 
        calendar year must be taxed as manufactured homes if occupied as 
        human dwelling places.  Park trailers used on the highway during 
        any calendar year must be taxed under section 168.013, 
        subdivision 1j. 
           Sec. 4.  Minnesota Statutes 1994, section 272.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  All property described in this section to 
        the extent herein limited shall be exempt from taxation: 
           (1) All public burying grounds. 
           (2) All public schoolhouses. 
           (3) All public hospitals. 
           (4) All academies, colleges, and universities, and all 
        seminaries of learning. 
           (5) All churches, church property, and houses of worship. 
           (6) Institutions of purely public charity except parcels of 
        property containing structures and the structures described in 
        section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 
        and (3), or paragraph (d), other than those that qualify for 
        exemption under clause (25). 
           (7) All public property exclusively used for any public 
        purpose. 
           (8) Except for the taxable personal property enumerated 
        below, all personal property and the property described in 
        section 272.03, subdivision 1, paragraphs (c) and (d), shall be 
        exempt.  
           The following personal property shall be taxable:  
           (a) personal property which is part of an electric 
        generating, transmission, or distribution system or a pipeline 
        system transporting or distributing water, gas, crude oil, or 
        petroleum products or mains and pipes used in the distribution 
        of steam or hot or chilled water for heating or cooling 
        buildings and structures; 
           (b) railroad docks and wharves which are part of the 
        operating property of a railroad company as defined in section 
        270.80; 
           (c) personal property defined in section 272.03, 
        subdivision 2, clause (3); 
           (d) leasehold or other personal property interests which 
        are taxed pursuant to section 272.01, subdivision 2; 273.124, 
        subdivision 7; or 273.19, subdivision 1; or any other law 
        providing the property is taxable as if the lessee or user were 
        the fee owner; 
           (e) manufactured homes and sectional structures, including 
        storage sheds, decks, and similar removable improvements 
        constructed on the site of a manufactured home, sectional 
        structure, park trailer or travel trailer as provided in section 
        273.125, subdivision 8, paragraph (f); and 
           (f) flight property as defined in section 270.071.  
           (9) Personal property used primarily for the abatement and 
        control of air, water, or land pollution to the extent that it 
        is so used, and real property which is used primarily for 
        abatement and control of air, water, or land pollution as part 
        of an agricultural operation, as a part of a centralized 
        treatment and recovery facility operating under a permit issued 
        by the Minnesota pollution control agency pursuant to chapters 
        115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
        and 7045.0020 to 7045.1260, as a wastewater treatment facility 
        and for the treatment, recovery, and stabilization of metals, 
        oils, chemicals, water, sludges, or inorganic materials from 
        hazardous industrial wastes, or as part of an electric 
        generation system.  For purposes of this clause, personal 
        property includes ponderous machinery and equipment used in a 
        business or production activity that at common law is considered 
        real property. 
           Any taxpayer requesting exemption of all or a portion of 
        any real property or any equipment or device, or part thereof, 
        operated primarily for the control or abatement of air or water 
        pollution shall file an application with the commissioner of 
        revenue.  The equipment or device shall meet standards, rules, 
        or criteria prescribed by the Minnesota pollution control 
        agency, and must be installed or operated in accordance with a 
        permit or order issued by that agency.  The Minnesota pollution 
        control agency shall upon request of the commissioner furnish 
        information or advice to the commissioner.  On determining that 
        property qualifies for exemption, the commissioner shall issue 
        an order exempting the property from taxation.  The equipment or 
        device shall continue to be exempt from taxation as long as the 
        permit issued by the Minnesota pollution control agency remains 
        in effect. 
           (10) Wetlands.  For purposes of this subdivision, 
        "wetlands" means:  (i) land described in section 103G.005, 
        subdivision 18; (ii) land which is mostly under water, produces 
        little if any income, and has no use except for wildlife or 
        water conservation purposes, provided it is preserved in its 
        natural condition and drainage of it would be legal, feasible, 
        and economically practical for the production of livestock, 
        dairy animals, poultry, fruit, vegetables, forage and grains, 
        except wild rice; or (iii) land in a wetland preservation area 
        under sections 103F.612 to 103F.616.  "Wetlands" under items (i) 
        and (ii) include adjacent land which is not suitable for 
        agricultural purposes due to the presence of the wetlands, but 
        do not include woody swamps containing shrubs or trees, wet 
        meadows, meandered water, streams, rivers, and floodplains or 
        river bottoms.  Exemption of wetlands from taxation pursuant to 
        this section shall not grant the public any additional or 
        greater right of access to the wetlands or diminish any right of 
        ownership to the wetlands. 
           (11) Native prairie.  The commissioner of the department of 
        natural resources shall determine lands in the state which are 
        native prairie and shall notify the county assessor of each 
        county in which the lands are located.  Pasture land used for 
        livestock grazing purposes shall not be considered native 
        prairie for the purposes of this clause.  Upon receipt of an 
        application for the exemption provided in this clause for lands 
        for which the assessor has no determination from the 
        commissioner of natural resources, the assessor shall refer the 
        application to the commissioner of natural resources who shall 
        determine within 30 days whether the land is native prairie and 
        notify the county assessor of the decision.  Exemption of native 
        prairie pursuant to this clause shall not grant the public any 
        additional or greater right of access to the native prairie or 
        diminish any right of ownership to it. 
           (12) Property used in a continuous program to provide 
        emergency shelter for victims of domestic abuse, provided the 
        organization that owns and sponsors the shelter is exempt from 
        federal income taxation pursuant to section 501(c)(3) of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1992, notwithstanding the fact that the sponsoring organization 
        receives funding under section 8 of the United States Housing 
        Act of 1937, as amended. 
           (13) If approved by the governing body of the municipality 
        in which the property is located, property not exceeding one 
        acre which is owned and operated by any senior citizen group or 
        association of groups that in general limits membership to 
        persons age 55 or older and is organized and operated 
        exclusively for pleasure, recreation, and other nonprofit 
        purposes, no part of the net earnings of which inures to the 
        benefit of any private shareholders; provided the property is 
        used primarily as a clubhouse, meeting facility, or recreational 
        facility by the group or association and the property is not 
        used for residential purposes on either a temporary or permanent 
        basis. 
           (14) To the extent provided by section 295.44, real and 
        personal property used or to be used primarily for the 
        production of hydroelectric or hydromechanical power on a site 
        owned by the state or a local governmental unit which is 
        developed and operated pursuant to the provisions of section 
        103G.535. 
           (15) If approved by the governing body of the municipality 
        in which the property is located, and if construction is 
        commenced after June 30, 1983:  
           (a) a "direct satellite broadcasting facility" operated by 
        a corporation licensed by the federal communications commission 
        to provide direct satellite broadcasting services using direct 
        broadcast satellites operating in the 12-ghz. band; and 
           (b) a "fixed satellite regional or national program service 
        facility" operated by a corporation licensed by the federal 
        communications commission to provide fixed satellite-transmitted 
        regularly scheduled broadcasting services using satellites 
        operating in the 6-ghz. band. 
        An exemption provided by clause (15) shall apply for a period 
        not to exceed five years.  When the facility no longer qualifies 
        for exemption, it shall be placed on the assessment rolls as 
        provided in subdivision 4.  Before approving a tax exemption 
        pursuant to this paragraph, the governing body of the 
        municipality shall provide an opportunity to the members of the 
        county board of commissioners of the county in which the 
        facility is proposed to be located and the members of the school 
        board of the school district in which the facility is proposed 
        to be located to meet with the governing body.  The governing 
        body shall present to the members of those boards its estimate 
        of the fiscal impact of the proposed property tax exemption.  
        The tax exemption shall not be approved by the governing body 
        until the county board of commissioners has presented its 
        written comment on the proposal to the governing body or 30 days 
        have passed from the date of the transmittal by the governing 
        body to the board of the information on the fiscal impact, 
        whichever occurs first. 
           (16) Real and personal property owned and operated by a 
        private, nonprofit corporation exempt from federal income 
        taxation pursuant to United States Code, title 26, section 
        501(c)(3), primarily used in the generation and distribution of 
        hot water for heating buildings and structures.  
           (17) Notwithstanding section 273.19, state lands that are 
        leased from the department of natural resources under section 
        92.46. 
           (18) Electric power distribution lines and their 
        attachments and appurtenances, that are used primarily for 
        supplying electricity to farmers at retail.  
           (19) Transitional housing facilities.  "Transitional 
        housing facility" means a facility that meets the following 
        requirements.  (i) It provides temporary housing to individuals, 
        couples, or families.  (ii) It has the purpose of reuniting 
        families and enabling parents or individuals to obtain 
        self-sufficiency, advance their education, get job training, or 
        become employed in jobs that provide a living wage.  (iii) It 
        provides support services such as child care, work readiness 
        training, and career development counseling; and a 
        self-sufficiency program with periodic monitoring of each 
        resident's progress in completing the program's goals.  (iv) It 
        provides services to a resident of the facility for at least 
        three months but no longer than three years, except residents 
        enrolled in an educational or vocational institution or job 
        training program.  These residents may receive services during 
        the time they are enrolled but in no event longer than four 
        years.  (v) It is owned and operated or under lease from a unit 
        of government or governmental agency under a property 
        disposition program and operated by one or more organizations 
        exempt from federal income tax under section 501(c)(3) of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1992.  This exemption applies notwithstanding the fact that the 
        sponsoring organization receives financing by a direct federal 
        loan or federally insured loan or a loan made by the Minnesota 
        housing finance agency under the provisions of either Title II 
        of the National Housing Act or the Minnesota housing finance 
        agency law of 1971 or rules promulgated by the agency pursuant 
        to it, and notwithstanding the fact that the sponsoring 
        organization receives funding under Section 8 of the United 
        States Housing Act of 1937, as amended. 
           (20) Real and personal property, including leasehold or 
        other personal property interests, owned and operated by a 
        corporation if more than 50 percent of the total voting power of 
        the stock of the corporation is owned collectively by:  (i) the 
        board of regents of the University of Minnesota, (ii) the 
        University of Minnesota Foundation, an organization exempt from 
        federal income taxation under section 501(c)(3) of the Internal 
        Revenue Code of 1986, as amended through December 31, 1992, and 
        (iii) a corporation organized under chapter 317A, which by its 
        articles of incorporation is prohibited from providing pecuniary 
        gain to any person or entity other than the regents of the 
        University of Minnesota; which property is used primarily to 
        manage or provide goods, services, or facilities utilizing or 
        relating to large-scale advanced scientific computing resources 
        to the regents of the University of Minnesota and others. 
           (21)(a) Wind energy conversion systems, as defined in 
        section 216C.06, subdivision 12, installed after January 1, 
        1991, and before January 2, 1995, and used as an electric power 
        source, are exempt. 
           (b) Wind energy conversion systems, as defined in section 
        216C.06, subdivision 12, installed after January 1, 1995, 
        including the foundation or support pad, which are (i) used as 
        an electric power source; (ii) located within one county and 
        owned by the same owner; and (iii) produce two megawatts or less 
        of electricity as measured by nameplate ratings, are exempt. 
           (c) Wind energy conversion systems, as defined in section 
        216C.06, subdivision 12, installed after January 1, 1995, and 
        used as an electric power source but not exempt under item (b), 
        are treated as follows:  (i) the foundation and support pad are 
        taxable; (ii) the associated supporting and protective 
        structures are exempt for the first five assessment years after 
        they have been constructed, and thereafter, 30 percent of the 
        market value of the associated supporting and protective 
        structures are taxable; and (iii) the turbines, blades, 
        transformers, and its related equipment, are exempt. 
           (22) Containment tanks, cache basins, and that portion of 
        the structure needed for the containment facility used to 
        confine agricultural chemicals as defined in section 18D.01, 
        subdivision 3, as required by the commissioner of agriculture 
        under chapter 18B or 18C. 
           (23) Photovoltaic devices, as defined in section 216C.06, 
        subdivision 13, installed after January 1, 1992, and used to 
        produce or store electric power. 
           (24) Real and personal property owned and operated by a 
        private, nonprofit corporation exempt from federal income 
        taxation pursuant to United States Code, title 26, section 
        501(c)(3), primarily used for an ice arena or ice rink, and used 
        primarily for youth and high school programs. 
           (25) A structure that is situated on real property that is 
        used for: 
           (i) housing for the elderly or for low- and moderate-income 
        families as defined in Title II of the National Housing Act, as 
        amended through December 31, 1990, and funded by a direct 
        federal loan or federally insured loan made pursuant to Title II 
        of the act; or 
           (ii) housing lower income families or elderly or 
        handicapped persons, as defined in section 8 of the United 
        States Housing Act of 1937, as amended. 
           In order for a structure to be exempt under (i) or (ii), it 
        must also meet each of the following criteria: 
           (A) is owned by an entity which is operated as a nonprofit 
        corporation organized under chapter 317A; 
           (B) is owned by an entity which has not entered into a 
        housing assistance payments contract under section 8 of the 
        United States Housing Act of 1937, or, if the entity which owns 
        the structure has entered into a housing assistance payments 
        contract under section 8 of the United States Housing Act of 
        1937, the contract provides assistance for less than 90 percent 
        of the dwelling units in the structure, excluding dwelling units 
        intended for management or maintenance personnel; 
           (C) operates an on-site congregate dining program in which 
        participation by residents is mandatory, and provides assisted 
        living or similar social and physical support services for 
        residents; and 
           (D) was not assessed and did not pay tax under chapter 273 
        prior to the 1991 levy, while meeting the other conditions of 
        this clause. 
           An exemption under this clause remains in effect for taxes 
        levied in each year or partial year of the term of its permanent 
        financing. 
           (26) Real and personal property that is located in the 
        Superior National Forest, and owned or leased and operated by a 
        nonprofit organization that is exempt from federal income 
        taxation under section 501(c)(3) of the Internal Revenue Code of 
        1986, as amended through December 31, 1992, and primarily used 
        to provide recreational opportunities for disabled veterans and 
        their families. 
           (27) Manure pits and appurtenances, which may include 
        slatted floors and pipes, installed or operated in accordance 
        with a permit, order, or certificate of compliance issued by the 
        Minnesota pollution control agency.  The exemption shall 
        continue for as long as the permit, order, or certificate issued 
        by the Minnesota pollution control agency remains in effect. 
           (28) Notwithstanding clause (8), item (a), attached 
        machinery and other personal property which is part of a 
        facility containing a cogeneration system as described in 
        section 216B.166, subdivision 2, paragraph (a), if the 
        cogeneration system has met the following criteria:  (i) the 
        system utilizes natural gas as a primary fuel and the 
        cogenerated steam initially replaces steam generated from 
        existing thermal boilers utilizing coal; (ii) the facility 
        developer is selected as a result of a procurement process 
        ordered by the public utilities commission; and (iii) 
        construction of the facility is commenced after July 1, 1994, 
        and before July 1, 1997. 
           (29) Real property acquired by a home rule charter city, 
        statutory city, county, town, or school district under a lease 
        purchase agreement or an installment purchase contract during 
        the term of the lease purchase agreement as long as and to the 
        extent that the property is used by the city, county, town, or 
        school district and devoted to a public use and to the extent it 
        is not subleased to any private individual, entity, association, 
        or corporation in connection with a business or enterprise 
        operated for profit. 
           Sec. 5.  [272.027] [PERSONAL PROPERTY USED TO GENERATE 
        ELECTRICITY FOR PRODUCTION AND RESALE.] 
           Personal property used to generate electric power is exempt 
        from property taxation if the electric power is used to 
        manufacture or produce goods, products, or services, other than 
        electric power, by the owner of the electric generation plant.  
        The exemption does not apply to property used to produce 
        electric power for sale to others and does not apply to real 
        property.  In determining the value subject to tax, a 
        proportionate share of the value of the generating facilities, 
        equal to the proportion that the power sold to others bears to 
        the total generation of the plant, is subject to the general 
        property tax in the same manner as other property.  Power 
        generated in such a plant and exchanged for an equivalent amount 
        of power that is used for the manufacture or production of 
        goods, products, or services other than electric power by the 
        owner of the generating plant is considered to be used by the 
        owner of the plant. 
           Sec. 6.  Minnesota Statutes 1994, section 272.115, 
        subdivision 1, is amended to read: 
           Subdivision 1.  Whenever any real estate is sold for a 
        consideration in excess of $1,000, whether by warranty deed, 
        quitclaim deed, contract for deed or any other method of sale, 
        the grantor, grantee or the legal agent of either shall file a 
        certificate of value with the county auditor in the county in 
        which the property is located when the deed or other document is 
        presented for recording.  Contract for deeds are subject to 
        recording under section 507.235, subdivision 1.  Value shall, in 
        the case of any deed not a gift, be the amount of the full 
        actual consideration thereof, paid or to be paid, including the 
        amount of any lien or liens assumed.  The items and value of 
        personal property transferred with the real property must be 
        listed and deducted from the sale price.  The certificate of 
        value shall include the classification to which the property 
        belongs for the purpose of determining the fair market value of 
        the property.  The certificate shall include financing terms and 
        conditions of the sale which are necessary to determine the 
        actual, present value of the sale price for purposes of the 
        sales ratio study.  The commissioner of revenue shall promulgate 
        administrative rules specifying the financing terms and 
        conditions which must be included on the certificate.  Pursuant 
        to the authority of the commissioner of revenue in section 
        270.066, the certificate of value must include the social 
        security number or the federal employer identification number of 
        the grantors and grantees.  The identification numbers of the 
        grantors and grantees are private data on individuals or 
        nonpublic data as defined in section 13.02, subdivisions 9 and 
        12, but, notwithstanding that section, the private or nonpublic 
        data may be disclosed to the commissioner of revenue for 
        purposes of tax administration. 
           Sec. 7.  Minnesota Statutes 1994, section 273.124, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL RULE.] (a) Residential real estate 
        that is occupied and used for the purposes of a homestead by its 
        owner, who must be a Minnesota resident, is a residential 
        homestead.  
           Agricultural land, as defined in section 273.13, 
        subdivision 23, that is occupied and used as a homestead by its 
        owner, who must be a Minnesota resident, is an agricultural 
        homestead. 
           Dates for establishment of a homestead and homestead 
        treatment provided to particular types of property are as 
        provided in this section.  
           Property of a trustee, beneficiary, or grantor of a trust 
        is not disqualified from receiving homestead benefits if the 
        homestead requirements under this chapter are satisfied. 
           The assessor shall require proof, as provided in 
        subdivision 13, of the facts upon which classification as a 
        homestead may be determined.  Notwithstanding any other law, the 
        assessor may at any time require a homestead application to be 
        filed in order to verify that any property classified as a 
        homestead continues to be eligible for homestead status. 
           When there is a name change or a transfer of homestead 
        property, the assessor may reclassify the property in the next 
        assessment unless a homestead application is filed to verify 
        that the property continues to qualify for homestead 
        classification. 
           (b) For purposes of this section, homestead property shall 
        include property which is used for purposes of the homestead but 
        is separated from the homestead by a road, street, lot, 
        waterway, or other similar intervening property.  The term "used 
        for purposes of the homestead" shall include but not be limited 
        to uses for gardens, garages, or other outbuildings commonly 
        associated with a homestead, but shall not include vacant land 
        held primarily for future development.  In order to receive 
        homestead treatment for the noncontiguous property, the owner 
        shall apply for it to the assessor by July 1 of the year when 
        the treatment is initially sought.  After initial qualification 
        for the homestead treatment, additional applications for 
        subsequent years are not required. 
           (c) Residential real estate that is occupied and used for 
        purposes of a homestead by a relative of the owner is a 
        homestead but only to the extent of the homestead treatment that 
        would be provided if the related owner occupied the property.  
        For purposes of this paragraph and paragraph (f), "relative" 
        means a parent, stepparent, child, stepchild, grandparent, 
        grandchild, brother, sister, uncle, or aunt.  This relationship 
        may be by blood or marriage.  Property that was classified as 
        seasonal recreational residential property at the time when 
        treatment under this paragraph would first apply shall continue 
        to be classified as seasonal recreational residential property 
        for the first four assessment years beginning after the date 
        when the relative of the owner occupies the property as a 
        homestead will not be reclassified as a homestead unless it is 
        occupied as a homestead by the owner; this delay prohibition 
        also applies to property that, in the absence of this paragraph, 
        would have been classified as seasonal recreational residential 
        property at the time when the residence was constructed.  
        Neither the related occupant nor the owner of the property may 
        claim a property tax refund under chapter 290A for a homestead 
        occupied by a relative.  In the case of a residence located on 
        agricultural land, only the house, garage, and immediately 
        surrounding one acre of land shall be classified as a homestead 
        under this paragraph, except as provided in paragraph (d). 
           (d) Agricultural property that is occupied and used for 
        purposes of a homestead by a relative of the owner, is a 
        homestead, only to the extent of the homestead treatment that 
        would be provided if the related owner occupied the property, 
        and only if all of the following criteria are met: 
           (1) the relative who is occupying the agricultural property 
        is a son, daughter, father, or mother of the owner of the 
        agricultural property or a son or daughter of the spouse of the 
        owner of the agricultural property, 
           (2) the owner of the agricultural property must be a 
        Minnesota resident, 
           (3) the owner of the agricultural property must not receive 
        homestead treatment on any other agricultural property in 
        Minnesota, and 
           (4) the owner of the agricultural property is limited to 
        only one agricultural homestead per family under this paragraph. 
           Neither the related occupant nor the owner of the property 
        may claim a property tax refund under chapter 290A for a 
        homestead occupied by a relative qualifying under this 
        paragraph.  For purposes of this paragraph, "agricultural 
        property" means the house, garage, other farm buildings and 
        structures, and agricultural land. 
           Application must be made to the assessor by the owner of 
        the agricultural property to receive homestead benefits under 
        this paragraph.  The assessor may require the necessary proof 
        that the requirements under this paragraph have been met. 
           (e) In the case of property owned by a property owner who 
        is married, the assessor must not deny homestead treatment in 
        whole or in part if only one of the spouses occupies the 
        property and the other spouse is absent due to:  (1) marriage 
        dissolution proceedings, (2) legal separation, (3) employment or 
        self-employment in another location as provided under 
        subdivision 13, or (4) residence in a nursing home or boarding 
        care facility, or (5) other personal circumstances causing the 
        spouses to live separately, not including an intent to obtain 
        two homestead classifications for property tax purposes.  To 
        qualify under clause (3), the spouse's place of employment or 
        self-employment must be at least 50 miles distant from the other 
        spouse's place of employment, and the homesteads must be at 
        least 50 miles distant from each other.  Homestead treatment, in 
        whole or in part, shall not be denied to the spouse of an owner 
        if he or she previously occupied the residence with the owner 
        and the absence of the owner is due to one of the exceptions 
        provided in this paragraph. 
           (f) If an individual is purchasing property with the intent 
        of claiming it as a homestead and is required by the terms of 
        the financing agreement to have a relative shown on the deed as 
        a coowner, the assessor shall allow a full homestead 
        classification.  This provision only applies to first-time 
        purchasers, whether married or single, or to a person who had 
        previously been married and is purchasing as a single individual 
        for the first time.  The application for homestead benefits must 
        be on a form prescribed by the commissioner and must contain the 
        data necessary for the assessor to determine if full homestead 
        benefits are warranted. 
           Sec. 8.  Minnesota Statutes 1994, section 273.124, 
        subdivision 13, is amended to read: 
           Subd. 13.  [HOMESTEAD APPLICATION.] (a) A person who meets 
        the homestead requirements under subdivision 1 must file a 
        homestead application with the county assessor to initially 
        obtain homestead classification. 
           (b) On or before January 2, 1993, each county assessor 
        shall mail a homestead application to the owner of each parcel 
        of property within the county which was classified as homestead 
        for the 1992 assessment year.  The format and contents of a 
        uniform homestead application shall be prescribed by the 
        commissioner of revenue.  The commissioner shall consult with 
        the chairs of the house and senate tax committees on the 
        contents of the homestead application form.  The application 
        must clearly inform the taxpayer that this application must be 
        signed by all owners who occupy the property or by the 
        qualifying relative and returned to the county assessor in order 
        for the property to continue receiving homestead treatment.  The 
        envelope containing the homestead application shall clearly 
        identify its contents and alert the taxpayer of its necessary 
        immediate response. 
           (c) Every property owner applying for homestead 
        classification must furnish to the county assessor the social 
        security number of each occupant who is listed as an owner of 
        the property on the deed of record, the name and address of each 
        owner who does not occupy the property, and the name and social 
        security number of each owner's spouse who occupies the 
        property.  The application must be signed by each owner who 
        occupies the property and by each owner's spouse who occupies 
        the property, or, in the case of property that qualifies as a 
        homestead under subdivision 1, paragraph (c), by the qualifying 
        relative. 
           If a property owner occupies a homestead, the property 
        owner's spouse may not claim another property as a homestead 
        unless the property owner and the property owner's spouse file 
        with the assessor an affidavit or other proof required by the 
        assessor stating that the property owner's spouse does not 
        occupy the homestead because marriage dissolution proceedings 
        are pending, the spouses are legally separated, or the spouse's 
        employment or self-employment location requires the spouse to 
        have a separate homestead.  The assessor may require proof of 
        employment or self-employment and employment or self-employment 
        location, or proof of dissolution proceedings or legal 
        separation qualifies as a homestead under subdivision 1, 
        paragraph (e). 
           If the social security number or affidavit or other proof 
        is not provided, the county assessor shall classify the property 
        as nonhomestead.  Owners or spouses occupying residences owned 
        by their spouses and previously occupied with the other spouse, 
        either of whom fail to include the other spouse's name and 
        social security number of the homestead application or provide 
        the affidavits or other proof requested, will be deemed to have 
        elected to receive only partial homestead treatment of their 
        residence.  The remainder of the residence will be classified as 
        nonhomestead residential.  When an owner or spouse's name and 
        social security number appear on homestead applications for two 
        separate residences and only one application is signed, the 
        owner or spouse will be deemed to have elected to homestead the 
        residence for which the application was signed. 
           The social security numbers or affidavits or other proofs 
        of the property owners and spouses 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, or, for purposes of proceeding 
        under the revenue recapture act to recover personal property 
        taxes owing, to the county treasurer. 
           (d) If residential real estate is occupied and used for 
        purposes of a homestead by a relative of the owner and qualifies 
        for a homestead under subdivision 1, paragraph (c), in order for 
        the property to receive homestead status, a homestead 
        application must be filed with the assessor.  The social 
        security number of each relative occupying the property and the 
        social security number of each owner who is related to an 
        occupant of the property shall be required on the homestead 
        application filed under this subdivision.  If a different 
        relative of the owner subsequently occupies the property, the 
        owner of the property must notify the assessor within 30 days of 
        the change in occupancy.  The social security number of a 
        relative occupying the property is private data on individuals 
        as defined by section 13.02, subdivision 12, but may be 
        disclosed to the commissioner of revenue.  
           (e) The homestead application shall also notify the 
        property owners that the application filed under this section 
        will not be mailed annually and that if the property is granted 
        homestead status for the 1993 assessment, or any assessment year 
        thereafter, that same property shall remain classified as 
        homestead until the property is sold or transferred to another 
        person, or the owners, the spouse of the owner, or the relatives 
        no longer use the property as their homestead.  Upon the sale or 
        transfer of the homestead property, a certificate of value must 
        be timely filed with the county auditor as provided under 
        section 272.115.  Failure to notify the assessor within 30 days 
        that the property has been sold, transferred, or that the owner, 
        the spouse of the owner, or the relative is no longer occupying 
        the property as a homestead, shall result in the penalty 
        provided under this subdivision and the property will lose its 
        current homestead status. 
           (f) If the homestead application is not returned within 30 
        days, the county will send a second application to the present 
        owners of record.  The notice of proposed property taxes 
        prepared under section 275.065, subdivision 3, shall reflect the 
        property's classification.  Beginning with assessment year 1993 
        for all properties, If a homestead application has not been 
        filed with the county by December 15, the assessor shall 
        classify the property as nonhomestead for the current assessment 
        year for taxes payable in the following year, provided that the 
        owner may be entitled to receive the homestead classification by 
        proper application under section 375.192. 
           (g) At the request of the commissioner, each county must 
        give the commissioner a list that includes the name and social 
        security number of each property owner and the property owner's 
        spouse occupying the property, or relative of a property owner, 
        applying for homestead classification under this subdivision.  
        The commissioner shall use the information provided on the lists 
        as appropriate under the law, including for the detection of 
        improper claims by owners, or relatives of owners, under chapter 
        290A.  
           (h) If, in comparing the lists supplied by the counties, 
        the commissioner finds that a property owner is may be claiming 
        more than one a fraudulent 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 the tax 
        reduction resulting from the classification as a homestead under 
        section 273.13, the taconite homestead credit under section 
        273.135, and the supplemental homestead credit under section 
        273.1391. 
           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 100 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 of taxes and penalty to the 
        succeeding year's tax list to be collected as part of the 
        property taxes.  In the case of a manufactured home, the amount 
        shall be certified to the current year's tax list for collection.
           (i) Any amount of homestead benefits recovered by the 
        county from the property owner shall be distributed to the 
        county, city or town, and school district where the property is 
        located in the same proportion that each taxing district's levy 
        was to the total of the three taxing districts' levy for the 
        current year.  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 total amount of penalty collected must be 
        deposited in the county general fund. 
           (j) 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. 
           (k) In addition to lists of homestead properties, the 
        commissioner may ask the counties to furnish lists of all 
        properties and the record owners. 
           Sec. 9.  Minnesota Statutes 1994, section 273.13, 
        subdivision 24, is amended to read: 
           Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
        property and utility real and personal property, except class 5 
        property as identified in subdivision 31, clause (1), is class 
        3a.  It has a class rate of three percent of the first $100,000 
        of market value for taxes payable in 1993 and thereafter, and 
        5.06 percent of the market value over $100,000.  In the case of 
        state-assessed commercial, industrial, and utility property 
        owned by one person or entity, only one parcel has a reduced 
        class rate on the first $100,000 of market value.  In the case 
        of other commercial, industrial, and utility property owned by 
        one person or entity, only one parcel in each county has a 
        reduced class rate on the first $100,000 of market value, except 
        that: 
           (1) if the market value of the parcel is less than 
        $100,000, and additional parcels are owned by the same person or 
        entity in the same city or town within that county, the reduced 
        class rate shall be applied up to a combined total market value 
        of $100,000 for all parcels owned by the same person or entity 
        in the same city or town within the county; 
           (2) in the case of grain, fertilizer, and feed elevator 
        facilities, as defined in section 18C.305, subdivision 1, or 
        232.21, subdivision 8, the limitation to one parcel per owner 
        per county for the reduced class rate shall not apply, but there 
        shall be a limit of $100,000 of preferential value per site of 
        contiguous parcels owned by the same person or entity.  Only the 
        value of the elevator portion of each parcel shall qualify for 
        treatment under this clause.  For purposes of this subdivision, 
        contiguous parcels include parcels separated only by a railroad 
        or public road right-of-way; and 
           (3) in the case of property owned by a nonprofit charitable 
        organization that qualifies for tax exemption under section 
        501(c)(3) of the Internal Revenue Code of 1986, as amended 
        through December 31, 1993, if the property is used as a business 
        incubator, the limitation to one parcel per owner per county for 
        the reduced class rate shall not apply, provided that the 
        reduced rate applies only to the first $100,000 of value per 
        parcel owned by the organization.  As used in this clause, a 
        "business incubator" is a facility used for the development of 
        nonretail businesses, offering access to equipment, space, 
        services, and advice to the tenant businesses, for the purpose 
        of encouraging economic development, diversification, and job 
        creation in the area served by the organization. 
           To receive the reduced class rate on additional parcels 
        under clause (1), (2), or (3), the taxpayer must notify the 
        county assessor that the taxpayer owns more than one parcel that 
        qualifies under clause (1), (2), or (3). 
           (b) Employment property defined in section 469.166, during 
        the period provided in section 469.170, shall constitute class 
        3b and has a class rate of 2.3 percent of the first $50,000 of 
        market value and 3.6 percent of the remainder, except that for 
        employment property located in a border city enterprise zone 
        designated pursuant to section 469.168, subdivision 4, paragraph 
        (c), the class rate of the first $100,000 of market value and 
        the class rate of the remainder is determined under paragraph 
        (a), unless the governing body of the city designated as an 
        enterprise zone determines that a specific parcel shall be 
        assessed pursuant to the first clause of this sentence.  The 
        governing body may provide for assessment under the first clause 
        of the preceding sentence only for property which is located in 
        an area which has been designated by the governing body for the 
        receipt of tax reductions authorized by section 469.171, 
        subdivision 1. 
           (c) Structures which are (i) located on property classified 
        as class 3a, (ii) constructed under an initial building permit 
        issued after January 2, 1996, (iii) located in a transit zone as 
        defined under section 473.3915, subdivision 3, (iv) located 
        within the boundaries of a school district, and (v) not 
        primarily used for retail or transient lodging purposes, shall 
        have a class rate of four percent on that portion of the market 
        value in excess of $100,000 and any market value under $100,000 
        that does not qualify for the three percent class rate under 
        paragraph (a).  As used in item (v), a structure is primarily 
        used for retail or transient lodging purposes if over 50 percent 
        of its square footage is used for those purposes.  The four 
        percent rate shall also apply to improvements to existing 
        structures that meet the requirements of items (i) to (v) if the 
        improvements are constructed under an initial building permit 
        issued after January 2, 1996, even if the remainder of the 
        structure was constructed prior to January 2, 1996.  For the 
        purposes of this paragraph, a structure shall be considered to 
        be located in a transit zone if any portion of the structure 
        lies within the zone.  If any property once eligible for 
        treatment under this paragraph ceases to remain eligible due to 
        revisions in transit zone boundaries, the property shall 
        continue to receive treatment under this paragraph for a period 
        of three years. 
           Sec. 10.  Minnesota Statutes 1994, section 273.13, 
        subdivision 25, is amended to read: 
           Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
        estate containing four or more units and used or held for use by 
        the owner or by the tenants or lessees of the owner as a 
        residence for rental periods of 30 days or more.  Class 4a also 
        includes hospitals licensed under sections 144.50 to 144.56, 
        other than hospitals exempt under section 272.02, and contiguous 
        property used for hospital purposes, without regard to whether 
        the property has been platted or subdivided.  Class 4a property 
        in a city with a population of 5,000 or less, that is (1) 
        located outside of the metropolitan area, as defined in section 
        473.121, subdivision 2, or outside any county contiguous to the 
        metropolitan area, and (2) whose city boundary is at least 15 
        miles from the boundary of any city with a population greater 
        than 5,000 has a class rate of 3.5 percent of market value for 
        taxes payable in 1992, and 3.4 2.3 percent of market value for 
        taxes payable in 1993 1996 and thereafter.  All other class 4a 
        property has a class rate of 3.4 percent of market value for 
        taxes payable in 1996 and thereafter.  For purposes of this 
        paragraph, population has the same meaning given in section 
        477A.011, subdivision 3. 
           (b) Class 4b includes: 
           (1) residential real estate containing less than four 
        units, other than seasonal residential, and recreational; 
           (2) manufactured homes not classified under any other 
        provision; 
           (3) a dwelling, garage, and surrounding one acre of 
        property on a nonhomestead farm classified under subdivision 23, 
        paragraph (b).  
           Class 4b property has a class rate of 2.8 percent of market 
        value for taxes payable in 1992, 2.5 percent of market value for 
        taxes payable in 1993, and 2.3 percent of market value for taxes 
        payable in 1994 and thereafter. 
           (c) Class 4c property includes: 
           (1) a structure that is:  
           (i) situated on real property that is used for housing for 
        the elderly or for low- and moderate-income families as defined 
        in Title II, as amended through December 31, 1990, of the 
        National Housing Act or the Minnesota housing finance agency law 
        of 1971, as amended, or rules promulgated by the agency and 
        financed by a direct federal loan or federally insured loan made 
        pursuant to Title II of the Act; or 
           (ii) situated on real property that is used for housing the 
        elderly or for low- and moderate-income families as defined by 
        the Minnesota housing finance agency law of 1971, as amended, or 
        rules adopted by the agency pursuant thereto and financed by a 
        loan made by the Minnesota housing finance agency pursuant to 
        the provisions of the act.  
           This clause applies only to property of a nonprofit or 
        limited dividend entity.  Property is classified as class 4c 
        under this clause for 15 years from the date of the completion 
        of the original construction or substantial rehabilitation, or 
        for the original term of the loan.  
           (2) a structure that is: 
           (i) 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 
           (ii) 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.  Property is classified as class 4c under 
        this clause for the term of the housing assistance payments 
        contract, including all renewals, or for the term of its 
        permanent financing, whichever is shorter; and 
           (3) a qualified low-income building as defined in section 
        42(c)(2) of the Internal Revenue Code of 1986, as amended 
        through December 31, 1990, that (i) receives a low-income 
        housing credit under section 42 of the Internal Revenue Code of 
        1986, as amended through December 31, 1990; or (ii) meets the 
        requirements of that section and receives public financing, 
        except financing provided under sections 469.174 to 469.179, 
        which contains terms restricting the rents; or (iii) meets the 
        requirements of section 273.1317.  Classification pursuant to 
        this clause is limited to a term of 15 years.  The public 
        financing received must be from at least one of the following 
        sources:  government issued bonds exempt from taxes under 
        section 103 of the Internal Revenue Code of 1986, as amended 
        through December 31, 1993, the proceeds of which are used for 
        the acquisition or rehabilitation of the building; programs 
        under section 221(d)(3), 202, or 236, of Title II of the 
        National Housing Act; rental housing program funds under Section 
        8 of the United States Housing Act of 1937 or the market rate 
        family graduated payment mortgage program funds administered by 
        the Minnesota housing finance agency that are used for the 
        acquisition or rehabilitation of the building; public financing 
        provided by a local government used for the acquisition or 
        rehabilitation of the building, including grants or loans from 
        federal community development block grants, HOME block grants, 
        or residential rental bonds issued under chapter 474A; or other 
        rental housing program funds provided by the Minnesota housing 
        finance agency for the acquisition or rehabilitation of the 
        building. 
           For all properties described in clauses (1), (2), and (3) 
        and in paragraph (d), the market value determined by the 
        assessor must be based on the normal approach to value using 
        normal unrestricted rents unless the owner of the property 
        elects to have the property assessed under Laws 1991, chapter 
        291, article 1, section 55.  If the owner of the property elects 
        to have the market value determined on the basis of the actual 
        restricted rents, as provided in Laws 1991, chapter 291, article 
        1, section 55, the property will be assessed at the rate 
        provided for class 4a or class 4b property, as appropriate.  
        Properties described in clauses (1)(ii), (3), and (4) may apply 
        to the assessor for valuation under Laws 1991, chapter 291, 
        article 1, section 55.  The land on which these structures are 
        situated has the class rate given in paragraph (b) if the 
        structure contains fewer than four units, and the class rate 
        given in paragraph (a) if the structure contains four or more 
        units.  This clause applies only to the property of a nonprofit 
        or limited dividend entity.  
           (4) 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.  This clause does not apply to any 
        portion of the land or improvements used for nonresidential 
        purposes.  For purposes of this clause, 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 clause, "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: 
           (a) it is a nonprofit corporation organized under chapter 
        317A; 
           (b) it has as its principal purpose providing housing for 
        lower income families in a specific geographic community 
        designated in its articles or bylaws; 
           (c) it limits membership with voting rights to residents of 
        the designated community; and 
           (d) 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; and 
           (5) except as provided in subdivision 22, paragraph (c), 
        real property devoted to temporary and seasonal residential 
        occupancy for recreation purposes, including real property 
        devoted to temporary and seasonal residential occupancy for 
        recreation purposes and not devoted to commercial purposes for 
        more than 250 days in the year preceding the year of 
        assessment.  For purposes of this clause, property is devoted to 
        a commercial purpose on a specific day if any portion of the 
        property is used for residential occupancy, and a fee is charged 
        for residential occupancy.  Class 4c also includes commercial 
        use real property used exclusively for recreational purposes in 
        conjunction with class 4c property devoted to temporary and 
        seasonal residential occupancy for recreational purposes, up to 
        a total of two acres, provided the property is not devoted to 
        commercial recreational use for more than 250 days in the year 
        preceding the year of assessment and is located within two miles 
        of the class 4c property with which it is used.  Class 4c 
        property classified in this clause also includes the remainder 
        of class 1c resorts.  Owners of real property devoted to 
        temporary and seasonal residential occupancy for recreation 
        purposes and all or a portion of which was devoted to commercial 
        purposes for not more than 250 days in the year preceding the 
        year of assessment desiring classification as class 1c or 4c, 
        must submit a declaration to the assessor designating the cabins 
        or units occupied for 250 days or less in the year preceding the 
        year of assessment by January 15 of the assessment year.  Those 
        cabins or units and a proportionate share of the land on which 
        they are located will be designated class 1c or 4c as otherwise 
        provided.  The remainder of the cabins or units and a 
        proportionate share of the land on which they are located will 
        be designated as class 3a.  The first $100,000 of the market 
        value of the remainder of the cabins or units and a 
        proportionate share of the land on which they are located shall 
        have a class rate of three percent.  The owner of property 
        desiring designation as class 1c or 4c property must provide 
        guest registers or other records demonstrating that the units 
        for which class 1c or 4c designation is sought were not occupied 
        for more than 250 days in the year preceding the assessment if 
        so requested.  The portion of a property operated as a (1) 
        restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
        facility operated on a commercial basis not directly related to 
        temporary and seasonal residential occupancy for recreation 
        purposes shall not qualify for class 1c or 4c; 
           (6) real property up to a maximum of one acre of land owned 
        by a nonprofit community service oriented organization; provided 
        that the property is not used for a revenue-producing activity 
        for more than six days in the calendar year preceding the year 
        of assessment and the property is not used for residential 
        purposes on either a temporary or permanent basis.  For purposes 
        of this clause, a "nonprofit community service oriented 
        organization" means any corporation, society, association, 
        foundation, or institution organized and operated exclusively 
        for charitable, religious, fraternal, civic, or educational 
        purposes, and which is exempt from federal income taxation 
        pursuant to section 501(c)(3), (10), or (19) of the Internal 
        Revenue Code of 1986, as amended through December 31, 1990.  For 
        purposes of this clause, "revenue-producing activities" shall 
        include but not be limited to property or that portion of the 
        property that is used as an on-sale intoxicating liquor or 3.2 
        percent malt liquor establishment licensed under chapter 340A, a 
        restaurant open to the public, bowling alley, a retail store, 
        gambling conducted by organizations licensed under chapter 349, 
        an insurance business, or office or other space leased or rented 
        to a lessee who conducts a for-profit enterprise on the 
        premises.  Any portion of the property which is used for 
        revenue-producing activities for more than six days in the 
        calendar year preceding the year of assessment shall be assessed 
        as class 3a.  The use of the property for social events open 
        exclusively to members and their guests for periods of less than 
        24 hours, when an admission is not charged nor any revenues are 
        received by the organization shall not be considered a 
        revenue-producing activity; 
           (7) post-secondary student housing of not more than one 
        acre of land that is owned by a nonprofit corporation organized 
        under chapter 317A and is used exclusively by a student 
        cooperative, sorority, or fraternity for on-campus housing or 
        housing located within two miles of the border of a college 
        campus; and 
           (8) manufactured home parks as defined in section 327.14, 
        subdivision 3. 
           Class 4c property has a class rate of 2.3 percent of market 
        value, except that (i) for each parcel of seasonal residential 
        recreational property not used for commercial purposes under 
        clause (5) has a class rate of 2.2 percent of market value for 
        taxes payable in 1992, and for taxes payable in 1993 and 
        thereafter, the first $72,000 of market value on each parcel has 
        a class rate of two 1.9 percent for taxes payable in 1997 and 
        1.8 percent for taxes payable in 1998 and thereafter, and the 
        market value of each parcel that exceeds $72,000 has a class 
        rate of 2.5 percent, and (ii) manufactured home parks assessed 
        under clause (8) have a class rate of two percent for taxes 
        payable in 1993, 1994, and 1995 only 1996, and thereafter.  
           (d) Class 4d property includes: 
           (1) a structure that is: 
           (i) 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; 
           (ii) located in a municipality of less than 10,000 
        population; and 
           (iii) financed by a direct loan or insured loan from the 
        Farmers Home Administration.  Property is classified under this 
        clause for 15 years from the date of the completion of the 
        original construction or for the original term of the loan.  
           The class rates in paragraph (c), clauses (1), (2), and (3) 
        and this clause apply to the properties described in them, 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 those properties, 4c or 4d 
        classification is available only for those units meeting the 
        requirements of section 273.1318. 
           Classification under this clause is only available to 
        property of a nonprofit or limited dividend entity. 
           In the case of a structure financed or refinanced under any 
        federal or state mortgage insurance or direct loan program 
        exclusively for housing for the elderly or for housing for the 
        handicapped, a unit shall be considered occupied so long as it 
        is actually occupied by an elderly or handicapped person or, if 
        vacant, is held for rental to an elderly or handicapped person. 
           (2) For taxes payable in 1992, 1993, and 1994, only, 
        buildings and appurtenances, together with the land upon which 
        they are located, leased by the occupant under the community 
        lending model lease-purchase mortgage loan program administered 
        by the Federal National Mortgage Association, provided the 
        occupant's income is no greater than 60 percent of the county or 
        area median income, adjusted for family size and the building 
        consists of existing single family or duplex housing.  The lease 
        agreement must provide for a portion of the lease payment to be 
        escrowed as a nonrefundable down payment on the housing.  To 
        qualify under this clause, the taxpayer must apply to the county 
        assessor by May 30 of each year.  The application must be 
        accompanied by an affidavit or other proof required by the 
        assessor to determine qualification under this clause. 
           (3) Qualifying buildings and appurtenances, together with 
        the land upon which they are located, leased for a period of up 
        to five years by the occupant under a lease-purchase program 
        administered by the Minnesota housing finance agency or a 
        housing and redevelopment authority authorized under sections 
        469.001 to 469.047, provided the occupant's income is no greater 
        than 80 percent of the county or area median income, adjusted 
        for family size, and the building consists of two or less 
        dwelling units.  The lease agreement must provide for a portion 
        of the lease payment to be escrowed as a nonrefundable down 
        payment on the housing.  The administering agency shall verify 
        the occupants income eligibility and certify to the county 
        assessor that the occupant meets the income criteria under this 
        paragraph.  To qualify under this clause, the taxpayer must 
        apply to the county assessor by May 30 of each year.  For 
        purposes of this section, "qualifying buildings and 
        appurtenances" shall be defined as one or two unit residential 
        buildings which are unoccupied and have been abandoned and 
        boarded for at least six months. 
           Class 4d property has a class rate of two percent of market 
        value except that property classified under clause (3), shall 
        have the same class rate as class 1a property. 
           (e) Residential rental property that would otherwise be 
        assessed as class 4 property under paragraph (a); paragraph (b), 
        clauses (1) and (3); paragraph (c), clause (1), (2), (3), or 
        (4), is assessed at the class rate applicable to it under 
        Minnesota Statutes 1988, section 273.13, if it is found to be a 
        substandard building under section 273.1316.  Residential rental 
        property that would otherwise be assessed as class 4 property 
        under paragraph (d) is assessed at 2.3 percent of market value 
        if it is found to be a substandard building under section 
        273.1316. 
           Sec. 11.  Minnesota Statutes 1994, section 273.1398, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) In this section, the 
        terms defined in this subdivision have the meanings given them. 
           (b) "Unique taxing jurisdiction" means the geographic area 
        subject to the same set of local tax rates. 
           (c) "Net tax capacity" means the product of (i) the 
        appropriate net class rates for the year in which the aid is 
        payable, except that for aid payable in 1993 1996 the class rate 
        applicable to all class 4a shall be 3.5 3.4 percent; and the 
        class rate applicable to class 4b shall be 2.65 percent; and for 
        aid payable in 1994 the class rate applicable to class 4b shall 
        be 2.4 percent and the class rate applicable to class 2a 
        property over $115,000 market value and less than 320 acres is 
        1.15 percent, and (ii) estimated market values for the 
        assessment two years prior to that in which aid is payable.  The 
        exclusion of the value of the house, garage, and one acre from 
        the first tier of agricultural homestead property must not be 
        considered in determining net tax capacity for purposes of this 
        paragraph for aids payable in 1994.  "Total net tax capacity" 
        means the net tax capacities for all property within the unique 
        taxing jurisdiction.  The total net tax capacity used shall be 
        reduced by the sum of (1) the unique taxing jurisdiction's net 
        tax capacity of commercial industrial property as defined in 
        section 473F.02, subdivision 3, multiplied by the ratio 
        determined pursuant to section 473F.08, subdivision 6, for the 
        municipality, as defined in section 473F.02, subdivision 8, in 
        which the unique taxing jurisdiction is located, (2) the net tax 
        capacity of the captured value of tax increment financing 
        districts as defined in section 469.177, subdivision 2, and (3) 
        the net tax capacity of transmission lines deducted from a local 
        government's total net tax capacity under section 273.425.  For 
        purposes of determining the net tax capacity of property 
        referred to in clauses (1), (2), and (3), the net tax capacity 
        shall be multiplied by the ratio of the highest class rate for 
        class 3a property for taxes payable in the year in which the aid 
        is payable to the highest class rate for class 3a property in 
        the prior year.  Net tax capacity cannot be less than zero. 
           (d) "Previous net tax capacity" means the product of the 
        appropriate net class rates for the year previous to the year in 
        which the aid is payable, and estimated market values for the 
        assessment two years prior to that in which aid is payable.  
        "Total previous net tax capacity" means the previous net tax 
        capacities for all property within the unique taxing 
        jurisdiction.  The total previous net tax capacity shall be 
        reduced by the sum of (1) the unique taxing jurisdiction's 
        previous net tax capacity of commercial-industrial property as 
        defined in section 473F.02, subdivision 3, multiplied by the 
        ratio determined pursuant to section 473F.08, subdivision 6, for 
        the municipality, as defined in section 473F.02, subdivision 8, 
        in which the unique taxing jurisdiction is located, (2) the 
        previous net tax capacity of the captured value of tax increment 
        financing districts as defined in section 469.177, subdivision 
        2, and (3) the previous net tax capacity of transmission lines 
        deducted from a local government's total net tax capacity under 
        section 273.425.  Previous net tax capacity cannot be less than 
        zero. 
           (e) "Equalized market values" are market values that have 
        been equalized by dividing the assessor's estimated market value 
        for the second year prior to that in which the aid is payable by 
        the assessment sales ratios determined by class in the 
        assessment sales ratio study conducted by the department of 
        revenue pursuant to section 124.2131 in the second year prior to 
        that in which the aid is payable.  The equalized market values 
        shall equal the unequalized market values divided by the 
        assessment sales ratio. 
           (f) "Equalized school levies" means the amounts levied for: 
           (1) general education under section 124A.23, subdivision 2; 
           (2) supplemental revenue under section 124A.22, subdivision 
        8a; 
           (3) capital expenditure facilities revenue under section 
        124.243, subdivision 3; 
           (4) capital expenditure equipment revenue under section 
        124.244, subdivision 2; 
           (5) basic transportation under section 124.226, subdivision 
        1; and 
           (6) referendum revenue under section 124A.03. 
           (g) "Current local tax rate" means the quotient derived by 
        dividing the taxes levied within a unique taxing jurisdiction 
        for taxes payable in the year prior to that for which aids are 
        being calculated by the total previous net tax capacity of the 
        unique taxing jurisdiction.  
           (h) For purposes of calculating and allocating homestead 
        and agricultural credit aid authorized pursuant to subdivision 2 
        and the disparity reduction aid authorized in subdivision 3, 
        "gross taxes levied on all properties," "gross taxes," or "taxes 
        levied" means the total net tax capacity based taxes levied on 
        all properties except that levied on the captured value of tax 
        increment districts as defined in section 469.177, subdivision 
        2, and that levied on the portion of commercial industrial 
        properties' assessed value or gross tax capacity, as defined in 
        section 473F.02, subdivision 3, subject to the areawide tax as 
        provided in section 473F.08, subdivision 6, in a unique taxing 
        jurisdiction.  "Gross taxes" are before any reduction for 
        disparity reduction aid but "taxes levied" are after any 
        reduction for disparity reduction aid.  Gross taxes levied or 
        taxes levied cannot be less than zero.  
           "Taxes levied" excludes equalized school levies. 
           (i) "Human services aids" means: 
           (1) aid to families with dependent children under sections 
        256.82, subdivision 1, and 256.935, subdivision 1; 
           (2) medical assistance under sections 256B.041, subdivision 
        5, and 256B.19, subdivision 1; 
           (3) general assistance medical care under section 256D.03, 
        subdivision 6; 
           (4) general assistance under section 256D.03, subdivision 
        2; 
           (5) work readiness under section 256D.03, subdivision 2; 
           (6) emergency assistance under section 256.871, subdivision 
        6; 
           (7) Minnesota supplemental aid under section 256D.36, 
        subdivision 1; 
           (8) preadmission screening and alternative care grants; 
           (9) work readiness services under section 256D.051; 
           (10) case management services under section 256.736, 
        subdivision 13; 
           (11) general assistance claims processing, medical 
        transportation and related costs; and 
           (12) medical assistance, medical transportation and related 
        costs. 
           (j) "Household adjustment factor" means the number of 
        households for the second most recent year preceding that in 
        which the aids are payable divided by the number of households 
        for the third most recent year.  The household adjustment factor 
        cannot be less than one.  
           (k) "Growth adjustment factor" means the household 
        adjustment factor in the case of counties.  In the case of 
        cities, towns, school districts, and special taxing districts, 
        the growth adjustment factor equals one.  The growth adjustment 
        factor cannot be less than one.  
           (l) For aid payable in 1992 and subsequent years, 
        "homestead and agricultural credit base" means the previous 
        year's certified homestead and agricultural credit aid 
        determined under subdivision 2 less any permanent aid reduction 
        in the previous year to homestead and agricultural credit aid 
        under section 477A.0132, plus, for aid payable in 1992, fiscal 
        disparity homestead and agricultural credit aid under 
        subdivision 2b.  
           (m) "Net tax capacity adjustment" means (1) the total 
        previous net tax capacity minus the total net tax capacity, 
        multiplied by (2) the unique taxing jurisdiction's current local 
        tax rate.  The net tax capacity adjustment cannot be less than 
        zero. 
           (n) "Fiscal disparity adjustment" means the difference 
        between (1) a taxing jurisdiction's fiscal disparity 
        distribution levy under section 473F.08, subdivision 3, clause 
        (a), for taxes payable in the year prior to that for which aids 
        are being calculated, and (2) the same distribution levy 
        multiplied by the ratio of the highest class rate for class 3 
        property for taxes payable in the year prior to that for which 
        aids are being calculated to the highest class rate for class 3 
        property for taxes payable in the second prior year to that for 
        which aids are being calculated.  In the case of school 
        districts, the fiscal disparity distribution levy shall exclude 
        that part of the levy attributable to equalized school levies. 
           Sec. 12.  Minnesota Statutes 1994, section 273.37, is 
        amended by adding a subdivision to read: 
           Subd. 3.  Taxable wind energy conversion systems, as 
        defined in section 216C.06, subdivision 12, which are not owned, 
        operated, and exclusively controlled by the owner of the land 
        upon which the system is situated, must be listed and assessed 
        as personal property in the name of the owner of the system in 
        the taxing district where it is situated. 
           Sec. 13.  Minnesota Statutes 1994, section 274.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ORDINARY BOARD; MEETINGS, DEADLINES, 
        GRIEVANCES.] (a) The town board of a town, or the council or 
        other governing body of a city, is the board of review except in 
        cities whose charters provide for a board of equalization.  The 
        county assessor shall fix a day and time when the board or the 
        board of equalization shall meet in the assessment districts of 
        the county.  On or before February 15 of each year the assessor 
        shall give written notice of the time to the city or town 
        clerk.  Notwithstanding the provisions of any charter to the 
        contrary, the meetings must be held between April 1 and May 31 
        each year.  The clerk shall give published and posted notice of 
        the meeting at least ten days before the date of the meeting.  
        If in any county, at least 25 percent of the total net tax 
        capacity of a city or town is noncommercial seasonal residential 
        recreational property classified under section 273.13, 
        subdivision 25, the county must hold two county-wide 
        informational meetings on Saturdays.  The meetings will allow 
        noncommercial seasonal residential recreational taxpayers to 
        discuss their property valuation with the appropriate assessment 
        staff.  These Saturday informational meetings must be scheduled 
        to allow the owner of the noncommercial seasonal residential 
        recreational property the opportunity to attend one of the 
        meetings prior to the scheduled board of review for their city 
        or town.  The Saturday meeting dates must be contained on the 
        notice of valuation of real property under section 273.121.  The 
        board shall meet at the office of the clerk to review the 
        assessment and classification of property in the town or city.  
        No changes in valuation or classification which are intended to 
        correct errors in judgment by the county assessor may be made by 
        the county assessor after the board of review or the county 
        board of equalization has adjourned; however, corrections of 
        errors that are merely clerical in nature or changes that extend 
        homestead treatment to property are permitted after adjournment 
        until the tax extension date for that assessment year.  The 
        changes must be fully documented and maintained in the 
        assessor's office and must be available for review by any 
        person.  A copy of the changes made during this period must be 
        sent to the county board no later than December 31 of the 
        assessment year.  
           (b) The board shall determine whether the taxable property 
        in the town or city has been properly placed on the list and 
        properly valued by the assessor.  If real or personal property 
        has been omitted, the board shall place it on the list with its 
        market value, and correct the assessment so that each tract or 
        lot of real property, and each article, parcel, or class of 
        personal property, is entered on the assessment list at its 
        market value.  No assessment of the property of any person may 
        be raised unless the person has been duly notified of the intent 
        of the board to do so.  On application of any person feeling 
        aggrieved, the board shall review the assessment or 
        classification, or both, and correct it as appears just.  
           (c) A local board of review may reduce assessments upon 
        petition of the taxpayer but the total reductions must not 
        reduce the aggregate assessment made by the county assessor by 
        more than one percent.  If the total reductions would lower the 
        aggregate assessments made by the county assessor by more than 
        one percent, none of the adjustments may be made.  The assessor 
        shall correct any clerical errors or double assessments 
        discovered by the board of review without regard to the one 
        percent limitation.  
           (d) A majority of the members may act at the meeting, and 
        adjourn from day to day until they finish hearing the cases 
        presented.  The assessor shall attend, with the assessment books 
        and papers, and take part in the proceedings, but must not 
        vote.  The county assessor, or an assistant delegated by the 
        county assessor shall attend the meetings.  The board shall list 
        separately, on a form appended to the assessment book, all 
        omitted property added to the list by the board and all items of 
        property increased or decreased, with the market value of each 
        item of property, added or changed by the board, placed opposite 
        the item.  The county assessor shall enter all changes made by 
        the board in the assessment book.  
           (e) If a person fails to appear in person, by counsel, or 
        by written communication before the board after being duly 
        notified of the board's intent to raise the assessment of the 
        property, or if a person feeling aggrieved by an assessment or 
        classification fails to apply for a review of the assessment or 
        classification, the person may not appear before the county 
        board of equalization for a review of the assessment or 
        classification.  This paragraph does not apply if an assessment 
        was made after the board meeting, as provided in section 273.01, 
        or if the person can establish not having received notice of 
        market value at least five days before the local board of review 
        meeting.  
           (f) The board of review or the board of equalization must 
        complete its work and adjourn within 20 days from the time of 
        convening stated in the notice of the clerk, unless a longer 
        period is approved by the commissioner of revenue.  No action 
        taken after that date is valid.  All complaints about an 
        assessment or classification made after the meeting of the board 
        must be heard and determined by the county board of 
        equalization.  A nonresident may, at any time, before the 
        meeting of the board of review file written objections to an 
        assessment or classification with the county assessor.  The 
        objections must be presented to the board of review at its 
        meeting by the county assessor for its consideration. 
           Sec. 14.  Minnesota Statutes 1994, section 275.065, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PROPOSED LEVY.] (a) Notwithstanding any 
        law or charter to the contrary, on or before September 15, each 
        taxing authority, other than a school district, shall adopt a 
        proposed budget and each taxing authority shall certify to the 
        county auditor the proposed or, in the case of a town, the final 
        property tax levy for taxes payable in the following year.  
           (b) On or before September 30, each school district shall 
        certify to the county auditor the proposed property tax levy for 
        taxes payable in the following year.  The school district may 
        certify the proposed levy as (1) a specific dollar amount, or 
        (2) an amount equal to the maximum levy limitation certified by 
        the commissioner of education to the county auditor according to 
        section 124.918, subdivision 1. 
           (c) If the board of estimate and taxation or any similar 
        board that establishes maximum tax levies for taxing 
        jurisdictions within a first class city certifies the maximum 
        property tax levies for funds under its jurisdiction by charter 
        to the county auditor by September 15, the city shall be deemed 
        to have certified its levies for those taxing jurisdictions. 
           (d) For purposes of this section, "taxing authority" 
        includes all home rule and statutory cities, towns, counties, 
        school districts, and special taxing districts as defined in 
        section 275.066.  Intermediate school districts that levy a tax 
        under chapter 124 or 136D, joint powers boards established under 
        sections 124.491 to 124.495, and common school districts No. 
        323, Franconia, and No. 815, Prinsburg, are also special taxing 
        districts for purposes of this section.  
           Sec. 15.  Minnesota Statutes 1994, section 275.065, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
        county auditor shall prepare and the county treasurer shall 
        deliver after November 10 and on or before November 24 each 
        year, by first class mail to each taxpayer at the address listed 
        on the county's current year's assessment roll, a notice of 
        proposed property taxes and, in the case of a town, final 
        property taxes.  
           (b) The commissioner of revenue shall prescribe the form of 
        the notice. 
           (c) The notice must inform taxpayers that it contains the 
        amount of property taxes each taxing authority other than a town 
        proposes to collect for taxes payable the following year and, 
        for a town, the amount of its final levy.  It must clearly state 
        that each taxing authority, including regional library districts 
        established under section 134.201, and including the 
        metropolitan taxing districts as defined in paragraph (i), but 
        excluding all other special taxing districts and towns, will 
        hold a public meeting to receive public testimony on the 
        proposed budget and proposed or final property tax levy, or, in 
        case of a school district, on the current budget and proposed 
        property tax levy.  It must clearly state the time and place of 
        each taxing authority's meeting and an address where comments 
        will be received by mail.  The notice must include the estimated 
        percentage increase in Minnesota personal income, provided by 
        the commissioner of revenue under section 275.064, in a way to 
        facilitate comparison of the proposed budget and levy increases 
        with the increase in personal income.  For 1993, the notice must 
        clearly state that each taxing authority holding a public 
        meeting will describe the increases or decreases of the total 
        budget, including employee and independent contractor 
        compensation in the prior year, current year, and the proposed 
        budget year.  
           (d) The notice must state for each parcel: 
           (1) the market value of the property as determined under 
        section 273.11, and used for computing property taxes payable in 
        the following year and for taxes payable in the current year; 
        and, in the case of residential property, whether the property 
        is classified as homestead or nonhomestead.  The notice must 
        clearly inform taxpayers of the years to which the market values 
        apply and that the values are final values; 
           (2) by county, city or town, school district excess 
        referenda levy, remaining school district levy, regional library 
        district, if in existence, the total of the metropolitan special 
        taxing districts as defined in paragraph (i) and the sum of the 
        remaining special taxing districts, and as a total of the taxing 
        authorities, including all special taxing districts, the 
        proposed or, for a town, final net tax on the property for taxes 
        payable the following year and the actual tax for taxes payable 
        the current year.  For the purposes of this subdivision, "school 
        district excess referenda levy" means school district taxes for 
        operating purposes approved at referendums, including those 
        taxes based on net tax capacity as well as those based on market 
        value.  "School district excess referenda levy" does not include 
        school district taxes for capital expenditures approved at 
        referendums or school district taxes to pay for the debt service 
        on bonds approved at referenda.  In the case of the city of 
        Minneapolis, the levy for the Minneapolis library board and the 
        levy for Minneapolis park and recreation shall be listed 
        separately from the remaining amount of the city's levy.  In the 
        case of a parcel where tax increment or the fiscal disparities 
        areawide tax applies, the proposed tax levy on the captured 
        value or the proposed tax levy on the tax capacity subject to 
        the areawide tax must each be stated separately and not included 
        in the sum of the special taxing districts; and 
           (3) the increase or decrease in the amounts in clause (2) 
        from taxes payable in the current year to proposed or, for a 
        town, final taxes payable the following year, expressed as a 
        dollar amount and as a percentage. 
           (e) The notice must clearly state that the proposed or 
        final taxes do not include the following: 
           (1) special assessments; 
           (2) levies approved by the voters after the date the 
        proposed taxes are certified, including bond referenda, school 
        district levy referenda, and levy limit increase referenda; 
           (3) amounts necessary to pay cleanup or other costs due to 
        a natural disaster occurring after the date the proposed taxes 
        are certified; 
           (4) amounts necessary to pay tort judgments against the 
        taxing authority that become final after the date the proposed 
        taxes are certified; and 
           (5) the contamination tax imposed on properties which 
        received market value reductions for contamination. 
           (f) Except as provided in subdivision 7, failure of the 
        county auditor to prepare or the county treasurer to deliver the 
        notice as required in this section does not invalidate the 
        proposed or final tax levy or the taxes payable pursuant to the 
        tax levy. 
           (g) If the notice the taxpayer receives under this section 
        lists the property as nonhomestead and the homeowner provides 
        satisfactory documentation to the county assessor that the 
        property is owned and has been used as the owner's homestead 
        prior to June 1 of that year, the assessor shall reclassify the 
        property to homestead for taxes payable in the following year. 
           (h) In the case of class 4 residential property used as a 
        residence for lease or rental periods of 30 days or more, the 
        taxpayer must either: 
           (1) mail or deliver a copy of the notice of proposed 
        property taxes to each tenant, renter, or lessee; or 
           (2) post a copy of the notice in a conspicuous place on the 
        premises of the property.  
           (i) For purposes of this subdivision, subdivisions 5a and 
        6, "metropolitan special taxing districts" means the following 
        taxing districts in the seven-county metropolitan area that levy 
        a property tax for any of the specified purposes listed below: 
           (1) metropolitan council under section 473.132, 473.167, 
        473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
           (2) metropolitan airports commission under section 473.667, 
        473.671, or 473.672; and 
           (3) metropolitan mosquito control commission under section 
        473.711. 
           For purposes of this section, any levies made by the 
        regional rail authorities in the county of Anoka, Carver, 
        Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
        398A shall be included with the appropriate county's levy and 
        shall be discussed at that county's public hearing. 
           The notice must be mailed or posted by the taxpayer by 
        November 27 or within three days of receipt of the notice, 
        whichever is later.  A taxpayer may notify the county treasurer 
        of the address of the taxpayer, agent, caretaker, or manager of 
        the premises to which the notice must be mailed in order to 
        fulfill the requirements of this paragraph. 
           Sec. 16.  Minnesota Statutes 1994, section 276.131, is 
        amended to read: 
           276.131 [DISTRIBUTION OF PENALTIES, INTEREST, AND COSTS.] 
           The penalties, interest, and costs collected on special 
        assessments and real and personal property taxes must be 
        distributed as follows: 
           (1) all penalties and interest collected on special 
        assessments against real or personal property must be 
        distributed to the taxing jurisdiction that levied the 
        assessment; 
           (2) 50 percent of all penalties and interest collected on 
        real and personal property taxes must be distributed to the 
        county in which the property is located, and the other 50 
        percent must be distributed to the school district in which the 
        property is located districts within the county.  The 
        distribution to the school district must be in accordance with 
        the provisions of section 124.10; and 
           (3) all costs collected by the county on special 
        assessments and on delinquent real and personal property taxes 
        must be distributed to the county in which the property is 
        located.  
           Sec. 17.  [276.20] [WIND ENERGY TAX; DEFINITIONS.] 
           Subdivision 1.  [TERMS.] For the purposes of this section 
        and section 276.21, the following terms shall have these 
        meanings, unless otherwise provided to the contrary. 
           Subd. 2.  [WIND ENERGY SYSTEM.] "Wind energy system" means 
        a wind energy conversion system defined under section 216C.06, 
        subdivision 12, which is used as an electric power source. 
           Subd. 3.  [AREA.] "Area" means the counties of Lincoln and 
        Pipestone. 
           Subd. 4.  [HOME COUNTY.] "Home county" means the county of 
        Pipestone. 
           Subd. 5.  [MUNICIPALITY.] "Municipality" means any city or 
        town that is located in the area. 
           Subd. 6.  [QUALIFYING WIND ENERGY SYSTEM NET TAX 
        CAPACITY.] "Qualifying wind energy system net tax capacity" 
        means: 
           (a) the taxable portion of the net tax capacity of any wind 
        energy system located in the area installed after January 1, 
        1995; 
           (b) the portion of the hypothetical net tax capacity of a 
        wind energy system located in the area installed after January 
        1, 1991, and before January 2, 1995, that would be computed if 
        the property were subject to taxation under section 272.02, 
        subdivision 1, clause (21), paragraph (c). 
           Sec. 18.  [276.21] [WIND ENERGY TAX.] 
           Subdivision 1.  [DETERMINING LOCAL TAX RATES.] In 
        determining the local tax rate under section 275.08 for the 
        county and for any municipality in which one or more wind energy 
        systems are located, the county auditor shall deduct the 
        qualifying wind energy system net tax capacity as defined under 
        section 276.20, subdivision 6, clause (a), from the total net 
        tax capacity of the county and each municipality containing this 
        property. 
           Subd. 2.  [COUNTY WIND ENERGY TAX.] Each county auditor 
        shall determine the county wind energy tax by multiplying the 
        county tax rate times the net tax capacity of the taxable wind 
        energy system property located within the county.  The sum of 
        these amounts for each county in the area shall be called the 
        "county wind energy distribution pool." 
           Subd. 3.  [MUNICIPAL WIND ENERGY TAX.] Each county auditor 
        shall determine the municipal wind energy tax by multiplying 
        each municipality's tax rate times the net tax capacity of the 
        taxable wind energy system property located within the 
        municipality.  The sum of these amounts for all municipalities 
        in the area shall be called the "municipal wind energy 
        distribution pool." 
           Subd. 4.  [COUNTY WIND ENERGY DISTRIBUTION.] Each county 
        within the area is entitled to receive a distribution from the 
        county wind energy distribution pool equal to its proportion of 
        qualifying wind energy system net tax capacity relative to the 
        total for all counties in the area, provided that each county in 
        the area shall be entitled to a distribution equal to the 
        greater of (a) ten percent of the total county wind energy 
        distribution pool, or (b) 50 percent of the county's wind energy 
        tax. 
           Subd. 5.  [MUNICIPAL WIND ENERGY DISTRIBUTION.] Each 
        municipality within the area is entitled to receive a 
        distribution from the municipal wind energy distribution pool 
        equal to its proportion of qualifying wind energy system net tax 
        capacity relative to the total for all municipalities in the 
        area. 
           Subd. 6.  [WIND ENERGY TAX SETTLEMENT; PAYMENT.] The home 
        county auditor shall determine for each county in the area the 
        difference between the amount of the county wind energy tax 
        under subdivision 2 and the county wind energy distribution 
        under subdivision 4.  The home county auditor shall also 
        determine for each municipality within each county in the area, 
        the difference between the amount of the municipal wind energy 
        tax under subdivision 3 and the municipal wind energy 
        distribution under subdivision 5.  On or before May 16 of each 
        year, the home county shall certify the differences so 
        determined to each county auditor in the area.  In addition, the 
        home county auditor shall certify to those county auditors in 
        the area whose county and municipal wind energy tax exceeds the 
        total county and municipal wind energy tax distribution, the 
        settlement the county is to make to the other counties.  On or 
        before June 15 and November 15 of each year, each county 
        treasurer in a county in the area having a total wind energy tax 
        in excess of the total wind energy distribution shall pay 
        one-half of the excess to the other counties in accordance with 
        the home county auditor's certification.  On or before June 25 
        and November 25 of each year, each county treasurer in the area 
        shall pay the county and each municipality its wind energy 
        distribution amount. 
           Sec. 19.  Minnesota Statutes 1994, section 279.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  Except as provided in subdivision 3 or 4, 
        on May 16 or 21 days after the postmark date on the envelope 
        containing the property tax statement, whichever is later, a 
        penalty shall accrue and thereafter be charged upon all unpaid 
        taxes on real estate on the current lists in the hands of the 
        county treasurer.  The penalty shall be at a rate of two percent 
        on homestead property until May 31 and four percent on June 1.  
        The penalty on nonhomestead property shall be at a rate of four 
        percent until May 31 and eight percent on June 1.  This penalty 
        shall not accrue until June 1 of each year, or 21 days after the 
        postmark date on the envelope containing the property tax 
        statements, whichever is later, on commercial use real property 
        used for seasonal residential recreational purposes and 
        classified as class 1c or 4c, 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, or 21 days after the postmark date on the 
        envelope containing the property tax statement, whichever is 
        later, shall attach an affidavit to the payment attesting to 
        compliance with the income provision of this subdivision.  
        Thereafter, for both homestead and nonhomestead property, on the 
        first day of each month beginning July 1, up to and including 
        October 1 following, an additional penalty of one percent for 
        each month shall accrue and be charged on all such unpaid taxes 
        provided that if the due date was extended beyond May 15 as the 
        result of any delay in mailing property tax statements no 
        additional penalty shall accrue if the tax is paid by the 
        extended due date.  If the tax is not paid by the extended due 
        date, then all penalties that would have accrued if the due date 
        had been May 15 shall be charged.  When the taxes against any 
        tract or lot exceed $50, one-half thereof may be paid prior to 
        May 16 or 21 days after the postmark date on the envelope 
        containing the property tax statement, whichever is later; 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 two percent 
        shall accrue thereon for homestead property and a penalty of 
        four percent on nonhomestead property.  Thereafter, for 
        homestead property, on the first day of November an additional 
        penalty of four percent shall accrue and on the first day of 
        December following, an additional penalty of two percent shall 
        accrue and be charged on all such unpaid taxes.  Thereafter, for 
        nonhomestead property, on the first day of November and December 
        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 or 21 
        days after the postmark date on the envelope containing the 
        property tax statement, whichever is later, 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.  
           This section applies to payment of personal property taxes 
        assessed against improvements to leased property, except as 
        provided by section 277.01, subdivision 3. 
           A county may provide by resolution that in the case of a 
        property owner that has multiple tracts or parcels with 
        aggregate taxes exceeding $50, payments may be made in 
        installments as provided in this subdivision. 
           The county treasurer may accept payments of more or less 
        than the exact amount of a tax installment due.  If the accepted 
        payment is less than the amount due, payments must be applied 
        first to the penalty accrued for the year the payment is made.  
        Acceptance of partial payment of tax does not constitute a 
        waiver of the minimum payment required as a condition for filing 
        an appeal under section 278.03 or any other law, nor does it 
        affect the order of payment of delinquent taxes under section 
        280.39. 
           Sec. 20.  Minnesota Statutes 1994, section 279.01, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [SEASONAL RESIDENTIAL RECREATIONAL PROPERTY.] In 
        the case of class 4c seasonal residential recreational property 
        not used for commercial purposes, penalties shall accrue and be 
        charged on unpaid taxes at the times and at the rates provided 
        in subdivision 1 for homestead property. 
           Sec. 21.  [282.135] [DELEGATION BY COUNTY BOARD.] 
           Except as provided in section 282.13 and notwithstanding 
        any other law to the contrary, the county board may delegate to 
        the county auditor any authority, power, or responsibility 
        relating generally to the administration of tax-forfeited land 
        assigned to the county board this chapter.  This delegation 
        includes, but is not limited to, the authority, power, and 
        responsibility to classify tax-forfeited land as conservation or 
        nonconservation property; set the appraisal values and terms of 
        sale and sell at public auction; initiate legal proceedings to 
        cancel purchase and repurchase contracts in default status; 
        authorize reinstatement of canceled tax-forfeited contracts; and 
        authorize former owners and other eligible parties to repurchase 
        tax-forfeited land.  If delegation is granted under this 
        section, the county board shall prescribe the conditions for 
        delegation and may revoke the delegation without good cause or 
        prior notice.  If the county auditor holds elective office, no 
        delegation shall be made under this section unless the county 
        auditor concurs in the delegation. 
           Sec. 22.  Minnesota Statutes 1994, section 290A.03, 
        subdivision 6, is amended to read: 
           Subd. 6.  [HOMESTEAD.] "Homestead" means the dwelling 
        occupied as the claimant's 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 273.125, subdivision 8, 
        or a park trailer taxed as a manufactured home under section 
        168.012, subdivision 9, assessed as personal property may be a 
        dwelling for purposes of this subdivision. 
           Sec. 23.  Minnesota Statutes 1994, 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 under section 273.13 but after 
        deductions made under sections 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 274.19, subdivision 8, and for homesteads which are 
        park trailers taxed as manufactured homes under section 168.012, 
        subdivision 9, "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 whose 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 December 15 of the assessment year to which the "property 
        taxes payable" relate; or (ii) the claimant must provide 
        documentation from the local assessor that application for 
        homestead classification has been made on or before December 15 
        of the year in which the "property taxes payable" were payable 
        and that the assessor has approved the application. 
           Sec. 24.  Minnesota Statutes 1994, section 290A.04, 
        subdivision 3, is amended to read: 
           Subd. 3.  The commissioner of revenue shall construct and 
        make available to taxpayers a comprehensive table showing the 
        property taxes to be paid and refund allowed at various levels 
        of income and assessment.  The table shall follow the schedule 
        of income percentages, maximums and other provisions specified 
        in subdivision 2, except that the commissioner may graduate the 
        transition between income brackets.  All refunds shall be 
        computed in accordance with tables prepared and issued by the 
        commissioner of revenue.  
           The commissioner shall include on the form an appropriate 
        space or method for the claimant to identify if the property 
        taxes paid are for a manufactured home, as defined in section 
        273.125, subdivision 8, paragraph (c), or a park trailer taxed 
        as a manufactured home under section 168.012, subdivision 9. 
           Sec. 25.  Minnesota Statutes 1994, section 290A.07, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  A claimant who is a renter or a homeowner who 
        occupies a manufactured home, as defined in section 273.125, 
        subdivision 8, paragraph (c), or a park trailer taxed as a 
        manufactured home under section 168.012, subdivision 9, shall 
        receive full payment after August 1 and before August 15 or 60 
        days after receipt of the application, whichever is later.  
           Sec. 26.  Minnesota Statutes 1994, section 375.192, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [DELEGATION BY COUNTY BOARD.] Notwithstanding any 
        law to the contrary, the county board may delegate to the county 
        auditor any authority, power, or responsibility assigned to the 
        county board in this section.  If delegation is granted under 
        this subdivision, the county board shall prescribe the 
        conditions for the delegation and may revoke delegation without 
        good cause or prior notice.  If the county auditor holds 
        elective office, no delegation shall be made under this 
        subdivision unless the county auditor concurs in the delegation. 
           Sec. 27.  [473.3915] [TRANSIT ZONES.] 
           Subdivision 1.  [DEFINITIONS.] For the purposes of this 
        section, the terms defined in subdivisions 2 and 3 have the 
        meanings given them. 
           Subd. 2.  [REGULAR ROUTE TRANSIT SERVICE.] "Regular route 
        transit service" means services as defined in section 473.385, 
        subdivision 1, paragraph (b), with at least two scheduled runs 
        per hour between 7:00 a.m. and 6:30 p.m., Monday to Friday, and 
        regularly scheduled service on Saturday, Sunday, and holidays, 
        and weekdays after 6:30 p.m. 
           Subd. 3.  [TRANSIT ZONE.] "Transit zone" means the area 
        within one-quarter of a mile of a route along which regular 
        route transit service is provided that is also within the 
        metropolitan urban service area, as determined by the council.  
        "Transit zone" includes any light rail transit route for which 
        funds for construction have been committed. 
           Subd. 4.  [TRANSIT ZONES; MAP AND PLAN.] For the purposes 
        of section 273.13, subdivision 24, the council shall designate 
        transit zones and identify them on a detailed map and in a 
        plan.  The council shall review the map and plan once a year and 
        revise them as necessary to indicate the current transit zones.  
        The council shall provide each county and city assessor in the 
        metropolitan area a copy of the current map and plan. 
           Subd. 5.  [TRANSIT ZONE MAP; DATE FIRST PRODUCED.] The 
        metropolitan council shall produce an initial version of the 
        transit zone map required under subdivision 4 by January 1, 1996.
           Subd. 6.  [APPLICATION.] This section applies in the 
        counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and 
        Washington. 
           Sec. 28.  Laws 1985, chapter 302, section 2, subdivision 1, 
        as amended by Laws 1993, chapter 375, article 5, section 36, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ORDINANCE.] The governing body of the city 
        may adopt ordinances: 
           (a) establishing a special service district in the part of 
        Minneapolis which is south of 28th Street, west of Dupont Avenue 
        South, north of 31st Street, and east of East Calhoun Parkway 
        and East Lake of the Isles Parkway; and 
           (b) establishing a special service district south of Sixth 
        Street southeast, west of Sixteenth Avenue Southeast, north of a 
        line parallel to and 200 feet south of University Avenue and 
        east of Twelfth Avenue Southeast; 
           (c) establishing a special service district that includes 
        that part of Minneapolis lying within the following described 
        line:  commencing at the intersection of Grant Street with 
        LaSalle Avenue, South on LaSalle Avenue to Franklin Avenue south 
        on Blaisdell Avenue to 29th Street, east on 29th Street to 1st 
        Avenue South, north on 1st Avenue South to a point on a line 
        parallel to and 200 feet south of 26th Street, east on that line 
        to 3rd Avenue South, north on 3rd Avenue South to a point on a 
        line parallel to and 200 feet north of 26th Street, west on that 
        line to 1st Avenue South, north on 1st Avenue South to Grant 
        Street, west on Grant Street to the point of origin; 
           (d) establishing a special service district south of Saint 
        Anthony Parkway, west of a line parallel to and 300 feet east of 
        Central Avenue, north of Broadway Street, and east of a line 
        parallel to and 300 feet west of Central Avenue; and 
           (e) establishing a special service district that includes 
        that portion of Minneapolis lying within the following described 
        line:  commencing at the intersection of the Mississippi River 
        and Interstate Highway 94, northwesterly along the Mississippi 
        River to its intersection with Interstate Highway 35W, 
        southwesterly on Interstate Highway 35W to its intersection with 
        Hiawatha Avenue extended (Trunk Highway 55), southeasterly on 
        Hiawatha Avenue to its intersection with Franklin Avenue, 
        easterly on Franklin Avenue to its intersection with 20th Avenue 
        South extended, northerly on 20th Avenue South to its 
        intersection with Interstate Highway 94, and easterly on 
        Interstate Highway 94 to the point of origin. 
           Only property which is zoned for commercial, business, or 
        industrial use under a municipal zoning ordinance may be 
        included in a special service district.  The ordinance shall 
        describe with particularity the areas to be included in the 
        district and the special services to be furnished.  The 
        ordinance may not be adopted until after a public hearing on the 
        question.  Notice of the hearing shall include: 
           (1) the time and place of the hearing; 
           (2) a map showing the boundaries of the proposed district; 
        and 
           (3) a statement that all persons owning property in the 
        proposed district will be given an opportunity to be heard at 
        the hearing. 
           Subd. 2.  [LOCAL APPROVAL.] This section is effective the 
        day after the governing body of the city of Minneapolis complies 
        with Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 29.  Laws 1992, chapter 511, article 2, section 45, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EXEMPTION.] As provided in this section, 
        qualified student housing at the Duluth technical college is 
        exempt from ad valorem property taxation and in lieu payments 
        under Minnesota Statutes, section 469.040, subdivision 3.  In 
        order to qualify for the exemption, the requirements in 
        subdivisions 2 to 6 must be met. 
           Sec. 30.  Laws 1992, chapter 511, article 2, section 45, is 
        amended by adding a subdivision to read: 
           Subd. 6a.  [HOUSING REDEVELOPMENT AUTHORITY; EXCEPTIONS.] 
        The requirements of subdivisions 2, 3, 4, and 5 do not apply in 
        order to qualify for the exemption if the student housing is 
        owned by the local housing and redevelopment authority, the 
        reduced cost of development due to the exemption is reflected in 
        lower rents, and a reasonable system is used to provide priority 
        to students in renting the dwelling units. 
           Sec. 31.  Laws 1992, chapter 511, article 2, section 45, 
        subdivision 7, is amended to read: 
           Subd. 7.  [EXPIRATION.] This section applies to student 
        housing approved by the state board before January 1, 1997.  The 
        property tax exemption for a student housing development is 
        limited to 20 years from the date of first occupancy.  This 
        section expires January 1, 2018. 
           Sec. 32.  Laws 1992, chapter 511, article 2, section 46, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EXEMPTION.] As provided in this section, 
        qualified student housing at the Thief River Falls technical 
        college is exempt from ad valorem property taxation and in lieu 
        payments under Minnesota Statutes, section 469.040, subdivision 
        3.  In order to qualify for the exemption, the requirements in 
        subdivisions 2 to 6 must be met. 
           Sec. 33.  Laws 1992, chapter 511, article 2, section 46, is 
        amended by adding a subdivision to read: 
           Subd. 6a.  [HOUSING REDEVELOPMENT AUTHORITY; EXCEPTIONS.] 
        The requirements of subdivisions 2, 3, 4, and 5 do not apply in 
        order to qualify for the exemption if the student housing is 
        owned by the local housing and redevelopment authority or by a 
        multicounty housing and redevelopment authority on land leased 
        from a city or school district, the reduced cost of development 
        due to the exemption is reflected in lower rents, and a 
        reasonable system is used to provide priority to students in 
        renting the dwelling units. 
           Sec. 34.  Laws 1992, chapter 511, article 2, section 46, 
        subdivision 7, is amended to read: 
           Subd. 7.  [EXPIRATION.] This section applies to student 
        housing approved by the state board before January 1, 1997.  The 
        property tax exemption for a student housing development is 
        limited to 20 years from the date of first occupancy.  This 
        section expires January 1, 2018. 
           Sec. 35.  Laws 1993, chapter 375, article 5, section 40, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ESTABLISHMENT OF SPECIAL SERVICE DISTRICT; 
        AREA.] The governing body of the city may establish a special 
        service district in the city.  The district shall be bounded on 
        the northwest by Interstate Highway 35, on the northeast by the 
        centerline of Sixth Avenue West and as the same is extended to 
        the United States Harbor Line in St. Louis Bay, on the southeast 
        by said Harbor Line and on the southwest by the centerline 
        of Ninth Tenth Avenue West and as the same is extended to said 
        Harbor Line. 
           Sec. 36.  Laws 1993, chapter 375, article 5, section 44, is 
        amended to read: 
           Sec. 44.  [EFFECTIVE DATE.] 
           Section 1 is effective April 1, 1994.  
           Sections 2, 3, clause (26), and 43, paragraph (b), are 
        effective for taxes levied in 1993, payable in 1994, and 
        thereafter. 
           Section 3, clause (25), is effective for taxes levied in 
        1991, payable in 1992, and thereafter.  Upon application to and 
        approval by the county auditor, the county treasurer shall 
        refund to the taxpayer any taxes paid for 1992 that are exempt 
        under section 3, clause (25).  The refund shall be paid without 
        interest.  Each taxing jurisdiction must reimburse the county 
        for the refund in the same proportion as the taxing 
        jurisdiction's levy bears to the total levies of all 
        jurisdictions for taxes payable in 1992.  The amount of the 
        reimbursement may be deducted in the next distribution of tax 
        proceeds to the taxing jurisdiction. 
           Sections 4 to 7, 17, and 43, paragraph (a), are effective 
        the day following final enactment, except that section 17, 
        paragraphs (c) and (d) are effective for taxes payable in 1994 
        and thereafter. 
           Sections 8 to 10, 12, 19, 21 to 27, and 30 are effective 
        for 1993 assessments for taxes payable in 1994 and subsequent 
        years, except if provided otherwise. 
           Section 11, clauses (1) and (2), are effective for the 1992 
        assessment, taxes payable in 1993 and thereafter.  Section 11, 
        clause (3), is effective for the 1993 assessment, taxes payable 
        in 1994 and thereafter. 
           Section 13 is effective for qualifying improvements made 
        after January 2, 1993; except that in the case of improvements 
        made under a city-sponsored interest rate incentive program, 
        section 13 is also effective for improvements made between 
        January 1, 1992, and January 1, 1993, provided that the market 
        value of those improvements shall initially be excluded from the 
        property's 1995 assessment and are subject to all other 
        limitations under Minnesota Statutes 1994, section 273.11, 
        subdivision 16.  
           Sections 14 and 15 are effective for the 1994 assessment, 
        payable in 1995, and thereafter.  Notwithstanding Minnesota 
        Statutes, section 273.112, subdivision 6, in order to qualify 
        for valuation under Minnesota Statutes, section 273.112, for the 
        1994 assessment, the taxpayer of the property devoted to golf 
        and operated by private clubs, that does not meet the 
        requirement of Minnesota Statutes, section 273.112, subdivision 
        3, for the 1993 assessment year, must submit an affidavit or 
        other written verification to the assessor showing that the 
        bylaws in rules and regulations of the private club meet the 
        eligibility requirements of Minnesota Statutes, section 273.112, 
        by January 1, 1994. 
           Sections 16 and 18 are effective for assessment year 1994 
        and subsequent years. 
           Section 20 is effective for taxes payable in 1995 and 
        thereafter. 
           Section 28 is effective for taxes payable in 1994 and 
        thereafter. 
           Section 29 is effective for the 1991 assessment and 
        thereafter, for taxes payable in 1992 and thereafter.  For taxes 
        payable in 1992 and 1993, any amounts paid by the property owner 
        in excess of the amounts required by section 29 shall be paid by 
        the county treasurer to the property owner under the abatement 
        procedures. 
           Section 31 is effective for applications for reductions or 
        abatements filed after the day of final enactment. 
           Section 33 is effective for assessments certified after 
        July 1, 1993. 
           Section 40 is effective the day after compliance with 
        Minnesota Statutes, section 645.021, subdivision 3, by the 
        governing body of the city of Duluth. 
           Section 43, clause (c) is repealed effective January 2, 
        1993, provided that any improvements made prior to January 2, 
        1993, shall continue to qualify for the delayed assessment 
        provisions under section 383C.78 for the duration of the period 
        provided in that section. 
           Sec. 37.  Laws 1994, chapter 587, article 9, section 10, 
        subdivision 6, is amended to read: 
           Subd. 6.  [EFFECTIVE DATE.] This section (a) Laws 1994, 
        chapter 587, article 9, section 10, is effective in any of the 
        following cities or towns the day after compliance by the 
        governing body of a city or town with Minnesota Statutes, 
        section 645.021, subdivision 3:  the cities of Nashwauk, 
        Keewatin, Marble, Taconite, and Calumet, and the towns of Feely, 
        Goodland, Iron Range, Greenway, Lone Pine, Lawrence, Nashwauk, 
        Balsam, and Bearville the day after compliance with Minnesota 
        Statutes, section 645.021, subdivision 3, by the governing body 
        of each.  This section.  Laws 1994, chapter 587, article 9, 
        section 10, is effective for unorganized territories described 
        in subdivision 1, paragraph (a), clauses (12) to (18), the day 
        after compliance with Minnesota Statutes, section 645.021, 
        subdivision 3, by the Itasca county board. 
           (b) Notwithstanding the time limitations for filing local 
        approval under Minnesota Statutes, section 645.021, subdivision 
        3, the certificate of approval of any of the cities, towns, or 
        counties named in this subdivision may be filed with the 
        secretary of state at any time after May 6, 1994, and the law 
        approved by the certificate is then effective as to the 
        certifying city, town, or unorganized territory. 
           Sec. 38.  Laws 1994, chapter 587, article 5, section 27, is 
        amended as follows: 
           Sec. 27.  [RENTAL TAX EQUITY; SAINT PAUL PILOT PROJECT.] 
           Subdivision 1.  [PILOT; TERM.] A pilot project for rental 
        tax equity in the city of Saint Paul is established.  The 
        program is for property taxes payable in 1995 and 1996.  The 
        program is available to owners of single- and two-family 
        nonhomestead property. 
           Subd. 2.  [PRIMARY OBJECTIVE.] The pilot project's primary 
        objective is to help stabilize costs for the conscientious, 
        industrious landlord who is already providing safe, decent, and 
        affordable housing.  The property tax reduction provided by the 
        program is intended to give an incentive to other landlords to 
        improve their tenant-occupied property and still offer 
        affordable housing. 
           Subd. 3.  [PROPERTY TAX TREATMENT.] (a) Single- and 
        two-family nonhomestead property located in the city of Saint 
        Paul and existing on the effective date of this section, that is 
        classified under Minnesota Statutes, section 273.13, subdivision 
        25, paragraph (b), clause (1), and that meets the requirements 
        of this section, is eligible for the property tax credit under 
        subdivision 8. 
           (b) The program is not a housing or building code 
        enforcement program.  
           (c) Participation in the program is voluntary. 
           (d) If reimbursements under subdivision 8 limit the number 
        of participants in this program, priority shall be given to 
        landlords who live in the city of Saint Paul. 
           Subd. 4.  [NOTIFICATION TO OWNERS.] The city of Saint Paul 
        shall notify the owner of each single- and two-family 
        nonhomestead property located in the city that the property may 
        be eligible to receive a property tax credit as provided in this 
        section. 
           Subd. 5.  [PROGRAM STEPS.] (a) A landlord who owns eligible 
        property and who wishes to participate must arrange for a 
        certified evaluator who is licensed by the city of Saint Paul to 
        evaluate the property. 
           (b) The landlord must notify the tenant of the evaluation 
        so that the tenant may be present if the tenant wishes. 
           (c) The evaluator must evaluate the property using program 
        guidelines adopted by resolution of the Saint Paul city council 
        prior to implementation of the program under this section. 
           (d) If the evaluator determines that repairs are necessary, 
        the landlord must make the repairs and call for a reinspection 
        by the evaluator. To receive the property tax credit under 
        subdivision 9, the evaluator must have determined that repairs 
        were necessary, and the landlord must make the repairs and call 
        for a reinspection by the evaluator. 
           If the evaluator identifies life or safety hazards, the 
        evaluator must notify appropriate city officials, who shall take 
        immediate action to require and enforce repair of the life or 
        safety hazard items. 
           (e) The evaluator must reinspect the property to see if the 
        program guidelines have been followed. 
           (f) The evaluator must submit a report on the property's 
        evaluation to the appropriate city officials, the landlord, and 
        the tenant.  A filing fee must be paid at the time the report is 
        submitted to the city. 
           (g) Appropriate city officials must review the report and 
        approve it or issue orders for further repair.  In so doing, 
        city staff members may make an on-site review.  The landlord may 
        withdraw from the program at any time without making required 
        repairs except those for life or safety hazards, which may be 
        otherwise required.  Property for which the evaluator's report 
        is approved must be certified by the appropriate city officials 
        to the county assessor.  The city must limit the number of 
        qualifying properties so that the credit payable under 
        subdivision 8 will not, in the city's estimate, exceed 
        $1,000,000. 
           (h) A landlord who chooses to participate must complete an 
        application for certification by November 1, 1994, for taxes 
        payable in 1995 and by September 1, 1995, for taxes payable in 
        1996. 
           (i) An owner may apply this program to no more than two 
        nonhomestead, single- or two-family, tenant-occupied properties. 
           Subd. 6.  [APPEALS.] (a) The board of equalization must 
        serve as a board of review to hear appeals relating to the value 
        of improvements and properties.  Procedures for board actions 
        and for appeals from board decisions are as provided for other 
        matters decided by the board of equalization.  
           (b) The city may appoint a board of appeals to hear 
        disputes regarding qualification.  The board shall meet to hear 
        appeals under this program between November 1 and December 1, 
        1994, for appeals for taxes payable in 1995 and between November 
        1 and December 1, 1995, for appeals for taxes payable in 1996. 
           Subd. 7.  [CITY FEES.] The landlord must pay the housing 
        evaluator a fee, as determined by the city, for the initial 
        inspection and necessary reinspections.  The evaluator must pay 
        a filing fee, as determined by the city, to file the evaluator's 
        report.  The evaluator may be reimbursed by the landlord for 
        this fee.  The landlord must pay the city a fee, as determined 
        by the city, to apply for recertification.  If additional 
        inspections are required, a reinspection fee, as determined by 
        the city, must be paid by the landlord. 
           Subd. 8.  [CREDIT AND REIMBURSEMENT.] (a) [CREDIT 
        PROVIDED.] Property that meets the requirements under this 
        section is eligible for a property tax credit equal to the 
        difference between (1) the tax on the property and (2) the tax 
        that would be payable if the property were classified under 
        Minnesota Statutes, section 273.13, subdivision 22, paragraph 
        (a). 
           (b) [PROPERTY TAX STATEMENTS.] The property tax statement 
        provided under Minnesota Statutes, section 276.04, to an owner 
        of property that receives the credit under this subdivision 
        shall include information on the amount of the credit given to 
        the property.  The Ramsey county treasurer shall notify the 
        commissioner of revenue on how the county plans to modify the 
        property tax statements to include the necessary information. 
           (c) [GENERAL FUND; REPLACEMENT OF REVENUE.] Payment from 
        the general fund shall be made as provided in this subdivision 
        for the purpose of replacing revenue lost as a result of the 
        reduction of property taxes provided in this subdivision. 
           The Ramsey county auditor shall certify to the commissioner 
        of revenue the amount of reduction resulting from this 
        subdivision.  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 Minnesota Statutes, section 275.29.  The commissioner of 
        revenue shall review the certification to determine its accuracy 
        and make changes in the certification as necessary or return the 
        certification to the county auditor for corrections. 
           Based on current year tax data reported in the abstracts of 
        tax lists, the commissioner of revenue shall determine the 
        taxing district distribution of the amounts certified.  The 
        commissioner of revenue shall pay to each taxing district, other 
        than school districts, its total payment for the year at the 
        times provided in Minnesota Statutes, section 473H.10.  The 
        credit reimbursement to school districts must be certified to 
        the commissioner of education and paid as provided under 
        Minnesota Statutes, section 273.1392. 
           The reimbursement paid under this subdivision shall be made 
        only in 1995 and in 1996, and is limited to a total amount 
        of $1,000,000 for the two years.  To the extent the amount of 
        credit originally certified exceeds $1,000,000, reimbursements 
        to the taxing districts shall be prorated according to the 
        proportions of their levies so as not to exceed $1,000,000. 
           Any amount remaining of the $1,000,000 total appropriation, 
        after the reimbursement for taxes payable in 1995 have been 
        paid, is available for taxes payable in 1996 provided, however, 
        that the total amount available for both taxes payable in 1995 
        and 1996 shall not exceed the total $1,000,000 appropriation for 
        both years. 
           Subd. 9.  [REPORT TO THE LEGISLATURE.] By January 15, 1995, 
        and by January 15, 1996, the Saint Paul city council shall 
        provide a report to the committee on housing and the committee 
        on taxes and tax laws of the senate and the housing committee 
        and the tax committee of the house of representatives on the 
        program.  The report must include the program guidelines, 
        housing costs, rents and the extent of participation in the 
        program for the 1995 tax year and 1996 tax year, respectively. 
           Subd. 10.  [EFFECTIVE DATE.] This section is effective the 
        day following final enactment, upon compliance with Minnesota 
        Statutes, section 645.021, subdivision 3, by the city of Saint 
        Paul, and applies to property taxes payable in 1995 and in 1996 
        on nonhomestead, single- and two-family rental properties 
        existing on the effective date. 
           Sec. 39.  [CITY OF ROSEVILLE; ESTABLISHMENT OF SPECIAL 
        SERVICE DISTRICTS.] 
           Subdivision 1.  [DEFINITIONS.] (a) For the purpose of this 
        section, the terms defined have the meanings given them. 
           (b) "City" means the city of Roseville. 
           (c) "Special services" means: 
           (1) all services rendered or contracted for by the city, 
        including the repair, maintenance, operation, and construction 
        of any improvement authorized by Minnesota Statutes, section 
        429.021; 
           (2) maintenance of landscape and streetscape improvements 
        installed by the city; and 
           (3) any other service provided to the public by the city as 
        authorized by law or charter. 
           Subd. 2.  [ESTABLISHMENT OF DISTRICTS.] The governing body 
        of the city of Roseville may adopt ordinances establishing 
        special service districts.  The provisions of Minnesota 
        Statutes, chapter 428A, govern the establishment and operation 
        of special service districts in the city. 
           Subd. 3.  [EFFECTIVE DATE.] This section is effective the 
        day following final enactment, after the governing body of the 
        city of Roseville complies with Minnesota Statutes, section 
        645.021, subdivision 3. 
           Sec. 40.  [TAX-EXEMPT PROPERTY; EXCEPTION TO TIME 
        REQUIREMENT.] 
           Subdivision 1.  [EXCEPTION TO TIME REQUIREMENT.] 
        Notwithstanding the time requirements of Minnesota Statutes, 
        section 272.02, subdivision 4, paragraph (b), for taxes levied 
        in 1991, payable in 1992, the governing body of a county that 
        has a population exceeding 700,000 according to the most recent 
        federal decennial census may grant a property tax exemption for 
        property that (1) meets the requirements of exempt property 
        under Minnesota Statutes, section 272.02, subdivision 4, 
        paragraph (b), except for the July 1 date; (2) was an athletic 
        facility classified as class 3 commercial and industrial 
        property on January 2, 1991; and (3) was acquired during 1991 by 
        a church.  
           Subd. 2.  [EFFECTIVE DATE.] Subdivision 1 is effective the 
        day following final enactment, and applies to property taxes 
        levied in 1991, payable in 1992, only. 
           Sec. 41.  [CITY OF ST. LOUIS PARK; ESTABLISHMENT OF SPECIAL 
        SERVICE DISTRICTS.] 
           Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
        section, the terms defined have the meanings given them. 
           (b) "City" means the city of St. Louis Park. 
           (c) "Special services" means: 
           (1) all services rendered or contracted for by the city, 
        including the repair, maintenance, operation, and construction 
        of any improvement authorized by Minnesota Statutes, section 
        429.021; 
           (2) maintenance of landscape and streetscape improvements 
        installed by the city; and 
           (3) any other service provided to the public by the city as 
        authorized by law or charter. 
           Subd. 2.  [ESTABLISHMENT OF DISTRICTS.] The governing body 
        of the city of St. Louis Park may adopt ordinances establishing 
        special service districts.  The provisions of Minnesota 
        Statutes, chapter 428A, govern the establishment and operation 
        of special service districts in the city. 
           Subd. 3.  [LOCAL APPROVAL.] This section is effective the 
        day following final enactment, after the governing body of the 
        city of St. Louis Park complies with Minnesota Statutes, section 
        645.021, subdivision 3. 
           Sec. 42.  [CITY OF RICHFIELD; FORMATION OF NONPROFIT 
        HOUSING CORPORATIONS.] 
           Subdivision 1.  [FORMATION OF NONPROFIT HOUSING 
        CORPORATIONS.] The housing and redevelopment authority of the 
        city of Richfield may form or consent to the formation of one or 
        more corporations under Minnesota Statutes, chapter 317A, for 
        the purpose of owning and operating housing developments 
        financed with mortgages insured by the Federal Housing 
        Administration of the United States Department of Housing and 
        Urban Development to be occupied by low- and moderate-income 
        persons and families. 
           Subd. 2.  [CONTROL BY AUTHORITY.] The authority shall be a 
        member of each corporation, and the members of the board of 
        directors of each corporation shall be members or employees of 
        the authority.  The authority may capitalize a corporation and 
        may acquire all or a part of the corporation's share or member 
        certificates.  The authority shall approve a corporation's 
        articles of incorporation and bylaws, directors, projects, and 
        expenditures, the sale or conveyance of projects, the issuance 
        of obligations, and such other actions of a corporation as the 
        authority may determine.  The authority shall take title to 
        property of a corporation upon its dissolution. 
           Subd. 3.  [ISSUANCE OF BONDS.] A nonprofit corporation 
        authorized to be formed under subdivision 1 may issue bonds for 
        the purpose of financing the acquisition and operation of 
        multifamily housing developments, in furtherance of the public 
        purpose of provision of low- and moderate-income housing.  The 
        bonds shall be payable solely from the revenues of the 
        developments and shall be issued upon such terms as the 
        corporation shall determine, with the consent of the authority. 
           Subd. 4.  [PROPERTY TAX EXEMPTION.] Property owned by a 
        nonprofit corporation authorized to be formed under subdivision 
        1 shall be treated as public property exclusively used for a 
        public purpose under Minnesota Statutes, section 272.02, 
        subdivision 1. 
           Subd. 5.  [EFFECTIVE DATE.] This section is effective the 
        day after compliance with Minnesota Statutes, section 645.021, 
        subdivision 3, by the city council of the city of Richfield. 
           Sec. 43.  [RENTAL TAX EQUITY; BROOKLYN PARK PILOT PROJECT; 
        PAYABLE 1996 ONLY.] 
           Subdivision 1.  [PILOT; TERM.] A pilot project for rental 
        tax equity in the city of Brooklyn Park is established.  The 
        program is for property taxes payable in 1996 only.  The program 
        is available to owners of residential rental property. 
           Subd. 2.  [PRIMARY OBJECTIVE.] The pilot project's primary 
        objective is to give an incentive to landlords to improve their 
        tenant-occupied property and still offer affordable housing. 
           Subd. 3.  [DEFINITION; RESIDENTIAL RENTAL PROPERTY.] For 
        the purposes of this section, "residential rental property" 
        means privately owned property classified under section 273.13, 
        subdivision 25, paragraph (a) or (b)(1), that is ten or more 
        years old. 
           Subd. 4.  [PROPERTY TAX TREATMENT.] (a) Residential rental 
        property located in the city of Brooklyn Park that meets the 
        requirements of this section, is eligible for the property tax 
        credit under subdivision 9. 
           (b) The program is not a housing or building code 
        enforcement program.  
           (c) Participation in the program is voluntary. 
           Subd. 5.  [NOTIFICATION TO OWNERS.] The city of Brooklyn 
        Park shall notify the owner of each residential rental property 
        located in the city that the property may be eligible to receive 
        a property tax credit as provided in this section. 
           Subd. 6.  [PROGRAM STEPS.] (a) The Brooklyn Park city 
        council shall adopt by resolution guidelines for implementation 
        of the program under this section. 
           (b) A landlord who owns eligible property and who wishes to 
        participate must arrange for a certified evaluator who is 
        licensed by the city of Brooklyn Park to evaluate the property. 
           (c) The landlord must notify the tenant of the evaluation 
        so that the tenant may be present if the tenant wishes. 
           (d) The evaluator must evaluate the property using program 
        guidelines adopted by resolution of the Brooklyn Park city 
        council prior to implementation of the program under this 
        section. 
           (e) To receive the property tax credit under subdivision 9, 
        the evaluator must have determined that repairs were necessary, 
        and the landlord must make the repairs and call for a 
        reinspection by the evaluator.  If the evaluator identifies life 
        or safety hazards, the evaluator must notify appropriate city 
        officials, who shall take immediate action to require and 
        enforce repair of the life or safety hazard items. 
           (f) The evaluator must reinspect the property to see if the 
        program guidelines have been followed. 
           (g) The evaluator must submit a report on the property's 
        evaluation to the appropriate city officials, the landlord, and 
        the tenant.  A filing fee must be paid at the time the report is 
        submitted to the city. 
           (h) Appropriate city officials must review the report and 
        approve it or issue orders for further repair.  In so doing, 
        city staff members may make an on-site review.  The landlord may 
        withdraw from the program at any time without making required 
        repairs except those for life or safety hazards, which may be 
        otherwise required.  Property for which the evaluator's report 
        is approved must be certified by the appropriate city officials 
        to the county assessor.  The city must limit the number of 
        qualifying properties so that the credit payable under 
        subdivision 9 will not, in the city's estimate, exceed $350,000. 
           (i) A landlord who chooses to participate must complete an 
        application for certification by November 1, 1995 for credit 
        payable in 1996. 
           Subd. 7.  [APPEALS.] (a) The board of equalization must 
        serve as a board of review to hear appeals relating to the value 
        of improvements and properties.  Procedures for board actions 
        and for appeals from board decisions are as provided for other 
        matters decided by the board of equalization.  
           (b) The city may appoint a board of appeals to hear 
        disputes regarding qualification.  The board shall meet to hear 
        appeals under this program between November 1 and December 1, 
        1995. 
           Subd. 8.  [CITY FEES.] The landlord must pay the housing 
        evaluator a fee, as determined by the city, for the initial 
        inspection and necessary reinspections.  The evaluator must pay 
        a filing fee, as determined by the city, to file the evaluator's 
        report.  The evaluator may be reimbursed by the landlord for 
        this fee.  The landlord must pay the city a fee, as determined 
        by the city, to apply for recertification.  If additional 
        inspections are required, a reinspection fee, as determined by 
        the city, must be paid by the landlord. 
           Subd. 9.  [CREDIT AND REIMBURSEMENT.] (a) [CREDIT 
        PROVIDED.] Property that meets the requirements of this section 
        is eligible for a property tax credit equal to the difference 
        between (1) the tax on the property and (2) the tax that would 
        be payable if the property were classified under Minnesota 
        Statutes, section 273.13, subdivision 22, paragraph (a).  For 
        the purposes of determining the tax that would be payable if the 
        property were classified under section 273.13, subdivision 22, 
        paragraph (a), the first $72,000 of market value shall be 
        applied to the parcel as a whole. 
           (b) [PROPERTY TAX STATEMENTS.] The property tax statement 
        provided under Minnesota Statutes, section 276.04, to an owner 
        of property that receives the credit under this subdivision 
        shall include information on the amount of the credit given to 
        the property.  The Hennepin county treasurer shall notify the 
        commissioner of revenue on how the county plans to modify the 
        property tax statements to include the necessary information. 
           (c) [GENERAL FUND; REPLACEMENT OF REVENUE.] Payment from 
        the general fund shall be made as provided in this subdivision 
        for the purpose of replacing revenue lost as a result of the 
        reduction of property taxes provided in this subdivision. 
           The Hennepin county auditor shall certify to the 
        commissioner of revenue the amount of reduction resulting from 
        this subdivision.  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 Minnesota Statutes, section 275.29.  The commissioner of 
        revenue shall review the certification to determine its accuracy 
        and make changes in the certification as necessary or return the 
        certification to the county auditor for corrections. 
           Based on current year tax data reported in the abstracts of 
        tax lists, the commissioner of revenue shall determine the 
        taxing district distribution of the amounts certified.  The 
        commissioner of revenue shall pay to each taxing district, other 
        than school districts, its total payment for the year at the 
        times provided in Minnesota Statutes, section 473H.10.  The 
        credit reimbursement to school districts must be certified to 
        the commissioner of education and paid as provided under 
        Minnesota Statutes, section 273.1392. 
           The reimbursement paid under this subdivision shall be made 
        only in 1996, and is limited to $350,000.  To the extent the 
        amount of credit originally certified exceeds $350,000, 
        reimbursements to the taxing districts shall be prorated 
        according to the proportions of their levies so as not to exceed 
        $350,000. 
           Subd. 10.  [REPORT TO THE LEGISLATURE.] By January 15, 
        1997, the Brooklyn Park city council shall provide a report to 
        the legislature as provided in Minnesota Statutes, section 
        3.195.  The council shall report to the committee on housing and 
        the committee on taxes and tax laws of the senate, and the 
        housing committee and the tax committee of the house of 
        representatives on the program.  The report must include the 
        program guidelines, housing costs, rents, and the extent of 
        participation in the program. 
           Subd. 11.  [EFFECTIVE DATE.] This section is effective the 
        day following final enactment, upon compliance with Minnesota 
        Statutes, section 645.021, subdivision 3, by the city of 
        Brooklyn Park, and applies to property taxes payable in 1996 on 
        residential rental properties. 
           Sec. 44.  [PROPERTY TAX REFUNDS; BROOKLYN PARK RENTAL 
        EQUITY PARTICIPANTS.] 
           Notwithstanding Minnesota Statutes, section 290A.03, 
        subdivision 11, for purposes of calculating a claimant's 
        property tax refund, in the case of a claimant who resides in a 
        unit certified for participation in the rental equity project 
        under section 43, the claimant's "rent constituting property 
        taxes paid" for property taxes payable in 1996 only shall be 20 
        percent of gross rent actually paid in cash or its equivalent. 
           An owner or managing agent of a unit certified for 
        participation in the rental equity project shall indicate that 
        the unit was certified for participation on the rent certificate 
        prescribed in Minnesota Statutes, section 290A.19, paragraph 
        (a).  In the event that the owner or managing agent fails to 
        provide a rent certificate and the renter obtains a statement 
        from the county treasurer, as prescribed in Minnesota Statutes, 
        section 290A.19, paragraph (c), the county treasurer shall also 
        indicate on the statement if the building was certified for 
        participation in the rental equity project. 
           Sec. 45.  [PROPERTY TAX REFUNDS; ST. PAUL RENTAL EQUITY 
        PARTICIPANTS.] 
           Notwithstanding Minnesota Statutes, section 290A.03, 
        subdivision 11, for purposes of calculating a claimant's 
        property tax refund, in the case of a claimant who resides in a 
        unit certified for participation in the St. Paul rental equity 
        program under section 38, the claimant's "rent constituting 
        property taxes paid" for property taxes payable in 1996 only 
        shall be 20 percent of gross rent actually paid in cash or its 
        equivalent. 
           An owner or managing agent of a unit certified for 
        participation in the rental equity project shall indicate that 
        the unit was certified for participation on the rent certificate 
        prescribed in Minnesota Statutes, section 290A.19, paragraph 
        (a).  In the event that the owner or managing agent fails to 
        provide a rent certificate and the renter obtains a statement 
        from the county treasurer, as prescribed in Minnesota Statutes, 
        section 290A.19, paragraph (c), the county treasurer shall also 
        indicate on the statement if the building was certified for 
        participation in the rental equity project. 
           Sec. 46.  [STUDY OF APARTMENT PROPERTY TAX RELIEF.] 
           The commissioner of revenue, with the assistance of the 
        executive director of the Minnesota housing finance agency, 
        shall conduct a study on alternative methods of providing 
        incentives to improve the stock of rental housing throughout the 
        state. 
           (a) The study must specifically consider the following 
        proposal as if it were in effect for property taxes payable in 
        1998:  Provide a two percent class rate for five assessment 
        years on the market value of improvements made to class 4a 
        apartment property if (i) the assessor's estimated market value 
        of the improvements is at least 20 percent of the total 
        estimated market value of the property, and (ii) the building is 
        at least 25 years old.  For purposes of this paragraph, 
        "improvements" shall exclude adding square footage or amenities 
        to the building. 
           (b) The study should also consider other policy 
        alternatives that could be considered by the legislature in 
        trying to encourage improvements to deteriorating apartment 
        properties throughout the state. 
           (c) The study must include an analysis of the 
        administrative feasibility, policy implications, and state and 
        local fiscal impacts of the specific proposal described in 
        paragraph (a), the St. Paul and Brooklyn Park rental equity 
        programs and any other options resulting from paragraph (b) 
        alternatives. 
           (d) On or before February 15, 1996, the commissioner shall 
        report the findings of the study to the chairs of the House and 
        the Senate Tax Committees, along with recommendations that would 
        facilitate administration and improve the effectiveness of the 
        proposal described in paragraph (a) and any other options 
        considered. 
           Sec. 47.  [STEARNS COUNTY; REFUND OF PURCHASE PRICE.] 
           Subdivision 1.  [REFUND OF PURCHASE PRICE.] The governing 
        body of Stearns county shall refund to the city of Melrose a 
        portion of the amount paid by the city for the purchase on 
        October 28, 1994, of property designated as PIN No. 66:  
        36648.000, located in the city of Melrose.  The amount of the 
        refund must equal the taxes, penalties, and interest paid on 
        that property for taxes payable years 1990 and 1991. 
           Subd. 2.  [EFFECTIVE DATE.] Subdivision 1 is effective the 
        day following final enactment, after the Stearns county board 
        complies with Minnesota Statutes, section 645.021, subdivision 3.
           Sec. 48.  [COMPUTATION OF TAX RATES.] 
           In computing the basic transportation tax rate under 
        Minnesota Statutes, section 124.226, subdivision 1, and the 
        general education tax rate under Minnesota Statutes, section 
        124A.23, subdivision 1, the commissioner shall, notwithstanding 
        Minnesota Statutes, section 124.2131, subdivision 1, use 
        adjusted net tax capacities that do not reflect the class rate 
        reductions for seasonal residential recreational property not 
        used for commercial purposes, in section 10.  Notwithstanding 
        the dollar amounts specified in Minnesota Statutes, section 
        124.226, subdivision 1, and section 124A.23, subdivision 1, the 
        resulting rate shall be applied to the adjusted net tax 
        capacities as computed under Minnesota Statutes, section 
        124.2131, for purposes of determining the basic transportation 
        levy under Minnesota Statutes, section 124.226, subdivision 1, 
        and the general education levy under Minnesota Statutes, section 
        124A.23, subdivision 2.  The equalizing factor under Minnesota 
        Statutes, section 124A.02, shall be computed using the tax rate 
        computed under this section. 
           Sec. 49.  [WIND ENERGY; UPDATED OFFERS.] 
           The remaining companies after April 1, 1995, that are 
        seeking to fulfill the wind generation requirements of Minnesota 
        Statutes, section 116C.771, paragraph (b), through the 
        competitive bidding process under Minnesota Statutes, section 
        216B.2422, subdivision 5, shall be permitted to update their 
        offers to account for changes in the property tax treatment of 
        wind energy conversion system property contained in 1995 H. F. 
        No. 1864, if enacted.  The public utility shall notify each of 
        the remaining companies in writing of this provision and shall 
        establish a schedule for updated offers.  The public utilities 
        commission shall not approve a contract until the public utility 
        has demonstrated to the commission's satisfaction that it has 
        provided the opportunity to each of the remaining companies to 
        submit an updated bid. 
           Sec. 50.  [APPROPRIATION.] 
           $350,000 is appropriated from the general fund to the 
        commissioner of revenue for the biennium ending June 30, 1997, 
        for purposes of the Brooklyn Park Rent Equity Program under 
        section 43. 
           Sec. 51.  [REPEALER.] 
           (a) Minnesota Statutes 1994, section 168.013, subdivision 
        lj, is repealed. 
           (b) Minnesota Statutes 1994, section 245.48, is repealed. 
           Sec. 52.  [EFFECTIVE DATE.] 
           Sections 1, 2, and 36 are effective for the 1995 levy and 
        thereafter, for taxes payable in 1996 and thereafter.  Sections 
        3 and 13 are effective for taxes payable in 1997 and thereafter. 
        Sections 4, 7, 8, 12, 17, and 18 are effective for the 1995 
        assessment and thereafter, payable in 1996 and thereafter, 
        provided that the provisions of section 7 restricting homestead 
        classification for seasonal recreational residential property 
        apply to taxes payable in 1996 and thereafter regardless of the 
        date of occupancy of the property or the date of filing of an 
        application for homestead classification by the relative of the 
        owner.  Section 5 is effective for the 1996 assessment and 
        thereafter.  Sections 9 and 27 are effective for the 1997 
        assessment and thereafter, for taxes payable in 1998 and 
        thereafter.  Sections 14 and 15 are effective for notices and 
        tax statements prepared in 1995 and thereafter, for taxes 
        payable in 1996 and thereafter.  Sections 19 and 20 are 
        effective for taxes levied in 1995, payable in 1996, and 
        thereafter.  Sections 21, 26, 38, and 46 are effective the day 
        following final enactment.  Sections 22 to 25 are effective for 
        refunds based on property taxes paid in 1997 and thereafter, and 
        for rent paid in 1996 and thereafter.  Sections 29 to 31 are 
        effective the day after the governing body of Duluth complies 
        with Minnesota Statutes, section 645.021, subdivision 3.  
        Sections 32 to 34 are effective the day after the governing body 
        of Thief River Falls complies with Minnesota Statutes, section 
        645.021, subdivision 3.  Section 35 is effective the day after 
        the governing body of the city of Duluth complies with Minnesota 
        Statutes, section 645.021, subdivision 3.  Section 48 is 
        effective for school aids payable in fiscal years 1998 and 
        thereafter.  Section 51, paragraph (a), is effective beginning 
        January 1, 1997. 
                                   ARTICLE 4
               PROPERTY TAX REFUND AS DEDUCTION ON TAX STATEMENT 
           Section 1.  Minnesota Statutes 1994, section 270A.03, 
        subdivision 7, is amended to read: 
           Subd. 7.  [REFUND.] "Refund" means an individual income tax 
        refund or political contribution refund, pursuant to chapter 
        290,; or a property tax credit or refund, pursuant to chapter 
        290A, other than a refund which has been certified to or 
        calculated by the county auditor under section 276.012.  
           For purposes of this chapter, lottery prizes, as set forth 
        in section 349A.08, subdivision 8, shall be treated as refunds. 
           In the case of a joint property tax refund payable to 
        spouses under chapter 290A, the refund shall be considered as 
        belonging to each spouse in the proportion of the total refund 
        that equals each spouse's proportion of the total income 
        determined under section 290A.03, subdivision 3.  The 
        commissioner shall remit the entire refund to the claimant 
        agency, which shall, upon the request of the spouse who does not 
        owe the debt, determine the amount of the refund belonging to 
        that spouse and refund the amount to that spouse. 
           Sec. 2.  Minnesota Statutes 1994, section 270B.12, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [PROPERTY TAX REFUNDS.] The commissioner may 
        disclose to a county auditor and treasurer, and to their 
        designated agents or employees, the property tax refund amounts 
        for each parcel of homestead property in the county as 
        determined by the commissioner under chapter 290A. 
           Sec. 3.  Minnesota Statutes 1994, section 273.124, 
        subdivision 13, is amended to read: 
           Subd. 13.  [HOMESTEAD APPLICATION.] (a) A person who meets 
        the homestead requirements under subdivision 1 must file a 
        homestead application with the county assessor to initially 
        obtain homestead classification. 
           (b) On or before January 2, 1993, each county assessor 
        shall mail a homestead application to the owner of each parcel 
        of property within the county which was classified as homestead 
        for the 1992 assessment year.  The format and contents of a 
        uniform homestead application shall be prescribed by the 
        commissioner of revenue.  The commissioner shall consult with 
        the chairs of the house and senate tax committees on the 
        contents of the homestead application form.  The application 
        must clearly inform the taxpayer that this application must be 
        signed by all owners who occupy the property or by the 
        qualifying relative and returned to the county assessor in order 
        for the property to continue receiving homestead treatment.  The 
        envelope containing the homestead application shall clearly 
        identify its contents and alert the taxpayer of its necessary 
        immediate response. 
           (c) Every property owner applying for homestead 
        classification must furnish to the county assessor the social 
        security number of each occupant who is listed as an owner of 
        the property on the deed of record, the name and address of each 
        owner who does not occupy the property, and the name and social 
        security number of each owner's spouse who occupies the 
        property.  The application must be signed by each owner who 
        occupies the property and by each owner's spouse who occupies 
        the property, or, in the case of property that qualifies as a 
        homestead under subdivision 1, paragraph (c), by the qualifying 
        relative. 
           If a property owner occupies a homestead, the property 
        owner's spouse may not claim another property as a homestead 
        unless the property owner and the property owner's spouse file 
        with the assessor an affidavit or other proof required by the 
        assessor stating that the property owner's spouse does not 
        occupy the homestead because marriage dissolution proceedings 
        are pending, the spouses are legally separated, or the spouse's 
        employment or self-employment location requires the spouse to 
        have a separate homestead.  The assessor may require proof of 
        employment or self-employment and employment or self-employment 
        location, or proof of dissolution proceedings or legal 
        separation. 
           If the social security number or affidavit or other proof 
        is not provided, the county assessor shall classify the property 
        as nonhomestead. 
           The social security numbers or affidavits or other proofs 
        of the property owners and spouses 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, or, for purposes of proceeding 
        under the revenue recapture act to recover personal property 
        taxes owing, to the county treasurer. 
           (d) If residential real estate is occupied and used for 
        purposes of a homestead by a relative of the owner and qualifies 
        for a homestead under subdivision 1, paragraph (c), in order for 
        the property to receive homestead status, a homestead 
        application must be filed with the assessor.  The social 
        security number of each relative occupying the property and the 
        social security number of each owner who is related to an 
        occupant of the property shall be required on the homestead 
        application filed under this subdivision.  If a different 
        relative of the owner subsequently occupies the property, the 
        owner of the property must notify the assessor within 30 days of 
        the change in occupancy.  The social security number of a 
        relative occupying the property is private data on individuals 
        as defined by section 13.02, subdivision 12, but may be 
        disclosed to the commissioner of revenue.  
           (e) The homestead application shall also notify the 
        property owners that the application filed under this section 
        will not be mailed annually and that if the property is granted 
        homestead status for the 1993 assessment, or any assessment year 
        thereafter, that same property shall remain classified as 
        homestead until the property is sold or transferred to another 
        person, or the owners or the relatives no longer use the 
        property as their homestead.  Upon the sale or transfer of the 
        homestead property, a certificate of value must be timely filed 
        with the county auditor as provided under section 272.115.  
        Failure to notify the assessor within 30 days that the property 
        has been sold, transferred, or that the owner or the relative is 
        no longer occupying the property as a homestead, shall result in 
        the penalty provided under this subdivision and the property 
        will lose its current homestead status. 
           (f) If the homestead application is not returned within 30 
        days, the county will send a second application to the present 
        owners of record.  The notice of proposed property taxes 
        prepared under section 275.065, subdivision 3, shall reflect the 
        property's classification.  Beginning with assessment year 1993 
        for all properties, If a homestead application has not been 
        filed with the county by December 15, the assessor shall 
        classify the property as nonhomestead for the current assessment 
        year for taxes payable in the following year, provided that the 
        owner may be entitled to receive the homestead classification by 
        proper application under section 375.192. 
           (g) At the request of the commissioner, each county must 
        give the commissioner a list that includes the name and social 
        security number of each property owner and the property owner's 
        spouse occupying the property, or relative of a property owner, 
        applying for homestead classification under this subdivision.  
        The commissioner shall use the information provided on the lists 
        as appropriate under the law, including for the detection of 
        improper claims by owners, or relatives of owners, under chapter 
        290A.  
           (h) 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 the tax reduction resulting from the 
        classification as a homestead under section 273.13, the taconite 
        homestead credit under section 273.135, and the supplemental 
        homestead credit under section 273.1391, and the property tax 
        refunds under chapter 290A deducted on the property tax 
        statement. 
           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 100 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 of taxes and penalty to the 
        succeeding year's tax list to be collected as part of the 
        property taxes.  In the case of a manufactured home, the amount 
        shall be certified to the current year's tax list for collection.
           (i) Any amount of homestead benefits recovered by the 
        county from the property owner shall be distributed to the 
        county, city or town, and school district where the property is 
        located in the same proportion that each taxing district's levy 
        was to the total of the three taxing districts' levy for the 
        current year.  Any amount recovered attributable to property tax 
        refunds reimbursed to the county by the state shall be paid to 
        the commissioner of revenue for deposit in the fund from which 
        it was paid.  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 total amount of penalty collected must be 
        deposited in the county general fund. 
           (j) 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. 
           (k) In addition to lists of homestead properties, the 
        commissioner may ask the counties to furnish lists of all 
        properties and the record owners. 
           Sec. 4.  Minnesota Statutes 1994, section 275.065, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
        county auditor shall prepare and the county treasurer shall 
        deliver after November 10 and on or before November 24 each 
        year, by first class mail to each taxpayer at the address listed 
        on the county's current year's assessment roll, a notice of 
        proposed property taxes and, in the case of a town, final 
        property taxes.  
           (b) The commissioner of revenue shall prescribe the form of 
        the notice. 
           (c) The notice must inform taxpayers that it contains the 
        amount of property taxes each taxing authority other than a town 
        proposes to collect for taxes payable the following year and, 
        for a town, the amount of its final levy.  It must clearly state 
        that each taxing authority, including regional library districts 
        established under section 134.201, and including the 
        metropolitan taxing districts as defined in paragraph (i), but 
        excluding all other special taxing districts and towns, will 
        hold a public meeting to receive public testimony on the 
        proposed budget and proposed or final property tax levy, or, in 
        case of a school district, on the current budget and proposed 
        property tax levy.  It must clearly state the time and place of 
        each taxing authority's meeting and an address where comments 
        will be received by mail.  The notice must include the estimated 
        percentage increase in Minnesota personal income, provided by 
        the commissioner of revenue under section 275.064, in a way to 
        facilitate comparison of the proposed budget and levy increases 
        with the increase in personal income.  For 1993, the notice must 
        clearly state that each taxing authority holding a public 
        meeting will describe the increases or decreases of the total 
        budget, including employee and independent contractor 
        compensation in the prior year, current year, and the proposed 
        budget year.  
           (d) The notice must state for each parcel: 
           (1) the market value of the property as determined under 
        section 273.11, and used for computing property taxes payable in 
        the following year and for taxes payable in the current year; 
        and, in the case of residential property, whether the property 
        is classified as homestead or nonhomestead.  The notice must 
        clearly inform taxpayers of the years to which the market values 
        apply and that the values are final values; 
           (2) by county, city or town, school district excess 
        referenda levy, remaining school district levy, regional library 
        district, if in existence, the total of the metropolitan special 
        taxing districts as defined in paragraph (i) and the sum of the 
        remaining special taxing districts, and as a total of the taxing 
        authorities, including all special taxing districts, the 
        proposed or, for a town, final net tax on the property for taxes 
        payable the following year, including separate deductions for 
        the property tax refunds under section 290A.04, subdivisions 2 
        and 2h, and the actual tax for taxes payable the current year, 
        including separate deductions for the property tax refunds under 
        section 290A.04, subdivisions 2 and 2h.  For the purposes of 
        this subdivision, "school district excess referenda levy" means 
        school district taxes for operating purposes approved at 
        referendums, including those taxes based on net tax capacity as 
        well as those based on market value.  "School district excess 
        referenda levy" does not include school district taxes for 
        capital expenditures approved at referendums or school district 
        taxes to pay for the debt service on bonds approved at 
        referenda.  In the case of the city of Minneapolis, the levy for 
        the Minneapolis library board and the levy for Minneapolis park 
        and recreation shall be listed separately from the remaining 
        amount of the city's levy.  In the case of a parcel where tax 
        increment or the fiscal disparities areawide tax applies, the 
        proposed tax levy on the captured value or the proposed tax levy 
        on the tax capacity subject to the areawide tax must each be 
        stated separately and not included in the sum of the special 
        taxing districts; and 
           (3) the increase or decrease in the amounts in clause (2) 
        from taxes payable in the current year to proposed or, for a 
        town, final taxes payable the following year, expressed as a 
        dollar amount and as a percentage. 
           (e) The notice must clearly state that the proposed or 
        final taxes do not include the following and that these items 
        may increase the proposed tax shown on the notice: 
           (1) special assessments; 
           (2) levies approved by the voters after the date the 
        proposed taxes are certified, including bond referenda, school 
        district levy referenda, and levy limit increase referenda; 
           (3) amounts necessary to pay cleanup or other costs due to 
        a natural disaster occurring after the date the proposed taxes 
        are certified; 
           (4) amounts necessary to pay tort judgments against the 
        taxing authority that become final after the date the proposed 
        taxes are certified; and 
           (5) the contamination tax imposed on properties which 
        received market value reductions for contamination.  
        The notice must state that the deduction for a property tax 
        refund under section 290A.04, subdivision 2h, is contingent upon 
        continuity in ownership of the property.  
           (f) Except as provided in subdivision 7, failure of the 
        county auditor to prepare or the county treasurer to deliver the 
        notice as required in this section does not invalidate the 
        proposed or final tax levy or the taxes payable pursuant to the 
        tax levy. 
           (g) If the notice the taxpayer receives under this section 
        lists the property as nonhomestead and the homeowner provides 
        satisfactory documentation to the county assessor that the 
        property is owned and has been used as the owner's homestead 
        prior to June 1 of that year, the assessor shall reclassify the 
        property to homestead for taxes payable in the following year. 
           (h) In the case of class 4 residential property used as a 
        residence for lease or rental periods of 30 days or more, the 
        taxpayer must either: 
           (1) mail or deliver a copy of the notice of proposed 
        property taxes to each tenant, renter, or lessee; or 
           (2) post a copy of the notice in a conspicuous place on the 
        premises of the property.  
           (i) For purposes of this subdivision, subdivisions 5a and 
        6, "metropolitan special taxing districts" means the following 
        taxing districts in the seven-county metropolitan area that levy 
        a property tax for any of the specified purposes listed below: 
           (1) metropolitan council under section 473.132, 473.167, 
        473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
           (2) metropolitan airports commission under section 473.667, 
        473.671, or 473.672; and 
           (3) metropolitan mosquito control commission under section 
        473.711. 
           For purposes of this section, any levies made by the 
        regional rail authorities in the county of Anoka, Carver, 
        Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
        398A shall be included with the appropriate county's levy and 
        shall be discussed at that county's public hearing. 
           The notice must be mailed or posted by the taxpayer by 
        November 27 or within three days of receipt of the notice, 
        whichever is later.  A taxpayer may notify the county treasurer 
        of the address of the taxpayer, agent, caretaker, or manager of 
        the premises to which the notice must be mailed in order to 
        fulfill the requirements of this paragraph. 
           Sec. 5.  [276.012] [COMPUTATION AND ADMINISTRATION OF 
        PROPERTY TAX REFUNDS.] 
           (a) On or before October 1 each year, the commissioner of 
        revenue shall certify to the county auditor the property tax 
        refund amount under section 290A.04, subdivision 2, for each 
        parcel of homestead property as defined in section 290A.03, 
        subdivision 6, other than a manufactured home assessed under 
        section 273.125, subdivision 8, paragraph (c), that qualifies 
        for a refund relating to taxes payable in the current year. 
           (b) The county auditor shall compute the refund for 
        purposes of the proposed property tax notice for each parcel of 
        homestead property as defined in section 290A.03, subdivision 6, 
        other than a manufactured home assessed under section 273.125, 
        subdivision 8, paragraph (c), that may qualify for a refund 
        under section 290A.04, subdivision 2h, for taxes payable in the 
        subsequent year.  
           (c) After certification of the levies by taxing districts 
        under section 275.07, the county auditor shall compute the 
        refund for each parcel of homestead property as defined in 
        section 290A.03, subdivision 6, other than a manufactured home 
        assessed under section 273.125, subdivision 8, paragraph (c), 
        that qualifies for a refund under section 290A.04, subdivision 
        2h, for taxes payable in the current year. 
           (d) The county auditor shall separately certify the amounts 
        in paragraphs (a) and (c) to the county treasurer who shall 
        reflect the amounts as property tax deductions on the property 
        tax statement under section 276.04 for taxes payable in the 
        current year, provided that to receive the refunds, the property 
        must be classified as homestead property under section 273.13 
        for taxes payable in the year the refund is payable.  
           (e) The county auditor shall annually separately certify 
        the costs of the property tax refunds under section 290A.04, 
        subdivisions 2 and 2h, to the department of revenue with the 
        abstract of tax lists under section 275.29. 
           Sec. 6.  Minnesota Statutes 1994, section 276.04, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
        shall provide for the printing of the tax statements.  The 
        commissioner of revenue shall prescribe the form of the property 
        tax statement and its contents.  The statement must contain the 
        parcel identification number and a county identification number 
        as specified by the commissioner.  The statement must contain 
        the qualifying tax amount to be used by the taxpayer in claiming 
        a property tax refund under section 290A.04, subdivision 2, in 
        the form and location determined by the commissioner of 
        revenue.  The statement must contain a tabulated statement of 
        the dollar amount due to each taxing authority from the parcel 
        of real property for which a particular tax statement is 
        prepared.  The dollar amounts due the county, township or 
        municipality, the total of the metropolitan special taxing 
        districts as defined in section 275.065, subdivision 3, 
        paragraph (i), school district excess referenda levy, remaining 
        school district levy, and the total of other voter approved 
        referenda levies based on market value under section 275.61 must 
        be separately stated.  The amounts due all other special taxing 
        districts, if any, may be aggregated.  For the purposes of this 
        subdivision, "school district excess referenda levy" means 
        school district taxes for operating purposes approved at 
        referenda, including those taxes based on market value.  "School 
        district excess referenda levy" does not include school district 
        taxes for capital expenditures approved at referendums or school 
        district taxes to pay for the debt service on bonds approved at 
        referenda.  The amount of the tax on contamination value imposed 
        under sections 270.91 to 270.98, if any, must also be separately 
        stated.  The dollar amounts, including the dollar amount of any 
        special assessments, may be rounded to the nearest even whole 
        dollar.  For purposes of this section whole odd-numbered dollars 
        may be adjusted to the next higher even-numbered dollar.  The 
        amount of market value excluded under section 273.11, 
        subdivision 16, if any, must also be listed on the tax 
        statement.  The statement shall include the following sentence, 
        printed in upper case letters in boldface print:  "THE STATE OF 
        MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES.  THE STATE 
        OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND 
        REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."  
           (b) The property tax statements for manufactured homes and 
        sectional structures taxed as personal property shall contain 
        the same information that is required on the tax statements for 
        real property.  
           (c) Real and personal property tax statements must contain 
        the following information in the order given in this paragraph.  
        The information must contain the current year tax information in 
        the right column with the corresponding information for the 
        previous year in a column on the left: 
           (1) the property's estimated market value under section 
        273.11, subdivision 1; 
           (2) the property's taxable market value after reductions 
        under section 273.11, subdivisions 1a and 16; 
           (3) the property's gross tax, calculated by multiplying the 
        property's gross tax capacity times the total local tax rate and 
        adding to the result the sum of the aids enumerated in clause 
        (3); 
           (4) a total of the following aids: 
           (i) education aids payable under chapters 124 and 124A; 
           (ii) local government aids for cities, towns, and counties 
        under chapter 477A; and 
           (iii) disparity reduction aid under section 273.1398; 
           (5) for homestead residential and agricultural properties, 
        the homestead and agricultural credit aid apportioned to the 
        property.  This amount is obtained by multiplying the total 
        local tax rate by the difference between the property's gross 
        and net tax capacities under section 273.13.  This amount must 
        be separately stated and identified as "homestead and 
        agricultural credit."  For purposes of comparison with the 
        previous year's amount for the statement for taxes payable in 
        1990, the statement must show the homestead credit for taxes 
        payable in 1989 under section 273.13, and the agricultural 
        credit under section 273.132 for taxes payable in 1989; 
           (6) any credits received under sections 273.119; 273.123; 
        273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
        473H.10, except that the amount of credit received under section 
        273.135 must be separately stated and identified as "taconite 
        tax relief"; and 
           (7) the net tax payable in the manner required in paragraph 
        (a).; 
           (8) for eligible homestead properties, the property tax 
        refunds under section 290A.04, subdivisions 2 and 2h, if any, 
        shown separately as deductions on the statement; and 
           (9) the tax after deduction of the property tax refunds 
        under clause (8). 
           (d) The commissioner of revenue shall certify to the county 
        auditor the actual or estimated aids enumerated in clauses (3) 
        and (4) that local governments will receive in the following 
        year.  In the case of a county containing a city of the first 
        class, for taxes levied in 1991, and for all counties for taxes 
        levied in 1992 and thereafter, The commissioner must certify 
        this amount by September 1.  
           Sec. 7.  Minnesota Statutes 1994, section 276.09, is 
        amended to read: 
           276.09 [SETTLEMENT BETWEEN AUDITOR AND TREASURER.] 
           On the later of May 20 of each year or 26 calendar days 
        after the postmark date on the envelopes containing real or 
        personal property tax statements, the county treasurer shall 
        make full settlement with the county auditor of all receipts 
        collected 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 the settlement, send an abstract of 
        it to the state auditor in the form prescribed by the state 
        auditor.  At the 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 the later of May 20 or the 
        actual settlement date to December 31 of each year must be made 
        as provided in section 276.111. 
           For purposes of this section, "receipts" includes all tax 
        payments received by the county treasurer on or before the 
        settlement date and all property tax refunds paid to the county 
        treasurer under section 290A.07.  
           Sec. 8.  Minnesota Statutes 1994, section 276.111, is 
        amended to read: 
           276.111 [DISTRIBUTIONS AND FINAL YEAR-END SETTLEMENT.] 
           Within 14 business days after July 20, the county treasurer 
        shall pay to each taxing district 100 percent of the estimated 
        collections arising from taxes levied by and belonging to the 
        taxing district from the settlement day determined in section 
        276.09 to July 25. 
           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 the settlement day determined in 
        section 276.09 July 25 to October 20.  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 the 
        settlement day determined in section 276.09 July 25 to November 
        20. 
           On or before January 5, the county treasurer shall make 
        full settlement with the county auditor of all receipts 
        collected from the settlement day determined in section 276.09 
        to December 31.  After subtracting any tax distributions that 
        have been made to the taxing districts in July, 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 
        accrues at an annual rate of eight percent and must be paid to 
        the taxing district if this final settlement amount is not paid 
        by January 25.  Interest must be paid upon appropriation from 
        the general revenue fund of the county.  If not paid, it may be 
        recovered by the taxing district in a civil action. 
           Sec. 9.  Minnesota Statutes 1994, section 289A.60, 
        subdivision 12, is amended to read: 
           Subd. 12.  [PENALTIES RELATING TO PROPERTY TAX REFUNDS.] 
        (a) If the commissioner determines that a property tax refund 
        claim is or was excessive and was filed with fraudulent intent, 
        the claim must be disallowed in full.  If the claim has been 
        paid, the amount disallowed may be recovered by assessment and 
        collection. 
           (b) If it is determined that a property tax refund claim is 
        excessive and was negligently prepared, ten percent of the 
        corrected claim must be disallowed.  If the claim has been paid, 
        the amount disallowed must be recovered by assessment and 
        collection.  
           (c) An owner or managing agent who knowingly fails to give 
        a certificate of rent constituting property tax to a renter, as 
        required by section 290A.19, paragraph (a), is liable to the 
        commissioner for a penalty of $100 for each failure. 
           (d) If the owner or managing agent knowingly gives rent 
        certificates that report total rent constituting property taxes 
        in excess of the amount of actual rent constituting property 
        taxes paid on the rented part of a property, the owner or 
        managing agent is liable for a penalty equal to the greater of 
        (1) $100 or (2) 50 percent of the excess that is reported.  An 
        overstatement of rent constituting property taxes is presumed to 
        be knowingly made if it exceeds by ten percent or more the 
        actual rent constituting property taxes. 
           (e) No property tax refund claim based on rent paid, or on 
        property taxes payable in the case of a manufactured home 
        assessed under section 273.125, subdivision 8, paragraph (c), is 
        allowed if the initial claim is filed more than one year after 
        the original due date for filing the claim.  
           (f) Except as provided in paragraph (e), no property tax 
        refund claim based on property taxes payable filed after the 
        original due date for filing the claim may be paid.  No 
        extensions of time for filing may be granted. 
           Sec. 10.  Minnesota Statutes 1994, 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 under section 273.13 but after 
        deductions made under sections 273.135, 273.1391, 273.42, 
        subdivision 2, and any other state paid property tax credits in 
        any calendar year other than property tax refunds determined 
        under chapter 290A.  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 274.19, subdivision 8 assessed under section 273.125, 
        subdivision 8, paragraph (c), "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 whose 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 to which the "property taxes payable" used in computing 
        the refund relate, and (i) the property must have been 
        classified as homestead property pursuant to section 273.13, 
        subdivision 22 or 23, on or before December 15 of the assessment 
        year to which the "property taxes payable" relate; or (ii) the 
        claimant must provide documentation from the local assessor that 
        application for homestead classification has been made on or 
        before December August 15 of the year in which the "property 
        taxes payable" were payable and that the assessor has approved 
        the application. 
           No refunds under section 290A.04, subdivision 2 or 2h, may 
        be deducted on the property tax statement unless the property is 
        classified as homestead property for taxes payable in the year 
        the property tax refund is paid. 
           Sec. 11.  Minnesota Statutes 1994, section 290A.04, 
        subdivision 2h, is amended to read: 
           Subd. 2h.  (a) If the gross property taxes payable on a 
        homestead increase more than 12 percent over the net property 
        taxes payable in the prior year on the same property that is 
        owned and occupied by the same owner on January 2 of both years, 
        and the amount of that increase is $100 or more for taxes 
        payable in 1995 and 1996, a claimant who is, a homeowner shall 
        be allowed an additional refund equal to 60 percent of the 
        amount of the increase over the greater of 12 percent of the 
        prior year's net property taxes payable or $100 for taxes 
        payable in 1995 and 1996.  This subdivision shall not apply to 
        any increase in the gross property taxes payable attributable to 
        improvements made to the homestead after the assessment date for 
        the prior year's taxes.  
           The maximum refund allowed under this subdivision is $1,000.
           (b) For purposes of this subdivision, the following terms 
        have the meanings given: 
           (1) "Net property taxes payable" means property taxes 
        payable minus refund amounts for which the claimant qualifies 
        pursuant to subdivision 2 and this subdivision.  
           (2) "Gross property taxes" means net property taxes payable 
        determined without regard to the refund allowed under this 
        subdivision. 
           (c) In addition to the other proofs required by this 
        chapter, each claimant under this subdivision shall file with 
        the property tax refund return a copy of the property tax 
        statement for taxes payable in the preceding year or other 
        documents required by the commissioner. 
           (d) On or before December 1, 1995, the commissioner shall 
        estimate the cost of making the payments provided by this 
        subdivision for taxes payable in 1996.  Notwithstanding the open 
        appropriation provision of section 290A.23, if the estimated 
        total refund claims for taxes payable in 1996 exceed $5,500,000, 
        the commissioner shall first reduce the 60 percent refund rate 
        enough, but to no lower a rate than 50 percent, so that the 
        estimated total refund claims do not exceed $5,500,000.  If the 
        commissioner estimates that total claims will exceed $5,500,000 
        at a 50 percent refund rate, the commissioner shall also reduce 
        the $1,000 maximum refund amount by enough so that total 
        estimated refund claims do not exceed $5,500,000. 
           The determinations of the revised thresholds by the 
        commissioner are not rules subject to chapter 14.  
           (e) Upon request, the appropriate county official shall 
        make available the names and addresses of the property taxpayers 
        who may be eligible for the additional property tax refund under 
        this section.  The information shall be provided on a magnetic 
        computer disk.  The county may recover its costs by charging the 
        person requesting the information the reasonable cost for 
        preparing the data.  The information may not be used for any 
        purpose other than for notifying the homeowner of potential 
        eligibility and assisting the homeowner, without charge, in 
        preparing a refund claim. 
           Sec. 12.  [290A.055] [PUBLIC DATA; NOTICE ON CLAIM FORM.] 
           The property tax refund claim form must contain a statement 
        notifying claimants that the property tax refund amount is 
        public data, and that it will appear on the property tax 
        statement and on other county records. 
           Sec. 13.  Minnesota Statutes 1994, section 290A.07, is 
        amended to read: 
           290A.07 [TIME FOR AND MANNER OF PAYMENT.] 
           Subdivision 1.  [GENERAL FUND.] Allowable claims filed 
        pursuant to the provisions of this chapter and the refund under 
        section 290A.04, subdivision 2h, shall be paid by the 
        commissioner from the general fund as provided in this section.  
           Subd. 2a.  [PAYMENT TO CLAIMANT.] A claimant who is a 
        renter or a homeowner who occupies a manufactured home, as 
        defined in section 273.125, subdivision 8, paragraph (c), shall 
        receive full payment after August 1 and before August 15 or 60 
        days after receipt of the application, whichever is later.  
           Subd. 3.  [PAYMENT TO COUNTY TREASURER AS DEDUCTION ON 
        PROPERTY TAX STATEMENT.] A claimant In the case of property not 
        included in subdivision 2a shall receive full payment after 
        September 15 and before September 30., payment of a refund under 
        section 290A.04, subdivision 2, is made as a deduction on the 
        property tax statement for the homestead for taxes payable the 
        following year, and payment of a refund under section 290A.04, 
        subdivision 2h, is made as a deduction on the property tax 
        statement for the homestead for taxes payable in the current 
        year.  
           Subd. 4.  [PAYMENT TO COUNTY TREASURER.] Annually on or 
        before July 20, the commissioner shall pay the amount of the 
        property tax refunds under section 290A.04, subdivisions 2 and 
        2h, certified by the county auditor under section 276.012, 
        paragraph (e), to the county treasurer for settlement and 
        distribution under sections 276.09 to 276.111. 
           Sec. 14.  Minnesota Statutes 1994, section 290A.15, is 
        amended to read: 
           290A.15 [CLAIM APPLIED AGAINST OUTSTANDING LIABILITY.] 
           The amount of any claim otherwise payable under this 
        chapter may be applied by the commissioner against any 
        delinquent tax liability of the claimant or spouse of the 
        claimant payable to the department of revenue.  This section 
        does not apply to (1) refunds under section 290A.04, subdivision 
        2, that have been certified by the commissioner of revenue to 
        the county auditor under section 276.012, or (2) refunds under 
        section 290A.04, subdivision 2h, determined by the county 
        auditor under section 276.012. 
           Sec. 15.  Minnesota Statutes 1994, section 290A.18, is 
        amended to read: 
           290A.18 [RIGHT TO FILE CLAIM; RIGHT TO RECEIVE CREDIT.] 
           Subdivision 1.  [CLAIM BY SURVIVING SPOUSE OR DEPENDENT.] 
        Except as provided in subdivision 3, if a person entitled to 
        relief under this chapter dies prior to receiving relief, the 
        surviving spouse or dependent of the person shall be entitled to 
        file the claim and receive relief.  If there is no surviving 
        spouse or dependent, the right to the credit shall lapse.  
           Subd. 2.  [CLAIMANT CANNOT BE LOCATED.] Except as provided 
        in subdivision 3, if the commissioner cannot locate the claimant 
        within two years from the date that the original warrant was 
        issued, or if a claimant to whom a warrant has been issued does 
        not cash that warrant within two years from the date the warrant 
        was issued, the right to the credit shall lapse, and the warrant 
        shall be deposited in the general fund. 
           Subd. 3.  [RIGHT TO RECEIVE REFUND NOT PERSONAL TO 
        CLAIMANT.] Property tax refunds under section 290A.04, 
        subdivisions 2 and 2h, are paid as a deduction on the property 
        tax statement of the property as provided in section 290A.07, 
        subdivision 3.  The right to receive the deduction is not 
        personal to the claimant or to a surviving spouse or dependent 
        of the claimant. 
           Sec. 16.  [290A.26] [APPROPRIATION; COUNTY COSTS.] 
           $2,650,000 is appropriated for fiscal year 1998, and 
        $2,370,000 is appropriated for fiscal year 1999, and each year 
        thereafter, to the commissioner of revenue to pay counties for 
        the costs of implementing and administering the property tax 
        refunds for homeowners.  The commissioner shall make the 
        payments annually on July 20.  The commissioner, after 
        consultation with the Minnesota Association of County Officers, 
        shall apportion the available appropriation among the counties. 
           Sec. 17.  [1997 LEVY; TRUTH IN TAXATION NOTICE.] 
           For taxes payable in 1998 only, the notice of proposed 
        property taxes under Minnesota Statutes, section 275.065, 
        subdivision 3, shall state that beginning with property taxes 
        payable in 1998, the homestead property tax refund calculated 
        under Minnesota Statutes, section 290A.04, subdivision 2, and 
        the special refund for property tax increases under Minnesota 
        Statutes, section 290A.04, subdivision 2h, shall be paid as a 
        deduction from the net tax on the property for all qualifying 
        properties other than manufactured homes assessed under 
        Minnesota Statutes, section 273.125, subdivision 8, paragraph 
        (c).  The notice shall clearly notify the taxpayer that these 
        deductions are shown on the notice of proposed taxes for taxes 
        payable in 1998, and that the actual tax for taxes payable in 
        1998 may be greater than the amount shown on the notice if the 
        ownership or classification of the property changes before the 
        refunds are paid.  The commissioner of revenue shall prescribe 
        the form and wording of the statement required in this section.  
        The commissioner may prescribe that the statement be included 
        with the notice of proposed property taxes as a separate 
        addendum.  At least five working days before distribution to the 
        counties, the notice prescribed by the commissioner of revenue 
        under this section must be submitted to the chairs of the senate 
        committee on taxes and tax laws and the house tax committee for 
        their advice and approval. 
           Sec. 18.  [PROPERTY TAX REFUNDS FOR TAXES PAYABLE IN 1998; 
        TRANSITION PROVISION.] 
           Notwithstanding the provisions of Minnesota Statutes, 
        chapter 290A, or any other law to the contrary, the property tax 
        refund amounts under Minnesota Statutes, section 290A.04, 
        subdivisions 2 and 2h, relating to property taxes payable in 
        1997, as paid by the commissioner to the claimants under 
        Minnesota Statutes, section 290A.07, subdivision 3, shall be the 
        amounts certified on October 1, 1997, by the commissioner of 
        revenue to the county auditors.  The refund amounts under 
        Minnesota Statutes, section 290A.04, subdivision 2, are the 
        amounts that the county auditor shall show as a deduction on the 
        property tax statement for taxes payable in 1998.  The county 
        auditor shall calculate the amounts of the refund under 
        Minnesota Statutes, section 290A.04, subdivision 2h, for taxes 
        payable in 1998, and show that amount as a deduction on the 1998 
        property tax statement. 
           Sec. 19.  [APPROPRIATION.] 
           $95,000 is appropriated for the fiscal year ending June 30, 
        1998, from the general fund in the state treasury to the 
        commissioner of revenue for purposes of implementing and 
        administering this article. 
           Sec. 20.  [EFFECTIVE DATE.] 
           Sections 1 to 15 are effective for property tax refunds 
        payable as deductions on property tax statements in 1998 and 
        thereafter. 
                                   ARTICLE 5 
                              ECONOMIC DEVELOPMENT  
           Section 1.  Minnesota Statutes 1994, section 124.2131, is 
        amended by adding a subdivision to read: 
           Subd. 3a.  [CAPTURED TAX CAPACITY ADJUSTMENT.] In 
        calculating adjusted net tax capacity, the commissioner of 
        revenue shall increase the adjusted net tax capacity of a school 
        district containing a tax increment financing district for which 
        an election is made under section 469.1782, subdivision 1, 
        clause (1).  The amount of the increase equals the captured net 
        tax capacity of the tax increment financing district in the year 
        preceding the first taxes payable year in which the special law 
        permits collection beyond that permitted by the general law 
        duration limit that otherwise would apply.  The addition applies 
        beginning for aid and levy for the first taxes payable year in 
        which the special law permits collection of increment beyond 
        that permitted by the general law duration limit that otherwise 
        would apply.  The addition continues to apply for each taxes 
        payable year the district remains in effect. 
           Sec. 2.  [270.0683] [REPORT ON THE EFFECT OF TAX INCENTIVES 
        UPON THE NUMBER OF JOBS.] 
           On a biennial basis, the commissioner of trade and economic 
        development shall analyze the effect of all business related tax 
        reductions or waivers on the aggregate number of jobs created 
        and wages paid in those new jobs.  The commissioner of trade and 
        economic development shall present the results of the analysis 
        to the legislature. 
           Sec. 3.  [270.0684] [GOALS FOR NEW TAX EXPENDITURES.] 
           Each newly enacted business related tax expenditure must 
        include measurable goals for jobs and wages and require a 
        biennial review conducted by the commissioner of trade and 
        economic development for continuation based upon meeting those 
        goals.  The commissioner of trade and economic development shall 
        report the results of the review to the legislature. 
           Sec. 4.  Minnesota Statutes 1994, section 273.1399, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the following terms have the meanings given. 
           (a) "Qualifying captured net tax capacity" means the 
        following amounts:  
           (1) The captured net tax capacity of a new or the expanded 
        part of an existing economic development or soils condition tax 
        increment financing district, other than a qualified 
        manufacturing district, for which certification was requested 
        after April 30, 1990;. 
           (2) the captured net tax capacity of a qualified 
        manufacturing district, multiplied by the following percentage 
        based on the number of years that have elapsed since the 
        assessment year of the original net tax capacity.  In no case 
        may the final amounts be less than zero or greater than the 
        total captured net tax capacity of the district: 
                Number of Years        Percentage
                       1                    0
                       2                   20
                       3                   40
                       4                   60
                       5                   80
                       6 or more          100;
           (3) The captured net tax capacity of a new or the expanded 
        part of an existing tax increment financing district, other than 
        a qualified housing district, qualified hazardous substance 
        subdistrict, or an economic development or soils condition 
        district, for which certification was requested after April 30, 
        1990, multiplied by the following percentage based on the number 
        of years that have elapsed since the assessment year of the 
        original net tax capacity.  In no case may the final amounts be 
        less than zero or greater than the total captured net tax 
        capacity of the district. 
                 Number of     Renewal and     All other 
                 years         Renovation      Districts
                               Districts
                 0 to 5           0                0 
                    6            12.5              6.25
                    7            25               12.5 
                    8            37.5             18.75 
                    9            50               25 
                   10            62.5             31.25 
                   11            75               37.5 
                   12            87.5             43.75 
                   13            100              50 
                   14            100              56.25 
                   15            100              62.5 
                   16            100              68.75 
                   17            100              75 
                   18            100              81.25 
                   19            100              87.5 
                   20            100              93.75 
                   21 or more    100              100 
           In the case of (3) The following rules apply to a hazardous 
        substance subdistrict,.  The applicable percentage under clause 
        (2) must be determined under the "all other districts" category. 
        The number of years must be measured from the date of 
        certification of the subdistrict for purposes of the additional 
        captured net tax capacity resulting from the reduction in the 
        subdistrict's or site's original net tax capacity.  After 
        termination of the overlying district, captured net tax capacity 
        includes the full amount that is captured by the subdistrict. 
           (4) Qualified captured tax capacity does not include the 
        captured tax capacity of exempt districts under subdivisions 6 
        and 7.  
           (b) The terms defined in section 469.174 have the meanings 
        given in that section. 
           (c) "Qualified manufacturing district" means an economic 
        development district that qualifies under section 469.176, 
        subdivision 4c, paragraph (a), without regard to clauses (2) and 
        (5), for which certification was requested after June 30, 1991, 
        located in a home rule charter or statutory city that has a 
        population under 10,000 according to the last federal census. 
           (d) "Qualified housing district" means a housing district 
        for a residential rental project or projects in which the only 
        properties receiving assistance from revenues derived from tax 
        increments from the district meet all of the requirements for a 
        low-income housing credit under section 42 of the Internal 
        Revenue Code of 1986, as amended through December 31, 1992, 
        regardless of whether the project actually receives a low-income 
        housing credit. 
           (e) "Qualified hazardous substance subdistrict" means a 
        hazardous substance subdistrict in which the municipality has 
        made an election to make an alternative local contribution as 
        provided under section 469.175, subdivision 7a. 
           Sec. 5.  Minnesota Statutes 1994, section 273.1399, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REPORTING.] The county auditor shall calculate 
        the qualifying captured net tax capacity amount for each 
        municipal part of each school district in the county and report 
        the amounts to the commissioner of revenue at the time and in 
        the manner prescribed by the commissioner. (a) The commissioner 
        of revenue shall use the retained captured value, tax increment, 
        and other information reported in the abstract of tax lists 
        supplement in administering the provisions of this section. 
           (b) Each tax increment authority or municipality must by 
        March 15 of each year submit to the commissioner of revenue a 
        report on local contributions made to each tax increment 
        district in the preceding year.  The commissioner shall 
        prescribe the form and content of the report, including the 
        sources and amounts of contributions and any other information 
        the commissioner requires.  Submission of a local contribution 
        report is required for a tax increment district to be exempt 
        from the aid reduction provisions of this section. 
           Sec. 6.  Minnesota Statutes 1994, section 273.1399, 
        subdivision 6, is amended to read: 
           Subd. 6.  [EXEMPTION; ETHANOL PROJECTS EXEMPT DISTRICTS.] 
        (a) The provisions of this section do not apply to exempt tax 
        increment financing districts as specified by this subdivision. 
           (b) A tax increment financing district for an ethanol 
        production facility that satisfies all of the following 
        requirements is exempt: 
           (1) The district is an economic development district, that 
        qualifies under section 469.176, subdivision 4c, paragraph (a), 
        clause (1). 
           (2) The facility is certified by the commissioner of 
        revenue agriculture to qualify for state payments for ethanol 
        development under section 41A.09 to the extent funds are 
        available. 
           (3) Increments from the district are used only to finance 
        the qualifying ethanol development project located in the 
        district or to pay for administrative costs of the district. 
           (4) The district is located outside of the seven-county 
        metropolitan area, as defined in section 473.121. 
           (5) The tax increment financing plan was approved by a 
        resolution of the county board. 
           (6) The exemption provided by this paragraph applies until 
        the first year after the total amount of increment for the 
        district does not exceed $1,000,000 exceeds $1,500,000.  The 
        county auditor shall notify the commissioner of revenue of the 
        expiration of the exemption by June 1 of the year in which the 
        auditor projects the revenues from increments will exceed 
        $1,500,000. 
           (c) A qualified housing district is exempt. 
           (d) A district is exempt if the municipality elects at the 
        time of approving the tax increment financing plan for the 
        district to make a qualifying local contribution.  To qualify 
        for the exemption in each year, the authority or the 
        municipality must make a qualifying local contribution equal to 
        the listed percentages of increment from the district or 
        subdistrict: 
           (1) for an economic development district, a housing 
        district, or a renewal and renovation district, ten percent; 
           (2) for a redevelopment district, a mined underground space 
        district, a hazardous substance subdistrict, or a soils 
        condition district, 7.5 percent. 
           The maximum local contribution for all districts in the 
        municipality is limited to two percent of city net tax capacity 
        as defined in section 477A.011, subdivision 20. 
           The amount of the local contribution must be made out of 
        unrestricted money of the authority or municipality, such as the 
        general fund, a property tax levy, or a federal or a state 
        grant-in-aid which may be spent for general government 
        purposes.  The local contribution may not be made, directly or 
        indirectly, with tax increments or developer payments as defined 
        under section 469.1766.  The local contribution must be used to 
        pay project costs and cannot be used for general government 
        purposes or for improvements or costs that the authority or 
        municipality planned to incur absent the project.  The authority 
        or municipality may request contributions from other local 
        government entities that will benefit from the district's 
        activities.  These contributions reduce the local contribution 
        required of the municipality or authority by this paragraph.  
        Cities, counties, towns, and schools may contribute to paying 
        these costs, notwithstanding any other law to the contrary. 
           If the state contributes to the project costs through a 
        direct grant or similar incentive, the required local 
        contribution is reduced by one-half of the dollar amount of the 
        state grant or other similar incentive. 
           Sec. 7.  Minnesota Statutes 1994, section 273.1399, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [EXEMPTION; AGRICULTURAL PROCESSING 
        FACILITIES.] The provisions of this section do not apply to a 
        tax increment financing district that satisfies all of the 
        following requirements: 
           (1) the district is established to construct or expand an 
        agricultural processing facility; 
           (2) the construction or expansion of the facility creates, 
        or upon completion will create, a minimum of five permanent 
        full-time jobs; 
           (3) the district is located outside of the seven-county 
        metropolitan area, as defined in section 473.121; 
           (4) the tax increment financing plan was approved by a 
        resolution of the county board; 
           (5) the municipality approving the tax increment financing 
        plan agrees to make at least a five percent local contribution 
        that meets the requirements of subdivision 6, paragraph (d), 
        including the limitation to two percent of city tax capacity; 
        and 
           (6) the commissioner of agriculture has certified to the 
        county auditor that the requirements of this subdivision have 
        been met. 
           The exemption provided by this subdivision applies until 
        the first year after the total amount of increment for the 
        district exceeds $1,500,000.  The county auditor shall notify 
        the commissioner of revenue of the expiration of the exemption 
        by June 1 of the year in which the auditor projects the revenues 
        from increment will exceed $1,500,000. 
           For purposes of this section, "agricultural processing 
        facility" means land, buildings, structures, fixtures, and 
        improvements used or operated primarily for the processing or 
        production of marketable products from agricultural crops, 
        including waste and residues from agricultural crops, and 
        including livestock products, poultry products, and wood 
        products, but not the raising of livestock or poultry. 
           Sec. 8.  Minnesota Statutes 1994, section 273.1399, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [APPLICATION TO EXTENSIONS BY SPECIAL LAW.] The 
        provisions of this section apply to a tax increment financing 
        district, notwithstanding the date on which the request for 
        certification was made, if (1) the duration limit of the 
        district under section 469.176 is extended by a special law and 
        (2) the municipality elects under section 469.1782, subdivision 
        1, clause (2), that this section applies to the extension.  The 
        section applies beginning for the first taxes payable year after 
        the district would have terminated under general law and the aid 
        reduction is determined by using 100 percent of the captured tax 
        capacity as the qualified captured tax capacity of the 
        district.  The exemption provided by subdivision 6, paragraph 
        (d), does not apply. 
           Sec. 9.  Minnesota Statutes 1994, section 375.83, is 
        amended to read: 
           375.83 [ECONOMIC AND AGRICULTURAL DEVELOPMENT.] 
           A county board may appropriate not more than $50,000 
        annually money out of the general revenue fund of the county to 
        be paid to any incorporated development society or organization 
        of this state which, in the board's opinion, will use the money 
        for the best interests of the county in promoting, advertising, 
        improving, or developing the economic and agricultural resources 
        of the county.  The limitation on appropriations in this section 
        does not prohibit accumulation of amounts in excess of $50,000 
        in a fund to be used for the purposes of this section.  The 
        total amount accumulated in the fund must not exceed $300,000. 
           Sec. 10.  Minnesota Statutes 1994, section 469.169, 
        subdivision 9, is amended to read: 
           Subd. 9.  [ADDITIONAL BORDER CITY ALLOCATIONS.] In addition 
        to tax reductions authorized in subdivisions 7 and 8, the 
        commissioner may allocate $1,100,000 for tax reductions to 
        border city enterprise zones in cities located on the western 
        border of the state, and $300,000 to the border city enterprise 
        zone in the city of Duluth.  The commissioner shall make 
        allocations to zones in cities on the western border by 
        evaluating which cities' applications for allocations relate to 
        business prospects that have the greatest positive economic 
        impact.  Allocations made under this subdivision may be used for 
        tax reductions as provided in section 469.171, or other offsets 
        of taxes imposed on or remitted by businesses located in the 
        enterprise zone, but only if the municipality determines that 
        the granting of the tax reduction or offset is necessary in 
        order to retain a business within or attract a business to the 
        zone.  Limitations on allocations under section 469.169, 
        subdivision 7, do not apply to this allocation.  Enterprise 
        zones that receive allocations under this subdivision may 
        continue in effect for purposes of those allocations through 
        December 31, 1994 1995. 
           Sec. 11.  Minnesota Statutes 1994, section 469.169, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [ADDITIONAL BORDER CITY ALLOCATIONS.] In 
        addition to tax reductions authorized in subdivisions 7, 8, and 
        9, the commissioner may allocate $1,500,000 for tax reductions 
        to border city enterprise zones in cities located on the western 
        border of the state.  The commissioner shall make allocations to 
        zones in cities on the western border on a per capita basis.  
        Allocations made under this subdivision may be used for tax 
        reductions as provided in section 469.171, or other offsets of 
        taxes imposed on or remitted by businesses located in the 
        enterprise zone, but only if the municipality determines that 
        the granting of the tax reduction or offset is necessary in 
        order to retain a business within or attract a business to the 
        zone.  Limitations on allocations under section 469.169, 
        subdivision 7, do not apply to this allocation.  Enterprise 
        zones that receive allocations under this subdivision may 
        continue in effect for purposes of those allocations through 
        December 31, 1996. 
           Sec. 12.  Minnesota Statutes 1994, section 469.174, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CAPTURED NET TAX CAPACITY.] "Captured net tax 
        capacity" means the amount by which the current net tax capacity 
        of a tax increment financing district or an extended subdistrict 
        exceeds the original net tax capacity, including the value of 
        property normally taxable as personal property by reason of its 
        location on or over property owned by a tax-exempt entity.  In 
        the case of a hazardous substance subdistrict, except an 
        extended subdistrict, "captured net tax capacity" means the 
        amount by which the original net tax capacity of the portion of 
        the tax increment financing district overlying the subdistrict 
        exceeds the original net tax capacity of the subdistrict. 
           Sec. 13.  Minnesota Statutes 1994, section 469.174, 
        subdivision 19, is amended to read: 
           Subd. 19.  [SOILS CONDITION DISTRICT.] (a) "Soils condition 
        district" means a type of tax increment financing district 
        consisting of a project, or portions of a project, within which 
        the authority finds by resolution that the following conditions 
        exist: 
           (1) unusual terrain, the presence of hazardous substances, 
        pollution, or contaminants, or soil deficiencies for 80 percent 
        of the acreage in the district require substantial filling, 
        grading, requires removal or remedial action, or other physical 
        preparation for use; 
           (2) the estimated cost of the physical preparation under 
        clause (1), but excluding costs directly related to roads as 
        defined in section 160.01 and local improvements as described in 
        sections 429.021, subdivision 1, clauses (1) to (7), (11), and 
        (12), and 430.01, proposed removal and remedial action exceeds 
        the fair market value of the land before completion of the 
        preparation. 
           The requirements of clause (2) need not be satisfied, if 
        each parcel of property in the district either satisfies the 
        requirements of clause (2) or the estimated costs of the 
        proposed removal or remedial action exceeds $2 per square foot 
        for the area of the parcel. 
           (b) An area does not qualify as a soils condition district 
        if it contains a wetland, as defined in section 103G.005, unless 
        the development agreement prohibits draining, filling, or other 
        alteration of the wetland or other binding legal assurances for 
        preservation of the wetland are provided. 
           (c) If the district is located in the metropolitan area, 
        the proposed development of the district in the tax increment 
        financing plan must be consistent with the municipality's land 
        use plan adopted in accordance with sections 473.851 to 473.872 
        and reviewed by the metropolitan council under section 473.175.  
        If the district is located outside of the metropolitan area, the 
        proposed development of the district must be consistent with the 
        municipality's comprehensive municipal plan. The proposed 
        removal or remediation action must be specified in a development 
        action response plan to satisfy the requirements of paragraph 
        (a). 
           Sec. 14.  Minnesota Statutes 1994, section 469.174, 
        subdivision 21, is amended to read: 
           Subd. 21.  [CREDIT ENHANCED BONDS.] "Credit enhanced bonds" 
        means special obligation bonds that are: 
           (1) payable primarily from tax increments (i) derived from 
        a tax increment financing district within which the activity, as 
        defined in section 469.1763, subdivision 1, financed by at least 
        75 percent the applicable in-district percentage of the bond 
        proceeds is located and (ii) estimated on the date of issuance 
        to be sufficient to pay when due the debt service on the bonds, 
        and 
           (2) further secured by tax increments (i) derived from one 
        or more tax increment financing districts and (ii) determined by 
        the issuer to be necessary in order to make the marketing of the 
        bonds feasible. 
           For purposes of this subdivision, "applicable in-district 
        percentage" means the percentage under section 469.1763, 
        subdivision 2, for the district. 
           Sec. 15.  Minnesota Statutes 1994, section 469.174, is 
        amended by adding a subdivision to read: 
           Subd. 23.  [HAZARDOUS SUBSTANCE SUBDISTRICT.] "Hazardous 
        substance subdistrict" or "subdistrict" means a hazardous 
        substance subdistrict created under section 469.175, subdivision 
        7. 
           Sec. 16.  Minnesota Statutes 1994, section 469.174, is 
        amended by adding a subdivision to read: 
           Subd. 24.  [EXTENDED SUBDISTRICT.] "Extended subdistrict" 
        means a hazardous substance subdistrict, but only for any period 
        during which the subdistrict remains in effect after the 
        overlying tax increment district has terminated. 
           Sec. 17.  Minnesota Statutes 1994, section 469.175, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] (a) A tax 
        increment financing plan shall contain:  
           (1) a statement of objectives of an authority for the 
        improvement of a project; 
           (2) a statement as to the development program for the 
        project, including the property within the project, if any, that 
        the authority intends to acquire; 
           (3) a list of any development activities that the plan 
        proposes to take place within the project, for which contracts 
        have been entered into at the time of the preparation of the 
        plan, including the names of the parties to the contract, the 
        activity governed by the contract, the cost stated in the 
        contract, and the expected date of completion of that activity; 
           (4) identification or description of the type of any other 
        specific development reasonably expected to take place within 
        the project, and the date when the development is likely to 
        occur; 
           (5) estimates of the following:  
           (i) cost of the project, including administration expenses; 
           (ii) amount of bonded indebtedness to be incurred; 
           (iii) sources of revenue to finance or otherwise pay public 
        costs; 
           (iv) the most recent net tax capacity of taxable real 
        property within the tax increment financing district; 
           (v) the estimated captured net tax capacity of the tax 
        increment financing district at completion; and 
           (vi) the duration of the tax increment financing district's 
        existence; 
           (6) statements of the authority's alternate estimates of 
        the impact of tax increment financing on the net tax capacities 
        of all taxing jurisdictions in which the tax increment financing 
        district is located in whole or in part.  For purposes of one 
        statement, the authority shall assume that the estimated 
        captured net tax capacity would be available to the taxing 
        jurisdictions without creation of the district, and for purposes 
        of the second statement, the authority shall assume that none of 
        the estimated captured net tax capacity would be available to 
        the taxing jurisdictions without creation of the district; 
           (7) identification and description of studies and analyses 
        used to make the determination set forth in subdivision 3, 
        clause (2); and 
           (8) identification of all parcels to be included in the 
        district or any subdistrict. 
           (b) For a housing district, redevelopment district, or a 
        hazardous substance subdistrict, the authority may elect in the 
        tax increment financing plan to provide for the identification 
        of a minimum market value in the plan, development agreement, or 
        assessment agreement, and provide that increment is first 
        received by the authority when (1) the market value of the 
        improvements as determined by the assessor reaches or exceeds 
        the minimum market value, or (2) four years has elapsed from the 
        date of certification of the original net tax capacity of the 
        taxable real property in the district or subdistrict by the 
        county auditor, whichever is earlier. 
           Sec. 18.  Minnesota Statutes 1994, section 469.175, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MUNICIPALITY APPROVAL.] A county auditor shall 
        not certify the original net tax capacity of a tax increment 
        financing district until the tax increment financing plan 
        proposed for that district has been approved by the municipality 
        in which the district is located.  If an authority that proposes 
        to establish a tax increment financing district and the 
        municipality are not the same, the authority shall apply to the 
        municipality in which the district is proposed to be located and 
        shall obtain the approval of its tax increment financing plan by 
        the municipality before the authority may use tax increment 
        financing.  The municipality shall approve the tax increment 
        financing plan only after a public hearing thereon after 
        published notice in a newspaper of general circulation in the 
        municipality at least once not less than ten days nor more than 
        30 days prior to the date of the hearing.  The published notice 
        must include a map of the area of the district from which 
        increments may be collected and, if the project area includes 
        additional area, a map of the project area in which the 
        increments may be expended.  The hearing may be held before or 
        after the approval or creation of the project or it may be held 
        in conjunction with a hearing to approve the project.  Before or 
        at the time of approval of the tax increment financing plan, the 
        municipality shall make the following findings, and shall set 
        forth in writing the reasons and supporting facts for each 
        determination: 
           (1) that the proposed tax increment financing district is a 
        redevelopment district, a renewal or renovation district, a 
        mined underground space development district, a housing 
        district, a soils condition district, or an economic development 
        district; if the proposed district is a redevelopment district 
        or a renewal or renovation district, the reasons and supporting 
        facts for the determination that the district meets the criteria 
        of section 469.174, subdivision 10, paragraph (a), clauses (1) 
        and (2), or subdivision 10a, must be retained and made available 
        to the public by the authority until the district has been 
        terminated. 
           (2) that the proposed development or redevelopment, in the 
        opinion of the municipality, would not reasonably be expected to 
        occur solely through private investment within the reasonably 
        foreseeable future and therefore the use of tax increment 
        financing is deemed necessary that the increased market value of 
        the site that could reasonably be expected to occur without the 
        use of tax increment financing would be less than the increase 
        in the market value estimated to result from the proposed 
        development after subtracting the present value of the projected 
        tax increments for the maximum duration of the district 
        permitted by the plan.  The requirements of this clause do not 
        apply if the district is a qualified housing district, as 
        defined in section 273.1399, subdivision 1. 
           (3) that the tax increment financing plan conforms to the 
        general plan for the development or redevelopment of the 
        municipality as a whole. 
           (4) that the tax increment financing plan will afford 
        maximum opportunity, consistent with the sound needs of the 
        municipality as a whole, for the development or redevelopment of 
        the project by private enterprise. 
           (5) that the municipality elects the method of tax 
        increment computation set forth in section 469.177, subdivision 
        3, clause (b), if applicable. 
           When the municipality and the authority are not the same, 
        the municipality shall approve or disapprove the tax increment 
        financing plan within 60 days of submission by the authority, or 
        the plan shall be deemed approved.  When the municipality and 
        the authority are not the same, the municipality may not amend 
        or modify a tax increment financing plan except as proposed by 
        the authority pursuant to subdivision 4.  Once approved, the 
        determination of the authority to undertake the project through 
        the use of tax increment financing and the resolution of the 
        governing body shall be conclusive of the findings therein and 
        of the public need for the financing. 
           Sec. 19.  Minnesota Statutes 1994, section 469.175, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ANNUAL DISCLOSURE.] For all tax increment 
        financing districts, whether created prior or subsequent to 
        August 1, 1979, on or before July 1 of each year, the authority 
        shall submit to the county board, the county auditor, the school 
        board, the commissioner of revenue state auditor and, if the 
        authority is other than the municipality, the governing body of 
        the municipality, a report of the status of the district.  The 
        report shall include the following information:  the amount and 
        the source of revenue in the account, the amount and purpose of 
        expenditures from the account, the amount of any pledge of 
        revenues, including principal and interest on any outstanding 
        bonded indebtedness, the original net tax capacity of the 
        district, the captured net tax capacity retained by the 
        authority, the captured net tax capacity shared with other 
        taxing districts, the tax increment received, and any additional 
        information necessary to demonstrate compliance with any 
        applicable tax increment financing plan.  An annual statement 
        showing the tax increment received and expended in that year, 
        the original net tax capacity, captured net tax capacity, amount 
        of outstanding bonded indebtedness, the amount of the district's 
        increments paid to other governmental bodies, the amount paid 
        for administrative costs, the sum of increments paid, directly 
        or indirectly, for activities and improvements located outside 
        of the district, and any additional information the authority 
        deems necessary shall be published in a newspaper of general 
        circulation in the municipality.  If the fiscal disparities 
        contribution for the district is computed under section 469.177, 
        subdivision 3, paragraph (a), the annual statement must disclose 
        that fact and indicate the amount of increased property tax 
        imposed on other properties in the municipality as a result of 
        the fiscal disparities contribution.  The commissioner of 
        revenue shall prescribe the form of this statement and the 
        method for calculating the increased property taxes. 
           Sec. 20.  Minnesota Statutes 1994, section 469.175, 
        subdivision 6, is amended to read: 
           Subd. 6.  [FINANCIAL REPORTING.] (a) The state auditor 
        shall develop a uniform system of accounting and financial 
        reporting for tax increment financing districts.  The system of 
        accounting and financial reporting shall, as nearly as possible: 
           (1) provide for full disclosure of the sources and uses of 
        public funds in the district; 
           (2) permit comparison and reconciliation with the affected 
        local government's accounts and financial reports; 
           (3) permit auditing of the funds expended on behalf of a 
        district, including a single district that is part of a 
        multidistrict project or that is funded in part or whole through 
        the use of a development account funded with tax increments from 
        other districts or with other public money; 
           (4) be consistent with generally accepted accounting 
        principles. 
           (b) The authority must annually submit to the state 
        auditor, on or before July 1, a financial report in compliance 
        with paragraph (a).  Copies of the report must also be provided 
        to the county and school district boards and to the governing 
        body of the municipality, if the authority is not the 
        municipality.  To the extent necessary to permit compliance with 
        the requirement of financial reporting, the county and any other 
        appropriate local government unit or private entity must provide 
        the necessary records or information to the authority or the 
        state auditor as provided by the system of accounting and 
        financial reporting developed pursuant to paragraph (a). 
           (c) The annual financial report must also include the 
        following items: 
           (1) the original net tax capacity of the district; 
           (2) the captured net tax capacity of the district, 
        including the amount of any captured net tax capacity shared 
        with other taxing districts; 
           (3) the outstanding principal amount of bonds issued or 
        other loans incurred to finance project costs in the district; 
           (4) for the reporting period and for the duration of the 
        district, the amount budgeted under the tax increment financing 
        plan, and the actual amount expended for, at least, the 
        following categories: 
           (i) acquisition of land and buildings through condemnation 
        or purchase; 
           (ii)  site improvements or preparation costs; 
           (iii) installation of public utilities, parking facilities, 
        streets, roads, sidewalks, or other similar public improvements; 
           (iv) administrative costs, including the allocated cost of 
        the authority; 
           (v) public park facilities, facilities for social, 
        recreational, or conference purposes, or other similar public 
        improvements; and 
           (5) (4) for properties sold to developers, the total cost 
        of the property to the authority and the price paid by the 
        developer; 
           (6) the amount of tax exempt obligations, other than those 
        reported under clause (3), that were issued on behalf of private 
        entities for facilities located in the district (5) the amount 
        of increments rebated or paid to developers or property owners 
        for privately financed improvements or other qualifying costs. 
           (d) The reporting requirements imposed by this subdivision 
        are in lieu of the annual disclosure required by subdivision 5 
        apply to districts certified before, on, and after August 1, 
        1979. 
           Sec. 21.  Minnesota Statutes 1994, section 469.175, 
        subdivision 6a, is amended to read: 
           Subd. 6a.  [REPORTING REQUIREMENTS.] (a) The municipality 
        must annually report to the commissioner of revenue state 
        auditor the following amounts for the entire municipality: 
           (1) the total principal amount of nondefeased tax increment 
        financing bonds that are outstanding at the end of the previous 
        calendar year; and 
           (2) the total annual amount of principal and interest 
        payments that are due for the current calendar year on (i) 
        general obligation tax increment financing bonds, and (ii) other 
        tax increment financing bonds. 
           (b) The municipality must annually report to the 
        commissioner of revenue state auditor the following amounts for 
        each tax increment financing district located in the 
        municipality: 
           (1) the type of district, whether economic development, 
        redevelopment, housing, soils condition, mined underground 
        space, or hazardous substance site; 
           (2) the date on which the district is required to be 
        decertified; 
           (3) the captured tax capacity of the district, by property 
        class as specified by the commissioner of revenue, for taxes 
        payable in the current calendar year amount of any payments and 
        the value of in-kind benefits, such as physical improvements and 
        the use of building space, that are financed with revenues 
        derived from increments and are provided to another governmental 
        unit (other than the municipality) during the preceding calendar 
        year; 
           (4) the tax increment revenues for taxes payable in the 
        current calendar year; 
           (5) whether the tax increment financing plan or other 
        governing document permits increment revenues to be expended (i) 
        to pay bonds, the proceeds of which were or may be expended on 
        activities located outside of the district, (ii) for deposit 
        into a common fund from which money may be expended on 
        activities located outside of the district, or (iii) to 
        otherwise finance activities located outside of the tax 
        increment financing district; and 
           (6) any additional information that the commissioner of 
        revenue state auditor may require.  
           (c) The report required by this subdivision must be filed 
        with the commissioner of revenue state auditor on or before 
        March July 1 of each year. 
           (d) The state auditor may provide for combining the reports 
        required by this subdivision and subdivisions 5 and 6 so that 
        only one report is made for each year to the auditor. 
           (e) This section applies to districts certified before, on, 
        and after August 1, 1979. 
           Sec. 22.  Minnesota Statutes 1994, section 469.176, is 
        amended by adding a subdivision to read: 
           Subd. 1g.  [EXTENSION TO RECOVER CLEANUP COSTS.] (a) The 
        authority, with the approval of the municipality, may extend the 
        duration of a district beyond the limit that otherwise applies 
        under this section, if the following circumstances apply:  
           (1) after the district is established, contamination, 
        hazardous substances, pollution, or other materials requiring 
        removal or remediation are found in the district; 
           (2) the authority elects not to create a hazardous 
        substance subdistrict; and 
           (3) the municipality pays for the cost of removal, cleanup, 
        or remediation out of its general fund or other money of the 
        municipality, except revenues from tax increments.  
           (b) The maximum duration extension permitted by this 
        subdivision is the lesser of (1) ten years after the district 
        otherwise would have terminated or (2) the number of additional 
        years necessary to collect increment equal to the cleanup costs 
        paid by the municipality out of funds other than tax 
        increments.  Cleanup costs are limited to the actual costs of 
        removal and remediation, and do not include financing or 
        interest costs.  Cleanup costs do include testing and 
        engineering costs.  Cleanup costs must be reduced by any 
        reimbursements or amounts recovered from private parties or 
        other responsible parties. 
           Sec. 23.  Minnesota Statutes 1994, section 469.176, 
        subdivision 4b, is amended to read: 
           Subd. 4b.  [SOILS CONDITION DISTRICTS.] Revenue derived 
        from tax increment from a soils condition district under section 
        469.174, subdivision 19, may be used only to (1) acquire parcels 
        on which the improvements described in clause (2) will occur; 
        (2) pay for the cost of correcting the unusual terrain or soil 
        deficiencies and the additional cost of installing public 
        improvements directly caused by the deficiencies removal or 
        remedial action; and (3) pay for the administrative expenses of 
        the authority allocable to the district, including the cost of 
        preparation of the development action response plan.  The sale 
        by the authority of a parcel acquired and improved as described 
        in clauses (1) and (2) must be for a price that is no less than 
        the cost of acquisition. 
           Sec. 24.  Minnesota Statutes 1994, section 469.176, 
        subdivision 4c, is amended to read: 
           Subd. 4c.  [ECONOMIC DEVELOPMENT DISTRICTS.] (a) Revenue 
        derived from tax increment from an economic development district 
        may not be used to provide improvements, loans, subsidies, 
        grants, interest rate subsidies, or assistance in any form to 
        developments consisting of buildings and ancillary facilities, 
        if more than 15 percent of the buildings and facilities 
        (determined on the basis of square footage) are used for a 
        purpose other than:  
           (1) the manufacturing or production of tangible personal 
        property, including processing resulting in the change in 
        condition of the property; 
           (2) warehousing, storage, and distribution of tangible 
        personal property, excluding retail sales; 
           (3) research and development related to the activities 
        listed in clause (1) or (2); 
           (4) telemarketing if that activity is the exclusive use of 
        the property; 
           (5) tourism facilities; or 
           (6) space necessary for and related to the activities 
        listed in clauses (1) to (5).  
           (b) Notwithstanding the provisions of this subdivision, 
        revenue derived from tax increment from an economic development 
        district may be used to provide improvements, loans, subsidies, 
        grants, interest rate subsidies, or assistance in any form for 
        up to 5,000 square feet of commercial and retail facilities 
        within the municipal jurisdiction of a home rule charter or 
        statutory city that has a population of 5,000 or less.  The 
        5,000 square feet limitation is cumulative and applies to all 
        facilities in all the economic development districts within the 
        municipal jurisdiction pay for site preparation and public 
        improvements, if the following conditions are met: 
           (1) bedrock soils conditions are present in 80 percent or 
        more of the acreage of the district; 
           (2) the estimated cost of physical preparation of the site 
        exceeds the fair market value of the land before completion of 
        the preparation; and 
           (3) revenues from tax increments are expended only for the 
        additional costs of preparing the site because of unstable soils 
        and the bedrock soils condition, the additional cost of 
        installing public improvements because of unstable soils or the 
        bedrock soils condition, and reasonable administrative costs. 
           Sec. 25.  Minnesota Statutes 1994, section 469.176, 
        subdivision 7, is amended to read: 
           Subd. 7.  [SUBSEQUENT PARCELS NOT INCLUDABLE IN DISTRICTS.] 
        Except as provided in subdivision 6, for subsequent 
        recertification of parcels eliminated from a district because of 
        lack of development activity, no parcel that has been so 
        eliminated subsequent to two years from the date of the original 
        certification may be included in a tax increment district if, at 
        any time during the 20 years prior to the date when 
        certification of the district is requested pursuant to section 
        469.177, subdivision 1, that parcel had been included in an 
        economic development district. (a) The authority may not request 
        inclusion in a tax increment financing district and the county 
        auditor may not certify the original tax capacity of the 
        following: 
           (1) a parcel or a part of a parcel that qualified under the 
        provisions of section 273.111 or 273.112 or chapter 473H for 
        taxes payable in any of the five calendar years before the 
        filing of the request for certification, if the parcel is 
        located in the metropolitan area, as defined in section 473.121; 
        or 
           (2) a parcel or a part of a parcel, located outside of the 
        metropolitan area, as defined in section 473.121, that qualified 
        under the provisions of section 273.111 or 273.112 for taxes 
        payable in any of the five calendar years before the request for 
        certification, if the district is not a district in which 85 
        percent or more of the planned buildings and facilities 
        (determined on the basis of square footage) are for 
        manufacturing or production of tangible personal property, 
        including processing resulting in the change in condition of the 
        property. 
           Sec. 26.  Minnesota Statutes 1994, section 469.1763, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 
        increment financing district, an amount equal to at least 75 
        percent of the revenue derived from tax increments paid by 
        properties in the district must be expended on activities in the 
        district or to pay bonds, to the extent that the proceeds of the 
        bonds were used to finance activities in the district or to pay, 
        or secure payment of, debt service on credit enhanced 
        bonds.  For districts, other than redevelopment districts for 
        which the request for certification was made after June 30, 
        1995, the in-district percentage for purposes of the preceding 
        sentence is 80 percent.  Not more than 25 percent of the revenue 
        derived from tax increments paid by properties in the district 
        may be expended, through a development fund or otherwise, on 
        activities outside of the district but within the defined 
        geographic area of the project except to pay, or secure payment 
        of, debt service on credit enhanced bonds.  For districts, other 
        than redevelopment districts for which the request for 
        certification was made after June 30, 1995, the pooling 
        percentage for purposes of the preceding sentence is 20 
        percent.  The revenue derived from tax increments for the 
        district that are expended on costs under section 469.176, 
        subdivision 4h, paragraph (b), may be deducted first before 
        calculating the percentages that must be expended within and 
        without the district.  
           (b) In the case of a housing district, a housing project, 
        as defined in section 469.174, subdivision 11, is an activity in 
        the district.  
           (c) All administrative expenses are for activities outside 
        of the district. 
           Sec. 27.  Minnesota Statutes 1994, section 469.1763, 
        subdivision 4, is amended to read: 
           Subd. 4.  [USE OF REVENUES FOR DECERTIFICATION.] (a) 
        Beginning with the sixth year following certification of the 
        district, 75 the applicable in-district percent of the revenues 
        derived from tax increments paid by properties in the district 
        that remain after the expenditures permitted under subdivision 3 
        must be used only to pay: 
           (1) outstanding bonds, as defined in subdivision 3, 
        paragraphs (a), clause (2), and (b); 
           (2) contracts, as defined in subdivision 3, paragraph (a), 
        clauses (3) and (4); or 
           (3) credit enhanced bonds to which the revenues derived 
        from tax increments are pledged, but only to the extent that 
        revenues of the district for which the credit enhanced bonds 
        were issued are insufficient to pay the bonds and to the extent 
        that the increments from the unrestricted 25 applicable pooling 
        percent share for the district are insufficient. 
           (b) When the outstanding bonds have been defeased and when 
        sufficient money has been set aside to pay contractual 
        obligations as defined in subdivision 3, paragraph (a), clauses 
        (3) and (4), the district must be decertified and the pledge of 
        tax increment discharged. 
           Sec. 28.  Minnesota Statutes 1994, section 469.177, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
        after adoption of a tax increment financing plan, the auditor of 
        any county in which the district is situated shall, upon request 
        of the authority, certify the original net tax capacity of the 
        tax increment financing district and that portion of the 
        district overlying any subdistrict as described in the tax 
        increment financing plan and shall certify in each year 
        thereafter the amount by which the original net tax capacity has 
        increased or decreased as a result of a change in tax exempt 
        status of property within the district and any subdistrict, 
        reduction or enlargement of the district or changes pursuant to 
        subdivision 4.  
           (b) In the case of a mined underground space development 
        district the county auditor shall certify the original net tax 
        capacity as zero, plus the net tax capacity, if any, previously 
        assigned to any subsurface area included in the mined 
        underground space development district pursuant to section 
        272.04. 
           (c) For districts approved under section 469.175, 
        subdivision 3, or parcels added to existing districts after May 
        1, 1988, if the classification under section 273.13 of property 
        located in a district changes to a classification that has a 
        different assessment ratio, the original net tax capacity of 
        that property must be redetermined at the time when its use is 
        changed as if the property had originally been classified in the 
        same class in which it is classified after its use is changed. 
           (d) The amount to be added to the original net tax capacity 
        of the district as a result of previously tax exempt real 
        property within the district becoming taxable equals the net tax 
        capacity of the real property as most recently assessed pursuant 
        to section 273.18 or, if that assessment was made more than one 
        year prior to the date of title transfer rendering the property 
        taxable, the net tax capacity assessed by the assessor at the 
        time of the transfer.  If substantial taxable improvements were 
        made to a parcel after certification of the district and if the 
        property later becomes tax exempt, in whole or part, as a result 
        of the authority acquiring the property through foreclosure or 
        exercise of remedies under a lease or other revenue agreement or 
        as a result of tax forfeiture, the amount to be added to the 
        original net tax capacity of the district as a result of the 
        property again becoming taxable is the amount of the parcel's 
        value that was included in original net tax capacity when the 
        parcel was first certified.  The amount to be added to the 
        original net tax capacity of the district as a result of 
        enlargements equals the net tax capacity of the added real 
        property as most recently certified by the commissioner of 
        revenue as of the date of modification of the tax increment 
        financing plan pursuant to section 469.175, subdivision 4. 
           (e) For districts approved under section 469.175, 
        subdivision 3, or parcels added to existing districts after May 
        1, 1988, if the net tax capacity of a property increases because 
        the property no longer qualifies under the Minnesota 
        agricultural property tax law, section 273.111; the Minnesota 
        open space property tax law, section 273.112; or the 
        metropolitan agricultural preserves act, chapter 473H, or 
        because platted, unimproved property is improved or three years 
        pass after approval of the plat under section 273.11, 
        subdivision 1, the increase in net tax capacity must be added to 
        the original net tax capacity.  
           (f) Each year the auditor shall also add to the original 
        net tax capacity of each economic development district an amount 
        equal to the original net tax capacity for the preceding year 
        multiplied by the average percentage increase in the market 
        value of all property included in the economic development 
        district during the five years prior to certification of the 
        district. 
           (g) The amount to be subtracted from the original net tax 
        capacity of the district as a result of previously taxable real 
        property within the district becoming tax exempt, or a reduction 
        in the geographic area of the district, shall be the amount of 
        original net tax capacity initially attributed to the property 
        becoming tax exempt or being removed from the district.  If the 
        net tax capacity of property located within the tax increment 
        financing district is reduced by reason of a court-ordered 
        abatement, stipulation agreement, voluntary abatement made by 
        the assessor or auditor or by order of the commissioner of 
        revenue, the reduction shall be applied to the original net tax 
        capacity of the district when the property upon which the 
        abatement is made has not been improved since the date of 
        certification of the district and to the captured net tax 
        capacity of the district in each year thereafter when the 
        abatement relates to improvements made after the date of 
        certification.  The county auditor may specify reasonable form 
        and content of the request for certification of the authority 
        and any modification thereof pursuant to section 469.175, 
        subdivision 4.  
           (h) If a parcel of property contained a substandard 
        building that was demolished or removed and if the authority 
        elects to treat the parcel as occupied by a substandard building 
        under section 469.174, subdivision 10, paragraph (b), the 
        auditor shall certify the original net tax capacity of the 
        parcel using the greater of (1) the current net tax capacity of 
        the parcel, or (2) the estimated market value of the parcel for 
        the year in which the building was demolished or removed, but 
        applying the class rates for the current year. 
           Sec. 29.  Minnesota Statutes 1994, section 469.177, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [ORIGINAL LOCAL TAX RATE.] At the time of the 
        initial certification of the original net tax capacity for a tax 
        increment financing district or a subdistrict, the county 
        auditor shall certify the original local tax rate that applies 
        to the district or subdistrict.  The original local tax rate is 
        the sum of all the local tax rates that apply to a property in 
        the district or subdistrict.  The local tax rate to be certified 
        is the rate in effect for the same taxes payable year applicable 
        to the tax capacity values certified as the district's or 
        subdistrict's original tax capacity.  The resulting tax capacity 
        rate is the original local tax rate for the life of the district 
        or subdistrict. 
           Sec. 30.  Minnesota Statutes 1994, section 469.177, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CAPTURED NET TAX CAPACITY.] The county auditor 
        shall certify the amount of the captured net tax capacity to the 
        authority each year, together with the proportion that the 
        captured net tax capacity bears to the total net tax capacity of 
        the real property within the tax increment financing 
        district and any subdistrict for that year. 
           (a) An authority may choose to retain any part or all of 
        the captured net tax capacity for purposes of tax increment 
        financing according to one of the following options: 
           (1) If the plan provides that all the captured net tax 
        capacity is necessary to finance or otherwise make permissible 
        expenditures under section 469.176, subdivision 4, the authority 
        may retain the full captured net tax capacity. 
           (2) If the plan provides that only a portion of the 
        captured net tax capacity is necessary to finance or otherwise 
        make permissible expenditures under section 469.176, subdivision 
        4, only that portion shall be set aside and the remainder shall 
        be distributed among the affected taxing districts by the county 
        auditor. 
           (b) The portion of captured net tax capacity that an 
        authority intends to use for purposes of tax increment financing 
        must be clearly stated in the tax increment financing plan. 
           Sec. 31.  Minnesota Statutes 1994, section 469.177, 
        subdivision 6, is amended to read: 
           Subd. 6.  [REQUEST FOR CERTIFICATION OF NEW TAX INCREMENT 
        FINANCING DISTRICT.] A request for certification of a new tax 
        increment financing district pursuant to subdivision 1 or of a 
        modification to an existing tax increment financing district 
        pursuant to section 469.175, subdivision 4, received by the 
        county auditor on or before July 1 June 30 of the calendar year 
        shall be recognized by the county auditor in determining local 
        tax rates for the current and subsequent levy years.  Requests 
        received by the county auditor after July 1 June 30 of the 
        calendar year shall not be recognized by the county auditor in 
        determining local tax rates for the current levy year but shall 
        be recognized by the county auditor in determining local tax 
        rates for subsequent levy years.  
           Sec. 32.  Minnesota Statutes 1994, section 469.177, 
        subdivision 9, is amended to read: 
           Subd. 9.  [DISTRIBUTIONS OF EXCESS TAXES ON CAPTURED NET 
        TAX CAPACITY.] (a) If the amount of tax paid on captured net tax 
        capacity exceeds the amount of tax increment, the county auditor 
        shall distribute the excess to the municipality, county, and 
        school district as follows:  each governmental unit's share of 
        the excess equals 
           (1) the total amount of the excess for the tax increment 
        financing district, multiplied by 
           (2) a fraction, the numerator of which is the current local 
        tax rate of the governmental unit less the governmental unit's 
        local tax rate for the year the original local tax rate for the 
        district was certified (in no case may this amount be less than 
        zero) and the denominator of which is the sum of the numerators 
        for the municipality, county, and school district. 
        If the entire increase in the local tax rate is attributable to 
        a taxing district, other than the municipality, county, or 
        school district, then the excess must be distributed to the 
        municipality, county, and school district in proportion to their 
        respective local tax rates. 
           The school district's tax rate must be divided into the 
        portion of the tax rate attributable (1) to state equalized 
        levies, and (2) unequalized levies.  Equalized levies mean the 
        levies identified in section 273.1398, subdivision 1, and As 
        used in this subdivision, "equalized levies" means the sum of 
        the maximum amounts that may be levied for:  (i) general 
        education under section 124A.23, subdivision 2; (ii) 
        supplemental revenue under section 124A.22, subdivision 8a; 
        (iii) capital expenditure facilities revenue under section 
        124.243, subdivision 3; (iv) capital expenditure equipment 
        revenue under section 124.244, subdivision 2; and (v) basic 
        transportation under section 124.226, subdivision 1.  
        Unequalized levies mean the rest of the school district's 
        levies.  The calculations under clause (2) must determine the 
        amount of excess taxes attributable to each portion of the 
        school district's tax rate.  If one of the portions of the 
        change in the school district tax rate is less than zero and the 
        combined change is greater than zero, the combined rate must be 
        used and all the school district's share of excess taxes 
        allocated to that portion of the tax rate. 
           (b) The amounts distributed shall be deducted in computing 
        the levy limits of the taxing district for the succeeding 
        taxable year.  In the case of a school district, only the 
        proportion of the excess taxes attributable to unequalized 
        levies that are subject to a fixed dollar amount levy limit 
        shall be deducted from the levy limit. 
           (c) In the case of distributions to a school district that 
        are attributable to state equalized levies, the county auditor 
        shall report amounts distributed to the commissioner of 
        education in the same manner as provided for excess increments 
        under section 469.176, subdivision 2, and the distribution shall 
        be deducted from the school district's state aid payments. 
           Sec. 33.  Minnesota Statutes 1994, section 469.177, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [DEDUCTION FOR ENFORCEMENT COSTS; 
        APPROPRIATION.] (a) The county treasurer shall deduct an amount 
        equal to 0.1 percent of any increment distributed to an 
        authority or municipality.  The county treasurer shall pay the 
        amount deducted to the state treasurer for deposit in the state 
        general fund. 
           (b) The amounts deducted and paid under paragraph (a) are 
        appropriated to the state auditor for the cost of (1) the 
        financial reporting of tax increment financing information and 
        (2) the cost of examining and auditing of authorities' use of 
        tax increment financing as provided under section 469.1771, 
        subdivision 1.  Notwithstanding section 16A.28 or any other law 
        to the contrary, this appropriation does not cancel and remains 
        available until spent.  
           Sec. 34.  Minnesota Statutes 1994, section 469.1771, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ENFORCEMENT.] (a) The commissioner of 
        revenue shall enforce the provisions of sections 469.174 to 
        469.179.  In addition, the owner of taxable property located in 
        the city, town, school district, or county in which the tax 
        increment financing district is located may bring suit for 
        equitable relief or for damages, as provided in subdivisions 3 
        and 4, arising out of a failure of a municipality or authority 
        to comply with the provisions of sections 469.174 to 469.179, or 
        related provisions of this chapter.  The prevailing party in a 
        suit filed under the preceding sentence is entitled to costs, 
        including reasonable attorney fees. 
           (b) The responsibility for financial and compliance 
        auditing of state auditor may examine and audit political 
        subdivisions' use of tax increment financing remains with the 
        state auditor.  Without previous notice, the state auditor may 
        examine or audit accounts and records on a random basis as the 
        auditor deems to be in the public interest.  If the state 
        auditor finds evidence that an authority or municipality has 
        violated a provision of the law for which a remedy is provided 
        under this section, the state auditor shall forward the relevant 
        information to the commissioner of revenue.  The commissioner of 
        revenue may audit an authority's use of tax increment 
        financing county attorney.  The county attorney may bring an 
        action to enforce the provisions of sections 469.174 to 469.179 
        or related provisions of this chapter, for matters referred by 
        the state auditor or on behalf of the county. 
           (c) If the state auditor finds an authority is not in 
        compliance with sections 469.174 to 469.179 or related 
        provisions of law, the auditor shall notify the governing body 
        of the municipality that approved the tax increment financing 
        district of its findings.  The governing body of the 
        municipality must respond in writing to the state auditor within 
        60 days after receiving the notification.  Its written response 
        must state whether the municipality accepts, in whole or part, 
        the auditor's findings.  If the municipality does not accept the 
        findings, the statement must indicate the basis for its 
        disagreement.  The state auditor shall annually summarize the 
        responses it receives under this section and send the summary 
        and copies of the responses to the chairs of the committees of 
        the legislature with jurisdiction over tax increment financing. 
           Sec. 35.  [469.1782] [SPECIAL LAW PROVISIONS.] 
           Subdivision 1.  [ELECTION.] If a special law allows an 
        extension of the duration limit of an existing tax increment 
        financing district under section 469.176 or allows establishment 
        of a new district with a longer duration limit than permitted by 
        general law, the municipality must elect, by resolution, that 
        the district is subject to either: 
           (1) the adjustment to adjusted net tax capacity for the 
        school district under section 1; or 
           (2) the reduction in state tax increment financing aid 
        under section 273.1399, subdivision 8.  
        This election is irrevocable and must be made before the 
        extension is submitted by the municipality to the school 
        district for approval under subdivision 2.  If the municipality 
        fails to make an election before submitting the matter to the 
        school district, the municipality is deemed to have elected 
        clause (2). 
           Subd. 2.  [LOCAL APPROVAL OF SPECIAL LAWS.] (a) If a 
        special law allows an extension of the duration limit of an 
        existing tax increment financing district under section 469.176 
        or allows establishment of a new district with a longer duration 
        limit than that permitted by general law, the "affected local 
        government units," for purposes of section 645.021 and article 
        XII, section 2, of the Minnesota Constitution, include the city 
        or town, the school district, and the county in which the tax 
        increment district is located.  The town board may act to 
        approve the special law. 
           (b) The chief clerical officer of the municipality must, as 
        soon after the affected local units have approved the special 
        law allowing an extension, file with the secretary of state a 
        certificate stating the essential facts necessary to valid 
        approval, including a copy of each of the resolutions of 
        approval by the city or town, the school district, and the 
        county.  The attorney general shall prescribe the form of the 
        certificate and the secretary of state shall furnish copies.  If 
        the municipality fails to file a certificate of approval before 
        the first day of the next regular session of the legislature, 
        the extension of the duration is deemed to be disapproved, 
        unless the special law allows a longer period for approval.  If 
        the law contains other provisions besides an extension of the 
        duration and the municipality otherwise complies with section 
        645.021, the rest of the law takes effect. 
           Sec. 36.  [TAX INCREMENT FINANCING DISTRICT EXTENSION.] 
           Subdivision 1.  [AUTHORIZATION.] Notwithstanding Minnesota 
        Statutes, section 469.176, subdivision 1c, the St. Louis Park 
        economic development authority may collect and expend tax 
        increments from the Excelsior Boulevard Redevelopment Project 
        and Oak Park Village tax increment financing districts (Hennepin 
        county project numbers 1300 and 1301, respectively) located 
        within the city of St. Louis Park, after April 1, 2001, for 
        eligible activities within the redevelopment area.  The 
        authority under this section expires August 1, 2009. 
           Subd. 2.  [LOCAL APPROVAL.] This section is effective upon 
        compliance with Minnesota Statutes, sections 469.1782, 
        subdivision 2, and 645.021, subdivision 3. 
           Sec. 37.  [CITY OF HASTINGS; DISTRICT EXTENSION.] 
           Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
        provisions of Minnesota Statutes, section 469.176, subdivision 
        1c, the housing and redevelopment authority may collect and 
        expend tax increments from the downtown redevelopment tax 
        increment financing district, located within the city of 
        Hastings, after April 1, 2001, for eligible activities within 
        the district.  The authority under this section expires December 
        31, 2006. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
        compliance with Minnesota Statutes, sections 469.1782, 
        subdivision 2, and 645.021, subdivision 3. 
           Sec. 38.  [CITY OF HOPKINS; TAX INCREMENT DISTRICT.] 
           Subdivision 1.  [DURATION.] Notwithstanding the provisions 
        of Minnesota Statutes, section 469.176, subdivision 1c, tax 
        increment collected by the housing and redevelopment authority 
        in and for the city of Hopkins from tax increment financing 
        district no. 1-1 may be expended by the authority or the city of 
        Hopkins to pay or defease (1) bonds or obligations issued within 
        two years after the effective date of this section, or (2) bonds 
        issued to refund the principal of the outstanding bonds and pay 
        associated issuance costs, provided the average maturity of the 
        refunding bonds does not exceed the bonds refunded.  Tax 
        increment from district no. 1-1 will not be paid to the 
        authority after August 1, 2009. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
        compliance with Minnesota Statutes, sections 469.1782, 
        subdivision 2, and 645.021, subdivision 3. 
           Sec. 39.  [SWIFT COUNTY RURAL DEVELOPMENT FINANCE 
        AUTHORITY.] 
           Subdivision 1.  [ESTABLISHMENT.] The Swift county board 
        may, by adopting a written enabling resolution, establish a 
        county rural development finance authority that, subject to 
        subdivision 2, has the following powers:  powers of an economic 
        development authority under Minnesota Statutes, sections 469.090 
        to 469.107; and powers of a rural development financing 
        authority under sections 469.142 to 469.151. 
           Subd. 2.  [ECONOMIC DEVELOPMENT AUTHORITY POWERS.] If the 
        county rural development finance authority exercises the powers 
        of an economic development authority, the county may exercise 
        all of the powers relating to an economic development authority 
        granted to a city under Minnesota Statutes, sections 469.090 to 
        469.108, except for the authority to issue general obligation 
        bonds under Minnesota Statutes, section 469.102.  The levy 
        imposed by the county board under Minnesota Statutes, section 
        469.107, may be levied in addition to levies otherwise 
        authorized by law.  The county rural development finance 
        authority may create and define the boundaries of economic 
        development districts at any place or places within the county.  
        Minnesota Statutes, section 469.174, subdivision 10, and the 
        contiguity requirement specified under Minnesota Statutes, 
        section 469.101, subdivision 1, do not apply to limit the areas 
        that may be designated as county economic development districts. 
           Subd. 3.  [LIMIT OF POWERS.] (a) The enabling resolution 
        may impose the following limits on the actions of the authority: 
           (1) that the authority may not exercise any of the powers 
        contained in subdivision 1 unless those powers are specifically 
        authorized in the enabling resolution; and 
           (2) any other limitation or control established by the 
        county board by the enabling resolution. 
           (b) The enabling resolution may be modified at any time, 
        but may not be applied in a manner that impairs contracts 
        executed before the modification is made.  All modifications to 
        the enabling resolution must be by written resolution. 
           (c) Before the commencement of a project by the authority, 
        the governing body of the municipality in which the project is 
        to be located or the Swift county board, if the project is 
        outside municipal corporate limits, shall by majority vote 
        approve the project as recommended by the authority. 
           Subd. 4.  [BOARD OF DIRECTORS.] (a) The authority consists 
        of a board of seven directors.  The directors shall be appointed 
        by the Swift county board.  Each director shall be appointed to 
        serve for three years or until a successor is appointed and 
        qualified.  No director may serve more than two consecutive 
        terms.  The initial appointment of directors must be made so 
        that no more than one-third of the directors' positions will 
        require appointment in any one year due to fulfillment of their 
        three-year appointment.  The appointment of directors must be 
        made to reflect representation of the entire county by 
        population, appointing one director to represent each of the 
        five county commissioner districts.  The other two directors 
        must be representatives of various county-based economic 
        development organizations or be directors at-large.  No more 
        than two directors may reside in any one county commissioner 
        district. 
           (b) Two of the directors initially appointed shall serve 
        for terms of one year, two for two years, and three for three 
        years.  Each vacancy must be filled for the unexpired term in 
        the manner in which the original appointment was made.  A 
        vacancy occurs if a director no longer resides in the county.  
        No director shall be an officer, employee, director, 
        shareholder, or member of any corporation, firm, or association 
        with which the authority has entered into any operating lease, 
        or other agreement.  The directors may be removed by the county 
        for the reasons and in the manner provided under Minnesota 
        Statutes, section 469.010, and shall receive no compensation 
        other than reimbursement for expenses incurred in the 
        performance of their duties.  Directors shall have no personal 
        liability for obligations of the authority or the methods of 
        enforcement and collection of the obligations. 
           Subd. 5.  [EFFECTIVE DATE.] This section is effective upon 
        compliance by the Swift county board with Minnesota Statutes, 
        section 645.021, subdivision 3. 
           Sec. 40.  [CITY OF MORRIS; TAX INCREMENT FINANCING 
        DISTRICT.] 
           Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
        provisions of Minnesota Statutes, section 469.175, subdivision 
        4, paragraph (b), the economic development authority of the city 
        of Morris may, within one year after the effective date of this 
        section, enlarge the geographic area of tax increment financing 
        district No. 5 to include a parcel identified as lot 2, block 2, 
        Morris industrial park.  The district is established under and 
        subject to Minnesota Statutes, sections 469.174 to 469.178, 
        except: 
           (1) the duration limit for the district and enlarged area 
        is December 31, 2005; and 
           (2) the buildings to be constructed in the enlarged 
        geographic area of the district may, notwithstanding the 
        provisions of Minnesota Statutes, section 469.176, subdivision 
        4c, include space necessary for and related to the manufacturing 
        facility located on parcels contiguous to the district.  The 
        maximum space for nonmanufacturing uses may not exceed 40 
        percent of the square footage of the buildings.  This test may 
        be applied based on a two-year test period. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective after 
        compliance with Minnesota Statutes, sections 469.1782, 
        subdivision 2, and 645.021, subdivision 3. 
           Sec. 41.  [CITY OF OAKDALE; TAX INCREMENT DISTRICTS.] 
           Subdivision 1.  [DURATION.] (a) Notwithstanding Minnesota 
        Statutes, section 469.176, subdivisions 1 and 1b, tax increments 
        from the city of Oakdale tax increment financing district number 
        1-2 may be collected and expended by the authority through 
        December 31, 2011. 
           (b) Notwithstanding Minnesota Statutes, section 469.176, 
        subdivisions 1 and 1b, tax increments from the city of Oakdale 
        tax increment financing district number 9 may be collected and 
        expended by the authority through December 31, 2004. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
        compliance with Minnesota Statutes, sections 469.1782, 
        subdivision 2, and 645.021, subdivision 3. 
           Sec. 42.  [CITY OF LAKE CITY; TAX INCREMENT DISTRICT.] 
           Subdivision 1.  [DURATION EXTENSION.] Notwithstanding the 
        provisions of Minnesota Statutes, section 469.176, subdivision 
        1b, the duration of tax increment financing district number 3, 
        located within the city of Lake City, may be extended to January 
        1, 2002, by resolution of the governing body of Lake City. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective the 
        day following final enactment. 
           Sec. 43.  [CITY OF LAKEFIELD; TAX INCREMENT FINANCING 
        DISTRICTS.] 
           Subdivision 1.  [REDEVELOPMENT DISTRICT.] (a) The governing 
        body of the city of Lakefield may establish a tax increment 
        financing district that is a redevelopment district as defined 
        in Minnesota Statutes, section 469.174, subdivision 10, for the 
        purpose of developing the property previously used as the 
        municipal hospital.  The district is subject to Minnesota 
        Statutes, sections 469.174 to 469.179. 
           (b) Notwithstanding Minnesota Statutes, section 469.177, 
        subdivision 1, paragraph (d), for the district established under 
        this subdivision, the original tax capacity of the previously 
        tax exempt property comprising the municipal hospital equals the 
        value of the land only, as determined by the assessor at the 
        time of the transfer. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
        compliance by the governing body of the city of Lakefield with 
        Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 44.  [CITIES OF CRYSTAL, FRIDLEY, ST. PAUL, AND 
        MINNEAPOLIS; HOUSING REPLACEMENT DISTRICTS; DEFINITIONS.] 
           Subdivision 1.  [CAPTURED NET TAX CAPACITY.] "Captured net 
        tax capacity" means the amount by which the current net tax 
        capacity in a housing replacement district exceeds the original 
        net tax capacity, including the value of property normally 
        taxable as personal property by reason of its location on or 
        over property owned by a tax-exempt entity.  
           Subd. 2.  [ORIGINAL NET TAX CAPACITY.] "Original net tax 
        capacity" means the net tax capacity of all taxable real 
        property within a housing replacement district as certified by 
        the commissioner of revenue for the previous assessment year 
        less the net tax capacity attributable to existing improvements, 
        provided that the request by the authority for certification of 
        a new housing replacement district has been made to the county 
        auditor by June 30.  The original net tax capacity of housing 
        replacement districts for which requests are filed after June 30 
        has an original net tax capacity based on the current assessment 
        year.  In any case, the original net tax capacity must be 
        determined together with subsequent adjustments as set forth in 
        Minnesota Statutes, section 469.177, subdivision 1, paragraph 
        (c).  In determining the original net tax capacity, the net tax 
        capacity of real property exempt from taxation at the time of 
        the request shall be zero, except for real property which is tax 
        exempt by reason of public ownership by the requesting authority 
        and which has been publicly owned for less than one year prior 
        to the date of the request for certification, in which event the 
        net tax capacity of the property shall be the net tax capacity 
        as most recently determined by the commissioner of revenue. 
           Subd. 3.  [PARCEL.] "Parcel" means a tract or plat of land 
        established prior to the certification of the housing 
        replacement district as a single unit for purposes of assessment.
           Subd. 4.  [AUTHORITY.] For housing replacement projects in 
        the city of Crystal, "authority" means the Crystal economic 
        development authority.  For housing replacement projects in the 
        city of Fridley, "authority" means the housing and redevelopment 
        authority in and for the city of Fridley or a successor in 
        interest.  For housing replacement projects in the city of 
        Minneapolis, "authority" means the Minneapolis community 
        development agency.  For housing replacement projects in the 
        city of St. Paul, "authority" means the St. Paul housing and 
        redevelopment authority.  
           Sec. 45.  [ESTABLISHMENT OF HOUSING REPLACEMENT DISTRICTS.] 
           Subdivision 1.  [CREATION OF PROJECTS.] (a) An authority 
        may create a housing replacement project under sections 44 to 
        47, as provided in this section. 
           (b) For the cities of Crystal and Fridley, the authority 
        may designate up to 50 parcels in the city to be included in a 
        housing replacement district.  No more than ten parcels may be 
        included in year one of the district, with up to ten additional 
        parcels added to the district in each of the following nine 
        years.  For the cities of Minneapolis and St. Paul, each 
        authority may designate up to 100 parcels in the city to be 
        included in a housing replacement district over the life of the 
        district.  The only parcels that may be included in a district 
        are (1) vacant sites, (2) parcels containing vacant houses, or 
        (3) parcels containing houses that are structurally substandard, 
        as defined in Minnesota Statutes, section 469.174, subdivision 
        10.  
           (c) The city in which the authority is located must pay at 
        least 25 percent of the housing replacement project costs from 
        its general fund, a property tax levy, or other unrestricted 
        money, not including tax increments. 
           (d) The housing replacement district plan must have as it 
        sole object the acquisition of parcels for the purpose of 
        preparing the site to be sold for market rate housing.  As used 
        in this section, "market rate housing" means housing that has a 
        market value that does not exceed 150 percent of the average 
        market value of single-family housing in that municipality. 
           Subd. 2.  [HOUSING REPLACEMENT DISTRICT PLAN.] To establish 
        a housing replacement district under sections 44 to 47, an 
        authority shall adopt a housing replacement district plan which 
        contains: 
           (1) a statement of the objectives and a description of the 
        housing replacement projects proposed by the authority for the 
        housing replacement district; 
           (2) a statement of the housing replacement district plan, 
        demonstrating the coordination of that plan with the city's 
        comprehensive plan; 
           (3) estimates of the following: 
           (i) cost of the program, including administrative expenses; 
           (ii) sources of revenue to finance or otherwise pay public 
        costs; 
           (iii) the most recent net tax capacity of taxable real 
        property within the housing replacement district; and 
           (iv) the estimated captured net tax capacity of the housing 
        replacement district at completion; 
           (4) statements of the authority's alternate estimates of 
        the impact of the housing replacement district on the net tax 
        capacities of all taxing jurisdictions in which the housing 
        replacement district is located in whole or in part.  For 
        purposes of one statement, the municipality shall assume that 
        the estimated captured net tax capacity would be available to 
        the taxing jurisdictions without creation of the housing 
        replacement district, and for purposes of the second statement, 
        the county shall assume that none of the estimated captured net 
        tax capacity would be available to the taxing jurisdictions 
        without creation of the housing replacement district; and 
           (5) identification of all parcels to be included in the 
        district, to the extent known at the time the original housing 
        replacement district plan is prepared.  At a minimum, the 
        parcels that will be included in the housing replacement 
        district during its first year must be identified in the 
        original housing replacement district plan.  If parcels for 
        subsequent years are not specifically identified, the original 
        housing replacement district plan must include the criteria that 
        will be used by the authority to select parcels to be included 
        in the later years. 
           Subd. 3.  [PROCEDURE.] The provisions of Minnesota 
        Statutes, section 469.175, subdivisions 3, 4, 5, and 6, apply to 
        the establishment and operation of the housing replacement 
        districts created under sections 44 to 47, except as follows: 
           (1) the determination specified in Minnesota Statutes, 
        section 469.175, subdivision 3, clause (1), is not required; and 
           (2) addition of parcels not identified in the original 
        housing replacement district plan is not treated as a 
        modification of that plan requiring an approval process provided 
        that the parcels added are consistent with the criteria 
        described in subdivision 2, clause (5). 
           Sec. 46.  [LIMITATIONS.] 
           Subdivision 1.  [DURATION LIMITS.] No tax increment may be 
        paid to the authority on each parcel in a housing replacement 
        district after 15 years from date of receipt by the county of 
        the first tax increment from that parcel. 
           Subd. 2.  [LIMITATION ON USE OF TAX INCREMENTS.] All 
        revenues derived from tax increments must be used in accordance 
        with the housing replacement district plan.  The revenues must 
        be used solely to pay the costs of site acquisition, relocation, 
        demolition of existing structures, site preparation, and 
        pollution abatement on parcels identified in the housing 
        replacement district plan, as well as public improvements and 
        administrative costs directly related to those parcels. 
           Sec. 47.  [APPLICATION OF OTHER LAWS.] 
           Subdivision 1.  [COMPUTATION OF TAX INCREMENT.] The 
        provisions of Minnesota Statutes, section 469.177, subdivisions 
        1a, and 5 to 10, apply to the computation of tax increment for 
        the housing replacement districts created under sections 44 to 
        47.  The original local tax rate is the rate for the year a 
        parcel is certified for inclusion in a housing replacement 
        district.  
           Subd. 2.  [OTHER PROVISIONS.] References in Minnesota 
        Statutes to tax increment financing districts created and tax 
        increments generated under Minnesota Statutes, sections 469.174 
        to 469.179, other than references in Minnesota Statutes, section 
        273.1399, include housing replacement districts and tax 
        increments subject to sections 44 to 47, provided that Minnesota 
        Statutes, sections 469.174 to 469.179, apply only to the extent 
        specified in sections 44 to 47. 
           Subd. 3.  [MINNEAPOLIS SPECIAL LAW.] Laws 1980, chapter 
        595, section 2, subdivision 2, does not apply to a district 
        created under sections 44 to 47. 
           Sec. 48.  [REPEALER.] 
           Minnesota Statutes 1994, section 469.175, subdivision 7a, 
        is repealed. 
           Sec. 49.  [EFFECTIVE DATE.] 
           Sections 1, 8, and 35, subdivision 1, are effective for 
        special laws, if the enactment occurs on or after the enactment 
        date of this act. 
           Sections 2 and 3 apply to state grants, state loans, and 
        tax increment financing authorized on or after August 1, 1995. 
           Sections 4 to 6, and 48 apply to tax increment financing 
        districts and additions of new areas to existing tax increment 
        financing districts for which the request for certification was 
        made after June 30, 1994, and to all hazardous substance 
        subdistricts, regardless of when the request for certification 
        was made.  For districts for which the tax increment financing 
        plan was approved before July 1, 1995, the governing body of the 
        municipality must elect, by resolution, to be covered by the 
        section by no later than December 31, 1995. 
           Section 7 is effective for new tax increment financing 
        districts for which the request for certification is made after 
        the day following final enactment. 
           Sections 9, 12, 15 to 17, and 28 to 31, are effective the 
        day following final enactment. 
           Section 10 is effective January 1, 1995. 
           Sections 13, 14, 18, and 23 to 27, are effective June 30, 
        1995. 
           Sections 19 to 21, 33, and 34 are effective January 1, 
        1996, and apply to all tax increment financing districts 
        regardless of when the request for certification was made, 
        including requests made before August 1, 1979. 
           Section 22 is effective the day following final enactment 
        and applies to all tax increment financing districts for which 
        the request for certification was made after December 31, 1988. 
           Section 32 is effective beginning for taxes payable in 1994.
           Section 35, subdivision 2, is effective for special laws 
        that become effective two or more days after the day following 
        final enactment. 
           Sections 44 to 47 are effective for the cities of Crystal 
        and Fridley on the day following final enactment, for the cities 
        of Minneapolis and St. Paul on June 1, 1996, and upon compliance 
        by the governing bodies of the local units with Minnesota 
        Statutes, section 645.021, subdivision 3. 
                                   ARTICLE 6
                                 STATE FINANCE
           Section 1.  Minnesota Statutes 1994, section 16A.152, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [BUDGET RESERVE AND CASH FLOW ACCOUNT 
        ESTABLISHED.] (a) A budget reserve and cash flow account is 
        created in the general fund in the state treasury.  The 
        commissioner of finance shall restrict part or all of the 
        balance before reserves in the general fund as may be necessary 
        to fund the budget reserve and cash flow account as provided by 
        law from time to time. 
           (b) The commissioner of finance shall transfer the amount 
        necessary to bring the total amount of the budget reserve and 
        cash flow account, including any existing balance in the account 
        on June 30, 1993, to $360,000,000 $350,000,000 on July 1, 1995.  
        The amounts restricted shall remain in the account until drawn 
        down under subdivision 1 or increased under subdivision 2 and 
        used to meet cash flow deficiencies resulting from uneven 
        distribution of revenue collections and required expenditures 
        during a fiscal year. 
           Sec. 2.  [16A.67] [JUDGMENT BONDS.] 
           Subdivision 1.  [AUTHORIZATION.] The commissioner of 
        finance, upon request of the governor, is authorized to sell and 
        issue state bonds to fund the judgment rendered against the 
        state by the Minnesota supreme court in Cambridge State Bank et. 
        al. v. James, 514 N.W. 2d 565, on April 1, 1994, and interest 
        accrued thereon to fund any bond reserve determined to be 
        necessary, and to pay costs of issuance of the bonds.  The 
        proceeds of the bonds are appropriated for these purposes.  The 
        principal amount of the bonds shall not exceed $400,000,000.  
        The bonds shall be sold and issued upon such terms and in such 
        manner as the commissioner shall determine to be in the best 
        interests of the state.  The final maturity of the bonds shall 
        be not later than June 30, 2005. 
           Subd. 2.  [SECURITY; BONDS NOT PUBLIC DEBT.] The bonds and 
        the interest thereon shall be payable solely from and secured by 
        the revenues appropriated and transferred to the debt service 
        fund established for this purpose in subdivision 4 and 
        investment income thereon, and any bond reserve established for 
        the bonds.  The bonds are not public debt, and the full faith, 
        credit, and taxing powers of the state are not pledged for their 
        payment.  The bonds and the interest thereon shall not be paid, 
        directly or indirectly, in whole or in part, from a tax of 
        statewide application on any class of property, income, 
        transaction, or privilege. 
           Subd. 3.  [SPECIAL REVENUE FUND.] There is established in 
        the state treasury a separate and special revenue fund for 
        deposit of the revenues from net proceeds of the lottery in 
        accordance with section 349A.10, subdivision 5, money received 
        for payment or reimbursement of health care costs in accordance 
        with section 246.18, subdivision 7, state license and service 
        fees as defined in section 16A.6701, and investment income 
        thereon. 
           Subd. 4.  [DEBT SERVICE FUND.] There is established in the 
        state treasury a separate and special debt service fund.  Money 
        transferred or appropriated to the fund and investment income 
        thereon on hand or required to be transferred to the fund shall 
        be used and are irrevocably appropriated for the payment of the 
        principal of and interest on the bonds authorized in this 
        section when due.  
           Subd. 5.  [COVENANTS; AGREEMENTS.] The commissioner may, 
        for and on behalf of the state, enter into such covenants and 
        agreements not inconsistent with subdivisions 1 to 4 and 
        sections 246.18, subdivisions 4 and 6; and 349A.10, subdivision 
        5, as may be necessary or desirable to facilitate the sale and 
        issuance of the bonds on terms favorable to the state, 
        including, but not limited to, covenants and agreements relating 
        to the payment of and security for the bonds, tax-exemption, and 
        disclosure of information required by federal and state 
        securities laws.  Such covenants may not include covenants to 
        continue to operate the state lottery but may include covenants 
        to continue to seek payment by and reimbursement from nonstate 
        sources of health care costs so long as any bonds issued 
        pursuant to this section are outstanding.  The provisions of 
        sections 16A.672 and 16A.675 are applicable to the bonds. 
           Sec. 3.  [16A.6701] [DEPOSIT OF CERTAIN STATE LICENSE FEES, 
        SERVICE FEES, AND CHARGES.] 
           Subdivision 1.  [STATE LICENSE AND SERVICE FEES.] For 
        purposes of section 16A.665, subdivision 3, and this section, 
        the term "state license and service fees" means, and refers to, 
        all license fees, service fees, and charges imposed by law and 
        collected by any state officer, agency, or employee, which are 
        listed below or which are defined as departmental earnings under 
        section 16A.1285, subdivision 1, and the use of which is not 
        otherwise restricted by law, and which are not required to be 
        credited or transferred to a fund other than the general fund:  
           Minnesota Statutes 1994, sections 3.9221; 5.12; 5.14; 5.16; 
        5A.04; 6.58; 13.03, subdivision 10; 16A.155; 16A.48; 16A.54; 
        16A.72; 16B.59; 16B.70; 17A.04; 18.51, subdivision 2; 18.53; 
        18.54; 18C.551; 19.58; 19.64; 27.041, subdivision 2, clauses (d) 
        and (e); 27.07, subdivision 5; 28A.08; 32.071; 32.075; 32.392; 
        35.71; 35.824; 35.95; 41C.12; 45.027, subdivisions 3 and 6; 
        46.041, subdivision 1; 46.131, subdivisions 2, 7, 8, 9, and 10; 
        47.101, subdivision 2; 47.54, subdivisions 1 and 4; 47.62, 
        subdivision 4; 47.65; 48.475, subdivision 1; 48.61, subdivision 
        7; 48.93; 49.36, subdivision 1; 52.01; 52.203; 53.03, 
        subdivisions 1, 5, and 6; 53.09, subdivision 1; 53A.03; 53A.05, 
        subdivision 1; 53A.081, subdivision 3; 54.294, subdivision 1; 
        55.04, subdivision 2; 55.095; 56.02; 56.04; 56.10; 59A.03, 
        subdivision 2; 59A.06, subdivision 3; 60A.14, subdivisions 1 and 
        2; 60A.23, subdivision 8; 60K.19, subdivision 5; 65B.48, 
        subdivision 3; 70A.14, subdivision 4; 72B.04, subdivision 10; 
        79.251, subdivision 5; 80A.28, subdivisions 1, 2, 3, 4, 5, 6, 7, 
        7a, 8, and 9; 80C.04, subdivision 1; 80C.07; 80C.08, subdivision 
        1; 80C.16, subdivisions 2 and 3; 80C.18, subdivision 2; 82.20, 
        subdivision 8 and 9; 82A.04, subdivision 1; 82A.08, subdivision 
        2; 82A.16, subdivisions 2 and 6; 82B.09, subdivision 1; 83.23, 
        subdivisions 2, 3, and 4; 83.25, subdivisions 1 and 2; 83.26, 
        subdivision 2; 83.30, subdivision 2; 83.31, subdivision 2; 
        83.38, subdivision 2; 85.052; 85.053; 85.055; 88.79, subdivision 
        2; 89.035; 89.21; 115.073; 115.77, subdivisions 1 and 2; 116.41, 
        subdivision 2; 116C.69; 116C.712; 116J.9673; 125.08; 136C.04, 
        subdivision 9; 155A.045; 155A.16; 168.27, subdivision 11; 
        168.33, subdivisions 3 and 7; 168.54; 168.67; 168.705; 168A.152; 
        168A.29; 169.345; 171.06, subdivision 2a; 171.29, subdivision 2; 
        176.102; 176.1351; 176.181, subdivision 2a; 177.30; 181A.12; 
        183.545; 183.57; 184.28; 184.29; 184A.09; 201.091, subdivision 
        5; 204B.11; 207A.02; 214.06; 216C.261; 221.0355; 239.101; 
        240.06; 240.07; 240.08; 240.09; 240.10; 246.51; 270.69, 
        subdivision 2; 270A.07; 272.484; 296.06; 296.12; 296.17; 297.04; 
        297.33; 299C.46; 299C.62; 299K.09; 299K.095; 299L.07; 299M.04; 
        300.49; 318.02; 323.44, subdivision 3; 325D.415; 326.22; 
        326.3331; 326.47; 326.50; 326.92, subdivisions 1 and 3; 327.33; 
        331A.02; 332.15, subdivisions 2 and 3; 332.17; 332.22, 
        subdivision 1; 332.33, subdivisions 3 and 4; 332.54, subdivision 
        7; 333.055; 333.20; 333.23; 336.9-413; 336A.04; 336A.05; 
        336A.09; 345.35; 345.43, subdivision 1; 345.44; 345.55, 
        subdivision 3; 347.33; 349.151; 349.161; 349.162; 349.163; 
        349.164; 349.165; 349.166; 349.167; 357.08; 359.01, subdivision 
        3; 360.018; 360.63; 386.68; and 414.01, subdivision 11; 
        Minnesota Statutes 1994, chapters 154; 216B; 237; 302A; 303; 
        308A; 317A; 322A; and 322B; Laws 1990, chapter 593; Laws 1993, 
        chapter 254, section 7; and Laws 1994, chapter 573, section 4; 
        Minnesota Rules, parts 1800.0500; 1950.1070; 2100.9300; 
        7515.0210; and 9545.2000 to 9545.2040. 
           Subd. 2.  [FEES CREDITED TO SPECIAL REVENUE FUND.] All 
        state license and service fees must be credited to the special 
        revenue fund created in section 16A.67, subdivision 3.  Money 
        credited to the special revenue fund must be transferred to the 
        debt service fund established in section 16A.67, subdivision 4, 
        at the times and in the amounts determined by the commissioner 
        of finance to be necessary to provide for the payment and 
        security of bonds issued pursuant to section 16A.67.  On or 
        before the tenth day of each month, any money in the special 
        revenue fund not required to be transferred to the debt service 
        fund must be transferred to the general fund. 
           Subd. 3.  [APPLICABILITY.] If any state license or service 
        fee described in subdivision 1 is determined by the attorney 
        general or a court of competent jurisdiction to be a tax, the 
        provisions of subdivisions 1 and 2 no longer apply to it. 
           Sec. 4.  Minnesota Statutes 1994, section 246.18, 
        subdivision 4, as amended by Laws 1995, chapter 207, article 8, 
        section 28, is amended to read: 
           Subd. 4.  [COLLECTIONS DEPOSITED IN THE GENERAL FUND.] 
        Except as provided in subdivisions 2, 5, and 6, and 7, all 
        receipts from collection efforts for the regional treatment 
        centers, state nursing homes, and other state facilities as 
        defined in section 246.50, subdivision 3, must be deposited in 
        the general fund.  The commissioner shall ensure that the 
        departmental financial reporting systems and internal accounting 
        procedures comply with federal standards for reimbursement for 
        program and administrative expenditures and fulfill the purpose 
        of this paragraph. 
           Sec. 5.  Minnesota Statutes 1994, section 246.18, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [USE OF CERTAIN REIMBURSEMENT FUNDS.] Except as 
        provided in subdivisions 2, 5, and 6, and unless otherwise 
        required by federal law, during any period in which bonds are 
        issued and outstanding under section 16A.67, all money received 
        from the federal government or other nonstate source for payment 
        or reimbursement of health care costs incurred at regional 
        treatment centers, state nursing homes, and other state 
        facilities as defined in section 246.50, subdivision 3, must be 
        credited to the special revenue fund created in section 16A.67, 
        subdivision 3.  Money credited to the special revenue fund must 
        be transferred to the debt service fund established in section 
        16A.67, subdivision 4, at the times and in the amounts 
        determined by order of the commissioner of finance to be 
        necessary to provide for the payment and security of bonds 
        issued pursuant to section 16A.67.  On or before the tenth day 
        of each month, any money in the special revenue fund not 
        required to be transferred to the debt service fund must be 
        transferred to the general fund. 
           Sec. 6.  Minnesota Statutes 1994, section 349A.10, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DEPOSIT OF NET PROCEEDS.] Within 30 days after 
        the end of each month, the director shall deposit in the state 
        treasury the net proceeds of the lottery, which is the balance 
        in the lottery fund after transfers to the lottery prize fund 
        and credits to the lottery operations account.  Of the net 
        proceeds, 40 percent must be credited to the Minnesota 
        environment and natural resources trust fund, and the remainder 
        must be credited to the general fund special revenue fund 
        created in section 16A.67, subdivision 3.  Money created to the 
        special revenue fund must be transferred to the debt service 
        fund established in section 16A.67, subdivision 4, at the times 
        and in the amounts determined by the commissioner of finance to 
        be necessary to provide for the payment and security of bonds 
        issued pursuant to section 16A.67.  On or before the tenth day 
        of each month, any money in the special revenue fund not 
        required to be transferred to the debt service fund must be 
        transferred to the general fund. 
           Sec. 7.  [EFFECTIVE DATE.] 
           Sections 1 to 6 are effective July 1, 1995. 
                                   ARTICLE 7
                                  TACONITE TAX
           Section 1.  Minnesota Statutes 1994, section 298.01, 
        subdivision 4, is amended to read: 
           Subd. 4.  [OCCUPATION TAX; IRON ORE; TACONITE 
        CONCENTRATES.] A person engaged in the business of mining or 
        producing of iron ore or, taconite concentrates or direct 
        reduced ore in this state shall pay an occupation tax to the 
        state of Minnesota.  The tax is determined in the same manner as 
        the tax imposed by section 290.02, except that sections 290.05, 
        subdivision 1, clause (a), and 290.17, subdivision 4, do not 
        apply.  The tax is in addition to all other taxes. 
           Sec. 2.  Minnesota Statutes 1994, section 298.227, is 
        amended to read: 
           298.227 [TACONITE ECONOMIC DEVELOPMENT FUND.] 
           An amount equal to that distributed pursuant to each 
        taconite producer's taxable production and qualifying sales 
        under section 298.28, subdivision 9a, shall be held by the iron 
        range resources and rehabilitation board in a separate taconite 
        economic development fund for each taconite and direct reduced 
        ore producer.  Money from the fund for each producer shall be 
        released only on the written authorization of a joint committee 
        consisting of an equal number of representatives of the salaried 
        employees and the nonsalaried production and maintenance 
        employees of that producer.  The district 33 director of the 
        United States Steelworkers of America, on advice of each local 
        employee president, shall select the employee members.  In 
        nonorganized operations, the employee committee shall be elected 
        by the nonsalaried production and maintenance employees.  Each 
        producer's joint committee may authorize release of the funds 
        held pursuant to this section only for acquisition of equipment 
        and facilities for the producer or for research and development 
        in Minnesota on new mining, or taconite, iron, or steel 
        production technology.  Funds may be released only upon a 
        majority vote of the representatives of the committee.  If a 
        taconite production facility is sold after operations at the 
        facility had ceased, any money remaining in the fund for the 
        former producer may be released to the purchaser of the facility 
        on the terms otherwise applicable to the former producer under 
        this section.  Any portion of the fund which is not released by 
        a joint committee within two years of its deposit in the fund 
        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 for 
        placement in their respective special accounts.  Two-thirds of 
        the unreleased funds shall be distributed to the taconite 
        environmental protection fund and one-third to the northeast 
        Minnesota economic protection trust fund.  This section is 
        effective for taxes payable in 1993 and 1994. 
           Sec. 3.  Minnesota Statutes 1994, section 298.24, 
        subdivision 1, is amended to read: 
           Subdivision 1.  (a) For concentrate produced in 1992, 1993, 
        and 1994, and 1995 there is 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 $2.054 per gross ton of 
        merchantable iron ore concentrate produced therefrom.  
           (b) For concentrates produced in 1995 1996 and subsequent 
        years, the tax rate shall be equal to the preceding year's tax 
        rate plus an amount equal to the preceding year's tax rate 
        multiplied by the percentage increase in the implicit price 
        deflator from the fourth quarter of the second preceding year to 
        the fourth quarter of the preceding year.  "Implicit price 
        deflator" for the gross national product means the implicit 
        price deflator prepared by the bureau of economic analysis of 
        the United States Department of Commerce.  
           (c) The tax shall be imposed on the average of the 
        production for the current year and the previous two years.  The 
        rate of the tax imposed will be the current year's tax rate.  
        This clause shall not apply in the case of the closing of a 
        taconite facility if the property taxes on the facility would be 
        higher if this clause and section 298.25 were not applicable.  
           (d) If the tax or any part of the tax imposed by this 
        subdivision is held to be unconstitutional, a tax of $2.054 per 
        gross ton of merchantable iron ore concentrate produced shall be 
        imposed.  
           (e) Consistent with the intent of this subdivision to 
        impose a tax based upon the weight of merchantable iron ore 
        concentrate, the commissioner of revenue may indirectly 
        determine the weight of merchantable iron ore concentrate 
        included in fluxed pellets by subtracting the weight of the 
        limestone, dolomite, or olivine derivatives or other basic flux 
        additives included in the pellets from the weight of the 
        pellets.  For purposes of this paragraph, "fluxed pellets" are 
        pellets produced in a process in which limestone, dolomite, 
        olivine, or other basic flux additives are combined with 
        merchantable iron ore concentrate.  No subtraction from the 
        weight of the pellets shall be allowed for binders, mineral and 
        chemical additives other than basic flux additives, or moisture. 
           (f) (1) Notwithstanding any other provision of this 
        subdivision, for concentrates produced in 1994 through 1999 the 
        first five years of a plant's production of direct reduced ore, 
        the rate of the tax on direct reduced ore is determined under 
        this paragraph.  As used in this paragraph, "direct reduced ore" 
        is ore that results in a product that has an iron content of at 
        least 75 percent.  The rate to be applied to direct reduced ore 
        is 25 percent of the rate otherwise determined under this 
        subdivision for the first 500,000 of taxable tons for the 
        production year, and 50 percent of the rate otherwise determined 
        for any remainder.  If the taxpayer had no production in the two 
        years prior to the the current production year, the tonnage 
        eligible to be taxed at 25 percent of the rate otherwise 
        determined under this subdivision is the first 166,667 tons.  If 
        the taxpayer had some production in the year prior to the 
        current production year but no production in the second prior 
        year, the tonnage eligible to be taxed at 25 percent of the rate 
        otherwise determined under this subdivision is the first 333,333 
        tons. 
           (2) Production of direct reduced ore in this state is 
        subject to the tax imposed by this section, but if that 
        production is not produced by a producer of taconite or iron 
        sulfides, the production of taconite or iron sulfides consumed 
        in the production of direct reduced iron in this state is not 
        subject to the tax imposed by this section on taconite or iron 
        sulfides. 
           Sec. 4.  Minnesota Statutes 1994, section 298.25, is 
        amended to read: 
           298.25 [TAXES ADDITIONAL TO OTHER TAXES.] 
           The taxes imposed under section 298.24 shall be in addition 
        to the occupation tax imposed upon the business of mining and 
        producing iron ore.  Except as herein otherwise provided, such 
        taxes shall be in lieu of all other taxes upon such 
        taconite and, iron sulphides, and direct reduced ore or the 
        lands in which they are contained, or upon the mining or 
        quarrying thereof, or the production of concentrate or direct 
        reduced ore therefrom, or upon the concentrate or direct reduced 
        ore produced, or upon the machinery, equipment, tools, supplies 
        and buildings used in such mining, quarrying or production, or 
        upon the lands occupied by, or used in connection with, such 
        mining, quarrying or production facilities.  If electric or 
        steam power for the mining, transportation or concentration of 
        such taconite or the, concentrates or direct reduced ore 
        produced therefrom is generated in plants principally devoted to 
        the generation of power for such purposes, the plants in which 
        such power is generated and all machinery, equipment, tools, 
        supplies, transmission and distribution lines used in the 
        generation and distribution of such power, shall be considered 
        to be machinery, equipment, tools, supplies and buildings used 
        in the mining, quarrying, or production of taconite and, 
        taconite concentrates or direct reduced ore within the meaning 
        of this section.  If part of the power generated in such a plant 
        is used for purposes other than the mining or concentration of 
        taconite or direct reduced ore or the transportation or loading 
        of taconite or, the concentrates thereof or direct reduced ore, 
        a proportionate share of the value of such generating 
        facilities, equal to the proportion that the power used for such 
        other purpose bears to the generating capacity of the plant, 
        shall be subject to the general property tax in the same manner 
        as other property; provided, power generated in such a plant and 
        exchanged for an equivalent amount of power which is used for 
        the mining, transportation, or concentration of such 
        taconite or, concentrates or direct reduced ore produced 
        therefrom, shall be considered as used for such purposes within 
        the meaning of this section.  Nothing herein shall prevent the 
        assessment and taxation of the surface of reserve land 
        containing taconite and not occupied by such facilities or used 
        in connection therewith at the value thereof without regard to 
        the taconite or iron sulphides therein, nor the assessment and 
        taxation of merchantable iron ore or other minerals, or 
        iron-bearing materials other than taconite or iron sulphides in 
        such lands in the manner provided by law, nor the assessment and 
        taxation of facilities used in producing sulphur or sulphur 
        products from iron sulphide concentrates, or in refining such 
        sulphur products, under the general property tax laws.  Nothing 
        herein shall except from general taxation or from taxation as 
        provided by other laws any property used for residential or 
        townsite purposes, including utility services thereto. 
           Sec. 5.  Minnesota Statutes 1994, section 298.28, 
        subdivision 9a, is amended to read: 
           Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 10.4 
        cents per ton for distributions in 1993 and 15.4 cents per ton 
        for distributions in 1994, 1995, and 1996, and 1997 shall be 
        paid to the taconite economic development fund.  No distribution 
        shall be made under this paragraph in any year in which total 
        industry production falls below 30 million tons. 
           (b) An amount equal to 50 percent of the tax under section 
        298.24 for concentrate sold in the form of pellet chips and 
        fines not exceeding 5/16 inch in size and not including crushed 
        pellets shall be paid to the taconite economic development 
        fund.  The amount paid shall not exceed $700,000 annually for 
        all companies.  If the initial amount to be paid to the fund 
        exceeds this amount, each company's payment shall be prorated so 
        the total does not exceed $700,000. 
           Sec. 6.  Minnesota Statutes 1994, section 298.296, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TEMPORARY LOAN AUTHORITY.] The board may 
        recommend that up to $10,000,000 from the corpus of the trust 
        may be used for loans as provided in this subdivision.  The 
        money would be available for loans for construction and 
        equipping of facilities constituting (1) a value added iron 
        products plant, which may be either a new plant or a facility 
        incorporated into an existing plant that produces iron upgraded 
        to a minimum of 75 percent iron content or any iron alloy with a 
        total minimum metallic content of 90 percent; or (2) a new mine 
        or minerals processing plant for any mineral subject to the net 
        proceeds tax imposed under section 298.015.  A loan under this 
        subdivision may not exceed $5,000,000 for any facility.  The 
        authority to make loans under this subdivision terminates 
        December 31, 1995 1997. 
           Sec. 7.  [EFFECTIVE DATE.] 
           This article is effective for production years beginning 
        after December 31, 1994. 
                                   ARTICLE 8
                           AIDS TO LOCAL GOVERNMENTS
           Section 1.  Minnesota Statutes 1994, section 465.795, 
        subdivision 7, is amended to read: 
           Subd. 7.  [SCOPE.] As used in sections 465.795 to 465.799 
        and sections 465.801 to 465.87 465.88, the terms defined in this 
        section have the meanings given them. 
           Sec. 2.  Minnesota Statutes 1994, section 465.796, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DUTIES OF BOARD.] The board shall: 
           (1) accept applications from local government units for 
        waivers of administrative rules and temporary, limited 
        exemptions from enforcement of procedural requirements in state 
        law as provided in section 465.797, and determine whether to 
        approve, modify, or reject the application; 
           (2) accept applications for grants to local government 
        units and related organizations proposing to design models or 
        plans for innovative service delivery and management as provided 
        in section 465.798 and determine whether to approve, modify, or 
        reject the application; 
           (3) accept applications from local government units for 
        financial assistance to enable them to plan for cooperative 
        efforts as provided in section 465.799, and determine whether to 
        approve, modify, or reject the application; 
           (4) accept applications from eligible local government 
        units for service-sharing grants as provided in section 465.801, 
        and determine whether to approve, modify, or reject the 
        application; 
           (5) accept applications from counties, cities, and towns 
        proposing to combine under sections 465.81 to 465.87 465.88, and 
        determine whether to approve or disapprove the application; and 
           (6) make recommendations to the legislature for the 
        authorization of pilot projects for the implementation of 
        innovative service delivery activities that require statutory 
        authorization; 
           (7) make recommendations to the legislature regarding the 
        elimination of state mandates that inhibit local government 
        efficiency, innovation, and cooperation. by prescribing specific 
        processes for achieving a desired outcome; 
           (8) investigate and review the role of unfunded state 
        mandates in intergovernmental relations and assess their impact 
        on state and local government objectives and responsibilities; 
           (9) make recommendations to the governor and the 
        legislature regarding: 
           (i) allowing flexibility for local units of government in 
        complying with specific unfunded state mandates for which terms 
        of compliance are unnecessarily rigid or complex; 
           (ii) reconciling any two or more unfunded state mandates 
        that impose contradictory or inconsistent requirements; 
           (iii) terminating unfunded state mandates that are 
        duplicative, obsolete, or lacking in practical utility; 
           (iv) suspending, on a temporary basis, unfunded state 
        mandates that are not vital to public health and safety and that 
        compound the fiscal difficulties of local units of government, 
        including recommendations for initiating the suspensions; 
           (v) consolidating or simplifying unfunded state mandates or 
        the planning or reporting requirements of the mandates, in order 
        to reduce duplication and facilitate compliance by local units 
        of government with those mandates; and 
           (vi) establishing common state definitions or standards to 
        be used by local units of government in complying with unfunded 
        state mandates that use different definitions or standards for 
        the same terms or principles; and 
           (10) identify relevant unfunded state mandates. 
           The duties imposed under clauses (8) to (10) shall be 
        performed to the extent possible given existing resources.  Each 
        recommendation under clause (9) shall, to the extent 
        practicable, identify the specific unfunded state mandates to 
        which the recommendation applies.  The commissioners or 
        directors of state agencies responsible for the promulgation or 
        enforcement of the unfunded mandates addressed in clauses (7) to 
        (10) shall assign staff to assist the board in carrying out the 
        board's duties under this section. 
        The board may purchase services from the metropolitan council in 
        reviewing requests for waivers and grant applications. 
           Sec. 3.  Minnesota Statutes 1994, section 465.797, 
        subdivision 5, is amended to read: 
           Subd. 5.  [CONDITIONS OF AGREEMENTS.] (a) If the board 
        grants a request for a waiver or exemption, the board and the 
        local government unit shall enter into an agreement providing 
        for the delivery of the service or program that is the subject 
        of the application.  The agreement must specify desired outcomes 
        and the means of measurement by which the board will determine 
        whether the outcomes specified in the agreement have been met.  
        The agreement must specify the duration of the waiver or 
        exemption, which.  The duration of a waiver from an 
        administrative rule may be for no less than two years and no 
        more than four years, subject to renewal if both parties agree.  
        An exemption from enforcement of a law terminates ten days after 
        adjournment of the regular legislative session held during the 
        calendar year following the year when the exemption is granted, 
        unless the legislature has acted to extend or make permanent the 
        exemption. 
           (b) If the board grants a waiver or exemption, it must 
        report the waiver or exemption to the legislature, including the 
        chairs of the governmental operations and appropriate policy 
        committees in the house and senate, and the governor within 30 
        days. 
           (c) The board may reconsider or renegotiate the agreement 
        if the rule or law affected by the waiver or exemption is 
        amended or repealed during the term of the original agreement.  
        A waiver of a rule under this section has the effect of a 
        variance granted by an agency under section 14.05, subdivision 
        4.  A local unit of government that is granted an exemption from 
        enforcement of a procedural requirement in state law under this 
        section is exempt from that law for the duration of the 
        exemption.  The board may require periodic reports from the 
        local government unit, or conduct investigations of the service 
        or program. 
           Sec. 4.  Minnesota Statutes 1994, section 465.798, is 
        amended to read: 
           465.798 [SERVICE BUDGET MANAGEMENT MODEL GRANTS.] 
           One or more local units of governments, an association of 
        local governments, the metropolitan council, a local unit of 
        government acting in conjunction with an organization or a state 
        agency, or an organization established by two or more local 
        units of government under a joint powers agreement may apply to 
        the board of government innovation and management for a grant to 
        be used to develop models for innovative service budget 
        management.  The application to the board must state what other 
        sources of funding have been considered by the local units of 
        government to implement the project and explain why it is not 
        possible to complete the project without assistance from the 
        board.  The board may not award a grant if it determines that 
        the local units of government could complete the project without 
        board assistance.  A copy of the application must be provided by 
        the units to the exclusive representatives certified under 
        section 179A.12 to represent employees who provide the service 
        or program affected by the application.  
           Proposed models may provide options to local governments, 
        neighborhood or community organizations, or individuals for 
        managing budgets for service delivery.  A copy of the work 
        product for which the grant was provided must be furnished to 
        the board upon completion, and the board may disseminate it to 
        other local units of government or interested groups.  If the 
        board finds that the model was not completed or implemented 
        according to the terms of the grant agreement, it may require 
        the grantee to repay all or a portion of the grant.  The board 
        shall award grants on the basis of each qualified applicant's 
        score under the scoring system in section 465.802.  The amount 
        of a grant under this section may not exceed $50,000. 
           Sec. 5.  Minnesota Statutes 1994, section 465.799, is 
        amended to read: 
           465.799 [COOPERATION PLANNING GRANTS.] 
           Two or more local government units; an association of local 
        governments; a local unit of government acting in conjunction 
        with the metropolitan council, an organization, or a state 
        agency; or an organization formed by two or more local units of 
        government under a joint powers agreement may apply to the board 
        of government innovation and cooperation for a grant to be used 
        to develop a plan for intergovernmental cooperation in providing 
        services.  The application to the board must state what other 
        sources of funding have been considered by the local units of 
        government to implement the project and explain why it is not 
        possible to complete the project without assistance from the 
        board.  The board may not award a grant if it determines that 
        the local units of government could complete the project without 
        board assistance.  A copy of the application must be submitted 
        by the applicants to the exclusive representatives certified 
        under section 179A.12 to represent employees who provide the 
        service or program affected by the application.  
           The plan may include model contracts or agreements to be 
        used to implement the plan.  A copy of the work product for 
        which the grant was provided must be furnished to the board upon 
        completion, and the board may disseminate it to other local 
        units of government or interested groups.  If the board finds 
        that the grantee has failed to implement the plan according to 
        the terms of the agreement, it may require the grantee to repay 
        all or a portion of the grant.  The board shall award grants on 
        the basis of each qualified applicant's score under the scoring 
        system in section 465.802.  The amount of a grant under this 
        section may not exceed $50,000. 
           Sec. 6.  Minnesota Statutes 1994, section 465.801, is 
        amended to read: 
           465.801 [SERVICE SHARING GRANTS.] 
           Two or more local units of government; an association of 
        local governments; a local unit of government acting in 
        conjunction with the metropolitan council, an organization, or a 
        state agency; or an organization established by two or more 
        local units of government under a joint powers agreement may 
        apply to the board of government innovation and cooperation for 
        a grant to be used to meet the start-up costs of providing 
        shared services or functions.  Agreements solely to make joint 
        purchases are not sufficient to qualify under this section.  The 
        application to the board must state what other sources of 
        funding have been considered by the local units of government to 
        implement the project and explain why it is not possible to 
        complete the project without assistance from the board.  The 
        board may not award a grant if it determines that the local 
        units of government could complete the project without board 
        assistance.  A copy of the application must be provided by the 
        applicants to the exclusive representatives certified under 
        section 179A.12 to represent employees who provide the service 
        or program affected by the application. 
           The proposal must include plans fully to integrate a 
        service or function provided by two or more local government 
        units.  A copy of the work product for which the grant was 
        provided must be furnished to the board upon completion, and the 
        board may disseminate it to other local units of government or 
        interested groups.  If the board finds that the grantee has 
        failed to implement the plan according to the terms of the 
        agreement, it may require the grantee to repay all or a portion 
        of the grant.  The board shall award grants on the basis of each 
        qualified applicant's score under the scoring system in section 
        465.802.  The amount of a grant under this section may not 
        exceed $100,000. 
           Sec. 7.  Minnesota Statutes 1994, section 465.81, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SCOPE.] Sections 465.81 to 465.87 
        establish procedures to be used by counties, cities, or towns 
        that adopt by resolution an agreement providing a plan to 
        provide combined services during an initial two-year cooperation 
        period that may not exceed two years and then to merge into a 
        single unit of government over the succeeding two-year period.  
           Sec. 8.  Minnesota Statutes 1994, section 465.82, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONTENTS OF PLAN.] The plan shall must state:  
           (1) the specific cooperative activities the units will 
        engage in during the first two years of the venture; 
           (2) the steps to be taken to effect the merger of the 
        governmental units, beginning in the third year of the process, 
        with completion no later than four years after the process 
        begins; 
           (3) the steps by which a single governing body will be 
        created.  Notwithstanding any other law to the contrary, all 
        current members of the governing bodies of the local government 
        units that propose to combine under sections 465.81 to 465.87 
        may serve on the initial governing body of the combined unit, 
        until a gradual reduction in membership is achieved by foregoing 
        election of new members when terms expire until the number 
        permitted by other law is reached; 
           (4) changes in services provided, facilities used, 
        administrative operations and staffing to effect the preliminary 
        cooperative activities and the final merger and a two-, five-, 
        and ten-year projection of expenditures for each unit if it 
        combined and if it remained separate; 
           (5) treatment of employees of the merging governmental 
        units, specifically including provisions for reassigning 
        employees, dealing with unions, and providing financial 
        incentives to encourage early retirements; 
           (6) financial arrangements for the merger, specifically 
        including responsibility for debt service on outstanding 
        obligations of the merging entities; 
           (7) two, five, and ten-year projections prepared by the 
        department of revenue at the request of the local government 
        unit, of revenues, expenditures, and property taxes for each 
        unit if it combined and if it remained separate one- and 
        two-year impact analysis, prepared by the granting state agency 
        at the request of the local government unit, of major state aid 
        revenues received for each unit if it combined and if it 
        remained separate.  This would also include an impact analysis, 
        prepared by the department of revenue, of property tax revenue 
        implications, if any, associated with tax increment financing 
        districts and fiscal disparities resulting from the merger; 
           (8) procedures for a referendum to be held prior to the 
        year of before the proposed combination to approve combining the 
        local government units, specifically stating whether a majority 
        of those voting in each district proposed for combination or a 
        majority of those voting on the question in the entire area 
        proposed for combination would be needed to pass the referendum; 
        and 
           (9) a time schedule for implementation. 
           Notwithstanding clause (3) or any other law to the 
        contrary, all current members of the governing bodies of the 
        local governmental units that propose to combine under sections 
        465.81 to 465.88 may serve on the initial governing body of the 
        combined unit until a gradual reduction in membership is 
        achieved by foregoing election of new members when terms expire 
        until the number permitted by other law is reached. 
           Sec. 9.  Minnesota Statutes 1994, section 465.84, is 
        amended to read: 
           465.84 [REFERENDUM.] 
           During the first or second year of cooperation, and after 
        approval of the plan by the department board under section 
        465.83, a referendum on the question of combination shall must 
        be conducted.  The referendum shall must be on a date called by 
        the governing bodies of the units that propose to combine.  The 
        referendum shall must be conducted according to the Minnesota 
        election law, as defined in section 200.01.  If the referendum 
        fails, the same question or a modified question may be submitted 
        the following year.  If the referendum fails again, the same 
        question may not be submitted.  Referendums shall be conducted 
        on the same date in all local government units. 
           Sec. 10.  Minnesota Statutes 1994, section 465.85, is 
        amended to read: 
           465.85 [COUNTY AUDITOR TO PREPARE PLAT.] 
           Upon the request of two or more local government units that 
        have adopted a resolution to cooperate and combine, the county 
        auditor shall prepare a plat.  If the proposed combined local 
        government unit is located in more than one county, the request 
        shall must be submitted to the county auditor of the county that 
        has the greatest land area in the proposed district.  The plat 
        must show:  
           (1) the boundaries of each of the present units; 
           (2) the boundaries of the proposed unit; 
           (3) the boundaries of proposed election districts, if 
        requested; and 
           (4) other information deemed pertinent by the governing 
        bodies or the county auditor. 
           Sec. 11.  Minnesota Statutes 1994, section 465.87, is 
        amended to read: 
           465.87 [AIDS TO COOPERATING AND COMBINING UNITS.] 
           Subdivision 1.  [ELIGIBILITY.] A local government unit is 
        eligible to apply for aid under this section if the board has 
        approved its plan to cooperate and combine under section 465.83. 
           Subd. 1a.  [ADDITIONAL ELIGIBILITY.] A local government 
        unit is eligible to apply for aid under this section if it has 
        combined with another unit of government in accordance with any 
        process within chapter 414 that results in the elimination of at 
        least one local government unit and a copy of the municipal 
        board's order combining the two units of government is forwarded 
        to the board.  If two units of government cooperate in the 
        orderly annexation of the entire area of a third unit of 
        government which has a population of at least 8,000 people, the 
        two units of government are each eligible for the amount of aid 
        specified in subdivision 2.  
           Subd. 1b.  [APPLICATION PROCEDURES.] A local government 
        unit covered by subdivision 1 may submit an application to the 
        board along with the final plan for cooperation and combination 
        required by section 465.83.  A local government unit covered by 
        subdivision 1a may submit an application to the board after the 
        issuance of the municipal board's order combining the two units 
        of government.  The application must be on a form prescribed by 
        the board and must specify the total amount of aid requested up 
        to the maximum authorized by subdivision 2.  The application 
        must also include a detailed explanation of the need for the aid 
        and provide a budget indicating how the requested aid would be 
        used. 
           Subd. 1c.  [AID AWARD.] The board may grant or deny an 
        application for aid made by a local government unit under 
        subdivision 1b.  The board may also grant aid to an applicant in 
        an amount that is less than the amount requested by the 
        applicant.  The board shall base its decision on the following 
        criteria: 
           (1) whether the local government unit has adequately 
        demonstrated that the requested aid is essential to 
        accomplishing the proposed combination; 
           (2) whether the activities to be funded by the requested 
        aid are directly related to the combination; 
           (3) whether other sources of funding for the activities 
        identified in the application, including short-term cost 
        savings, are available to the applicant as a direct result of 
        the combination; and 
           (4) whether there are competing needs for the funding 
        available to the board that would provide a greater public 
        benefit than would be realized by the combination or activities 
        described in the application.  
           The board may award money to an applicant for a period not 
        to exceed four years.  Any funding awarded for a period beyond 
        the biennium in which an award is made, however, is contingent 
        on future appropriations to the board. 
           Subd. 2.  [AMOUNT OF AID.] The annual amount of aid to be 
        paid to each eligible local government unit is equal to may not 
        exceed the following per capita amounts, based on the combined 
        population of the units, not to exceed $100,000 per year for any 
        unit as estimated by the state demographer, or $100,000, 
        whichever is less. 
              Combined Population                   Aid
               after Combination                 Per Capita
                     0 -  2,500                     $25 
                 2,500 -  5,000                      20 
                 5,000 - 20,000                      15
                    over 20,000                      10
        Payments shall must be made on the dates provided for payments 
        of local government aid under section 477A.013, beginning in the 
        year during which substantial cooperative activities under the 
        plan initially occur, unless those activities begin after July 
        1, in which case the initial aid payment shall must be made in 
        the following calendar year.  Payments to a local government 
        unit that qualifies for aid under subdivision 1a must be made on 
        the dates provided for payments of local government aids under 
        section 477A.013, beginning in the calendar year during which a 
        combination in any form is expected to be ordered by the 
        Minnesota municipal board as evidenced in a resolution adopted 
        by July 1 by the affected local government units declaring their 
        intent to combine.  The resolutions must certify that the 
        combination agreement addressing all issues relative to the 
        combination is substantially complete.  The total amount of aid 
        paid may not exceed the amount appropriated to the board for 
        purposes of this section. 
           Subd. 3.  [TERMINATION OF AID; RECAPTURE.] If a second 
        referendum under section 465.84 fails, or if an initial 
        referendum fails and the governing body does not schedule a 
        second referendum within one year after the first has failed, or 
        if one or more of the local government units that proposed to 
        combine terminates its participation in the cooperation or 
        combination, no additional aid will may be paid under this 
        section.  The amount previously paid under this section to a 
        unit must be repaid if the governing body of the unit acts to 
        terminate its current level of participation in the plan.  The 
        amount previously paid to the unit must be repaid in annual 
        installments equal to the total amount paid to the unit for all 
        years under subdivision subdivisions 1c and 2, divided by the 
        number of years when payments were made. 
           Sec. 12.  [465.88] [PLANNING AID FOR CONSOLIDATION 
        STUDIES.] 
           Two local units of government with a combined population of 
        2,500 or less based on the most recent decennial census may 
        apply to the board for aid to assist in the study of a possible 
        consolidation or combination.  To be eligible for receipt of aid 
        under this section, the two local units of government must be 
        subject to a municipal board motion to form a consolidation 
        commission under section 414.041, subdivision 2, or the 
        governing bodies of the local units of government must have 
        approved a resolution expressing their intent to develop and 
        submit a combination plan for consideration by the board.  The 
        application must be on a form prescribed by the board and must 
        provide a proposed budget detailing how the requested aid shall 
        be used.  The governing bodies of the local units of government 
        must also approve resolutions certifying that the requested aid 
        is essential for paying a portion of the costs associated with 
        the consolidation or combination study.  The board may grant up 
        to $10,000 in aid for each application received. 
           Sec. 13.  Minnesota Statutes 1994, section 477A.011, 
        subdivision 36, is amended to read: 
           Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
        paragraphs (b) and (c), "city aid base" means, for each city, 
        the sum of the local government aid and equalization aid it was 
        originally certified to receive in calendar year 1993 under 
        Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, 
        and the amount of disparity reduction aid it received in 
        calendar year 1993 under Minnesota Statutes 1992, section 
        273.1398, subdivision 3. 
           (b) For aids payable in 1996 and thereafter, a city that in 
        1992 or 1993 transferred an amount from governmental funds to 
        its sewer and water fund, which amount exceeded its net levy for 
        taxes payable in the year in which the transfer occurred, has a 
        "city aid base" equal to the sum of (i) its city aid base, as 
        calculated under paragraph (a), and (ii) one-half of the 
        difference between its city aid distribution under section 
        477A.013, subdivision 9, for aids payable in 1995 and its city 
        aid base for aids payable in 1995. 
           (c) The city aid base for any city with a population less 
        than 500 is increased by $40,000 for aids payable in calendar 
        year 1995 and thereafter, and the maximum amount of total aid it 
        may receive under section 477A.013, subdivision 9, paragraph 
        (c), is also increased by $40,000 for aids payable in calendar 
        year 1995 only, provided that: 
           (i) the average total tax capacity rate for taxes payable 
        in 1995 exceeds 200 percent; 
           (ii) the city portion of the tax capacity rate exceeds 100 
        percent; and 
           (iii) its city aid base is less than $60 per capita. 
           Sec. 14.  Minnesota Statutes 1994, section 477A.0121, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PUBLIC DEFENDER COSTS.] Each calendar year, four 
        two percent of the total appropriation for this section shall be 
        retained by the commissioner of revenue to make reimbursements 
        to the commissioner of finance for payments made under section 
        611.27.  The reimbursements shall be to defray the additional 
        costs associated with court-ordered counsel under section 
        611.27.  Any retained amounts not used for reimbursement in a 
        year shall be included in the next distribution of county 
        criminal justice aid that is certified to the county auditors 
        for the purpose of property tax reduction for the next taxes 
        payable year.  
           Sec. 15.  Minnesota Statutes 1994, section 477A.0132, is 
        amended to read: 
           477A.0132 [AID REDUCTIONS TO LOCAL GOVERNMENTS.] 
           Subdivision 1.  [AFFECTED LOCAL GOVERNMENTS.] The following 
        permanent and nonpermanent reductions shall be made in aids paid 
        to the following local units of government: 
           (a) For aids payable in 1992 1996, there shall be a 
        permanent nonpermanent reduction in aids to counties, 
        cities, towns, and special taxing districts of $86,000,000.  For 
        purposes of this reduction, hospital districts are not 
        considered special taxing districts $16,000,000, provided that 
        section 25, subdivision 1, is enacted; otherwise the reduction 
        is $14,000,000. 
           (b) Aid reductions required under section 16A.711, 
        subdivision 5, shall be nonpermanent reductions in aids to 
        counties, cities, towns, and special taxing districts equal to 
        the difference between the aid amounts certified to be paid and 
        the amount of the appropriation to pay the aids.  
           (c) For aids payable in 1996 there shall be a permanent 
        reduction in aids to counties of $10,000,000, provided that 
        section 16 is enacted. 
           Subd. 2.  [CALCULATION OF AID REDUCTION.] The aid reduction 
        to each local government as provided under subdivision 1 will be 
        equal to the product of the reduction percentage and its 
        reduction base.  The reduction base is defined as the following: 
           (a) For subdivision 1, clause (a), the reduction base is 
        equal to the adjusted revenue base for 1992 1996. 
           (b) For subdivision 1, clause (b), the reduction base is 
        equal to the adjusted revenue base for the year in which the aid 
        payment is to be made. 
           (c) For subdivision 1, clause (c), the reduction base is a 
        county's aid in calendar year 1996 under section 477A.0121.  
           Reductions under subdivisions 1, paragraph (a), and 2, 
        paragraph (a), to any individual county, city, or town are 
        limited to an amount equal to 0.45 percent of the unit's 1994 
        adjusted net tax capacity.  For this subdivision, "adjusted net 
        tax capacity" means the political subdivision's net tax capacity 
        calculated using the method for calculating city net tax 
        capacity under section 477A.011, subdivision 20. 
           Subd. 3.  [ORDER OF AID REDUCTIONS.] (a) The aid reduction 
        to a local government calculated under subdivisions 1, 
        paragraphs (a) and (c), and 2, paragraphs (a) and (c), is 
        applied to homestead and agricultural credit aid under section 
        273.1398 only. 
           (b) The aid reduction to a local government as calculated 
        under other paragraphs of subdivisions 1 and 2, is first applied 
        to its local government aid under sections 477A.012 and 477A.013 
        excluding aid under section 477A.013, subdivision 5; then, if 
        necessary, to its equalization aid under section 477A.013, 
        subdivision 5; then if necessary, to its homestead and 
        agricultural credit aid under section 273.1398, subdivision 2; 
        and then, if necessary, to its disparity reduction aid under 
        section 273.1398, subdivision 3.  No aid payment may be less 
        than $0.  Aid reductions under this section in any given year 
        shall be divided equally between the July and December aid 
        payments unless specified otherwise. 
           Sec. 16.  Minnesota Statutes 1994, section 477A.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ANNUAL APPROPRIATION.] A sum sufficient to 
        discharge the duties imposed by sections 477A.011 to 477A.014 is 
        annually appropriated from the general fund to the commissioner 
        of revenue.  For aids payable in 1996 and thereafter, the total 
        aids paid under sections 477A.013, subdivision 9, 477A.0121, and 
        477A.0122 are the amounts certified to be paid in the previous 
        year, adjusted for inflation as provided under subdivision 3. 
        Aid payments to counties under section 477A.0121 are limited to 
        $20,265,000 in 1996.  For aid payable in 1997 and thereafter, 
        the total aids paid under section 477A.0121 are the amounts 
        certified to be paid in the previous year, adjusted for 
        inflation as provided under subdivision 3. 
           Sec. 17.  Laws 1994, chapter 587, article 3, section 21, is 
        amended to read: 
           Sec. 21.  [REPEALER.] 
           (a) Minnesota Statutes 1992, sections 3.862 and 477A.012, 
        subdivision 6 are repealed. 
           (b) Minnesota Statutes 1992, sections 16A.711, 
        273.1381, and 273.1398, subdivision 7, and 477A.0132, as amended 
        by Laws 1994, chapter 416, article 1, section 60; and Minnesota 
        Statutes 1993 Supplement, sections 16A.712, 256E.06, subdivision 
        12, 273.166, subdivision 4, 290A.23, subdivision 2, 477A.03, 
        subdivision 1, and Laws 1973, chapter 650, article 24, section 
        6, as amended by Laws 1974, chapter 257, section 4 are repealed. 
           Sec. 18.  [AID ADJUSTMENT.] 
           Homestead and agricultural credit aid under Minnesota 
        Statutes, section 273.1398, subdivisions 2 and 8, for any 
        statutory city incorporated after January 1, 1975, which is 
        located in a county containing a city of the first class which 
        is not a metropolitan county under Minnesota Statutes, section 
        473.121, subdivision 4, shall be permanently increased by 
        $200,000, beginning with aids payable in 1996. 
           Sec. 19.  [HACA REDUCTION; HENNEPIN COUNTY COURT 
        EMPLOYEES.] 
           Subdivision 1.  [HACA REDUCTION.] There shall be deducted 
        from the homestead and agricultural credit aid payments to 
        Hennepin county under Minnesota Statutes, section 273.1398, an 
        amount equal to $180,000, which represents the cost to the state 
        for the assumption of two Hennepin county staff attorneys whose 
        job functions are that of court referees and whose positions 
        should have been transferred to the state as part of the court 
        takeover in Laws 1989, First Special Session chapter 1, article 
        4.  One-half of the total amount shall be deducted from each of 
        the aid payments made in 1995 to Hennepin county under Minnesota 
        Statutes, section 273.1398.  The amount of reduction made under 
        this section shall be a permanent aid reduction. 
           Subd. 2.  [EFFECTIVE DATE.] Subdivision 1 is effective for 
        aid payments made to Hennepin county in 1995 provided, however, 
        that the aid reduction made under subdivision 1 is contingent 
        upon enactment of a law in 1995 which (i) transfers the Hennepin 
        county positions, and (ii) provides from the general fund a 
        funding to the state supreme court for the positions. 
           Sec. 20.  [HACA ADJUSTMENT; DAKOTA COUNTY.] 
           Subdivision 1.  [HACA ADJUSTMENT.] The homestead and 
        agricultural credit aid offset for the 1996 public defender 
        costs for Dakota county shall be changed from the $644,000 
        amount as contained in Minnesota Statutes 1994, section 
        477A.012, subdivision 7, paragraph (b), to a corrected amount of 
        $492,000.  The $152,000 adjustment results from an incorrect 
        estimate of Dakota county's public defender costs which were 
        transferred to the state under Laws 1994, chapter 636, article 
        11, section 1.  The adjustment amount of $152,000 provided for 
        under this section is a permanent aid increase to Dakota county 
        made under Minnesota Statutes, section 273.1398, subdivision 2. 
           Subd. 2.  [EFFECTIVE DATE.] Subdivision 1 is effective for 
        homestead and agricultural credit aid paid to Dakota county 
        beginning in calendar year 1996 and subsequent years. 
           Sec. 21.  [HACA ADJUSTMENT; ANOKA COUNTY.] 
           Subdivision 1.  [HACA ADJUSTMENT.] The homestead and 
        agricultural credit aid offset for the 1996 public defender 
        costs for Anoka county shall be changed from the $634,000 amount 
        as contained in Minnesota Statutes 1994, section 477A.012, 
        subdivision 7, paragraph (b), to a corrected amount of 
        $472,000.  The $162,000 adjustment results from an incorrect 
        estimate of Anoka county's public defender costs which were 
        transferred to the state under Laws 1994, chapter 636, article 
        11, section 1.  The adjustment amount of $162,000 provided for 
        under this section is a permanent aid increase to Anoka county 
        made under Minnesota Statutes, section 273.1398, subdivision 2. 
           Subd. 2.  [EFFECTIVE DATE.] Subdivision 1 is effective for 
        homestead and agricultural credit aid paid to Anoka county 
        beginning in calendar year 1996 and subsequent years. 
           Sec. 22.  [STUDY OF LOCAL GOVERNMENT AID DISTRIBUTION 
        PROGRAMS AND GOVERNMENT SERVICE DELIVERY.] 
           By July 1, 1995, the legislative commission on planning and 
        fiscal policy or its successor entity shall establish a 
        subcommittee to study:  (1) alternative methods of distributing 
        general purpose aids to units of local governments; and (2) 
        approaches to maximizing the efficiency and effectiveness of 
        local government service delivery.  For purposes of the study, 
        each home rule charter or statutory city and county shall 
        provide the subcommittee with information and analysis as 
        requested by the subcommittee.  The subcommittee shall notify 
        each city and county that is required to submit information no 
        later than 60 days before the report is due.  If a city or 
        county fails to submit when due a report that satisfies the 
        subcommittee, the subcommittee may recommend that the 
        legislature impose a financial penalty on the city or county. 
           By February 1, 1996, the subcommittee shall report the 
        findings of the study to the legislative commission on planning 
        and fiscal policy or its successor entity and to the chairs of 
        the house and senate tax committees, along with recommendations 
        for reforms in aid distribution and government service delivery 
        systems. 
           Sec. 23.  [REPORT ON UNFUNDED STATE MANDATES.] 
           The board of government innovation and cooperation shall 
        prepare and distribute a report to the governor and legislature 
        by January 15, 1996, containing recommended legislation to 
        accomplish the goals of Minnesota Statutes, section 465.796, 
        subdivision 2, clauses (8) to (10). 
           Sec. 24.  [STUDY ON CONSOLIDATING COUNTIES AND 
        RATIONALIZING OTHER INTERNAL BOUNDARIES.] 
           The board of government innovation and cooperation shall 
        study, to the extent possible given available resources, the 
        feasibility of consolidating counties in the state.  As part of 
        the study, the board shall consider conforming county boundaries 
        to other existing physical or organizational boundaries 
        including, among others, state judicial districts, and shall 
        consider the economic implications that may result from the 
        consolidation.  
           The study shall also include a consideration of the 
        rationalization of other internal boundaries of the state such 
        as highway maintenance and regional economic districts.  
           The board shall report on the study to the appropriate 
        committees of the legislature by January 15, 1997. 
           Sec. 25.  [APPROPRIATION.] 
           Subdivision 1.  $2,000,000 is appropriated to the board of 
        government innovation and cooperation from the general fund, 
        with $1,000,000 to be available for fiscal year 1996 and 
        $1,000,000 to be available for fiscal year 1997.  At least 50 
        percent of the amount appropriated must be used to provide aids 
        to cooperating and combining local government units under 
        Minnesota Statutes, section 465.87.  Any amount of the 
        appropriation to the board of government innovation and 
        cooperation under Laws 1993, chapter 375, article 15, section 
        15, that is unexpended on June 30, 1995, shall remain available 
        for expenditure by the board until June 30, 1997. 
           Subd. 2.  An amount sufficient to pay the additional aid 
        under section 13, paragraph (c), in calendar year 1995 is 
        appropriated from the local government trust fund to the 
        commissioner of revenue. 
           Sec. 26.  [EFFECTIVE DATES.] 
           Section 13 is effective for aids payable in 1995 and 
        thereafter. 
           Sections 14 to 16, and 18 are effective for aids payable in 
        1996. 
           Section 17 is effective the day after final enactment. 
           Sections 22 and 25 are effective July 1, 1995. 
                                   ARTICLE 9 
                                 MISCELLANEOUS 
           Section 1.  Minnesota Statutes 1994, section 14.61, is 
        amended to read: 
           14.61 [AGENCY DECISION IN CONTESTED CASE.] 
           In all contested cases the decision of the officials of the 
        agency who are to render the final decision shall not be made 
        until the report of the administrative law judge as required by 
        sections 14.48 to 14.56, has been made available to parties to 
        the proceeding for at least ten days and an opportunity has been 
        afforded to each party adversely affected to file exceptions and 
        present argument to a majority of the officials who are to 
        render the decision.  This section does not apply to a contested 
        case under which the report or order of the administrative law 
        judge constitutes the final decision in the case. 
           Sec. 2.  Minnesota Statutes 1994, section 14.62, is amended 
        by adding a subdivision to read: 
           Subd. 4.  [APPLICABILITY.] This section does not apply to a 
        contested case under which the report or order of the 
        administrative law judge constitutes the final decision in the 
        case. 
           Sec. 3.  Minnesota Statutes 1994, section 60A.15, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
        before April 1, June 1, and December 1 of each year, every 
        domestic and foreign company, including town and farmers' mutual 
        insurance companies, domestic mutual insurance companies, marine 
        insurance companies, health maintenance organizations, 
        integrated service networks, community integrated service 
        networks, and nonprofit health service plan corporations, shall 
        pay to the commissioner of revenue installments equal to 
        one-third of the insurer's total estimated tax for the current 
        year.  Except as provided in paragraphs (b) (d) and (e), 
        installments must be based on a sum equal to two percent of the 
        premiums described in paragraph (c) (b). 
           (b) For town and farmers' mutual insurance companies and 
        mutual property and casualty insurance companies other than 
        those (i) writing life insurance, or (ii) whose total assets on 
        December 31, 1989, exceeded $1,600,000,000, the installments 
        must be based on an amount equal to the following percentages of 
        the premiums described in paragraph (c): 
           (1) for premiums paid after December 31, 1988, and before 
        January 1, 1992, one percent; and 
           (2) for premiums paid after December 31, 1991, one-half of 
        one percent. 
           (c) Installments under paragraph (a), (b) (d), or (e) are 
        percentages of gross premiums less return premiums on all direct 
        business received by the insurer in this state, or by its agents 
        for it, in cash or otherwise, during such year. 
           (d) (c) Failure of a company to make payments of at least 
        one-third of either (1) the total tax paid during the previous 
        calendar year or (2) 80 percent of the actual tax for the 
        current calendar year shall subject the company to the penalty 
        and interest provided in this section, unless the total tax for 
        the current tax year is $500 or less. 
           (e) (d) For health maintenance organizations, nonprofit 
        health services plan corporations, integrated service networks, 
        and community integrated service networks, the installments must 
        be based on an amount equal to one percent of premiums described 
        in paragraph (c) (b) that are paid after December 31, 1995. 
           (e) For purposes of computing installments for town and 
        farmers' mutual insurance companies and for mutual property 
        casualty companies with total assets on December 31, 1989, of 
        $1,600,000,000 or less, the following rates apply: 
           (1) for all life insurance, two percent; 
           (2) for town and farmers' mutual insurance companies and 
        for mutual property and casualty companies with total assets of 
        $5,000,000 or less, on all other coverages, one percent; and 
           (3) for mutual property and casualty companies with total 
        assets on December 31, 1989, of $1,600,000,000 or less, on all 
        other coverages, 1.26 percent. 
           (f) Premiums under medical assistance, the MinnesotaCare 
        program, and the Minnesota comprehensive health insurance plan 
        are not subject to tax under this section. 
           Sec. 4.  Minnesota Statutes 1994, section 69.021, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REPORT OF PREMIUMS.] Each insurer, including 
        township and farmers mutual insurers where applicable, shall 
        return to the commissioner with its annual financial statement 
        the reports described in subdivision 1 certified by its 
        secretary and president or chief financial officer.  The 
        Minnesota Firetown Premium Report shall contain a true and 
        accurate statement of the total premium for all gross direct 
        fire, lightning, sprinkler leakage, and extended coverage 
        insurance of all domestic mutual insurers and the total premiums 
        for all gross direct fire, lightning, sprinkler leakage and 
        extended coverage insurance of all other insurers, less return 
        premiums and dividends received by them on that business written 
        or done during the preceding calendar year upon property located 
        within the state or brought into the state for temporary use.  
        The fire and extended coverage portion of multiperil and 
        multiple peril package premiums and all other combination 
        premiums shall be determined by applying percentages determined 
        by the commissioner or by rating bureaus recognized by the 
        commissioner.  The Minnesota Aid to Police Premium Report shall 
        contain a true and accurate statement of the total premiums, 
        less return premiums and dividends, on all direct business 
        received by such insurer in this state, or by its agents for it, 
        in cash or otherwise, during the preceding calendar year, with 
        reference to insurance written for perils described in section 
        69.011, subdivision 1, clause (f), except that domestic mutual 
        insurance companies must not file a report. 
           Sec. 5.  Minnesota Statutes 1994, section 69.021, 
        subdivision 5, is amended to read: 
           Subd. 5.  [CALCULATION OF STATE AID.] (a) The amount of 
        fire state aid available for apportionment shall be two equal to 
        107 percent of the amount of premium taxes paid to the state 
        upon the fire, lightning, sprinkler leakage, and extended 
        coverage premiums reported to the commissioner by insurers on 
        the Minnesota Firetown Premium Report.  This amount shall be 
        reduced by the amount required to pay the state auditor's costs 
        and expenses of the audits or exams of the firefighters relief 
        associations. 
           (b) The total amount for apportionment in respect to peace 
        officer state aid is equal to 104 percent of 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, plus the payment amounts received under section 
        60A.152 since the last aid apportionment, and reduced by the 
        amount required to pay the state auditor's costs and expenses of 
        the audits or exams of the police relief associations.  The 
        total amount for apportionment in respect to firefighters state 
        aid shall not be greater or lesser less than the amount of 
        premium taxes paid to the state upon two percent of the premiums 
        reported to the commissioner by insurers on the Minnesota 
        Firetown Premium Report after subtracting (1) the amount 
        required to pay the state auditor's costs and expenses of the 
        audits or exams of the firefighters relief associations, and (2) 
        one percent of the premiums reported by town and farmers' mutual 
        insurance companies and mutual property and casualty companies 
        with total assets of $5,000,000 or less.  The total amount for 
        apportionment in respect to the police state aid program shall 
        not be less than two percent of the amount of premiums reported 
        to the commissioner by insurers on the Minnesota Aid to Police 
        Premium Report after subtracting the amount required to pay the 
        state auditor's cost and expenses of the audits or exams of the 
        police relief associations.  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. 6.  Minnesota Statutes 1994, section 270A.07, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SETOFF PROCEDURES.] (a) The commissioner, upon 
        receipt of notification, shall initiate procedures to detect any 
        refunds otherwise payable to the debtor.  When the commissioner 
        determines that a refund is due to a debtor whose debt was 
        submitted by a claimant agency, the commissioner shall first 
        deduct the fee in subdivision 1 and then remit the refund or the 
        amount claimed, whichever is less, to the agency.  In 
        transferring or remitting moneys to the claimant agency, the 
        commissioner shall provide information indicating the amount 
        applied against each debtor's obligation and the debtor's 
        address listed on the tax return.  
           (b) The commissioner shall remit to the debtor the amount 
        of any refund due in excess of the debt submitted for setoff by 
        the claimant agency.  Notice of the amount setoff and address of 
        the claimant agency shall accompany any disbursement to the 
        debtor of the balance of a refund.  The notice shall also advise 
        the debtor of the right to contest the validity of the claim, 
        other than a claim based upon child support under section 
        518.171, 518.54, 518.551, or chapter 518C at a hearing, subject 
        to the restrictions in this paragraph.  The debtor must assert 
        this right by written request to the claimant agency, which 
        request the claimant agency must receive within 45 days of the 
        date of the notice.  This right does not apply to (1) issues 
        relating to the validity of the claim that have been previously 
        raised at a hearing under this section or section 270A.09; (2) 
        issues relating to the validity of the claim that were not 
        timely raised by the debtor under section 270A.08, subdivision 
        2; or (3) issues relating to the validity of the claim for which 
        a hearing is discretionary under section 270A.09. 
           Sec. 7.  Minnesota Statutes 1994, section 270A.09, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [CONTESTED CASE; FINAL DECISION.] The report of 
        the administrative law judge shall contain a decision and order, 
        which constitute the final decision in the contested case.  A 
        copy of the decision and order shall be served by first class 
        mail upon each party, the commissioner of revenue, and the 
        attorney general.  Fees and expenses may be awarded as provided 
        in sections 15.471 to 15.475.  The provisions for judicial 
        review under sections 14.63 to 14.68 apply to decisions of the 
        administrative law judge under this subdivision. 
           Sec. 8.  Minnesota Statutes 1994, section 270A.11, is 
        amended to read: 
           270A.11 [DATA PRIVACY.] 
           Private and confidential data on individuals may be 
        exchanged among the department, the taxpayer's rights advocate, 
        the attorney general, the claimant agency, and the debtor as 
        necessary to accomplish and effectuate the intent of sections 
        270A.01 to 270A.12, as provided by section 13.05, subdivision 4, 
        clause (b).  The department may disclose to the claimant agency 
        only the debtor's name, address, social security number and the 
        amount of the refund, and in the case of a joint return, the 
        name of the debtor's spouse.  Any person employed by, or 
        formerly employed by, a claimant agency who discloses any such 
        information for any other purpose, shall be subject to the civil 
        and criminal penalties of section 270B.18. 
           Sec. 9.  Minnesota Statutes 1994, section 349.12, 
        subdivision 25, is amended to read: 
           Subd. 25.  [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 
        or more of the following:  
           (1) any expenditure by or contribution to a 501(c)(3) 
        organization, provided that the organization and expenditure or 
        contribution are in conformity with standards prescribed by the 
        board under section 349.154; 
           (2) a contribution to an individual or family suffering 
        from poverty, homelessness, or physical or mental disability, 
        which is used to relieve the effects of that poverty, 
        homelessness, or disability; 
           (3) a contribution to an individual for treatment for 
        delayed posttraumatic stress syndrome or a contribution to a 
        recognized program for the treatment of compulsive gambling on 
        behalf of an individual who is a compulsive gambler; 
           (4) a contribution to or expenditure on a public or private 
        nonprofit educational institution registered with or accredited 
        by this state or any other state; 
           (5) a contribution to a scholarship fund for defraying the 
        cost of education to individuals where the funds are awarded 
        through an open and fair selection process; 
           (6) activities by an organization or a government entity 
        which recognize humanitarian or military service to the United 
        States, the state of Minnesota, or a community, subject to rules 
        of the board, provided that the rules must not include mileage 
        reimbursements in the computation of the per occasion 
        reimbursement limit and must impose no aggregate annual limit on 
        the amount of reasonable and necessary expenditures made to 
        support: 
           (i) members of a military marching or colorguard unit for 
        activities conducted within the state; or 
           (ii) members of an organization solely for services 
        performed by the members at funeral services; 
           (7) recreational, community, and athletic facilities and 
        activities intended primarily for persons under age 21, provided 
        that such facilities and activities do not discriminate on the 
        basis of gender and the organization complies with section 
        349.154; 
           (8) payment of local taxes authorized under this chapter, 
        taxes imposed by the United States on receipts from lawful 
        gambling, the taxes imposed by section 297E.02, subdivisions 1, 
        4, 5, and 6, and the tax imposed on unrelated business income by 
        section 290.05, subdivision 3; 
           (9) payment of real estate taxes and assessments on 
        permitted gambling premises wholly owned by the licensed 
        organization paying the taxes, not to exceed: 
           (i) the amount which an organization may expend under board 
        rule on rent for premises used for bingo, the amount which an 
        organization may expend under board rules on rent for bingo; or 
        and 
           (ii) $15,000 $35,000 per year for premises used for other 
        forms of lawful gambling;: 
           (10) a contribution to the United States, this state or any 
        of its political subdivisions, or any agency or instrumentality 
        thereof other than a direct contribution to a law enforcement or 
        prosecutorial agency; 
           (11) a contribution to or expenditure by a nonprofit 
        organization which is a church or body of communicants gathered 
        in common membership for mutual support and edification in 
        piety, worship, or religious observances; 
           (12) payment of one-half of the reasonable costs of an 
        audit required in section 297E.06, subdivision 4; 
           (13) a contribution to or expenditure on a wildlife 
        management project that benefits the public at-large, provided 
        that the state agency with authority over that wildlife 
        management project approves the project before the contribution 
        or expenditure is made; or 
           (14) expenditures, approved by the commissioner of natural 
        resources, by an organization for grooming and maintaining 
        snowmobile trails that are (1) grant-in-aid trails established 
        under section 116J.406, or (2) other trails open to public use, 
        including purchase or lease of equipment for this purpose. 
           (b) Notwithstanding paragraph (a), "lawful purpose" does 
        not include: 
           (1) any expenditure made or incurred for the purpose of 
        influencing the nomination or election of a candidate for public 
        office or for the purpose of promoting or defeating a ballot 
        question; 
           (2) any activity intended to influence an election or a 
        governmental decision-making process; 
           (3) the erection, acquisition, improvement, expansion, 
        repair, or maintenance of real property or capital assets owned 
        or leased by an organization, unless the board has first 
        specifically authorized the expenditures after finding that (i) 
        the real property or capital assets will be used exclusively for 
        one or more of the purposes in paragraph (a); (ii) with respect 
        to expenditures for repair or maintenance only, that the 
        property is or will be used extensively as a meeting place or 
        event location by other nonprofit organizations or community or 
        service groups and that no rental fee is charged for the use; 
        (iii) with respect to expenditures, including a mortgage payment 
        or other debt service payment, for erection or acquisition only, 
        that the erection or acquisition is necessary to replace with a 
        comparable building, a building owned by the organization and 
        destroyed or made uninhabitable by fire or natural disaster, 
        provided that the expenditure may be only for that part of the 
        replacement cost not reimbursed by insurance; or (iv) with 
        respect to expenditures, including a mortgage payment or other 
        debt service payment, for erection or acquisition only, that the 
        erection or acquisition is necessary to replace with a 
        comparable building a building owned by the organization that 
        was acquired from the organization by eminent domain or sold by 
        the organization to a purchaser that the organization reasonably 
        believed would otherwise have acquired the building by eminent 
        domain, provided that the expenditure may be only for that part 
        of the replacement cost that exceeds the compensation received 
        by the organization for the building being replaced; 
           (4) an expenditure by an organization which is a 
        contribution to a parent organization, foundation, or affiliate 
        of the contributing organization, if the parent organization, 
        foundation, or affiliate has provided to the contributing 
        organization within one year of the contribution any money, 
        grants, property, or other thing of value; 
           (5) a contribution by a licensed organization to another 
        licensed organization unless the board has specifically 
        authorized the contribution.  The board must authorize such a 
        contribution when requested to do so by the contributing 
        organization unless it makes an affirmative finding that the 
        contribution will not be used by the recipient organization for 
        one or more of the purposes in paragraph (a); or 
           (6) a contribution to a statutory or home rule charter 
        city, county, or town by a licensed organization with the 
        knowledge that the governmental unit intends to use the 
        contribution for a pension or retirement fund. 
           Sec. 10.  [410.325] [TAX ANTICIPATION CERTIFICATES.] 
           Notwithstanding a contrary provision of other law or 
        charter, a home rule charter city may issue tax anticipation 
        certificates in the manner and subject to the limitations 
        applicable to statutory cities under section 412.261.  The 
        certificates may also be issued in anticipation of federal and 
        state aids, but the total amount of certificates issued against 
        any fund for any year with interest on them must not exceed any 
        limits in the charter relating to the total of the anticipated 
        tax levy and the anticipated state aids for any fund not yet 
        collected or received.  
           Sec. 11.  [PIPESTONE COUNTY; AUTHORIZATION.] 
           The county of Pipestone may issue its general obligation 
        bonds in a principal amount of not to exceed $598,000 to defray 
        the expense of repair and renovation of the county courthouse 
        and courthouse annex.  The bonds shall be issued in accordance 
        with Minnesota Statutes, chapter 475.  No further election 
        proceedings are required.  Minnesota Statutes, section 275.61, 
        shall apply to taxes levied to pay the bonds as if the bonds 
        were required to be approved and were approved by the voters. 
           Sec. 12.  [MORRISON COUNTY; FAIRGROUND IMPROVEMENT BONDS; 
        REFERENDUM.] 
           Morrison county may issue its general obligation bonds in a 
        principal amount of not to exceed $1,200,000 for county 
        fairground improvements, under Minnesota Statutes, sections 
        373.40 to 373.42 and chapter 475.  However, the bonds may be 
        issued only after an election has been held on the question 
        under Minnesota Statutes, section 475.58, and the voters have 
        approved the bond issue. 
           Sec. 13.  [STUDY OF REVENUE RECAPTURE.] 
           The commissioner of revenue, in consultation with the 
        attorney general, shall study the compliance of claimant 
        agencies with the requirements of the revenue recapture act.  
        The study shall consider the number and nature of complaints by 
        taxpayers with regard to claims of specific claimant agencies, 
        and evaluate the general issues raised in those complaints.  On 
        or before January 15, 1996, the commissioner shall report the 
        results of the study to the chairs of the house of 
        representatives committee on taxes and the senate committee on 
        taxes and tax laws.  The report shall include recommendations to 
        strengthen compliance by claimant agencies with the revenue 
        recapture act. 
           Sec. 14.  [APPROPRIATION.] 
           $150,000 is appropriated from the general fund to the 
        commissioner of revenue to conduct the Minnesota-Wisconsin 
        individual income tax reciprocity rebenchmark study.  $50,000 is 
        appropriated for the fiscal year ending June 30, 1996, and 
        $100,000 is appropriated for the fiscal year ending June 30, 
        1997. 
           Sec. 15.  [EFFECTIVE DATES.] 
           Sections 3 and 4 are effective retroactively to January 1, 
        1995.  Section 5 is effective January 1, 1996.  Section 11 takes 
        effect the day after the Pipestone county board complies with 
        Minnesota Statutes, section 645.021, subdivision 3.  Section 12 
        is effective the day after the county board of Morrison county 
        complies with Minnesota Statutes, section 645.021, subdivision 3.
                                   ARTICLE 10 
                           REVENUE POLICY INITIATIVES 
                           INCOME AND BUSINESS TAXES 
           Section 1.  Minnesota Statutes 1994, section 289A.18, 
        subdivision 2, is amended to read: 
           Subd. 2.  [WITHHOLDING RETURNS, ENTERTAINER WITHHOLDING 
        RETURNS, RETURNS FOR WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE 
        CONTRACTORS, AND WITHHOLDING RETURNS FROM PARTNERSHIPS AND S 
        CORPORATIONS.] Withholding returns are due on or before the last 
        day of the month following the close of the quarterly period.  
        However, if the return shows timely deposits in full payment of 
        the taxes due for that period, the return returns for the first, 
        second, and third quarters may be filed on or before the tenth 
        day of the second calendar month following the period and the 
        return for the fourth quarter may be filed on or before the 28th 
        day of the second calendar month following the period.  An 
        employer, in preparing a quarterly return, may take credit for 
        monthly deposits previously made for that quarter.  Entertainer 
        withholding tax returns are due within 30 days after each 
        performance.  Returns for withholding from payments to 
        out-of-state contractors are due within 30 days after the 
        payment to the contractor.  Returns for withholding by 
        partnerships are due on or before the due date specified for 
        filing partnership returns.  Returns for withholding by S 
        corporations are due on or before the due date specified for 
        filing corporate franchise tax returns. 
           Sec. 2.  Minnesota Statutes 1994, section 289A.20, 
        subdivision 2, is amended to read: 
           Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
        WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
        WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
        (a) A tax required to be deducted and withheld during the 
        quarterly period must be paid on or before the last day of the 
        month following the close of the quarterly period, unless an 
        earlier time for payment is provided.  A tax required to be 
        deducted and withheld from compensation of an entertainer and 
        from a payment to an out-of-state contractor must be paid on or 
        before the date the return for such tax must be filed under 
        section 289A.18, subdivision 2.  Taxes required to be deducted 
        and withheld by partnerships and S corporations must be paid on 
        or before the date the return must be filed under section 
        289A.18, subdivision 2. 
           (b) An employer who, during the previous quarter, withheld 
        more than $500 $1,500 of tax under section 290.92, subdivision 
        2a or 3, or 290.923, subdivision 2, must deposit tax withheld 
        under those sections with the commissioner within the time 
        allowed to deposit the employer's federal withheld employment 
        taxes under Treasury Regulation, section 31.6302-1, without 
        regard to the safe harbor or de minimus rules in subparagraph 
        (f) or the one-day rule in subsection (c), clause (3).  
        Taxpayers must submit a copy of their federal notice of deposit 
        status to the commissioner upon request by the commissioner. 
           (c) The commissioner may prescribe by rule other return 
        periods or deposit requirements.  In prescribing the reporting 
        period, the commissioner may classify payors according to the 
        amount of their tax liability and may adopt an appropriate 
        reporting period for the class that the commissioner judges to 
        be consistent with efficient tax collection.  In no event will 
        the duration of the reporting period be more than one year. 
           (d) If less than the correct amount of tax is paid to the 
        commissioner, proper adjustments with respect to both the tax 
        and the amount to be deducted must be made, without interest, in 
        the manner and at the times the commissioner prescribes.  If the 
        underpayment cannot be adjusted, the amount of the underpayment 
        will be assessed and collected in the manner and at the times 
        the commissioner prescribes. 
           (e) If the aggregate amount of the tax withheld during a 
        fiscal year ending June 30 under section 290.92, subdivision 2a 
        or 3, is equal to or exceeds $120,000 $50,000, the employer must 
        remit each required deposit in the subsequent calendar year by 
        means of a funds transfer as defined in section 336.4A-104, 
        paragraph (a).  The funds transfer payment date, as defined in 
        section 336.4A-401, must be on or before the date the deposit is 
        due.  If the date the deposit is due is not a funds transfer 
        business day, as defined in section 336.4A-105, paragraph (a), 
        clause (4), the payment date must be on or before the funds 
        transfer business day next following the date the deposit is due.
           (f) Providers of payroll services who remit withholding 
        deposits on behalf of 50 or more employers, or on behalf of any 
        employer with aggregate amounts over the threshold in paragraph 
        (e), must remit all deposits by means of a funds transfer as 
        provided in paragraph (e), regardless of the aggregate amount of 
        tax withheld during a fiscal year for all of the employers. 
           Sec. 3.  Minnesota Statutes 1994, section 289A.38, 
        subdivision 7, is amended to read: 
           Subd. 7.  [FEDERAL TAX CHANGES.] If the amount of income, 
        items of tax preference, deductions, or credits for any year of 
        a taxpayer as reported to the Internal Revenue Service is 
        changed or corrected by the commissioner of Internal Revenue or 
        other officer of the United States or other competent authority, 
        or where a renegotiation of a contract or subcontract with the 
        United States results in a change in income, items of tax 
        preference, deductions, or credits, or, in the case of estate 
        tax, where there are adjustments to the taxable estate resulting 
        in a change to the credit for state death taxes, the taxpayer 
        shall report the change or correction or renegotiation results 
        in writing to the commissioner, in the form required by the 
        commissioner.  The report must be submitted within 90 180 days 
        after the final determination and must concede the accuracy of 
        the determination or state how it is wrong be in the form of 
        either an amended Minnesota return conceding the accuracy of the 
        federal determination or a letter detailing how the federal 
        determination is incorrect or does not change the Minnesota 
        tax.  A taxpayer filing an amended federal tax return must also 
        file a copy of the amended return with the commissioner of 
        revenue within 90 180 days after filing the amended return. 
           Sec. 4.  Minnesota Statutes 1994, section 289A.55, 
        subdivision 7, is amended to read: 
           Subd. 7.  [INSTALLMENT PAYMENTS; ESTATE TAX.] Interest must 
        be paid on unpaid installment payments of the tax authorized 
        under section 289A.30, subdivision 2, beginning on the date the 
        tax was due without regard to extensions allowed or extensions 
        elected, at the rate of interest in effect under given in 
        section 270.75, nine months following the date of death. 
           Sec. 5.  Minnesota Statutes 1994, section 289A.60, is 
        amended by adding a subdivision to read: 
           Subd. 24.  [PENALTY FOR FAILURE TO NOTIFY OF FEDERAL 
        CHANGE.] If a person fails to report to the commissioner a 
        change or correction of the person's federal return in the 
        manner and time prescribed in section 289A.38, subdivision 7, 
        there must be added to the tax an amount equal to ten percent of 
        the amount of any underpayment of Minnesota tax attributable to 
        the federal change. 
           Sec. 6.  Minnesota Statutes 1994, section 290.01, 
        subdivision 7b, is amended to read: 
           Subd. 7b.  [RESIDENT TRUST.] Resident trust means a trust, 
        except a grantor type trust, which is administered in this state 
        either (1) was created by a will of a decedent who at his or her 
        death was domiciled in this state or (2) is an irrevocable 
        trust, the grantor of which was domiciled in this state at the 
        time the trust became irrevocable.  For the purpose of this 
        subdivision, a trust is considered irrevocable to the extent the 
        grantor is not treated as the owner thereof under sections 671 
        to 678 of the Internal Revenue Code.  The term "grantor type 
        trust" means a trust where the income or gains of the trust are 
        taxable to the grantor or others treated as substantial owners 
        under sections 671 to 678 of the Internal Revenue Code. 
           Sec. 7.  Minnesota Statutes 1994, section 290.015, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL RULE.] (a) Except as provided in 
        subdivision 3, a person that conducts a trade or business that 
        has a place of business in this state, regularly has employees 
        or independent contractors conducting business activities on its 
        behalf in this state, or owns or leases real property located in 
        this state or tangible personal property located in this state 
        as defined in section 290.191, subdivision 6, paragraph (e), is 
        subject to the taxes imposed by this chapter. 
           (b) Except as provided in subdivision 3, a person that 
        conducts a trade or business not described in paragraph (a) is 
        subject to the taxes imposed by this chapter if the trade or 
        business obtains or regularly solicits business from within this 
        state, without regard to physical presence in this state. 
           (c) For purposes of paragraph (b), business from within 
        this state includes, but is not limited to: 
           (1) sales of products or services of any kind or nature to 
        customers in this state who receive the product or service in 
        this state; 
           (2) sales of services which are performed from outside this 
        state but the benefits of which services are consumed received 
        in this state; 
           (3) transactions with customers in this state that involve 
        intangible property and result in income flowing to the person 
        from within this state as provided in section 290.191; 
           (4) leases of tangible personal property that is located in 
        this state as defined in section 290.191, subdivision 6, 
        paragraph (e); 
           (5) sales and leases of real property located in this 
        state; and 
           (6) if a financial institution, deposits received from 
        customers in this state.  
           (d) For purposes of paragraph (b), solicitation includes, 
        but is not limited to: 
           (1) the distribution, by mail or otherwise, without regard 
        to the state from which such distribution originated or in which 
        the materials were prepared, of catalogs, periodicals, 
        advertising flyers, or other written solicitations of business 
        to customers in this state; 
           (2) display of advertisements on billboards or other 
        outdoor advertising in this state; 
           (3) advertisements in newspapers published in this state; 
           (4) advertisements in trade journals or other periodicals, 
        the circulation of which is primarily within this state; 
           (5) advertisements in a Minnesota edition of a national or 
        regional publication or a limited regional edition of which this 
        state is included of a broader regional or national publication 
        which are not placed in other geographically defined editions of 
        the same issue of the same publication; 
           (6) advertisements in regional or national publications in 
        an edition which is not by its contents geographically targeted 
        to Minnesota, but which is sold over the counter in Minnesota or 
        by subscription to Minnesota residents; 
           (7) advertisements broadcast on a radio or television 
        station located in Minnesota; or 
           (8) any other solicitation by telegraph, telephone, 
        computer database, cable, optic, microwave, or other 
        communication system. 
           Sec. 8.  Minnesota Statutes, 1994, section 290.067, 
        subdivision 1, as amended by Laws 1995, chapter 1, section 4, is 
        amended to read: 
           Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
        as a credit against the tax due from the taxpayer and a spouse, 
        if any, under this chapter an amount equal to the dependent care 
        credit for which the taxpayer is eligible pursuant to the 
        provisions of section 21 of the Internal Revenue Code subject to 
        the limitations provided in subdivision 2 except that in 
        determining whether the child qualified as a dependent, income 
        received as an aid to families with dependent children grant or 
        allowance to or on behalf of the child must not be taken into 
        account in determining whether the child received more than half 
        of the child's support from the taxpayer, and the provisions of 
        section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
           (b) If a child who is six years of age or less has not 
        attained the age of six years at the close of the taxable year 
        is cared for at a licensed family day care home operated by the 
        child's parent, the taxpayer is deemed to have paid 
        employment-related expenses.  If the child is 16 months old or 
        younger at the close of the taxable year, the amount of expenses 
        deemed to have been paid equals the maximum limit for one 
        qualified individual under section 21(c) and (d) of the Internal 
        Revenue Code.  If the child is older than 16 months of age 
        but not older than six years of age has not attained the age of 
        six years at the close of the taxable year, the amount of 
        expenses deemed to have been paid equals the amount the licensee 
        would charge for the care of a child of the same age for the 
        same number of hours of care.  
           (c) If a married couple: 
           (1) has a child who has not attained the age of one year at 
        the close of the taxable year; 
           (2) files a joint tax return for the taxable year; and 
           (3) does not participate in a dependent care assistance 
        program as defined in section 129 of the Internal Revenue Code, 
        in lieu of the actual employment related expenses paid for that 
        child under paragraph (a) or the deemed amount under paragraph 
        (b), the lesser of (i) the combined earned income of the couple 
        or (ii) $2,400 will be deemed to be the employment related 
        expense paid for that child.  The earned income limitation of 
        section 21(d) of the Internal Revenue Code shall not apply to 
        this deemed amount.  These deemed amounts apply regardless of 
        whether any employment-related expenses have been paid.  
           (d) If the taxpayer is not required and does not file a 
        federal individual income tax return for the tax year, no credit 
        is allowed for any amount paid to any person unless: 
           (1) the name, address, and taxpayer identification number 
        of the person are included on the return claiming the credit; or 
           (2) if the person is an organization described in section 
        501(c)(3) of the Internal Revenue Code and exempt from tax under 
        section 501(a) of the Internal Revenue Code, the name and 
        address of the person are included on the return claiming the 
        credit.  
        In the case of a failure to provide the information required 
        under the preceding sentence, the preceding sentence does not 
        apply if it is shown that the taxpayer exercised due diligence 
        in attempting to provide the information required. 
           In the case of a nonresident, part-year resident, or a 
        person who has earned income not subject to tax under this 
        chapter, the credit determined under section 21 of the Internal 
        Revenue Code must be allocated based on the ratio by which the 
        earned income of the claimant and the claimant's spouse from 
        Minnesota sources bears to the total earned income of the 
        claimant and the claimant's spouse. 
           Sec. 9.  Minnesota Statutes 1994, section 290.191, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL RULE.] (a) Except as otherwise 
        provided in section 290.17, subdivision 5, the net income from a 
        trade or business carried on partly within and partly without 
        this state must be apportioned to this state as provided in this 
        section.  
           (b) For purposes of this section, "state" means a state of 
        the United States, the District of Columbia, the commonwealth of 
        Puerto Rico, or any territory or possession of the United States 
        or any foreign country. 
           Sec. 10.  Minnesota Statutes 1994, section 290.191, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DETERMINATION OF SALES FACTOR.] For purposes of 
        this section, the following rules apply in determining the sales 
        factor.  
           (a) The sales factor includes all sales, gross earnings, or 
        receipts received in the ordinary course of the business, except 
        that the following types of income are not included in the sales 
        factor: 
           (1) interest; 
           (2) dividends; 
           (3) sales of capital assets as defined in section 1221 of 
        the Internal Revenue Code; 
           (4) sales of property used in the trade or business, except 
        sales of leased property of a type which is regularly sold as 
        well as leased; 
           (5) sales of debt instruments as defined in section 
        1275(a)(1) of the Internal Revenue Code or sales of stock; and 
           (6) royalties, fees, or other like income of a type which 
        qualify for a subtraction from federal taxable income under 
        section 290.01, subdivision 19(d)(11).  
           (b) Sales of tangible personal property are made within 
        this state if the property is received by a purchaser at a point 
        within this state, and the taxpayer is taxable in this state, 
        regardless of the f.o.b. point, other conditions of the sale, or 
        the ultimate destination of the property. 
           (c) Tangible personal property delivered to a common or 
        contract carrier or foreign vessel for delivery to a purchaser 
        in another state or nation is a sale in that state or nation, 
        regardless of f.o.b. point or other conditions of the sale.  
           (d) Notwithstanding paragraphs (b) and (c), when 
        intoxicating liquor, wine, fermented malt beverages, cigarettes, 
        or tobacco products are sold to a purchaser who is licensed by a 
        state or political subdivision to resell this property only 
        within the state of ultimate destination, the sale is made in 
        that state.  
           (e) Sales made by or through a corporation that is 
        qualified as a domestic international sales corporation under 
        section 992 of the Internal Revenue Code are not considered to 
        have been made within this state.  
           (f) Sales, rents, royalties, and other income in connection 
        with real property is attributed to the state in which the 
        property is located.  
           (g) Receipts from the lease or rental of tangible personal 
        property, including finance leases and true leases, must be 
        attributed to this state if the property is located in this 
        state and to other states if the property is not located in this 
        state.  Moving property including, but not limited to, motor 
        vehicles, rolling stock, aircraft, vessels, or mobile equipment 
        is located in this state if: 
           (1) the operation of the property is entirely within this 
        state; or 
           (2) the operation of the property is in two or more states 
        and the principal base of operations from which the property is 
        sent out is in this state. 
           (h) Royalties and other income not described in paragraph 
        (a), clause (6), received for the use of or for the privilege of 
        using intangible property, including patents, know-how, 
        formulas, designs, processes, patterns, copyrights, trade names, 
        service names, franchises, licenses, contracts, customer lists, 
        or similar items, must be attributed to the state in which the 
        property is used by the purchaser.  If the property is used in 
        more than one state, the royalties or other income must be 
        apportioned to this state pro rata according to the portion of 
        use in this state.  If the portion of use in this state cannot 
        be determined, the royalties or other income must be excluded 
        from both the numerator and the denominator.  Intangible 
        property is used in this state if the purchaser uses the 
        intangible property or the rights therein in the regular course 
        of its business operations in this state, regardless of the 
        location of the purchaser's customers. 
           (i) Sales of intangible property are made within the state 
        in which the property is used by the purchaser.  If the property 
        is used in more than one state, the sales must be apportioned to 
        this state pro rata according to the portion of use in this 
        state.  If the portion of use in this state cannot be 
        determined, the sale must be excluded from both the numerator 
        and the denominator of the sales factor.  Intangible property is 
        used in this state if the purchaser used the intangible property 
        in the regular course of its business operations in this state. 
           (j) Receipts from the performance of services must be 
        attributed to the state in which the benefits of where the 
        services are consumed received.  If the benefits are consumed in 
        more than one state, the receipts from those benefits must be 
        apportioned to this state pro rata according to the portion of 
        the benefits consumed in this state. If the extent to which the 
        benefits of services are consumed in this state is not readily 
        determinable, the benefits of the For the purposes of this 
        section, receipts from the performance of services provided to a 
        corporation, partnership, or trust may only be attributed to a 
        state where it has a fixed place of doing business.  If the 
        state where the services are received is not readily 
        determinable or is a state where the corporation, partnership, 
        or trust receiving the service does not have a fixed place of 
        doing business, the services shall be deemed to be consumed 
        received at the location of the office of the customer from 
        which the services were ordered in the regular course of the 
        customer's trade or business.  If the ordering office cannot be 
        determined, the benefits of the services shall be deemed to be 
        consumed received at the office of the customer to which the 
        services are billed.  
           Sec. 11.  Minnesota Statutes 1994, section 290.191, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DETERMINATION OF RECEIPTS FACTOR FOR FINANCIAL 
        INSTITUTIONS.] (a) For purposes of this section, the rules in 
        this subdivision and subdivisions 7 and subdivision 8 apply in 
        determining the receipts factor for financial institutions.  
           (b) "Receipts" for this purpose means gross income, 
        including net taxable gain on disposition of assets, including 
        securities and money market instruments, when derived from 
        transactions and activities in the regular course of the 
        taxpayer's trade or business.  
           (c) "Money market instruments" means federal funds sold and 
        securities purchased under agreements to resell, commercial 
        paper, banker's acceptances, and purchased certificates of 
        deposit and similar instruments to the extent that the 
        instruments are reflected as assets under generally accepted 
        accounting principles.  
           (d) "Securities" means United States Treasury securities, 
        obligations of United States government agencies and 
        corporations, obligations of state and political subdivisions, 
        corporate stock, bonds, and other securities, participations in 
        securities backed by mortgages held by United States or state 
        government agencies, loan-backed securities and similar 
        investments to the extent the investments are reflected as 
        assets under generally accepted accounting principles.  
           (e) Receipts from the lease or rental of real or tangible 
        personal property, including both finance leases and true 
        leases, must be attributed to this state if the property is 
        located in this state.  Tangible personal property that is 
        characteristically moving property, such as motor vehicles, 
        rolling stock, aircraft, vessels, mobile equipment, and the 
        like, is considered to be located in a state if: 
           (1) the operation of the property is entirely within the 
        state; or 
           (2) the operation of the property is in two or more states, 
        but the principal base of operations from which the property is 
        sent out is in the state. 
           (f) Interest income and other receipts from assets in the 
        nature of loans that are secured primarily by real estate or 
        tangible personal property must be attributed to this state if 
        the security property is located in this state under the 
        principles stated in paragraph (e).  
           (g) Interest income and other receipts from consumer loans 
        not secured by real or tangible personal property that are made 
        to residents of this state, whether at a place of business, by 
        traveling loan officer, by mail, by telephone or other 
        electronic means, must be attributed to this state.  
           (h) Interest income and other receipts from commercial 
        loans and installment obligations that are unsecured by real or 
        tangible personal property or secured by intangible property 
        must be attributed to this state if the proceeds of the loan are 
        to be applied in this state.  If it cannot be determined where 
        the funds are to be applied, the income and receipts are 
        attributed to the state in which the office of the borrower from 
        which the application would be made in the regular course of 
        business is located.  If this cannot be determined, the 
        transaction is disregarded in the apportionment formula. 
           (i) Interest income and other receipts from a participating 
        financial institution's portion of participation and syndication 
        loans must be attributed under paragraphs (e) to (h).  A 
        participation loan is an arrangement in which a lender makes a 
        loan to a borrower and then sells, assigns, or otherwise 
        transfers all or a part of the loan to a purchasing financial 
        institution.  A syndication loan is a loan transaction involving 
        multiple financial institutions in which all the lenders are 
        named as parties to the loan documentation, are known to the 
        borrower, and have privity of contract with the borrower.  
           (j) Interest income and other receipts including service 
        charges from financial institution credit card and travel and 
        entertainment credit card receivables and credit card holders' 
        fees must be attributed to the state to which the card charges 
        and fees are regularly billed.  
           (k) Merchant discount income derived from financial 
        institution credit card holder transactions with a merchant must 
        be attributed to the state in which the merchant is located.  In 
        the case of merchants located within and outside the state, only 
        receipts from merchant discounts attributable to sales made from 
        locations within the state are attributed to this state.  It is 
        presumed, subject to rebuttal, that the location of a merchant 
        is the address shown on the invoice submitted by the merchant to 
        the taxpayer. 
           (l) Receipts from the performance of fiduciary and other 
        services must be attributed to the state in which the benefits 
        of the services are consumed received.  If the benefits are 
        consumed in more than one state, the receipts from those 
        benefits must be apportioned to this state pro rata according to 
        the portion of the benefits consumed in this state.  For the 
        purposes of this section, services provided to a corporation, 
        partnership, or trust must be attributed to a state where it has 
        a fixed place of doing business.  If the extent to which the 
        benefits of state where the services are consumed in this state 
        received is not readily determinable or is a state where the 
        corporation, partnership, or trust does not have a fixed place 
        of doing business, the benefits of the services shall be deemed 
        to be consumed received at the location of the office of the 
        customer from which the services were ordered in the regular 
        course of the customer's trade or business.  If the ordering 
        office cannot be determined, the benefits of the services shall 
        be deemed to be consumed received at the office of the customer 
        to which the services are billed.  
           (m) Receipts from the issuance of travelers checks and 
        money orders must be attributed to the state in which the checks 
        and money orders are purchased.  
           (n) Receipts from investments of a financial institution in 
        securities and from money market instruments must be apportioned 
        to this state based on the ratio that total deposits from this 
        state, its residents, including any business with an office or 
        other place of business in this state, its political 
        subdivisions, agencies, and instrumentalities bear to the total 
        deposits from all states, their residents, their political 
        subdivisions, agencies, and instrumentalities.  In the case of 
        an unregulated financial institution subject to this section, 
        these receipts are apportioned to this state based on the ratio 
        that its gross business income, excluding such receipts, earned 
        from sources within this state bears to gross business income, 
        excluding such receipts, earned from sources within all states.  
        For purposes of this subdivision, deposits made by this state, 
        its residents, its political subdivisions, agencies, and 
        instrumentalities must be attributed to this state, whether or 
        not the deposits are accepted or maintained by the taxpayer at 
        locations within this state. 
           (o) A financial institution's interest in property 
        described in section 290.015, subdivision 3, paragraph (b), is 
        included in the receipts factor in the same manner as assets in 
        the nature of securities or money market instruments are 
        included in paragraph (n).  
           Sec. 12.  Minnesota Statutes 1994, section 290.92, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (1)  [WAGES.] For purposes 
        of this section, the term "wages" means the same as that term is 
        defined in section 3401(a) and (f) of the Internal Revenue Code, 
        except wages shall not include agricultural labor as defined in 
        section 3121(g) of the Internal Revenue Code. 
           (2)  [PAYROLL PERIOD.] For purposes of this section the 
        term "payroll period" means a period for which a payment of 
        wages is ordinarily made to the employee by the employee's 
        employer, and the term "miscellaneous payroll period" means a 
        payroll period other than a daily, weekly, biweekly, 
        semimonthly, monthly, quarterly, semiannual, or annual payroll 
        period. 
           (3)  [EMPLOYEE.] For purposes of this section the term 
        "employee" means any resident individual performing services for 
        an employer, either within or without, or both within and 
        without the state of Minnesota, and every nonresident individual 
        performing services within the state of Minnesota, the 
        performance of which services constitute, establish, and 
        determine the relationship between the parties as that of 
        employer and employee.  As used in the preceding sentence, the 
        term "employee" includes an officer of a corporation, and an 
        officer, employee, or elected official of the United States, a 
        state, or any political subdivision thereof, or the District of 
        Columbia, or any agency or instrumentality of any one or more of 
        the foregoing. 
           (4)  [EMPLOYER.] For purposes of this section the term 
        "employer" means any person, including individuals, fiduciaries, 
        estates, trusts, partnerships, limited liability companies, and 
        corporations transacting business in or deriving any income from 
        sources within the state of Minnesota for whom an individual 
        performs or performed any service, of whatever nature, as the 
        employee of such person, except that if the person for whom the 
        individual performs or performed the services does not have 
        legal control of the payment of the wages for such services, the 
        term "employer," except for purposes of paragraph (1), means the 
        person having legal control of the payment of such wages.  As 
        used in the preceding sentence, the term "employer" includes any 
        corporation, individual, estate, trust, or organization which is 
        exempt from taxation under section 290.05 and further includes, 
        but is not limited to, officers of corporations who have legal 
        control, either individually or jointly with another or others, 
        of the payment of the wages. 
           (5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 
        purposes of this section, the term "number of withholding 
        exemptions claimed" means the number of withholding exemptions 
        claimed in a withholding exemption certificate in effect under 
        subdivision 5, except that if no such certificate is in effect, 
        the number of withholding exemptions claimed shall be considered 
        to be zero. 
           Sec. 13.  Minnesota Statutes 1994, section 290.9201, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CREDIT AGAINST TAX.] Each calendar year an 
        entertainment entity may take a nonrefundable credit 
        of $100 $120 against the tax imposed by this section. 
           Sec. 14.  [OMISSIONS FROM INHERITANCE OR ESTATE TAX 
        RETURN.] 
           Effective for decedents dying before August 1, 1990, the 
        provisions of Minnesota Statutes, section 289A.38, subdivision 
        6, apply to assets omitted from an inheritance tax return or 
        estate tax return rather than the provisions of Minnesota 
        Statutes 1988, section 291.11, subdivision 1, clause (2)(c). 
           Sec. 15.  [EFFECTIVE DATE.] 
           Section 1 is effective for returns due after December 31, 
        1995.  Section 2 as it relates to quarterly withholding deposits 
        is effective for withholding done after December 31, 1995, and 
        the remainder of section 2 is effective for payments due after 
        December 31, 1995.  Sections 3 and 5 are effective for federal 
        determinations after December 31, 1995.  Section 4 is effective 
        for estates of decedents dying after the date of final 
        enactment.  Section 6 is effective for deaths after December 31, 
        1995, and trusts that become irrevocable after December 31, 
        1995.  Sections 7 and 9 to 11 are effective for tax years 
        beginning after December 31, 1995.  Section 12 is effective for 
        wages paid after December 31, 1995.  Sections 8 and 13 are 
        effective for tax years beginning after December 31, 1994. 
                                   ARTICLE 11
                           REVENUE POLICY INITIATIVES 
                     PROPERTY TAX AND PROPERTY TAX REFUNDS
           Section 1.  Minnesota Statutes 1994, section 273.124, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL RULE.] (a) Residential real estate 
        that is occupied and used for the purposes of a homestead by its 
        owner, who must be a Minnesota resident, is a residential 
        homestead.  
           Agricultural land, as defined in section 273.13, 
        subdivision 23, that is occupied and used as a homestead by its 
        owner, who must be a Minnesota resident, is an agricultural 
        homestead. 
           Dates for establishment of a homestead and homestead 
        treatment provided to particular types of property are as 
        provided in this section.  
           Property of a trustee, beneficiary, or grantor of a trust 
        is not disqualified from receiving homestead benefits if the 
        homestead requirements under this chapter are satisfied. 
           The assessor shall require proof, as provided in 
        subdivision 13, of the facts upon which classification as a 
        homestead may be determined.  Notwithstanding any other law, the 
        assessor may at any time require a homestead application to be 
        filed in order to verify that any property classified as a 
        homestead continues to be eligible for homestead status.  
        Notwithstanding any other law to the contrary, the department of 
        revenue may, upon request from an assessor, verify whether an 
        individual who is requesting or receiving homestead 
        classification has filed a Minnesota income tax return as a 
        resident for the most recent taxable year for which the 
        information is available. 
           When there is a name change or a transfer of homestead 
        property, the assessor may reclassify the property in the next 
        assessment unless a homestead application is filed to verify 
        that the property continues to qualify for homestead 
        classification. 
           (b) For purposes of this section, homestead property shall 
        include property which is used for purposes of the homestead but 
        is separated from the homestead by a road, street, lot, 
        waterway, or other similar intervening property.  The term "used 
        for purposes of the homestead" shall include but not be limited 
        to uses for gardens, garages, or other outbuildings commonly 
        associated with a homestead, but shall not include vacant land 
        held primarily for future development.  In order to receive 
        homestead treatment for the noncontiguous property, the owner 
        shall apply for it to the assessor by July 1 of the year when 
        the treatment is initially sought.  After initial qualification 
        for the homestead treatment, additional applications for 
        subsequent years are not required. 
           (c) Residential real estate that is occupied and used for 
        purposes of a homestead by a relative of the owner is a 
        homestead but only to the extent of the homestead treatment that 
        would be provided if the related owner occupied the property.  
        For purposes of this paragraph, "relative" means a parent, 
        stepparent, child, stepchild, grandparent, grandchild, brother, 
        sister, uncle, or aunt.  This relationship may be by blood or 
        marriage.  Property that was classified as seasonal recreational 
        residential property at the time when treatment under this 
        paragraph would first apply shall continue to be classified as 
        seasonal recreational residential property for the first four 
        assessment years beginning after the date when the relative of 
        the owner occupies the property as a homestead; this delay also 
        applies to property that, in the absence of this paragraph, 
        would have been classified as seasonal recreational residential 
        property at the time when the residence was constructed.  
        Neither the related occupant nor the owner of the property may 
        claim a property tax refund under chapter 290A for a homestead 
        occupied by a relative.  In the case of a residence located on 
        agricultural land, only the house, garage, and immediately 
        surrounding one acre of land shall be classified as a homestead 
        under this paragraph, except as provided in paragraph (d). 
           (d) Agricultural property that is occupied and used for 
        purposes of a homestead by a relative of the owner, is a 
        homestead, only to the extent of the homestead treatment that 
        would be provided if the related owner occupied the property, 
        and only if all of the following criteria are met: 
           (1) the relative who is occupying the agricultural property 
        is a son, daughter, father, or mother of the owner of the 
        agricultural property or a son or daughter of the spouse of the 
        owner of the agricultural property, 
           (2) the owner of the agricultural property must be a 
        Minnesota resident, 
           (3) the owner of the agricultural property must not receive 
        homestead treatment on any other agricultural property in 
        Minnesota, and 
           (4) the owner of the agricultural property is limited to 
        only one agricultural homestead per family under this paragraph. 
           Neither the related occupant nor the owner of the property 
        may claim a property tax refund under chapter 290A for a 
        homestead occupied by a relative qualifying under this 
        paragraph.  For purposes of this paragraph, "agricultural 
        property" means the house, garage, other farm buildings and 
        structures, and agricultural land. 
           Application must be made to the assessor by the owner of 
        the agricultural property to receive homestead benefits under 
        this paragraph.  The assessor may require the necessary proof 
        that the requirements under this paragraph have been met. 
           (e) In the case of property owned by a property owner who 
        is married, the assessor must not deny homestead treatment in 
        whole or in part if only one of the spouses occupies the 
        property and the other spouse is absent due to:  (1) marriage 
        dissolution proceedings, (2) legal separation, (3) employment or 
        self-employment in another location as provided under 
        subdivision 13, or (4) residence in a nursing home or boarding 
        care facility. 
           Sec. 2.  Minnesota Statutes 1994, section 273.124, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COOPERATIVES AND CHARITABLE CORPORATIONS.] When 
        one or more dwellings, or one or more buildings which each 
        contain several dwelling units, are owned by a corporation or 
        association organized under chapter 308A, and each person who 
        owns a share or shares in the corporation or association is 
        entitled to occupy a dwelling, or dwelling unit in the building, 
        the corporation or association may claim homestead treatment for 
        each dwelling, or for each unit in case of a building containing 
        several dwelling units, for the dwelling or for the part of the 
        value of the building occupied by a shareholder.  Each dwelling 
        or unit must be designated by legal description or number, and 
        the net tax capacity of each dwelling that qualifies for 
        assessment under this subdivision must include not more than 
        one-half acre of land, if platted, nor more than 80 acres if 
        unplatted.  The net tax capacity of the building or buildings 
        containing several dwelling units is the sum of the net tax 
        capacities of each of the respective units comprising the 
        building.  To qualify for the treatment provided by this 
        subdivision, the corporation or association must be wholly owned 
        by persons having a right to occupy a dwelling or dwelling unit 
        owned by the corporation or association.  A charitable 
        corporation organized under the laws of Minnesota and not 
        otherwise exempt thereunder with no outstanding stock qualifies 
        for homestead treatment with respect to member residents of the 
        dwelling units who have purchased and hold residential 
        participation warrants entitling them to occupy the units. 
           When dwelling units no longer qualify under this 
        subdivision, the current owner must notify the assessor within 
        60 days.  Failure to notify the assessor within 60 days shall 
        result in the loss of benefits under this subdivision for taxes 
        payable in the year that the failure is discovered.  For these 
        purposes, "benefits under this subdivision" means the difference 
        in the net tax capacity of the units which no longer qualify as 
        computed under this subdivision and as computed under the 
        otherwise applicable law, times the local tax rate applicable to 
        the building for that taxes payable year.  Upon discovery of a 
        failure to notify, the assessor shall inform the auditor of the 
        difference in net tax capacity for the building or buildings in 
        which units no longer qualify, and the auditor shall calculate 
        the benefits under this subdivision.  Such amount, plus a 
        penalty equal to 100 percent of that amount, shall then be 
        demanded of the building's owner.  The property owner may appeal 
        the county's determination by serving copies of a petition for 
        review with county officials as provided in section 278.01 and 
        filing a proof of service as provided in section 278.01 with the 
        Minnesota tax court within 60 days of the date of the notice 
        from the county.  The appeal shall be governed by the tax court 
        procedures provided in chapter 271, for cases relating to the 
        tax laws as defined in section 271.01, subdivision 5; 
        disregarding sections 273.125, subdivision 5, and 278.03, but 
        including section 278.05, subdivision 2.  If the amount of the 
        benefits under this subdivision and penalty are not paid within 
        60 days, and if no appeal has been filed, the county auditor 
        shall certify the amount of the benefit and penalty to the 
        succeeding year's tax list to be collected as part of the 
        property taxes on the affected buildings. 
           Sec. 3.  Minnesota Statutes 1994, 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 317A and qualifying under section 
        501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as 
        amended through December 31, 1990, or a limited partnership 
        which corporation or partnership operates the property in 
        conjunction with a cooperative association, and has received 
        public financing, homestead treatment may be claimed by the 
        cooperative association on behalf of the members of the 
        cooperative for each dwelling unit occupied by a member of the 
        cooperative.  The cooperative association must provide the 
        assessor with the social security numbers of those members.  To 
        qualify for the treatment provided by this subdivision, the 
        following conditions must be met:  
           (a) the cooperative association must be organized under 
        chapter 308A and all voting members of the board of directors 
        must be resident tenants of the cooperative and must be elected 
        by the resident tenants of the cooperative; 
           (b) the cooperative association must have a lease for 
        occupancy of the property for a term of at least 20 years, which 
        permits the cooperative association, while not in default on the 
        lease, to participate materially in the management of the 
        property, including material participation in establishing 
        budgets, setting rent levels, and hiring and supervising a 
        management agent; 
           (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 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; 
           (d) a minimum of 40 percent of the cooperative 
        association's members must have incomes at or less than 60 
        percent of area median gross income as determined by the United 
        States Secretary of Housing and Urban Development under section 
        142(d)(2)(B) of the Internal Revenue Code of 1986, as amended 
        through December 31, 1991.  For purposes of this clause, "member 
        income" means the income of a member existing at the time the 
        member acquires cooperative membership; 
           (e) if a limited partnership owns the property, it must 
        include as the managing general partner a nonprofit organization 
        operating under the provisions of chapter 317A and qualifying 
        under section 501(c)(3) or 501(c)(4) of the Internal Revenue 
        Code of 1986, as amended through December 31, 1990, and the 
        limited partnership agreement must provide that the managing 
        general partner have sufficient powers so that it materially 
        participates in the management and control of the limited 
        partnership; 
           (f) prior to becoming a member of a leasehold cooperative 
        described in this subdivision, a person must have received 
        notice that (1) describes leasehold cooperative property in 
        plain language, including but not limited to the effects of 
        classification under this subdivision on rents, property taxes 
        and tax credits or refunds, and operating expenses, and (2) 
        states that copies of the articles of incorporation and bylaws 
        of the cooperative association, the lease between the owner and 
        the cooperative association, a sample sublease between the 
        cooperative association and a tenant, and, if the owner is a 
        partnership, a copy of the limited partnership agreement, can be 
        obtained upon written request at no charge from the owner, and 
        the owner must send or deliver the materials within seven days 
        after receiving any request; 
           (g) if a dwelling unit of a building was occupied on the 
        60th day prior to the date on which the unit became leasehold 
        cooperative property described in this subdivision, the notice 
        described in paragraph (f) must have been sent by first class 
        mail to the occupant of the unit at least 60 days prior to the 
        date on which the unit became leasehold cooperative property.  
        For purposes of the notice under this paragraph, the copies of 
        the documents referred to in paragraph (f) may be in proposed 
        version, provided that any subsequent material alteration of 
        those documents made after the occupant has requested a copy 
        shall be disclosed to any occupant who has requested a copy of 
        the document.  Copies of the articles of incorporation and 
        certificate of limited partnership shall be filed with the 
        secretary of state after the expiration of the 60-day period 
        unless the change to leasehold cooperative status does not 
        proceed; 
           (h) the county attorney of the county in which the property 
        is located must certify to the assessor that the property meets 
        the requirements of this subdivision; 
           (i) the public financing received must be from at least one 
        of the following sources: 
           (1) tax increment financing proceeds used for the 
        acquisition or rehabilitation of the building or interest rate 
        write-downs relating to the acquisition of the building; 
           (2) government issued bonds exempt from taxes under section 
        103 of the Internal Revenue Code of 1986, as amended through 
        December 31, 1991, the proceeds of which are used for the 
        acquisition or rehabilitation of the building; 
           (3) programs under section 221(d)(3), 202, or 236, of Title 
        II of the National Housing Act; 
           (4) rental housing program funds under Section 8 of the 
        United States Housing Act of 1937 or the market rate family 
        graduated payment mortgage program funds administered by the 
        Minnesota housing finance agency that are used for the 
        acquisition or rehabilitation of the building; 
           (5) low-income housing credit under section 42 of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1991; 
           (6) public financing provided by a local government used 
        for the acquisition or rehabilitation of the building, including 
        grants or loans from (i) federal community development block 
        grants; (ii) HOME block grants; or (iii) residential rental 
        bonds issued under chapter 474A; or 
           (7) other rental housing program funds provided by the 
        Minnesota housing finance agency for the acquisition or 
        rehabilitation of the building; 
           (j) at the time of the initial request for homestead 
        classification or of any transfer of ownership of the property, 
        the governing body of the municipality in which the property is 
        located must hold a public hearing and make the following 
        findings: 
           (1) that the granting of the homestead treatment of the 
        apartment's units will facilitate safe, clean, affordable 
        housing for the cooperative members that would otherwise not be 
        available absent the homestead designation; 
           (2) that the owner has presented information satisfactory 
        to the governing body showing that the savings garnered from the 
        homestead designation of the units will be used to reduce 
        tenant's rents or provide a level of furnishing or maintenance 
        not possible absent the designation; and 
           (3) that the requirements of paragraphs (b), (d), and (i) 
        have been met. 
           Homestead treatment must be afforded to units occupied by 
        members of the cooperative association and the units must be 
        assessed as provided in subdivision 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. 
           When dwelling units no longer qualify under this 
        subdivision, the current owner must notify the assessor within 
        60 days.  Failure to notify the assessor within 60 days shall 
        result in the loss of benefits under this subdivision for taxes 
        payable in the year that the failure is discovered.  For these 
        purposes, "benefits under this subdivision" means the difference 
        in the net tax capacity of the units which no longer qualify as 
        computed under this subdivision and as computed under the 
        otherwise applicable law, times the local tax rate applicable to 
        the building for that taxes payable year.  Upon discovery of a 
        failure to notify, the assessor shall inform the auditor of the 
        difference in net tax capacity for the building or buildings in 
        which units no longer qualify, and the auditor shall calculate 
        the benefits under this subdivision.  Such amount, plus a 
        penalty equal to 100 percent of that amount, shall then be 
        demanded of the building's owner.  The property owner may appeal 
        the county's determination by serving copies of a petition for 
        review with county officials as provided in section 278.01 and 
        filing a proof of service as provided in section 278.01 with the 
        Minnesota tax court within 60 days of the date of the notice 
        from the county.  The appeal shall be governed by the tax court 
        procedures provided in chapter 271, for cases relating to the 
        tax laws as defined in section 271.01, subdivision 5; 
        disregarding sections 273.125, subdivision 5, and 278.03, but 
        including section 278.05, subdivision 2.  If the amount of the 
        benefits under this subdivision and penalty are not paid within 
        60 days, and if no appeal has been filed, the county auditor 
        shall certify the amount of the benefit and penalty to the 
        succeeding year's tax list to be collected as part of the 
        property taxes on the affected buildings. 
           Sec. 4.  Minnesota Statutes 1994, 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 1 or class 2a or the 
        value of the first tier of net class rates provided under 
        section 273.13, subdivision 22, or 23, paragraph (a), is 
        entitled to assessment as a homestead under section 273.13, 
        subdivision 22 or 23.  The limitation in this subdivision does 
        not apply to buildings containing fewer than four residential 
        units 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. 5.  Minnesota Statutes 1994, section 274.14, is 
        amended to read: 
           274.14 [LENGTH OF SESSION; RECORD.] 
           The county board of equalization or the special board of 
        equalization appointed by it shall meet during the last two 
        weeks in June that contain the last ten meeting days, in June.  
        For this purpose, "meeting days" are defined as any day of the 
        week excluding Saturday and Sunday.  The board may meet on any 
        ten consecutive meeting days in June, after the second Friday in 
        June, if the actual meeting dates are contained on the valuation 
        notices mailed to each property owner in the county under 
        section 273.121.  No action taken by the county board of review 
        after June 30 is valid, except for corrections permitted in 
        sections 273.01 and 274.01.  The county auditor shall keep an 
        accurate record of the proceedings and orders of the board.  The 
        record must be published like other proceedings of county 
        commissioners.  A copy of the published record must be sent to 
        the commissioner of revenue, with the abstract of assessment 
        required by section 274.16.  
           Sec. 6.  Minnesota Statutes 1994, section 275.07, 
        subdivision 1, is amended to read: 
           Subdivision 1.  The taxes voted by cities, counties, school 
        districts, and special districts shall be certified by the 
        proper authorities to the county auditor on or before five 
        working days after December 20 in each year.  A town must 
        certify the levy adopted by the town board to the county auditor 
        by September 15 each year.  If the town board modifies the levy 
        at a special town meeting after September 15, the town board 
        must recertify its levy to the county auditor on or before five 
        working days after December 20.  The taxes certified shall not 
        be reduced by the county auditor by the aid received under 
        sections section 273.1398, subdivisions 2 and 3 subdivision 2, 
        but shall be reduced by the county auditor by the aid received 
        under section 273.1398, subdivision 3.  If a city, town, county, 
        school district, or special district fails to certify its levy 
        by that date, its levy shall be the amount levied by it for the 
        preceding year. 
           Sec. 7.  Minnesota Statutes 1994, section 275.08, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  The amounts certified under section 275.07 after 
        adjustment under section 275.07, subdivision 3, by an individual 
        local government unit, except for any amounts certified under 
        sections 124A.03, subdivision 2a, and 275.61, shall be divided 
        by the total net tax capacity of all taxable properties within 
        the local government unit's taxing jurisdiction.  The resulting 
        ratio, the local government's local tax rate, multiplied by each 
        property's net tax capacity shall be each property's tax for 
        that local government unit before reduction by any credits.  
           Any amount certified to the county auditor under section 
        124A.03, subdivision 2a, or 275.61, after the dates given in 
        those sections, shall be divided by the total estimated market 
        value of all taxable properties within the taxing district.  The 
        resulting ratio, the taxing district's new referendum tax rate, 
        multiplied by each property's estimated market value shall be 
        each property's new referendum tax before reduction by any 
        credits. 
           Sec. 8.  Minnesota Statutes 1994, section 289A.60, 
        subdivision 12, is amended to read: 
           Subd. 12.  [PENALTIES RELATING TO PROPERTY TAX REFUNDS.] 
        (a) If the commissioner determines that a property tax refund 
        claim is or was excessive and was filed with fraudulent intent, 
        the claim must be disallowed in full.  If the claim has been 
        paid, the amount disallowed may be recovered by assessment and 
        collection. 
           (b) If it is determined that a property tax refund claim is 
        excessive and was negligently prepared, ten percent of the 
        corrected claim must be disallowed.  If the claim has been paid, 
        the amount disallowed must be recovered by assessment and 
        collection.  
           (c) An owner or managing agent who knowingly without 
        reasonable cause fails to give a certificate of rent 
        constituting property tax to a renter, as required by section 
        290A.19, paragraph (a), is liable to the commissioner for a 
        penalty of $100 for each failure. 
           (d) If the owner or managing agent knowingly gives rent 
        certificates that report total rent constituting property taxes 
        in excess of the amount of actual rent constituting property 
        taxes paid on the rented part of a property, the owner or 
        managing agent is liable for a penalty equal to the greater of 
        (1) $100 or (2) 50 percent of the excess that is reported.  An 
        overstatement of rent constituting property taxes is presumed to 
        be knowingly made if it exceeds by ten percent or more the 
        actual rent constituting property taxes. 
           (e) No claim is allowed if the initial claim is filed more 
        than one year after the original due date for filing the claim.  
           Sec. 9.  [EFFECTIVE DATE.] 
           Section 5 is effective for taxes payable in 1997 and 
        thereafter.  Sections 2 to 4 are effective January 1, 1996, and 
        thereafter.  Section 8 is effective for certificates of rent 
        paid required after the date of final enactment. 
                                   ARTICLE 12
                           REVENUE POLICY INITIATIVES
                            SALES AND SPECIAL TAXES
           Section 1.  Minnesota Statutes 1994, section 297.08, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONTRABAND DEFINED.] The following are 
        declared to be contraband: 
           (1) All packages which do not have stamps affixed to them 
        as provided in sections 297.01 to 297.13, including but not 
        limited to (i) packages with illegible stamps and packages with 
        stamps that are not complete or whole even if the stamps are 
        legible, and (ii) all devices for the vending of cigarettes in 
        which such unstamped packages as defined in item (i) are found, 
        including all contents contained within the devices. 
           (2) Any device for the vending of cigarettes and all 
        packages of cigarettes contained therein, where the device does 
        not afford at least partial visibility of contents.  Where any 
        package exposed to view does not carry the stamp required by 
        sections 297.01 to 297.13, it shall be presumed that all 
        packages contained in the device are unstamped and contraband. 
           (3) Any device for the vending of cigarettes to which the 
        commissioner or authorized agents have been denied access for 
        the inspection of contents.  In lieu of seizure, the 
        commissioner or an agent may seal the device to prevent its use 
        until inspection of contents is permitted. 
           (4) Any device for the vending of cigarettes which does not 
        carry the name and address of the owner, plainly marked and 
        visible from the front of the machine. 
           (5) Any device including, but not limited to, motor 
        vehicles, trailers, snowmobiles, airplanes, and boats used with 
        the knowledge of the owner or of a person operating with the 
        consent of the owner for the storage or transportation of more 
        than 5,000 cigarettes which are contraband under this 
        subdivision.  When cigarettes are being transported in the 
        course of interstate commerce, or are in movement from either a 
        public warehouse to a distributor upon orders from a 
        manufacturer or distributor, or from one distributor to another, 
        the cigarettes are not contraband, notwithstanding the 
        provisions of clause (1). 
           (6) All packages obtained in violation of section 297.11, 
        subdivision 6. 
           (7) All packages offered for sale or held as inventory in 
        violation of section 297.11, subdivision 7. 
           Sec. 2.  Minnesota Statutes 1994, section 297.08, 
        subdivision 3, is amended to read: 
           Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
        DISPOSITION OF SEIZED PROPERTY.] Within two days after the 
        seizure of any alleged contraband, the person making the seizure 
        shall deliver an inventory of the property seized to the person 
        from whom the seizure was made, if known, and file a copy with 
        the commissioner.  Within ten days after the date of service of 
        the inventory, the person from whom the property was seized or 
        any person claiming an ownership or security interest in the 
        property may file with the commissioner a demand for a judicial 
        determination of the question as to whether the property was 
        lawfully subject to seizure and forfeiture.  The commissioner, 
        within 30 days, shall institute an action in the district court 
        of the county where the seizure was made to determine the issue 
        of forfeiture.  The only issue to be decided by the court is 
        whether the alleged contraband is contraband, as defined in 
        subdivision 1.  The action shall be brought in the name of the 
        state and shall be prosecuted by the county attorney or by the 
        attorney general.  The court shall hear the action without a 
        jury and shall try and determine the issues of fact and law 
        involved.  Whenever a judgment of forfeiture is entered, the 
        commissioner may, unless the judgment is stayed pending an 
        appeal, either (1) deliver the forfeited property to the 
        commissioner of human services for use by patients in state 
        institutions; (2) cause it to be destroyed; or (3) cause it to 
        be sold at public auction as provided by law.  If a demand for 
        judicial determination is made and no action is commenced as 
        provided in this subdivision, the property shall be released by 
        the commissioner and redelivered to the person entitled to it.  
        If no demand is made, the property seized shall be deemed 
        forfeited to the state by operation of law and may be disposed 
        of by the commissioner as provided where there has been a 
        judgment of forfeiture.  Whenever the commissioner is satisfied 
        that any person from whom property is seized under sections 
        297.01 to 297.13 was acting in good faith and without intent to 
        evade the tax imposed by sections 297.01 to 297.13, the 
        commissioner shall release the property seized, without further 
        legal proceedings. 
           Sec. 3.  Minnesota Statutes 1994, section 297C.02, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FERMENTED MALT BEVERAGES.] There is imposed 
        on the direct or indirect sale of fermented malt beverages all 
        fermented malt beverages that are imported, directly or 
        indirectly sold, or possessed in this state the following excise 
        tax:  
           (1) on fermented malt beverages containing not more than 
        3.2 percent alcohol by weight, $2.40 per barrel of 31 gallons; 
           (2) on fermented malt beverages containing more than 3.2 
        percent alcohol by weight, $4.60 per barrel of 31 gallons.  
           The tax is at a proportional rate for fractions of a barrel 
        of 31 gallons. 
           Sec. 4.  Minnesota Statutes 1994, section 297C.07, is 
        amended to read: 
           297C.07 [EXCEPTIONS.] 
           The following are not subject to the excise tax: 
           (1) Sales by a manufacturer, brewer, or wholesaler for 
        shipment outside the state in interstate commerce. 
           (2) Sales of wine for sacramental purposes under section 
        340A.316. 
           (3) Fruit juices naturally fermented or beer naturally 
        brewed in the home for family use. 
           (4) Malt beverages served by a brewery for on-premise 
        consumption at no charge, or distributed to brewery employees 
        for on-premise consumption under a labor contract. 
           (5) Alcoholic beverages sold to authorized manufacturers of 
        food products or pharmaceutical firms.  The alcoholic beverage 
        must be used exclusively in the manufacture of food products or 
        medicines.  For purposes of this part, "manufacturer" means a 
        manufacturer of food products intended for sale to wholesalers 
        or retailers for ultimate sale to the consumer. 
           (6) Sales to common carriers engaged in interstate 
        transportation of passengers and qualified approved military 
        clubs, except as provided in section 297C.17.  
           (7) Alcoholic beverages sold or transferred between 
        Minnesota wholesalers.  
           (8) Sales to a federal agency, that the state of Minnesota 
        is prohibited from taxing under the constitution or laws of the 
        United States or under the constitution of Minnesota. 
           (9) Shipments of wine to Minnesota residents under section 
        340A.417. 
           (10) One liter of intoxicating liquor or 288 ounces of malt 
        liquor per calendar month imported or possessed by a person 
        entering Minnesota from another state, provided the alcoholic 
        beverages accompany the person into this state and will not be 
        offered for sale or used for any commercial purpose. 
           (11) Four liters of intoxicating liquor or ten quarts (320 
        ounces) of malt liquor per calendar month imported or possessed 
        by a person entering Minnesota from a foreign country, provided 
        the alcoholic beverages accompany the person into this state and 
        will not be offered for sale or used for any commercial purpose. 
           (12) The alcoholic beverage contained in 12 or fewer 
        commemorative bottles per calendar month imported into this 
        state. 
           Sec. 5.  [REPEALER.] 
           Minnesota Statutes 1994, section 297A.212, is repealed.  
           Sec. 6.  [EFFECTIVE DATE.] 
           Sections 1 to 5, are effective the day following final 
        enactment. 
                                   ARTICLE 13
                           REVENUE POLICY INITIATIVES
                           COLLECTIONS AND COMPLIANCE
           Section 1.  Minnesota Statutes 1994, section 60A.15, 
        subdivision 12, is amended to read: 
           Subd. 12.  [OVERPAYMENTS, CLAIMS FOR REFUND.] (1) 
        [PROCEDURE, TIME LIMIT, APPROPRIATION.] A company who has paid, 
        voluntarily or otherwise, or from whom there has been collected 
        an amount of tax for any year in excess of the amount legally 
        due for that year, may file with the commissioner of revenue a 
        claim for a refund of the excess.  Except as provided in 
        subdivision 11, no claim or refund shall be allowed or made 
        after 3-1/2 years from the date prescribed for filing the return 
        (plus any extension of time granted for filing the return but 
        only if filed within the extended time) or after two years from 
        the date of overpayment, whichever period is longer, unless 
        before the expiration of the period a claim is filed by the 
        company the period prescribed in section 289A.40, subdivision 1. 
        For this purpose, a return or amended return claiming an 
        overpayment constitutes a claim for refund. 
           Upon the filing of a claim, the commissioner shall examine 
        it, shall make and file written findings denying or allowing the 
        claim in whole or in part, and shall mail a notice thereof to 
        the company at the address stated upon the return.  If the claim 
        is allowed in whole or in part, the commissioner shall issue a 
        certificate for the refundment of the excess paid by the 
        company, with interest at the rate specified in section 270.76 
        computed from the date of the payment of the tax until the date 
        the refund is paid or the credit is made to the company.  The 
        commissioner of finance shall pay the refund out of the proceeds 
        of the taxes imposed by this section, as other state moneys are 
        expended.  As much of the proceeds of the taxes as necessary are 
        appropriated for that purpose. 
           (2) [DENIAL OF CLAIM, COURT PROCEEDINGS.] If the claim is 
        denied in whole or in part, the commissioner shall mail an order 
        of denial to the company in the manner prescribed in subdivision 
        8.  An appeal from this order may be taken to the Minnesota tax 
        court in the manner prescribed in section 271.06, or the company 
        may commence an action against the commissioner to recover the 
        denied overpayment.  The action may be brought in the district 
        court of the district in the county of its principal place of 
        business, or in the district court for Ramsey county.  The 
        action in the district court must be commenced within 18 months 
        following the mailing of the order of denial to the company.  If 
        a claim for refund is filed by a company and no order of denial 
        is issued within six months of the filing, the company may 
        commence an action in the district court as in the case of a 
        denial, but the action must be commenced within two years of the 
        date that the claim for refund was filed. 
           (3) [CONSENT TO EXTEND TIME.] If the commissioner and the 
        company have, within the periods prescribed in clause (1), 
        consented in writing to any extension of time for the assessment 
        of the tax, the period within which a claim for refund may be 
        filed, or a refund may be made or allowed, if no claim is filed, 
        shall be the period within which the commissioner and the 
        company have consented to an extension for the assessment of the 
        tax and six months thereafter.  The period within which a claim 
        for refund may be filed shall not expire prior to two years 
        after the tax was paid. 
           (4) [OVERPAYMENTS; REFUNDS.] If the amount determined to be 
        an overpayment exceeds the taxes imposed by this section, the 
        amount of excess shall be considered an overpayment.  An amount 
        paid as tax constitutes an overpayment even if in fact there was 
        no tax liability with respect to which the amount was paid. 
           Notwithstanding any other provision of law to the contrary, 
        in the case of any overpayment, the commissioner, within the 
        applicable period of limitations, shall refund any balance of 
        more than one dollar to the company if the company requests the 
        refund. 
           Sec. 2.  Minnesota Statutes 1994, section 60A.199, 
        subdivision 8, is amended to read: 
           Subd. 8.  [REFUND PROCEDURE; TIME LIMIT; APPROPRIATION.] A 
        licensee which has paid, voluntarily or otherwise, or from which 
        there was collected an amount of tax for any year in excess of 
        the amount legally due for that year, may file with the 
        commissioner of revenue a claim for a refund of the excess. 
        Except as provided in subdivision 3, no claim or refund shall be 
        allowed or made after 3-1/2 years from the date prescribed for 
        filing the return (plus any extension of time granted for filing 
        the return but only if filed within the extended time) or after 
        two years from the date of overpayment, whichever period is 
        longer, unless before the expiration of the period a claim is 
        filed by the licensee the period prescribed in section 289A.40, 
        subdivision 1.  For this purpose, a return or amended return 
        claiming an overpayment constitutes a claim for refund.  
           Upon the filing of a claim the commissioner shall examine 
        it, shall make written findings thereon denying or allowing the 
        claim in whole or in part, and shall mail a notice thereof to 
        the licensee at the address stated upon the return.  If the 
        claim is allowed in whole or in part, the commissioner shall 
        issue a certificate for a refund of the excess paid by the 
        licensee, with interest at the rate specified in section 270.76 
        computed from the date of the payment of the tax until the date 
        the refund is paid or credit is made to the licensee.  The 
        commissioner of finance shall cause the refund to be paid as 
        other state moneys are expended.  So much of the proceeds of the 
        taxes as is necessary are appropriated for that purpose.  
           Sec. 3.  Minnesota Statutes 1994, section 60A.199, 
        subdivision 10, is amended to read: 
           Subd. 10.  [CONSENT TO EXTEND TIME.] If the commissioner 
        and the licensee have, within the periods prescribed by this 
        section, consented in writing to any extension of time for the 
        assessment of the tax, the period within which a claim for 
        refund may be filed, or a refund may be made or allowed, if no 
        claim is filed, is the period within which the commissioner and 
        the licensee have consented to an extension for the assessment 
        of the tax and six months thereafter, the period within which a 
        claim for refund may be filed shall not expire prior to two 
        years after the tax was paid. 
           Sec. 4.  [270.7002] [PERSONAL LIABILITY FOR FAILURE TO 
        HONOR A LEVY.] 
           Subdivision 1.  [SURRENDER OF PROPERTY SUBJECT TO LEVY.] A 
        person who fails or refuses to surrender property or rights to 
        property subject to a levy served on the person under section 
        270.70, 270.7001, or 290.92, subdivision 23, is liable in an 
        amount equal to the value of the property or rights not 
        surrendered, or the amount of taxes, penalties, and interest for 
        the collection of which the levy was made, whichever is less.  A 
        financial institution need not surrender funds on deposit until 
        ten days after service of the levy. 
           Subd. 2.  [PENALTY.] In addition to the personal liability 
        imposed by subdivision 1, if a person required to surrender 
        property or rights to property fails to do so without reasonable 
        cause, the person is liable for a penalty equal to 25 percent of 
        the amount under subdivision 1. 
           Subd. 3.  [PERSON DEFINED.] The term "person" as used in 
        this section includes an officer or employee of a corporation or 
        a member or employee of a partnership, who as such officer, 
        employee, or member is under a duty to surrender the property or 
        rights to property or to respond to the levy. 
           Subd. 4.  [ORDER ASSESSING LIABILITY.] The liability 
        imposed by this section may, after demand to honor a levy has 
        been made, be assessed by the commissioner within 60 days after 
        service of the demand.  The assessment may be based on 
        information available to the commissioner.  The assessment is 
        presumed to be valid, and the burden is on the person assessed 
        to show it is incorrect or invalid.  An order assessing 
        liability for failure to honor a levy is reviewable 
        administratively under section 289A.65, and is appealable to tax 
        court under chapter 271.  The amount assessed, plus interest at 
        the rate specified in section 270.75, may be collected by any 
        remedy available to the commissioner for the collection of 
        taxes.  The proceeds collected are applied first to the 
        liability of the original taxpayer to the extent of the 
        liability under subdivision 1 plus interest, and then to the 
        penalty under subdivision 2. 
           Sec. 5.  Minnesota Statutes 1994, 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, and must revoke, a license for the conduct of a 
        profession, occupation, 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 $500 or more in delinquent taxes or has 
        not filed returns.  If the applicant taxpayer does not owe 
        delinquent taxes but has not filed returns, the commissioner may 
        not notify the licensing authority unless the taxpayer has been 
        given 90 days' written notice to file the returns or show that 
        the returns are not required to be filed.  A licensing authority 
        that has received a notice from the commissioner may issue, 
        transfer, or renew, or not revoke 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 
        and has filed all required returns. 
           Sec. 6.  Minnesota Statutes 1994, 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 all taxes payable to the commissioner 
        including penalties and interest due on the taxes. 
           (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, a member of a partnership, or an individual 
        who is liable for delinquent taxes, 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.  In the 
        case of a license transfer, "applicant" also means both the 
        transferor and the transferee of the license.  "Applicant" also 
        means any holder of a license. 
           (d) "License" includes a contract for space rental at the 
        Minnesota state fair. 
           (e) "Licensing authority" includes the Minnesota state fair 
        board. 
           Sec. 7.  Minnesota Statutes 1994, section 270.72, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NOTICE AND HEARING.] (a) The commissioner, on 
        notifying a licensing authority pursuant to subdivision 1 not to 
        issue, transfer, or renew a license, must send a copy of the 
        notice to the applicant.  If the applicant requests, in writing, 
        within 30 days of the 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.  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.  
           (b) Prior to notifying a licensing authority pursuant to 
        subdivision 1 to revoke a license, the commissioner must send a 
        notice to the applicant of the commissioner's intent to require 
        revocation of the license and of the applicant's right to a 
        hearing under paragraph (a).  A license is subject to revocation 
        when 30 days have passed following the date of the notice in 
        this paragraph without the applicant requesting a hearing, or, 
        if a hearing is timely requested, upon final determination of 
        the hearing under section 14.62, subdivision 1.  A license shall 
        be revoked by the licensing authority within 30 days after 
        receiving notice from the commissioner to revoke. 
           (c) A hearing under this subdivision is in lieu of any 
        other hearing or proceeding provided by law arising from any 
        action taken under subdivision 1. 
           Sec. 8.  [270.721] [REVOCATION OF CORPORATE CERTIFICATES OF 
        AUTHORITY TO DO BUSINESS IN THIS STATE.] 
           When a foreign corporation authorized to do business in 
        this state under chapter 303 fails to comply with any tax laws 
        administered by the commissioner of revenue, the commissioner 
        may serve the secretary of state with a certified copy of an 
        order finding such failure to comply.  The secretary of state, 
        upon receipt of the order, shall revoke the certificate of 
        authority of the corporation to do business in this state, and 
        shall reinstate the certificate under section 303.19 only when 
        the corporation has obtained from the commissioner an order 
        finding that the corporation is in compliance with state tax 
        law.  An order requiring revocation of a certificate shall not 
        be issued unless the commissioner gives the corporation 30 days' 
        written notice of the proposed order, specifying the violations 
        of state tax law, and affording the corporation an opportunity 
        to request a contested case hearing under chapter 14. 
           Sec. 9.  Minnesota Statutes 1994, section 270.79, 
        subdivision 4, is amended to read: 
           Subd. 4.  [REFUND PROCEDURES.] (a) If the commissioner 
        determines that the cumulative refunds due all affected 
        taxpayers will exceed $50,000,000, the refund procedures in this 
        subdivision apply.  
           (b) The refunds due shall be paid in five installments 
        beginning after July 1 of.  The first installment will be paid 
        during the calendar year following the later of the filing of 
        the refund claim or the final judicial determination and ending 
        in the fifth calendar year or at the time that the return for 
        that calendar year is filed subsequent installments will be paid 
        at any time during each of the four succeeding calendar years. 
           (c) The refunds shall be paid in the form of refundable 
        credits claimed on the tax return for the tax type giving rise 
        to the refund. 
           (d) In the case of annual returns the credit allowable must 
        be claimed on the annual return.  When returns are filed on 
        other than an annual basis, the allowable credit must be claimed 
        on the first return due after July 1 of a calendar year The 
        commissioner shall compute the annual refund installment due 
        under this subdivision, and notify the taxpayer of the total 
        amount of the claim for refund which has been allowed. 
           (e) (d) The credit allowed for installment paid each year 
        equals 20 percent of the claimed refund allowed unless the 
        commissioner determines that the cumulative refunds due for a 
        particular year under this section will exceed $150,000,000.  If 
        the refunds payable will exceed that amount, the claimed refunds 
        they will be reduced pro rata with any balance remaining due 
        payable with the final refund installment. 
           (f) (e) Unless contrary to the provisions in this section, 
        the provisions for refunds in the various tax types, including 
        provisions related to the payment of interest, apply to the 
        refunds subject to these provisions.  
           (g) (f) The commissioner may establish a de minimis 
        individual refund amount below which the installment provisions 
        do not apply.  The amount established under this paragraph is 
        not subject to the provisions of chapter 14. 
           (g) If the commissioner of finance determines that it is in 
        the best interest of the state, refunds payable under this 
        section may be paid in fewer than five installments. 
           Sec. 10.  Minnesota Statutes 1994, section 289A.26, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] If the 
        aggregate amount of estimated tax payments made during a 
        calendar year is equal to or exceeds $80,000 $20,000, all 
        estimated tax payments in the subsequent calendar year must be 
        paid by means of a funds transfer as defined in section 
        336.4A-104, paragraph (a).  The funds transfer payment date, as 
        defined in section 336.4A-401, must be on or before the date the 
        estimated tax payment is due.  If the date the estimated tax 
        payment is due is not a funds transfer business day, as defined 
        in section 336.4A-105, paragraph (a), clause (4), the payment 
        date must be on or before the funds transfer business day next 
        following the date the estimated tax payment is due. 
           Sec. 11.  Minnesota Statutes 1994, section 289A.40, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TIME LIMIT; GENERALLY.] Unless otherwise 
        provided in this chapter, a claim for a refund of an overpayment 
        of state tax must be filed within 3-1/2 years from the date 
        prescribed for filing the return, plus any extension of time 
        granted for filing the return, but only if filed within the 
        extended time, or two years one year from the time date of an 
        order assessing tax under section 289A.37, subdivision 1, upon 
        payment in full of the tax is paid in full, penalties, and 
        interest shown on the order, whichever period expires 
        later.  Claims for refund filed after the 3-1/2 year period but 
        within the one-year period are limited to the amount of the tax, 
        penalties, and interest on the order and to issues determined by 
        the order. 
           Sec. 12.  Minnesota Statutes 1994, section 289A.60, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
        a taxpayer fails to make and file a return other than an income 
        tax return of an individual, a withholding return, or sales or 
        use tax return, within the time prescribed or an extension, a 
        penalty is added to the tax.  The penalty is three percent of 
        the amount of tax not paid on or before the date prescribed for 
        payment of the tax including any extensions if the failure is 
        for not more than 30 days, with an additional five percent of 
        the amount of tax remaining unpaid during each additional 30 
        days or fraction of 30 days, during which the failure continues, 
        not exceeding 23 percent in the aggregate. 
           If a taxpayer fails to file a return, other than an income 
        tax return of an individual, within 60 days of the date 
        prescribed for filing of the return (determined with regard to 
        any extension of time for filing), the addition to tax under 
        this subdivision must not be less than the lesser of:  (1) $200; 
        or (2) the greater of (a) 25 percent of the amount required to 
        be shown as tax on the return without reduction for any payments 
        made or refundable credits allowable against the tax, or (b) $50.
           If a taxpayer fails to file an individual income tax return 
        within six months after the date prescribed for filing of the 
        return, a penalty of ten percent of the amount of tax not paid 
        by the end of that six-month period is added to the tax.  
           If a taxpayer fails to file a withholding or sales or use 
        tax return within the time prescribed, including an extension, a 
        penalty of five percent of the amount of tax not timely paid is 
        added to the tax.  
           Sec. 13.  Minnesota Statutes 1994, section 290.92, 
        subdivision 23, is amended to read: 
           Subd. 23.  [WITHHOLDING BY EMPLOYER OF DELINQUENT TAXES.] 
        (1) The commissioner may, within five years after the date of 
        assessment of the tax, or if a lien has been filed under section 
        270.69, within the statutory period for enforcement of the lien, 
        give notice to any employer deriving income which has a taxable 
        situs in this state regardless of whether the income is exempt 
        from taxation, that an employee of that employer is delinquent 
        in a certain amount with respect to any state taxes, including 
        penalties, interest, and costs.  The commissioner can proceed 
        under this subdivision only if the tax is uncontested or if the 
        time for appeal of the tax has expired.  The commissioner shall 
        not proceed under this subdivision until the expiration of 30 
        days after mailing to the taxpayer, at the taxpayer's last known 
        address, a written notice of (a) the amount of taxes, interest, 
        and penalties due from the taxpayer and demand for their 
        payment, and (b) the commissioner's intention to require 
        additional withholding by the taxpayer's employer pursuant to 
        this subdivision.  The effect of the notice shall expire 180 
        days after it has been mailed to the taxpayer provided that the 
        notice may be renewed by mailing a new notice which is in 
        accordance with this subdivision.  The renewed notice shall have 
        the effect of reinstating the priority of the original claim.  
        The notice to the taxpayer shall be in substantially the same 
        form as that provided in section 571.72.  The notice shall 
        further inform the taxpayer of the wage exemptions contained in 
        section 550.37, subdivision 14.  If no statement of exemption is 
        received by the commissioner within 30 days from the mailing of 
        the notice, the commissioner may proceed under this 
        subdivision.  The notice to the taxpayer's employer may be 
        served by mail or by delivery by an employee of the department 
        of revenue and shall be in substantially the same form as 
        provided in section 571.75.  Upon receipt of notice, the 
        employer shall withhold from compensation due or to become due 
        to the employee, the total amount shown by the notice, subject 
        to the provisions of section 571.922.  The employer shall 
        continue to withhold each pay period until the notice is 
        released by the commissioner under section 270.709.  Upon 
        receipt of notice by the employer, the claim of the state of 
        Minnesota shall have priority over any subsequent garnishments 
        or wage assignments.  The commissioner may arrange between the 
        employer and the employee for withholding a portion of the total 
        amount due the employee each pay period, until the total amount 
        shown by the notice plus accrued interest has been withheld.  
           The "compensation due" any employee is defined in 
        accordance with the provisions of section 571.921.  The maximum 
        withholding allowed under this subdivision for any one pay 
        period shall be decreased by any amounts payable pursuant to a 
        garnishment action with respect to which the employer was served 
        prior to being served with the notice of delinquency and any 
        amounts covered by any irrevocable and previously effective 
        assignment of wages; the employer shall give notice to the 
        department of the amounts and the facts relating to such 
        assignments within ten days after the service of the notice of 
        delinquency on the form provided by the department of revenue as 
        noted in this subdivision.  
           (2) If the employee ceases to be employed by the employer 
        before the full amount set forth in a notice of delinquency plus 
        accrued interest has been withheld, the employer shall 
        immediately notify the commissioner in writing of the 
        termination date of the employee and the total amount withheld.  
        No employer may discharge any employee by reason of the fact 
        that the commissioner has proceeded under this subdivision.  If 
        an employer discharges an employee in violation of this 
        provision, the employee shall have the same remedy as provided 
        in section 571.927, subdivision 2.  
           (3) Within ten days after the expiration of such pay 
        period, the employer shall remit to the commissioner, on a form 
        and in the manner prescribed by the commissioner, the amount 
        withheld during each pay period under this subdivision.  Should 
        any employer, after notice, willfully fail to withhold in 
        accordance with the notice and this subdivision, or willfully 
        fail to remit any amount withheld as required by this 
        subdivision, the employer shall be liable for the total amount 
        set forth in the notice together with accrued interest which may 
        be collected by any means provided by law relating to taxation.  
        Any amount collected from the employer for failure to withhold 
        or for failure to remit under this subdivision shall be credited 
        to the employee's account in the following manner:  penalties, 
        interest, tax, and costs.  
           (4) Clauses (1), (2), and (3), except provisions imposing a 
        liability on the employer for failure to withhold or remit, 
        shall apply to cases in which the employer is the United States 
        or any instrumentality thereof or this state or any municipality 
        or other subordinate unit thereof.  
           (5) The commissioner shall refund to the employee excess 
        amounts withheld from the employee under this subdivision.  If 
        any excess results from payments by the employer because of 
        willful failure to withhold or remit as prescribed in clause 
        (3), the excess attributable to the employer's payment shall be 
        refunded to the employer.  
           (6) Employers required to withhold delinquent taxes, 
        penalties, interest, and costs under this subdivision shall not 
        be required to compute any additional interest, costs or other 
        charges to be withheld.  
           (7) The collection remedy provided to the commissioner by 
        this subdivision shall have the same legal effect as if it were 
        a levy made pursuant to section 270.70.  
           Sec. 14.  Minnesota Statutes 1994, section 294.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PROCEDURES; TIME LIMIT.] A company, joint 
        stock association, copartnership, corporation, or individual who 
        has paid, voluntarily or otherwise, or from whom there has been 
        collected (other than by proceedings instituted by the attorney 
        general under sections 294.06 and 294.08, subdivision 3) an 
        amount of gross earnings tax for any year in excess of the 
        amount legally due for that year, may file with the commissioner 
        of revenue a claim for a refund of such excess.  Except as 
        provided in subdivision 4, no such claim shall be entertained 
        unless filed within two years after such tax was paid or 
        collected, or within 3-1/2 years from the filing of the return, 
        whichever period is the longer the period prescribed in section 
        289A.40, subdivision 1.  Upon the filing of a claim the 
        commissioner shall examine the same and shall make and file 
        written findings thereon denying or allowing the claim in whole 
        or in part and shall mail a notice thereof to such company, 
        joint stock association, copartnership, corporation, or 
        individual at the address stated upon the return.  If such claim 
        is allowed in whole or in part, the commissioner shall credit 
        the amount of the allowance against any tax due the state from 
        the claimant and for the balance of said allowance, if any, the 
        commissioner shall issue a certificate for the refundment of the 
        excess paid.  The commissioner of finance shall cause such 
        refund to be paid out of the proceeds of the gross earnings 
        taxes imposed by Minnesota Statutes 1967, chapters 294 and 295 
        as other state moneys are expended.  So much of the proceeds as 
        may be necessary are hereby appropriated for that purpose.  Any 
        allowance so made by the commissioner shall include interest at 
        the rate specified in section 270.76 computed from the date of 
        payment or collection of the tax until the date the refund is 
        paid to the claimant.  
           Sec. 15.  Minnesota Statutes 1994, section 294.09, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CONSENT TO EXTEND TIME.] If the commissioner and 
        the taxpayer have within the periods prescribed in subdivision 1 
        consented in writing to any extension of time for the assessment 
        of the tax under the provisions of section 294.08, subdivision 
        4, the period within which a claim for refund may be filed, or a 
        refund may be made or allowed, if no claim is filed, shall be 
        the period within which the commissioner and the taxpayer have 
        consented to an extension for the assessment of the tax and six 
        months thereafter, provided, however, that the period within 
        which a claim for refund may be filed shall not expire prior to 
        two years after the tax was paid. 
           Sec. 16.  Minnesota Statutes 1994, section 297.35, 
        subdivision 1, is amended to read: 
           Subdivision 1.  On or before the 18th 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 1.5 percent of such liability as compensation to 
        reimburse the distributor for expenses incurred in the 
        administration of sections 297.31 to 297.39.  The return for the 
        May liability and 75 percent of the estimated June liability is 
        due on the date payment of the tax is due. 
           A distributor having a liability of $120,000 or more during 
        a calendar fiscal year ending June 30 must remit all liabilities 
        in the subsequent fiscal calendar year ending June 30 by means 
        of a funds transfer as defined in section 336.4A-104, paragraph 
        (a).  The funds transfer payment date, as defined in section 
        336.4A-401, must be on or before the date the tax is due.  If 
        the date the tax is due is not a funds transfer business day, as 
        defined in section 336.4A-105, paragraph (a), clause (4), the 
        payment date must be on or before the funds transfer business 
        day next following the date the tax is due. 
           Sec. 17.  Minnesota Statutes 1994, section 297.43, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PENALTY FOR FAILURE TO FILE.] If a person fails 
        to make and file a return within the time required under 
        sections 297.07, 297.23, and 297.35, there shall be added to the 
        tax five percent of the amount of tax not paid on or before the 
        date prescribed for payment of the tax.  The amount so added to 
        any tax under this subdivision and subdivision 1 shall be 
        collected at the same time and in the same manner and as a part 
        of the tax and shall bear interest at the rate specified in 
        section 270.75 from the time the tax should have been paid, 
        unless the tax has been paid before the discovery of the 
        negligence, in which case the amount so added shall be collected 
        in the same manner as the tax. 
           In the case of a failure to file a return within 60 days of 
        the date prescribed for filing of the return (determined with 
        regard to any extension of time for filing), the addition to tax 
        under this subdivision shall not be less than the lesser of (i) 
        $200; or (ii) the greater of (a) 25 percent of the amount 
        required to be shown as tax on the return without reduction for 
        any payments made or refundable credits allowable against the 
        tax; or (b) $50.  
           Sec. 18.  Minnesota Statutes 1994, section 297C.14, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PENALTY FOR FAILURE TO FILE.] If a person fails 
        to make and file a return within the time required by this 
        chapter or an extension of time, there shall be added to the tax 
        five percent of the amount of tax not paid on or before the date 
        prescribed for payment of the tax.  The amount so added to any 
        tax under subdivisions 1 and 2 shall be collected at the same 
        time and in the same manner and as a part of the tax and shall 
        bear interest at the rate specified in section 270.75 from the 
        time the tax should have been paid, unless the tax has been paid 
        before the discovery of the negligence, in which case the amount 
        so added shall be collected in the same manner as the tax. 
           In the case of a failure to file a return within 60 days of 
        the date prescribed for filing of the return (determined with 
        regard to any extension of time for filing), the addition to tax 
        under this subdivision shall not be less than the lesser of (i) 
        $200; or (ii) the greater of (a) 25 percent of the amount 
        required to be shown as tax on the return without reduction for 
        any payments made or refundable credits allowable against the 
        tax; or (b) $50.  
           Sec. 19.  Minnesota Statutes 1994, section 297E.11, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TIME LIMIT FOR REFUNDS.] Unless otherwise 
        provided in this chapter, a claim for a refund of an overpayment 
        of tax must be filed within 3-1/2 years from the date prescribed 
        for filing the return, plus any extension of time granted for 
        filing the return, but only if filed within the extended time, 
        or two years from the time the tax is paid, whichever period 
        expires later the period prescribed in section 289A.40, 
        subdivision 1.  Interest on refunds must be computed at the rate 
        specified in section 270.76 from the date of payment to the date 
        the refund is paid or credited.  For purposes of this 
        subdivision, the date of payment is the later of the date the 
        tax was finally due or was paid.  
           Sec. 20.  Minnesota Statutes 1994, section 297E.12, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
        a taxpayer fails to make and file a return within the time 
        prescribed or an extension, a penalty is added to the tax.  The 
        penalty is five percent of the amount of tax not paid on or 
        before the date prescribed for payment of the tax. 
           If a taxpayer fails to file a return within 60 days of the 
        date prescribed for filing of the return (determined with regard 
        to any extension of time for filing), the addition to tax under 
        this subdivision must be at least the lesser of:  (1) $200; or 
        (2) the greater of (i) 25 percent of the amount required to be 
        shown as tax on the return without reduction for any payments 
        made or refundable credits allowable against the tax, or (ii) 
        $50. 
           Sec. 21.  Minnesota Statutes 1994, section 299F.26, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PROCEDURE, TIME LIMIT, APPROPRIATION.] A 
        company which has paid, voluntarily or otherwise, or from which 
        there was collected an amount of tax for any year in excess of 
        the amount legally due for that year, may file with the 
        commissioner of revenue a claim for a refund of the excess.  
        Except as provided in subdivision 4, no claim or refund shall be 
        allowed or made after 3-1/2 years from the date prescribed for 
        filing the return (plus any extension of time granted for filing 
        the return but only if filed within the extended time) or after 
        two years from the date of overpayment, whichever period is 
        longer, unless before the expiration of the period a claim is 
        filed by the company the period prescribed in section 289A.40, 
        subdivision 1.  For this purpose a return or amended return 
        claiming an overpayment constitutes a claim for refund. 
           Upon the filing of a claim the commissioner shall examine 
        the same and shall make and file written findings thereon 
        denying or allowing the claim in whole or in part and shall mail 
        a notice thereof to the company at the address stated upon the 
        return.  If such claim is allowed in whole or in part, the 
        commissioner shall issue a certificate for the refundment of the 
        excess paid by the company, with interest at the rate specified 
        in section 270.76 computed from the date of the payment of the 
        tax until the date the refund is paid or the credit is made to 
        the company, and the commissioner of finance shall cause the 
        refund to be paid as other state moneys are expended.  So much 
        of the proceeds of the taxes as is necessary are appropriated 
        for that purpose. 
           Sec. 22.  Minnesota Statutes 1994, section 299F.26, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CONSENT TO EXTEND TIME.] If the commissioner and 
        the company have within the periods prescribed in subdivision 1, 
        consented in writing to any extension of time for the assessment 
        of the tax, the period within a claim for refund may be filed, 
        or a refund may be made or allowed, if no claim is filed, shall 
        be the period within which the commissioner and the company have 
        consented to an extension for the assessment of the tax and six 
        months thereafter, provided, however, that the period within 
        which a claim for refund may be filed shall not expire prior to 
        two years after the tax was paid. 
           Sec. 23.  [REPEALER.] 
           Minnesota Statutes 1994, sections 270.70, subdivisions 8, 
        9, and 10; and 297A.38, are repealed. 
           Sec. 24.  [EFFECTIVE DATE.] 
           Sections 1, 2, 11, 14, 19, and 21 are effective for claims 
        for refund which have not been filed as of the day following 
        final enactment and in which the time period for filing the 
        claim has not expired under the provisions in effect prior to 
        the day following final enactment.  The time period for filing 
        such claims is the time period prescribed in the enacted 
        sections, or one year after the day following final enactment, 
        whichever is greater. 
           Sections 3, 15, and 22, and the provisions in section 1 
        pertaining to consents to extend time, are effective for 
        consents to extend time for filing claims for refund entered 
        into on or after the day following final enactment. 
           Sections 4, 8, 12, 13, 16 to 18, 20, and 23 are effective 
        the day following final enactment. 
           Sections 5 to 7 are effective July 1, 1995. 
           Section 9 is effective for payments of refunds resulting 
        from final determinations made on or after April 26, 1994, 
        including refunds resulting from appeals filed before that date 
        but finally determined after that date. 
           Section 10 is effective for payments due for tax years 
        beginning after December 31, 1995. 
                                   ARTICLE 14 
                           REVENUE POLICY INITIATIVES 
                                 MISCELLANEOUS 
           Section 1.  Minnesota Statutes 1994, section 289A.43, is 
        amended to read: 
           289A.43 [PROHIBITION OF SUITS TO RESTRAIN ASSESSMENT OR 
        COLLECTION.] 
           Except for the express procedures in this chapter, chapters 
        270 and 271, and any other tax statutes for contesting the 
        assessment or collection of taxes, penalties, or interest 
        administered by the commissioner of revenue, and except for an 
        action challenging the constitutionality of a tax statute on its 
        face, if it is demonstrated to the court by clear and convincing 
        evidence that under no circumstances would the commissioner 
        ultimately prevail and that the taxpayer will suffer irreparable 
        harm if the relief sought is not granted, no suit to restrain 
        assessment or collection, including a declaratory judgment 
        action, can be maintained in any court by any person.  
           Sec. 2.  Minnesota Statutes 1994, section 295.53, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DEDUCTIONS FOR STAFF MODEL HEALTH PLAN COMPANY.] 
        In addition to the exemptions allowed under subdivision 1, a 
        staff model health plan company may deduct from its gross 
        revenues for the year: 
           (1) amounts paid to hospitals, surgical centers, and health 
        care providers that are not employees of the staff model health 
        plan company for services on which liability for the tax is 
        imposed under section 295.52; 
           (2) net amounts added to reserves, if to the extent that 
        the amounts added do not cause total reserves do not to exceed 
        200 percent of the statutory net worth requirement, the 
        calculation of which may be determined on a consolidated basis, 
        taking into account the amounts held in reserve by affiliated 
        staff model health plan companies; 
           (3) assessments for the comprehensive health insurance plan 
        under section 62E.11; and 
           (4) amounts spent for administration as reported as total 
        administration to the department of health in the statement of 
        revenues, expenses, and net worth pursuant to section 62D.08, 
        subdivision 3, clause (a). 
           Sec. 3.  [296.041] [ELECTRONICALLY FILED RETURNS OR 
        REPORTS; SIGNATURES.] 
           For purposes of this chapter, the name of the taxpayer, the 
        name of the taxpayer's authorized agent, or the taxpayer's 
        identification number constitutes a signature when transmitted 
        as part of the information on returns or reports filed by 
        electronic means by the taxpayer or at the taxpayer's 
        direction.  "Electronic means" includes, but is not limited to, 
        the use of a touch-tone telephone to transmit return or report 
        information in a manner prescribed by the commissioner. 
           Sec. 4.  Minnesota Statutes 1994, section 296.12, 
        subdivision 3, is amended to read: 
           Subd. 3.  [TAX COLLECTION, REPORTING AND PAYMENT.] (a) For 
        clear diesel fuel, the tax is imposed on the distributor who 
        receives the fuel. 
           (b) For all other special fuels, the tax is imposed on the 
        distributor, bulk purchaser, or special fuel dealer.  The tax 
        may be paid upon receipt or sale as follows:  
           (1) Distributors and special fuel dealers may, subject to 
        the approval of the commissioner, elect to pay to the 
        commissioner the special fuel excise tax on all special fuel 
        delivered or sold into the supply tank of an aircraft or a 
        licensed motor vehicle.  Under this option an invoice must be 
        issued at the time of each delivery showing the name and address 
        of the purchaser, date of sale, number of gallons, price per 
        gallon and total amount of sale.  A separate sales ticket book 
        shall be maintained for special fuel sales; and 
           (2) Bulk purchasers shall report and pay the excise tax on 
        all special fuel purchased by them for storage, to the 
        commissioner in the form and manner prescribed by the 
        commissioner. 
           (c) Any person delivering special fuel on which the excise 
        tax has not previously been paid, into the supply tank of an 
        aircraft or a licensed motor vehicle shall report such delivery 
        and pay the excise tax on the special fuel so delivered, to the 
        commissioner. 
           Sec. 5.  Minnesota Statutes 1994, section 296.12, 
        subdivision 4, is amended to read: 
           Subd. 4.  [MONTHLY REPORTS; SHRINKAGE ALLOWANCE.] On or 
        before the 23rd day of each month, the persons subject to the 
        provisions of this section shall file in the office of the 
        commissioner at St. Paul, Minnesota, a report in the following 
        manner form and manner prescribed by the commissioner.  Reports 
        shall contain information as follows: 
           (1) Distributors of clear diesel fuel must file a monthly 
        tax return with the department listing all purchases or receipts 
        of clear diesel fuel.  Distributors may be allowed to take a 
        credit or credits under section 296.14, subdivision 2.  
           (2) Distributors and dealers of special fuel other than 
        clear diesel fuel shall report the total number of gallons 
        delivered to them during the preceding calendar month and shall 
        pay the special fuel excise tax due thereon to the commissioner. 
        The invoice must show the true and correct name and address of 
        the purchaser, and the purchaser's signature.  The report shall 
        contain such other information as the commissioner may require.  
           (3) Distributors and dealers of special fuel other than 
        clear diesel fuel who have elected to pay the special fuel 
        excise tax on all special fuel delivered into the supply tank of 
        an aircraft or licensed motor vehicle as provided in subdivision 
        3, shall report the total number of gallons delivered into the 
        supply tank of an aircraft or licensed motor vehicle during the 
        preceding calendar month and shall pay the special fuel excise 
        tax due thereon to the commissioner.  
           (4) Bulk purchasers shall report and pay the special fuel 
        excise tax on all special fuel except clear diesel fuel 
        purchased by them for storage, during the preceding calendar 
        month.  In such cases as the commissioner may permit, credit for 
        the excise tax due or previously paid on special fuel not used 
        in aircraft or licensed motor vehicles, may be allowed in 
        computing tax liability.  The report shall contain such other 
        information as the commissioner may require. 
           (5) In computing the special fuel excise tax due, a 
        deduction of one percent of the quantity of special fuel on 
        which tax is due shall be made for evaporation and loss.  
           (6) Each report shall contain a confession of judgment for 
        the amount of the tax shown due thereon to the extent not timely 
        paid.  
           Sec. 6.  Minnesota Statutes 1994, section 296.12, 
        subdivision 11, is amended to read: 
           Subd. 11.  [QUALIFIED BULK PURCHASERS.] Notwithstanding any 
        other provision of law to the contrary, the commissioner of 
        revenue may allow any bulk purchaser who receives special fuel 
        other than clear diesel fuel in bulk storage for subsequent 
        delivery into the supply tank of licensed motor vehicles or 
        aircraft operated by the bulk purchaser to purchase bulk special 
        fuel on a tax paid basis from any consenting supplier licensed 
        as a distributor or special fuel dealer under this section or 
        section 296.06.  Bulk purchasers qualifying under this provision 
        must become registered in a manner approved by the commissioner 
        but shall be exempt from the bulk purchaser license 
        requirements.  Every licensed distributor or special fuel dealer 
        who sells or delivers special fuel other than clear diesel fuel 
        on a tax paid basis to persons registered under this provision 
        must report on or before the 23rd day of each month sales made 
        during the preceding calendar month and shall pay the special 
        fuel excise tax due thereon to the commissioner.  The report 
        shall be in the form and manner prescribed by the commissioner, 
        and shall contain information as the commissioner may require.  
           Sec. 7.  Minnesota Statutes 1994, section 296.141, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PAYMENT OF GASOLINE TAX AND PETROLEUM TANK 
        RELEASE CLEANUP FEE; SHRINKAGE ALLOWANCE.] On or before the 23rd 
        day of each month, every person who is required to pay a 
        gasoline tax shall file in the office of with the commissioner 
        at St. Paul, Minnesota, a report, in a the form and manner 
        approved by the commissioner, showing the number of gallons of 
        petroleum products received by the reporter during the preceding 
        calendar month, and other information the commissioner may 
        require.  The number of gallons of gasoline must be reported in 
        United States standard liquid gallons (231 cubic inches), except 
        that the commissioner may upon written application and for cause 
        shown permit the distributor to report the number of gallons of 
        gasoline as corrected to a 60 degree Fahrenheit temperature.  If 
        the application is granted, all gasoline covered in the 
        application and allowed by the commissioner must continue to be 
        reported by the distributor on the adjusted basis for a period 
        of one year from the date of the granting of the application.  
        The number of gallons of petroleum products other than gasoline 
        must be reported as originally invoiced. 
           Each report must show separately the number of gallons of 
        aviation gasoline received by the reporter during such calendar 
        month. 
           Each report must include the amount of gasoline tax on 
        gasoline received by the reporter during the preceding month; 
        provided that in computing the tax a deduction of three percent 
        of the quantity of gasoline received by a distributor shall be 
        made for evaporation and loss; provided further that at the time 
        of reporting, the distributor shall submit satisfactory evidence 
        that one-third of the three percent deduction has been credited 
        or paid to dealers on quantities sold to them.  The A written 
        report is deemed to have been filed as required in this 
        subdivision if postmarked on or before the 23rd day of the month 
        in which payable. 
           Sec. 8.  Minnesota Statutes 1994, section 296.141, 
        subdivision 2, is amended to read: 
           Subd. 2.  [INSPECTION FEES.] Persons required to pay an 
        inspection fee under section 239.101 must file a report.  Each 
        report must include the amount of inspection fees due on 
        petroleum products.  The Reports must be filed with the 
        commissioner in the form and manner the commissioner 
        prescribes.  A written report is considered filed as required if 
        postmarked on or before the 23rd day of the month in which 
        payable. 
           Sec. 9.  Minnesota Statutes 1994, section 296.141, 
        subdivision 6, is amended to read: 
           Subd. 6.  [ON-FARM BULK STORAGE OF GASOLINE OR SPECIAL 
        FUEL; ETHYL ALCOHOL FOR PERSONAL USE.] Notwithstanding the 
        provisions of this section, the producer of ethyl alcohol which 
        is produced for personal use and not for sale in the usual 
        course of business and a farmer who uses gasoline or any special 
        fuel on which a tax has not been paid shall report and pay the 
        tax on all ethyl alcohol, gasoline, or special fuel delivered 
        into the supply tank of a licensed motor vehicle during the 
        preceding calendar year.  The tax must be reported in the form 
        and manner prescribed by the commissioner and paid together with 
        any refund claim filed by the taxpayer under section 296.18.  If 
        no refund claim is filed, the tax must be reported and paid 
        annually by March 15 or more frequently, as the commissioner may 
        prescribe.  Any producer qualifying under this subdivision is 
        exempt from the licensing requirements contained in section 
        296.06, subdivision 1. 
           Sec. 10.  Minnesota Statutes 1994, section 296.17, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [UNREPORTED FUEL.] It shall be the duty of 
        every distributor, dealer, and person who sells or uses gasoline 
        manufactured, produced, received, or stored by the distributor, 
        dealer, or person, and of every person using gasoline in motor 
        vehicles or special fuel in licensed motor vehicles, if the same 
        has not been reported or if the tax on account thereof has not 
        been paid to the commissioner, to report to the commissioner in 
        the form and manner prescribed by the commissioner, the quantity 
        of such gasoline so sold or used or such special fuel used, and 
        such person shall become liable for the payment of the tax.  All 
        provisions of sections 296.01 to 296.421 relating to the 
        calculation, collection and payment of the tax shall be 
        applicable to any such person, dealer or distributor. 
           Sec. 11.  Minnesota Statutes 1994, section 296.17, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REFUNDS ON FUEL USED IN OTHER STATES.] Every 
        person regularly or habitually operating motor vehicles upon the 
        public highways of any other state or states and using in said 
        motor vehicles gasoline or special fuel purchased or obtained in 
        this state, shall be allowed a credit or refund equal to the tax 
        on said gasoline or special fuel paid to this state on the 
        gasoline or special fuel actually used in the other state or 
        states.  No credit or refund shall be allowed under this 
        subdivision for taxes paid to any state which imposes a tax upon 
        gasoline or special fuel purchased or obtained in this state and 
        used on the highways of such other state, and which does not 
        allow a similar credit or refund for the tax paid to this state 
        on gasoline or special fuel purchased or acquired in such other 
        state and used on the highways of this state.  Every person 
        claiming a credit or refund under this subdivision shall file a, 
        claim on a in the form and manner prescribed by the commissioner 
        or take the credit on a subsequent tax return within one year of 
        the last day of the month following the end of the quarter when 
        the overpayment occurred.  
           Sec. 12.  Minnesota Statutes 1994, section 296.17, 
        subdivision 5, is amended to read: 
           Subd. 5.  [UNREPORTED AVIATION GASOLINE.] The provisions of 
        subdivision 1 do not apply to aviation gasoline.  It shall be 
        the duty of every distributor, dealer, and person who receives, 
        sells, stores, or withdraws from storage in this state aviation 
        gasoline manufactured, produced, received, or stored by the 
        distributor, dealer, or person, if the same has not been 
        reported or if a tax provided for in section 296.02 on account 
        thereof, has not been paid to the commissioner, to report to the 
        commissioner, in the form and manner prescribed by the 
        commissioner, the quantity of such gasoline so received, sold, 
        stored, or withdrawn from storage, and such person shall become 
        liable for the payment of the tax. 
           All provisions of sections 296.01 to 296.421 relating to 
        the calculation, collections, and payment of the tax shall be 
        applicable to any such person, dealer, or distributor. 
           Sec. 13.  Minnesota Statutes 1994, section 296.17, 
        subdivision 11, is amended to read: 
           Subd. 11.  [MOTOR CARRIER REPORTS.] Every motor carrier 
        subject to the road tax shall, on or before the last day of 
        April, July, October, and January, file with the commissioner 
        such in the form and manner prescribed by the commissioner, 
        reports of operations during the previous three months as the 
        commissioner may require, and such other reports from time to 
        time as the commissioner may deem necessary.  The commissioner 
        by rule may exempt from the quarterly reporting requirements of 
        this section those motor carriers whose mileage is all or 
        substantially all and those motor carriers whose mileage is 
        minimal within this state, or states with which Minnesota has 
        reciprocity and require in such instances an annual report 
        reflecting the operations of the carrier during the previous 
        year along with payment of any taxes due. 
           Each report shall contain a confession of judgment for the 
        amount of the tax shown due thereon to the extent not timely 
        paid. 
           Sec. 14.  Minnesota Statutes 1994, section 296.18, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CLAIM; FUEL USED IN OTHER VEHICLES.] Any 
        person who shall buy and use gasoline for a qualifying purpose 
        other than use in motor vehicles, snowmobiles except as provided 
        in clause (2), or motorboats, or special fuel for a qualifying 
        purpose other than use in licensed motor vehicles, and who shall 
        have paid the Minnesota excise tax directly or indirectly 
        through the amount of the tax being included in the price of the 
        gasoline or special fuel, or otherwise, shall be reimbursed and 
        repaid the amount of the tax paid upon filing with the 
        commissioner a signed claim in writing in the form and manner 
        prescribed by the commissioner, and containing the information 
        the commissioner shall require and accompanied by the original 
        invoice thereof.  By signing any such claim which is false or 
        fraudulent, the applicant shall be subject to the penalties 
        provided in this section for knowingly making a false claim.  
        The claim shall set forth the total amount of the gasoline so 
        purchased and used by the applicant other than in motor 
        vehicles, or special fuel so purchased and used by the applicant 
        other than in licensed motor vehicles, and shall state when and 
        for what purpose it was used.  When a claim contains an error in 
        computation or preparation, the commissioner is authorized to 
        adjust the claim in accordance with the evidence shown on the 
        claim or other information available to the commissioner.  The 
        commissioner, on being satisfied that the claimant is entitled 
        to the payments, shall approve the claim and transmit it to the 
        commissioner of finance.  No repayment shall be made unless the 
        claim and invoice shall be filed with the commissioner within 
        one year from the date of the purchase.  The postmark on the 
        envelope in which the a written claim is mailed shall determine 
        the its date of filing.  The words "gasoline" or "special fuel" 
        as used in this subdivision do not include aviation gasoline or 
        special fuel for aircraft.  Gasoline or special fuel bought and 
        used for a "qualifying purpose" means: 
           (1) Gasoline or special fuel used in carrying on a trade or 
        business, used on a farm situated in Minnesota, and used for a 
        farming purpose.  "Farm" and "farming purpose" have the meanings 
        given them in section 6420(c)(2), (3), and (4) of the Internal 
        Revenue Code of 1986, as amended through December 31, 1988.  
           (2) Gasoline or special fuel used for off-highway business 
        use.  "Off-highway business use" means any use by a person in 
        that person's trade, business, or activity for the production of 
        income.  "Off-highway business use" includes use of a passenger 
        snowmobile off the public highways as part of the operations of 
        a resort as defined in section 157.01, subdivision 1.  
        "Off-highway business use" does not include use as a fuel in a 
        motor vehicle which, at the time of use, is registered or is 
        required to be registered for highway use under the laws of any 
        state or foreign country.  
           (3) Gasoline or special fuel placed in the fuel tanks of 
        new motor vehicles, manufactured in Minnesota, and shipped by 
        interstate carrier to destinations in other states or foreign 
        countries. 
           Sec. 15.  Minnesota Statutes 1994, section 296.18, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FAILURE TO USE OR SELL FOR INTENDED PURPOSE; 
        REPORTS REQUIRED.] (1) Any person who shall buy aviation 
        gasoline or special fuel for aircraft use and who shall have 
        paid the excise taxes due thereon directly or indirectly through 
        the amount of the tax being included in the price thereof, or 
        otherwise, and shall use said gasoline or special fuel in motor 
        vehicles or shall knowingly sell it to any person for use in 
        motor vehicles shall, on or before the twenty-third day of the 
        month following that in which such gasoline or special fuel was 
        so used or sold, report the fact of such use or sale to the 
        commissioner in such form and manner as the commissioner may 
        prescribe. 
           (2) Any person who shall buy gasoline other than aviation 
        gasoline and who shall have paid the motor vehicle gasoline 
        excise tax directly or indirectly through the amount of the tax 
        being included in the price of the gasoline, or otherwise, who 
        shall knowingly sell such gasoline to any person to be used for 
        the purpose of producing or generating power for propelling 
        aircraft, or who shall receive, store, or withdraw from storage 
        such gasoline to be used for that purpose, shall, on or before 
        the 23rd day of the month following that in which such gasoline 
        was so sold, stored, or withdrawn from storage, report the fact 
        of such sale, storage, or withdrawal from storage to the 
        commissioner in such form and manner as the commissioner may 
        prescribe. 
           (3) Any person who shall buy aviation gasoline or special 
        fuel for aircraft use and who shall have paid the excise taxes 
        directly or indirectly through the amount of the tax being 
        included in the price thereof, or otherwise, who shall not use 
        it in motor vehicles or receive, sell, store, or withdraw it 
        from storage for the purpose of producing or generating power 
        for propelling aircraft, shall be reimbursed and repaid the 
        amount of the tax paid upon filing with the commissioner a 
        signed claim in writing in such form and containing such 
        information as the commissioner shall require and accompanied by 
        the original invoice thereof manner as the commissioner may 
        prescribe.  By signing any such filing a claim which is false or 
        fraudulent, the applicant shall be subject to the penalties 
        provided in section 296.25 for knowingly or willfully making a 
        false claim.  The claim shall set forth the total amount of the 
        aviation gasoline or special fuel for aircraft use so purchased 
        and used by the applicant, and shall state when and for what 
        purpose it was used.  When a claim contains an error in 
        computation or preparation, the commissioner is authorized to 
        adjust the claim in accordance with the evidence shown on the 
        claim or other information available to the commissioner.  The 
        commissioner, on being satisfied that the claimant is entitled 
        to payment, shall approve the claim and transmit it to the 
        commissioner of finance.  No repayment shall be made unless the 
        claim and invoice shall be filed with the commissioner within 
        one year from the date of the purchase.  The postmark on the 
        envelope in which the a written claim is mailed shall determine 
        the its date of filing. 
           Sec. 16.  Minnesota Statutes 1994, section 296.18, 
        subdivision 5, is amended to read: 
           Subd. 5.  [GRADUATED REDUCTION-BASIS REFUND CLAIM, 
        REQUIREMENTS.] Any distributor or other person claiming to be 
        entitled to any refund provided for in subdivision 4 shall 
        receive such refund upon filing with the commissioner a verified 
        claim in such form and manner, and, containing such information, 
        and accompanied by such invoices or other proof as the 
        commissioner shall require.  The claim shall set forth, among 
        other things, the total number of gallons of aviation gasoline 
        or special fuel for aircraft use upon which the claimant has 
        directly or indirectly paid the excise tax provided for in 
        sections 296.02, subdivision 2, or 296.025, subdivision 2, 
        during the calendar year, which has been received, stored, or 
        withdrawn from storage by the claimant in this state and not 
        sold or otherwise disposed of to others.  The commissioner, on 
        being satisfied that the claimant is entitled to the refund, 
        shall approve the claim and transmit it to the commissioner of 
        finance, and it shall be paid as provided for in section 
        296.421, subdivision 2.  All claims for refunds under this 
        subdivision shall be made on or before April 15 following the 
        end of the calendar year for which the refund is claimed.  
        Claims for aviation gasoline and special fuel tax refund filed 
        within 15 days beyond the due date prescribed by this 
        subdivision shall be honored by the commissioner less a penalty 
        of 25 percent of the amount of the approved claim. 
           Sec. 17.  [340A.7035] [CONSUMER IMPORTATION; ILLEGAL ACTS.] 
           A person who enters Minnesota from another state and who 
        imports or possesses alcoholic beverages in excess of the 
        tax-exempt quantities provided for in section 297C.07, 
        paragraphs (10), (11), and (12), is guilty of a misdemeanor.  A 
        person who enters Minnesota from a foreign country who imports 
        or possesses alcoholic beverages on which the excise tax imposed 
        by sections 297C.02 and 297C.09 has not been paid, other than 
        the tax-exempt quantities provided for in section 297C.07, 
        paragraphs (10), (11), and (12), is guilty of a misdemeanor.  A 
        peace officer, the commissioner of public safety, and employees 
        designated by the commissioner of public safety may seize 
        alcoholic beverages imported or possessed in violation of this 
        section.  This section does not apply to the consignments of 
        alcoholic beverages shipped into this state by holders of 
        Minnesota import licenses or Minnesota manufacturers and 
        wholesalers when licensed by the commissioner of public safety 
        or to common carriers with licenses to sell alcoholic beverages 
        in more than one state when licensed by the commissioner of 
        public safety to sell alcoholic beverages in this state. 
           Sec. 18.  [EFFECTIVE DATE.] 
           Section 1 is effective for lawsuits initiated on or after 
        the day following final enactment. 
           Sections 2 to 17 are effective the day following final 
        enactment. 
                                   ARTICLE 15 
                         REVENUE TECHNICAL INITIATIVES 
                       INCOME TAX AND PROPERTY TAX REFUND
           Section 1.  Minnesota Statutes 1994, section 290.032, 
        subdivision 1, is amended to read: 
           Subdivision 1.  There is hereby imposed as an addition to 
        the annual income tax for a taxable year of a taxpayer in the 
        classes described in section 290.03 a tax with respect to any 
        distribution received by such taxpayer that is treated as a lump 
        sum distribution under section 402(e) 402(d) of the Internal 
        Revenue Code and that is subject to tax for such taxable year 
        under section 402(e) 402(d) of the Internal Revenue Code. 
           Sec. 2.  Minnesota Statutes 1994, section 290.032, 
        subdivision 2, is amended to read: 
           Subd. 2.  The amount of tax imposed by subdivision 1 shall 
        be computed in the same way as the tax imposed under section 
        402(e) 402(d) of the Internal Revenue Code, except that the 
        initial separate tax shall be an amount equal to five times the 
        tax which would be imposed by section 290.06, subdivision 2c, if 
        the recipient was an unmarried individual, and the taxable net 
        income was an amount equal to one-fifth of the excess of 
           (i) the total taxable amount of the lump sum distribution 
        for the year, over 
           (ii) the minimum distribution allowance, and except that 
        references in section 402(e) 402(d) of the Internal Revenue Code 
        to paragraph (1)(A) thereof shall instead be references to 
        subdivision 1, and the excess, if any, of the subtraction base 
        amount over federal taxable income for a qualified individual as 
        provided under section 290.0802, subdivision 2. 
           Sec. 3.  Minnesota Statutes 1994, section 290A.04, 
        subdivision 2h, is amended to read: 
           Subd. 2h.  (a) If the gross property taxes payable on a 
        homestead increase more than 12 percent over the net property 
        taxes payable in the prior year on the same property that is 
        owned and occupied by the same owner on January 2 of both years, 
        and the amount of that increase is $100 or more for taxes 
        payable in 1995 and 1996, a claimant who is a homeowner shall be 
        allowed an additional refund equal to 60 percent of the amount 
        of the increase over the greater of 12 percent of the prior 
        year's net property taxes payable or $100 for taxes payable in 
        1995 and 1996.  This subdivision shall not apply to any increase 
        in the gross property taxes payable attributable to improvements 
        made to the homestead after the assessment date for the prior 
        year's taxes.  This subdivision shall not apply to any increase 
        in the gross property taxes payable attributable to the 
        termination of valuation exclusions under section 273.11, 
        subdivision 16. 
           The maximum refund allowed under this subdivision is $1,000.
           (b) For purposes of this subdivision, the following terms 
        have the meanings given: 
           (1) "Net property taxes payable" means property taxes 
        payable minus refund amounts for which the claimant qualifies 
        pursuant to subdivision 2 and this subdivision.  
           (2) "Gross property taxes" means net property taxes payable 
        determined without regard to the refund allowed under this 
        subdivision. 
           (c) In addition to the other proofs required by this 
        chapter, each claimant under this subdivision shall file with 
        the property tax refund return a copy of the property tax 
        statement for taxes payable in the preceding year or other 
        documents required by the commissioner. 
           (d) On or before December 1, 1995, the commissioner shall 
        estimate the cost of making the payments provided by this 
        subdivision for taxes payable in 1996.  Notwithstanding the open 
        appropriation provision of section 290A.23, if the estimated 
        total refund claims for taxes payable in 1996 exceed $5,500,000, 
        the commissioner shall first reduce the 60 percent refund rate 
        enough, but to no lower a rate than 50 percent, so that the 
        estimated total refund claims do not exceed $5,500,000.  If the 
        commissioner estimates that total claims will exceed $5,500,000 
        at a 50 percent refund rate, the commissioner shall also reduce 
        the $1,000 maximum refund amount by enough so that total 
        estimated refund claims do not exceed $5,500,000. 
           The determinations of the revised thresholds by the 
        commissioner are not rules subject to chapter 14.  
           (e) Upon request, the appropriate county official shall 
        make available the names and addresses of the property taxpayers 
        who may be eligible for the additional property tax refund under 
        this section.  The information shall be provided on a magnetic 
        computer disk.  The county may recover its costs by charging the 
        person requesting the information the reasonable cost for 
        preparing the data.  The information may not be used for any 
        purpose other than for notifying the homeowner of potential 
        eligibility and assisting the homeowner, without charge, in 
        preparing a refund claim. 
           Sec. 4.  Minnesota Statutes 1994, section 290A.04, 
        subdivision 6, is amended to read: 
           Subd. 6.  [INFLATION ADJUSTMENT.] Beginning for property 
        tax refunds payable in calendar year 1996, the commissioner 
        shall annually adjust the dollar amounts of the income 
        thresholds and the maximum refunds under subdivisions 2 and 2a 
        for inflation.  The commissioner shall make the inflation 
        adjustments in accordance with section 290.06, subdivision 2d, 
        except that for purposes of this subdivision the percentage 
        increase shall be determined from the year ending on August 31, 
        1993 1994, to the year ending on August 31 of the year preceding 
        that in which the refund is payable.  The commissioner shall use 
        the appropriate percentage increase to annually adjust the 
        income thresholds and maximum refunds under subdivisions 2 and 
        2a for inflation without regard to whether or not the income tax 
        brackets are adjusted for inflation in that year.  The 
        commissioner shall round the thresholds and the maximum amounts, 
        as adjusted to the nearest $10 amount.  If the amount ends in 
        $5, the commissioner shall round it up to the next $10 amount.  
           The commissioner shall annually announce the adjusted 
        refund schedule at the same time provided under section 290.06.  
        The determination of the commissioner under this subdivision is 
        not a rule under the administrative procedure act. 
           Sec. 5.  Laws 1994, chapter 587, article 1, section 27, is 
        amended to read: 
           Sec. 27.  [EFFECTIVE DATE.] 
           Sections 1, 7, 10, 13, 15, 16, and 22 are effective for 
        taxable years beginning after December 31, 1993. 
           Section 2 is effective to be used as an offset against 
        premium tax liabilities payable after November 30, 1995.  If a 
        guaranty association assessment was made before August 1, 1994, 
        under Minnesota Statutes 1992, sections 61B.01 to 61B.16, and is 
        revoked or invalidated, a subsequent assessment to pay the same 
        liabilities shall not be eligible for the offset as provided for 
        under Minnesota Statutes, section 60A.15, subdivision 15, and 
        shall not be used in any calculation to determine the offset 
        limitation under Minnesota Statutes, section 60A.15, subdivision 
        15, paragraph (c). 
           Sections 4 and 25, paragraph (b), are effective for 
        installments of estimated taxes due after the day following 
        enactment. 
           Section 5 is effective for taxable years beginning after 
        December 31, 1994. 
           Section 8 is effective for wages paid or incurred after 
        December 31, 1993. 
           Section 20 is effective to be used as an offset against tax 
        liabilities payable after June 30, 1995.  If a guaranty 
        association assessment was made before August 1, 1994, under 
        Minnesota Statutes 1992, sections 61B.01 to 61B.16 and is 
        revoked or invalidated, a subsequent assessment to pay the same 
        liabilities shall not be eligible for the offset as provided for 
        under Minnesota Statutes, section 290.35, subdivision 6, and 
        shall not be used in any calculation to determine the offset 
        limitation under Minnesota Statutes, section 290.35, subdivision 
        6, paragraph (c). 
           Sec. 6.  [REPEALER.] 
           Minnesota Statutes 1994, section 290A.04, subdivision 2i, 
        and Laws 1989, First Special Session chapter 1, article 7, 
        section 9, are repealed. 
           Sec. 7.  [EFFECTIVE DATE.] 
           Sections 1 and 2 are effective for tax years beginning 
        after December 31, 1994.  Section 5 is effective for tax years 
        beginning after December 31, 1993.  Section 6 is effective for 
        property taxes payable in 1995 and thereafter.  Sections 3 and 4 
        are effective for refunds based on property taxes payable in 
        1996 and rent paid in 1995 and thereafter. 
                                   ARTICLE 16 
                         REVENUE TECHNICAL INITIATIVES
                                  PROPERTY TAX
           Section 1.  Minnesota Statutes 1994, section 270.47, is 
        amended to read: 
           270.47 [RULES.] 
           The board shall establish the rules necessary to accomplish 
        the purpose of section 270.41, and shall establish criteria 
        required of assessing officials in the state.  Separate criteria 
        may be established depending upon the responsibilities of the 
        assessor.  The board shall prepare and give examinations from 
        time to time to determine whether assessing officials possess 
        the necessary qualifications for performing the functions of the 
        office.  Such tests shall be given immediately upon completion 
        of courses required by the board, or to persons who already 
        possess the requisite qualifications under the rules of the 
        board.  Rules adopted by the board before July 1, 1981 to 
        accomplish the purposes of sections 270.41 to 270.53, including 
        those relating to licensure, are valid without compliance with 
        the administrative procedure act.  
           Sec. 2.  Minnesota Statutes 1994, section 270.48, is 
        amended to read: 
           270.48 [LICENSURE OF QUALIFIED PERSONS.] 
           The board shall license persons as possessing the necessary 
        qualifications of an assessing official.  Different levels of 
        licensure may be established as to classes of property which 
        assessors may be certified to assess at the discretion of the 
        board.  Every person, except a local or county assessor, 
        regularly employed by the assessor to assist in making decisions 
        regarding valuing and classifying property for assessment 
        purposes shall be required to become licensed within three years 
        of the date of employment or June 1, 1975, whichever is later. 
        Licensure shall be required for local and county assessors as 
        otherwise provided in sections 270.41 to 270.53. 
           Sec. 3.  Minnesota Statutes 1994, section 270.485, is 
        amended to read: 
           270.485 [SENIOR ACCREDITATION.] 
           The legislature finds that the property tax system would be 
        enhanced by requiring that every senior appraiser in the 
        department of revenue's local government services property tax 
        division obtain senior accreditation from the state board of 
        assessors.  Every senior appraiser, including the department's 
        regional representatives, by January 1, 1990, and every county 
        assessor within two years of the first appointment under section 
        273.061, or by January 1, 1992, whichever is later, must obtain 
        senior accreditation from the state board of assessors.  The 
        board shall provide the necessary courses or training.  If a 
        department senior appraiser or regional representative fails to 
        obtain or maintain senior accreditation by January 1, 1990, the 
        failure shall be grounds for dismissal, disciplinary action, or 
        corrective action.  Except as provided in section 273.061, 
        subdivision 2, paragraph (c), after December 30, 1991, the 
        commissioner must not approve the appointment of a county 
        assessor who is not senior accredited by the state board of 
        assessors.  No employee hired by the commissioner as a senior 
        appraiser or regional representative after June 30, 1987, shall 
        attain permanent status until the employee obtains senior 
        accreditation. 
           Sec. 4.  Minnesota Statutes 1994, section 270.494, is 
        amended to read: 
           270.494 [CERTAIN TOWNSHIPS AND CITIES OPTION TO ELECT TO 
        REINSTATE THE OFFICE OF ASSESSOR.] 
           Notwithstanding the provisions of sections 270.49, 270.493, 
        and section 273.05, subdivision 1, a city or township in which 
        the office of assessor has been eliminated because of failure of 
        the city or township to certify by resolution to the 
        commissioner of revenue its intention to employ or continue to 
        employ a certified assessor on or before April 1, 1972, pursuant 
        to section 270.49, or failure to hire a certified assessor prior 
        to June 15, 1975, pursuant to sections 270.493 and 270.50, or 
        failure to fill a vacancy in the office within 90 days pursuant 
        to section 273.05, subdivision 1, may elect, with the approval 
        of the commissioner, to have the office of assessor reinstated 
        by hiring a certified or accredited assessor.  This section 
        shall not apply to Ramsey county or to cities and townships 
        located in counties which have elected a county assessment 
        system in accordance with section 273.055. 
           Sec. 5.  Minnesota Statutes 1994, section 270.50, is 
        amended to read: 
           270.50 [EMPLOYMENT OF LICENSED ASSESSORS.] 
           Commencing June 15, 1975, No assessor shall be employed who 
        has not been licensed as qualified by the board, provided the 
        time to comply may be extended after application to the board 
        upon a showing that licensed assessors are not available for 
        employment.  The board may license that a county or local 
        assessor who has not received the training, but possesses the 
        necessary qualifications for performing the functions of the 
        office by the passage of an approved examination or may waive 
        the examination if such person has demonstrated competence in 
        performing the functions of the office for a period of time the 
        board deems reasonable.  The county or local assessing district 
        shall assume the cost of training of its assessors in courses 
        approved by the board for the purpose of obtaining the 
        assessor's license to the extent of course fees, mileage, meals 
        and lodging, and recognized travel expenses not paid by the 
        state.  If the governing body of any township or city fails to 
        employ an assessor as required by sections 270.41 to 270.53, the 
        assessment shall be made by the county assessor. 
           A town shall pay its assessor $20 for each day the assessor 
        is attending approved courses or taking the examination.  In 
        addition, the town shall pay its assessor $10 for each approved 
        course successfully completed and $20 upon licensure.  The 
        maximum payable to an assessor for successful completion of 
        courses and licensure shall not exceed $50. 
           In the case of cities incorporated or townships organized 
        after April 11, 1974 except cities or towns located in Ramsey 
        county or which have elected a county assessor system in 
        accordance with section 273.055, the board shall allow the city 
        or town 90 days from the latter of June 3, 1977 or the date of 
        incorporation or organization to employ a licensed assessor. 
           Sec. 6.  Minnesota Statutes 1994, section 270.52, is 
        amended to read: 
           270.52 [COSTS OF MAKING ASSESSMENTS.] 
           The cost of making any assessment provided in sections 
        270.41 to 270.53 shall be charged to the assessment district 
        involved.  The county auditor shall certify the costs incurred 
        to the appropriate governing body not later than September 
        August 1 of each year, and if unpaid as of October 10 September 
        1, the county auditor shall levy a tax upon the taxable property 
        of such taxing district sufficient to pay such costs.  The 
        amount so collected shall be credited to the general revenue 
        fund of the county.  
           Sec. 7.  Minnesota Statutes 1994, section 270.53, is 
        amended to read: 
           270.53 [EXISTING CONTRACTS FOR ASSESSMENT OF PROPERTY.] 
           Sections 270.41 to 270.53 shall not supersede existing 
        contracts executed pursuant to section 273.072 or 471.59 except 
        to the extent that such contracts may conflict with section 
        270.49 or 270.50 nor preclude contracts between a taxing 
        district and the county for the assessment of property by the 
        county assessor.  
           Sec. 8.  Minnesota Statutes 1994, section 272.121, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXCEPTIONS.] No certification of current tax 
        paid is required when the land is being conveyed to the federal 
        government, the state, or a home rule charter or statutory city 
        or any other political subdivision, or.  No certification of 
        current tax paid is required under subdivision 1 for any 
        sheriff's or referee's certificate of sale or other instrument 
        if a certification of delinquent tax for the instrument is not 
        required under section 272.12. 
           Sec. 9.  Minnesota Statutes 1994, section 273.11, 
        subdivision 16, is amended to read: 
           Subd. 16.  [VALUATION EXCLUSION FOR CERTAIN IMPROVEMENTS.] 
        Improvements to homestead property made before January 2, 2003, 
        shall be fully or partially excluded from the value of the 
        property for assessment purposes provided that (1) the house is 
        at least 35 years old at the time of the improvement and (2) 
        either (a) the assessor's estimated market value of the house on 
        January 2 of the current year is equal to or less than $150,000, 
        or (b) if the estimated market value of the house is over 
        $150,000 market value but is less than $300,000 on January 2 of 
        the current year, the property qualifies if 
           (i) it is located in a city or town in which 50 percent or 
        more of the homes owner-occupied housing units were constructed 
        before 1960 based upon the 1990 federal census, and 
           (ii) the city or town's median family income based upon the 
        1990 federal census is less than the statewide median family 
        income based upon the 1990 federal census. 
           Any house which has an estimated market value of $300,000 
        or more on January 2 of the current year is not eligible to 
        receive any property valuation exclusion under this section.  
        For purposes of determining this eligibility, "house" means land 
        and buildings.  
           The age of a residence is the number of years that the 
        residence has existed at its present site.  In the case of an 
        owner-occupied duplex or triplex, the improvement is eligible 
        regardless of which portion of the property was improved. 
           If the property lies in a jurisdiction which is subject to 
        a building permit process, a building permit must have been 
        issued prior to commencement of the improvement.  Any 
        improvement must add at least $1,000 to the value of the 
        property to be eligible for exclusion under this subdivision.  
        Only improvements to the structure which is the residence of the 
        qualifying homesteader or construction of or improvements to no 
        more than one two-car garage per residence qualify for the 
        provisions of this subdivision.  If an improvement was begun 
        between January 2, 1992, and January 2, 1993, any value added 
        from that improvement for the January 1994 and subsequent 
        assessments shall qualify for exclusion under this subdivision 
        provided that a building permit was obtained for the improvement 
        between January 2, 1992, and January 2, 1993.  Whenever a 
        building permit is issued for property currently classified as 
        homestead, the issuing jurisdiction shall notify the property 
        owner of the possibility of valuation exclusion under this 
        subdivision.  The assessor shall require an application, 
        including documentation of the age of the house from the owner, 
        if unknown by the assessor.  The application may be filed 
        subsequent to the date of the building permit provided that the 
        application is filed prior to the next assessment date. 
           After the adjournment of the 1994 county board of 
        equalization meetings, no exclusion may be granted for an 
        improvement by a local board of review or county board of 
        equalization unless (1) a building permit was issued prior to 
        the commencement of the improvement if the jurisdiction requires 
        a building permit, and (2) an application was completed on a 
        timely basis.  No abatement of the taxes for qualifying 
        improvements may be granted by a county board unless (1) a 
        building permit was issued prior to commencement of the 
        improvement if the jurisdiction requires a building permit, and 
        (2) an application was completed on a timely basis. 
           The assessor shall note the qualifying value of each 
        improvement on the property's record, and the sum of those 
        amounts shall be subtracted from the value of the property in 
        each year for ten years after the improvement has been made, at 
        which time an amount equal to 20 percent of the qualifying value 
        shall be added back in each of the five subsequent assessment 
        years.  The valuation exclusion shall terminate whenever (1) the 
        property is sold, or (2) the property is reclassified to a class 
        which does not qualify for treatment under this subdivision. 
        Improvements made by an occupant who is the purchaser of the 
        property under a conditional purchase contract do not qualify 
        under this subdivision unless the seller of the property is a 
        governmental entity.  The qualifying value of the property shall 
        be computed based upon the increase from that structure's market 
        value as of January 2 preceding the acquisition of the property 
        by the governmental entity. 
           The total qualifying value for a homestead may not exceed 
        $50,000.  The total qualifying value for a homestead with a 
        house that is less than 70 years old may not exceed $25,000.  
        The term "qualifying value" means the increase in estimated 
        market value resulting from the improvement if the improvement 
        occurs when the house is at least 70 years old, or one-half of 
        the increase in estimated market value resulting from the 
        improvement otherwise.  The $25,000 and $50,000 maximum 
        qualifying value under this subdivision may result from up to 
        three separate improvements to the homestead.  The application 
        shall state, in clear language, that if more than three 
        improvements are made to the qualifying property, a taxpayer may 
        choose which three improvements are eligible, provided that 
        after the taxpayer has made the choice and any valuation 
        attributable to those improvements has been excluded from 
        taxation, no further changes can be made by the taxpayer. 
           If 50 percent or more of the square footage of a structure 
        is voluntarily razed or removed, the valuation increase 
        attributable to any subsequent improvements to the remaining 
        structure does not qualify for the exclusion under this 
        subdivision.  If a structure is unintentionally or accidentally 
        destroyed by a natural disaster, the property is eligible for an 
        exclusion under this subdivision provided that the structure was 
        not completely destroyed.  The qualifying value on property 
        destroyed by a natural disaster shall be computed based upon the 
        increase from that structure's market value as determined on 
        January 2 of the year in which the disaster occurred.  A 
        property receiving benefits under the homestead disaster 
        provisions under section 273.123 is not disqualified from 
        receiving an exclusion under this subdivision.  If any 
        combination of improvements made to a structure after January 1, 
        1993, increases the size of the structure by 100 percent or 
        more, the valuation increase attributable to the portion of the 
        improvement that causes the structure's size to exceed 100 
        percent does not qualify for exclusion under this subdivision. 
           Sec. 10.  Minnesota Statutes 1994, section 273.1398, is 
        amended by adding a subdivision to read: 
           Subd. 2d.  [AIDS DETERMINED AS OF JUNE 30.] For aid amounts 
        authorized under subdivisions 2 and 3, and section 273.166:  (i) 
        if the effective date for a municipal incorporation, 
        consolidation, annexation, detachment, dissolution, or township 
        organization is on or before June 30 of the year preceding the 
        aid distribution year, the change in boundaries or form of 
        government shall be recognized for aid determinations for the 
        aid distribution year; (ii) if the effective date for a 
        municipal incorporation, consolidation, annexation, detachment, 
        dissolution, or township organization is after June 30 of the 
        year preceding the aid distribution year, the change in 
        boundaries or form of government shall not be recognized for aid 
        determinations until the following year. 
           Sec. 11.  Minnesota Statutes 1994, section 273.17, 
        subdivision 2, is amended to read: 
           Subd. 2.  In counties where the county auditor has elected 
        to discontinue the preparation of assessment books as provided 
        by section 273.03, subdivision 2, such changes as provided for 
        in subdivision 1 of this section, shall be recorded in a 
        separate record prepared under the direction of the county 
        assessor and shall identify, by description or property 
        identification number, or both, the real estate affected, the 
        previous year's net tax capacities and the new market values and 
        net tax capacities, provided that if only property 
        identification numbers are used they shall be such that shall 
        permit positive identification of the real estate to which they 
        apply.  Such record shall further indicate the total amount of 
        increase or decrease in net tax capacity contained therein.  The 
        county assessor shall make return of such record to the county 
        auditor who shall be the official custodian thereof. 
           Such record shall be known as "County assessor's changes in 
        real estate valuations for the year 19.........".  Such records 
        on file in the county auditor's office may be destroyed when 
        they are more than 20 ten years old pursuant to the conditions 
        for destruction of government records contained in Minnesota 
        Statutes 1961, section 384.14 sections 138.161 to 138.25. 
           Sec. 12.  Minnesota Statutes 1994, section 275.065, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
        Between November 29 and December 20, the governing bodies of the 
        city, county, metropolitan special taxing districts as defined 
        in subdivision 3, paragraph (i), and regional library districts 
        shall each hold a public hearing to discuss and seek public 
        comment on its final budget and property tax levy for taxes 
        payable in the following year, and the governing body of the 
        school district shall hold a public hearing to review its 
        current budget and proposed property tax levy for taxes payable 
        in the following year.  The metropolitan special taxing 
        districts shall be required to hold only a single joint public 
        hearing, the location of which will be determined by the 
        affected metropolitan agencies. 
           At a subsequent hearing, each county, school district, 
        city, and metropolitan special taxing district may amend its 
        proposed property tax levy and must adopt a final property tax 
        levy.  Each county, city, and metropolitan special taxing 
        district may also amend its proposed budget and must adopt a 
        final budget at the subsequent hearing.  A school district is 
        not required to adopt its final budget at the subsequent 
        hearing.  The subsequent hearing of a taxing authority must be 
        held on a date subsequent to the date of the taxing authority's 
        initial public hearing, or subsequent to the date of its 
        continuation hearing if a continuation hearing is held.  The 
        subsequent hearing may be held at a regularly scheduled board or 
        council meeting or at a special meeting scheduled for the 
        purposes of the subsequent hearing.  The subsequent hearing of a 
        taxing authority does not have to be coordinated by the county 
        auditor to prevent a conflict with an initial hearing, a 
        continuation hearing, or a subsequent hearing of any other 
        taxing authority.  All subsequent hearings must be held prior to 
        five working days after December 20 of the levy year. 
           The time and place of the subsequent hearing must be 
        announced at the initial public hearing or at the continuation 
        hearing. 
           The property tax levy certified under section 275.07 by a 
        city, county, metropolitan special taxing district, regional 
        library district, or school district must not exceed the 
        proposed levy determined under subdivision 1, except by an 
        amount up to the sum of the following amounts: 
           (1) the amount of a school district levy whose voters 
        approved a referendum to increase taxes under section 124.82, 
        subdivision 3, 124A.03, subdivision 2, 124B.03, subdivision 2, 
        or 136C.411, after the proposed levy was certified; 
           (2) the amount of a city or county levy approved by the 
        voters after the proposed levy was certified; 
           (3) the amount of a levy to pay principal and interest on 
        bonds issued or approved by the voters under section 475.58 
        after the proposed levy was certified; 
           (4) the amount of a levy to pay costs due to a natural 
        disaster occurring after the proposed levy was certified, if 
        that amount is approved by the commissioner of revenue under 
        subdivision 6a; 
           (5) the amount of a levy to pay tort judgments against a 
        taxing authority that become final after the proposed levy was 
        certified, if the amount is approved by the commissioner of 
        revenue under subdivision 6a; 
           (6) the amount of an increase in levy limits certified to 
        the taxing authority by the commissioner of education after the 
        proposed levy was certified; and 
           (7) the amount required under section 124.755. 
           At the hearing under this subdivision, the percentage 
        increase in property taxes proposed by the taxing authority, if 
        any, and the specific purposes for which property tax revenues 
        are being increased must be discussed.  At the hearing held in 
        1993 only, specific information for previous year, current year, 
        and proposed budget year must be presented on: 
           (i) percent of total proposed budget representing total 
        compensation cost; 
           (ii) numbers of employees by general classification, and 
        whether full or part time; 
           (iii) number and budgeted expenditures for independent 
        contractors; and 
           (iv) the effect of budget increases or decreases on the 
        proposed property tax levy. 
           During the discussion, the governing body shall hear 
        comments regarding a proposed increase and explain the reasons 
        for the proposed increase.  The public shall be allowed to speak 
        and to ask questions.  At the subsequent hearing held as 
        provided in this subdivision, the governing body, other than the 
        governing body of a school district, shall adopt its final 
        property tax levy prior to adopting its final budget. 
           If the hearing is not completed on its scheduled date, the 
        taxing authority must announce, prior to adjournment of the 
        hearing, the date, time, and place for the continuation of the 
        hearing.  The continued hearing must be held at least five 
        business days but no more than 14 business days after the 
        original hearing. 
           The hearing must be held after 5:00 p.m. if scheduled on a 
        day other than Saturday.  No hearing may be held on a Sunday.  
        The governing body of a county shall hold a hearing on the 
        second Tuesday in December each year, and may hold additional 
        hearings on other dates before December 20 if necessary for the 
        convenience of county residents.  If the county needs a 
        continuation of its hearing, the continued hearing shall be held 
        on the third Tuesday in December.  If the third Tuesday in 
        December falls on December 21, the county's continuation hearing 
        shall be held on Monday, December 20.  The county auditor shall 
        provide for the coordination of hearing dates for all cities and 
        school districts within the county. 
           The metropolitan special taxing districts shall hold a 
        joint public hearing on the first Monday of December.  A 
        continuation hearing, if necessary, shall be held on the second 
        Monday of December. 
           By August 10, each school board and the board of the 
        regional library district shall certify to the county auditors 
        of the counties in which the school district or regional library 
        district is located the dates on which it elects to hold its 
        hearings and any continuations.  If a school board or regional 
        library district does not certify the dates by August 10, the 
        auditor will assign the hearing date.  The dates elected or 
        assigned must not conflict with the hearing dates of the county 
        hearing dates or the metropolitan special taxing districts.  The 
        Ramsey county auditor shall coordinate with the metropolitan 
        special taxing districts as defined in subdivision 3, paragraph 
        (i), a date on which the metropolitan special taxing districts 
        will hold their joint public hearing and any continuation.  The 
        metropolitan special taxing districts shall decide on mutually 
        agreeable dates for their joint public hearing and for any 
        continuation of that hearing and certify these dates to the 
        Ramsey county auditor on or before July 25.  By August 20, the 
        county auditor shall notify the clerks of the cities within the 
        county of the dates on which school districts, metropolitan 
        special taxing districts, and regional library districts have 
        elected to hold their hearings.  At the time a city certifies 
        its proposed levy under subdivision 1 it shall certify the dates 
        on which it elects to hold its hearings and any continuations.  
        The city must not select dates that conflict with the county 
        hearing dates, metropolitan special taxing district dates, or 
        with those elected by or assigned to the school districts or 
        regional library district in which the city is located. 
           The county hearing dates and the city, metropolitan special 
        taxing district, regional library district, and school district 
        hearing dates must be designated on the notices required under 
        subdivision 3.  The continuation dates need not be stated on the 
        notices.  
           This subdivision does not apply to towns and special taxing 
        districts other than regional library districts and metropolitan 
        special taxing districts. 
           Notwithstanding the requirements of this section, the 
        employer is required to meet and negotiate over employee 
        compensation as provided for in chapter 179A.  
           Sec. 13.  Minnesota Statutes 1994, section 276.04, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
        shall provide for the printing of the tax statements.  The 
        commissioner of revenue shall prescribe the form of the property 
        tax statement and its contents.  The statement must contain a 
        tabulated statement of the dollar amount due to each taxing 
        authority from the parcel of real property for which a 
        particular tax statement is prepared.  The dollar amounts due 
        the county, township or municipality, the total of the 
        metropolitan special taxing districts as defined in section 
        275.065, subdivision 3, paragraph (i), school district excess 
        referenda levy, remaining school district levy, and the total of 
        other voter approved referenda levies based on market value 
        under section 275.61 must be separately stated.  The amounts due 
        all other special taxing districts, if any, may be aggregated.  
        For the purposes of this subdivision, "school district excess 
        referenda levy" means school district taxes for operating 
        purposes approved at referenda, including those taxes based 
        on net tax capacity as well as those based on market value.  
        "School district excess referenda levy" does not include school 
        district taxes for capital expenditures approved at referendums 
        or school district taxes to pay for the debt service on bonds 
        approved at referenda.  The amount of the tax on contamination 
        value imposed under sections 270.91 to 270.98, if any, must also 
        be separately stated.  The dollar amounts, including the dollar 
        amount of any special assessments, may be rounded to the nearest 
        even whole dollar.  For purposes of this section whole 
        odd-numbered dollars may be adjusted to the next higher 
        even-numbered dollar.  The amount of market value excluded under 
        section 273.11, subdivision 16, if any, must also be listed on 
        the tax statement.  The statement shall include the following 
        sentence, printed in upper case letters in boldface print:  "THE 
        STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES.  
        THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING 
        CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."  
           (b) The property tax statements for manufactured homes and 
        sectional structures taxed as personal property shall contain 
        the same information that is required on the tax statements for 
        real property.  
           (c) Real and personal property tax statements must contain 
        the following information in the order given in this paragraph.  
        The information must contain the current year tax information in 
        the right column with the corresponding information for the 
        previous year in a column on the left: 
           (1) the property's estimated market value under section 
        273.11, subdivision 1; 
           (2) the property's taxable market value after reductions 
        under section 273.11, subdivisions 1a and 16; 
           (3) the property's gross tax, calculated by multiplying the 
        property's gross tax capacity times the total local tax rate and 
        adding to the result the sum of the aids enumerated in clause 
        (3); 
           (4) a total of the following aids: 
           (i) education aids payable under chapters 124 and 124A; 
           (ii) local government aids for cities, towns, and counties 
        under chapter 477A; and 
           (iii) disparity reduction aid under section 273.1398; 
           (5) for homestead residential and agricultural properties, 
        the homestead and agricultural credit aid apportioned to the 
        property.  This amount is obtained by multiplying the total 
        local tax rate by the difference between the property's gross 
        and net tax capacities under section 273.13.  This amount must 
        be separately stated and identified as "homestead and 
        agricultural credit."  For purposes of comparison with the 
        previous year's amount for the statement for taxes payable in 
        1990, the statement must show the homestead credit for taxes 
        payable in 1989 under section 273.13, and the agricultural 
        credit under section 273.132 for taxes payable in 1989; 
           (6) any credits received under sections 273.119; 273.123; 
        273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
        473H.10, except that the amount of credit received under section 
        273.135 must be separately stated and identified as "taconite 
        tax relief"; and 
           (7) the net tax payable in the manner required in paragraph 
        (a).  
           The commissioner of revenue shall certify to the county 
        auditor the actual or estimated aids enumerated in clauses (3) 
        and (4) that local governments will receive in the following 
        year.  In the case of a county containing a city of the first 
        class, for taxes levied in 1991, and for all counties for taxes 
        levied in 1992 and thereafter, the commissioner must certify 
        this amount by September 1.  
           Sec. 14.  Minnesota Statutes 1994, section 284.28, 
        subdivision 2, is amended to read: 
           Subd. 2.  Except as provided in subdivision 5, no cause of 
        action or defense shall be asserted or maintained upon any claim 
        adverse to the state, or its successors in interest, including 
        but not limited to any claim based upon any failure, omission, 
        error, or defect described in subdivision 1, respecting any 
        lands claimed to have been forfeited to the state for taxes, 
        unless such cause of action or defense is asserted in an action 
        commenced within one year after the filing of the county 
        auditor's certificate of forfeiture, as provided by section 
        281.23, subdivision 8 9, and acts supplementary thereto, or by 
        any other law hereafter enacted providing for the filing and 
        recording of such certificates. 
           Sec. 15.  Minnesota Statutes 1994, section 298.75, 
        subdivision 2, is amended to read: 
           Subd. 2.  A county shall impose upon every importer and 
        operator a production tax equal to ten cents per cubic yard or 
        seven cents per ton of aggregate material removed except that 
        the county board may decide not to impose this tax if it 
        determines that in the previous year operators removed less than 
        20,000 tons or 14,000 cubic yards of aggregate material from 
        that county.  The tax shall be imposed on aggregate material 
        produced in the county when the aggregate material is 
        transported from the extraction site or sold, when in the case 
        of storage the.  When aggregate material is stored in a 
        stockpile is within the state of Minnesota and the highways are 
        a public highway, road or street is not used for transporting 
        the aggregate material, the tax shall be imposed either when the 
        aggregate material is sold, or when it is transported from the 
        stockpile site, or when it is used from the stockpile, whichever 
        occurs first.  The tax shall be imposed on an importer when the 
        aggregate material is imported into the county that imposes the 
        tax.  
           If the aggregate material is transported directly from the 
        extraction site to a waterway, railway, or another mode of 
        transportation other than a highway, road or street, the tax 
        imposed by this section shall be apportioned equally between the 
        county where the aggregate material is extracted and the county 
        to which the aggregate material is originally transported.  If 
        that destination is not located in Minnesota, then the county 
        where the aggregate material was extracted shall receive all of 
        the proceeds of the tax.  
           Sec. 16.  Minnesota Statutes 1994, section 428A.01, 
        subdivision 5, is amended to read: 
           Subd. 5.  [NET TAX CAPACITY.] Except as provided in section 
        428A.05, "net tax capacity" means the net tax capacity most 
        recently certified by the county auditor under section 428A.03, 
        subdivision 1a, before the effective date of the ordinance or 
        resolution adopted under section 428A.02 or 428A.03. 
           Sec. 17.  Minnesota Statutes 1994, section 428A.03, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [CERTIFICATION OF NET TAX CAPACITY.] Upon a 
        request of the city, the county auditor must certify the most 
        recent net tax capacity of the taxable property subject to 
        service charges within the special service district. 
           Sec. 18.  Minnesota Statutes 1994, section 428A.05, is 
        amended to read: 
           428A.05 [COLLECTION OF SERVICE CHARGES.] 
           Service charges may be imposed on the basis of the net tax 
        capacity of the property on which the service charge is imposed 
        but must be spread only upon the net tax capacity of the taxable 
        property located in the geographic area described in the 
        ordinance.  Service charges based on net tax capacity may be 
        payable and collected at the same time and in the same manner as 
        provided for payment and collection of ad valorem taxes.  When 
        made payable in the same manner as ad valorem taxes, service 
        charges not paid on or before the applicable due date shall be 
        subject to the same penalty and interest as in the case of ad 
        valorem tax amounts not paid by the respective due date.  The 
        due date for a service charge payable in the same manner as ad 
        valorem taxes is the due date given in law for the real or 
        personal property tax for the property on which the service 
        charge is imposed.  Services charges imposed on net tax capacity 
        which are to become payable in the following year must be 
        certified to the county auditor by the date provided in section 
        429.061, subdivision 3, for the annual certification of special 
        assessment installments.  Other service charges imposed must be 
        collected as provided by ordinance.  Service charges based on 
        net tax capacity collected under sections 428A.01 to 428A.10 are 
        not included in computations under section 469.177, chapter 
        473F, or any other law that applies to general ad valorem 
        levies.  For the purpose of this section, "net tax capacity" 
        means the net tax capacity most recently determined at the time 
        that tax rates are determined under section 275.08. 
           Sec. 19.  Minnesota Statutes 1994, section 473.446, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TAXATION WITHIN TRANSIT TAXING DISTRICT.] 
        For the purposes of sections 473.404 to 473.449 and the 
        metropolitan transit system, except as otherwise provided in 
        this subdivision, the council shall levy each year upon all 
        taxable property within the metropolitan transit taxing 
        district, defined in subdivision 2, a transit tax consisting of: 
           (a) an amount which shall be used for payment of the 
        expenses of operating transit and paratransit service and to 
        provide for payment of obligations issued by the council under 
        section 473.436, subdivision 6; 
           (b) an additional amount, if any, the council determines to 
        be necessary to provide for the full and timely payment of its 
        certificates of indebtedness and other obligations outstanding 
        on July 1, 1985, to which property taxes under this section have 
        been pledged; and 
           (c) an additional amount necessary to provide full and 
        timely payment of certificates of indebtedness, bonds, including 
        refunding bonds or other obligations issued or to be issued 
        under section 473.39 by the council for purposes of acquisition 
        and betterment of property and other improvements of a capital 
        nature and to which the council has specifically pledged tax 
        levies under this clause. 
           The property tax levied by the council for general purposes 
        under clause (a) must not exceed the following amount for the 
        years specified: 
           (1) for taxes payable in 1995, the council's property tax 
        levy limitation for general transit purposes is equal to the 
        former regional transit board's property tax levy limitation for 
        general transit purposes under this subdivision, for taxes 
        payable in 1994, multiplied by an index for market valuation 
        changes equal to the total market valuation of all taxable 
        property located within the metropolitan transit taxing district 
        for the current assessment taxes payable year divided by the 
        total market valuation of all taxable property located within 
        the metropolitan transit taxing district for the previous 
        assessment taxes payable year; and 
           (2) for taxes payable in 1996 and subsequent years, the 
        product of (i) the council's property tax levy limitation for 
        general transit purposes for the previous year determined under 
        this subdivision multiplied by (ii) an index for market 
        valuation changes equal to the total market valuation of all 
        taxable property located within the metropolitan transit taxing 
        district for the current taxes payable year divided by the total 
        market valuation of all taxable property located within the 
        metropolitan transit taxing district for the previous taxes 
        payable year. 
           For the taxes payable year 1995, the index for market 
        valuation changes shall be multiplied by an amount equal to the 
        sum of the regional transit board's property tax levy limitation 
        for the taxes payable year 1994 and $160,665.  The $160,665 
        increase shall be a permanent adjustment to the levy limit base 
        used in determining the regional transit board's property tax 
        levy limitation for general purposes for subsequent taxes 
        payable years. 
           For the purpose of determining the council's property tax 
        levy limitation for general transit purposes under this 
        subdivision, "total market valuation" means the total market 
        valuation of all taxable property within the metropolitan 
        transit taxing district without valuation adjustments for fiscal 
        disparities (chapter 473F), tax increment financing (sections 
        469.174 to 469.179), and high voltage transmission lines 
        (section 273.425). 
           The county auditor shall reduce the tax levied pursuant to 
        this subdivision on all property within statutory and home rule 
        charter cities and towns that receive full-peak service and 
        limited off-peak service by an amount equal to the tax levy that 
        would be produced by applying a rate of 0.510 percent of net tax 
        capacity on the property.  The county auditor shall reduce the 
        tax levied pursuant to this subdivision on all property within 
        statutory and home rule charter cities and towns that receive 
        limited peak service by an amount equal to the tax levy that 
        would be produced by applying a rate of 0.765 percent of net tax 
        capacity on the property.  The amounts so computed by the county 
        auditor shall be submitted to the commissioner of revenue as 
        part of the abstracts of tax lists required to be filed with the 
        commissioner under section 275.29.  Any prior year adjustments 
        shall also be certified in the abstracts of tax lists.  The 
        commissioner shall review the certifications to determine their 
        accuracy and may make changes in the certification as necessary 
        or return a certification to the county auditor for 
        corrections.  The commissioner shall pay to the council the 
        amounts certified by the county auditors on the dates provided 
        in section 273.1398.  There is annually appropriated from the 
        general fund in the state treasury to the department of revenue 
        the amounts necessary to make these payments.  
           For the purposes of this subdivision, "full-peak and 
        limited off-peak service" means peak period regular route 
        service, plus weekday midday regular route service at intervals 
        longer than 60 minutes on the route with the greatest frequency; 
        and "limited peak period service" means peak period regular 
        route service only.  
           For the purposes of property taxes payable in the following 
        year, the council shall annually determine which cities and 
        towns qualify for the 0.510 percent or 0.765 percent tax 
        capacity rate reduction and shall certify this list to the 
        county auditor of the county wherein such cities and towns are 
        located on or before September 15.  No changes may be made to 
        the annual list after September 15. 
           Sec. 20.  Minnesota Statutes 1994, section 473.711, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BUDGET; TAX LEVY.] The metropolitan mosquito 
        control commission shall prepare an annual budget.  The budget 
        may provide for expenditures in an amount not exceeding the 
        property tax levy limitation determined in this subdivision.  
        The commission may levy a tax on all taxable property in the 
        district as defined in section 473.702 to provide funds for the 
        purposes of sections 473.701 to 473.716.  The tax shall not 
        exceed the property tax levy limitation determined in this 
        subdivision.  A participating county may agree to levy an 
        additional tax to be used by the commission for the purposes of 
        sections 473.701 to 473.716 but the sum of the county's and 
        commission's taxes may not exceed the county's proportionate 
        share of the property tax levy limitation determined under this 
        subdivision based on the ratio of its total net tax capacity to 
        the total net tax capacity of the entire district as adjusted by 
        section 270.12, subdivision 3.  The auditor of each county in 
        the district shall add the amount of the levy made by the 
        district to other taxes of the county for collection by the 
        county treasurer with other taxes.  When collected, the county 
        treasurer shall make settlement of the tax with the district in 
        the same manner as other taxes are distributed to political 
        subdivisions.  No county shall levy any tax for mosquito, 
        disease vectoring tick, and black gnat (Simuliidae) control 
        except under sections 473.701 to 473.716.  The levy shall be in 
        addition to other taxes authorized by law. 
           The property tax levied by the metropolitan mosquito 
        control commission shall not exceed the product of (1) the 
        commission's property tax levy limitation for the previous year 
        determined under this subdivision multiplied by (2) an index for 
        market valuation changes equal to the total market valuation of 
        all taxable property located within the district for the current 
        assessment taxes payable year divided by the total market 
        valuation of all taxable property located within the district 
        for the previous assessment taxes payable year. 
           For the purpose of determining the commission's property 
        tax levy limitation under this subdivision, "total market 
        valuation" means the total market valuation of all taxable 
        property within the district without valuation adjustments for 
        fiscal disparities (chapter 473F), tax increment financing 
        (sections 469.174 to 469.179), and high voltage transmission 
        lines (section 273.425). 
           Sec. 21.  [REPEALER.] 
           Minnesota Statutes 1994, sections 270.49; and 270.493; and 
        Laws 1988, chapter 698, section 5, are repealed. 
           Sec. 22.  [EFFECTIVE DATE.] 
           Sections 1 to 5, 7 to 9, 11 to 18, and 21 are effective the 
        day following final enactment.  Section 6 is effective for taxes 
        payable in 1997 and thereafter.  Section 10 is effective for 
        aids payable in 1995 and thereafter.  Sections 19 and 20 are 
        effective for taxes payable in 1995 and thereafter.  
                                   ARTICLE 17 
                         REVENUE TECHNICAL INITIATIVES
                            SALES AND SPECIAL TAXES
           Section 1.  Minnesota Statutes 1994, section 289A.18, 
        subdivision 4, is amended to read: 
           Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
        tax returns must be filed on or before the 20th day of the month 
        following the close of the preceding reporting period, except 
        that annual use tax returns provided for under section 289A.11, 
        subdivision 1, must be filed by April 15 following the close of 
        the calendar year, in the case of individuals.  Annual use tax 
        returns of businesses, including sole proprietorships, and 
        annual sales tax returns must be filed by February 5 following 
        the close of the calendar year.  
           (b) Except for the return for the June reporting period, 
        which is due on the following August 25, returns filed by 
        retailers required to remit liabilities by means of funds 
        transfer under section 289A.20, subdivision 4, paragraph (d), 
        are due on or before the 25th day of the month following the 
        close of the preceding reporting period.  The return for the May 
        liability and 75 percent of the estimated June liability is due 
        on the date payment of the estimated June liability is due, and 
        on or before August 25 of a year, the retailer must file a 
        return showing the actual June liability. 
           (c) If a retailer has an average sales and use tax 
        liability, including local sales and use taxes administered by 
        the commissioner, equal to or less than $500 per month in any 
        quarter of a calendar year, and has substantially complied with 
        the tax laws during the preceding four calendar quarters, the 
        retailer may request authorization to file and pay the taxes 
        quarterly in subsequent calendar quarters.  The authorization 
        remains in effect during the period in which the retailer's 
        quarterly returns reflect sales and use tax liabilities of less 
        than $1,500 and there is continued compliance with state tax 
        laws. 
           (d) If a retailer has an average sales and use tax 
        liability, including local sales and use taxes administered by 
        the commissioner, equal to or less than $100 per month during a 
        calendar year, and has substantially complied with the tax laws 
        during that period, the retailer may request authorization to 
        file and pay the taxes annually in subsequent years.  The 
        authorization remains in effect during the period in which the 
        retailer's annual returns reflect sales and use tax liabilities 
        of less than $1,200 and there is continued compliance with state 
        tax laws. 
           (e) The commissioner may also grant quarterly or annual 
        filing and payment authorizations to retailers if the 
        commissioner concludes that the retailers' future tax 
        liabilities will be less than the monthly totals identified in 
        paragraphs (c) and (d).  An authorization granted under this 
        paragraph is subject to the same conditions as an authorization 
        granted under paragraphs (c) and (d). 
           Sec. 2.  Minnesota Statutes 1994, section 297A.01, 
        subdivision 3, is amended to read: 
           Subd. 3.  A "sale" and a "purchase" includes, but is not 
        limited to, each of the following transactions: 
           (a) Any transfer of title or possession, or both, of 
        tangible personal property, whether absolutely or conditionally, 
        and the leasing of or the granting of a license to use or 
        consume tangible personal property other than manufactured homes 
        used for residential purposes for a continuous period of 30 days 
        or more, for a consideration in money or by exchange or barter; 
           (b) The production, fabrication, printing, or processing of 
        tangible personal property for a consideration for consumers who 
        furnish either directly or indirectly the materials used in the 
        production, fabrication, printing, or processing; 
           (c) The furnishing, preparing, or serving for a 
        consideration of food, meals, or drinks.  "Sale" does not 
        include: 
           (1) meals or drinks served to patients, inmates, or persons 
        residing at hospitals, sanitariums, nursing homes, senior 
        citizens homes, and correctional, detention, and detoxification 
        facilities; 
           (2) meals or drinks purchased for and served exclusively to 
        individuals who are 60 years of age or over and their spouses or 
        to the handicapped and their spouses by governmental agencies, 
        nonprofit organizations, agencies, or churches or pursuant to 
        any program funded in whole or part through 42 USCA sections 
        3001 through 3045, wherever delivered, prepared or served; or 
           (3) meals and lunches served at public and private schools, 
        universities, or colleges.  Notwithstanding section 297A.25, 
        subdivision 2, taxable food or meals include, but are not 
        limited to, the following:  
           (i) heated food or drinks; 
           (ii) sandwiches prepared by the retailer; 
           (iii) single sales of prepackaged ice cream or ice milk 
        novelties prepared by the retailer; 
           (iv) hand-prepared or dispensed ice cream or ice milk 
        products including cones, sundaes, and snow cones; 
           (v) soft drinks and other beverages prepared or served by 
        the retailer; 
           (vi) gum; 
           (vii) ice; 
           (viii) all food sold in vending machines; 
           (ix) party trays prepared by the retailers; and 
           (x) all meals and single servings of packaged snack food, 
        single cans or bottles of pop, sold in restaurants and bars; 
           (d) The granting of the privilege of admission to places of 
        amusement, recreational areas, or athletic events, except a 
        world championship football game sponsored by the national 
        football league, and the privilege of having access to and the 
        use of amusement devices, tanning facilities, reducing salons, 
        steam baths, turkish baths, health clubs, and spas or athletic 
        facilities; 
           (e) The furnishing for a consideration of lodging and 
        related services by a hotel, rooming house, tourist court, motel 
        or trailer camp and of the granting of any similar license to 
        use real property other than the renting or leasing thereof for 
        a continuous period of 30 days or more; 
           (f) The furnishing for a consideration of electricity, gas, 
        water, or steam for use or consumption within this state, or 
        local exchange telephone service, intrastate toll service, and 
        interstate toll service, if that service originates from and is 
        charged to a telephone located in this state.  Telephone service 
        includes paging services and private communication service, as 
        defined in United States Code, title 26, section 4252(d), except 
        for private communication service purchased by an agent acting 
        on behalf of the state lottery.  The furnishing for a 
        consideration of access to telephone services by a hotel to its 
        guests is a sale under this clause.  Sales by municipal 
        corporations in a proprietary capacity are included in the 
        provisions of this clause.  The furnishing of water and sewer 
        services for residential use shall not be considered a sale.  
        The sale of natural gas to be used as a fuel in vehicles 
        propelled by natural gas shall not be considered a sale for the 
        purposes of this section; 
           (g) The furnishing for a consideration of cable television 
        services, including charges for basic service, charges for 
        premium service, and any other charges for any other 
        pay-per-view, monthly, or similar television services; 
           (h) Notwithstanding section 297A.25, subdivisions 9 and 12, 
        the sales of racehorses including claiming sales and fees paid 
        for breeding racehorses or horses previously used for racing 
        shall be considered a "sale" and a "purchase."  "Racehorse" 
        means a horse that is or is intended to be used for racing and 
        whose birth has been recorded by the Jockey Club or the United 
        States Trotting Association or the American Quarter Horse 
        Association.  "Sale" does not include fees paid for breeding 
        horses that are not racehorses; 
           (i) The furnishing for a consideration of parking services, 
        whether on a contractual, hourly, or other periodic basis, 
        except for parking at a meter; 
           (j) The furnishing for a consideration of services listed 
        in this paragraph: 
           (i) laundry and dry cleaning services including cleaning, 
        pressing, repairing, altering, and storing clothes, linen 
        services and supply, cleaning and blocking hats, and carpet, 
        drapery, upholstery, and industrial cleaning.  Laundry and dry 
        cleaning services do not include services provided by coin 
        operated facilities operated by the customer; 
           (ii) motor vehicle washing, waxing, and cleaning services, 
        including services provided by coin-operated facilities operated 
        by the customer, and rustproofing, undercoating, and towing of 
        motor vehicles; 
           (iii) building and residential cleaning, maintenance, and 
        disinfecting and exterminating services; 
           (iv) services provided by detective agencies services, 
        security services, burglar, fire alarm, and armored car services 
        not including services performed within the jurisdiction they 
        serve by off-duty licensed peace officers as defined in section 
        626.84, subdivision 1; 
           (v) pet grooming services; 
           (vi) lawn care, fertilizing, mowing, spraying and sprigging 
        services; garden planting and maintenance; tree, bush, and shrub 
        pruning, bracing, spraying, and surgery; tree, bush, shrub and 
        stump removal; and tree trimming for public utility lines.  
        Services performed under a construction contract for the 
        installation of shrubbery, plants, sod, trees, bushes, and 
        similar items are not taxable; 
           (vii) solid waste collection and disposal services as 
        described in section 297A.45; 
           (viii) massages, except when provided by a licensed health 
        care facility or professional or upon written referral from a 
        licensed health care facility or professional for treatment of 
        illness, injury, or disease; and 
           (ix) the furnishing for consideration of lodging, board and 
        care services for animals in kennels and other similar 
        arrangements, but excluding veterinary and horse boarding 
        services. 
        The services listed in this paragraph are taxable under section 
        297A.02 if the service is performed wholly within Minnesota or 
        if the service is performed partly within and partly without 
        Minnesota and the greater proportion of the service is performed 
        in Minnesota, based on the cost of performance.  In applying the 
        provisions of this chapter, the terms "tangible personal 
        property" and "sales at retail" include taxable services and the 
        provision of taxable services, unless specifically provided 
        otherwise.  Services performed by an employee for an employer 
        are not taxable under this paragraph.  Services performed by a 
        partnership or association for another partnership or 
        association are not taxable under this paragraph if one of the 
        entities owns or controls more than 80 percent of the voting 
        power of the equity interest in the other entity.  Services 
        performed between members of an affiliated group of corporations 
        are not taxable.  For purposes of this section, "affiliated 
        group of corporations" includes those entities that would be 
        classified as a member of an affiliated group under United 
        States Code, title 26, section 1504, and who are eligible to 
        file a consolidated tax return for federal income tax purposes; 
           (k) A "sale" and a "purchase" includes the transfer of 
        computer software, meaning information and directions that 
        dictate the function performed by data processing equipment.  A 
        "sale" and a "purchase" does not include the design, 
        development, writing, translation, fabrication, lease, or 
        transfer for a consideration of title or possession of a custom 
        computer program; and 
           (l) The granting of membership in a club, association, or 
        other organization if: 
           (1) the club, association, or other organization makes 
        available for the use of its members sports and athletic 
        facilities (without regard to whether a separate charge is 
        assessed for use of the facilities); and 
           (2) use of the sports and athletic facilities is not made 
        available to the general public on the same basis as it is made 
        available to members.  
        Granting of membership includes both one-time initiation fees 
        and periodic membership dues.  Sports and athletic facilities 
        include golf courses, tennis, racquetball, handball and squash 
        courts, basketball and volleyball facilities, running tracks, 
        exercise equipment, swimming pools, and other similar athletic 
        or sports facilities.  The provisions of this paragraph do not 
        apply to camps or other recreation facilities owned and operated 
        by an exempt organization under section 501(c)(3) of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1992, for educational and social activities for young people 
        primarily age 18 and under.  
           Sec. 3.  Minnesota Statutes 1994, section 297E.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [IMPOSITION.] A tax is imposed on all 
        lawful gambling other than (1) pull-tabs purchased and placed 
        into inventory after January 1, 1987, and (2) tipboards 
        purchased and placed into inventory after June 30, 1988, at the 
        rate of ten percent on the gross receipts as defined in section 
        349.12 297E.01, subdivision 21 8, less prizes actually paid.  
        The tax imposed by this subdivision is in lieu of the tax 
        imposed by section 297A.02 and all local taxes and license fees 
        except a fee authorized under section 349.16, subdivision 8, or 
        a tax authorized under subdivision 5.  
           The tax imposed under this subdivision is payable by the 
        organization or party conducting, directly or indirectly, the 
        gambling.  
           Sec. 4.  Minnesota Statutes 1994, section 297E.02, 
        subdivision 6, is amended to read: 
           Subd. 6.  [COMBINED RECEIPTS TAX.] In addition to the taxes 
        imposed under subdivisions 1 and 4, a tax is imposed on the 
        combined receipts of the organization.  As used in this section, 
        "combined receipts" is the sum of the organization's gross 
        receipts from lawful gambling less gross receipts directly 
        derived from the conduct of bingo, raffles, and paddlewheels, as 
        defined in section 349.12 297E.01, subdivision 21 8, for the 
        fiscal year.  The combined receipts of an organization are 
        subject to a tax computed according to the following schedule: 
           If the combined receipts for the          The tax is:
           fiscal year are:
           Not over $500,000                   zero
           Over $500,000, but not over
           $700,000                            two percent of the amount
                                               over $500,000, but not
                                               over $700,000
           Over $700,000, but not over
           $900,000                            $4,000 plus four percent
                                               of the amount over
                                               $700,000, but not over
                                               $900,000
           Over $900,000                       $12,000 plus six percent
                                               of the amount over
                                               $900,000
           Sec. 5.  Minnesota Statutes 1994, section 297E.02, 
        subdivision 11, is amended to read: 
           Subd. 11.  [UNPLAYED OR DEFECTIVE PULL-TABS OR TIPBOARDS.] 
        If a deal of pull-tabs or tipboards registered with the board or 
        bar coded in accordance with chapter chapters 297E and 349 and 
        upon which the tax imposed by subdivision 4 has been paid is 
        returned unplayed to the distributor, the commissioner shall 
        allow a refund of the tax paid.  
           If a defective deal registered with the board or bar coded 
        in accordance with chapter chapters 297E and 349 and upon which 
        the taxes have been paid is returned to the manufacturer, the 
        distributor shall submit to the commissioner of revenue 
        certification from the manufacturer that the deal was returned 
        and in what respect it was defective.  The certification must be 
        on a form prescribed by the commissioner and must contain 
        additional information the commissioner requires.  
           The commissioner may require that no refund under this 
        subdivision be made unless the returned pull-tabs or tipboards 
        have been set aside for inspection by the commissioner's 
        employee.  
           Reductions in previously paid taxes authorized by this 
        subdivision must be made when and in the manner prescribed by 
        the commissioner.  
           Sec. 6.  Minnesota Statutes 1994, section 297E.031, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION AND ISSUANCE.] A distributor 
        who sells gambling products under this chapter must file an 
        application with the commissioner an application, on a form 
        prescribed by the commissioner, for a gambling tax permit and 
        identification number.  The commissioner, when satisfied that 
        the applicant has a valid license from the board meets all 
        applicable requirements under chapters 297E and 349, shall issue 
        the applicant a permit and number.  A permit is not assignable 
        and is valid only for the distributor in whose name it is issued.
           Sec. 7.  Minnesota Statutes 1994, section 297E.13, 
        subdivision 5, is amended to read: 
           Subd. 5.  [UNTAXED GAMBLING EQUIPMENT.] It is a gross 
        misdemeanor for a person to possess gambling equipment for 
        resale in this state that has not been stamped or bar-coded in 
        accordance with chapter chapters 297E and 349 and upon which the 
        taxes imposed by chapter 297A or section 297E.02, subdivision 4, 
        have not been paid.  The director of gambling enforcement or the 
        commissioner or the designated inspectors and employees of the 
        director or commissioner may seize in the name of the state of 
        Minnesota any unregistered or untaxed gambling equipment.  
           Sec. 8.  Minnesota Statutes 1994, section 325D.33, 
        subdivision 4, is amended to read: 
           Subd. 4.  [WHOLESALER TO PRESERVE COPIES OF INVOICES.] 
        Every person who sells cigarettes to persons other than the 
        ultimate consumer shall prepare for each sale itemized invoices 
        showing the seller's name and address, the purchaser's name and 
        address, the date of sale, and all prices and discounts and 
        shall keep legible copies of them for one year from the date of 
        sale.  
           Sec. 9.  Minnesota Statutes 1994, section 349.163, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PULL-TAB AND TIPBOARD FLARES.] (a) A 
        manufacturer may not ship or cause to be shipped into this state 
        or sell for use or resale in this state any deal of pull-tabs or 
        tipboards that does not have its own individual flare as 
        required for that deal by this subdivision and rule of the 
        board.  A person other than a manufacturer may not manufacture, 
        alter, modify, or otherwise change a flare for a deal of 
        pull-tabs or tipboards except as allowed by this chapter or 
        board rules. 
           (b) A manufacturer must comply with either paragraphs (c) 
        to (g) or (f) to (j) with respect to pull-tabs and tipboards 
        sold by the manufacturer before January 1, 1995, for use or 
        resale in Minnesota or shipped into or caused to be shipped into 
        Minnesota by the manufacturer before January 1, 1995.  A 
        manufacturer must comply with paragraphs (f) to (j) with respect 
        to pull-tabs and tipboards sold by the manufacturer on and after 
        January 1, 1995, for use or resale in Minnesota or shipped into 
        or caused to be shipped into Minnesota by the manufacturer on 
        and after January 1, 1995.  Paragraphs (c) to (e) expire January 
        1, 1995. 
           (c) The flare of each deal of pull-tabs and tipboards sold 
        by a manufacturer for use or resale in Minnesota must have the 
        Minnesota gambling stamp affixed.  The flare, with the stamp 
        affixed, must be placed inside the wrapping of the deal which 
        the flare describes. 
           (d) Each pull-tab and tipboard flare must bear the 
        following statement printed in letters large enough to be 
        clearly legible: 
           "Pull-tab (or tipboard) purchasers -- This pull-tab (or 
        tipboard) game is not legal in Minnesota unless: 
           -- a Minnesota gambling stamp is affixed to this sheet, and 
           -- the serial number handwritten on the gambling stamp is 
        the same as the serial number printed on this sheet and on the 
        pull-tab (or tipboard) ticket you have purchased." 
           (e) The flare of each pull-tab and tipboard game must bear 
        the serial number of the game, printed in numbers at least 
        one-half inch high and must be imprinted with the following: 
           (1) the name of the game; 
           (2) the name of the manufacturer; 
           (3) the number of tickets in the deal; and 
           (4) other information the board by rule requires. 
           (f) The flare of each pull-tab and tipboard game must have 
        affixed to or imprinted at the bottom a bar code that provides 
        all information required by the commissioner of revenue under 
        section 297E.04, subdivision 2. 
        The serial number included in the bar code must be the same as 
        the serial number of the tickets included in the deal.  A 
        manufacturer who manufactures a deal of pull-tabs must affix to 
        the outside of the box containing that game the same bar code 
        that is affixed to or imprinted at the bottom of a flare for 
        that deal. 
           (g) No person may alter the bar code that appears on the 
        outside of a box containing a deal of pull-tabs and tipboards.  
        Possession of a box containing a deal of pull-tabs and tipboards 
        that has a bar code different from the bar code of the deal 
        inside the box is prima facie evidence that the possessor has 
        altered the bar code on the box. 
           (h) The flare of each deal of pull-tabs and tipboards sold 
        by a manufacturer for use or resale in Minnesota must have 
        imprinted on it a symbol that is at least one inch high and one 
        inch wide consisting of an outline of the geographic boundaries 
        of Minnesota with the letters "MN" inside the outline.  The 
        flare must be placed inside the wrapping of the deal which the 
        flare describes.  
           (i) Each pull-tab and tipboard flare must bear the 
        following statement printed in letters large enough to be 
        clearly legible: 
           "Pull-tab (or tipboard) purchasers -- This pull-tab (or 
        tipboard) game is not legal in Minnesota unless: 
           -- an outline of Minnesota with letters "MN" inside it is 
        imprinted on this sheet, and 
           -- the serial number imprinted on the bar code at the 
        bottom of this sheet is the same as the serial number on the 
        pull-tab (or tipboard) ticket you have purchased." 
           (j) The flare of each pull-tab and tipboard game must have 
        the serial number of the game imprinted on the bar code at the 
        bottom of the flare in numerals at least one-half inch high. 
           Sec. 10.  [REPEALER.] 
           Minnesota Statutes 1994, section 60A.15, subdivision 7, is 
        repealed. 
           Sec. 11.  [INSTRUCTIONS TO REVISOR.] 
           In the next edition of Minnesota Statutes, the revisor of 
        statutes shall renumber section 297E.02, subdivision 5, as 
        section 349.213, subdivision 3, and shall change all references 
        to that section in Minnesota Statutes or Minnesota Rules 
        accordingly. 
           Sec. 12.  [EFFECTIVE DATE.] 
           Section 1 is effective for returns due in 1996 and 
        thereafter.  Sections 2 to 11 are effective the day following 
        final enactment. 
                                   ARTICLE 18 
                         REVENUE TECHNICAL INITIATIVES 
                                 MINNESOTACARE 
           Section 1.  Minnesota Statutes 1994, section 295.50, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] For purposes of sections 
        295.50 to 295.58 295.59, the following terms have the meanings 
        given. 
           Sec. 2.  Minnesota Statutes 1994, section 295.50, 
        subdivision 4, is amended to read: 
           Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
        provider" means: 
           (1) a person furnishing any or all of the following goods 
        or services directly to a patient or consumer:  medical, 
        surgical, optical, visual, dental, hearing, nursing services, 
        drugs, medical supplies, medical appliances, laboratory, 
        diagnostic or therapeutic services, or any goods and services 
        not listed above that qualifies qualify for reimbursement under 
        the medical assistance program provided under chapter 256B; 
           (2) a staff model health plan company; or 
           (3) a licensed an ambulance service required to be licensed.
           (b) Health care provider does not include hospitals, 
        nursing homes licensed under chapter 144A or licensed in any 
        other jurisdiction, pharmacies, and surgical centers, bus and 
        taxicab transportation, or any other providers of transportation 
        services other than ambulance services required to be licensed, 
        supervised living facilities for persons with mental retardation 
        or related conditions, licensed under Minnesota Rules, parts 
        4665.0100 to 4665.9900, residential care homes licensed under 
        chapter 144B, board and lodging establishments providing only 
        custodial services that are licensed under chapter 157 and 
        registered under section 157.031 to provide supportive services 
        or health supervision services, adult foster homes as defined in 
        Minnesota Rules, part 9555.5050 and boarding care homes, as 
        defined in Minnesota Rules, part 4655.0100. 
           Sec. 3.  Minnesota Statutes 1994, section 295.53, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EXEMPTIONS.] The following payments are 
        excluded from the gross revenues subject to the hospital, 
        surgical center, or health care provider taxes under sections 
        295.50 to 295.57: 
           (1) payments received for services provided under the 
        Medicare program, including payments received from the 
        government, and organizations governed by sections 1833 and 1876 
        of title XVIII of the federal Social Security Act, United States 
        Code, title 42, section 1395, and enrollee deductibles, 
        coinsurance, and copayments, whether paid by the individual or 
        by insurer or other third party.  Payments for services not 
        covered by Medicare are taxable; 
           (2) medical assistance payments including payments received 
        directly from the government or from a prepaid plan; 
           (3) payments received for home health care services; 
           (4) payments received from hospitals or surgical centers 
        for goods and services on which liability for tax is imposed 
        under section 295.52 or the source of funds for the payment is 
        exempt under clause (1), (2), (7), (8), or (10); 
           (5) payments received from health care providers for goods 
        and services on which liability for tax is imposed under 
        sections 295.52 to 295.57 this chapter or the source of funds 
        for the payment is exempt under clause (1), (2), (7), (8), or 
        (10); 
           (6) amounts paid for legend drugs, other than nutritional 
        products, to a wholesale drug distributor reduced by 
        reimbursements received for legend drugs under clauses (1), (2), 
        (7), and (8); 
           (7) payments received under the general assistance medical 
        care program including payments received directly from the 
        government or from a prepaid plan; 
           (8) payments received for providing services under the 
        MinnesotaCare program including payments received directly from 
        the government or from a prepaid plan and enrollee deductibles, 
        coinsurance, and copayments; 
           (9) payments received by a resident health care provider or 
        the wholly owned subsidiary of a resident health care provider 
        for care provided outside Minnesota to a patient who is not 
        domiciled in Minnesota; 
           (10) payments received from the chemical dependency fund 
        under chapter 254B; 
           (11) payments received in the nature of charitable 
        donations that are not designated for providing patient services 
        to a specific individual or group; 
           (12) payments received for providing patient services if 
        the services are incidental to conducting medical research; 
           (13) payments received from any governmental agency for 
        services benefiting the public, not including payments made by 
        the government in its capacity as an employer or insurer; 
           (14) payments received for services provided by community 
        residential mental health facilities licensed under Minnesota 
        Rules, parts 9520.0500 to 9520.0690, community support programs 
        and family community support programs approved under Minnesota 
        Rules, parts 9535.1700 to 9535.1760, and community mental health 
        centers as defined in section 245.62, subdivision 2; 
           (15) government payments received by a regional treatment 
        center; 
           (16) payments received for hospice care services; 
           (17) payments received by a resident health care provider 
        or the wholly owned subsidiary of a resident health care 
        provider for medical supplies, appliances and equipment 
        delivered outside of Minnesota; 
           (18) payments received for services provided by community 
        supervised living facilities for persons with mental retardation 
        or related conditions licensed under Minnesota Rules, parts 
        4665.0100 to 4665.9900; 
           (19) payments received by a post-secondary educational 
        institution from student tuition, student activity fees, health 
        care service fees, government appropriations, donations, or 
        grants.  Fee for service payments and payments for extended 
        coverage are taxable; and 
           (20) (19) payments received for services provided by: 
        residential care homes licensed under chapter 144B; board and 
        lodging establishments providing only custodial services, that 
        are licensed under chapter 157 and registered under section 
        157.031 to provide supportive services or health supervision 
        services; and assisted living programs, and congregate housing 
        programs, and other senior housing options. 
           Sec. 4.  Minnesota Statutes 1994, section 295.53, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DEDUCTIONS EXEMPTIONS FOR PHARMACIES.] (a) 
        Pharmacies may deduct exclude from their gross revenues subject 
        to tax payments for medical supplies, appliances, and devices 
        that are exempt under subdivision 1, except payments under 
        subdivision 1, clauses (3), (6), (9), (11), and (14) (1), (2), 
        (4), (5), (7), (8), and (13). 
           (b) Resident pharmacies may deduct exclude from their gross 
        revenues subject to tax payments received for medical supplies, 
        appliances, and equipment delivered outside of Minnesota. 
           Sec. 5.  Minnesota Statutes 1994, section 295.55, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [EXTENSIONS FOR FILING RETURNS.] If good cause 
        exists, the commissioner may extend the time for filing 
        MinnesotaCare tax returns for not more than 60 days. 
           Sec. 6.  Minnesota Statutes 1994, section 295.57, is 
        amended to read: 
           295.57 [COLLECTION AND ENFORCEMENT; REFUNDS; RULEMAKING; 
        APPLICATION OF OTHER CHAPTERS; INTEREST ON OVERPAYMENTS.] 
           Subdivision 1.  [APPLICATION OF OTHER CHAPTERS.] Unless 
        specifically provided otherwise by sections 295.50 to 295.58 
        295.59, the enforcement, interest, and penalty provisions under 
        chapter 294, appeal provisions in sections 289A.43 and 289A.65, 
        criminal penalties in section 289A.63, and refunds provisions in 
        section 289A.50, and collection and rulemaking provisions under 
        chapter 270, apply to a liability for the taxes imposed under 
        sections 295.50 to 295.58 295.59. 
           Subd. 2.  [INTEREST ON OVERPAYMENTS.] Interest must be paid 
        on an overpayment refunded or credited to the taxpayer from the 
        date of payment of the tax until the date the refund is paid or 
        credited.  For purposes of this subdivision, the date of payment 
        is the due date of the return or the date of actual payment of 
        the tax, whichever is later. 
           Sec. 7.  [EFFECTIVE DATES.] 
           Sections 1 and 4 are effective the day following final 
        enactment.  
           Sections 2 and 3 are effective for tax periods beginning on 
        or after January 1, 1996. 
           Section 5 is effective for returns due on or after January 
        1, 1996. 
           Section 6 is retroactively effective from January 1, 1994. 
                                   ARTICLE 19 
                         REVENUE TECHNICAL INITIATIVES 
                                 MISCELLANEOUS 
           Section 1.  Minnesota Statutes 1994, section 270.69, 
        subdivision 10, is amended to read: 
           Subd. 10.  [LIMITATION FOR HOMESTEAD PROPERTY.] A lien 
        imposed under this section upon property defined as homestead 
        property in chapter 510 sections 510.01 and 510.02 may not be 
        enforced against homestead property by levy under section 
        270.70, or by judgment lien foreclosure under chapter 550, but 
        notwithstanding section 510.07, is enforceable against the 
        proceeds from the sale, conveyance, or transfer of the homestead.
           Sec. 2.  Minnesota Statutes 1994, section 270B.03, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [WHO MAY INSPECT.] Returns and return 
        information must, on written request, be made open to inspection 
        by or disclosure to the data subject.  For purposes of this 
        chapter, the following are the data subject: 
           (1) in the case of an individual return, that individual; 
           (2) in the case of an income tax return filed jointly, 
        either of the individuals with respect to whom the return is 
        filed; 
           (3) in the case of a partnership return, any person who was 
        a member of the partnership during any part of the period 
        covered by the return; 
           (4) in the case of the return of a corporation or its 
        subsidiary: 
           (i) any person designated by resolution of the board of 
        directors or other similar governing body; 
           (ii) any officer or employee of the corporation upon 
        written request signed by any officer and attested to by the 
        secretary or another officer; 
           (iii) any bona fide shareholder of record owning one 
        percent or more of the outstanding stock of the corporation; 
           (iv) if the corporation is a corporation that has made an 
        election under section 1362 of the Internal Revenue Code of 
        1986, as amended through December 31, 1988, any person who was a 
        shareholder during any part of the period covered by the return 
        during which an election was in effect; or 
           (v) if the corporation has been dissolved, any person 
        authorized by state law to act for the corporation or any person 
        who would have been authorized if the corporation had not been 
        dissolved; 
           (5) in the case of an estate return: 
           (i) the personal representative or trustee of the estate; 
        and 
           (ii) any heir at law, next of kin, or beneficiary of the 
        estate, but only if the commissioner finds that the heir at law, 
        next of kin, or beneficiary has a material interest that will be 
        affected by information contained in the return; 
           (6) in the case of a trust return: 
           (i) the trustee or trustees, jointly or separately; and 
           (ii) any beneficiary of the trust, but only if the 
        commissioner finds that the beneficiary has a material interest 
        that will be affected by information contained in the return; 
           (7) if liability has been assessed to a transferee under 
        section 289A.31, subdivision 3, the transferee is the data 
        subject with regard to the returns and return information 
        relating to the assessed liability; and 
           (8) in the case of an Indian tribal government or an Indian 
        tribal government-owned entity, 
           (i) the chair of the tribal government, or 
           (ii) any person authorized by the tribal government; and 
           (9) in the case of a successor as defined in section 
        270.102, subdivision 1, paragraph (b), the successor is the data 
        subject and information may be disclosed as provided by section 
        270.102, subdivision 4.  
           Sec. 3.  Minnesota Statutes 1994, section 270B.12, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MUNICIPALITIES LOCAL UNITS OF GOVERNMENT.] Sales 
        and or use tax returns and return information are open to 
        inspection by or disclosure to the taxing officials of 
        any municipality local unit of government of the state of 
        Minnesota that has a local sales or use tax, for the purpose of 
        and to the extent necessary for the administration of the local 
        sales and or use tax. 
           Sec. 4.  Minnesota Statutes 1994, section 270B.14, 
        subdivision 11, is amended to read: 
           Subd. 11.  [DISCLOSURE TO COMMISSIONER OF HEALTH.] (a) On 
        the request of the commissioner of health, the commissioner may 
        disclose return information to the extent provided in paragraph 
        (b) and for the purposes provided in paragraph (c). 
           (b) Data that may be disclosed are limited to the 
        taxpayer's identity, as defined in section 270B.01, subdivision 
        5. 
           (c) The commissioner of health may request data only for 
        the purposes of carrying out epidemiologic investigations, which 
        includes conducting occupational health and safety surveillance, 
        and locating and notifying individuals exposed to health hazards 
        as a result of employment.  Requests for data by the 
        commissioner of health must be in writing and state the purpose 
        of the request.  Data received may be used only for the purposes 
        of section 144.0525. 
           (d) The commissioner may disclose health care service 
        revenue data to the commissioner of health as provided by 
        section 62J.41, subdivision 2. 
           Sec. 5.  Minnesota Statutes 1994, section 289A.50, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL RIGHT TO REFUND.] (a) Subject to 
        the requirements of this section and section 289A.40, a taxpayer 
        who has paid a tax in excess of the taxes lawfully due and who 
        files a written claim for refund will be refunded or credited 
        the overpayment of the tax determined by the commissioner to be 
        erroneously paid.  
           (b) The claim must specify the name of the taxpayer, the 
        date when and the period for which the tax was paid, the kind of 
        tax paid, the amount of the tax that the taxpayer claims was 
        erroneously paid, the grounds on which a refund is claimed, and 
        other information relative to the payment and in the form 
        required by the commissioner.  An income tax, estate tax, or 
        corporate franchise tax return, or amended return claiming an 
        overpayment constitutes a claim for refund.  
           (c) When, in the course of an examination, and within the 
        time for requesting a refund, the commissioner determines that 
        there has been an overpayment of tax, the commissioner shall 
        refund or credit the overpayment to the taxpayer and no demand 
        is necessary.  If the overpayment exceeds $1, the amount of the 
        overpayment must be refunded to the taxpayer.  If the amount of 
        the overpayment is less than $1, the commissioner is not 
        required to refund.  In these situations, the commissioner does 
        not have to make written findings or serve notice by mail to the 
        taxpayer. 
           (d) If the amount allowable as a credit for withholding, 
        estimated taxes, or dependent care exceeds the tax against which 
        the credit is allowable, the amount of the excess is considered 
        an overpayment.  The refund allowed by section 290.06, 
        subdivision 23, is also considered an overpayment.  The 
        requirements of section 270.10, subdivision 1, do not apply to 
        the refunding of such an overpayment shown on the original 
        return filed by a taxpayer. 
           (e) If the entertainment tax withheld at the source exceeds 
        by $1 or more the taxes, penalties, and interest reported in the 
        return of the entertainment entity or imposed by section 
        290.9201, the excess must be refunded to the entertainment 
        entity.  If the excess is less than $1, the commissioner need 
        not refund that amount. 
           (f) If the surety deposit required for a construction 
        contract exceeds the liability of the out-of-state contractor, 
        the commissioner shall refund the difference to the contractor. 
           (g) An action of the commissioner in refunding the amount 
        of the overpayment does not constitute a determination of the 
        correctness of the return of the taxpayer.  
           (h) There is appropriated from the general fund to the 
        commissioner of revenue the amount necessary to pay refunds 
        allowed under this section. 
           Sec. 6.  Minnesota Statutes 1994, section 296.01, 
        subdivision 34, is amended to read: 
           Subd. 34.  [SPECIAL FUEL.] "Special fuel" means (1) all 
        combustible gases and liquid petroleum products or substitutes 
        therefor including clear undyed diesel fuel, except gasoline, 
        which are delivered into the supply tank of a licensed motor 
        vehicle or into storage tanks maintained by an owner or operator 
        of a licensed motor vehicle as a source of supply for such 
        vehicle; (2) all combustible gases and liquid petroleum products 
        or substitutes therefor, except gasoline, when delivered to a 
        licensed special fuel dealer or to the retail service station 
        storage of a distributor who has elected to pay the special fuel 
        excise tax as provided in section 296.12, subdivision 3; (3) all 
        combustible gases and liquid petroleum products or substitutes 
        therefor, except gasoline, which are used as aviation fuel; or 
        (4) dyed fuel that is being used illegally in a licensed motor 
        vehicle.  
           Sec. 7.  Minnesota Statutes 1994, section 296.025, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TAX IMPOSED.] There is hereby imposed an 
        excise tax of the same rate per gallon as the gasoline excise 
        tax on all special fuel.  For clear undyed diesel fuel, the tax 
        is imposed on the first distributor who received the product in 
        Minnesota.  For dyed fuel being used illegally in a licensed 
        motor vehicle, the tax is imposed on the owner or operator of 
        the motor vehicle, or in some instances, on the dealer who 
        supplied the fuel.  For dyed fuel used in a motor vehicle but 
        subject to a federal exemption, although no federal tax may be 
        imposed, the fuel is subject to the state tax.  For other fuels, 
        including jet fuel, propane, and compressed natural gas, the tax 
        is imposed on the distributor, special fuel dealer, or bulk 
        purchaser.  This tax is payable at the time and in the manner 
        specified in this chapter.  For purposes of this section, "owner 
        or operator" means the operation of licensed motor vehicles, 
        whether loaded or empty, whether for compensation or not for 
        compensation, and whether owned by or leased to the motor 
        carrier who operates them or causes them to be operated. 
           Sec. 8.  Minnesota Statutes 1994, section 296.12, 
        subdivision 3, is amended to read: 
           Subd. 3.  [TAX COLLECTION, REPORTING AND PAYMENT.] (a) 
        For clear undyed diesel fuel, the tax is imposed on the 
        distributor who receives the fuel. 
           (b) For all other special fuels, the tax is imposed on the 
        distributor, bulk purchaser, or special fuel dealer.  The tax 
        may be paid upon receipt or sale as follows:  
           (1) Distributors and special fuel dealers may, subject to 
        the approval of the commissioner, elect to pay to the 
        commissioner the special fuel excise tax on all special fuel 
        delivered or sold into the supply tank of an aircraft or a 
        licensed motor vehicle.  Under this option an invoice must be 
        issued at the time of each delivery showing the name and address 
        of the purchaser, date of sale, number of gallons, price per 
        gallon and total amount of sale.  A separate sales ticket book 
        shall be maintained for special fuel sales; and 
           (2) Bulk purchasers shall report and pay the excise tax on 
        all special fuel purchased by them for storage, to the 
        commissioner. 
           (c) Any person delivering special fuel on which the excise 
        tax has not previously been paid, into the supply tank of an 
        aircraft or a licensed motor vehicle shall report such delivery 
        and pay the excise tax on the special fuel so delivered, to the 
        commissioner. 
           Sec. 9.  Minnesota Statutes 1994, section 296.12, 
        subdivision 4, is amended to read: 
           Subd. 4.  [MONTHLY REPORTS; SHRINKAGE ALLOWANCE.] On or 
        before the 23rd day of each month, the persons subject to the 
        provisions of this section shall file in the office of the 
        commissioner at St. Paul, Minnesota, a report in the following 
        manner: 
           (1) Distributors of clear undyed diesel fuel must file a 
        monthly tax return with the department listing all purchases or 
        receipts of clear undyed diesel fuel.  Distributors may be 
        allowed to take a credit or credits under section 296.14, 
        subdivision 2.  
           (2) Distributors and dealers of special fuel other than 
        clear undyed diesel fuel shall report the total number of 
        gallons delivered to them during the preceding calendar month 
        and shall pay the special fuel excise tax due thereon to the 
        commissioner. The invoice must show the true and correct name 
        and address of the purchaser, and the purchaser's signature.  
        The report shall contain such other information as the 
        commissioner may require.  
           (3) Distributors and dealers of special fuel other than 
        clear undyed diesel fuel who have elected to pay the special 
        fuel excise tax on all special fuel delivered into the supply 
        tank of an aircraft or licensed motor vehicle as provided in 
        subdivision 3, shall report the total number of gallons 
        delivered into the supply tank of an aircraft or licensed motor 
        vehicle during the preceding calendar month and shall pay the 
        special fuel excise tax due thereon to the commissioner.  
           (4) Bulk purchasers shall report and pay the special fuel 
        excise tax on all special fuel except clear undyed diesel fuel 
        purchased by them for storage, during the preceding calendar 
        month.  In such cases as the commissioner may permit, credit for 
        the excise tax due or previously paid on special fuel not used 
        in aircraft or licensed motor vehicles, may be allowed in 
        computing tax liability.  The report shall contain such other 
        information as the commissioner may require. 
           (5) In computing the special fuel excise tax due, a 
        deduction of one percent of the quantity of special fuel on 
        which tax is due shall be made for evaporation and loss.  
           (6) Each report shall contain a confession of judgment for 
        the amount of the tax shown due thereon to the extent not timely 
        paid. 
           Sec. 10.  [EFFECTIVE DATE.] 
           Section 1 is effective for sales, conveyances, or transfers 
        on or after the day following final enactment. 
           Sections 2 to 9 are effective the day following final 
        enactment. 
           Presented to the governor May 30, 1995 
           Signed by the governor June 1, 1995, 11:18 a.m.

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569