Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 490-H.F.No. 4127 
                  An act relating to financing state and local 
                  government; providing a sales tax rebate; providing 
                  agricultural assistance; extending the time to qualify 
                  for and making certain other changes to the 1999 sales 
                  tax rebate and 1999 agricultural assistance; providing 
                  agricultural assistance; reducing individual income 
                  tax rates; making changes to income, franchise, 
                  withholding, sales and use, property, motor vehicle 
                  sales and registration, mortgage registry, health care 
                  provider, motor fuels, cigarette and tobacco, liquor, 
                  insurance premiums, lawful gambling, taconite 
                  production, estate, and special taxes; limiting 
                  certain maximum motor vehicle registration tax 
                  amounts; changing and allowing tax credits, 
                  subtractions, and exemptions; conforming with changes 
                  in federal income tax provisions; providing for 
                  allocation and apportionment of income; changing 
                  property tax valuation, assessment, levy, 
                  classification, homestead, credit, aid, exemption, 
                  deferral, review, appeal, abatement, and distribution 
                  provisions; changing levy authority; reducing rates on 
                  lawful gambling taxes; changing tax increment 
                  financing and housing improvement area provisions; 
                  providing special authority for certain political 
                  subdivisions; transferring money to the Minnesota 
                  Minerals 21st Century Fund; providing for a grant to 
                  the city of Richfield to be used for acquisition of 
                  certain residential property; changing and clarifying 
                  tax administration, collection, enforcement, interest, 
                  and penalty provisions; authorizing certain special 
                  assessments; changing revenue recapture provisions; 
                  modifying certain aids to local units of government; 
                  changing county reporting requirements; providing 
                  certain duties and powers to the commissioner of 
                  revenue, the state auditor, and to the attorney 
                  general; defining terms; classifying data; requiring 
                  studies; transferring certain funds; appropriating 
                  money; amending Minnesota Statutes 1998, sections 
                  8.30; 16A.46; 60A.15, subdivision 1; 97A.061, by 
                  adding subdivisions; 115A.557, subdivision 3; 168.013, 
                  subdivision 1a; 270.063, by adding a subdivision; 
                  270.072, subdivision 2, and by adding a subdivision; 
                  270A.03, subdivision 7; 270A.07, subdivision 1; 
                  272.115, subdivision 1; 273.111, subdivision 3; 
                  273.124, by adding a subdivision; 273.125, subdivision 
                  8; 273.1399, subdivision 1; 273.37, subdivision 3; 
                  275.066; 276.19, subdivision 1; 289A.08, by adding a 
                  subdivision; 289A.20, subdivision 2; 289A.26, 
                  subdivision 1; 289A.35; 289A.60, subdivisions 1, 14, 
                  and 15; 290.01, subdivisions 19c, 19d, and 19e; 
                  290.015, subdivisions 1, 3, and 4; 290.06, subdivision 
                  22, and by adding subdivisions; 290.0671, subdivision 
                  6, and by adding a subdivision; 290.0672, subdivisions 
                  1 and 2; 290.17, subdivision 2; 290.92, subdivisions 
                  3, 19, 28, and 29; 290B.04, by adding a subdivision; 
                  290B.05, subdivision 3; 290B.07; 290B.08, subdivisions 
                  1 and 2; 290B.09, subdivision 2; 295.50, subdivision 
                  9b; 295.58; 296A.03, subdivision 5; 296A.21, 
                  subdivisions 2 and 3; 296A.22, subdivision 6; 297A.01, 
                  subdivisions 13 and 15; 297A.15, by adding a 
                  subdivision; 297A.25, subdivisions 5, 16, 34, and by 
                  adding subdivisions; 297B.01, subdivision 7; 297B.03; 
                  297B.09, subdivision 1; 297E.02, by adding a 
                  subdivision; 297F.01, subdivisions 7, 14, 17, and by 
                  adding subdivisions; 297F.08, subdivisions 2, 5, 8, 
                  and 9; 297F.09, subdivisions 1 and 2; 297F.13, 
                  subdivision 4; 297F.21, subdivisions 1 and 3; 428A.11, 
                  by adding subdivisions; 428A.13, subdivisions 1 and 3; 
                  428A.14, subdivision 1; 428A.15; 428A.16; 428A.17; 
                  428A.19; 428A.21; 429.011, subdivisions 2a and 5; 
                  429.021, subdivision 1; 429.031, subdivision 1; 
                  469.040, by adding a subdivision; 469.115; 469.1734, 
                  subdivision 4; 469.174, subdivisions 9, 10, 11, 12, 
                  14, and 22; 469.175, subdivisions 1a, 2, 2a, 3, 5, and 
                  6; 469.176, subdivision 1b, and by adding a 
                  subdivision; 469.1761, subdivision 4; 469.1763, 
                  subdivision 2; 469.177, subdivision 1; 469.1771, 
                  subdivision 2a, and by adding a subdivision; 469.1813, 
                  subdivision 4; 477A.06, subdivision 3; 477A.11, 
                  subdivision 1; 477A.12; 477A.13; and 477A.14; 
                  Minnesota Statutes 1999 Supplement, sections 16D.09, 
                  subdivision 2; 168.012, subdivision 1; 270.65; 
                  270A.03, subdivision 2; 270A.07, subdivision 2; 
                  272.02, subdivision 39, and by adding a subdivision; 
                  273.124, subdivisions 1, 8, and 14; 273.13, 
                  subdivisions 24 and 25; 273.1382, subdivision 1b; 
                  273.1398, subdivision 4a; 275.70, subdivision 5; 
                  275.71, subdivision 4; 287.01, subdivision 2; 289A.02, 
                  subdivision 7; 289A.20, subdivision 4; 289A.55, 
                  subdivision 9; 290.01, subdivisions 19, 19b, and 31; 
                  290.06, subdivisions 2c and 2d; 290.0671, subdivision 
                  1; 290.0675, subdivisions 1, 2, and 3; 290.091, 
                  subdivisions 1, 2, and 6; 290A.03, subdivision 15; 
                  290B.03, subdivision 1; 290B.05, subdivision 1; 
                  291.005, subdivision 1; 295.53, subdivision 1; 
                  297A.25, subdivisions 9 and 11; 297E.02, subdivisions 
                  1, 4, and 6; 297F.08, subdivision 8a; 298.24, 
                  subdivision 1; 383D.74, subdivision 2; 469.1771, 
                  subdivision 1; 469.1813, subdivisions 1 and 6; 
                  477A.011, subdivision 36; 477A.03, subdivision 2; and 
                  477A.06, subdivision 1; Laws 1987, chapter 402, 
                  section 2, subdivisions 1, 4, and 5; Laws 1988, 
                  chapter 645, section 3, as amended; Laws 1997, chapter 
                  231, article 1, section 19; Laws 1999, chapter 112, 
                  section 1, subdivisions 1, 2, and 7; Laws 1999, 
                  chapter 112, section 2; Laws 1999, chapter 243, 
                  article 1, section 2; Laws 1999, chapter 243, article 
                  6, section 18; proposing coding for new law in 
                  Minnesota Statutes, chapters 273; 278; and 477A; 
                  repealing Minnesota Statutes 1998, sections 270.072, 
                  subdivision 5; 270.075, subdivisions 3 and 4; 270.083; 
                  273.127; 273.1316; 297F.09, subdivision 6; 297G.09, 
                  subdivision 5; 469.055, subdivision 5; 469.101, 
                  subdivision 21; 469.135; 469.136; 469.137; 469.138; 
                  469.139; 469.140; 469.174, subdivision 13; 469.175, 
                  subdivision 6a; and 469.176, subdivision 4a; Minnesota 
                  Rules, part 8160.0300, subpart 4. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                   ARTICLE 1 
                             2000 SALES TAX REBATE 
           Section 1.  [STATEMENT OF PURPOSE.] 
           (a) The state of Minnesota derives revenues from a variety 
        of taxes, fees, and other sources, including the state sales tax.
           (b) It is fair and reasonable to refund the existing state 
        budget surplus in the form of a rebate of nonbusiness consumer 
        sales taxes paid by individuals in calendar year 1998. 
           (c) Information concerning the amount of sales tax paid at 
        various income levels is contained in the Minnesota tax 
        incidence report, which is written by the commissioner of 
        revenue and presented to the legislature according to Minnesota 
        Statutes, section 270.0682. 
           (d) It is fair and reasonable to use information contained 
        in the Minnesota tax incidence report, updated to calendar year 
        1998, to determine the proportionate share of the sales tax 
        rebate due each eligible taxpayer since no effective or 
        practical mechanism exists for determining the amount of actual 
        sales tax paid by each eligible individual. 
           Sec. 2.  [SALES TAX REBATE.] 
           (a) An individual who: 
           (1) was eligible for a credit under Laws 1998, chapter 389, 
        article 1, section 1, and who filed for or received that credit 
        on or before November 30, 2000; or 
           (2) was a resident of Minnesota for any part of 1998, and 
        filed a 1998 Minnesota income tax return on or before November 
        30, 2000, and had a tax liability before refundable credits on 
        that return of at least $1 but did not file the claim for credit 
        authorized under Laws 1998, chapter 389, article 1, section 1, 
        as amended, and who was not allowed to be claimed as a dependent 
        on a 1998 federal income tax return filed by another person; or 
           (3) had the property taxes payable on his or her homestead 
        abated to zero under Laws 1998, chapter 383, section 20, shall 
        receive a sales tax rebate. 
           (b) The sales tax rebate for taxpayers who qualify under 
        paragraph (a) as married filing joint or head of household must 
        be computed according to the following schedule: 
             Income                                Sales Tax Rebate
         less than $2,500                                $168
         at least $2,500 but less than $5,000            $217
         at least $5,000 but less than $10,000           $231
         at least $10,000 but less than $15,000          $253
         at least $15,000 but less than $20,000          $275
         at least $20,000 but less than $25,000          $299
         at least $25,000 but less than $30,000          $312
         at least $30,000 but less than $35,000          $338
         at least $35,000 but less than $40,000          $369
         at least $40,000 but less than $45,000          $396
         at least $45,000 but less than $50,000          $417
         at least $50,000 but less than $60,000          $444
         at least $60,000 but less than $70,000          $476
         at least $70,000 but less than $80,000          $523
         at least $80,000 but less than $90,000          $562
         at least $90,000 but less than $100,000         $620
         at least $100,000 but less than $120,000        $671
         at least $120,000 but less than $140,000        $735
         at least $140,000 but less than $160,000        $795
         at least $160,000 but less than $180,000        $851
         at least $180,000 but less than $200,000        $904
         at least $200,000 but less than $400,000      $1,157
         at least $400,000 but less than $600,000      $1,522
         at least $600,000 but less than $800,000      $1,826
         at least $800,000 but less than $1,000,000    $2,093
         $1,000,000 and over                           $2,400
           (c) The sales tax rebate for individuals who qualify under 
        paragraph (a) as single or married filing separately must be 
        computed according to the following schedule: 
         Income                                    Sales Tax Rebate
         less than $2,500                                $95
         at least $2,500 but less than $5,000           $116
         at least $5,000 but less than $10,000          $137
         at least $10,000 but less than $15,000         $184
         at least $15,000 but less than $20,000         $210
         at least $20,000 but less than $25,000         $228
         at least $25,000 but less than $30,000         $238
         at least $30,000 but less than $40,000         $259
         at least $40,000 but less than $50,000         $290
         at least $50,000 but less than $70,000         $342
         at least $70,000 but less than $100,000        $435
         at least $100,000 but less than $140,000       $524
         at least $140,000 but less than $200,000       $632
         at least $200,000 but less than $400,000       $857
         at least $400,000 but less than $600,000     $1,128
         $600,000 and over                            $1,200
           (d) Individuals who were not residents of Minnesota for any 
        part of 1998 and who paid more than $10 in Minnesota sales tax 
        on nonbusiness consumer purchases in that year qualify for a 
        rebate under this paragraph only.  Qualifying nonresidents must 
        file a claim for rebate on a form prescribed by the commissioner 
        by November 30, 2000.  The claim must include receipts showing 
        the Minnesota sales tax paid and the date of the sale.  Taxes 
        paid on purchases allowed in the computation of federal taxable 
        income or reimbursed by an employer are not eligible for the 
        rebate.  The commissioner shall determine the qualifying taxes 
        paid and rebate the lesser of: 
           (1) 29.7 percent of that amount; or 
           (2) the maximum amount for which the claimant would have 
        been eligible as determined under paragraph (b) if the taxpayer 
        filed the 1998 federal income tax return as a married taxpayer 
        filing jointly or head of household, or as determined under 
        paragraph (c) for other taxpayers. 
           (e) "Income," for purposes of this section other than 
        paragraph (d), is taxable income as defined in section 63 of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1997, plus the sum of any additions to federal taxable income 
        for the taxpayer under Minnesota Statutes, section 290.01, 
        subdivision 19a, and reported on the original 1998 income tax 
        return, including subsequent adjustments to that return made 
        within the time limits specified in paragraph (l).  For an 
        individual who was a resident of Minnesota for less than the 
        entire year, the sales tax rebate equals the sales tax rebate 
        calculated under paragraph (b) or (c) multiplied by the 
        percentage determined pursuant to Minnesota Statutes, section 
        290.06, subdivision 2c, paragraph (e), as calculated on the 
        original 1998 income tax return, including subsequent 
        adjustments to that return made within the time limits specified 
        in paragraph (l).  For purposes of paragraph (d), "income" is 
        taxable income as defined in section 63 of the Internal Revenue 
        Code of 1986, as amended through December 31, 1997, and reported 
        on the taxpayer's original federal tax return for the first 
        taxable year beginning after December 31, 1997. 
           (f) Individuals who were residents of Minnesota for all of 
        1998, were not eligible for a rebate under paragraph (a), 
        attained the age of 18 on or before December 31, 1998, and 
        received in 1998 social security benefits as defined in section 
        86(d)(1) of the Internal Revenue Code of 1986, as amended 
        through December 31, 1999, are entitled to a rebate of $95.  If 
        the Social Security Administration or Railroad Retirement Board 
        is paying benefits to a recipient by electronic funds transfers 
        in 2000, the rebate under this paragraph must be paid by the 
        commissioner through electronic funds transfer to the same 
        financial institution and into the same account into which the 
        Social Security Administration or Railroad Retirement Board 
        transfers social security benefits in calendar year 2000. 
           (g) An individual who: 
           (1) was allowed to be claimed as a dependent on a 1998 
        federal income tax return filed by another person; 
           (2) would have otherwise been eligible for a rebate under 
        clause (a)(2); and 
           (3) reported earned income as defined in section 
        32(c)(2)(A)(i) of the Internal Revenue Code, 
           is eligible for a rebate under this paragraph only.  The 
        rebate under this paragraph equals 35 percent of the amount 
        allowed under the schedule in paragraph (c) based on the 
        individual's income.  For an individual who was a resident of 
        Minnesota for less than the entire year, the sales tax rebate 
        equals the rebate calculated under this paragraph multiplied by 
        the percentage determined pursuant to Minnesota Statutes, 
        section 290.06, subdivision 2c, paragraph (e), as calculated on 
        the original 1998 income tax return. 
           (h) An individual who 
           (1) was a resident of Minnesota for any part of 1998; 
           (2) was not eligible for a rebate under paragraph (a) or 
        (f); 
           (3) was not allowed to be claimed as a dependent on a 1998 
        federal income tax return by another person; and 
           (4) filed a 1998 Minnesota income tax return before 
        November 30, 2000, in order to 
           (i) claim a credit under section 290.067, 290.0671, or 
        290.0674; 
           (ii) claim a refund of withheld taxes; or 
           (iii) claim a refund of estimated taxes, 
        is eligible for a rebate under this paragraph only.  For married 
        couples filing joint returns and heads of households, the rebate 
        equals the minimum amount in paragraph (b).  For single filers 
        and married individuals filing separate returns, the rebate 
        equals the minimum amount in paragraph (c).  For an individual 
        who was a resident of Minnesota for less than the entire year, 
        the sales tax rebate equals the rebate calculated under this 
        paragraph multiplied by the percentage determined pursuant to 
        Minnesota Statutes, section 290.06, subdivision 2c, paragraph 
        (e), as calculated on the original 1998 income tax return. 
           (i) For a fiscal year taxpayer, the dates in paragraphs (a) 
        through (d) are extended one month for each month in calendar 
        year 1998 that occurred prior to the start of the individual's 
        1998 fiscal tax year. 
           (j) Before payment, the commissioner of revenue shall 
        adjust the rebate as follows: 
           the rebates calculated in paragraphs (b), (c), (d), (f), 
        (g), and (h) must be proportionately reduced to account for (i) 
        rebates under paragraphs (g) and (h), and (ii) 1998 income tax 
        returns that are filed on or after January 1, 2000, but before 
        June 1, 2000, so that the estimated amount of sales tax rebates 
        payable under paragraphs (b), (c), (d), (f), (g), and (h) on the 
        date the rebate is processed does not exceed $635,600,000.  The 
        adjustment under this paragraph is not a rule subject to 
        Minnesota Statutes, chapter 14. 
           (k) The commissioner of revenue may begin making sales tax 
        rebates by July 1, 2000.  Sales tax rebates not paid by January 
        1, 2001, bear interest at the rate specified in Minnesota 
        Statutes, section 270.75. 
           (l) A sales tax rebate shall not be adjusted based on 
        changes to a 1998 income tax return that are made by order of 
        assessment after the date the rebate is processed, or made by 
        the taxpayer that are filed with the commissioner of revenue 
        after that date. 
           (m) Individuals who filed a joint income tax return for 
        1998 shall receive a joint sales tax rebate.  After the sales 
        tax rebate has been issued, but before the check has been 
        cashed, either joint claimant may request a separate check for 
        one-half of the joint sales tax rebate.  Notwithstanding 
        anything in this section to the contrary, if prior to payment, 
        the commissioner has been notified that persons who filed a 
        joint 1998 income tax return are living at separate addresses, 
        as indicated on their 1999 income tax return or otherwise, the 
        commissioner may issue separate checks to each person.  The 
        amount payable to each person is one-half of the total joint 
        rebate. 
           (n) If a rebate is received by the estate of a deceased 
        individual after the probate estate has been closed, and if the 
        original rebate check is returned to the commissioner with a 
        copy of the decree of descent or final account of the estate, 
        social security numbers, and addresses of the beneficiaries, the 
        commissioner may issue separate checks in proportion to their 
        share in the residuary estate in the names of the residuary 
        beneficiaries of the estate. 
           (o) The sales tax rebate is a "Minnesota tax law" for 
        purposes of Minnesota Statutes, section 270B.01, subdivision 8. 
           (p) The sales tax rebate is "an overpayment of any tax 
        collected by the commissioner" for purposes of Minnesota 
        Statutes, section 270.07, subdivision 5.  For purposes of this 
        paragraph, a joint sales tax rebate is payable to each spouse 
        equally. 
           (q) If the commissioner of revenue cannot locate an 
        individual entitled to a sales tax rebate by July 1, 2002, or if 
        an individual to whom a sales tax rebate was issued has not 
        cashed the check by July 1, 2002, the right to the sales tax 
        rebate lapses and the check must be deposited in the general 
        fund. 
           (r) Individuals entitled to a sales tax rebate pursuant to 
        paragraph (a), (f), (g), or (h) but who did not receive one, and 
        individuals who receive a sales tax rebate that was not 
        correctly computed, must file a claim with the commissioner 
        before July 1, 2001, in a form prescribed by the commissioner.  
        These claims must be treated as if they are a claim for refund 
        under Minnesota Statutes, section 289A.50, subdivisions 4 and 7. 
           (s) The sales tax rebate is a refund subject to revenue 
        recapture under Minnesota Statutes, chapter 270A.  The 
        commissioner of revenue shall remit the entire refund to the 
        claimant agency, which shall, upon the request of the spouse who 
        does not owe the debt, refund one-half of the joint sales tax 
        rebate to the spouse who does not owe the debt. 
           (t) The rebate is a reduction of fiscal year 2000 sales tax 
        revenues.  The amount necessary to make the sales tax rebates 
        and interest provided in this section is appropriated from the 
        general fund to the commissioner of revenue in fiscal year 2000 
        and is available until June 30, 2002. 
           (u) If a sales tax rebate check is cashed by someone other 
        than the payee or payees of the check, and the commissioner of 
        revenue determines that the check has been forged or improperly 
        endorsed or the commissioner determines that a rebate was 
        overstated or erroneously issued, the commissioner may issue an 
        order of assessment for the amount of the check or the amount 
        the check is overstated against the person or persons cashing 
        it.  The assessment must be made within two years after the 
        check is cashed, but if cashing the check constitutes theft 
        under Minnesota Statutes, section 609.52, or forgery under 
        Minnesota Statutes, section 609.631, the assessment can be made 
        at any time.  The assessment may be appealed administratively 
        and judicially.  The commissioner may take action to collect the 
        assessment in the same manner as provided by Minnesota Statutes, 
        chapter 289A, for any other order of the commissioner assessing 
        tax. 
           (v) Notwithstanding Minnesota Statutes, sections 9.031, 
        16A.40, 16B.49, 16B.50, and any other law to the contrary, the 
        commissioner of revenue may take whatever actions the 
        commissioner deems necessary to pay the rebates required by this 
        section, and may, in consultation with the commissioner of 
        finance and the state treasurer, contract with a private vendor 
        or vendors to process, print, and mail the rebate checks or 
        warrants required under this section and receive and disburse 
        state funds to pay those checks or warrants. 
           (w) The commissioner may pay rebates required by this 
        section by electronic funds transfer to individuals who 
        requested that their 1999 individual income tax refund be paid 
        through electronic funds transfer.  The commissioner may make 
        the electronic funds transfer payments to the same financial 
        institution and into the same account as the 1999 individual 
        income tax refund. 
           Sec. 3.  [APPROPRIATIONS.] 
           (a) $1,730,600 is appropriated from the general fund to the 
        commissioner of revenue to administer the sales tax rebates in 
        this article and in article 3 for fiscal year 2000.  Any 
        unencumbered balance remaining on June 30, 2000, does not cancel 
        but is available for expenditure by the commissioner of revenue 
        until June 30, 2001.  Notwithstanding Minnesota Statutes, 
        section 16A.285, and except as provided in paragraph (b), the 
        commissioner of revenue may not use this appropriation for any 
        purpose other than administering the 1999 and 2000 sales tax 
        rebates.  This is a one-time appropriation and may not be added 
        to the agency's budget base. 
           (b) Of the amount appropriated in paragraph (a), the 
        necessary amount is transferred from the commissioner of revenue 
        to the legislative auditor, not to exceed $50,000, for an audit 
        of the appropriations to the department of revenue for 
        administration of the property tax rebates in Laws 1997, chapter 
        231, article 16, section 29; and Laws 1998, chapter 389, article 
        1, section 4; and the appropriation for administration of the 
        sales tax rebate in Laws 1999, chapter 243, article 1, section 
        3.  The purpose of this audit is to determine whether the funds 
        appropriated were expended consistent with the purpose of the 
        appropriations.  The legislative auditor shall report the 
        findings of the audit to the legislature by January 1, 2001. 
           (c) $278,000 is appropriated from the general fund to the 
        state treasurer to pay the cost of clearing sales tax rebate 
        checks through commercial banks. 
           Sec. 4.  [EFFECTIVE DATE.] 
           Sections 1 to 3 are effective the day following final 
        enactment. 

                                   ARTICLE 2 
                            AGRICULTURAL ASSISTANCE 
           Section 1.  Laws 1999, chapter 112, section 1, subdivision 
        1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
        subdivision apply to this section. 
           (b) "Acre" means an acre of effective agricultural use land 
        within the state of Minnesota as reported to the farm service 
        agency on form 156EZ. 
           (c) "Commissioner" means the commissioner of revenue. 
           (d) "Effective agricultural use land" means the land 
        suitable for growing an agricultural crop and excludes land 
        enrolled in the conservation reserve program established by 
        Minnesota Statutes, section 103F.515, or the water bank program 
        established by Minnesota Statutes, section 103F.601. 
           (e) "Farm" or "farm operation" means an agricultural 
        production operation with a unique farm number as reported on 
        form 156EZ to the farm service agency, which includes at least 
        40 acres of effective agricultural use land. 
           (f) "Farm operator" means a person who is identified as the 
        operator of a farm on form 156EZ filed with the farm service 
        agency. 
           (g) "Farm service agency" means the United States Farm 
        Service Agency. 
           (h) "Farmer" or "farmer at risk" means a person who 
        produces an agricultural crop or livestock and is reported to 
        the farm service agency as bearing a percentage of the risk for 
        the farm operation. 
           (i) "Livestock" means cattle, hogs, poultry, and sheep. 
           (j) "Livestock production facility" means a farm that has 
        produced at least a total of $10,000 in sales of unprocessed 
        livestock or unprocessed dairy products or receipts from the 
        care of another farmer's livestock as reported on schedule F or 
        form 1065 or form 1120 or 1120S of the farmer's federal income 
        tax return for either taxable years beginning in calendar year 
        1997 or 1998. 
           (k) "Person" includes individuals, fiduciaries, estates, 
        trusts, partnerships, joint ventures, and corporations. 
           EFFECTIVE DATE:  This section is effective retroactively to 
        April 23, 1999. 
           Sec. 2.  Laws 1999, chapter 112, section 1, subdivision 2, 
        is amended to read: 
           Subd. 2.  [PAYMENT TO FARMERS.] Every farm operator may 
        apply on a separate form for each farm that they operate to the 
        commissioner for payments as provided under this subdivision.  
        The payment shall be made to each farmer at risk for a farm 
        operation and shall equal $4, multiplied by the number of acres 
        of the farm operation, multiplied by the percentage of the risk 
        borne by that farmer for that farm operation.  If total payments 
        for a farm to all farmers at risk for that farm would exceed 
        $5,600, the payment to each farmer at risk shall be prorated so 
        that the total payments to all farmers at risk for that farm do 
        not exceed $5,600. 
           Applications shall be based on information reported to the 
        farm service agency for crop year 1998 by December 31, 1998.  
        The applications shall include the social security number or 
        federal employer identification number or a producer number 
        assigned by the farm service agency for each farmer and the farm 
        service agency farm number from form 156EZ.  The commissioner 
        shall prepare application forms for the payment and ensure that 
        they are available throughout the state.  The commissioner shall 
        make payments by June 30, 1999, to each eligible farmer who 
        applies by May 31, 1999, or within 30 days of the application if 
        the application is received after May 31, 1999.  In no case will 
        applications be accepted after September June 30, 1999 2000. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 3.  Laws 1999, chapter 112, section 1, subdivision 7, 
        is amended to read: 
           Subd. 7.  [CERTIFICATION AND PAYMENT.] Any person eligible 
        for the refund under subdivisions 4 to 8 shall send the 
        commissioner a copy of the certification that the taxpayer 
        received from the county auditor.  In no case will applications 
        be accepted after November June 30, 1999 2000.  The commissioner 
        shall issue a refund by July 15, 1999, to each qualifying 
        taxpayer who applied by June 15, 1999, or within 30 days of 
        receipt of the application if received after June 15, 1999. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 4.  Laws 1999, chapter 112, section 2, is amended to 
        read: 
           Sec. 2.  [APPROPRIATION.] 
           (a) The amount necessary to fund the payments required 
        under section 1, subdivisions 2 and 7, is appropriated in fiscal 
        year years 1999 and 2000 from the general fund to the 
        commissioner of revenue.  This appropriation is available until 
        June 30, 2000 2001. 
           (b) $68,000 is appropriated in fiscal year 1999 to the 
        commissioner of revenue for distribution to counties for the 
        costs of administering section 1, subdivisions 4 to 8.  This 
        appropriation is available until June 30, 2000.  The 
        distribution to counties shall be based on the number of refunds 
        received under the provisions of section 1, subdivisions 4 to 8. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 5.  [AGRICULTURAL ASSISTANCE IN 2000.] 
           Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
        subdivision apply to this section.  
           (b) "Acre" means an acre of agricultural land within a 
        qualified county as reported on the schedule of crop insurance. 
           (c) "Commissioner" means the commissioner of agriculture. 
           (d) "Crop insurance" means federal multiple peril crop and 
        revenue insurance, hail and wind crop insurance, or catastrophic 
        crop insurance. 
           (e) "Person" includes individuals, fiduciaries, estates, 
        trusts, partnerships, joint farm ventures, and corporations. 
           (f) "Qualified counties" means the counties which were 
        declared as disaster counties in Minnesota by a 1999 
        presidential declaration or which are contiguous to any one of 
        the counties which was declared a disaster county in Minnesota 
        by a 1999 presidential declaration.  The counties are:  Aitkin, 
        Becker, Beltrami, Carlton, Cass, Clay, Clearwater, Cook, Crow 
        Wing, Hubbard, Itasca, Kanabec, Kittson, Koochiching, Lake, Lake 
        of the Woods, Mahnomen, Marshall, Mille Lacs, Morrison, Norman, 
        Otter Tail, Pennington, Pine, Polk, Red Lake, Roseau, St. Louis, 
        Todd, Wadena, and Wilkin. 
           Subd. 2.  [PAYMENT.] Every person operating a farm in a 
        qualified county who has obtained crop insurance on that farm 
        may apply on a form prepared by the commissioner for payments as 
        provided under this subdivision.  The payment equals $4, 
        multiplied by the number of acres covered under the crop 
        insurance.  In no case shall total payments for any single acre 
        of land exceed $4.  
           Applications must be based on information for crop year 
        2000.  The applications must include the applicant's social 
        security number or federal employer identification number and a 
        copy of the schedule of crop insurance for crop year 2000.  In 
        the case of a married couple, the social security numbers or 
        federal employer identification numbers are required for both 
        spouses.  The commissioner shall prepare application forms for 
        the payments and ensure that they are available in the qualified 
        counties.  The commissioner shall make payments by October 1, 
        2000, to each eligible person who applies by August 15, 2000, or 
        within 45 days of the application if the application is received 
        after August 15, 2000.  In no case will applications be accepted 
        after September 30, 2000. 
           Subd. 3.  [LIMIT.] No individual or married couple may 
        receive total payments under this section in excess of $5,600 
        whether individually, through the person's pro rata ownership 
        share of another eligible farming entity, or both. 
           Subd. 4.  [PENALTIES.] If the commissioner of agriculture 
        determines that claims for payments under subdivision 2 are or 
        were excessive or were filed with fraudulent intent, the claim 
        must be disallowed in full.  If the claim has been paid, the 
        commissioner of agriculture shall notify the commissioner of 
        revenue of the relevant information, and the amount disallowed 
        must be recovered by assessment and collection under Minnesota 
        Statutes, chapters 270 and 289A.  The assessment must be made 
        within two years after a check is cashed, but if cashing a check 
        constitutes theft under Minnesota Statutes, section 609.52, or 
        forgery under Minnesota Statutes, section 609.631, the 
        assessment may be made at any time.  The assessment may be 
        appealed administratively and judicially. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 6.  [APPROPRIATION.] 
           (a) The amount necessary to fund the payments under section 
        5 is appropriated in fiscal year 2001 from the general fund to 
        the commissioner of agriculture.  This appropriation is 
        available until June 30, 2001. 
           (b) The amount necessary to administer the agricultural 
        assistance program under section 5 is appropriated from the 
        general fund to the commissioner of agriculture, provided that 
        amount shall not exceed $50,000. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 

                                   ARTICLE 3 
                             1999 SALES TAX REBATE
           Section 1.  Laws 1999, chapter 243, article 1, section 2, 
        is amended to read: 
           Sec. 2.  [SALES TAX REBATE.] 
           (a) An individual who: 
           (1) was eligible for a credit under Laws 1997, chapter 231, 
        article 1, section 16, as amended by Laws 1997, First Special 
        Session chapter 5, section 35, and Laws 1997, Third Special 
        Session chapter 3, section 11, and Laws 1998, chapter 304, and 
        Laws 1998, chapter 389, article 1, section 3, and who filed for 
        or received that credit on or before June 15, 1999; or 
           (2) was a resident of Minnesota for any part of 1997, and 
        filed a 1997 Minnesota income tax return on or before June 15, 
        1999, and had a tax liability before refundable credits on that 
        return of at least $1 but did not file the claim for credit 
        authorized under Laws 1997, chapter 231, article 1, section 16, 
        as amended, and who was not allowed to be claimed as a dependent 
        on a 1997 federal income tax return filed by another person; or 
           (3) had the property taxes payable on his or her homestead 
        abated to zero under Laws 1997, chapter 231, article 2, section 
        64, 
        shall receive a sales tax rebate. 
           (b) The sales tax rebate for taxpayers who qualify under 
        paragraph (a) as married filing joint or head of household must 
        be computed according to the following schedule: 
             Income                             Sales Tax Rebate
         less than $2,500                              $  358
         at least $2,500 but less than $5,000          $  469
         at least $5,000 but less than $10,000         $  502
         at least $10,000 but less than $15,000        $  549
         at least $15,000 but less than $20,000        $  604
         at least $20,000 but less than $25,000        $  641
         at least $25,000 but less than $30,000        $  690
         at least $30,000 but less than $35,000        $  762
         at least $35,000 but less than $40,000        $  820
         at least $40,000 but less than $45,000        $  874
         at least $45,000 but less than $50,000        $  921
         at least $50,000 but less than $60,000        $  969
         at least $60,000 but less than $70,000        $1,071
         at least $70,000 but less than $80,000        $1,162
         at least $80,000 but less than $90,000        $1,276
         at least $90,000 but less than $100,000       $1,417
         at least $100,000 but less than $120,000      $1,535
         at least $120,000 but less than $140,000      $1,682
         at least $140,000 but less than $160,000      $1,818
         at least $160,000 but less than $180,000      $1,946
         at least $180,000 but less than $200,000      $2,067
         at least $200,000 but less than $400,000      $2,644
         at least $400,000 but less than $600,000      $3,479
         at least $600,000 but less than $800,000      $4,175
         at least $800,000 but less than $1,000,000    $4,785
         $1,000,000 and over                           $5,000
           (c) The sales tax rebate for individuals who qualify under 
        paragraph (a) as single or married filing separately must be 
        computed according to the following schedule: 
              Income                                 Sales Tax Rebate
         less than $2,500                              $  204
         at least $2,500 but less than $5,000          $  249
         at least $5,000 but less than $10,000         $  299
         at least $10,000 but less than $15,000        $  408
         at least $15,000 but less than $20,000        $  464
         at least $20,000 but less than $25,000        $  496
         at least $25,000 but less than $30,000        $  515
         at least $30,000 but less than $40,000        $  570
         at least $40,000 but less than $50,000        $  649
         at least $50,000 but less than $70,000        $  776
         at least $70,000 but less than $100,000       $  958
         at least $100,000 but less than $140,000      $1,154
         at least $140,000 but less than $200,000      $1,394
         at least $200,000 but less than $400,000      $1,889
         at least $400,000 but less than $600,000      $2,485
         $600,000 and over                             $2,500
           (d) Individuals who were not residents of Minnesota for any 
        part of 1997 and who paid more than $10 in Minnesota sales tax 
        on nonbusiness consumer purchases in that year qualify for a 
        rebate under this paragraph only.  Qualifying nonresidents must 
        file a claim for rebate on a form prescribed by the commissioner 
        before the later of June 15, 1999, or 30 days after the date of 
        enactment of this act.  The claim must include receipts showing 
        the Minnesota sales tax paid and the date of the sale.  Taxes 
        paid on purchases allowed in the computation of federal taxable 
        income or reimbursed by an employer are not eligible for the 
        rebate.  The commissioner shall determine the qualifying taxes 
        paid and rebate the lesser of: 
           (1) 69.0 percent of that amount; or 
           (2) the maximum amount for which the claimant would have 
        been eligible as determined under paragraph (b) if the taxpayer 
        filed the 1997 federal income tax return as a married taxpayer 
        filing jointly or head of household, or as determined under 
        paragraph (c) for other taxpayers. 
           (e) "Income," for purposes of this section other than 
        paragraph (d), is taxable income as defined in section 63 of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1996, plus the sum of any additions to federal taxable income 
        for the taxpayer under Minnesota Statutes, section 290.01, 
        subdivision 19a, and reported on the original 1997 income tax 
        return including subsequent adjustments to that return made 
        within the time limits specified in paragraph (h).  For an 
        individual who was a resident of Minnesota for less than the 
        entire year, the sales tax rebate equals the sales tax rebate 
        calculated under paragraph (b) or (c) multiplied by the 
        percentage determined pursuant to Minnesota Statutes, section 
        290.06, subdivision 2c, paragraph (e), as calculated on the 
        original 1997 income tax return including subsequent adjustments 
        to that return made within the time limits specified in 
        paragraph (h).  For purposes of paragraph (d), "income" is 
        taxable income as defined in section 63 of the Internal Revenue 
        Code of 1986, as amended through December 31, 1996, and reported 
        on the taxpayer's original federal tax return for the first 
        taxable year beginning after December 31, 1996. 
           (f) An individual who would have been eligible for a rebate 
        under paragraph (a), clause (1) or (2), or (d) had the 
        individual filed a 1997 Minnesota income tax return or claim 
        form by June 15, 1999, who files the return or claim form by 
        June 30, 2000, is eligible for the rebate amount under paragraph 
        (b) as adjusted by paragraph (h) if the individual is married 
        filing joint or head of household and the rebate amount under 
        paragraph (c) as adjusted by paragraph (h) if the individual is 
        married filing separately or single. 
           (g) For a fiscal year taxpayer, the June 15, 1999, dates in 
        paragraphs (a) through (d) are extended one month for each month 
        in calendar year 1997 that occurred prior to the start of the 
        individual's 1997 fiscal tax year. 
           (h) Before payment, the commissioner of revenue shall 
        adjust the rebate as follows: 
           (1) the rebates calculated in paragraphs (b), (c), and (d) 
        must be proportionately reduced to account for 1997 income tax 
        returns that are filed on or after January 1, 1999, but before 
        July 1, 1999, so that the amount of sales tax rebates payable 
        under paragraphs (b), (c), and (d) does not exceed 
        $1,250,000,000; and 
           (2) the commissioner of finance shall certify by July 15, 
        1999, preliminary fiscal year 1999 general fund net nondedicated 
        revenues.  The certification shall exclude the impact of any 
        legislation enacted during the 1999 regular session.  If 
        certified net nondedicated revenues exceed the amount forecast 
        in February 1999, up to $50,000,000 of the increase shall be 
        added to the total amount rebated.  The commissioner of revenue 
        shall adjust all rebates proportionally to reflect any 
        increases.  The total amount of the rebate shall not exceed 
        $1,300,000,000. 
        The adjustments under this paragraph are not rules subject to 
        Minnesota Statutes, chapter 14. 
           (g) (i) The commissioner of revenue may begin making sales 
        tax rebates by August 1, 1999.  Sales tax rebates not paid by 
        October 1, 1999, bear interest at the rate specified in 
        Minnesota Statutes, section 270.75.  Sales tax rebates paid to 
        (1) taxpayers who file their original 1997 Minnesota income tax 
        return after June 15, 1999, and (2) qualifying nonresidents who 
        file a claim for rebate after June 15, 1999, 
        bear interest at the rate specified in Minnesota Statutes, 
        section 270.75, beginning October 1, 2000. 
           (h) (j) A sales tax rebate shall not be adjusted based on 
        changes to a 1997 income tax return that are made by order of 
        assessment after June 15, 1999, or made by the taxpayer that are 
        filed with the commissioner of revenue after June 15, 1999. 
           (i) (k) Individuals who filed a joint income tax return for 
        1997 shall receive a joint sales tax rebate.  After the sales 
        tax rebate has been issued, but before the check has been 
        cashed, either joint claimant may request a separate check for 
        one-half of the joint sales tax rebate.  Notwithstanding 
        anything in this section to the contrary, if prior to payment, 
        the commissioner has been notified that persons who filed a 
        joint 1997 income tax return are living at separate addresses, 
        as indicated on their 1998 income tax return or otherwise, the 
        commissioner may issue separate checks to each person.  The 
        amount payable to each person is one-half of the total joint 
        rebate.  If a rebate is received by the estate of a deceased 
        individual after the probate estate has been closed, and if the 
        original rebate check is returned to the commissioner with a 
        copy of the decree of descent or final account of the estate, 
        social security numbers, and addresses of the beneficiaries, the 
        commissioner may issue separate checks in proportion to their 
        share in the residuary estate in the names of the residuary 
        beneficiaries of the estate. 
           (j) (l) The sales tax rebate is a "Minnesota tax law" for 
        purposes of Minnesota Statutes, section 270B.01, subdivision 8. 
           (k) (m) The sales tax rebate is "an overpayment of any tax 
        collected by the commissioner" for purposes of Minnesota 
        Statutes, section 270.07, subdivision 5.  For purposes of this 
        paragraph, a joint sales tax rebate is payable to each spouse 
        equally. 
           (l) (n) If the commissioner of revenue cannot locate an 
        individual entitled to a sales tax rebate by July 1, 2001, or if 
        an individual to whom a sales tax rebate was issued has not 
        cashed the check by July 1, 2001, the right to the sales tax 
        rebate lapses and the check must be deposited in the general 
        fund. 
           (m) (o) Individuals entitled to a sales tax rebate pursuant 
        to paragraph (a), but who did not receive one, and individuals 
        who receive a sales tax rebate that was not correctly computed, 
        must file a claim with the commissioner before July 1, 2000, in 
        a form prescribed by the commissioner.  Taxpayers who file their 
        original 1997 Minnesota income tax return after June 15, 1999, 
        and qualifying nonresidents who file a claim for rebate after 
        June 15, 1999, and who do not receive it or who receive a sales 
        tax rebate that was not correctly computed, must file a claim 
        with the commissioner before July 1, 2001, in a form prescribed 
        by the commissioner.  These claims must be treated as if they 
        are a claim for refund under Minnesota Statutes, section 
        289A.50, subdivisions 4 and 7. 
           (n) (p) The sales tax rebate is a refund subject to revenue 
        recapture under Minnesota Statutes, chapter 270A.  The 
        commissioner of revenue shall remit the entire refund to the 
        claimant agency, which shall, upon the request of the spouse who 
        does not owe the debt, refund one-half of the joint sales tax 
        rebate to the spouse who does not owe the debt. 
           (o) (q) The rebate is a reduction of fiscal year 1999 sales 
        tax revenues.  The amount necessary to make the sales tax 
        rebates and interest provided in this section is appropriated 
        from the general fund to the commissioner of revenue in fiscal 
        year 1999 and is available until June 30, 2001. 
           (p) (r) If a sales tax rebate check is cashed by someone 
        other than the payee or payees of the check, and the 
        commissioner of revenue determines that the check has been 
        forged or improperly endorsed or the commissioner determines 
        that a rebate was overstated or erroneously issued, the 
        commissioner may issue an order of assessment for the amount of 
        the check or the amount the check is overstated against the 
        person or persons cashing it.  The assessment must be made 
        within two years after the check is cashed, but if cashing the 
        check constitutes theft under Minnesota Statutes, section 
        609.52, or forgery under Minnesota Statutes, section 609.631, 
        the assessment can be made at any time.  The assessment may be 
        appealed administratively and judicially.  The commissioner may 
        take action to collect the assessment in the same manner as 
        provided by Minnesota Statutes, chapter 289A, for any other 
        order of the commissioner assessing tax. 
           (q) (s) Notwithstanding Minnesota Statutes, sections 9.031, 
        16A.40, 16B.49, 16B.50, and any other law to the contrary, the 
        commissioner of revenue may take whatever actions the 
        commissioner deems necessary to pay the rebates required by this 
        section, and may, in consultation with the commissioner of 
        finance and the state treasurer, contract with a private vendor 
        or vendors to process, print, and mail the rebate checks or 
        warrants required under this section and receive and disburse 
        state funds to pay those checks or warrants. 
           (r) (t) The commissioner may pay rebates required by this 
        section by electronic funds transfer to individuals who 
        requested that their 1998 individual income tax refund be paid 
        through electronic funds transfer.  The commissioner may make 
        the electronic funds transfer payments to the same financial 
        institution and into the same account as the 1998 individual 
        income tax refund. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 2.  [APPLICATION OF LAW.] 
           The limitation on the total amount of rebates in Laws 1999, 
        chapter 243, article 1, section 2, paragraph (f), does not apply 
        to rebates issued under section 1.  To the extent applicable, 
        all other provisions of Laws 1999, chapter 243, article 1, 
        section 2, apply to the rebates paid under section 1.  
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 3.  [APPROPRIATION.] 
           The amount necessary to pay the rebates under section 1 is 
        appropriated from the general fund to the commissioner of 
        revenue for fiscal years 2000 and 2001. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 

                                   ARTICLE 4 
                           INCOME AND FRANCHISE TAXES 
           Section 1.  Minnesota Statutes 1998, section 289A.08, is 
        amended by adding a subdivision to read: 
           Subd. 16.  [TAX REFUND OR RETURN PREPARERS.] (a) A "tax 
        refund or return preparer," as defined in section 289A.60, 
        subdivision 13, paragraph (g), who prepared more than 500 
        Minnesota individual income tax returns for the prior calendar 
        year must file all Minnesota individual income tax returns 
        prepared for the current calendar year by electronic means. 
           (b) For tax returns prepared for the tax year beginning in 
        2001, the "500" in paragraph (a) is reduced to 250. 
           (c) For tax returns prepared for tax years beginning after 
        December 31, 2001, the "500" in paragraph (a) is reduced to 100. 
           (d) Paragraph (a) does not apply to a return if the 
        taxpayer has indicated on the return that the taxpayer did not 
        want the return filed by electronic means. 
           EFFECTIVE DATE:  This section is effective for tax returns 
        prepared for taxable years beginning after December 31, 1999. 
           Sec. 2.  Minnesota Statutes 1998, 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 $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 minimis 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 the amounts established for 
        remitting federal withheld taxes pursuant to the regulations 
        promulgated under section 6302(h) of the Internal Revenue Code, 
        the employer must remit each required deposit for wages paid 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) A third-party bulk filer as defined in section 290.92, 
        subdivision 30, paragraph (a), clause (2), who remits 
        withholding deposits 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.  
           EFFECTIVE DATE:  This section is effective for wages paid 
        after December 31, 1999. 
           Sec. 3.  Minnesota Statutes 1998, section 289A.26, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MINIMUM LIABILITY.] A corporation subject 
        to taxation under chapter 290 (excluding section 290.92) or an 
        entity subject to taxation under section 290.05, subdivision 3, 
        must make payment of estimated tax for the taxable year if its 
        tax liability so computed can reasonably be expected to exceed 
        $500, or in accordance with rules prescribed by the commissioner 
        for an affiliated group of corporations electing to file filing 
        one return as permitted under section 289A.08, subdivision 3. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 4.  Minnesota Statutes 1998, section 289A.60, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PENALTY FOR FAILURE TO PAY TAX.] (a) If a 
        tax other than a withholding or sales or use tax is not paid 
        within the time specified for payment, a penalty must be added 
        to the amount required to be shown as tax.  The penalty is three 
        percent of the tax not paid on or before the date specified for 
        payment of the tax if the failure is for not more than 30 days, 
        with an additional penalty of three 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 24 
        percent in the aggregate. 
           If an individual files a state individual income tax return 
        and pays all of the state individual income tax with the filing 
        of a return within six months of the date the return is due and 
        the amount paid by the due date of the return is at least 90 
        percent of the amount of tax due, as shown on the return, the 
        individual is presumed to have reasonable cause for the late 
        payment. 
           (b) If a withholding or sales or use tax is not paid within 
        the time specified for payment, a penalty must be added to the 
        amount required to be shown as tax.  The penalty is five percent 
        of the tax not paid on or before the date specified for payment 
        of the tax if the failure is for not more than 30 days, with an 
        additional penalty of 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 15 
        percent in the aggregate. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 5.  Minnesota Statutes 1999 Supplement, section 
        290.01, subdivision 19b, is amended to read: 
           Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
        individuals, estates, and trusts, there shall be subtracted from 
        federal taxable income: 
           (1) interest income on obligations of any authority, 
        commission, or instrumentality of the United States to the 
        extent includable in taxable income for federal income tax 
        purposes but exempt from state income tax under the laws of the 
        United States; 
           (2) if included in federal taxable income, the amount of 
        any overpayment of income tax to Minnesota or to any other 
        state, for any previous taxable year, whether the amount is 
        received as a refund or as a credit to another taxable year's 
        income tax liability; 
           (3) the amount paid to others, less the credit allowed 
        under section 290.0674, not to exceed $1,625 for each qualifying 
        child in grades kindergarten to 6 and $2,500 for each qualifying 
        child in grades 7 to 12, for tuition, textbooks, and 
        transportation of each qualifying child in attending an 
        elementary or secondary school situated in Minnesota, North 
        Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
        this state may legally fulfill the state's compulsory attendance 
        laws, which is not operated for profit, and which adheres to the 
        provisions of the Civil Rights Act of 1964 and chapter 363.  For 
        the purposes of this clause, "tuition" includes fees or tuition 
        as defined in section 290.0674, subdivision 1, clause (1).  As 
        used in this clause, "textbooks" includes books and other 
        instructional materials and equipment used in elementary and 
        secondary schools in teaching only those subjects legally and 
        commonly taught in public elementary and secondary schools in 
        this state.  Equipment expenses qualifying for deduction 
        includes expenses as defined and limited in section 290.0674, 
        subdivision 1, clause (3).  "Textbooks" does not include 
        instructional books and materials used in the teaching of 
        religious tenets, doctrines, or worship, the purpose of which is 
        to instill such tenets, doctrines, or worship, nor does it 
        include books or materials for, or transportation to, 
        extracurricular activities including sporting events, musical or 
        dramatic events, speech activities, driver's education, or 
        similar programs.  For purposes of the subtraction provided by 
        this clause, "qualifying child" has the meaning given in section 
        32(c)(3) of the Internal Revenue Code; 
           (4) contributions made in taxable years beginning after 
        December 31, 1981, and before January 1, 1985, to a qualified 
        governmental pension plan, an individual retirement account, 
        simplified employee pension, or qualified plan covering a 
        self-employed person that were included in Minnesota gross 
        income in the taxable year for which the contributions were made 
        but were deducted or were not included in the computation of 
        federal adjusted gross income, less any amount allowed to be 
        subtracted as a distribution under this subdivision or a 
        predecessor provision in taxable years that began before January 
        1, 2000.  This subtraction applies only for taxable years 
        beginning after December 31, 1999, and before January 1, 2001.  
        If an individual's subtraction under this clause exceeds the 
        individual's taxable income, the excess may be carried forward 
        to taxable years beginning after December 31, 2000, and before 
        January 1, 2002; 
           (5) income as provided under section 290.0802; 
           (6) the amount of unrecovered accelerated cost recovery 
        system deductions allowed under subdivision 19g; 
           (7) to the extent included in federal adjusted gross 
        income, income realized on disposition of property exempt from 
        tax under section 290.491; 
           (8) to the extent not deducted in determining federal 
        taxable income or used to claim the long-term care insurance 
        credit under section 290.0672, the amount paid for health 
        insurance of self-employed individuals as determined under 
        section 162(l) of the Internal Revenue Code, except that the 
        percent limit does not apply.  If the taxpayer individual 
        deducted insurance payments under section 213 of the Internal 
        Revenue Code of 1986, the subtraction under this clause must be 
        reduced by the lesser of: 
           (i) the total itemized deductions allowed under section 
        63(d) of the Internal Revenue Code, less state, local, and 
        foreign income taxes deductible under section 164 of the 
        Internal Revenue Code and the standard deduction under section 
        63(c) of the Internal Revenue Code; or 
           (ii) the lesser of (A) the amount of insurance qualifying 
        as "medical care" under section 213(d) of the Internal Revenue 
        Code to the extent not deducted under section 162(1) of the 
        Internal Revenue Code or excluded from income or (B) the total 
        amount deductible for medical care under section 213(a); 
           (9) the exemption amount allowed under Laws 1995, chapter 
        255, article 3, section 2, subdivision 3; 
           (10) to the extent included in federal taxable income, 
        postservice benefits for youth community service under section 
        124D.42 for volunteer service under United States Code, title 
        42, section 5011(d), as amended; 
           (11) to the extent not deducted in determining federal 
        taxable income by an individual who does not itemize deductions 
        for federal income tax purposes for the taxable year, an amount 
        equal to 50 percent of the excess of charitable contributions 
        allowable as a deduction for the taxable year under section 
        170(a) of the Internal Revenue Code over $500; and 
           (12) to the extent included in federal taxable income, 
        holocaust victims' settlement payments for any injury incurred 
        as a result of the holocaust, if received by an individual who 
        was persecuted for racial or religious reasons by Nazi Germany 
        or any other Axis regime or an heir of such a person; and 
           (13) for taxable years beginning before January 1, 2008, 
        the amount of the federal small ethanol producer credit allowed 
        under section 40(a)(3) of the Internal Revenue Code which is 
        included in gross income under section 87 of the Internal 
        Revenue Code. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999.  
           Sec. 6.  Minnesota Statutes 1998, section 290.01, 
        subdivision 19c, is amended to read: 
           Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
        INCOME.] For corporations, there shall be added to federal 
        taxable income: 
           (1) the amount of any deduction taken for federal income 
        tax purposes for income, excise, or franchise taxes based on net 
        income or related minimum taxes, including but not limited to 
        the tax imposed under section 290.0922, paid by the corporation 
        to Minnesota, another state, a political subdivision of another 
        state, the District of Columbia, or any foreign country or 
        possession of the United States; 
           (2) interest not subject to federal tax upon obligations 
        of:  the United States, its possessions, its agencies, or its 
        instrumentalities; the state of Minnesota or any other state, 
        any of its political or governmental subdivisions, any of its 
        municipalities, or any of its governmental agencies or 
        instrumentalities; the District of Columbia; or Indian tribal 
        governments; 
           (3) exempt-interest dividends received as defined in 
        section 852(b)(5) of the Internal Revenue Code; 
           (4) the amount of any net operating loss deduction taken 
        for federal income tax purposes under section 172 or 832(c)(10) 
        of the Internal Revenue Code or operations loss deduction under 
        section 810 of the Internal Revenue Code; 
           (5) the amount of any special deductions taken for federal 
        income tax purposes under sections 241 to 247 of the Internal 
        Revenue Code; 
           (6) losses from the business of mining, as defined in 
        section 290.05, subdivision 1, clause (a), that are not subject 
        to Minnesota income tax; 
           (7) the amount of any capital losses deducted for federal 
        income tax purposes under sections 1211 and 1212 of the Internal 
        Revenue Code; 
           (8) the amount of any charitable contributions deducted for 
        federal income tax purposes under section 170 of the Internal 
        Revenue Code; 
           (9) the exempt foreign trade income of a foreign sales 
        corporation under sections 921(a) and 291 of the Internal 
        Revenue Code; 
           (10) the amount of percentage depletion deducted under 
        sections 611 through 614 and 291 of the Internal Revenue Code; 
           (11) for certified pollution control facilities placed in 
        service in a taxable year beginning before December 31, 1986, 
        and for which amortization deductions were elected under section 
        169 of the Internal Revenue Code of 1954, as amended through 
        December 31, 1985, the amount of the amortization deduction 
        allowed in computing federal taxable income for those 
        facilities; 
           (12) the amount of any deemed dividend from a foreign 
        operating corporation determined pursuant to section 290.17, 
        subdivision 4, paragraph (g); 
           (13) the amount of any environmental tax paid under section 
        59(a) of the Internal Revenue Code; and 
           (14) the amount of a partner's pro rata share of net income 
        which does not flow through to the partner because the 
        partnership elected to pay the tax on the income under section 
        6242(a)(2) of the Internal Revenue Code. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 7.  Minnesota Statutes 1998, section 290.01, 
        subdivision 19d, is amended to read: 
           Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
        TAXABLE INCOME.] For corporations, there shall be subtracted 
        from federal taxable income after the increases provided in 
        subdivision 19c:  
           (1) the amount of foreign dividend gross-up added to gross 
        income for federal income tax purposes under section 78 of the 
        Internal Revenue Code; 
           (2) the amount of salary expense not allowed for federal 
        income tax purposes due to claiming the federal jobs credit 
        under section 51 of the Internal Revenue Code; 
           (3) any dividend (not including any distribution in 
        liquidation) paid within the taxable year by a national or state 
        bank to the United States, or to any instrumentality of the 
        United States exempt from federal income taxes, on the preferred 
        stock of the bank owned by the United States or the 
        instrumentality; 
           (4) amounts disallowed for intangible drilling costs due to 
        differences between this chapter and the Internal Revenue Code 
        in taxable years beginning before January 1, 1987, as follows: 
           (i) to the extent the disallowed costs are represented by 
        physical property, an amount equal to the allowance for 
        depreciation under Minnesota Statutes 1986, section 290.09, 
        subdivision 7, subject to the modifications contained in 
        subdivision 19e; and 
           (ii) to the extent the disallowed costs are not represented 
        by physical property, an amount equal to the allowance for cost 
        depletion under Minnesota Statutes 1986, section 290.09, 
        subdivision 8; 
           (5) the deduction for capital losses pursuant to sections 
        1211 and 1212 of the Internal Revenue Code, except that: 
           (i) for capital losses incurred in taxable years beginning 
        after December 31, 1986, capital loss carrybacks shall not be 
        allowed; 
           (ii) for capital losses incurred in taxable years beginning 
        after December 31, 1986, a capital loss carryover to each of the 
        15 taxable years succeeding the loss year shall be allowed; 
           (iii) for capital losses incurred in taxable years 
        beginning before January 1, 1987, a capital loss carryback to 
        each of the three taxable years preceding the loss year, subject 
        to the provisions of Minnesota Statutes 1986, section 290.16, 
        shall be allowed; and 
           (iv) for capital losses incurred in taxable years beginning 
        before January 1, 1987, a capital loss carryover to each of the 
        five taxable years succeeding the loss year to the extent such 
        loss was not used in a prior taxable year and subject to the 
        provisions of Minnesota Statutes 1986, section 290.16, shall be 
        allowed; 
           (6) an amount for interest and expenses relating to income 
        not taxable for federal income tax purposes, if (i) the income 
        is taxable under this chapter and (ii) the interest and expenses 
        were disallowed as deductions under the provisions of section 
        171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
        federal taxable income; 
           (7) in the case of mines, oil and gas wells, other natural 
        deposits, and timber for which percentage depletion was 
        disallowed pursuant to subdivision 19c, clause (11), a 
        reasonable allowance for depletion based on actual cost.  In the 
        case of leases the deduction must be apportioned between the 
        lessor and lessee in accordance with rules prescribed by the 
        commissioner.  In the case of property held in trust, the 
        allowable deduction must be apportioned between the income 
        beneficiaries and the trustee in accordance with the pertinent 
        provisions of the trust, or if there is no provision in the 
        instrument, on the basis of the trust's income allocable to 
        each; 
           (8) for certified pollution control facilities placed in 
        service in a taxable year beginning before December 31, 1986, 
        and for which amortization deductions were elected under section 
        169 of the Internal Revenue Code of 1954, as amended through 
        December 31, 1985, an amount equal to the allowance for 
        depreciation under Minnesota Statutes 1986, section 290.09, 
        subdivision 7; 
           (9) the amount included in federal taxable income 
        attributable to the credits provided in Minnesota Statutes 1986, 
        section 273.1314, subdivision 9, or Minnesota Statutes, section 
        469.171, subdivision 6; 
           (10) amounts included in federal taxable income that are 
        due to refunds of income, excise, or franchise taxes based on 
        net income or related minimum taxes paid by the corporation to 
        Minnesota, another state, a political subdivision of another 
        state, the District of Columbia, or a foreign country or 
        possession of the United States to the extent that the taxes 
        were added to federal taxable income under section 290.01, 
        subdivision 19c, clause (1), in a prior taxable year; 
           (11) 80 percent of royalties, fees, or other like income 
        accrued or received from a foreign operating corporation or a 
        foreign corporation which is part of the same unitary business 
        as the receiving corporation; 
           (12) income or gains from the business of mining as defined 
        in section 290.05, subdivision 1, clause (a), that are not 
        subject to Minnesota franchise tax; 
           (13) the amount of handicap access expenditures in the 
        taxable year which are not allowed to be deducted or capitalized 
        under section 44(d)(7) of the Internal Revenue Code; 
           (14) the amount of qualified research expenses not allowed 
        for federal income tax purposes under section 280C(c) of the 
        Internal Revenue Code, but only to the extent that the amount 
        exceeds the amount of the credit allowed under section 290.068; 
           (15) the amount of salary expenses not allowed for federal 
        income tax purposes due to claiming the Indian employment credit 
        under section 45A(a) of the Internal Revenue Code; and 
           (16) the amount of any refund of environmental taxes paid 
        under section 59A of the Internal Revenue Code; and 
           (17) for taxable years beginning before January 1, 2008, 
        the amount of the federal small ethanol producer credit allowed 
        under section 40(a)(3) of the Internal Revenue Code which is 
        included in gross income under section 87 of the Internal 
        Revenue Code. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 8.  Minnesota Statutes 1998, section 290.01, 
        subdivision 19e, is amended to read: 
           Subd. 19e.  [DEPRECIATION MODIFICATIONS FOR CORPORATIONS.] 
        In the case of corporations, a modification shall be made for 
        the accelerated cost recovery system.  The allowable deduction 
        for the accelerated cost recovery system is the same amount as 
        provided in section 168 of the Internal Revenue Code with the 
        following modifications.  The modifications apply to taxable 
        years beginning after December 31, 1986, and to property for 
        which deductions under the Tax Reform Act of 1986, Public Law 
        Number 99-514, are elected or apply.  The modifications in 
        paragraphs (a) and (c) do not apply to taxable years beginning 
        after December 31, 2000.  
           (a) For property placed in service after December 31, 1980, 
        and before January 1, 1987, 40 percent of the allowance pursuant 
        to section 168 of the Internal Revenue Code of 1954, as amended 
        through December 31, 1985, for 15-, 18-, or 19-year real 
        property shall not be allowed and for all other property 20 
        percent shall not be allowed.  
           (b) For property placed in service after December 31, 1987, 
        no modification shall be made. 
           (c) For property placed in service after July 31, 1986, and 
        before January 1, 1987, for which the taxpayer elects the 
        deduction pursuant to section 203 of the Tax Reform Act of 1986, 
        Public Law Number 99-514, and for property placed in service 
        after December 31, 1986, and before January 1, 1988, 15 percent 
        of the allowance pursuant to section 168 of the Internal Revenue 
        Code shall not be allowed.  
           (d) For property placed in service after December 31, 1980, 
        and before January 1, 1987, for which the taxpayer elects to use 
        the straight line method provided in section 168(b)(3), (f)(12), 
        or (j)(1) or a method provided in section 168(e)(2) of the 
        Internal Revenue Code, as amended through December 31, 1986, but 
        excluding property for which the taxpayer elects the deduction 
        pursuant to section 203 of the Tax Reform Act of 1986, Public 
        Law Number 99-514, the modifications provided in paragraph (a) 
        do not apply. 
           (e) For taxable years beginning before January 1, 2001, for 
        property subject to the modifications contained in paragraphs 
        (a) and (c) and Minnesota Statutes 1986, section 290.09, 
        subdivision 7, clause (c), the following modification shall be 
        made after the entire amount of the allowable deduction has been 
        allowed for federal tax purposes for that property under the 
        provisions of section 168 of the Internal Revenue Code.  The 
        remaining depreciable basis in those assets for Minnesota 
        purposes, including the amount of any basis reduction to reflect 
        the investment tax credit for federal purposes under sections 
        48(q) and 49(d) of the Internal Revenue Code, shall be a 
        depreciation allowance computed using the straight line method 
        over the following number of years: 
           (1) three-year property, one year; 
           (2) five-year and seven-year property, two years; 
           (3) ten-year property, five years; and 
           (4) all other property, seven years.  
           (f) For taxable years beginning after December 31, 2000, 
        the amount of any remaining modification made under paragraph 
        (a) or (c) or Minnesota Statutes 1986, section 290.09, 
        subdivision 7, clause (c), not previously deducted under 
        paragraph (e), including the amount of any basis reduction to 
        reflect the federal investment tax credit for federal purposes 
        under section 48(q) and 49(d) of the Internal Revenue Code, is a 
        depreciation allowance in the first taxable year after December 
        31, 2000. 
           (g) For taxable years beginning before January 1, 2001, and 
        for property placed in service after December 31, 1987, the 
        remaining depreciable basis for Minnesota purposes that is 
        attributable to the basis reduction for federal purposes to 
        reflect the investment tax credit under sections 48(q) and 49(d) 
        of the Internal Revenue Code, shall be allowed as a deduction in 
        the first taxable year after the entire amount of the allowable 
        deduction for that property under the provisions of section 168 
        of the Internal Revenue Code, has been allowed, except that 
        where the straight line method provided in section 168(b)(3) is 
        used, the deduction provided in this clause shall be allowed in 
        the last taxable year in which an allowance for depreciation is 
        allowed for that property.  
           (g) (h) For qualified timber property for which the 
        taxpayer made an election under section 194 of the Internal 
        Revenue Code, the remaining depreciable basis for Minnesota 
        purposes is allowed as a deduction in the first taxable year 
        after the entire allowable deduction has been allowed for 
        federal tax purposes. 
           (h) (i) The basis of property to which section 168 of the 
        Internal Revenue Code applies is its basis as provided in this 
        chapter including the modifications provided in this subdivision 
        and in Minnesota Statutes 1986, section 290.09, subdivision 7, 
        paragraph (c).  The recapture tax provisions provided in 
        sections 1245 and 1250 of the Internal Revenue Code apply but 
        must be calculated using the basis provided in the preceding 
        sentence.  
           (i) (j) The basis of an asset acquired in an exchange of 
        assets, including an involuntary conversion, is the same as its 
        federal basis under the provisions of the Internal Revenue Code, 
        except that the difference in basis due to the modifications in 
        this subdivision and in Minnesota Statutes 1986, section 290.09, 
        subdivision 7, paragraph (c), is a deduction as provided in 
        paragraph (e).  
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 9.  Minnesota Statutes 1998, 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 that is 
        located in this state or tangible personal property located, 
        including but not limited to mobile property, that is present 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 services are 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 receipts attributed to this state as provided in 
        section 290.191, subdivision 5 or 6; 
           (4) leases of tangible personal property that is located in 
        this state as defined in section 290.191, subdivision 5, 
        paragraph (g), or 6, paragraph (e); and 
           (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. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 10.  Minnesota Statutes 1998, section 290.015, 
        subdivision 3, is amended to read: 
           Subd. 3.  [EXCEPTIONS.] (a) A person is not subject to tax 
        under this chapter if the person is engaged in the business of 
        selling tangible personal property and taxation of that person 
        under this chapter is precluded by Public Law Number 86-272, 
        United States Code, title 15, sections 381 to 384, or would be 
        so precluded except for the fact that the person stored tangible 
        personal property in a state licensed facility under chapter 231.
           (b) Ownership of an interest in the following types of 
        property (including those contacts with this state reasonably 
        required to evaluate and complete the acquisition or disposition 
        of the property, the servicing of the property or the income 
        from it, the collection of income from the property, or the 
        acquisition or liquidation of collateral relating to the 
        property) shall not be a factor in determining whether the owner 
        is subject to tax under this chapter: 
           (1) an interest in a real estate mortgage investment 
        conduit, a real estate investment trust, a financial asset 
        securitization investment trust, or a regulated investment 
        company or a fund of a regulated investment company, as those 
        terms are defined in the Internal Revenue Code; 
           (2) an interest in money market instruments or securities 
        as defined in section 290.191, subdivision 6, paragraphs (c) and 
        (d); 
           (3) an interest in a loan-backed, mortgage-backed, or 
        receivable-backed security representing either:  (i) ownership 
        in a pool of promissory notes, mortgages, or receivables or 
        certificates of interest or participation in such notes, 
        mortgages, or receivables, or (ii) debt obligations or equity 
        interests which provide for payments in relation to payments or 
        reasonable projections of payments on the notes, mortgages, or 
        receivables; 
           (4) an interest acquired from a person in assets described 
        in section 290.191, subdivision 11, paragraphs (e) to (l), 
        subject to the provisions of paragraph (c), clause (2)(A); 
           (5) an interest acquired from a person in the right to 
        service, or collect income from any assets described in section 
        290.191, subdivision 11, paragraphs (e) to (l), subject to the 
        provisions of paragraph (c), clause (2)(A); 
           (6) an interest acquired from a person in a funded or 
        unfunded agreement to extend or guarantee credit whether 
        conditional, mandatory, temporary, standby, secured, or 
        otherwise, subject to the provisions of paragraph (c), clause 
        (2)(A); 
           (7) an interest of a person other than an individual, 
        estate, or trust, in any intangible, tangible, real, or personal 
        property acquired in satisfaction, whether in whole or in part, 
        of any asset embodying a payment obligation which is in default, 
        whether secured or unsecured, the ownership of an interest in 
        which would be exempt under the preceding provisions of this 
        subdivision, provided the property is disposed of within a 
        reasonable period of time; or 
           (8) amounts held in escrow or trust accounts, pursuant to 
        and in accordance with the terms of property described in this 
        subdivision. 
           (c)(1) For purposes of paragraph (b), clauses (4) to (6), 
        an interest in the type of assets or credit agreements described 
        is deemed to exist at the time the owner becomes legally 
        obligated, conditionally or unconditionally, to fund, acquire, 
        renew, extend, amend, or otherwise enter into the credit 
        arrangement. 
           (2)(A) An owner has acquired an interest from a person in 
        paragraph (b), clauses (4) to (6), assets if:  
           (i) the owner at the time of the acquisition of the asset 
        does not own, directly or indirectly, 15 percent or more of the 
        outstanding stock or in the case of a partnership 15 percent or 
        more of the capital or profit interests of the person from whom 
        it acquired the asset; 
           (ii) the person from whom the owner acquired the asset 
        regularly sells, assigns, or transfers interests in paragraph 
        (b), clauses (4) to (6), assets during the 12 calendar months 
        immediately preceding the month of acquisition to three or more 
        persons; and 
           (iii) the person from whom the owner acquired the asset 
        does not sell, assign, or transfer 75 percent or more of its 
        paragraph (b), clauses (4) to (6), assets during the 12 calendar 
        months immediately preceding the month of acquisition to the 
        owner. 
        For purposes of determining indirect ownership under item (i), 
        the owner is deemed to own all stock, capital, or profit 
        interests owned by another person if the owner directly owns 15 
        percent or more of the stock, capital, or profit interests in 
        the other person.  The owner is also deemed to own through any 
        intermediary parties all stock, capital, and profit interests 
        directly owned by a person to the extent there exists a 15 
        percent or more chain of ownership of stock, capital, or profit 
        interests between the owner, intermediary parties and the person.
           (B) If the owner of the asset is a member of the a unitary 
        group business, paragraph (b), clauses (4) to (8), do not apply 
        to an interest acquired from another member of the unitary group 
        business.  If the interest in the asset was originally acquired 
        from a nonunitary member and at that time qualified as a section 
        290.015, subdivision 3, paragraph (b), asset, the foregoing 
        limitation does not apply. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 11.  Minnesota Statutes 1998, section 290.015, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LIMITATIONS.] (a) This section does not subject 
        a trade or business to any regulation, including any tax, of any 
        local unit of government or subdivision of this state if the 
        trade or business does not own or lease tangible or real 
        property located within this state and has no employees or 
        independent contractors present in this state to assist in the 
        carrying on of the business. 
           (b) The purchase of tangible personal property or 
        intangible property or services by a person that conducts a 
        trade or business with the principal place of business outside 
        of Minnesota, referred to as the "non-Minnesota person", from a 
        person within Minnesota shall not be taken into account in 
        determining whether the non-Minnesota person is subject to the 
        taxes imposed by this chapter, except for services involving 
        either the direct solicitation of Minnesota customers or 
        relationships with Minnesota customers after sales are made.  
        This paragraph is subject to the limitations contained in 
        subdivision 3, paragraph (b), clauses (4) to (6). 
           (c) No Contact with any Minnesota financial institution by 
        any financial institution with its principal place of business 
        outside Minnesota with respect to transactions described in 
        subdivision 3, or with respect to deposits received from or by a 
        Minnesota financial institution, shall not be taken into account 
        in determining whether such a financial institution is subject 
        to the taxes imposed by this chapter.  The fact of Participation 
        by a Minnesota financial institution in a transaction which also 
        involves a borrower and a financial institution that conducts a 
        trade or business with its principal place of business outside 
        of Minnesota shall not be a factor in determining whether such 
        financial institution is subject to the taxes imposed by this 
        chapter.  This paragraph does not apply to transactions between 
        or among members of the same unitary group business. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 12.  Minnesota Statutes 1999 Supplement, section 
        290.06, subdivision 2c, is amended to read: 
           Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
        AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
        married individuals filing joint returns and surviving spouses 
        as defined in section 2(a) of the Internal Revenue Code must be 
        computed by applying to their taxable net income the following 
        schedule of rates: 
           (1) On the first $25,220 $25,680, 5.5 5.35 percent; 
           (2) On all over $25,220 $25,680, but not over 
        $100,200 $102,030, 7.25 7.05 percent; 
           (3) On all over $100,200 $102,030, 8 7.85 percent. 
           Married individuals filing separate returns, estates, and 
        trusts must compute their income tax by applying the above rates 
        to their taxable income, except that the income brackets will be 
        one-half of the above amounts.  
           (b) The income taxes imposed by this chapter upon unmarried 
        individuals must be computed by applying to taxable net income 
        the following schedule of rates: 
           (1) On the first $17,250 $17,570, 5.5 5.35 percent; 
           (2) On all over $17,250 $17,570, but not over 
        $56,680 $57,710, 7.25 7.05 percent; 
           (3) On all over $56,680 $57,710, 8 7.85 percent. 
           (c) The income taxes imposed by this chapter upon unmarried 
        individuals qualifying as a head of household as defined in 
        section 2(b) of the Internal Revenue Code must be computed by 
        applying to taxable net income the following schedule of rates: 
           (1) On the first $21,240 $21,630, 5.5 5.35 percent; 
           (2) On all over $21,240 $21,630, but not 
        over $85,350 $86,910, 7.25 7.05 percent; 
           (3) On all over $85,350 $86,910, 8 7.85 percent. 
           (d) In lieu of a tax computed according to the rates set 
        forth in this subdivision, the tax of any individual taxpayer 
        whose taxable net income for the taxable year is less than an 
        amount determined by the commissioner must be computed in 
        accordance with tables prepared and issued by the commissioner 
        of revenue based on income brackets of not more than $100.  The 
        amount of tax for each bracket shall be computed at the rates 
        set forth in this subdivision, provided that the commissioner 
        may disregard a fractional part of a dollar unless it amounts to 
        50 cents or more, in which case it may be increased to $1. 
           (e) An individual who is not a Minnesota resident for the 
        entire year must compute the individual's Minnesota income tax 
        as provided in this subdivision.  After the application of the 
        nonrefundable credits provided in this chapter, the tax 
        liability must then be multiplied by a fraction in which:  
           (1) the numerator is the individual's Minnesota source 
        federal adjusted gross income as defined in section 62 of the 
        Internal Revenue Code and increased by the additions required 
        under section 290.01, subdivision 19a, clauses (1) and (6), 
        after applying the allocation and assignability provisions of 
        section 290.081, clause (a), or 290.17; and 
           (2) the denominator is the individual's federal adjusted 
        gross income as defined in section 62 of the Internal Revenue 
        Code of 1986, increased by the amounts specified in section 
        290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
        amounts specified in section 290.01, subdivision 19b, clause (1).
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 13.  Minnesota Statutes 1999 Supplement, section 
        290.06, subdivision 2d, is amended to read: 
           Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
        taxable years beginning after December 31, 1999 2000, the 
        minimum and maximum dollar amounts for each rate bracket for 
        which a tax is imposed in subdivision 2c shall be adjusted for 
        inflation by the percentage determined under paragraph (b).  For 
        the purpose of making the adjustment as provided in this 
        subdivision all of the rate brackets provided in subdivision 2c 
        shall be the rate brackets as they existed for taxable years 
        beginning after December 31, 1998 1999, and before January 
        1, 2000 2001.  The rate applicable to any rate bracket must not 
        be changed.  The dollar amounts setting forth the tax shall be 
        adjusted to reflect the changes in the rate brackets.  The rate 
        brackets as adjusted must be rounded to the nearest $10 amount.  
        If the rate bracket ends in $5, it must be rounded up to the 
        nearest $10 amount.  
           (b) The commissioner shall adjust the rate brackets and by 
        the percentage determined pursuant to the provisions of section 
        1(f) of the Internal Revenue Code, except that in section 
        1(f)(3)(B) the word "1998 1999" shall be substituted for the 
        word "1992."  For 2000 2001, the commissioner shall then 
        determine the percent change from the 12 months ending on August 
        31, 1998 1999, to the 12 months ending on August 31, 1999 2000, 
        and in each subsequent year, from the 12 months ending on August 
        31, 1998 1999, to the 12 months ending on August 31 of the year 
        preceding the taxable year.  The determination of the 
        commissioner pursuant to this subdivision shall not be 
        considered a "rule" and shall not be subject to the 
        Administrative Procedure Act contained in chapter 14.  
           No later than December 15 of each year, the commissioner 
        shall announce the specific percentage that will be used to 
        adjust the tax rate brackets. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 14.  Minnesota Statutes 1998, section 290.06, 
        subdivision 22, is amended to read: 
           Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
        taxpayer who is liable for taxes on or measured by net income to 
        another state or province or territory of Canada, as provided in 
        paragraphs (b) through (f), upon income allocated or apportioned 
        to Minnesota, is entitled to a credit for the tax paid to 
        another state or province or territory of Canada if the tax is 
        actually paid in the taxable year or a subsequent taxable year.  
        A taxpayer who is a resident of this state pursuant to section 
        290.01, subdivision 7, clause (2), and who is subject to income 
        tax as a resident in the state of the individual's domicile is 
        not allowed this credit unless the state of domicile does not 
        allow a similar credit. 
           (b) For an individual, estate, or trust, the credit is 
        determined by multiplying the tax payable under this chapter by 
        the ratio derived by dividing the income subject to tax in the 
        other state or province or territory of Canada that is also 
        subject to tax in Minnesota while a resident of Minnesota by the 
        taxpayer's federal adjusted gross income, as defined in section 
        62 of the Internal Revenue Code, modified by the addition 
        required by section 290.01, subdivision 19a, clause (1), and the 
        subtraction allowed by section 290.01, subdivision 19b, clause 
        (1), to the extent the income is allocated or assigned to 
        Minnesota under sections 290.081 and 290.17.  
           (c) If the taxpayer is an athletic team that apportions all 
        of its income under section 290.17, subdivision 5, paragraph 
        (c), the credit is determined by multiplying the tax payable 
        under this chapter by the ratio derived from dividing the total 
        net income subject to tax in the other state or province or 
        territory of Canada by the taxpayer's Minnesota taxable income. 
           (d) The credit determined under paragraph (b) or (c) shall 
        not exceed the amount of tax so paid to the other state or 
        province or territory of Canada on the gross income earned 
        within the other state or province or territory of Canada 
        subject to tax under this chapter, nor shall the allowance of 
        the credit reduce the taxes paid under this chapter to an amount 
        less than what would be assessed if such income amount was 
        excluded from taxable net income. 
           (e) In the case of the tax assessed on a lump sum 
        distribution under section 290.032, the credit allowed under 
        paragraph (a) is the tax assessed by the other state or province 
        or territory of Canada on the lump sum distribution that is also 
        subject to tax under section 290.032, and shall not exceed the 
        tax assessed under section 290.032.  To the extent the total 
        lump sum distribution defined in section 290.032, subdivision 1, 
        includes lump sum distributions received in prior years or is 
        all or in part an annuity contract, the reduction to the tax on 
        the lump sum distribution allowed under section 290.032, 
        subdivision 2, includes tax paid to another state that is 
        properly apportioned to that distribution. 
           (f) If a Minnesota resident reported an item of income to 
        Minnesota and is assessed tax in such other state or province or 
        territory of Canada on that same income after the Minnesota 
        statute of limitations has expired, the taxpayer shall receive a 
        credit for that year under paragraph (a), notwithstanding any 
        statute of limitations to the contrary.  The claim for the 
        credit must be submitted within one year from the date the taxes 
        were paid to the other state or province or territory of 
        Canada.  The taxpayer must submit sufficient proof to show 
        entitlement to a credit. 
           (g) For the purposes of this subdivision, a resident 
        shareholder of a corporation treated as an "S" corporation under 
        section 290.9725, must be considered to have paid a tax imposed 
        on the shareholder in an amount equal to the shareholder's pro 
        rata share of any net income tax paid by the S corporation to 
        another state.  For the purposes of the preceding sentence, the 
        term "net income tax" means any tax imposed on or measured by a 
        corporation's net income. 
           (h) For the purposes of this subdivision, a resident 
        partner of an entity taxed as a partnership under the Internal 
        Revenue Code must be considered to have paid a tax imposed on 
        the partner in an amount equal to the partner's pro rata share 
        of any net income tax paid by the partnership to another state.  
        For purposes of the preceding sentence, the term "net income" 
        tax means any tax imposed on or measured by a partnership's net 
        income. 
           (i) For the purposes of this subdivision, "another state" 
        includes the District of Columbia, but does not include Puerto 
        Rico or the several territories organized by Congress. 
           (j) The limitations on the credit in paragraphs (b), (c), 
        and (d), are imposed on a state by state basis. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 15.  Minnesota Statutes 1998, section 290.06, is 
        amended by adding a subdivision to read: 
           Subd. 22a.  [NONRESIDENT'S CREDIT FOR TAXES PAID TO STATE 
        OF DOMICILE.] (a) Notwithstanding subdivision 22, a nonresident 
        who is subject to tax in this state on the gain on the sale of a 
        partnership interest, which is allocable to this state under 
        section 290.17, subdivision 2, paragraph (c), is allowed a 
        credit for the tax paid to the state of the individual's 
        domicile upon the gain in the taxable year or a subsequent 
        taxable year.  This credit is only allowed if the state of 
        domicile does not allow a credit for the tax paid to Minnesota 
        on the gain. 
           (b) For purposes of this subdivision, the credit equals the 
        tax paid to the state of domicile multiplied by the ratio 
        derived by dividing the amount of gain on the sale of the 
        partnership interest subject to tax in the other state that is 
        also subject to tax in Minnesota by the taxpayer's federal 
        adjusted gross income, as defined in section 62 of the Internal 
        Revenue Code.  The credit allowed may not reduce the taxes paid 
        under this chapter to an amount less than the tax that would 
        apply if the gain were excluded from taxable net income. 
           (c) If a nonresident taxpayer reported the gain to 
        Minnesota and is assessed tax in the state of domicile on that 
        same income after the Minnesota statute of limitations has 
        expired, the taxpayer is allowed a credit for that year, 
        notwithstanding any statute of limitations to the contrary.  The 
        claim for the credit must be submitted within one year from the 
        date the taxes were paid to the state of domicile and the 
        taxpayer must submit sufficient proof to show entitlement to a 
        credit. 
           (d) For the purposes of this subdivision, "another state" 
        includes the District of Columbia, but does not include Puerto 
        Rico or the several territories organized by Congress. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 16.  Minnesota Statutes 1998, section 290.06, is 
        amended by adding a subdivision to read: 
           Subd. 28.  [CREDIT FOR TRANSIT PASSES.] A taxpayer may take 
        a credit against the tax due under this chapter equal to 30 
        percent of the expense incurred by the taxpayer to provide 
        transit passes, for use in Minnesota, to employees of the 
        taxpayer.  As used in this subdivision, "transit pass" has the 
        meaning given in section 132(f)(5)(A) of the Internal Revenue 
        Code.  If the taxpayer purchases the transit passes from the 
        transit system operator, and resells them to the employees, the 
        credit is based on the amount of the difference between the 
        price paid for the passes by the employer and the amount charged 
        to employees. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 17.  Minnesota Statutes 1999 Supplement, section 
        290.0671, subdivision 1, is amended to read: 
           Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
        allowed a credit against the tax imposed by this chapter equal 
        to a percentage of earned income.  To receive a credit, a 
        taxpayer must be eligible for a credit under section 32 of the 
        Internal Revenue Code.  
           (b) For individuals with no qualifying children, the credit 
        equals 1.1475 1.9125 percent of the first $4,460 of earned 
        income.  The credit is reduced by 1.1475 1.9125 percent of 
        earned income or modified adjusted gross income, whichever is 
        greater, in excess of $5,570, but in no case is the credit less 
        than zero. 
           (c) For individuals with one qualifying child, the credit 
        equals 7.45 8.5 percent of the first $6,680 of earned income and 
        8.5 percent of earned income over $11,650 but less than $12,990. 
        The credit is reduced by 5.13 5.73 percent of earned income or 
        modified adjusted gross income, whichever is greater, in excess 
        of $14,560, but in no case is the credit less than zero. 
           (d) For individuals with two or more qualifying children, 
        the credit equals 8.8 ten percent of the first $9,390 of earned 
        income and 20 percent of earned income over $14,350 but less 
        than $16,230.  The credit is reduced by 9.38 10.3 percent of 
        earned income or modified adjusted gross income, whichever is 
        greater, in excess of $17,280, but in no case is the credit less 
        than zero. 
           (e) For a nonresident or part-year resident, the credit 
        must be allocated based on the percentage calculated under 
        section 290.06, subdivision 2c, paragraph (e). 
           (f) For a person who was a resident for the entire tax year 
        and has earned income not subject to tax under this chapter, the 
        credit must be allocated based on the ratio of federal adjusted 
        gross income reduced by the earned income not subject to tax 
        under this chapter over federal adjusted gross income. 
           (g) The commissioner shall construct tables showing the 
        amount of the credit at various income levels and make them 
        available to taxpayers.  The tables shall follow the schedule 
        contained in this subdivision, except that the commissioner may 
        graduate the transition between income brackets. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999, and is not contingent 
        on the enactment of sections 18 and 19. 
           Sec. 18.  Minnesota Statutes 1998, section 290.0671, 
        subdivision 6, is amended to read: 
           Subd. 6.  [APPROPRIATION.] An amount sufficient to pay the 
        refunds required by this section is appropriated to the 
        commissioner from the general fund.  This amount includes any 
        amounts appropriated to the commissioner of human services from 
        the federal Temporary Assistance for Needy Families (TANF) block 
        grant funds for transfer to the commissioner of revenue. 
           Sec. 19.  Minnesota Statutes 1998, section 290.0671, is 
        amended by adding a subdivision to read: 
           Subd. 6a.  [TANF APPROPRIATION FOR WORKING FAMILY CREDIT 
        EXPANSION.] (a) On an annual basis the commissioner of revenue, 
        with the assistance of the commissioner of human services, shall 
        calculate the value of the refundable portion of the Minnesota 
        Working Family Credit provided under this section that qualifies 
        for payment with funds from the federal Temporary Assistance for 
        Needy Families (TANF) block grant.  Of this total amount, the 
        commissioner of revenue shall estimate the portion entailed by 
        the expansion of the credit rates for individuals with 
        qualifying children over the rates provided in Laws 1999, 
        chapter 243, article 2, section 12. 
           (b) An amount sufficient to pay the refunds entailed by the 
        expansion of the credit rates for individuals with qualifying 
        children over the rates provided in Laws 1999, chapter 243, 
        article 2, section 12, as estimated in paragraph (a), is 
        appropriated to the commissioner of human services from the 
        federal Temporary Assistance for Needy Families (TANF) block 
        grant funds, for transfer to the commissioner of revenue for 
        deposit in the general fund. 
           Sec. 20.  Minnesota Statutes 1998, section 290.0672, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section, the following terms have the meanings given. 
           (b) "Long-term care insurance" means a policy that: 
           (1) qualifies for a deduction under section 213 of the 
        Internal Revenue Code, disregarding the 7.5 percent income test; 
        or meets the requirements given in section 62A.46; or provides 
        similar coverage issued under the laws of another jurisdiction; 
        and 
           (2) does not have has a lifetime long-term care benefit 
        limit of not less than $100,000; and 
           (3) includes inflation protection that meets or exceeds has 
        been offered in compliance with the inflation protection 
        requirements of the long-term care insurance model regulation 
        cited under section 7702B(g)(2)(A)(i)(x) of the Internal Revenue 
        Code section 62S.23. 
           (c) "Qualified beneficiary" means the taxpayer or the 
        taxpayer's spouse.  
           (d) "Premiums deducted in determining federal taxable 
        income" means the lesser of (1) long-term care insurance 
        premiums that qualify as deductions under section 213 of the 
        Internal Revenue Code; and (2) the total amount deductible for 
        medical care under section 213 of the Internal Revenue Code. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 21.  Minnesota Statutes 1998, section 290.0672, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CREDIT.] A taxpayer is allowed a credit against 
        the tax imposed by this chapter for long-term care insurance 
        policy premiums paid during the tax year.  The credit for each 
        policy equals the lesser of (1) 25 percent of premiums paid to 
        the extent not deducted in determining federal taxable income; 
        or (2) $100.  A taxpayer may claim a credit for only one policy 
        for each qualified beneficiary.  Only one credit may be claimed 
        by any taxpayer for each policy.  A maximum of $100 applies to 
        each qualified beneficiary.  The maximum total credit allowed 
        per year is $200 for married couples filing joint returns and 
        $100 for all other filers.  For a nonresident or part-year 
        resident, the credit determined under this section must be 
        allocated based on the percentage calculated under section 
        290.06, subdivision 2c, paragraph (e). 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 22.  Minnesota Statutes 1999 Supplement, section 
        290.0675, subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section the following terms have the meanings given. 
           (b) "Earned income" means the sum of the following: 
           (1) earned income as defined in section 32(c)(2) of the 
        Internal Revenue Code; 
           (2) to the extent included in the Minnesota taxable income, 
        income received from a retirement pension, profit-sharing, stock 
        bonus, or annuity plan; and 
           (3) to the extent included in Minnesota taxable income, 
        social security benefits as defined in section 86(d)(1) of the 
        Internal Revenue Code. 
           (c) "Taxable income" means net income as defined in section 
        290.01, subdivision 19. 
           (d) "Earned income of lesser-earning spouse" means the 
        earned income of the spouse with the lesser amount of earned 
        income as defined in paragraph (b) for the taxable year.  
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 23.  Minnesota Statutes 1999 Supplement, section 
        290.0675, subdivision 2, is amended to read: 
           Subd. 2.  [CREDIT ALLOWED.] A married couple filing a joint 
        return is allowed a credit against the tax imposed under section 
        290.06.  
           The minimum taxable income for the married couple to be 
        eligible for the credit is $25,000 $25,680, and the minimum 
        earned income in order for the couple to be eligible for the 
        credit is $14,000 $14,250 for each spouse. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 24.  Minnesota Statutes 1999 Supplement, section 
        290.0675, subdivision 3, is amended to read: 
           Subd. 3.  [CREDIT AMOUNT.] The credit amount is as shown in 
        the table in this subdivision, based on the couple's taxable 
        income for the tax year and on the earned income of the 
        lesser-earning spouse. 
                                     Credit For          Credit For
          Earned Income of           Taxable Income      Taxable Income
          Lesser Earning Spouse      $25,000-$99,999     $100,000-over
          $14,000 - $14,999          $9                  $0    
          $15,000 - $15,999          $27                 $0    
          $16,000 - $16,999          $44                 $0    
          $17,000 - $17,999          $62                 $0    
          $18,000 - $18,999          $79                 $0    
          $19,000 - $19,999          $97                 $0  
          $20,000 - $20,999          $114                $0  
          $21,000 - $21,999          $132                $0 
          $22,000 - $22,999          $149                $0
          $23,000 - $23,999          $162                $0 
          $24,000 - $24,999          $162                $0   
          $25,000 - $25,999          $162                $0  
          $26,000 - $26,999          $162                $0   
          $27,000 - $27,999          $162                $0
          $28,000 - $28,999          $162                $9
          $29,000 - $29,999          $162                $16
          $30,000 - $30,999          $162                $24
          $31,000 - $31,999          $162                $31
          $32,000 - $32,999          $162                $39
          $33,000 - $33,999          $162                $46
          $34,000 - $34,999          $162                $54
          $35,000 - $35,999          $162                $61
          $36,000 - $36,999          $162                $69
          $37,000 - $37,999          $162                $76
          $38,000 - $38,999          $162                $84
          $39,000 - $39,999          $162                $91
          $40,000 - $40,999          $162                $99
          $41,000 - $41,999          $162                $106
          $42,000 - $42,999          $162                $114
          $43,000 - $43,999          $162                $121
          $44,000 - $44,999          $162                $129
          $45,000 - $45,999          $162                $136
          $46,000 - $46,999          $162                $144
          $47,000 - $47,999          $162                $151
          $48,000 - $48,999          $162                $159
          $49,000 - $49,999          $162                $166
          $50,000 - $50,999          $162                $174
          $51,000 - $51,999          $162                $181
          $52,000 - $52,999          $162                $189
          $53,000 - $53,999          $162                $196
          $54,000 - $54,999          $162                $204
          $55,000 - $55,999          $162                $211
          $56,000 - $56,999          $162                $219
          $57,000 - $57,999          $162                $226
          $58,000 - $58,999          $162                $234
          $59,000 - $59,999          $162                $241
          $60,000 - $60,999          $162                $249
          $61,000 - $61,999          $162                $256
          $62,000 and over           $162                $261
                                     Credit For          Credit For
          Earned Income of           Taxable Income      Taxable Income
          Lesser Earning Spouse      $25,680-$102,029    $102,030-over
          $14,250 - $15,249          $7                  $0    
          $15,250 - $16,249          $24                 $0    
          $16,250 - $17,249          $41                 $0    
          $17,250 - $18,249          $58                 $0    
          $18,250 - $19,249          $75                 $0    
          $19,250 - $20,249          $92                 $0  
          $20,250 - $21,249          $109                $0  
          $21,250 - $22,249          $126                $0 
          $22,250 - $23,249          $143                $0
          $23,250 - $24,249          $160                $0 
          $24,250 - $25,249          $161                $0   
          $25,250 - $26,249          $161                $0  
          $26,250 - $27,249          $161                $0   
          $27,250 - $28,249          $161                $0
          $28,250 - $29,249          $161                $0
          $29,250 - $30,249          $161                $0
          $30,250 - $31,249          $161                $0
          $31,250 - $32,249          $161                $6
          $32,250 - $33,249          $161                $14
          $33,250 - $34,249          $161                $22
          $34,250 - $35,249          $161                $30
          $35,250 - $36,249          $161                $38
          $36,250 - $37,249          $161                $46
          $37,250 - $38,249          $161                $54
          $38,250 - $39,249          $161                $62
          $39,250 - $40,249          $161                $70
          $40,250 - $41,249          $161                $78
          $41,250 - $42,249          $161                $86
          $42,250 - $43,249          $161                $94
          $43,250 - $44,249          $161                $102
          $44,250 - $45,249          $161                $110
          $45,250 - $46,249          $161                $118
          $46,250 - $47,249          $161                $126
          $47,250 - $48,249          $161                $134
          $48,250 - $49,249          $161                $142
          $49,250 - $50,249          $161                $150
          $50,250 - $51,249          $161                $158
          $51,250 - $52,249          $161                $166
          $52,250 - $53,249          $161                $174
          $53,250 - $54,249          $161                $182
          $54,250 - $55,249          $161                $190
          $55,250 - $56,249          $161                $198
          $56,250 - $57,249          $161                $206
          $57,250 - $58,249          $161                $214
          $58,250 - $59,249          $161                $222
          $59,250 - $60,249          $161                $230
          $60,250 - $61,249          $161                $238
          $61,250 - $62,249          $161                $246
          $62,250 - $63,249          $161                $254
          $63,250 - $64,249          $161                $262
          $64,250 and over           $161                $268
           For taxable years beginning after December 31, 2000, the 
        commissioner shall update the table as necessary to provide a 
        credit that reflects the relationship between the marginal tax 
        rates imposed under section 290.06, subdivision 2c. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 25.  Minnesota Statutes 1999 Supplement, section 
        290.091, subdivision 1, is amended to read: 
           Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
        other taxes imposed by this chapter a tax is imposed on 
        individuals, estates, and trusts equal to the excess (if any) of 
           (a) an amount equal to 6.5 6.4 percent of alternative 
        minimum taxable income after subtracting the exemption amount, 
        over 
           (b) the regular tax for the taxable year. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 26.  Minnesota Statutes 1999 Supplement, section 
        290.091, subdivision 2, is amended to read: 
           Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
        this section, the following terms have the meanings given: 
           (a) "Alternative minimum taxable income" means the sum of 
        the following for the taxable year: 
           (1) the taxpayer's federal alternative minimum taxable 
        income as defined in section 55(b)(2) of the Internal Revenue 
        Code; 
           (2) the taxpayer's itemized deductions allowed in computing 
        federal alternative minimum taxable income, but excluding: 
           (i) the Minnesota charitable contribution deduction; 
           (ii) the medical expense deduction; 
           (iii) the casualty, theft, and disaster loss deduction; 
           (iv) the impairment-related work expenses of a disabled 
        person; and 
           (v) holocaust victims' settlement payments to the extent 
        allowed under section 290.01, subdivision 19b; 
           (3) for depletion allowances computed under section 613A(c) 
        of the Internal Revenue Code, with respect to each property (as 
        defined in section 614 of the Internal Revenue Code), to the 
        extent not included in federal alternative minimum taxable 
        income, the excess of the deduction for depletion allowable 
        under section 611 of the Internal Revenue Code for the taxable 
        year over the adjusted basis of the property at the end of the 
        taxable year (determined without regard to the depletion 
        deduction for the taxable year); 
           (4) to the extent not included in federal alternative 
        minimum taxable income, the amount of the tax preference for 
        intangible drilling cost under section 57(a)(2) of the Internal 
        Revenue Code determined without regard to subparagraph (E); and 
           (5) to the extent not included in federal alternative 
        minimum taxable income, the amount of interest income as 
        provided by section 290.01, subdivision 19a, clause (1); 
           less the sum of the amounts determined under the following: 
           (1) interest income as defined in section 290.01, 
        subdivision 19b, clause (1); 
           (2) an overpayment of state income tax as provided by 
        section 290.01, subdivision 19b, clause (2), to the extent 
        included in federal alternative minimum taxable income; and 
           (3) the amount of investment interest paid or accrued 
        within the taxable year on indebtedness to the extent that the 
        amount does not exceed net investment income, as defined in 
        section 163(d)(4) of the Internal Revenue Code.  Interest does 
        not include amounts deducted in computing federal adjusted gross 
        income; and 
           (4) amounts subtracted from federal taxable income as 
        provided by section 290.01, subdivision 19b, clauses (4) and (6).
           In the case of an estate or trust, alternative minimum 
        taxable income must be computed as provided in section 59(c) of 
        the Internal Revenue Code. 
           (b) "Investment interest" means investment interest as 
        defined in section 163(d)(3) of the Internal Revenue Code. 
           (c) "Tentative minimum tax" equals 6.5 6.4 percent of 
        alternative minimum taxable income after subtracting the 
        exemption amount determined under subdivision 3. 
           (d) "Regular tax" means the tax that would be imposed under 
        this chapter (without regard to this section and section 
        290.032), reduced by the sum of the nonrefundable credits 
        allowed under this chapter.  
           (e) "Net minimum tax" means the minimum tax imposed by this 
        section. 
           (f) "Minnesota charitable contribution deduction" means a 
        charitable contribution deduction under section 170 of the 
        Internal Revenue Code to or for the use of an entity described 
        in section 290.21, subdivision 3, clauses (a) to (e).  When the 
        federal deduction for charitable contributions is limited under 
        section 170(b) of the Internal Revenue Code, the allowable 
        contributions in the year of contribution are deemed to be first 
        contributions to entities described in section 290.21, 
        subdivision 3, clauses (a) to (e). 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 27.  Minnesota Statutes 1999 Supplement, section 
        290.091, subdivision 6, is amended to read: 
           Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
        is allowed against the tax imposed by this chapter on 
        individuals, trusts, and estates equal to the minimum tax credit 
        for the taxable year.  The minimum tax credit equals the 
        adjusted net minimum tax for taxable years beginning after 
        December 31, 1988, reduced by the minimum tax credits allowed in 
        a prior taxable year.  The credit may not exceed the excess (if 
        any) for the taxable year of 
           (1) the regular tax, over 
           (2) the greater of (i) the tentative alternative minimum 
        tax, or (ii) zero. 
           (b) The adjusted net minimum tax for a taxable year equals 
        the lesser of the net minimum tax or the excess (if any) of 
           (1) the tentative minimum tax, over 
           (2) 6.5 6.4 percent of the sum of 
           (i) adjusted gross income as defined in section 62 of the 
        Internal Revenue Code, 
           (ii) interest income as defined in section 290.01, 
        subdivision 19a, clause (1), 
           (iii) interest on specified private activity bonds, as 
        defined in section 57(a)(5) of the Internal Revenue Code, to the 
        extent not included under clause (ii), 
           (iv) depletion as defined in section 57(a)(1), determined 
        without regard to the last sentence of paragraph (1), of the 
        Internal Revenue Code, less 
           (v) the deductions allowed in computing alternative minimum 
        taxable income provided in subdivision 2, paragraph (a), clause 
        (2) of the first series of clauses and clauses (1), (2), and (3) 
        of the second series of clauses, and 
           (vi) the exemption amount determined under subdivision 3. 
           In the case of an individual who is not a Minnesota 
        resident for the entire year, adjusted net minimum tax must be 
        multiplied by the fraction defined in section 290.06, 
        subdivision 2c, paragraph (e).  In the case of a trust or 
        estate, adjusted net minimum tax must be multiplied by the 
        fraction defined under subdivision 4, paragraph (b). 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 1999. 
           Sec. 28.  Minnesota Statutes 1998, section 290.17, 
        subdivision 2, is amended to read: 
           Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
        BUSINESS.] The income of a taxpayer subject to the allocation 
        rules that is not derived from the conduct of a trade or 
        business must be assigned in accordance with paragraphs (a) to 
        (f):  
           (a)(1) Subject to paragraphs (a)(2) and, (a)(3), and 
        (a)(4), income from labor or personal or professional services 
        wages as defined in section 3401(a) and (f) of the Internal 
        Revenue Code is assigned to this state if, and to the extent 
        that, the labor or services are work of the employee is 
        performed within it; all other income from such sources is 
        treated as income from sources without this state.  
           Severance pay shall be considered income from labor or 
        personal or professional services. 
           (2) In the case of an individual who is a nonresident of 
        Minnesota and who is an athlete or entertainer, income from 
        compensation for labor or personal services performed within 
        this state shall be determined in the following manner:  
           (i) The amount of income to be assigned to Minnesota for an 
        individual who is a nonresident salaried athletic team employee 
        shall be determined by using a fraction in which the denominator 
        contains the total number of days in which the individual is 
        under a duty to perform for the employer, and the numerator is 
        the total number of those days spent in Minnesota.  For purposes 
        of this paragraph, off-season training activities, unless 
        conducted at the team's facilities as part of a team imposed 
        program, are not included in the total number of duty days.  
        Bonuses earned as a result of play during the regular season or 
        for participation in championship, play-off, or all-star games 
        must be allocated under the formula.  Signing bonuses are not 
        subject to allocation under the formula if they are not 
        conditional on playing any games for the team, are payable 
        separately from any other compensation, and are nonrefundable; 
        and 
           (ii) The amount of income to be assigned to Minnesota for 
        an individual who is a nonresident, and who is an athlete or 
        entertainer not listed in clause (i), for that person's athletic 
        or entertainment performance in Minnesota shall be determined by 
        assigning to this state all income from performances or athletic 
        contests in this state.  
           (3) For purposes of this section, amounts received by a 
        nonresident as "retirement income" as defined in section (b)(1) 
        of the State Income Taxation of Pension Income Act, Public Law 
        Number 104-95, are not considered income derived from carrying 
        on a trade or business or from performing personal or 
        professional services wages or other compensation for work an 
        employee performed in Minnesota, and are not taxable under this 
        chapter.  
           (4) Wages, otherwise assigned to this state under clause 
        (1) and not qualifying under clause (3), are not taxable under 
        this chapter if the following conditions are met: 
           (i) The recipient was not a resident of this state for any 
        part of the taxable year in which the wages were received; and 
           (ii) The wages are for work performed while the recipient 
        was a resident of this state. 
           (b) Income or gains from tangible property located in this 
        state that is not employed in the business of the recipient of 
        the income or gains must be assigned to this state. 
           (c) Income or gains from intangible personal property not 
        employed in the business of the recipient of the income or gains 
        must be assigned to this state if the recipient of the income or 
        gains is a resident of this state or is a resident trust or 
        estate.  
           Gain on the sale of a partnership interest is allocable to 
        this state in the ratio of the original cost of partnership 
        tangible property in this state to the original cost of 
        partnership tangible property everywhere, determined at the time 
        of the sale.  If more than 50 percent of the value of the 
        partnership's assets consists of intangibles, gain or loss from 
        the sale of the partnership interest is allocated to this state 
        in accordance with the sales factor of the partnership for its 
        first full tax period immediately preceding the tax period of 
        the partnership during which the partnership interest was sold. 
           Gain on the sale of goodwill or income from a covenant not 
        to compete that is connected with a business operating all or 
        partially in Minnesota is allocated to this state to the extent 
        that the income from the business in the year preceding the year 
        of sale was assignable to Minnesota under subdivision 3.  
           When an employer pays an employee for a covenant not to 
        compete, the income allocated to this state is in the ratio of 
        the employee's service in Minnesota in the calendar year 
        preceding leaving the employment of the employer over the total 
        services performed by the employee for the employer in that year.
           (d) Income from winnings on Minnesota pari-mutuel betting 
        tickets, the Minnesota state lottery, and lawful gambling as 
        defined in section 349.12, subdivision 24, conducted within the 
        boundaries of the state of Minnesota shall be assigned to this 
        state.  
           (e) All items of gross income not covered in paragraphs (a) 
        to (d) and not part of the taxpayer's income from a trade or 
        business shall be assigned to the taxpayer's domicile. 
           (f) For the purposes of this section, working as an 
        employee shall not be considered to be conducting a trade or 
        business. 
           EFFECTIVE DATE:  This section is effective for wages 
        received after the day following final enactment, except that to 
        the extent this section impacts an employer's requirement to 
        withhold Minnesota tax under section 290.92, subdivision 41, the 
        requirement to withhold is effective for wages paid after 
        December 31, 2000. 
           Sec. 29.  Minnesota Statutes 1998, section 290.92, 
        subdivision 3, is amended to read: 
           Subd. 3.  [WITHHOLDING, IRREGULAR PERIOD.] If payment of 
        wages is made to an employee by an employer 
           (a) With respect to a payroll period or other period, any 
        part of which is included in a payroll period or other period 
        with respect to which wages are also paid to such employees by 
        such employer, or 
           (b) Without regard to any payroll period or other period, 
        but on or prior to the expiration of a payroll period or other 
        period with respect to which wages are also paid to such 
        employee by such employer, or 
           (c) With respect to a period beginning in one and ending in 
        another calendar year, or 
           (d) Through an agent, fiduciary, or other person who also 
        has the control, receipt, custody, or disposal of or pays, the 
        wages payable by another employer to such employee. 
           The manner of withholding and the amount to be deducted and 
        withheld under subdivision 2a shall be determined in accordance 
        with rules prescribed by the commissioner under which the 
        withholding exemption allowed to the employee in any calendar 
        year shall approximate the withholding exemption allowable with 
        respect to an annual payroll period, except that if supplemental 
        wages are not paid concurrent with a payroll period the employer 
        shall withhold tax on the supplemental payment at the rate of 
        6.25 percent as if no exemption had been claimed. 
           EFFECTIVE DATE:  This section is effective for wages paid 
        after December 31, 2000. 
           Sec. 30.  Minnesota Statutes 1998, section 290.92, 
        subdivision 19, is amended to read: 
           Subd. 19.  [EMPLOYEES INCURRING NO INCOME TAX LIABILITY.] 
        (a) Notwithstanding any other provision of this section, except 
        the provisions of subdivision 5a, an employer shall is not be 
        required to deduct and withhold any tax under this chapter upon 
        a payment of from wages paid to an employee if there is in 
        effect with respect to such payment: 
           (1) the employee furnished the employer with a withholding 
        exemption certificate, in such form and containing such other 
        information as the commissioner may prescribe, furnished to the 
        employer by the employee certifying that: 
           (i) certifies the employee (a) incurred no liability for 
        income tax imposed under this chapter for the employee's 
        preceding taxable year, and; 
           (b) (ii) certifies the employee anticipates incurring no 
        liability for income tax imposed under this chapter for the 
        current taxable year; and 
           (iii) is in a form and contains any other information 
        prescribed by the commissioner; or 
           (2)(i) the employee is not a resident of Minnesota when the 
        wages were paid; and 
           (ii) the employer reasonably expects that the employer will 
        not pay the employee enough wages assignable to Minnesota under 
        section 290.17, subdivision 2, clause (a)(1), to meet the 
        nonresident requirement to file a Minnesota individual income 
        tax return for the taxable year under section 289A.08, 
        subdivision 1, paragraph (a). 
           (b) The commissioner shall by rule provide for the 
        coordination of the provisions of this subdivision with the 
        provisions of subdivision 7. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 31.  Minnesota Statutes 1998, section 290.92, 
        subdivision 28, is amended to read: 
           Subd. 28.  [PAYMENTS TO HORSERACING LICENSE HOLDERS.] 
        Effective with payments made after April 1, 1988, any holder of 
        a license issued by the Minnesota racing commission who makes a 
        payment for personal or professional services to a holder of a 
        class C license issued by the commission, except an amount paid 
        as a purse, shall deduct from the payment and withhold seven 
        6.25 percent of the amount as Minnesota withholding tax when the 
        amount paid to that individual by the same person during the 
        calendar year exceeds $600.  For purposes of the provisions of 
        this section, a payment to any person which is subject to 
        withholding under this subdivision must be treated as if the 
        payment was a wage paid by an employer to an employee.  Every 
        individual who is to receive a payment which is subject to 
        withholding under this subdivision shall furnish the license 
        holder with a statement, made under the penalties of perjury, 
        containing the name, address, and social security account number 
        of the person receiving the payment.  No withholding is required 
        if the individual presents a signed certificate from the 
        individual's employer which states that the individual is an 
        employee of that employer.  A nonresident individual who holds a 
        class C license must be treated as an athlete for purposes of 
        applying the provisions of sections 290.17, subdivision 
        2(1)(b)(ii) and 290.92, subdivision 4a.  
           EFFECTIVE DATE:  This section applies to payments made 
        after the date of final enactment. 
           Sec. 32.  Minnesota Statutes 1998, section 290.92, 
        subdivision 29, is amended to read: 
           Subd. 29.  [LOTTERY PRIZES.] Eight 7.25 percent of the 
        payment of Minnesota state lottery winnings which are subject to 
        withholding must be withheld as Minnesota withholding tax.  For 
        purposes of this subdivision, the term "winnings which are 
        subject to withholding" has the meaning given in section 
        3402(q)(3) of the Internal Revenue Code.  For purposes of the 
        provisions of this section, a payment to any person of winnings 
        which are subject to withholding must be treated as if the 
        payment was a wage paid by an employer to an employee.  Every 
        individual who is to receive a payment of winnings which are 
        subject to withholding shall furnish the state lottery with a 
        statement, made under the penalties of perjury, containing the 
        name, address, and social security account number of the person 
        receiving the payment.  The Minnesota state lottery is liable 
        for the payment of the tax required to be withheld under this 
        subdivision but is not liable to any person for the amount of 
        the payment. 
           EFFECTIVE DATE:  This section applies to winnings paid 
        after the date of final enactment. 
           Sec. 33.  Minnesota Statutes 1998, section 469.1734, 
        subdivision 4, is amended to read: 
           Subd. 4.  [INCOME TAX.] (a) Upon application by the 
        qualifying business to the city, and approval of the city, a 
        qualifying business shall receive a credit against taxes imposed 
        under chapter 290, other than the tax imposed under section 
        290.92, based on the taxable net income of the qualified 
        business attributable to the border city, but outside the border 
        city development zone, multiplied by 9.8 percent in the case of 
        a taxpayer under section 290.02, and 8.5 7.85 percent in the 
        case of a taxpayer taxable under section 290.06, subdivision 
        2c.  The attributable net income of a qualified business in the 
        border city is determined by multiplying the taxable net income 
        of the business entity, determined as if the business were a C 
        corporation, by a fraction: 
           (1) the numerator of which is: 
           (i) the ratio of the taxpayer's property factor under 
        section 290.191 located in the border city, but outside of the 
        border city development zone, for the taxable year over the 
        property factor numerator determined under section 290.191, plus 
           (ii) the ratio of the taxpayer's payroll factor under 
        section 290.191 located in the border city, but outside of the 
        border city development zone, for the taxable year over the 
        payroll factor numerator determined under section 290.191; and 
           (2) the denominator of which is two. 
           (b) The credit under this subdivision applies after any 
        credit allowed under subdivision 5. 
           (c) After any notice period required by subdivision 7, the 
        city council must determine whether granting the credit is in 
        the best interest of the city, and if it so determines, must 
        approve the granting of the credit and determine its amount. 
           (d) The credit under this subdivision may not exceed the 
        amount of the tax credit certificates received by the taxpayer 
        from the city, less any tax credit certificates used under 
        section 469.1732, subdivision 2, and subdivisions 5 and 6. 
           (e) No taxpayer may receive the credit under this 
        subdivision for more than five taxable years. 
           EFFECTIVE DATE:  This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 34.  [TAX INFORMATION SAMPLE DATA STUDY.] 
           (a) One of the goals of a reengineered income tax system is 
        to reduce the administrative burden for both taxpayers and tax 
        administrators.  In order to reduce the cost of handling paper 
        returns and to explore electronic options for taxpayer filing of 
        tax data, the department of revenue will explore eliminating the 
        requirement of Minnesota Statutes, section 289A.08, subdivision 
        11, that the federal return be attached in filing a Minnesota 
        individual income tax return.  This federal return information 
        is used for the purposes of ensuring the accurate calculation of 
        individuals' Minnesota income tax liabilities and for the 
        purposes of preparing the microdata samples under Minnesota 
        Statutes, section 270.0681. 
           (b) To ensure the continued reliability of income tax data 
        samples and to evaluate ways in which the quality of samples may 
        be improved, the commissioner shall study and evaluate 
        alternatives to requiring taxpayers to attach a copy of their 
        federal return when filing Minnesota state income tax.  The 
        study must be prepared in consultation with the coordinating 
        committee established in Minnesota Statutes, section 270.0681, 
        subdivision 2.  The study must: 
           (1) evaluate the quality of federal electronic data 
        compared to sample data prepared from returns filed with the 
        department; 
           (2) evaluate alternative sampling methodology, including 
        preselection of sampled returns, panel data, and other sampling 
        methods; and 
           (3) evaluate and test whether alternative methods can 
           (i) provide a data sample that is as accurate and reliable 
        as one prepared from federal returns that are filed with or 
        attached to Minnesota individual income tax returns; and 
           (ii) result in a data sample that will continue to be 
        available to staff of both the department of finance and the 
        legislature on the same basis as one prepared from returns 
        required to be attached to or filed with the Minnesota tax 
        returns. 
           (c) The commissioner of revenue shall report the findings 
        of the study to the house tax committee chair, the senate tax 
        committee chair, and the commissioner of finance. 
           (d) The commissioner of revenue shall, with the approval of 
        the commissioner of finance, prepare a bill for introduction in 
        the 2001 legislative session that eliminates, for some or all 
        taxpayers, the requirement that a copy of the federal return be 
        filed with the individual income tax return, if the commissioner 
        determines as a result of the study that: 
           (1) an alternative method would provide a data sample that 
        is as accurate and reliable as one prepared from federal returns 
        required to be filed with the Minnesota return; and 
           (2) the sample will continue to be available to the staff 
        of both the department of finance and the legislature on the 
        same basis as one prepared from returns required to be filed 
        with Minnesota tax returns. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 35.  [COMMISSIONER OF REVENUE; TEMPORARY POWERS.] 
           Subdivision 1.  [APPLICABILITY.] This section gives the 
        commissioner of revenue certain temporary powers.  These powers 
        apply only to taxes imposed under Minnesota Statutes, sections 
        290.032, 290.06, and 290.091 administered by the commissioner 
        under Minnesota Statutes, chapters 289A and 290. 
           Subd. 2.  [PAYMENT OF TAXES.] The commissioner may 
        establish additional due dates, applicable to certain groups of 
        taxpayers, for the payment of taxes.  Unless the commissioner 
        has the written consent of the taxpayer, the additional payment 
        dates must not require the taxpayer to pay the tax earlier than 
        the payment dates provided by statute or rule.  The commissioner 
        may accept various forms of payment, including, but not limited 
        to, financial transaction cards and electronic funds transfer.  
           Subd. 3.  [FILING OF RETURN.] The commissioner may 
        establish additional due dates, applicable to certain groups of 
        taxpayers, for the filing of tax returns.  Unless the 
        commissioner has the written consent of the taxpayer, the return 
        due date must not be earlier than the due date provided by 
        statute or rule.  In conducting pilot studies, the commissioner 
        may use tax return forms with varying formats, accept electronic 
        filed returns, and waive the taxpayer signature requirements.  
           Subd. 4.  [AGREEMENTS.] The commissioner may enter written 
        agreements with taxpayers that provide for the payment of taxes 
        or the filing of returns at dates earlier than provided by 
        statute or rule.  The commissioner and the taxpayer may also 
        agree in writing to other changes from the statutory or rule 
        requirements related to the administration of these taxes.  If 
        the taxpayer agrees to pay taxes at a date earlier than that 
        provided by statute, the commissioner may negotiate payments to 
        the taxpayer to compensate in part or in full for the loss 
        incurred as a result of the accelerated payment.  
           Subd. 5.  [PROCEDURE; APPROVAL.] Pilot studies proposed 
        under these authorities must be presented to the chairs of the 
        house of representatives tax committee and the senate committee 
        on taxes and to the chairs of the committees on state government 
        finance of the house of representatives and the senate.  No 
        study may be undertaken without the approval of both tax 
        committee chairs.  If either chair fails to respond within 15 
        days after the proposal is presented, that chair is considered 
        to have approved the study.  If the study is approved, the 
        commissioner shall initially seek participation on a voluntary 
        basis from within the targeted taxpayer group. 
           Subd. 6.  [EXPIRATION DATE.] This section expires June 30, 
        2002, and all pilot projects under this section must be 
        completed by June 30, 2002. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 36.  [STUDY OF TAXPAYER ASSISTANCE SERVICES.] 
           The commissioner of revenue shall study the availability of 
        taxpayer assistance services throughout the state and provide a 
        written report to the legislature, in compliance with Minnesota 
        Statutes, sections 3.195 and 3.197, by January 15, 2001.  
        "Taxpayer assistance services" means accounting and tax 
        preparation services provided by volunteers to low-income and 
        disadvantaged Minnesota residents to help them file federal and 
        state income tax returns and Minnesota property tax refund 
        claims and to provide personal representation before the 
        department of revenue and the Internal Revenue Service.  The 
        study must evaluate: 
           (1) ways of establishing a measure to evaluate the 
        effectiveness of volunteers in achieving the department's 
        mission of achieving compliance with the tax laws; 
           (2) the geographic distribution and number of volunteer tax 
        preparation sites throughout the state, in comparison to the 
        distribution of low-income, elderly, and nonnative English 
        speakers; 
           (3) the income, language skills, and age-related screening 
        criteria used at volunteer tax preparations sites in determining 
        Minnesota residents' eligibility for taxpayer assistance 
        services; 
           (4) the level of training, support, and coordination that 
        the department provides to volunteers and the optimal level of 
        training for volunteers to have an adequate understanding of 
        Minnesota's tax forms; 
           (5) the effectiveness of grants awarded under Laws 1999, 
        chapter 243, article 2, section 31; and 
           (6) the availability of volunteers to assist taxpayers in 
        preparing Minnesota property tax refund claims after April 15. 
           The commissioner must invite testimony from organizations 
        and government entities concerned with taxpayer assistance, both 
        paid and volunteer.  Organizations receiving grants under Laws 
        1999, chapter 243, article 2, section 31, must provide 
        information necessary to the completion of the study to the 
        commissioner on request. 
           The study must consider the role of current economic 
        conditions, including the state unemployment rate, in training 
        and retaining qualified volunteers, the adequacy of current 
        taxpayer assistance services, the role of the department of 
        revenue in assisting low-income, elderly, and nonnative English 
        speakers, and must recommend ways for improving the availability 
        and the quality of taxpayer assistance services. 
           Sec. 37.  [REPORT ON ELECTRONIC CHECKOFF.] 
           The commissioner of revenue must report by February 1, 
        2001, to the committees on taxes of the house of representatives 
        and the senate on implementing an electronic income tax checkoff 
        program.  The program must be designed to allow an individual 
        who files an income tax return electronically to designate that 
        a portion of the individual's tax liability reported on the 
        return be deposited in one or more accounts established by law 
        and dedicated to particular programs or purposes. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 

                                   ARTICLE 5 
                                 PROPERTY TAXES 
           Section 1.  Minnesota Statutes 1998, section 270.072, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ASSESSMENT OF FLIGHT PROPERTY.] The flight 
        property of all airline companies operating in Minnesota shall 
        be assessed and appraised annually by the commissioner with 
        reference to its value on January 2 of the assessment year in 
        the manner prescribed by sections 270.071 to 270.079.  Aircraft 
        with a gross weight of less than 30,000 pounds and used on 
        intermittent or irregularly timed flights shall be excluded from 
        the provisions of sections 270.071 to 270.079. 
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and thereafter. 
           Sec. 2.  Minnesota Statutes 1998, section 270.072, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [AIRFLIGHT PROPERTY TAX LIEN.] The tax imposed 
        under sections 270.071 to 270.079 is a lien on all real and 
        personal property within this state of the airline company in 
        whose name the property is assessed.  For purposes of sections 
        270.65 and 270.69, the date of assessment for the tax imposed 
        under sections 270.071 to 270.079 is January 2 of each year for 
        the taxes payable in the following year.  
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and thereafter. 
           Sec. 3.  Minnesota Statutes 1999 Supplement, section 
        272.02, subdivision 39, is amended to read: 
           Subd. 39.  [ECONOMIC DEVELOPMENT; PUBLIC PURPOSE.] The 
        holding of property by a political subdivision of the state for 
        later resale for economic development purposes shall be 
        considered a public purpose in accordance with subdivision 8 for 
        a period not to exceed eight years, except that for property 
        located in a city of 5,000 population or under that is located 
        outside of the metropolitan area as defined in section 473.121, 
        subdivision 2, the period must not exceed 15 years.  
           The holding of property by a political subdivision of the 
        state for later resale (1) which is purchased or held for 
        housing purposes, or (2) which meets the conditions described in 
        section 469.174, subdivision 10, shall be considered a public 
        purpose in accordance with subdivision 8.  
           The governing body of the political subdivision which 
        acquires property which is subject to this subdivision shall 
        after the purchase of the property certify to the city or county 
        assessor whether the property is held for economic development 
        purposes or housing purposes, or whether it meets the conditions 
        of section 469.174, subdivision 10.  If the property is acquired 
        for economic development purposes and buildings or other 
        improvements are constructed after acquisition of the property, 
        and if more than one-half of the floor space of the buildings or 
        improvements which is available for lease to or use by a private 
        individual, corporation, or other entity is leased to or 
        otherwise used by a private individual, corporation, or other 
        entity the provisions of this subdivision shall not apply to the 
        property.  This subdivision shall not create an exemption from 
        section 272.01, subdivision 2; 272.68; 273.19; or 469.040, 
        subdivision 3; or other provision of law providing for the 
        taxation of or for payments in lieu of taxes for publicly held 
        property which is leased, loaned, or otherwise made available 
        and used by a private person. 
           EFFECTIVE DATE:  This section is effective for taxes levied 
        in 2000, payable in 2001, and thereafter. 
           Sec. 4.  Minnesota Statutes 1999 Supplement, section 
        272.02, is amended by adding a subdivision to read: 
           Subd. 44.  [ELECTRIC GENERATION FACILITY PERSONAL 
        PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
        machinery and other personal property which is part of a 
        simple-cycle combustion-turbine electric generation facility 
        that exceeds 250 megawatts of installed capacity and that meets 
        the requirements of this subdivision is exempt.  At the time of 
        construction, the facility must:  
           (1) utilize natural gas as a primary fuel; 
           (2) be located within 20 miles of parallel existing 16-inch 
        and 12-inch (outside diameter) natural gas pipelines and a 
        345-kilovolt high-voltage electric transmission line; and 
           (3) be designed to provide peaking, emergency backup, or 
        contingency services, and have received a certificate of need 
        under section 216B.243 demonstrating demand for its capacity.  
           Construction of the facility must be commenced after 
        January 1, 2000, and before January 1, 2004.  Property eligible 
        for this exemption does not include electric transmission lines 
        and interconnections or gas pipelines and interconnections 
        appurtenant to the property or the facility. 
           EFFECTIVE DATE:  This section is effective for assessment 
        year 2001 and thereafter.  
           Sec. 5.  Minnesota Statutes 1998, section 272.115, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIREMENT.] Except as otherwise provided 
        in subdivision 5, 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.  The information required to be 
        shown on the certificate of value is limited to the information 
        required as of the date of the acknowledgment on the deed or 
        other document to be recorded. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 6.  Minnesota Statutes 1998, section 273.111, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REQUIREMENTS.] (a) Real estate consisting of ten 
        acres or more or a nursery or greenhouse, and qualifying for 
        classification as class 1b, 2a, or 2b under section 273.13, 
        subdivision 23, paragraph (d), shall be entitled to valuation 
        and tax deferment under this section only if it is primarily 
        devoted to agricultural use, and meets the qualifications in 
        subdivision 6, and either:  
           (1) is the homestead of the owner, or of a surviving 
        spouse, child, or sibling of the owner or is real estate which 
        is farmed with the real estate which contains the homestead 
        property; or 
           (2) has been in possession of the applicant, the 
        applicant's spouse, parent, or sibling, or any combination 
        thereof, for a period of at least seven years prior to 
        application for benefits under the provisions of this section, 
        or is real estate which is farmed with the real estate which 
        qualifies under this clause and is within two four townships or 
        cities or combination thereof from the qualifying real estate; 
        or 
           (3) is the homestead of a shareholder in a family farm 
        corporation as defined in section 500.24, notwithstanding the 
        fact that legal title to the real estate may be held in the name 
        of the family farm corporation; or 
           (4) is in the possession of a nursery or greenhouse or an 
        entity owned by a proprietor, partnership, or corporation which 
        also owns the nursery or greenhouse operations on the parcel or 
        parcels. 
           (b) Valuation of real estate under this section is limited 
        to parcels the ownership of which is in noncorporate entities 
        except for:  
           (1) family farm corporations organized pursuant to section 
        500.24; and 
           (2) corporations that derive 80 percent or more of their 
        gross receipts from the wholesale or retail sale of 
        horticultural or nursery stock.  
           Corporate entities who previously qualified for tax 
        deferment pursuant to this section and who continue to otherwise 
        qualify under subdivisions 3 and 6 for a period of at least 
        three years following the effective date of Laws 1983, chapter 
        222, section 8, will not be required to make payment of the 
        previously deferred taxes, notwithstanding the provisions of 
        subdivision 9.  Special assessments are payable at the end of 
        the three-year period or at time of sale, whichever comes first. 
           (c) Land that previously qualified for tax deferment under 
        this section and no longer qualifies because it is not primarily 
        used for agricultural purposes but would otherwise qualify under 
        subdivisions 3 and 6 for a period of at least three years will 
        not be required to make payment of the previously deferred 
        taxes, notwithstanding the provisions of subdivision 9.  Sale of 
        the land prior to the expiration of the three-year period 
        requires payment of deferred taxes as follows:  sale in the year 
        the land no longer qualifies requires payment of the current 
        year's deferred taxes plus payment of deferred taxes for the two 
        prior years; sale during the second year the land no longer 
        qualifies requires payment of the current year's deferred taxes 
        plus payment of the deferred taxes for the prior year; and sale 
        during the third year the land no longer qualifies requires 
        payment of the current year's deferred taxes.  Deferred taxes 
        shall be paid even if the land qualifies pursuant to subdivision 
        11a.  When such property is sold or no longer qualifies under 
        this paragraph, or at the end of the three-year period, 
        whichever comes first, all deferred special assessments plus 
        interest are payable in equal installments spread over the time 
        remaining until the last maturity date of the bonds issued to 
        finance the improvement for which the assessments were levied.  
        If the bonds have matured, the deferred special assessments plus 
        interest are payable within 90 days.  The provisions of section 
        429.061, subdivision 2, apply to the collection of these 
        installments.  Penalties are not imposed on any such special 
        assessments if timely paid. 
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2000 and thereafter. 
           Sec. 7.  Minnesota Statutes 1999 Supplement, 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 held by a trustee, beneficiary, or grantor of 
        under a trust is not disqualified from receiving eligible for 
        homestead benefits classification 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 
        must use the property for the purposes of the homestead, and 
        must apply to the assessor, both by the deadlines given in 
        subdivision 9.  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 (g), "relative" 
        means a parent, stepparent, child, stepchild, grandparent, 
        grandchild, brother, sister, uncle, aunt, nephew, or niece.  
        This relationship may be by blood or marriage.  Property that 
        has been classified as seasonal recreational residential 
        property at any time during which it has been owned by the 
        current owner or spouse of the current owner will not be 
        reclassified as a homestead unless it is occupied as a homestead 
        by the owner; this 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, grandson, granddaughter, father, or mother 
        of the owner of the agricultural property or a son, or daughter, 
        grandson, or granddaughter 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, or (4) 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 owner's spouse who previously occupied the 
        residence with the owner if the absence of the owner is due to 
        one of the exceptions provided in this paragraph. 
           (f) The assessor must not deny homestead treatment in whole 
        or in part if: 
           (1) in the case of a property owner who is not married, the 
        owner is absent due to residence in a nursing home or boarding 
        care facility and the property is not otherwise occupied; or 
           (2) in the case of a property owner who is married, the 
        owner or the owner's spouse or both are absent due to residence 
        in a nursing home or boarding care facility and the property is 
        not occupied or is occupied only by the owner's spouse. 
           (g) 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. 
           (h) If residential or agricultural real estate is occupied 
        and used for purposes of a homestead by a child of a deceased 
        owner and the property is subject to jurisdiction of probate 
        court, the child shall receive relative homestead classification 
        under paragraph (c) or (d) to the same extent they would be 
        entitled to it if the owner was still living, until the probate 
        is completed.  For purposes of this paragraph, "child" includes 
        a relationship by blood or by marriage. 
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and thereafter. 
           Sec. 8.  Minnesota Statutes 1999 Supplement, section 
        273.124, subdivision 8, is amended to read: 
           Subd. 8.  [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 
        CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 
        PARTNERSHIP OR LEASED TO FAMILY FARM CORPORATION OR 
        PARTNERSHIP.] (a) Each family farm corporation, each joint farm 
        venture, each limited liability company, and each partnership 
        operating a family farm is entitled to class 1b under section 
        273.13, subdivision 22, paragraph (b), or class 2a assessment 
        for one homestead occupied by a shareholder, member, or partner 
        thereof who is residing on the land except as provided in 
        subdivision 14, paragraph (g), and actively engaged in farming 
        of the land owned by the corporation, joint farm venture, 
        limited liability company, or partnership.  Homestead treatment 
        applies even if legal title to the property is in the name of 
        the corporation, joint farm venture, limited liability company, 
        or partnership and not in the name of the person residing on it. 
           "Family farm corporation," and "family farm," and "farm 
        partnership" have the meanings given in section 500.24, except 
        that the number of allowable shareholders or partners under this 
        subdivision shall not exceed 12.  "Limited liability company" 
        has the meaning contained in section 322B.03, subdivision 28.  
        "Joint farm venture" means a cooperative agreement among two or 
        more farm enterprises authorized to operate farm land under 
        section 500.24. 
           (b) In addition to property specified in paragraph (a), any 
        other residences owned by corporations, joint farm ventures, 
        limited liability companies, or partnerships described in 
        paragraph (a) which are located on agricultural land and 
        occupied as homesteads by shareholders, members, or partners who 
        are actively engaged in farming on behalf of the corporation, 
        joint farm venture, limited liability company, or partnership 
        must also be assessed as class 2a property or as class 1b 
        property under section 273.13, subdivision 22, paragraph (b). 
           (c) Agricultural property owned by a shareholder of a 
        family farm corporation or joint farm venture, as defined in 
        paragraph (a), or by a member of a limited liability company, or 
        by a partner in a partnership operating a family farm and leased 
        to the family farm corporation by the shareholder, or to a 
        member of a limited liability company, or to the partnership by 
        the partner, is eligible for classification as class 1b under 
        section 273.13, subdivision 22, paragraph (b), or class 2a under 
        section 273.13, subdivision 23, paragraph (a), if the owner is 
        actually residing on the property except as provided in 
        subdivision 14, paragraph (g), and is actually engaged in 
        farming the land on behalf of the corporation, joint farm 
        venture, limited liability company, or partnership.  This 
        paragraph applies without regard to any legal possession rights 
        of the family farm corporation, joint farm venture, limited 
        liability company, or partnership operating a family farm under 
        the lease. 
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and thereafter except that the references to a 
        limited liability company or a member of a limited liability 
        company are effective only if H.F. No. 3312 is enacted during 
        the 2000 session. 
           Sec. 9.  Minnesota Statutes 1999 Supplement, section 
        273.124, subdivision 14, is amended to read: 
           Subd. 14.  [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 
        (a) Real estate of less than ten acres that is the homestead of 
        its owner must be classified as class 2a under section 273.13, 
        subdivision 23, paragraph (a), if:  
           (1) the parcel on which the house is located is contiguous 
        on at least two sides to (i) agricultural land, (ii) land owned 
        or administered by the United States Fish and Wildlife Service, 
        or (iii) land administered by the department of natural 
        resources on which in lieu taxes are paid under sections 477A.11 
        to 477A.14; 
           (2) its owner also owns a noncontiguous parcel of 
        agricultural land that is at least 20 acres; 
           (3) the noncontiguous land is located not farther than four 
        townships or cities, or a combination of townships or cities 
        from the homestead; and 
           (4) the agricultural use value of the noncontiguous land 
        and farm buildings is equal to at least 50 percent of the market 
        value of the house, garage, and one acre of land. 
           Homesteads initially classified as class 2a under the 
        provisions of this paragraph shall remain classified as class 
        2a, irrespective of subsequent changes in the use of adjoining 
        properties, as long as the homestead remains under the same 
        ownership, the owner owns a noncontiguous parcel of agricultural 
        land that is at least 20 acres, and the agricultural use value 
        qualifies under clause (4).  Homestead classification under this 
        paragraph is limited to property that qualified under this 
        paragraph for the 1998 assessment. 
           (b)(i) Agricultural property consisting of at least 40 
        acres shall be classified as the owner's homestead, to the same 
        extent as other agricultural homestead property, if all of the 
        following criteria are met: 
           (1) the owner, or the owner's son or daughter, is actively 
        farming the agricultural property; 
           (2) the owner of the agricultural property is a Minnesota 
        resident, and if the owner's son or daughter is actively farming 
        the agricultural property under clause (1), that person must 
        also be a Minnesota resident; 
           (3) neither the owner nor the spouse of the agricultural 
        property owner claims another agricultural homestead in 
        Minnesota; and 
           (4) the owner does not live farther than four townships or 
        cities, or a combination of four townships or cities, from the 
        agricultural property, and if the owner's son or daughter is 
        actively farming the agricultural property under clause (1), 
        that person must also live within the four townships or cities, 
        or combination of four townships or cities from the agricultural 
        property. 
           The relationship under this paragraph may be either by 
        blood or marriage. 
           (ii) Property containing the residence of an owner who owns 
        qualified property under clause (i) shall be classified as part 
        of the owner's agricultural homestead, if that property is also 
        used for noncommercial storage or drying of agricultural crops. 
           (c) Except as provided in paragraph (e), noncontiguous land 
        shall be included as part of a homestead under section 273.13, 
        subdivision 23, paragraph (a), only if the homestead is 
        classified as class 2a and the detached land is located in the 
        same township or city, or not farther than four townships or 
        cities or combination thereof from the homestead.  Any taxpayer 
        of these noncontiguous lands must notify the county assessor 
        that the noncontiguous land is part of the taxpayer's homestead, 
        and, if the homestead is located in another county, the taxpayer 
        must also notify the assessor of the other county. 
           (d) Agricultural land used for purposes of a homestead and 
        actively farmed by a person holding a vested remainder interest 
        in it must be classified as a homestead under section 273.13, 
        subdivision 23, paragraph (a).  If agricultural land is 
        classified class 2a, any other dwellings on the land used for 
        purposes of a homestead by persons holding vested remainder 
        interests who are actively engaged in farming the property, and 
        up to one acre of the land surrounding each homestead and 
        reasonably necessary for the use of the dwelling as a home, must 
        also be assessed class 2a. 
           (e) Agricultural land and buildings that were class 2a 
        homestead property under section 273.13, subdivision 23, 
        paragraph (a), for the 1997 assessment shall remain classified 
        as agricultural homesteads for subsequent assessments if:  
           (1) the property owner abandoned the homestead dwelling 
        located on the agricultural homestead as a result of the April 
        1997 floods; 
           (2) the property is located in the county of Polk, Clay, 
        Kittson, Marshall, Norman, or Wilkin; 
           (3) the agricultural land and buildings remain under the 
        same ownership for the current assessment year as existed for 
        the 1997 assessment year and continue to be used for 
        agricultural purposes; 
           (4) the dwelling occupied by the owner is located in 
        Minnesota and is within 30 miles of one of the parcels of 
        agricultural land that is owned by the taxpayer; and 
           (5) the owner notifies the county assessor that the 
        relocation was due to the 1997 floods, and the owner furnishes 
        the assessor any information deemed necessary by the assessor in 
        verifying the change in dwelling.  Further notifications to the 
        assessor are not required if the property continues to meet all 
        the requirements in this paragraph and any dwellings on the 
        agricultural land remain uninhabited. 
           (f) Agricultural land and buildings that were class 2a 
        homestead property under section 273.13, subdivision 23, 
        paragraph (a), for the 1998 assessment shall remain classified 
        agricultural homesteads for subsequent assessments if: 
           (1) the property owner abandoned the homestead dwelling 
        located on the agricultural homestead as a result of damage 
        caused by a March 29, 1998, tornado; 
           (2) the property is located in the county of Blue Earth, 
        Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 
           (3) the agricultural land and buildings remain under the 
        same ownership for the current assessment year as existed for 
        the 1998 assessment year; 
           (4) the dwelling occupied by the owner is located in this 
        state and is within 50 miles of one of the parcels of 
        agricultural land that is owned by the taxpayer; and 
           (5) the owner notifies the county assessor that the 
        relocation was due to a March 29, 1998, tornado, and the owner 
        furnishes the assessor any information deemed necessary by the 
        assessor in verifying the change in homestead dwelling.  For 
        taxes payable in 1999, the owner must notify the assessor by 
        December 1, 1998.  Further notifications to the assessor are not 
        required if the property continues to meet all the requirements 
        in this paragraph and any dwellings on the agricultural land 
        remain uninhabited. 
           (g) Agricultural property consisting of at least 40 acres 
        of a family farm corporation, joint farm venture, limited 
        liability company, or partnership as described under subdivision 
        8 shall be classified homestead, to the same extent as other 
        agricultural homestead property, if all of the following 
        criteria are met: 
           (1) the shareholder, member, or partner is actively farming 
        the agricultural property; 
           (2) the shareholder, member, or partner of the agricultural 
        property is a Minnesota resident; 
           (3) neither the shareholder, member, or partner, nor the 
        spouse of the shareholder, member, or partner claims another 
        agricultural homestead in Minnesota; and 
           (4) the shareholder, member, or partner does not live 
        farther than four townships or cities, or a combination of four 
        townships or cities, from the agricultural property. 
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and thereafter except that the references to a 
        limited liability company or a member of a limited liability 
        company are effective only if H.F. No. 3312 is enacted during 
        the 2000 session. 
           Sec. 10.  Minnesota Statutes 1998, section 273.124, is 
        amended by adding a subdivision to read: 
           Subd. 21.  [TRUST PROPERTY; HOMESTEAD.] Real property held 
        by a trustee under a trust is eligible for classification as 
        homestead property if: 
           (1) the grantor or surviving spouse of the grantor of the 
        trust occupies and uses the property as a homestead; 
           (2) a relative or surviving relative of the grantor who 
        meets the requirements of subdivision 1, paragraph (c), in the 
        case of residential real estate; or subdivision 1, paragraph 
        (d), in the case of agricultural property, occupies and uses the 
        property as a homestead; 
           (3) a family farm corporation, joint farm venture, limited 
        liability company, or partnership operating a family farm rents 
        the property held by a trustee under a trust, and a shareholder, 
        member, or partner of the corporation, joint farm venture, 
        limited liability company, or partnership occupies and uses the 
        property as a homestead, and is actively farming the property on 
        behalf of the corporation, joint farm venture, limited liability 
        company, or partnership; or 
           (4) a person who has received homestead classification for 
        property taxes payable in 2000 on the basis of an unqualified 
        legal right under the terms of the trust agreement to occupy the 
        property as that person's homestead and who continues to use the 
        property as a homestead. 
           For purposes of this subdivision, "grantor" is defined as 
        the person creating or establishing a testamentary, inter Vivos, 
        revocable or irrevocable trust by written instrument or through 
        the exercise of a power of appointment. 
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and thereafter except that the references to a 
        limited liability company or a member of a limited liability 
        company are effective only if H.F. No. 3312 is enacted during 
        the 2000 session. 
           Sec. 11.  Minnesota Statutes 1998, section 273.125, 
        subdivision 8, is amended to read: 
           Subd. 8.  [MANUFACTURED HOMES; SECTIONAL STRUCTURES.] (a) 
        In this section, "manufactured home" means a structure 
        transportable in one or more sections, which is built on a 
        permanent chassis, and designed to be used as a dwelling with or 
        without a permanent foundation when connected to the required 
        utilities, and contains the plumbing, heating, air conditioning, 
        and electrical systems in it.  Manufactured home includes any 
        accessory structure that is an addition or supplement to the 
        manufactured home and, when installed, becomes a part of the 
        manufactured home.  
           (b) A manufactured home that meets each of the following 
        criteria must be valued and assessed as an improvement to real 
        property, the appropriate real property classification applies, 
        and the valuation is subject to review and the taxes payable in 
        the manner provided for real property:  
           (1) the owner of the unit holds title to the land on which 
        it is situated; 
           (2) the unit is affixed to the land by a permanent 
        foundation or is installed at its location in accordance with 
        the Manufactured Home Building Code in sections 327.31 to 
        327.34, and rules adopted under those sections, or is affixed to 
        the land like other real property in the taxing district; and 
           (3) the unit is connected to public utilities, has a well 
        and septic tank system, or is serviced by water and sewer 
        facilities comparable to other real property in the taxing 
        district.  
           (c) A manufactured home that meets each of the following 
        criteria must be assessed at the rate provided by the 
        appropriate real property classification but must be treated as 
        personal property, and the valuation is subject to review and 
        the taxes payable in the manner provided in this section: 
           (1) the owner of the unit is a lessee of the land under the 
        terms of a lease; 
           (2) the unit is affixed to the land by a permanent 
        foundation or is installed at its location in accordance with 
        the Manufactured Home Building Code contained in sections 327.31 
        to 327.34, and the rules adopted under those sections, or is 
        affixed to the land like other real property in the taxing 
        district; and 
           (3) the unit is connected to public utilities, has a well 
        and septic tank system, or is serviced by water and sewer 
        facilities comparable to other real property in the taxing 
        district.  
           (d) Sectional structures must be valued and assessed as an 
        improvement to real property if the owner of the structure holds 
        title to the land on which it is located or is a qualifying 
        lessee of the land under section 273.19.  In this paragraph 
        "sectional structure" means a building or structural unit that 
        has been in whole or substantial part manufactured or 
        constructed at an off-site location to be wholly or partially 
        assembled on-site alone or with other units and attached to a 
        permanent foundation.  
           (e) The commissioner of revenue may adopt rules under the 
        Administrative Procedure Act to establish additional criteria 
        for the classification of manufactured homes and sectional 
        structures under this subdivision. 
           (f) A storage shed, deck, or similar improvement 
        constructed on property that is leased or rented as a site for a 
        manufactured home, sectional structure, park trailer, or travel 
        trailer is taxable as provided in this section.  In the case of 
        property that is leased or rented as a site for a travel 
        trailer, a storage shed, deck, or similar improvement on the 
        site that is considered personal property under this paragraph 
        is taxable only if its total estimated market value is over 
        $500.  The property is taxable as personal property to the 
        lessee of the site if it is not owned by the owner of the site.  
        The property is taxable as real estate if it is owned by the 
        owner of the site.  As a condition of permitting the owner of 
        the manufactured home, sectional structure, park trailer, or 
        travel trailer to construct improvements on the leased or rented 
        site, the owner of the site must obtain the permanent home 
        address of the lessee or user of the site.  The site owner must 
        provide the name and address to the assessor upon request. 
           EFFECTIVE DATE:  This section is effective beginning with 
        the 2000 assessment. 
           Sec. 12.  Minnesota Statutes 1999 Supplement, section 
        273.13, subdivision 24, is amended to read: 
           Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
        property and utility real and personal property is class 3a.  
           (1) Except as otherwise provided, each parcel of 
        commercial, industrial, or utility real property has a class 
        rate of 2.4 percent of the first tier of market value, and 3.4 
        percent of the remaining market value, except that.  In the case 
        of contiguous parcels of property owned by the same person or 
        entity, only the value equal to the first-tier value of the 
        contiguous parcels qualifies for the reduced class rate, except 
        that contiguous parcels owned by the same person or entity shall 
        be eligible for the first-tier value class rate on each separate 
        business operated by the owner of the property, provided the 
        business is housed in a separate structure.  For the purposes of 
        this subdivision, the first tier means the first $150,000 of 
        market value.  Real property owned in fee by a utility for 
        transmission line right-of-way shall be classified at the class 
        rate for the higher tier.  All personal property shall be 
        classified at the class rate for the higher tier.  For purposes 
        of this subdivision "personal property" means tools, implements, 
        and machinery of an electric generating, transmission, or 
        distribution system, or a pipeline system transporting or 
        distributing water, gas, crude oil, or petroleum products or 
        mains and pipes used in the distribution of steam or hot or 
        chilled water for heating or cooling buildings, which are 
        fixtures. 
           For purposes of this paragraph subdivision, parcels are 
        considered to be contiguous even if they are separated from each 
        other by a road, street, vacant lot, waterway, or other similar 
        intervening type of property.  Connections between parcels that 
        consist of power lines or pipelines do not cause the parcels to 
        be contiguous.  Property owners who have contiguous parcels of 
        property that constitute separate businesses that may qualify 
        for the first-tier class rate shall notify the assessor by July 
        1, for treatment beginning in the following taxes payable year.  
           (2) Personal property that is:  (i) part of an electric 
        generation, transmission, or distribution system; or (ii) part 
        of a pipeline system transporting or distributing water, gas, 
        crude oil, or petroleum products; and (iii) not described in 
        clause (3), has a class rate as provided under clause (1) for 
        the first tier of market value and the remaining market value.  
        In the case of multiple parcels in one county that are owned by 
        one person or entity, only one first tier amount is eligible for 
        the reduced rate.  
           (3) The entire market value of personal property that is:  
        (i) tools, implements, and machinery of an electric generation, 
        transmission, or distribution system; (ii) tools, implements, 
        and machinery of a pipeline system transporting or distributing 
        water, gas, crude oil, or petroleum products; or (iii) the mains 
        and pipes used in the distribution of steam or hot or chilled 
        water for heating or cooling buildings, has a class rate as 
        provided under clause (1) for the remaining market value in 
        excess of the first tier. 
           (b) Employment property defined in section 469.166, during 
        the period provided in section 469.170, shall constitute class 
        3b.  The class rates for class 3b property are determined under 
        paragraph (a). 
           (c)(1) Subject to the limitations of clause (2), 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 
        equal to the lesser of 2.975 percent or the class rate of the 
        second tier of the commercial property rate under paragraph (a) 
        on any portion of the market value that does not qualify for the 
        first tier 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.  A class rate equal to the lesser of 2.975 
        percent or the class rate of the second tier of the commercial 
        property class rate under paragraph (a) 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. 
           (2) This clause applies to any structure qualifying for the 
        transit zone reduced class rate under clause (1) on January 2, 
        1999, or any structure meeting any of the qualification criteria 
        in item (i) and otherwise qualifying for the transit zone 
        reduced class rate under clause (1).  Such a structure continues 
        to receive the transit zone reduced class rate until the 
        occurrence of one of the events in item (ii).  Property 
        qualifying under item (i)(D), that is located outside of a city 
        of the first class, qualifies for the transit zone reduced class 
        rate as provided in that item.  Property qualifying under item 
        (i)(E) qualifies for the transit zone reduced class rate as 
        provided in that item. 
           (i) A structure qualifies for the rate in this clause if it 
        is: 
           (A) property for which a building permit was issued before 
        December 31, 1998; or 
           (B) property for which a building permit was issued before 
        June 30, 2001, if: 
           (I) at least 50 percent of the land on which the structure 
        is to be built has been acquired or is the subject of signed 
        purchase agreements or signed options as of March 15, 1998, by 
        the entity that proposes construction of the project or an 
        affiliate of the entity; 
           (II) signed agreements have been entered into with one 
        entity or with affiliated entities to lease for the account of 
        the entity or affiliated entities at least 50 percent of the 
        square footage of the structure or the owner of the structure 
        will occupy at least 50 percent of the square footage of the 
        structure; and 
           (III) one of the following requirements is met: 
           the project proposer has submitted the completed data 
        portions of an environmental assessment worksheet by December 
        31, 1998; or 
           a notice of determination of adequacy of an environmental 
        impact statement has been published by April 1, 1999; or 
           an alternative urban areawide review has been completed by 
        April 1, 1999; or 
           (C) property for which a building permit is issued before 
        July 30, 1999, if: 
           (I) at least 50 percent of the land on which the structure 
        is to be built has been acquired or is the subject of signed 
        purchase agreements as of March 31, 1998, by the entity that 
        proposes construction of the project or an affiliate of the 
        entity; 
           (II) a signed agreement has been entered into between the 
        building developer and a tenant to lease for its own account at 
        least 200,000 square feet of space in the building; 
           (III) a signed letter of intent is entered into by July 1, 
        1998, between the building developer and the tenant to lease the 
        space for its own account; and 
           (IV) the environmental review process required by state law 
        was commenced by December 31, 1998; 
           (D) property for which an irrevocable letter of credit with 
        a housing and redevelopment authority was signed before December 
        31, 1998.  The structure shall receive the transit zone reduced 
        class rate during construction and for the duration of time that 
        the original tenants remain in the building.  Any unoccupied net 
        leasable square footage that is not leased within 36 months 
        after the certificate of occupancy has been issued for the 
        building shall not be eligible to receive the reduced class 
        rate.  This reduced class rate applies only if the a qualifying 
        entity that constructed the structure continues to own the 
        property; 
           (E) property, located in a city of the first class, and for 
        which the building permits for the excavation, the parking ramp, 
        and the office tower were issued prior to April 1, 1999, shall 
        receive the reduced class rate during construction and for the 
        first five assessment years immediately following its initial 
        occupancy provided that, when completed, at least 25 percent of 
        the net leasable square footage must be occupied by the a 
        qualifying entity or the parent entity constructing the 
        structure each year during this time period.  In order to 
        receive the reduced class rate on the structure in any 
        subsequent assessment years, at least 50 percent of the rentable 
        square footage must be occupied by the a qualifying entity or 
        the parent entity that constructed the structure.  This reduced 
        class rate applies only if the a qualifying entity or the parent 
        entity that constructed the structure continues to own the 
        property. 
           (ii) A structure specified by this clause, other than a 
        structure qualifying under clause (i)(D) or (E), shall continue 
        to receive the transit zone reduced class rate until the 
        occurrence of one of the following events: 
           (A) if the structure upon initial occupancy will be owner 
        occupied by the entity initially constructing the structure or 
        an affiliated entity, the structure receives the reduced class 
        rate until the structure ceases to be at least 50 percent 
        occupied by the entity or an affiliated entity, provided, if the 
        portion of the structure occupied by that entity or an affiliate 
        of the entity is less than 85 percent, the transit zone class 
        rate reduction for the portion of structure not so occupied 
        terminates upon the leasing of such space to any nonaffiliated 
        entity; or 
           (B) if the structure is leased by a single entity or 
        affiliated entity at the time of initial occupancy, the 
        structure shall receive the reduced class rate until the 
        structure ceases to be at least 50 percent occupied by the 
        entity or an affiliated entity, provided, if the portion of the 
        structure occupied by that entity or an affiliate of the entity 
        is less than 85 percent, the transit zone class rate reduction 
        for the portion of structure not so occupied shall terminate 
        upon the leasing of such space to any nonaffiliated entity; or 
           (C) if the structure meets the criteria in item (i)(C), the 
        structure shall receive the reduced class rate until the 
        expiration of the initial lease term of the applicable tenants. 
           Percentages occupied or leased shall be determined based 
        upon net leasable square footage in the structure.  The assessor 
        shall allocate the value of the structure in the same fashion as 
        provided in the general law for portions of any structure 
        receiving and not receiving the transit tax class reduction as a 
        result of this clause. 
           (3) For purposes of paragraph (c), "qualifying entity" 
        means the entity owning the property on September 1, 2000, or an 
        affiliate of an entity that owned the property on September 1, 
        2000. 
           EFFECTIVE DATE:  That portion of this section relating to 
        the definition of real and personal utility property is 
        effective for taxes payable in 2000 and thereafter.  All other 
        changes in the section are effective for taxes payable in 2001 
        and thereafter.  
           Sec. 13.  Minnesota Statutes 1999 Supplement, 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 2.15 percent of market value.  
        All other class 4a property has a class rate of 2.4 percent of 
        market value.  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 
        that does not qualify as class 4bb, 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) containing two or three units; 
           (4) unimproved property that is classified residential as 
        determined under subdivision 33.  
           Class 4b property has a class rate of 1.65 percent of 
        market value.  
           (c) Class 4bb includes: 
           (1) nonhomestead residential real estate containing one 
        unit, other than seasonal residential, and recreational; and 
           (2) a single family dwelling, garage, and surrounding one 
        acre of property on a nonhomestead farm classified under 
        subdivision 23, paragraph (b). 
           Class 4bb has a class rate of 1.2 percent on the first 
        $76,000 of market value and a class rate of 1.65 percent of its 
        market value that exceeds $76,000. 
           Property that has been classified as seasonal recreational 
        residential property at any time during which it has been owned 
        by the current owner or spouse of the current owner does not 
        qualify for class 4bb. 
           (d) Class 4c property includes: 
           (1) 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.  In order for a property to be 
        classified as class 4c, seasonal recreational residential for 
        commercial purposes, at least 40 percent of the annual gross 
        lodging receipts related to the property must be from business 
        conducted during 90 consecutive days and either (i) at least 60 
        percent of all paid bookings by lodging guests during the year 
        must be for periods of at least two consecutive nights; or (ii) 
        at least 20 percent of the annual gross receipts must be from 
        charges for rental of fish houses, boats and motors, 
        snowmobiles, downhill or cross-country ski equipment, or charges 
        for marina services, launch services, and guide services, or the 
        sale of bait and fishing tackle.  For purposes of this 
        determination, a paid booking of five or more nights shall be 
        counted as two bookings.  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 provided that the entire property including 
        that portion of the property classified as class 1c also meets 
        the requirements for class 4c under this clause; otherwise the 
        entire property is classified as class 3.  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 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; 
           (2) qualified property used as a golf course if: 
           (i) it is open to the public on a daily fee basis.  It may 
        charge membership fees or dues, but a membership fee may not be 
        required in order to use the property for golfing, and its green 
        fees for golfing must be comparable to green fees typically 
        charged by municipal courses; and 
           (ii) it meets the requirements of section 273.112, 
        subdivision 3, paragraph (d). 
           A structure used as a clubhouse, restaurant, or place of 
        refreshment in conjunction with the golf course is classified as 
        class 3a property; 
           (3) 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; 
           (4) 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; 
           (5) manufactured home parks as defined in section 327.14, 
        subdivision 3; and 
           (6) real property that is actively and exclusively devoted 
        to indoor fitness, health, social, recreational, and related 
        uses, is owned and operated by a not-for-profit corporation, and 
        is located within the metropolitan area as defined in section 
        473.121, subdivision 2; and 
           (7) a leased or privately owned noncommercial aircraft 
        storage hangar not exempt under section 272.01, subdivision 2, 
        and the land on which it is located, provided that: 
           (i) the land is on an airport owned or operated by a city, 
        town, county, metropolitan airports commission, or group 
        thereof, and 
           (ii) the land lease, or any ordinance or signed agreement 
        restricting the use of the leased premise, prohibits commercial 
        activity performed at the hangar. 
           If a hangar classified under this clause is sold after June 
        30, 2000, a bill of sale must be filed by the new owner with the 
        assessor of the county where the property is located within 60 
        days of the sale. 
           Class 4c property has a class rate of 1.65 percent of 
        market value, except that (i) each parcel of seasonal 
        residential recreational property not used for commercial 
        purposes has the same class rates as class 4bb property, (ii) 
        manufactured home parks assessed under clause (5) have the same 
        class rate as class 4b property, and (iii) property described in 
        paragraph (d), clause (4), has the same class rate as the rate 
        applicable to the first tier of class 4bb nonhomestead 
        residential real estate under paragraph (c).  
           (e) Class 4d property is qualifying low-income rental 
        housing certified to the assessor by the housing finance agency 
        under sections 273.126 and 462A.071.  Class 4d includes land in 
        proportion to the total market value of the building that is 
        qualifying low-income rental housing.  For all properties 
        qualifying as class 4d, the market value determined by the 
        assessor must be based on the normal approach to value using 
        normal unrestricted rents. 
           Class 4d property has a class rate of one percent of market 
        value.  
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and thereafter. 
           Sec. 14.  Minnesota Statutes 1999 Supplement, section 
        273.1382, subdivision 1b, is amended to read: 
           Subd. 1b.  [EDUCATION AGRICULTURAL CREDIT.] Property 
        classified as class 2a agricultural homestead or class 2b 
        agricultural nonhomestead or timberland is eligible for 
        education agricultural credit.  The credit is equal to 54 70 
        percent, in the case of agricultural homestead property up to 
        $600,000 in market value, or 50 63 percent, in the case of all 
        other agricultural nonhomestead property or timberland, of the 
        property's net tax capacity times the education credit tax rate 
        determined in subdivision 1.  The net tax capacity portion of 
        class 2a property attributable to consisting of the house, 
        garage, and surrounding one acre of land is not eligible for the 
        credit under this subdivision, nor does its market value count 
        towards the valuation threshold contained in this subdivision. 
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and thereafter. 
           Sec. 15.  Minnesota Statutes 1998, section 273.37, 
        subdivision 3, is amended 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 
        by the commissioner of revenue as personal property in the name 
        of the owner of the system in the taxing district where it is 
        situated. 
           EFFECTIVE DATE:  This section is effective for the 2000 
        assessment and thereafter. 
           Sec. 16.  [273.372] [PROCEEDINGS AND APPEALS; UTILITY 
        VALUATIONS.] 
           An appeal by a utility company concerning the exemption, 
        valuation, or classification on property for which the 
        commissioner of revenue has provided the county with 
        commissioner's orders or recommended values must be brought 
        against the commissioner in tax court or in district court of 
        the county where the property is located, and not against the 
        county or taxing district where the property is located.  If the 
        appeal to a court is of an order of the commissioner, it must be 
        brought under chapter 271.  If the appeal is brought under 
        chapter 278, the procedures in that chapter apply.  This 
        provision applies to the property contained under sections 
        273.33, 273.35, 273.36, and 273.37, but only if the appealed 
        values have remained unchanged from those provided to the county 
        by the commissioner.  If the exemption, valuation, or 
        classification being appealed has been changed by the county, 
        then the action must be brought under chapter 278 in the county 
        where the property is located. 
           Upon filing of any appeal by a utility company against the 
        commissioner, the commissioner shall give notice by first class 
        mail to each county which would be affected by the appeal. 
           Companies that submit the reports under section 273.371 by 
        the date specified in that section, or by the date specified by 
        the commissioner in an extension, may appeal administratively to 
        the commissioner under the procedures in section 270.11, 
        subdivision 6, prior to bringing an action in tax court or in 
        district court, however, instituting an administrative appeal 
        with the commissioner does not change or modify the deadline in 
        section 278.01 for bringing an action in tax court or district 
        court. 
           EFFECTIVE DATE:  This section is effective for appeals made 
        on property for assessment year 1999 and thereafter. 
           Sec. 17.  Minnesota Statutes 1998, section 275.066, is 
        amended to read: 
           275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 
           For the purposes of property taxation and property tax 
        state aids, the term "special taxing districts" includes the 
        following entities: 
           (1) watershed districts under chapter 103D; 
           (2) sanitary districts under sections 115.18 to 115.37; 
           (3) regional sanitary sewer districts under sections 115.61 
        to 115.67; 
           (4) regional public library districts under section 
        134.201; 
           (5) park districts under chapter 398; 
           (6) regional railroad authorities under chapter 398A; 
           (7) hospital districts under sections 447.31 to 447.38; 
           (8) St. Cloud metropolitan transit commission under 
        sections 458A.01 to 458A.15; 
           (9) Duluth transit authority under sections 458A.21 to 
        458A.37; 
           (10) regional development commissions under sections 
        462.381 to 462.398; 
           (11) housing and redevelopment authorities under sections 
        469.001 to 469.047; 
           (12) port authorities under sections 469.048 to 469.068; 
           (13) economic development authorities under sections 
        469.090 to 469.1081; 
           (14) metropolitan council under sections 473.123 to 
        473.549; 
           (15) metropolitan airports commission under sections 
        473.601 to 473.680; 
           (16) metropolitan mosquito control commission under 
        sections 473.701 to 473.716; 
           (17) Morrison county rural development financing authority 
        under Laws 1982, chapter 437, section 1; 
           (18) Croft Historical Park District under Laws 1984, 
        chapter 502, article 13, section 6; 
           (19) East Lake county medical clinic district under Laws 
        1989, chapter 211, sections 1 to 6; 
           (20) Floodwood area ambulance district under Laws 1993, 
        chapter 375, article 5, section 39; and 
           (21) Middle Mississippi river watershed management 
        organization under sections 103B.211 and 103B.241; and 
           (22) any other political subdivision of the state of 
        Minnesota, excluding counties, school districts, cities, and 
        towns, that has the power to adopt and certify a property tax 
        levy to the county auditor, as determined by the commissioner of 
        revenue. 
           EFFECTIVE DATE:  This section is effective for taxes levied 
        in 2000, payable in 2001, and thereafter. 
           Sec. 18.  Minnesota Statutes 1998, section 276.19, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NOTICE OF OVERPAYMENT.] If an overpayment 
        of property tax arises on a parcel for any reason due to receipt 
        of a payment that exceeds the total amount of the tax required 
        to be paid on the property tax statement, the responsible county 
        official shall promptly notify the payer by regular mail that 
        the overpayment has occurred.  The notice must state the amount 
        of overpayment and identify the parcel on which the overpayment 
        occurred.  The notice must also instruct the payer how to claim 
        the overpayment and advise that the overpayment is subject to 
        forfeiture under this section.  If the name or address of the 
        payer is not known, the notice of unclaimed overpayment must be 
        mailed to the taxpayer of record in the office of the county 
        auditor.  
           EFFECTIVE DATE:  This section is effective for overpayment 
        of taxes made the day following final enactment and thereafter, 
        and applies only to taxes levied in 1999, payable in 2000, and 
        thereafter. 
           Sec. 19.  [278.14] [REFUNDS OF MISTAKENLY BILLED TAXES.] 
           Subdivision 1.  [APPLICABILITY.] A county must pay a refund 
        of a mistakenly billed tax as provided in this section.  As used 
        in this section, "mistakenly billed tax" means an amount of 
        property tax that was billed, to the extent the amount billed 
        exceeds the accurate tax amount due to a misclassification of 
        the owner's property under section 273.13 or a mathematical 
        error in the calculation of the tax on the owner's property, 
        together with any penalty or interest paid on that amount.  This 
        section applies only to taxes payable in the current year and 
        the two prior years.  As used in this section, "mathematical 
        error" is limited to an error in: 
           (1) converting the market value of a property to tax 
        capacity or to a referendum market value; 
           (2) application of the tax rate as computed by the auditor 
        under sections 275.08, subdivisions 1b, 1c, and 1d; 276A.06, 
        subdivisions 4 and 5; and 473F.07, subdivisions 4 and 5, to the 
        property's tax capacity or referendum market value; or 
           (3) calculation of or eligibility for a credit. 
           The remedy provided under this section does not apply to a 
        misclassification under section 273.13 that is due to the 
        failure of the property owner to apply for the correct 
        classification as required by law. 
           Subd. 2.  [PROCEDURE.] A refund of mistakenly billed tax 
        must be paid upon verification of a claim made in a written 
        application by the owner of the property or upon discovery of 
        the mistakenly billed tax by the county.  Refunds of 
        overpayments will be made as provided in section 278.12. 
           Subd. 3.  [APPEALS.] If the county rejects a claim by a 
        property owner under subdivision 2, it must notify the property 
        owner of that decision within 90 days of receipt of the claim.  
        The property owner may appeal that decision to the tax court 
        within 60 days after receipt of a notice from the county of the 
        decision.  Relief granted by the tax court is limited to current 
        year taxes, and taxes in the two prior years. 
           EFFECTIVE DATE:  This section is effective for overpayment 
        of taxes made the day following final enactment and thereafter, 
        and applies only to taxes levied in 1999, payable in 2000, and 
        thereafter. 
           Sec. 20.  Minnesota Statutes 1999 Supplement, section 
        290B.03, subdivision 1, is amended to read: 
           Subdivision 1.  [PROGRAM QUALIFICATIONS.] The 
        qualifications for the senior citizens' property tax deferral 
        program are as follows: 
           (1) the property must be owned and occupied as a homestead 
        by a person 65 years of age or older.  In the case of a married 
        couple, both of the spouses must be at least 65 years old at the 
        time the first property tax deferral is granted, regardless of 
        whether the property is titled in the name of one spouse or both 
        spouses, or titled in another way that permits the property to 
        have homestead status; 
           (2) the total household income of the qualifying 
        homeowners, as defined in section 290A.03, subdivision 5, for 
        the calendar year preceding the year of the initial application 
        may not exceed $60,000; 
           (3) the homestead must have been owned and occupied as the 
        homestead of at least one of the qualifying homeowners for at 
        least 15 years prior to the year the initial application is 
        filed; 
           (4) there are no delinquent property taxes, penalties, or 
        interest on the homesteaded property; 
           (5) there are no delinquent special assessments on the 
        homesteaded property; 
           (6) there are no state or federal tax liens or judgment 
        liens on the homesteaded property; 
           (7) (5) there are no mortgages or other liens on the 
        property that secure future advances, except for those subject 
        to credit limits that result in compliance with clause (8) (6); 
        and 
           (8) (6) the total unpaid balances of debts secured by 
        mortgages and other liens on the property, including unpaid and 
        delinquent special assessments and interest and any delinquent 
        property taxes, penalties, and interest, but not including 
        property taxes payable during the year, does not exceed 30 75 
        percent of the assessor's estimated market value for the year. 
           Sec. 21.  Minnesota Statutes 1998, section 290B.04, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [PAYMENT OF DELINQUENT TAXES AND SPECIAL 
        ASSESSMENTS.] Upon approval of a senior citizen's initial 
        application, the commissioner of revenue shall pay to the 
        treasurer of the county where the property is located the amount 
        of any delinquent property taxes, penalties, interest, and 
        delinquent special assessments and interest on the property 
        which is the subject of the application. 
           Sec. 22.  Minnesota Statutes 1999 Supplement, section 
        290B.05, subdivision 1, is amended to read: 
           Subdivision 1.  [DETERMINATION BY COMMISSIONER.] The 
        commissioner shall determine each qualifying homeowner's "annual 
        maximum property tax amount" following approval of the 
        homeowner's initial application and following the receipt of a 
        resumption of eligibility certification.  The "annual maximum 
        property tax amount" equals three percent of the homeowner's 
        total household income for the year preceding either the initial 
        application or the resumption of eligibility certification, 
        whichever is applicable.  Following approval of the initial 
        application, the commissioner shall determine the qualifying 
        homeowner's "maximum allowable deferral."  No tax may be 
        deferred relative to the appropriate assessment year for any 
        homeowner whose total household income for the previous year 
        exceeds $60,000.  No tax shall be deferred in any year in which 
        the homeowner does not meet the program qualifications in 
        section 290B.03.  The maximum allowable total deferral is equal 
        to 75 percent of the assessor's estimated market value for the 
        year, less the balance of any mortgage loans and other amounts 
        secured by liens against the property at the time of 
        application, including any unpaid and delinquent special 
        assessments and interest and any delinquent property taxes, 
        penalties, and interest, but not including property taxes 
        payable during the year. 
           Sec. 23.  Minnesota Statutes 1998, section 290B.05, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 
        When final property tax amounts for the following year have been 
        determined, the county auditor shall calculate the "deferred 
        property tax amount."  The deferred property tax amount is equal 
        to the lesser of (1) the maximum allowable deferral for the 
        year; or (2) the difference between the total amount of property 
        taxes levied upon the qualifying homestead by all taxing 
        jurisdictions and the maximum property tax amount.  Any special 
        assessments levied by any local unit of government must not be 
        included in the total tax used to calculate the deferred tax 
        amount.  No deferral of the current year's property taxes is 
        allowed if there are any delinquent property taxes or delinquent 
        special assessments for any previous year.  Any tax attributable 
        to new improvements made to the property after the initial 
        application has been approved under section 290B.04, subdivision 
        2, must be excluded when determining any subsequent deferred 
        property tax amount.  The county auditor shall annually, on or 
        before April 15, certify to the commissioner of revenue the 
        property tax deferral amounts determined under this subdivision 
        by property and by owner.  
           Sec. 24.  Minnesota Statutes 1998, section 290B.07, is 
        amended to read: 
           290B.07 [LIEN; DEFERRED PORTION.] 
           (a) Payment by the state to the county treasurer 
        of property taxes, penalties, interest, or special assessments 
        and interest deferred under this section chapter is deemed a 
        loan from the state to the program participant.  The 
        commissioner must compute the interest as provided in section 
        270.75, subdivision 5, but not to exceed five percent, and 
        maintain records of the total deferred amount and interest for 
        each participant.  Interest shall accrue beginning September 1 
        of the payable year for which the taxes are deferred.  Any 
        deferral made under this chapter shall not be construed as 
        delinquent property taxes. 
           The lien created under section 272.31 continues to secure 
        payment by the taxpayer, or by the taxpayer's successors or 
        assigns, of the amount deferred, including interest, with 
        respect to all years for which amounts are deferred.  The lien 
        for deferred taxes and interest has the same priority as any 
        other lien under section 272.31, except that liens, including 
        mortgages, recorded or filed prior to the recording or filing of 
        the notice under section 290B.04, subdivision 2, have priority 
        over the lien for deferred taxes and interest.  A seller's 
        interest in a contract for deed, in which a qualifying homeowner 
        is the purchaser or an assignee of the purchaser, has priority 
        over deferred taxes and interest on deferred taxes, regardless 
        of whether the contract for deed is recorded or filed.  The lien 
        for deferred taxes and interest for future years has the same 
        priority as the lien for deferred taxes and interest for the 
        first year, which is always higher in priority than any 
        mortgages or other liens filed, recorded, or created after the 
        notice recorded or filed under section 290B.04, subdivision 2.  
        The county treasurer or auditor shall maintain records of the 
        deferred portion and shall list the amount of deferred taxes for 
        the year and the cumulative deferral and interest for all 
        previous years as a lien against the property.  In any 
        certification of unpaid taxes for a tax parcel, the county 
        auditor shall clearly distinguish between taxes payable in the 
        current year, deferred taxes and interest, and delinquent 
        taxes.  Payment of the deferred portion becomes due and owing at 
        the time specified in section 290B.08.  Upon receipt of the 
        payment, the commissioner shall issue a receipt for it to the 
        person making the payment upon request and shall notify the 
        auditor of the county in which the parcel is located, within ten 
        days, identifying the parcel to which the payment applies.  Upon 
        receipt by the commissioner of revenue of collected funds in the 
        amount of the deferral, the state's loan to the program 
        participant is deemed paid in full. 
           (b) If property for which taxes have been deferred under 
        this chapter forfeits under chapter 281 for nonpayment of a 
        nondeferred property tax amount, or because of nonpayment of 
        amounts previously deferred following a termination under 
        section 290B.08, the lien for the taxes deferred under this 
        chapter, plus interest and costs, shall be canceled by the 
        county auditor as provided in section 282.07.  However, 
        notwithstanding any other law to the contrary, any proceeds from 
        a subsequent sale of the property under chapter 282 or another 
        law, must be used to first reimburse the county's forfeited tax 
        sale fund for any direct costs of selling the property or any 
        costs directly related to preparing the property for sale, and 
        then to reimburse the state for the amount of the canceled 
        lien.  Within 90 days of the receipt of any sale proceed to 
        which the state is entitled under these provisions, the county 
        auditor must pay those funds to the commissioner of revenue by 
        warrant for deposit in the general fund.  No other deposit, use, 
        distribution, or release of gross sale proceeds or receipts may 
        be made by the county until payments sufficient to fully 
        reimburse the state for the canceled lien amount have been 
        transmitted to the commissioner. 
           Sec. 25.  Minnesota Statutes 1998, section 290B.08, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TERMINATION.] (a) The deferral of taxes 
        granted under this chapter terminates when one of the following 
        occurs: 
           (1) the property is sold or transferred; 
           (2) the death of the all qualifying 
        homeowner(s) homeowners; 
           (3) the homeowner notifies the commissioner in writing that 
        the homeowner desires to discontinue the deferral; or 
           (4) the property no longer qualifies as a homestead. 
           (b) A property is not terminated from the program because 
        no deferred property tax amount is determined on the homestead 
        for any given year after the homestead's initial enrollment into 
        the program. 
           EFFECTIVE DATE:  This section is effective for deferrals of 
        property taxes payable in 2001 and thereafter. 
           Sec. 26.  Minnesota Statutes 1998, section 290B.08, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PAYMENT UPON TERMINATION.] Upon the termination 
        of the deferral under subdivision 1, the amount of deferred 
        taxes and, penalties, interest, and special assessments and 
        interest, plus the recording or filing fees under both section 
        290B.04, subdivision 2, and this subdivision becomes due and 
        payable to the commissioner within 90 days of termination of the 
        deferral for terminations under subdivision 1, paragraph (a), 
        clauses (1) and (2), and within one year of termination of the 
        deferral for terminations under subdivision 1, paragraph (a), 
        clauses (3) and (4).  No additional interest is due on the 
        deferral if timely paid.  On receipt of payment, the 
        commissioner shall within ten days notify the auditor of the 
        county in which the parcel is located, identifying the parcel to 
        which the payment applies and shall remit the recording or 
        filing fees under section 290B.04, subdivision 2, and this 
        subdivision to the auditor.  A notice of termination of 
        deferral, containing the legal description and the recording or 
        filing data for the notice of qualification for deferral under 
        section 290B.04, subdivision 2, shall be prepared and recorded 
        or filed by the county auditor in the same office in which the 
        notice of qualification for deferral under section 290B.04, 
        subdivision 2, was recorded or filed, and the county auditor 
        shall mail a copy of the notice of termination to the property 
        owner.  The property owner shall pay the recording or filing 
        fees.  Upon recording or filing of the notice of termination of 
        deferral, the notice of qualification for deferral under section 
        290B.04, subdivision 2, and the lien created by it are 
        discharged.  If the deferral is not timely paid, the penalty, 
        interest, lien, forfeiture, and other rules for the collection 
        of ad valorem property taxes apply. 
           Sec. 27.  Minnesota Statutes 1998, section 290B.09, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPROPRIATION.] An amount sufficient to pay the 
        total amount of property tax determined under subdivision 1, 
        plus any amounts paid under section 290B.04, subdivision 7, is 
        annually appropriated from the general fund to the commissioner 
        of revenue. 
           Sec. 28.  Minnesota Statutes 1999 Supplement, section 
        383D.74, subdivision 2, is amended to read: 
           Subd. 2.  [EXPIRATION.] The authority to impose a penalty 
        under this section expires on December 31, 2000 2005. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 29.  Minnesota Statutes 1998, section 429.011, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [MUNICIPALITY.] "Municipality" also includes a 
        county in the case of construction, reconstruction, or 
        improvement of a county state-aid highway or county highway as 
        defined in section 160.02 including curbs and gutters and storm 
        sewers and includes; a county exercising its powers and duties 
        under section 444.075, subdivision 1; and a county for expenses 
        not paid for under section 403.113, subdivision 3, paragraph 
        (b), clause (3). 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 30.  Minnesota Statutes 1998, section 429.011, 
        subdivision 5, is amended to read: 
           Subd. 5.  [IMPROVEMENT.] "Improvement" means any type of 
        improvement made under authority granted by section 429.021, and 
        in the case of a county is limited to the construction, 
        reconstruction, or improvement of a county state-aid highway or 
        county highway including curbs and gutters and storm sewers, and 
        to the purchase, installation, or maintenance of signs, posts, 
        and markers for addressing related to the operation of enhanced 
        911 telephone service. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 31.  Minnesota Statutes 1998, section 429.021, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [IMPROVEMENTS AUTHORIZED.] The council of a 
        municipality shall have power to make the following improvements:
           (1) To acquire, open, and widen any street, and to improve 
        the same by constructing, reconstructing, and maintaining 
        sidewalks, pavement, gutters, curbs, and vehicle parking strips 
        of any material, or by grading, graveling, oiling, or otherwise 
        improving the same, including the beautification thereof and 
        including storm sewers or other street drainage and connections 
        from sewer, water, or similar mains to curb lines. 
           (2) To acquire, develop, construct, reconstruct, extend, 
        and maintain storm and sanitary sewers and systems, including 
        outlets, holding areas and ponds, treatment plants, pumps, lift 
        stations, service connections, and other appurtenances of a 
        sewer system, within and without the corporate limits. 
           (3) To construct, reconstruct, extend, and maintain steam 
        heating mains. 
           (4) To install, replace, extend, and maintain street lights 
        and street lighting systems and special lighting systems. 
           (5) To acquire, improve, construct, reconstruct, extend, 
        and maintain water works systems, including mains, valves, 
        hydrants, service connections, wells, pumps, reservoirs, tanks, 
        treatment plants, and other appurtenances of a water works 
        system, within and without the corporate limits. 
           (6) To acquire, improve and equip parks, open space areas, 
        playgrounds, and recreational facilities within or without the 
        corporate limits. 
           (7) To plant trees on streets and provide for their 
        trimming, care, and removal. 
           (8) To abate nuisances and to drain swamps, marshes, and 
        ponds on public or private property and to fill the same. 
           (9) To construct, reconstruct, extend, and maintain dikes 
        and other flood control works. 
           (10) To construct, reconstruct, extend, and maintain 
        retaining walls and area walls. 
           (11) To acquire, construct, reconstruct, improve, alter, 
        extend, operate, maintain, and promote a pedestrian skyway 
        system.  Such improvement may be made upon a petition pursuant 
        to section 429.031, subdivision 3.  
           (12) To acquire, construct, reconstruct, extend, operate, 
        maintain, and promote underground pedestrian concourses. 
           (13) To acquire, construct, improve, alter, extend, 
        operate, maintain, and promote public malls, plazas or 
        courtyards. 
           (14) To construct, reconstruct, extend, and maintain 
        district heating systems.  
           (15) To construct, reconstruct, alter, extend, operate, 
        maintain, and promote fire protection systems in existing 
        buildings, but only upon a petition pursuant to section 429.031, 
        subdivision 3.  
           (16) To acquire, construct, reconstruct, improve, alter, 
        extend, and maintain highway sound barriers. 
           (17) To improve, construct, reconstruct, extend, and 
        maintain gas and electric distribution facilities owned by a 
        municipal gas or electric utility. 
           (18) To purchase, install, and maintain signs, posts, and 
        other markers for addressing related to the operation of 
        enhanced 911 telephone service. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 32.  Minnesota Statutes 1998, section 429.031, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PREPARATION OF PLANS, NOTICE OF HEARING.] 
        (a) Before the municipality awards a contract for an improvement 
        or orders it made by day labor, or before the municipality may 
        assess any portion of the cost of an improvement to be made 
        under a cooperative agreement with the state or another 
        political subdivision for sharing the cost of making the 
        improvement, the council shall hold a public hearing on the 
        proposed improvement following two publications in the newspaper 
        of a notice stating the time and place of the hearing, the 
        general nature of the improvement, the estimated cost, and the 
        area proposed to be assessed.  The two publications must be a 
        week apart, and the hearing must be at least three days after 
        the second publication.  Not less than ten days before the 
        hearing, notice of the hearing must also be mailed to the owner 
        of each parcel within the area proposed to be assessed and must 
        contain a statement that a reasonable estimate of the impact of 
        the assessment will be available at the hearing, but failure to 
        give mailed notice or any defects in the notice does not 
        invalidate the proceedings.  For the purpose of giving mailed 
        notice, owners are those shown as owners on the records of the 
        county auditor or, in any county where tax statements are mailed 
        by the county treasurer, on the records of the county treasurer; 
        but other appropriate records may be used for this purpose.  For 
        properties that are tax exempt or subject to taxation on a gross 
        earnings basis and are not listed on the records of the county 
        auditor or the county treasurer, the owners may be ascertained 
        by any practicable means, and mailed notice must be given them 
        as provided in this subdivision.  
           (b) Before the adoption of a resolution ordering the 
        improvement, the council shall secure from the city engineer or 
        some other competent person of its selection a report advising 
        it in a preliminary way as to whether the proposed improvement 
        is necessary, cost-effective, and feasible and as to whether it 
        should best be made as proposed or in connection with some other 
        improvement.  The report must also include the estimated cost of 
        the improvement as recommended.  A reasonable estimate of the 
        total amount to be assessed, and a description of the 
        methodology used to calculate individual assessments for 
        affected parcels, must be available at the hearing.  No error or 
        omission in the report invalidates the proceeding unless it 
        materially prejudices the interests of an owner. 
           (c) If the report is not prepared by an employee of a 
        municipality, the compensation for preparing the report under 
        this subdivision must be based on the following factors: 
           (1) the time and labor required; 
           (2) the experience and knowledge of the preparer; 
           (3) the complexity and novelty of the problems involved; 
        and 
           (4) the extent of the responsibilities assumed. 
           (d) The compensation must not be based primarily on a 
        percentage of the estimated cost of the improvement. 
           (e) The council may also take other steps prior to the 
        hearing, including, among other things, the preparation of plans 
        and specifications and the advertisement for bids that will in 
        its judgment provide helpful information in determining the 
        desirability and feasibility of the improvement.  
           (f) The hearing may be adjourned from time to time, and a 
        resolution ordering the improvement may be adopted at any time 
        within six months after the date of the hearing by vote of a 
        majority of all members of the council when the improvement has 
        been petitioned for by the owners of not less than 35 percent in 
        frontage of the real property abutting on the streets named in 
        the petition as the location of the improvement.  When there has 
        been no such petition, the resolution may be adopted only by 
        vote of four-fifths of all members of the council; provided that 
        if the mayor of the municipality is a member of the council but 
        has no vote or votes only in case of a tie, the mayor is not 
        deemed to be a member for the purpose of determining a 
        four-fifths majority vote.  
           (g) The resolution ordering the improvement may reduce, but 
        not increase, the extent of the improvement as stated in the 
        notice of hearing. 
           EFFECTIVE DATE:  This section is effective for mailed 
        notices and hearings held June 1, 2000, and thereafter.  
           Sec. 33.  Minnesota Statutes 1998, section 469.040, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [DESIGNATED HOUSING CORPORATION.] Property 
        located within the exterior boundaries of the White Earth Indian 
        Reservation that is owned by the tribe's designated housing 
        entity as defined in United States Code, title 25, section 
        4103(21), and that is a housing project or a housing development 
        project, as defined in section 469.002, subdivisions 13 and 15, 
        is exempt from all real and personal property taxes of the city, 
        the county, the state, or any political subdivision thereof, but 
        the property is subject to subdivision 3.  A copy of those 
        portions of the annual reports submitted on behalf of the 
        housing entity to the Secretary of the United States Department 
        of Housing and Urban Development for the project that contain 
        information sufficient to determine the amount due under 
        subdivision 3 satisfies the reporting requirements of 
        subdivision 3 for the project. 
           EFFECTIVE DATE:  This section is effective for the 2000 
        assessment, taxes payable in 2001, and thereafter.  
           Sec. 34.  Laws 1987, chapter 402, section 2, subdivision 1, 
        is amended to read: 
           Subdivision 1.  [AGREEMENT.] The city of Moose Lake and one 
        or more of the towns of Moose Lake, Silver, and Windemere may by 
        action of their city council and town boards establish the Moose 
        Lake fire protection district.  The town of Silver may provide 
        that only a described part of its territory be included within 
        the district.  The district shall provide fire protection 
        services throughout its territory and may exercise all the 
        powers of the city and towns that relate to fire protection 
        anywhere within its territory.  Any other contiguous town or 
        home rule charter or statutory city may join the district with 
        the agreement of the cities and towns that comprise the district 
        at the time of its application to join.  Action to join the 
        district may be taken by the city council or town board of the 
        city or town.  
           EFFECTIVE DATE:  Pursuant to Minnesota Statutes, section 
        645.023, subdivision 1, clause (a), this section is effective 
        without local approval the day following final enactment. 
           Sec. 35.  Laws 1987, chapter 402, section 2, subdivision 4, 
        is amended to read: 
           Subd. 4.  [TAX.] The district may impose a property tax on 
        real property in the district in an amount sufficient to 
        discharge its operating expenses and debt payable in each year. 
        The tax shall be disregarded in the calculation of any levies or 
        limits on levies provided by Minnesota Statutes, chapter 275, or 
        other law.  A city or town that joins the district may not incur 
        expenses or debt for fire protection services for territory 
        included in the district and may not impose taxes for that 
        purpose.  The town of Silver may impose a property tax on 
        territory not included in the district to discharge costs or 
        debt incurred to provide fire protection services to that 
        territory.  
           EFFECTIVE DATE:  Pursuant to Minnesota Statutes, section 
        645.023, subdivision 1, clause (a), this section is effective 
        without local approval the day following final enactment. 
           Sec. 36.  Laws 1987, chapter 402, section 2, subdivision 5, 
        is amended to read: 
           Subd. 5.  [PUBLIC INDEBTEDNESS.] The district may incur 
        debt in the manner provided for a municipality by Minnesota 
        Statutes, chapter 475, when necessary to accomplish a duty 
        charged to it.  The district may also issue certificates of 
        indebtedness subject to debt limits for the district to purchase 
        capital equipment having an expected useful life at least as 
        long as the terms of the certificates.  The certificates must be 
        payable in not more than five years and must be issued on the 
        terms and in the manner as the board may determine.  Before 
        issuing certificates in an amount exceeding .25 percent of the 
        taxable property of the district, the board shall publish a 
        resolution indicating its intent to issue the certificates in a 
        newspaper of general circulation in the district.  The 
        certificates may be issued without an election unless within ten 
        days of the publication a petition signed by the sum of at least 
        ten percent of the voters in the member towns voting in the last 
        regular town election and ten percent of the voters of the city 
        voting in the last city general election requesting an election 
        on their issuance is filed with the board.  If a petition is 
        filed, the certificates may not be issued unless their issuance 
        is approved by a majority of the voters at a general or special 
        election in which all the residents of the city and member towns 
        are eligible to vote.  A tax levy shall be made against all 
        property in the district to pay the principal and interest on 
        the certificates, in accordance with Minnesota Statutes, section 
        475.61, as in the case of bonds.  
           EFFECTIVE DATE:  Pursuant to Minnesota Statutes, section 
        645.023, subdivision 1, clause (a), this section is effective 
        without local approval the day following final enactment. 
           Sec. 37.  [EVELETH-GILBERT JOINT RECREATION BOARD TAX.] 
           The cities and towns who participate in the Eveleth-Gilbert 
        joint recreation board may levy a tax on the taxable property 
        within their taxing jurisdictions situated within the boundaries 
        of independent school district No. 2154, Eveleth-Gilbert, as 
        provided in this section.  The maximum amount that may be levied 
        by all participating cities and towns combined shall not exceed 
        a total of $125,000 per year, for a maximum of eight years.  
        Property within the school district may be made subject to the 
        tax permitted by this section by the agreement of the governing 
        body or town board of the city or town where the property is 
        located.  The agreement may be by resolution of a governing body 
        or town board or by a joint powers agreement under Minnesota 
        Statutes, section 471.59.  If levied, this tax is in addition to 
        all other taxes permitted to be levied for park and recreation 
        purposes by the participating cities and towns.  It shall be 
        disregarded in the calculation of all tax levy limitations 
        imposed by charter and any general overall levy limitations.  A 
        city or town may withdraw its agreement to future taxes by 
        notice to the recreation board and the county auditor unless 
        provided otherwise by a joint powers agreement.  The tax shall 
        be collected by the St. Louis county treasurer and paid directly 
        to the Eveleth-Gilbert joint recreation board.  
           This section applies in the cities of Eveleth, Gilbert, 
        Leonidas, McKinley, and Iron Junction, and in the towns of 
        Biwabik, Clinton, and Fayal, all located in St. Louis county. 
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 through taxes payable in 2008. 
           Sec. 38.  [STUDY OF TAXATION OF FOREST LAND.] 
           Subdivision 1.  [STUDY.] The commissioner of revenue, in 
        cooperation with the Minnesota forest resources council, shall 
        study the taxation of forest land in this state.  The study 
        shall include a review of the current application of property 
        taxes to these lands and a review and comparison with other 
        forest land tax policies.  It shall also include recommendations 
        for changes in tax policy: 
           (1) to encourage forest productivity; 
           (2) to maintain land in forest cover; 
           (3) to encourage the application of sustainable site level 
        forest management guidelines; 
           (4) to address impacts on local government revenues; and 
           (5) for changes in tax rates. 
        The study shall be completed and transmitted to the chairs of 
        the house and senate tax committees by December 1, 2000. 
           Subd. 2.  [APPROPRIATION.] $50,000 is appropriated from the 
        general fund in fiscal year 2000 to the commissioner of revenue 
        for completion of the study required in this section.  This 
        appropriation is available until December 31, 2000. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 39.  [APPROPRIATION.] 
           Notwithstanding section 16A.1521, the balance of the 
        property tax reform account as of July 1, 2000, is transferred 
        to the general fund and any additional funds appropriated to the 
        property tax reform account as a result of the November, 1999, 
        forecast are canceled and the appropriation remains in the 
        general fund. 
           Sec. 40.  [REPEALER.] 
           (a) Minnesota Statutes 1998, sections 270.072, subdivision 
        5; and 270.075, subdivisions 3 and 4; are repealed. 
           (b) Minnesota Statutes 1998, section 273.127, is repealed. 
           (c) Minnesota Statutes 1998, section 273.1316, is repealed. 
           EFFECTIVE DATE:  Paragraph (a) is effective for taxes 
        payable in 2001 and thereafter.  Paragraph (b) is effective for 
        taxes payable in 2000 and thereafter.  Paragraph (c) is 
        effective the day following final enactment. 
           Sec. 41.  [EFFECTIVE DATE.] 
           Sections 20 to 24, 26, and 27 apply to all homeowners and 
        all property taxes deferred beginning in payable 2001, including 
        those homeowners who initially qualified under this program for 
        taxes payable in 1999 or 2000, except that if a homeowner did 
        not qualify for any property tax deferral for payable 2000 
        because of the percentage threshold in Minnesota Statutes, 
        section 290B.03, subdivision 1, paragraph (6), or the 
        prohibition on qualification of owners of property with 
        delinquent taxes or delinquent special assessments, and now 
        qualifies for the program with the changes in those provisions, 
        the homeowner may apply to the commissioner by July 1, 2000, and 
        request a retroactive qualification into the program for taxes 
        payable in 2000.  The commissioner of revenue shall notify the 
        county auditor of such eligible taxpayers.  The commissioner 
        shall make payment to the county for the appropriate amount due 
        for taxes payable in 2000, and the county treasurer shall refund 
        the taxpayer for any excess tax amount that the taxpayer has 
        paid to the county. 

                                   ARTICLE 6
                    LEVY LIMITS AND AIDS TO LOCAL GOVERNMENT 
           Section 1.  Minnesota Statutes 1998, section 97A.061, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [OFFSET OF PAYMENTS.] Payments to a county or 
        town under this section must be reduced by the amount of payment 
        to that county or town under section 477A.12 for the same lands 
        in the same year. 
           EFFECTIVE DATE:  This section is effective for payments 
        made in calendar year 2001 and thereafter. 
           Sec. 2.  Minnesota Statutes 1998, section 97A.061, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [ALLOCATION OF PAYMENTS.] Notwithstanding section 
        477A.14, the amounts paid to a county under section 477A.14 for 
        lands that are also subject to payment under this section shall 
        be allocated within the county in accordance with subdivision 2. 
           EFFECTIVE DATE:  This section is effective for payments 
        made in calendar year 2001 and thereafter. 
           Sec. 3.  Minnesota Statutes 1999 Supplement, section 
        273.1398, subdivision 4a, is amended to read: 
           Subd. 4a.  [AID OFFSET FOR COURT COSTS.] (a) By July 15, 
        1999, the supreme court shall determine and certify to the 
        commissioner of revenue for each county, other than counties 
        located in the eighth judicial district, the county's share of 
        the costs assumed under Laws 1999, chapter 216, article 7, 
        during the fiscal year beginning July 1, 2000, less an amount 
        equal to the county's share of transferred fines collected by 
        the district courts in the county during calendar year 1998.  
           (b) Payments to a county under subdivision 2 or section 
        273.166 for calendar year 2000 must be permanently reduced by an 
        amount equal to 75 percent of the net cost to the state for 
        assumption of district court costs as certified in paragraph (a).
           (c) Payments to a county under subdivision 2 or section 
        273.166 for calendar year 2001 must be permanently reduced by an 
        amount equal to 25 percent of the net cost to the state for 
        assumption of district court costs as certified in paragraph (a).
           (d) Payments to a county under subdivision 2 for calendar 
        year 2001 are permanently increased by an amount equal to 7.5 
        percent of the county's share of transferred fines collected by 
        the district courts in the county during calendar year 1998, as 
        determined under paragraph (a).  If the amount determined in 
        paragraph (a) exceeds the amount of aid a county is scheduled to 
        be paid under subdivision 2 in 2000, then the county shall not 
        receive an aid increase under this paragraph. 
           EFFECTIVE DATE:  This section is effective for aids payable 
        in 2001 and thereafter. 
           Sec. 4.  Minnesota Statutes 1999 Supplement, section 
        275.70, subdivision 5, is amended to read: 
           Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
        portions of ad valorem taxes levied by a local governmental unit 
        for the following purposes or in the following manner: 
           (1) to pay the costs of the principal and interest on 
        bonded indebtedness or to reimburse for the amount of liquor 
        store revenues used to pay the principal and interest due on 
        municipal liquor store bonds in the year preceding the year for 
        which the levy limit is calculated; 
           (2) to pay the costs of principal and interest on 
        certificates of indebtedness issued for any corporate purpose 
        except for the following: 
           (i) tax anticipation or aid anticipation certificates of 
        indebtedness; 
           (ii) certificates of indebtedness issued under sections 
        298.28 and 298.282; 
           (iii) certificates of indebtedness used to fund current 
        expenses or to pay the costs of extraordinary expenditures that 
        result from a public emergency; or 
           (iv) certificates of indebtedness used to fund an 
        insufficiency in tax receipts or an insufficiency in other 
        revenue sources; 
           (3) to provide for the bonded indebtedness portion of 
        payments made to another political subdivision of the state of 
        Minnesota; 
           (4) to fund payments made to the Minnesota state armory 
        building commission under section 193.145, subdivision 2, to 
        retire the principal and interest on armory construction bonds; 
           (5) for unreimbursed expenses related to flooding that 
        occurred during the first half of calendar year 1997, as allowed 
        by the commissioner of revenue under section 275.74, paragraph 
        (b); 
           (6) for local units of government located in an area 
        designated by the Federal Emergency Management Agency pursuant 
        to a major disaster declaration issued for Minnesota by 
        President Clinton after April 1, 1997, and before June 11, 1997, 
        for the amount of tax dollars lost due to abatements authorized 
        under section 273.123, subdivision 7, and Laws 1997, chapter 
        231, article 2, section 64, to the extent that they are related 
        to the major disaster and to the extent that neither the state 
        or federal government reimburses the local government for the 
        amount lost; 
           (7) property taxes approved by voters which are levied 
        against the referendum market value as provided under section 
        275.61; 
           (8) to fund matching requirements needed to qualify for 
        federal or state grants or programs to the extent that either 
        (i) the matching requirement exceeds the matching requirement in 
        calendar year 1997, or (ii) it is a new matching requirement 
        that didn't exist prior to 1998; 
           (9) to pay the expenses reasonably and necessarily incurred 
        in preparing for or repairing the effects of natural disaster 
        including the occurrence or threat of widespread or severe 
        damage, injury, or loss of life or property resulting from 
        natural causes, in accordance with standards formulated by the 
        emergency services division of the state department of public 
        safety, as allowed by the commissioner of revenue under section 
        275.74, paragraph (b); 
           (10) for the amount of tax revenue lost due to abatements 
        authorized under section 273.123, subdivision 7, for damage 
        related to the tornadoes of March 29, 1998, to the extent that 
        neither the state or federal government provides reimbursement 
        for the amount lost; 
           (11) pay amounts required to correct an error in the levy 
        certified to the county auditor by a city or county in a levy 
        year, but only to the extent that when added to the preceding 
        year's levy it is not in excess of an applicable statutory, 
        special law or charter limitation, or the limitation imposed on 
        the governmental subdivision by sections 275.70 to 275.74 in the 
        preceding levy year; 
           (12) to pay an abatement under section 469.1815; 
           (13) to pay the employer contribution to the local 
        government correctional service retirement plan under section 
        353E.03, subdivision 2, to the extent that the employer 
        contribution exceeds 5.49 percent of total salary; and 
           (14) to pay the operating or maintenance costs of a county 
        jail as authorized in section 641.01 or 641.262, or of a 
        correctional facility as defined in section 241.021, subdivision 
        1, paragraph (5), to the extent that the county can demonstrate 
        to the commissioner of revenue that the amount has been included 
        in the county budget as a direct result of a rule, minimum 
        requirement, minimum standard, or directive of the department of 
        corrections, or to pay the operating or maintenance costs of a 
        regional jail as authorized in section 641.262.  For purposes of 
        this clause, a district court order is not a rule, minimum 
        requirement, minimum standard, or directive of the department of 
        corrections.  If the county utilizes this special levy, any 
        amount levied by the county in the previous levy year for the 
        purposes specified under this clause and included in the 
        county's previous year's levy limitation computed under section 
        275.71, shall be deducted from the levy limit base under section 
        275.71, subdivision 2, when determining the county's current 
        year levy limitation.  The county shall provide the necessary 
        information to the commissioner of revenue for making this 
        determination; and 
           (15) to repay a state or federal loan used to fund the 
        direct or indirect required spending by the local government due 
        to a state or federal transportation project or other state or 
        federal capital project.  This authority may only be used if the 
        project is not a local government initiative. 
           EFFECTIVE DATE:  Minnesota Statutes, section 275.70, 
        subdivision 5, as amended by this section, is effective 
        beginning with taxes levied in 2000, payable in 2001 and 
        thereafter, for any year in which general levy limits are 
        imposed, notwithstanding Laws 1997, chapter 231, article 3, 
        section 9, as amended by Laws 1999, chapter 243, article 6, 
        section 10. 
           Sec. 5.  Minnesota Statutes 1999 Supplement, section 
        275.71, subdivision 4, is amended to read: 
           Subd. 4.  [PROPERTY TAX LEVY LIMIT.] For taxes levied 
        in 1998 and 1999, the property tax levy limit for a local 
        governmental unit is equal to its adjusted levy limit base 
        determined under subdivision 3 plus any additional levy 
        authorized under section 275.73, which is levied against net tax 
        capacity, reduced by the sum of (1) the total amount of aids 
        that the local governmental unit is certified to receive under 
        sections 477A.011 to 477A.014, (2) homestead and agricultural 
        aids it is certified to receive under section 273.1398, (3) 
        local performance aid it is certified to receive under section 
        477A.05, (4) taconite aids under sections 298.28 and 298.282 
        including any aid which was required to be placed in a special 
        fund for expenditure in the next succeeding year but excluding 
        amounts allocated under section 298.28, subdivision 2, paragraph 
        (b), (5) flood loss aid under section 273.1383, and (6) 
        low-income housing aid under sections 477A.06 and 477A.065. 
           EFFECTIVE DATE:  This section is effective for taxes levied 
        in 1999, payable in 2000. 
           Sec. 6.  Minnesota Statutes 1999 Supplement, section 
        477A.011, subdivision 36, is amended to read: 
           Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
        paragraphs (b) to (k) (n), "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. 
           (d) The city aid base for a city is increased by $20,000 in 
        1998 and thereafter and the maximum amount of total aid it may 
        receive under section 477A.013, subdivision 9, paragraph (c), is 
        also increased by $20,000 in calendar year 1998 only, provided 
        that: 
           (i) the city has a population in 1994 of 2,500 or more; 
           (ii) the city is located in a county, outside of the 
        metropolitan area, which contains a city of the first class; 
           (iii) the city's net tax capacity used in calculating its 
        1996 aid under section 477A.013 is less than $400 per capita; 
        and 
           (iv) at least four percent of the total net tax capacity, 
        for taxes payable in 1996, of property located in the city is 
        classified as railroad property. 
           (e) The city aid base for a city is increased by $200,000 
        in 1999 and thereafter and the maximum amount of total aid it 
        may receive under section 477A.013, subdivision 9, paragraph 
        (c), is also increased by $200,000 in calendar year 1999 only, 
        provided that: 
           (i) the city was incorporated as a statutory city after 
        December 1, 1993; 
           (ii) its city aid base does not exceed $5,600; and 
           (iii) the city had a population in 1996 of 5,000 or more. 
           (f) The city aid base for a city is increased by $450,000 
        in 1999 to 2008 and the maximum amount of total aid it may 
        receive under section 477A.013, subdivision 9, paragraph (c), is 
        also increased by $450,000 in calendar year 1999 only, provided 
        that: 
           (i) the city had a population in 1996 of at least 50,000; 
           (ii) its population had increased by at least 40 percent in 
        the ten-year period ending in 1996; and 
           (iii) its city's net tax capacity for aids payable in 1998 
        is less than $700 per capita. 
           (g) Beginning in 2002, the city aid base for a city is 
        equal to the sum of its city aid base in 2001 and the amount of 
        additional aid it was certified to receive under section 477A.06 
        in 2001.  For 2002 only, the maximum amount of total aid a city 
        may receive under section 477A.013, subdivision 9, paragraph 
        (c), is also increased by the amount it was certified to receive 
        under section 477A.06 in 2001. 
           (h) The city aid base for a city is increased by $150,000 
        for aids payable in 2000 and thereafter, and the maximum amount 
        of total aid it may receive under section 477A.013, subdivision 
        9, paragraph (c), is also increased by $150,000 in calendar year 
        2000 only, provided that: 
           (1) the city has a population that is greater than 1,000 
        and less than 2,500; 
           (2) its commercial and industrial percentage for aids 
        payable in 1999 is greater than 45 percent; and 
           (3) the total market value of all commercial and industrial 
        property in the city for assessment year 1999 is at least 15 
        percent less than the total market value of all commercial and 
        industrial property in the city for assessment year 1998. 
           (i) The city aid base for a city is increased by $200,000 
        in 2000 and thereafter, and the maximum amount of total aid it 
        may receive under section 477A.013, subdivision 9, paragraph 
        (c), is also increased by $200,000 in calendar year 2000 only, 
        provided that: 
           (1) the city had a population in 1997 of 2,500 or more; 
           (2) the net tax capacity of the city used in calculating 
        its 1999 aid under section 477A.013 is less than $650 per 
        capita; 
           (3) the pre-1940 housing percentage of the city used in 
        calculating 1999 aid under section 477A.013 is greater than 12 
        percent; 
           (4) the 1999 local government aid of the city under section 
        477A.013 is less than 20 percent of the amount that the formula 
        aid of the city would have been if the need increase percentage 
        was 100 percent; and 
           (5) the city aid base of the city used in calculating aid 
        under section 477A.013 is less than $7 per capita. 
           (j) The city aid base for a city is increased by $225,000 
        in calendar years 2000 to 2002 and the maximum amount of total 
        aid it may receive under section 477A.013, subdivision 9, 
        paragraph (c), is also increased by $225,000 in calendar year 
        2000 only, provided that: 
           (1) the city had a population of at least 5,000; 
           (2) its population had increased by at least 50 percent in 
        the ten-year period ending in 1997; 
           (3) the city is located outside of the Minneapolis-St. Paul 
        metropolitan statistical area as defined by the United States 
        Bureau of the Census; and 
           (4) the city received less than $30 per capita in aid under 
        section 477A.013, subdivision 9, for aids payable in 1999. 
           (k) The city aid base for a city is increased by $102,000 
        in 2000 and thereafter, and the maximum amount of total aid it 
        may receive under section 477A.013, subdivision 9, paragraph 
        (c), is also increased by $102,000 in calendar year 2000 only, 
        provided that: 
           (1) the city has a population in 1997 of 2,000 or more; 
           (2) the net tax capacity of the city used in calculating 
        its 1999 aid under section 477A.013 is less than $455 per 
        capita; 
           (3) the net levy of the city used in calculating 1999 aid 
        under section 477A.013 is greater than $195 per capita; and 
           (4) the 1999 local government aid of the city under section 
        477A.013 is less than 38 percent of the amount that the formula 
        aid of the city would have been if the need increase percentage 
        was 100 percent. 
           (l) The city aid base for a city is increased by $32,000 in 
        2001 and thereafter, and the maximum amount of total aid it may 
        receive under section 477A.013, subdivision 9, paragraph (c), is 
        also increased by $32,000 in calendar year 2001 only, provided 
        that: 
           (1) the city has a population in 1998 that is greater than 
        200 but less than 500; 
           (2) the city's revenue need used in calculating aids 
        payable in 2000 was greater than $200 per capita; 
           (3) the city net tax capacity for the city used in 
        calculating aids available in 2000 was equal to or less than 
        $200 per capita; 
           (4) the city aid base of the city used in calculating aid 
        under section 477A.013 is less than $65 per capita; and 
           (5) the city's formula aid for aids payable in 2000 was 
        greater than zero. 
           (m) The city aid base for a city is increased by $7,200 in 
        2001 and thereafter, and the maximum amount of total aid it may 
        receive under section 477A.013, subdivision 9, paragraph (c), is 
        also increased by $7,200 in calendar year 2001 only, provided 
        that: 
           (1) the city had a population in 1998 that is greater than 
        200 but less than 500; 
           (2) the city's commercial industrial percentage used in 
        calculating aids payable in 2000 was less than ten percent; 
           (3) more than 25 percent of the city's population was 60 
        years old or older according to the 1990 census; 
           (4) the city aid base of the city used in calculating aid 
        under section 477A.013 is less than $15 per capita; and 
           (5) the city's formula aid for aids payable in 2000 was 
        greater than zero. 
           (n) The city aid base for a city is increased by $45,000 in 
        2001 and thereafter, and the maximum amount of total aid it may 
        receive under section 477A.013, subdivision 9, paragraph (c), is 
        also increased by $45,000 in calendar year 2001 only, provided 
        that: 
           (1) the net tax capacity of the city used in calculating 
        its 2000 aid under section 477A.013 is less than $810 per 
        capita; 
           (2) the population of the city declined more than two 
        percent between 1988 and 1998; 
           (3) the net levy of the city used in calculating 2000 aid 
        under section 477A.013 is greater than $240 per capita; and 
           (4) the city received less than $36 per capita in aid under 
        section 477A.013, subdivision 9, for aids payable in 2000. 
           EFFECTIVE DATE:  This section is effective beginning with 
        aids payable in 2001 and thereafter. 
           Sec. 7.  Minnesota Statutes 1999 Supplement, section 
        477A.03, subdivision 2, is amended to read: 
           Subd. 2.  [ANNUAL APPROPRIATION.] (a) 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.  
           (b) Aid payments to counties under section 477A.0121 are 
        limited to $20,265,000 in 1996.  Aid payments to counties under 
        section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
        payable in 1998 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. 
           (c)(i) For aids payable in 1998 and thereafter, the total 
        aids paid to counties under section 477A.0122 are the amounts 
        certified to be paid in the previous year, adjusted for 
        inflation as provided under subdivision 3. 
           (ii) Aid payments to counties under section 477A.0122 in 
        2000 are further increased by an additional $20,000,000 in 2000. 
           (d) Aid payments to cities in 1999 under section 477A.013, 
        subdivision 9, are limited to $380,565,489.  For aids payable in 
        2000 and 2001, the total aids paid under section 477A.013, 
        subdivision 9, are the amounts certified to be paid in the 
        previous year, adjusted for inflation as provided in subdivision 
        3, and increased by the amount necessary to effectuate Laws 
        1999, chapter 243, article 5, section 48, paragraph (b).  For 
        aids payable in 2001 through 2003, the total aids paid under 
        section 477A.013, subdivision 9, are the amounts certified to be 
        paid in the previous year, adjusted for inflation as provided 
        under subdivision 3.  For aids payable in 2002 2004, the total 
        aids paid under section 477A.013, subdivision 9, are the amounts 
        certified to be paid in the previous year, adjusted for 
        inflation as provided under subdivision 3, and increased by the 
        amount certified to be paid in 2001 2003 under section 477A.06.  
        For aids payable in 2003 2005 and thereafter, the total aids 
        paid under section 477A.013, subdivision 9, are the amounts 
        certified to be paid in the previous year, adjusted for 
        inflation as provided under subdivision 3.  The additional 
        amount authorized under subdivision 4 is not included when 
        calculating the appropriation limits under this paragraph. 
           EFFECTIVE DATE:  This section is effective for aids payable 
        in 2000 and thereafter. 
           Sec. 8.  Minnesota Statutes 1999 Supplement, section 
        477A.06, subdivision 1, is amended to read: 
           Subdivision 1.  [ELIGIBILITY.] (a) For assessment years 
        1998, 1999, and 2000, 2001, and 2002, for all class 4d property 
        on which construction was begun before January 1, 1999, the 
        assessor shall determine the difference between the actual net 
        tax capacity and the net tax capacity that would be determined 
        for the property if the class rates for assessment year 1997 
        were in effect. 
           (b) In calendar years 1999, 2000, and 2001, 2002, and 2003, 
        each city shall be eligible for aid equal to (i) the amount by 
        which the sum of the differences determined in clause (a) for 
        the corresponding assessment year exceeds two percent of the 
        city's total taxable net tax capacity for taxes payable in 1998, 
        multiplied by (ii) the city government's average local tax rate 
        for taxes payable in 1998. 
           Sec. 9.  Minnesota Statutes 1998, section 477A.06, 
        subdivision 3, is amended to read: 
           Subd. 3.  [APPROPRIATION; PAYMENT.] (a) The commissioner 
        shall pay each city its qualifying aid amount on or before July 
        20 of each year.  An amount sufficient to pay the aid authorized 
        under this section is appropriated to the commissioner of 
        revenue from the property tax reform account in fiscal years 
        2000 and 2001, and from the general fund in fiscal year years 
        2002, 2003, and 2004. 
           (b) For fiscal years 2001 and 2002 through 2004, the amount 
        of aid appropriated under this section may not exceed $1,500,000 
        each year. 
           (c) If the total amount of aid that would otherwise be 
        payable under the formula in this section exceeds the maximum 
        allowed under paragraph (b), the amount of aid for each city is 
        reduced proportionately to equal the limit. 
           Sec. 10.  Minnesota Statutes 1998, section 477A.11, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TERMS.] For the purpose of Laws 1979, 
        Chapter 303, Article 8, Sections 1 to 5 sections 477A.11 to 
        477A.145, the terms defined in this section have the meanings 
        given them. 
           EFFECTIVE DATE:  This section applies to payments made in 
        calendar year 2001 and thereafter. 
           Sec. 11.  Minnesota Statutes 1998, section 477A.12, is 
        amended to read: 
           477A.12 [ANNUAL APPROPRIATIONS; LANDS ELIGIBLE; 
        CERTIFICATION OF ACREAGE.] 
           (a) There is As an offset for expenses incurred by counties 
        and towns in support of natural resources lands, the following 
        amounts are annually appropriated to the commissioner of natural 
        resources from the general fund for payment to counties within 
        the state an amount equal to transfer to the commissioner of 
        revenue.  The commissioner of revenue shall pay the transferred 
        funds to counties as required by sections 477A.11 to 477A.145.  
        The amounts are: 
           (1) for acquired natural resources land, $3, as adjusted 
        for inflation under section 477A.145, multiplied by the total 
        number of acres of acquired natural resources land or, beginning 
        July 1, 1996, at the county's option three-fourths of one 
        percent of the appraised value of all acquired natural resources 
        land in the county, whichever is greater; 
           (2) 75 cents, as adjusted for inflation under section 
        477A.145, multiplied by the number of acres of 
        county-administered other natural resources land; and 
           (3) 37.5 cents, as adjusted for inflation under section 
        477A.145, multiplied by the number of acres of 
        commissioner-administered other natural resources land located 
        in each county as of July 1 of each year prior to the payment 
        year. 
           (b) Lands for which payments in lieu are made pursuant to 
        section 97A.061, subdivision 3, and Laws 1973, chapter 567, 
        shall not be eligible for payments under this section.  Each 
        county auditor shall certify to the department of natural 
        resources during July of each year prior to the payment year the 
        number of acres of county-administered other natural resources 
        land within the county.  The department of natural resources 
        may, in addition to the certification of acreage, require 
        descriptive lists of land so certified.  The commissioner of 
        natural resources shall determine and certify to the 
        commissioner of revenue by March 1 of the payment year:  
           (1) the number of acres and most recent appraised value of 
        acquired natural resources land and within each county; 
           (2) the number of acres of commissioner-administered 
        natural resources land within each county; and 
           (3) the number of acres of county-administered other 
        natural resources land within each county, based on the reports 
        filed by each county auditor with the commissioner of natural 
        resources. 
           The commissioner of revenue shall determine the 
        distributions provided for in this section using the number of 
        acres and appraised values certified by the commissioner of 
        natural resources by March 1 of the payment year. 
           (c) For the purposes of this section, the appraised value 
        of acquired natural resources land is the purchase price for the 
        first five years after acquisition.  The appraised value of 
        acquired natural resources land received as a donation is the 
        value determined for the commissioner of natural resources by a 
        licensed appraiser, or the county assessor's estimated market 
        value if no appraisal is done.  The appraised value must be 
        determined by the county assessor every five years after the 
        land is acquired. 
           EFFECTIVE DATE:  This section applies to payments made in 
        calendar year 2001 and thereafter. 
           Sec. 12.  Minnesota Statutes 1998, section 477A.13, is 
        amended to read: 
           477A.13 [TIME OF PAYMENT, DEDUCTIONS.] 
           Payments to the counties shall of the amounts determined 
        under section 477A.12 must be made by the commissioner of 
        revenue from the general fund during the month of July of the 
        year next following certification.  There shall be deducted from 
        amounts paid any amounts paid to a county or township during the 
        preceding year pursuant to sections 97A.061, subdivisions 1 and 
        2, and 272.68, subdivision 3, with respect to the lands 
        certified pursuant to section 477A.12 at the time provided in 
        section 477A.015 for the first installment of local government 
        aid. 
           EFFECTIVE DATE:  This section applies to payments made in 
        calendar year 2001 and thereafter. 
           Sec. 13.  Minnesota Statutes 1998, section 477A.14, is 
        amended to read: 
           477A.14 [USE OF FUNDS.] 
           Forty Except as provided in section 97A.061, subdivision 5, 
        40 percent of the total payment to the county shall be deposited 
        in the county general revenue fund to be used to provide 
        property tax levy reduction.  The remainder shall be distributed 
        by the county in the following priority:  
           (a) 37.5 cents, as adjusted for inflation under section 
        477A.145, for each acre of county-administered other natural 
        resources land shall be deposited in a resource development fund 
        to be created within the county treasury for use in resource 
        development, forest management, game and fish habitat 
        improvement, and recreational development and maintenance of 
        county-administered other natural resources land.  Any county 
        receiving less than $5,000 annually for the resource development 
        fund may elect to deposit that amount in the county general 
        revenue fund; 
           (b) From the funds remaining, within 30 days of receipt of 
        the payment to the county, the county treasurer shall pay each 
        organized township 30 cents per, as adjusted for inflation under 
        section 477A.145, for each acre of acquired natural resources 
        land and 7.5 cents per, as adjusted for inflation under section 
        477A.145, for each acre of other natural resources land located 
        within its boundaries.  Payments for natural resources lands not 
        located in an organized township shall be deposited in the 
        county general revenue fund.  Payments to counties and townships 
        pursuant to this paragraph shall be used to provide property tax 
        levy reduction, except that of the payments for natural 
        resources lands not located in an organized township, the county 
        may allocate the amount determined to be necessary for 
        maintenance of roads in unorganized townships.  Provided that, 
        if the total payment to the county pursuant to section 477A.12 
        is not sufficient to fully fund the distribution provided for in 
        this clause, the amount available shall be distributed to each 
        township and the county general revenue fund on a pro rata 
        basis; and 
           (c) Any remaining funds shall be deposited in the county 
        general revenue fund.  Provided that, if the distribution to the 
        county general revenue fund exceeds $35,000, the excess shall be 
        used to provide property tax levy reduction. 
           EFFECTIVE DATE:  This section applies to payments made in 
        calendar year 2001 and thereafter. 
           Sec. 14.  [477A.145] [INFLATION ADJUSTMENT.] 
           In 2001 and each year thereafter, the amounts required to 
        be adjusted for inflation in sections 477A.12 and 477A.14 shall 
        be increased to an amount equal to:  (1) the amount before the 
        inflation adjustment multiplied by (2) one plus the percentage 
        increase in the implicit price deflator for government 
        consumption expenditures and gross investment for state and 
        local governments prepared by the Bureau of Economic Analysis of 
        the United States Department of Commerce for the period 
        indicated below:  
           (i) the period starting with the first quarter of 1994 and 
        ending with the third quarter of the calendar year prior to the 
        year in which aid is paid, provided that lands acquired by the 
        state under chapter 84A that are designated as state parks, 
        state recreation areas, scientific and natural areas, or 
        wildlife management areas are included in the definition of 
        acquired natural resource land under section 477A.11 for 
        calculating payments in calendar year 2001 and thereafter; 
           (ii) otherwise the period starting with the first quarter 
        of 1987 and ending with the third quarter of the calendar year 
        prior to the year in which the aid is paid.  
        These adjusted amounts must be rounded to the nearest one-tenth 
        of a cent. 
           EFFECTIVE DATE:  This section applies to payments made in 
        calendar year 2001 and thereafter. 
           Sec. 15.  Laws 1988, chapter 645, section 3, as amended by 
        Laws 1999, chapter 243, article 6, section 9, is amended to read:
           Sec. 3.  [TAX; PAYMENT OF EXPENSES.] 
           (a) The tax levied by the hospital district under Minnesota 
        Statutes, section 447.34, must not be levied at a rate that 
        exceeds .0063 0.063 percent of taxable market value.  
           (b) .0048 0.048 percent of taxable market value of tax in 
        paragraph (a) may be used only for acquisition, betterment, and 
        maintenance of the district's hospital and nursing home 
        facilities and equipment, and not for administrative or salary 
        expenses.  
           (c) .0015 0.015 percent of taxable market value of the tax 
        in paragraph (a) may be used solely for the purpose of capital 
        expenditures as it relates to ambulance acquisitions for the 
        Cook ambulance service and the Orr ambulance service and not for 
        administrative or salary expenses.  
           The part of the levy referred to in paragraph (c) must be 
        administered by the Cook Hospital and passed on directly to the 
        Cook area ambulance service board and the city of Orr to be held 
        in trust until funding for a new ambulance is needed by either 
        the Cook ambulance service or the Orr ambulance service. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 16.  Laws 1999, chapter 243, article 6, section 18, is 
        amended to read: 
           Sec. 18.  [EFFECTIVE DATE.] 
           Sections 3 to 6 and 10 are effective for taxes levied in 
        1999, and payable in 2000.  Section 7 is effective the day 
        following final enactment for taxes levied in 1999 and 
        thereafter.  Sections 8 and 17 are effective for taxes levied in 
        1999, payable in 2000, and thereafter.  
           The .0015 0.063 percent of market value levy described in 
        section 9, paragraph (a), and the 0.015 percent of taxable 
        market value levy described in section 9, paragraph (c), is are 
        effective for the cities of Cook and Orr and the counties of St. 
        Louis and Koochiching for affected parts of those counties on 
        January 1, 2000, to be requested for levies certified in the 
        year 2000, with the first payment to be received and taxes 
        payable in 2001 and thereafter.  The 0.048 percent market value 
        levy described in section 9, paragraph (b), is effective for the 
        cities of Cook and Orr and the counties of St. Louis and 
        Koochiching for the affected parts of those counties on January 
        1, 1999, for levies certified in 1999 and taxes payable in 2000 
        and thereafter. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 17.  [CAPITOL REGION WATERSHED DISTRICT LEVY LIMIT.] 
           The capitol region watershed district managers may levy an 
        annual ad valorem tax of 0.02418 percent of taxable market value 
        or $200,000, whichever is less, under Minnesota Statutes, 
        section 103D.905, subdivision 3, notwithstanding the maximum 
        dollar limit for the administrative fund in that subdivision. 
           EFFECTIVE DATE:  This section is effective for taxes levied 
        in 2000, payable in 2001 and thereafter. 
           Sec. 18.  [ADDITIONAL AID; LINCOLN COUNTY.] 
           Subdivision 1.  [AID INCREASE.] For aids payable in 2000, 
        Lincoln county shall receive an aid payment of up to $150,000 
        under this section.  The entire amount of this additional aid 
        shall be paid from the appropriation for reimbursement for 
        court-ordered counsel under section 477A.0121, subdivision 4, 
        with the December 26 payment of other aids paid under Minnesota 
        Statutes, section 477A.015, and shall be equal to the estimated 
        amount of the appropriation under Minnesota Statutes, section 
        477A.0121, subdivision 4, up to $150,000, that will not be spent 
        for public defender costs under Minnesota Statutes, section 
        611.27, in fiscal year 2000. 
           For aids payable in 2001, Lincoln county shall receive an 
        additional payment under this section of up to the difference 
        between $150,000 and what the county received under this 
        provision in the previous year.  The entire amount of this 
        additional aid shall be paid from the appropriation for 
        reimbursement for court-ordered counsel under section 477A.0121, 
        subdivision 4, with the December 26 payment of other aids paid 
        under Minnesota Statutes, section 477A.015, and shall be equal 
        to the estimated amount of the appropriation under Minnesota 
        Statutes, section 477A.0121, subdivision 4, up to the limit 
        determined in this paragraph, that will not be spent for public 
        defender costs under Minnesota Statutes, section 611.27, in 
        fiscal year 2001. 
           The county is not limited to the purposes listed in 
        Minnesota Statutes, section 477A.015, for spending this aid and 
        may pay a portion of this aid to Lake Benton township to 
        reimburse the township for losses due to the Wind Tower lawsuit 
        settlement.  The aid under this section must not be included in 
        calculating any aids or any limitations on levies or 
        expenditures under law. 
           EFFECTIVE DATE:  This section is effective the day after 
        timely compliance by the governing body of Lincoln county and 
        its chief clerical officer with Minnesota Statutes, section 
        645.021, subdivisions 2 and 3. 
           Sec. 19.  [LOCAL GOVERNMENT AID TO CITIES; THE CITY OF ST. 
        CLOUD AND ST. AUGUSTA TOWNSHIP (THE CITY OF VENTURA).] 
           Subdivision 1.  [ADDITIONAL LOCAL GOVERNMENT AID.] For aids 
        payable in 2001 only, an additional payment of $32,000 shall be 
        paid to the city of St. Cloud and an additional aid payment of 
        $75,000 shall be paid to St. Augusta township or its succeeding 
        municipal government (the city of Ventura).  This aid shall be 
        paid out of the city aid appropriation under Minnesota Statutes, 
        section 477A.03, subdivision 2, paragraph (d).  The aid under 
        this section must not be included in calculating aid paid under 
        Minnesota Statutes, section 477A.013, subdivision 9, or any 
        other law, or of any limitations on levies or expenditures. 
           EFFECTIVE DATE:  This section is effective for aids payable 
        in calendar year 2001 only for the city of St. Cloud, upon 
        timely compliance by its governing body and its chief clerical 
        officer with Minnesota Statutes, section 645.021, subdivisions 2 
        and 3.  This section is effective for aids payable in calendar 
        year 2001 only for St. Augusta township (city of Ventura), upon 
        timely compliance by its governing body and its chief clerical 
        officer with Minnesota Statutes, section 645.021, subdivisions 2 
        and 3. 
           Sec. 20.  [LAKE OF THE WOODS AND KOOCHICHING COUNTIES; 
        EXPENDITURES FOR ROAD AND BRIDGE PURPOSES.] 
           (a) Notwithstanding Minnesota Statutes, section 163.06, 
        subdivisions 4 and 5, the county board of Lake of the Woods 
        county, by resolution, may expend the proceeds of the levy under 
        Minnesota Statutes, section 163.06, in any organized or 
        unorganized township or portion thereof in the county. 
           (b) Notwithstanding Minnesota Statutes, section 163.06, 
        subdivisions 4 and 5, the county board of Koochiching county, by 
        resolution, may expend the proceeds of the levy under Minnesota 
        Statutes, section 163.06, in any organized or unorganized 
        township or portion thereof in the county. 
           EFFECTIVE DATES:  This section is effective for Lake of the 
        Woods county upon approval by and compliance with Minnesota 
        Statutes, section 645.021, subdivision 3.  This section is 
        effective for Koochiching county upon approval by and compliance 
        with Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 21.  [ST. LOUIS COUNTY; CAPITAL IMPROVEMENT PLAN 
        DEFINITION.] 
           For St. Louis county, the St. Louis county heritage and 
        arts center is included in the definition of "capital 
        improvement" in Minnesota Statutes, section 373.40, subdivision 
        1, but only with respect to bonds issued before July 1, 2002. 
           EFFECTIVE DATE:  This section is effective upon approval by 
        the governing body of St. Louis county, and compliance with 
        Minnesota Statutes, section 645.021, subdivision 3. 

                                   ARTICLE 7 
                         MOTOR VEHICLE REGISTRATION TAX 
           Section 1.  Minnesota Statutes 1998, section 168.013, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [PASSENGER AUTOMOBILE; HEARSE.] (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 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. 
           (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. 
           (f) The base value for purposes of this section shall be 
        the middle point between the extremes of its class. 
           (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 (h). 
           (h) Except as provided in paragraph (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.  The total tax under this subdivision shall not exceed $189 
        for the first renewal period and shall not exceed $99 for 
        subsequent renewal periods.  The total tax under this 
        subdivision on any vehicle filing its initial registration in 
        Minnesota in the second year of vehicle life shall not exceed 
        $189 and shall not exceed $99 for subsequent renewal periods.  
        The total tax under this subdivision on any vehicle filing its 
        initial registration in Minnesota in the third or subsequent 
        year of vehicle life shall not exceed $99 and shall not exceed 
        $99 in any subsequent renewal period. 
           (i) The annual additional tax under paragraph (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. 
           EFFECTIVE DATE:  This section is effective for taxes first 
        due after June 30, 2000. 
           Sec. 2.  Minnesota Statutes 1998, section 297B.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL FUND SHARE.] (a) Money collected 
        and received under this chapter must be deposited in the state 
        treasury and credited to the general fund.  The amounts 
        collected and received shall be credited as provided in this 
        subdivision,.  and transferred from the general fund on July 15 
        and February 15 of each fiscal year.  The commissioner of 
        finance must make each transfer based upon the actual receipts 
        of the preceding six calendar months and include the interest 
        earned during that six-month period.  The commissioner of 
        finance may establish a quarterly or other schedule providing 
        for more frequent payments to the transit assistance fund if the 
        commissioner determines it is necessary or desirable to provide 
        for the cash flow needs of the recipients of money from the 
        transit assistance fund.  
           (b) Twenty-five Thirty-two percent of the money collected 
        and received under this chapter after June 30, 1990, and before 
        July 1, 1991, must be transferred to the highway user tax 
        distribution fund and the transit assistance fund for 
        apportionment as follows:  75 percent must be transferred to 
        deposited in the highway user tax distribution fund for 
        apportionment in the same manner and for the same purposes as 
        other money in that fund, and the remaining 25 68 percent of the 
        money must be transferred to the transit assistance fund to be 
        appropriated to the commissioner of transportation for transit 
        assistance within the state and to the metropolitan 
        council deposited in the general fund.  
           (c) The distributions under this subdivision to the highway 
        user tax distribution fund until June 30, 1991, and to the trunk 
        highway fund thereafter, must be reduced by the amount necessary 
        to fund the appropriation under section 41A.09, subdivision 1.  
        For the fiscal years ending June 30, 1988, and June 30, 1989, 
        the commissioner of finance, before making the transfers 
        required on July 15 and January 15 of each year, shall estimate 
        the amount required to fund the appropriation under section 
        41A.09, subdivision 1, for the six-month period for which the 
        transfer is being made.  The commissioner shall then reduce the 
        amount transferred to the highway user tax distribution fund by 
        the amount of that estimate.  The commissioner shall reduce the 
        estimate for any six-month period by the amount by which the 
        estimate for the previous six-month period exceeded the amount 
        needed to fund the appropriation under section 41A.09, 
        subdivision 1, for that previous six-month period.  If at any 
        time during a six-month period in those fiscal years the amount 
        of reduction in the transfer to the highway user tax 
        distribution fund is insufficient to fund the appropriation 
        under section 41A.09, subdivision 1, for that period, the 
        commissioner shall transfer to the general fund from the highway 
        user tax distribution fund an additional amount sufficient to 
        fund the appropriation for that period, but the additional 
        amount so transferred to the general fund in a six-month period 
        may not exceed the amount transferred to the highway user tax 
        distribution fund for that six-month period. 
           EFFECTIVE DATE:  This section is effective for money 
        collected and received after June 30, 2002. 
           Sec. 3.  [APPROPRIATION.] 
           For fiscal year 2001, $149,804,000 is appropriated from the 
        general fund to the highway user tax distribution fund.  For 
        fiscal year 2002, $161,723,000 is appropriated from the general 
        fund to the highway user tax distribution fund. 

                                   ARTICLE 8 
                              SALES AND USE TAXES 
           Section 1.  Minnesota Statutes 1999 Supplement, section 
        289A.20, subdivision 4, is amended to read: 
           Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
        chapter 297A are due and payable to the commissioner monthly on 
        or before the 20th day of the month following the month in which 
        the taxable event occurred, or following another reporting 
        period as the commissioner prescribes or as allowed under 
        section 289A.18, subdivision 4, paragraph (f), except that use 
        taxes due on an annual use tax return as provided under section 
        289A.11, subdivision 1, are payable by April 15 following the 
        close of the calendar year. 
           (b) A vendor having a liability of $120,000 or more during 
        a fiscal year ending June 30 must remit the June liability for 
        the next year in the following manner: 
           (1) Two business days before June 30 of the year, the 
        vendor must remit 75 62 percent of the estimated June liability 
        to the commissioner.  
           (2) On or before August 14 of the year, the vendor must pay 
        any additional amount of tax not remitted in June. 
           (c) A vendor having a liability of $120,000 or more during 
        a fiscal year ending June 30 must remit all liabilities on 
        returns due for periods beginning 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 14th day 
        of the month following the month in which the taxable event 
        occurred, or on or before the 14th day of the month following 
        the month in which the sale is reported under section 289A.18, 
        subdivision 4, except for 75 62 percent of the estimated June 
        liability, which is due two business days before June 30.  The 
        remaining amount of the June liability is due on August 14.  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. 
           (d) If the vendor required to remit by electronic funds 
        transfer as provided in paragraph (c) is unable due to 
        reasonable cause to determine the actual sales and use tax due 
        on or before the due date for payment, the vendor may remit an 
        estimate of the tax owed using one of the following options: 
           (1) 100 percent of the tax reported on the previous month's 
        sales and use tax return; 
           (2) 100 percent of the tax reported on the sales and use 
        tax return for the same month in the previous calendar year; or 
           (3) 95 percent of the actual tax due. 
           Any additional amount of tax that is not remitted on or 
        before the due date for payment, must be remitted with the 
        return.  If a vendor fails to remit the actual liability or does 
        not remit using one of the estimate options by the due date for 
        payment, the vendor must remit actual liability as provided in 
        paragraph (c) in all subsequent periods.  This paragraph does 
        not apply to the June sales and use tax liability. 
           EFFECTIVE DATE:  The portion of this section related to the 
        percent of the June liability that must be filed by two business 
        days before the end of June is effective beginning with the June 
        2002 liability.  The remainder of this section is effective the 
        day following final enactment.  
           Sec. 2.  Minnesota Statutes 1998, section 289A.60, 
        subdivision 14, is amended to read: 
           Subd. 14.  [PENALTY FOR USE OF SALES TAX EXEMPTION 
        CERTIFICATES TO EVADE TAX.] A person who uses an exemption 
        certificate to buy property or purchase services that will be 
        used for purposes other than the exemption claimed, with the 
        intent to evade payment of sales tax to the seller, is subject 
        to a penalty of $100 for each transaction where that use of an 
        exemption certificate has occurred.  
           EFFECTIVE DATE:  This section is effective for exemption 
        certificates used on or after July 1, 2000.  
           Sec. 3.  Minnesota Statutes 1998, section 289A.60, 
        subdivision 15, is amended to read: 
           Subd. 15.  [ACCELERATED PAYMENT OF JUNE SALES TAX 
        LIABILITY; PENALTY FOR UNDERPAYMENT.] If a vendor is required by 
        law to submit an estimation of June sales tax liabilities and 75 
        62 percent payment by a certain date, the vendor shall pay a 
        penalty equal to ten percent of the amount of actual June 
        liability required to be paid in June less the amount remitted 
        in June.  The penalty must not be imposed, however, if the 
        amount remitted in June equals the lesser of 75 62 percent of 
        the preceding May's liability or 75 62 percent of the average 
        monthly liability for the previous calendar year. 
           EFFECTIVE DATE:  This section is effective beginning with 
        the June 2002 liability. 
           Sec. 4.  Minnesota Statutes 1998, section 297A.01, 
        subdivision 13, is amended to read: 
           Subd. 13.  "Agricultural production," as used in section 
        297A.25, subdivision 9, includes, but is not limited to, 
        horticulture; floriculture; maple syrup harvesting; raising of 
        pets, fur bearing animals, research animals, farmed cervidae, as 
        defined in section 17.451, subdivision 2, llamas, as defined in 
        section 17.455, subdivision 2, ratitae, as defined in section 
        17.453, subdivision 3, and horses. 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases made after June 30, 2000. 
           Sec. 5.  Minnesota Statutes 1998, section 297A.01, 
        subdivision 15, is amended to read: 
           Subd. 15.  "Farm machinery" means new or used machinery, 
        equipment, implements, accessories, and contrivances used 
        directly and principally in the production for sale, but not 
        including the processing, of livestock, dairy animals, dairy 
        products, poultry and poultry products, fruits, 
        vegetables, trees and shrubs, forage, grains and bees and apiary 
        products.  "Farm machinery" includes: 
           (1) machinery for the preparation, seeding or cultivation 
        of soil for growing agricultural crops and sod, harvesting and 
        threshing of agricultural products, harvesting or mowing of sod, 
        and certain machinery for dairy, livestock and poultry farms; 
           (2) barn cleaners, milking systems, grain dryers, automatic 
        feeding systems and similar installations, whether or not the 
        equipment is installed by the seller and becomes part of the 
        real property; 
           (3) irrigation equipment sold for exclusively agricultural 
        use, including pumps, pipe fittings, valves, sprinklers and 
        other equipment necessary to the operation of an irrigation 
        system when sold as part of an irrigation system, whether or not 
        the equipment is installed by the seller and becomes part of the 
        real property; 
           (4) logging equipment, including chain saws used for 
        commercial logging; 
           (5) fencing used for the containment of farmed cervidae, as 
        defined in section 17.451, subdivision 2; 
           (6) primary and backup generator units used to generate 
        electricity for the purpose of operating farm machinery, as 
        defined in this subdivision, or providing light or space heating 
        necessary for the production of livestock, dairy animals, dairy 
        products, or poultry and poultry products; and 
           (7) aquaculture production equipment as defined in 
        subdivision 19; and 
           (8) equipment used for maple syrup harvesting.  
           Repair or replacement parts for farm machinery shall not be 
        included in the definition of farm machinery.  
           Tools, shop equipment, grain bins, feed bunks, fencing 
        material except fencing material covered by clause (5), 
        communication equipment and other farm supplies shall not be 
        considered to be farm machinery.  "Farm machinery" does not 
        include motor vehicles taxed under chapter 297B, snowmobiles, 
        snow blowers, lawn mowers except those used in the production of 
        sod for sale, garden-type tractors or garden tillers and the 
        repair and replacement parts for those vehicles and machines. 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases made after June 30, 2000. 
           Sec. 6.  Minnesota Statutes 1998, section 297A.15, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [REFUND; APPROPRIATION; AGRICULTURAL PROCESSING 
        FACILITIES.] The tax on the gross receipts from the sale of 
        items exempt under section 297A.25, subdivision 87 or 90, must 
        be imposed and collected as if the sale were taxable and the 
        rate under section 297A.02, subdivision 1, applied. 
           Upon application by the owner of the property on forms 
        prescribed by the commissioner, a refund equal to the tax paid 
        on the gross receipts of the building materials and equipment 
        must be paid to the owner.  In the case of materials and 
        equipment in which the tax was paid by a contractor, application 
        must be made by the owner for the sales tax paid by the 
        contractor.  The application must include sufficient information 
        to permit the commissioner to verify the sales tax paid for the 
        project.  The contractor must furnish to the owner a statement 
        of the cost of building materials and equipment and the sales 
        taxes paid on these items.  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. 
           EFFECTIVE DATE:  This section is effective for applications 
        for refund made after June 30, 2000. 
           Sec. 7.  Minnesota Statutes 1998, section 297A.25, 
        subdivision 5, is amended to read: 
           Subd. 5.  [OUTSTATE TRANSPORT OR DELIVERY.] The gross 
        receipts from the following sales of, and storage, use, or 
        consumption of, tangible personal property are exempt:  
           (1) property which, without intermediate use, is shipped or 
        transported outside Minnesota by the purchaser and thereafter 
        used in a trade or business or is stored, processed, fabricated 
        or manufactured into, attached to or incorporated into other 
        tangible personal property transported or shipped outside 
        Minnesota and thereafter used in a trade or business outside 
        Minnesota, and which is not thereafter returned to a point 
        within Minnesota, except in the course of interstate commerce 
        (storage shall not constitute intermediate use); provided that 
        the property is not subject to tax in that state or country to 
        which it is transported for storage or use and provided further 
        that sales of tangible personal property to be used in other 
        states or countries as part of a maintenance contract shall be 
        specifically exempt; or 
           (2) property which the seller delivers to a common carrier 
        for delivery outside Minnesota, places in the United States mail 
        or parcel post directed to the purchaser outside Minnesota, or 
        delivers to the purchaser outside Minnesota by means of the 
        seller's own delivery vehicles, and which is not thereafter 
        returned to a point within Minnesota, except in the course of 
        interstate commerce; or 
           (3) aircraft, as defined in section 360.511 and approved by 
        the Federal Aviation Administration, and which the seller 
        delivers to a purchaser outside Minnesota or which, without 
        intermediate use, is shipped or transported outside Minnesota by 
        the purchaser, but only if the purchaser is not a resident of 
        Minnesota and provided that the aircraft is not thereafter 
        returned to a point within Minnesota, except in the course of 
        interstate commerce or isolated and occasional use and will be 
        registered in another state or country upon its removal from 
        Minnesota; this exemption applies even if the purchaser takes 
        possession of the aircraft in Minnesota and uses the aircraft in 
        the state exclusively for training purposes for a period not to 
        exceed ten days prior to removing the aircraft from this state. 
           EFFECTIVE DATE:  This section is effective for purchases 
        made after the date of final enactment. 
           Sec. 8.  Minnesota Statutes 1999 Supplement, 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, as amended through December 31, 1991, 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 horses and agricultural production 
        animals 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.  The following materials, tools, and equipment 
        used in metalcasting are exempt under this subdivision: 
        crucibles, thermocouple protection sheaths and tubes, stalk 
        tubes, refractory materials, molten metal filters and filter 
        boxes, and degassing lances, and base blocks.  Electricity used 
        to make snow for outdoor use for ski hills, ski slopes, or ski 
        trails is included in this exemption.  Petroleum and special 
        fuels used in producing or generating power for propelling 
        ready-mixed concrete trucks on the public highways of this state 
        are not included in this exemption. 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases made after June 30, 2000. 
           Sec. 9.  Minnesota Statutes 1999 Supplement, 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 Perpich center for arts education, an 
        instrumentality of a political subdivision that is accredited as 
        an optional/special function school by the North Central 
        Association of Colleges and Schools, school districts, public 
        libraries, public library systems, multicounty, multitype 
        library systems as defined in section 134.001, county law 
        libraries under chapter 134A, state agency libraries, the state 
        library under section 480.09, and the legislative reference 
        library 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, service cooperatives, secondary 
        vocational cooperative centers, special education cooperatives, 
        joint purchasing cooperatives, telecommunication cooperatives, 
        regional management information centers, 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).  
           Sales to hospitals and nursing homes owned and operated by 
        political subdivisions of the state are exempt under this 
        subdivision.  
           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 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 to a town of gravel and of machinery, equipment, and 
        accessories, except motor vehicles, used exclusively for road 
        and bridge maintenance, and leases of motor vehicles exempt from 
        tax under section 297B.03, clause (10), 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, 473.448, 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). 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases occurring after June 30, 2000. 
           Sec. 10.  Minnesota Statutes 1998, section 297A.25, 
        subdivision 16, is amended to read: 
           Subd. 16.  [SALES TO NONPROFIT GROUPS.] The gross receipts 
        from the sale of tangible personal property to, and the storage, 
        use or other consumption of such property by, any corporation, 
        society, association, foundation, or institution organized and 
        operated exclusively for charitable, religious, or educational 
        purposes if the property purchased is to be used in the 
        performance of charitable, religious, or educational functions, 
        or any senior citizen group or association of groups that in 
        general limits membership to persons who are either (1) age 55 
        or older, or (2) physically disabled, 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, are exempt.  For 
        purposes of this subdivision, charitable purpose includes the 
        maintenance of a cemetery owned by a religious organization.  
        Sales exempted by this subdivision include sales pursuant to 
        section 297A.01, subdivision 3, paragraphs (d) and (f).  This 
        exemption shall not apply to building, construction, or 
        reconstruction materials purchased by a contractor or a 
        subcontractor as a part of a lump-sum contract or similar type 
        of contract with a guaranteed maximum price covering both labor 
        and materials for use in the construction, alteration, or repair 
        of a building or facility.  This exemption does not apply to 
        construction materials purchased by tax exempt entities or their 
        contractors to be used in constructing buildings or facilities 
        which will not be used principally by the tax exempt entities.  
        This exemption does not apply applies to the leasing of a motor 
        vehicle as defined in section 297B.01, subdivision 5, only if 
        the vehicle is: 
           (1) a truck, as defined in section 168.011, a bus, as 
        defined in section 168.011, or a passenger automobile, as 
        defined in section 168.011, if the automobile is designed and 
        used for carrying more than nine persons including the driver; 
        and 
           (2) intended to be used primarily to transport tangible 
        personal property or individuals, other than employees, to whom 
        the organization provides service in performing its charitable, 
        religious, or educational purpose. 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases occurring after June 30, 2000. 
           Sec. 11.  Minnesota Statutes 1998, section 297A.25, 
        subdivision 34, is amended to read: 
           Subd. 34.  [MOTOR VEHICLES.] The gross receipts from the 
        sale or use of any motor vehicle taxable under the provisions of 
        the sales tax on motor vehicles laws of Minnesota shall be 
        exempt from taxation under this chapter.  Notwithstanding 
        subdivision 11, the exemption provided under this subdivision 
        remains in effect for motor vehicles purchased or leased by 
        political subdivisions of the state if the vehicles are exempt 
        from registration under section 168.012, subdivision 1, 
        paragraph (b), or exempt from taxation under section 473.448. 
           EFFECTIVE DATE:  This section is retroactively effective 
        July 1, 1997.  
           Sec. 12.  Minnesota Statutes 1998, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 84.  [MATERIALS USED TO MAKE RESIDENTIAL PROPERTY 
        HANDICAPPED ACCESSIBLE.] The gross receipts from the sale to, 
        and the storage, use, or consumption of building materials and 
        equipment to a nonprofit organization is exempt if: 
           (1) the materials and equipment are used or incorporated 
        into modifying an existing residential structure to make it 
        handicapped accessible; and 
           (2) the materials and equipment used in the modification 
        would qualify for an exemption under either subdivision 20 or 43 
        if made by the current owner of the residence. 
           For purposes of this subdivision, "nonprofit organization" 
        means any nonprofit corporation, society, association, 
        foundation, or institution organized and operated exclusively 
        for charitable, religious, educational, or civic purposes; or a 
        veterans' group exempt from federal taxation under section 
        501(c), clause (19), of the Internal Revenue Code. 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases occurring after June 30, 2000. 
           Sec. 13.  Minnesota Statutes 1998, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 85.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
        related services used in the maintenance of cemetery grounds are 
        exempt.  For purposes of this subdivision, "lawn care and 
        related services" means the services listed in section 297A.01, 
        subdivision 3, paragraph (i), clause (vi), and "cemetery" means 
        a cemetery for human burial. 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases occurring after June 30, 2000. 
           Sec. 14.  Minnesota Statutes 1998, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 86.  [PATENT, TRADEMARK, AND COPYRIGHT DRAWINGS AND 
        DOCUMENTS.] The gross receipts from the sale of, and use, 
        storage, distribution, or consumption of a drawing, diagram, or 
        similar or related document or a copy of such a document are 
        exempt if the document: 
           (1) is produced and sold by a patent drafter; and 
           (2) is for use in: 
           (i) a patent, trademark, or copyright application to be 
        filed with government agencies; 
           (ii) an application to the federal Food and Drug 
        Administration for approval of a medical device; or 
           (iii) a judicial or quasi-judicial proceeding, including 
        mediation and arbitration, relating to the validity of or legal 
        rights under a patent, trademark, or copyright. 
           For purposes of this subdivision, a "patent drafter" is a 
        person who prepares illustrative documents required in the 
        preparation of intellectual property applications. 
           EFFECTIVE DATE:  This section is effective for sales, use, 
        storage, distribution, or consumption occurring after June 30, 
        2000. 
           Sec. 15.  Minnesota Statutes 1998, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 88.  [MACHINERY AND EQUIPMENT FOR SKI AREAS.] The 
        gross receipts from the sale, storage, use, or consumption of 
        tangible personal property used or consumed primarily and 
        directly for tramways at ski areas or in snowmaking and 
        snow-grooming operations at ski hills, ski slopes, or ski 
        trails, including machinery, equipment, fuel, electricity, and 
        water additives used in the production and maintenance of 
        machine-made snow, are exempt. 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases made after June 30, 2000. 
           Sec. 16.  Minnesota Statutes 1998, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 89.  [FEED FOR POULTRY RAISED FOR HUMAN CONSUMPTION.] 
        The gross receipts from the sale of, and storage, use, or 
        consumption of poultry feed is exempt if the poultry is raised 
        for human consumption. 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases made after June 30, 2000. 
           Sec. 17.  Minnesota Statutes 1998, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 90.  [CONSTRUCTION MATERIALS AND EQUIPMENT; 
        AGRICULTURAL PROCESSING FACILITY.] Materials, supplies, and 
        equipment used or consumed in the construction and initial 
        equipping of an agricultural pork processing facility are exempt 
        from the tax imposed under this chapter provided that the 
        following conditions are met: 
           (1) the construction and equipping of the facility will be 
        at least $4,000,000; 
           (2) the facility is owned and operated by a cooperative 
        organized under chapter 308A; and 
           (3) the facility will have a maximum daily processing 
        capacity of at least 400 hogs. 
           The exemption applies regardless of whether the materials, 
        supplies, and equipment are purchased by the owner or by a 
        contractor, subcontractor, or builder.  The tax must be 
        calculated and paid at the time of purchase and a refund applied 
        for in the manner prescribed in section 297A.15, subdivision 8.  
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases made after January 1, 2000, and before December 31, 
        2000. 
           Sec. 18.  Minnesota Statutes 1998, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 87.  [CONSTRUCTION MATERIALS AND EQUIPMENT; PORK AND 
        BEEF AGRICULTURAL PROCESSING FACILITY.] Materials, supplies, and 
        equipment used or consumed in the construction and initial 
        equipping of an agricultural processing facility are exempt from 
        the tax imposed under this chapter provided that the following 
        conditions are met: 
           (1) the construction and equipping of the facility will be 
        at least $1,500,000; 
           (2) the facility is owned and operated by a C corporation, 
        as defined in section 1361(a)(2) of the Internal Revenue Code of 
        1986, with fewer than 20 shareholders of which at least one-half 
        of them are full-time or part-time farmers; 
           (3) the facility will have a weekly processing capacity of 
        at least 50 hogs and 30 beef animals.  The exemption applies 
        regardless of whether the materials, supplies, and equipment are 
        purchased by the owner or by a contractor, subcontractor, or 
        builder.  The tax must be calculated and paid at the time of 
        purchase and a refund applied for in the manner prescribed in 
        section 297A.15, subdivision 8.  
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases made after December 1, 1999, and before December 31, 
        2000.  
           Sec. 19.  Minnesota Statutes 1998, section 297B.01, 
        subdivision 7, is amended to read: 
           Subd. 7.  [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 
        ACQUIRED.] "Sale," "sells," "selling," "purchase," "purchased," 
        or "acquired" means any transfer of title of any motor vehicle, 
        whether absolutely or conditionally, for a consideration in 
        money or by exchange or barter for any purpose other than resale 
        in the regular course of business.  Any motor vehicle utilized 
        by the owner only by leasing such vehicle to others or by 
        holding it in an effort to so lease it, and which is put to no 
        other use by the owner other than resale after such lease or 
        effort to lease, shall be considered property purchased for 
        resale.  The terms also shall include any transfer of title or 
        ownership of a motor vehicle by way of gift or by any other 
        manner or by any other means whatsoever, for or without 
        consideration, except that these terms shall not include: 
           (a) the acquisition of a motor vehicle by inheritance from 
        or by bequest of, a decedent who owned it; 
           (b) the transfer of a motor vehicle which was previously 
        licensed in the names of two or more joint tenants and 
        subsequently transferred without monetary consideration to one 
        or more of the joint tenants; 
           (c) the transfer of a motor vehicle by way of gift between 
        a husband and wife or parent and child individuals, when the 
        transfer is with no monetary or other consideration or 
        expectation of consideration and the parties to the transfer 
        submit an affidavit to that effect at the time the title 
        transfer is recorded; 
           (d) the voluntary or involuntary transfer of a motor 
        vehicle between a husband and wife in a divorce proceeding; or 
           (e) the transfer of a motor vehicle by way of a gift to an 
        organization that is exempt from federal income taxation under 
        section 501(c)(3) of the Internal Revenue Code, as amended 
        through December 31, 1996, when the motor vehicle will be used 
        exclusively for religious, charitable, or educational purposes. 
           EFFECTIVE DATE:  This section is effective for 
        registrations after June 30, 2000. 
           Sec. 20.  Minnesota Statutes 1998, section 297B.03, is 
        amended to read: 
           297B.03 [EXEMPTIONS.] 
           There is specifically exempted from the provisions of this 
        chapter and from computation of the amount of tax imposed by it 
        the following:  
           (1) Purchase or use, including use under a lease purchase 
        agreement or installment sales contract made pursuant to section 
        465.71, of any motor vehicle by the United States and its 
        agencies and instrumentalities and by any person described in 
        and subject to the conditions provided in section 297A.25, 
        subdivision 18.  
           (2) Purchase or use of any motor vehicle by any person who 
        was a resident of another state at the time of the purchase and 
        who subsequently becomes a resident of Minnesota, provided the 
        purchase occurred more than 60 days prior to the date such 
        person began residing in the state of Minnesota.  
           (3) Purchase or use of any motor vehicle by any person 
        making a valid election to be taxed under the provisions of 
        section 297A.211.  
           (4) Purchase or use of any motor vehicle previously 
        registered in the state of Minnesota when such transfer 
        constitutes a transfer within the meaning of section 118, 331, 
        332, 336, 337, 338, 351 or, 355, 368, 721, 731, 1031, 1033, or 
        1563(a) of the Internal Revenue Code of 1986, as amended through 
        December 31, 1988 1999.  
           (5) Purchase or use of any vehicle owned by a resident of 
        another state and leased to a Minnesota based private or for 
        hire carrier for regular use in the transportation of persons or 
        property in interstate commerce provided the vehicle is titled 
        in the state of the owner or secured party, and that state does 
        not impose a sales tax or sales tax on motor vehicles used in 
        interstate commerce.  
           (6) Purchase or use of a motor vehicle by a private 
        nonprofit or public educational institution for use as an 
        instructional aid in automotive training programs operated by 
        the institution.  "Automotive training programs" includes motor 
        vehicle body and mechanical repair courses but does not include 
        driver education programs.  
           (7) Purchase of a motor vehicle for use as an ambulance by 
        an ambulance service licensed under section 144E.10. 
           (8) Purchase of a motor vehicle by or for a public library, 
        as defined in section 134.001, subdivision 2, as a bookmobile or 
        library delivery vehicle. 
           (9) Purchase of a ready-mixed concrete truck. 
           (10) Purchase or use of a motor vehicle by a town for use 
        exclusively for road maintenance, including snowplows and dump 
        trucks, but not including automobiles, vans, or pickup trucks. 
           (11) Purchase or use of a motor vehicle by a corporation, 
        society, association, foundation, or institution organized and 
        operated exclusively for charitable, religious, or educational 
        purposes, but only if the vehicle is: 
           (i) a truck, as defined in section 168.011, a bus, as 
        defined in section 168.011, or a passenger automobile, as 
        defined in section 168.011, if the automobile is designed and 
        used for carrying more than nine persons including the driver; 
        and 
           (ii) intended to be used primarily to transport tangible 
        personal property or individuals, other than employees, to whom 
        the organization provides service in performing its charitable, 
        religious, or educational purpose. 
           EFFECTIVE DATE:  This section is effective for sales and 
        purchases occurring after June 30, 2000, except that the new 
        language in clause (4) is effective the day following final 
        enactment. 
           Sec. 21.  [LOCAL TAXES ON MOTOR VEHICLES.] 
           Subdivision 1.  [SALES TAX PROHIBITED; PHASE-OUT.] (a) 
        Except as provided in paragraph (b), after June 30, 2000, no 
        home rule charter or statutory city, county, or other political 
        subdivision may impose a tax on the sale, transfer, or use of a 
        motor vehicle that exceeds the tax authorized under subdivision 
        2. 
           (b) If, on March 8, 2000, a tax was in effect in a home 
        rule charter or statutory city, county, or other political 
        subdivision that exceeded the limit imposed under subdivision 2, 
        the rate of that tax is reduced as follows: 
           (1) for sales or transfers after December 31, 2000, and 
        before January 1, 2002, the tax rate in effect on March 8, 2000, 
        is reduced by 25 percent; 
           (2) for sales or transfers after December 31, 2001, and 
        before January 1, 2003, the tax rate in effect on March 8, 2000, 
        is reduced by 50 percent; and 
           (3) for sales or transfers after December 31, 2002, and 
        before January 1, 2004, the tax rate in effect on March 8, 2000, 
        is reduced by 75 percent. 
        For sales or transfers after December 31, 2003, the political 
        subdivision may impose no tax except as authorized under 
        subdivision 2. 
           Subd. 2.  [EXCISE TAX ON MOTOR VEHICLES AUTHORIZED.] 
        Notwithstanding Minnesota Statutes, section 477A.016, or any 
        other provision of law, ordinance, or city charter, if a sales 
        and use tax on motor vehicles that was imposed by a political 
        subdivision is terminated under subdivision 1, the political 
        subdivision may impose by ordinance an excise tax of up to $20 
        per motor vehicle, as defined by ordinance, that was purchased 
        or acquired from any person engaged within the territory of the 
        political subdivision in the business of selling motor vehicles 
        at retail.  The proceeds of the tax must be used for the 
        purposes for which the tax terminated under subdivision 1 was 
        used. 
           EFFECTIVE DATE:  This section is effective July 1, 2000. 
           Sec. 22.  [DEVELOPMENT OF SALES AND USE TAX COLLECTION 
        SYSTEM.] 
           Subdivision 1.  [AUTHORIZATION TO ENTER INTO MULTISTATE 
        DISCUSSIONS.] The commissioner of revenue may enter into 
        discussions with states regarding development of a multistate, 
        voluntary, streamlined system for sales and use tax collection 
        and administration.  These discussions will focus on development 
        of a system that is capable of determining whether a transaction 
        is taxable or exempt, the appropriate tax rate applied to the 
        transaction, and the total tax due on the transaction, and shall 
        provide a method for collecting and remitting sales and use 
        taxes to the state.  The system may provide compensation for the 
        costs of collecting and remitting sales and use taxes.  
        Discussions between the department and other states may result 
        in developing and issuing a joint request for information from 
        public and private potential parties.  The commissioner must 
        publish the notices in the State Register. 
           Subd. 2.  [LIMITED TEST AUTHORIZATION.] (a) The 
        commissioner may participate in a sales tax pilot project with 
        other states and selected businesses to test a means for 
        simplifying sales and use tax administration, and may enter into 
        joint agreements for that purpose. 
           (b) Agreements to participate in the test will establish 
        provisions for the administration, imposition, and collection of 
        sales and use taxes resulting in revenues paid by the taxpayer 
        that are the same as would be paid under existing law. 
           (c) Parties to the agreements are excused from complying 
        with the provisions of Minnesota Statutes, chapters 289A and 
        297A, except for provisions setting tax rates and providing for 
        tax exemptions, to the extent a different procedure is required 
        by the agreements. 
           (d) Agreements authorized under this section terminate no 
        later than December 31, 2001. 
           Subd. 3.  [DISCLOSURE.] Any agreements entered into under 
        subdivision 1 or 2 are subject to the provisions of Minnesota 
        Statutes, chapter 270B. 
           Subd. 4.  [REPORT ON PROJECT.] By March 1, 2002, the 
        commissioner shall report to the chairs of the house of 
        representatives tax committee and the senate committee on 
        taxes.  The report must describe the status of multistate 
        discussions conducted under subdivision 1 and, if a proposed 
        system has been agreed upon by participating states, must also 
        recommend whether the state should participate in the system. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 

                                   ARTICLE 9 
                               HEALTH CARE TAXES 
           Section 1.  Minnesota Statutes 1998, 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, 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 (d), 
        (e), (h), and (i), installments must be based on a sum equal to 
        two percent of the premiums described in paragraph (b). 
           (b) Installments under paragraph (a), (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. 
           (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. 
           (d) For health maintenance organizations, nonprofit health 
        service plan corporations, and community integrated service 
        networks, the installments must be based on an amount determined 
        under paragraph (h) or (i). 
           (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) If the aggregate amount of premium tax payments under 
        this section and the fire marshal tax payments under section 
        299F.21 made during a calendar year is equal to or exceeds 
        $120,000, all 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 
        payment is due.  If the date the 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 
        payment is due.  
           (g) Premiums under medical assistance, general assistance 
        medical care, the MinnesotaCare program, and the Minnesota 
        comprehensive health insurance plan and all payments, revenues, 
        and reimbursements received from the federal government for 
        Medicare-related coverage as defined in section 62A.31, 
        subdivision 3, paragraph (e), are not subject to tax under this 
        section. 
           (h) For calendar years 1997, 1998, and 1999, the 
        installments for health maintenance organizations, community 
        integrated service networks, and nonprofit health service plan 
        corporations must be based on an amount equal to one percent of 
        premiums described under paragraph (b).  Health maintenance 
        organizations, community integrated service networks, and 
        nonprofit health service plan corporations that have met the 
        cost containment goals established under section 62J.04 in the 
        individual and small employer market for calendar year 1996 are 
        exempt from payment of the tax imposed under this section for 
        premiums paid after March 30, 1997, and before April 1, 1998.  
        Health maintenance organizations, community integrated service 
        networks, and nonprofit health service plan corporations that 
        have met the cost containment goals established under section 
        62J.04 in the individual and small employer market for calendar 
        year 1997 are exempt from payment of the tax imposed under this 
        section for premiums paid after March 30, 1998, and before April 
        1, 1999.  Health maintenance organizations, community integrated 
        service networks, and nonprofit health service plan corporations 
        that have met the cost containment goals established under 
        section 62J.04 in the individual and small employer market for 
        calendar year 1998 are exempt from payment of the tax imposed 
        under this section for premiums paid after March 30, 1999, and 
        before January 1, 2000 Health maintenance organizations, 
        community integrated service networks, and nonprofit health 
        service plan corporations are exempt from the tax imposed under 
        this section on premiums received in calendar years 2001 and 
        2002. 
           (i) For calendar years after 1999 2002, the commissioner of 
        finance shall determine the balance of the health care access 
        fund on September 1 of each year beginning September 1, 1999.  
        If the commissioner determines that there is no structural 
        deficit for the next fiscal year, no tax shall be imposed under 
        paragraph (d) for the following calendar year.  If the 
        commissioner determines that there will be a structural deficit 
        in the fund for the following fiscal year, then the 
        commissioner, in consultation with the commissioner of revenue, 
        shall determine the amount needed to eliminate the structural 
        deficit and a tax shall be imposed under paragraph (d) for the 
        following calendar year.  The commissioner shall determine the 
        rate of the tax as either one-quarter of one percent, one-half 
        of one percent, three-quarters of one percent, or one percent of 
        premiums described in paragraph (b), whichever is the lowest of 
        those rates that the commissioner determines will produce 
        sufficient revenue to eliminate the projected structural 
        deficit.  The commissioner of finance shall publish in the State 
        Register by October 1 of each year the amount of tax to be 
        imposed for the following calendar year.  In determining the 
        structural balance of the health care access fund for fiscal 
        years 2000 and 2001, the commissioner shall disregard the 
        transfer amount from the health care access fund to the general 
        fund for expenditures associated with the services provided to 
        pregnant women and children under the age of two enrolled in the 
        MinnesotaCare program a rate of one percent applies to premiums 
        of health maintenance organizations, community-integrated 
        service networks, and nonprofit health service plan corporations.
           (j) In approving the premium rates as required in sections 
        62L.08, subdivision 8, and 62A.65, subdivision 3, the 
        commissioners of health and commerce shall ensure that any 
        exemption from the tax as described in paragraphs (h) and (i) is 
        reflected in the premium rate. 
           EFFECTIVE DATE:  This section is effective for taxes on 
        premiums received after December 31, 2000. 
           Sec. 2.  Minnesota Statutes 1998, section 295.50, 
        subdivision 9b, is amended to read: 
           Subd. 9b.  [PATIENT SERVICES.] (a) "Patient services" means 
        inpatient and outpatient services and other goods and services 
        provided by hospitals, surgical centers, or health care 
        providers.  They include the following health care goods and 
        services provided to a patient or consumer: 
           (1) bed and board; 
           (2) nursing services and other related services; 
           (3) use of hospitals, surgical centers, or health care 
        provider facilities; 
           (4) medical social services; 
           (5) drugs, biologicals, supplies, appliances, and 
        equipment; 
           (6) other diagnostic or therapeutic items or services; 
           (7) medical or surgical services; 
           (8) items and services furnished to ambulatory patients not 
        requiring emergency care; 
           (9) emergency services; and 
           (10) covered services listed in section 256B.0625 and in 
        Minnesota Rules, parts 9505.0170 to 9505.0475. 
           (b) "Patient services" does not include:  
           (1) services provided to nursing homes licensed under 
        chapter 144A; and 
           (2) examinations for purposes of utilization reviews, 
        insurance claims or eligibility, litigation, and employment, 
        including reviews of medical records for those purposes. 
           EFFECTIVE DATE:  This section is effective for payments 
        received on or after January 1, 2000. 
           Sec. 3.  Minnesota Statutes 1999 Supplement, section 
        295.53, subdivision 1, is amended to read: 
           Subdivision 1.  [EXEMPTIONS.] (a) 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 Medicare 
        enrollee or by a Medicare supplemental coverage as defined in 
        section 62A.011, subdivision 3, clause (10).  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), (10), or (13), or (20); 
           (5) payments received from health care providers for goods 
        and services on which liability for tax is imposed under this 
        chapter or the source of funds for the payment is exempt under 
        clause (1), (2), (7), (8), (10), or (13), or (20); 
           (6) amounts paid for legend drugs, other than nutritional 
        products, to a wholesale drug distributor who is subject to tax 
        under section 295.52, subdivision 3, 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.  For purposes of this clause, 
        coinsurance means the portion of payment that the enrollee is 
        required to pay for the covered service; 
           (9) payments received by a health care provider or the 
        wholly owned subsidiary of a health care provider for care 
        provided outside 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 
        incurred through a formal program of health care research 
        conducted in conformity with federal regulations governing 
        research on human subjects.  Payments received from patients or 
        from other persons paying on behalf of the patients are subject 
        to tax; 
           (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 health care provider for 
        hearing aids and related equipment or prescription eyewear 
        delivered outside of Minnesota; 
           (18) payments received by an 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; 
           (19) payments received for services provided by:  assisted 
        living programs and congregate housing programs; and 
           (20) payments received from nursing homes licensed under 
        chapter 144A for services provided to a nursing home; and 
           (21) payments received for examinations for purposes of 
        utilization reviews, insurance claims or eligibility, 
        litigation, and employment, including reviews of medical records 
        for those purposes. 
           (20) payments received under the federal Employees Health 
        Benefits Act, United States Code, title 5, section 8909(f), as 
        amended by the Omnibus Reconciliation Act of 1990. 
           (b) Payments received by wholesale drug distributors for 
        legend drugs sold directly to veterinarians or veterinary bulk 
        purchasing organizations are excluded from the gross revenues 
        subject to the wholesale drug distributor tax under sections 
        295.50 to 295.59. 
           EFFECTIVE DATE:  This section is effective for payments 
        received on or after January 1, 2000. 
           Sec. 4.  Minnesota Statutes 1998, section 295.58, is 
        amended to read: 
           295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 
           The commissioner shall deposit all revenues, including 
        penalties and interest, derived from the taxes imposed by 
        sections 295.50 to 295.57 and from the insurance premiums tax on 
        health maintenance organizations, community integrated service 
        networks, and nonprofit health service plan corporations in the 
        health care access fund in the state treasury.  Refunds of 
        overpayments must be paid from the health care access fund in 
        the state treasury.  There is annually appropriated from the 
        health care access fund to the commissioner of revenue the 
        amount necessary to make any refunds required under section 
        295.54 this chapter. 
           EFFECTIVE DATE:  This section is effective for refunds made 
        on or after January 1, 1999. 

                                   ARTICLE 10 
                                 SPECIAL TAXES
           Section 1.  Minnesota Statutes 1998, section 115A.557, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ELIGIBILITY TO RECEIVE MONEY.] (a) To be 
        eligible to receive money distributed by the director under this 
        section, a county shall within one year of October 4, 1989: 
           (1) create a separate account in its general fund to credit 
        the money; and 
           (2) set up accounting procedures to ensure that money in 
        the separate account is spent only for the purposes in 
        subdivision 2. 
           (b) In each following year, each county shall also: 
           (1) have in place an approved solid waste management plan 
        or master plan including a recycling implementation strategy 
        under section 115A.551, subdivision 7, and a household hazardous 
        waste management plan under section 115A.96, subdivision 6, by 
        the dates specified in those provisions; 
           (2) submit a report by April 1 of each year to the director 
        detailing for the previous calendar year: 
           (i) how the money was spent including, but not limited to, 
        specific information on the number of employees performing SCORE 
        planning, oversight, and administration; the percentage of those 
        employees' total work time allocated to SCORE planning, 
        oversight, and administration; the specific duties and 
        responsibilities of those employees; and the amount of staff 
        salary for these SCORE duties and responsibilities of the 
        employees; and (ii) the resulting gains achieved in solid waste 
        management practices during the previous calendar year; and 
           (3) provide evidence to the director that local revenue 
        equal to 25 percent of the money sought for distribution under 
        this section will be spent for the purposes in subdivision 2. 
           (c) The director shall withhold all or part of the funds to 
        be distributed to a county under this section if the county 
        fails to comply with this subdivision and subdivision 2. 
           Sec. 2.  Minnesota Statutes 1999 Supplement, section 
        287.01, subdivision 2, is amended to read: 
           Subd. 2.  [AMENDMENT.] "Amendment" means generally a 
        document that alters an existing mortgage without securing a new 
        debt, or increasing the amount of an existing debt; and, that 
        does not, in the case of a multistate mortgage described in 
        section 287.05, subdivision 1, paragraph (b), result in an 
        increased percentage of the real property encumbered by the 
        mortgage being located in this state.  Specifically, A document 
        is considered an amendment to the extent it merely does if it 
        meets the definition in this subdivision, including documents 
        that do any one or any combination more of the following:  
           (i) extends the time for payment of the unpaid portion of 
        the original debt; 
           (ii) changes the rate of interest applicable to the unpaid 
        portion of the original debt; 
           (iii) adds additional real property as security for the 
        unpaid portion of the original debt; 
           (iv) releases some but not all of the real property serving 
        as security for the unpaid portion of the debt; 
           (v) replaces all the real property serving as security for 
        the unpaid portion of the debt with other real property 
        regardless of value; 
           (vi) replaces a party previously bound by the mortgage with 
        a new party who becomes bound by the same amended mortgage; or 
           (vii) reduces the amount of the debt secured by real 
        property located in this state, or in the case of a multistate 
        mortgage described in section 287.05, subdivision 1, paragraph 
        (b), reduces the percentage of real property encumbered by the 
        mortgage that is located in this state. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 3.  Minnesota Statutes 1999 Supplement, section 
        297E.02, subdivision 1, is amended to read: 
           Subdivision 1.  [IMPOSITION.] A tax is imposed on all 
        lawful gambling other than (1) pull-tab deals or games; (2) 
        tipboard deals or games; and (3) items listed in section 
        297E.01, subdivision 8, clauses (4) and (5), at the rate of 9 
        8.5 percent on the gross receipts as defined in section 297E.01, 
        subdivision 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.  
           EFFECTIVE DATE:  This section is effective July 1, 2000. 
           Sec. 4.  Minnesota Statutes 1998, section 297E.02, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [TAX CREDIT FOR CERTAIN RAFFLES.] An 
        organization may claim a credit equal to the tax reported under 
        subdivision 1 resulting from a raffle the net proceeds of which 
        have been used exclusively for the purposes of section 349.12, 
        subdivision 25, paragraph (a), clause (2).  The organization 
        claiming the credit must do so on the monthly gambling tax 
        return on which the raffle activity is reported under 
        subdivision 1. 
           EFFECTIVE DATE:  This section is effective August 1, 2000. 
           Sec. 5.  Minnesota Statutes 1999 Supplement, section 
        297E.02, subdivision 4, is amended to read: 
           Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
        on the sale of each deal of pull-tabs and tipboards sold by a 
        distributor.  The rate of the tax is 1.8 1.7 percent of the 
        ideal gross of the pull-tab or tipboard deal.  The sales tax 
        imposed by chapter 297A on the sale of the pull-tabs and 
        tipboards by the distributor is imposed on the retail sales 
        price less the tax imposed by this subdivision.  The retail sale 
        of pull-tabs or tipboards by the organization is exempt from 
        taxes imposed by chapter 297A and is exempt from all local taxes 
        and license fees except a fee authorized under section 349.16, 
        subdivision 8.  
           (b) The liability for the tax imposed by this section is 
        incurred when the pull-tabs and tipboards are delivered by the 
        distributor to the customer or to a common or contract carrier 
        for delivery to the customer, or when received by the customer's 
        authorized representative at the distributor's place of 
        business, regardless of the distributor's method of accounting 
        or the terms of the sale.  
           The tax imposed by this subdivision is imposed on all sales 
        of pull-tabs and tipboards, except the following:  
           (1) sales to the governing body of an Indian tribal 
        organization for use on an Indian reservation; 
           (2) sales to distributors licensed under the laws of 
        another state or of a province of Canada, as long as all 
        statutory and regulatory requirements are met in the other state 
        or province; 
           (3) sales of promotional tickets as defined in section 
        349.12; and 
           (4) pull-tabs and tipboards sold to an organization that 
        sells pull-tabs and tipboards under the exemption from licensing 
        in section 349.166, subdivision 2.  A distributor shall require 
        an organization conducting exempt gambling to show proof of its 
        exempt status before making a tax-exempt sale of pull-tabs or 
        tipboards to the organization.  A distributor shall identify, on 
        all reports submitted to the commissioner, all sales of 
        pull-tabs and tipboards that are exempt from tax under this 
        subdivision.  
           (c) A distributor having a liability of $120,000 or more 
        during a fiscal year ending June 30 must remit all liabilities 
        in the subsequent calendar year by 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. 
           (d) Any customer who purchases deals of pull-tabs or 
        tipboards from a distributor may file an annual claim for a 
        refund or credit of taxes paid pursuant to this subdivision for 
        unsold pull-tab and tipboard tickets.  The claim must be filed 
        with the commissioner on a form prescribed by the commissioner 
        by March 20 of the year following the calendar year for which 
        the refund is claimed.  The refund must be filed as part of the 
        customer's February monthly return.  The refund or credit is 
        equal to 1.8 1.7 percent of the face value of the unsold 
        pull-tab or tipboard tickets, provided that the refund or credit 
        will be 1.85 1.75 percent of the face value of the unsold 
        pull-tab or tipboard tickets for claims for a refund or credit 
        of taxes filed on the February 2000 2001 monthly return.  The 
        refund claimed will be applied as a credit against tax owing 
        under this chapter on the February monthly return.  If the 
        refund claimed exceeds the tax owing on the February monthly 
        return, that amount will be refunded.  The amount refunded will 
        bear interest pursuant to section 270.76 from 90 days after the 
        claim is filed.  
           EFFECTIVE DATE:  This section is effective July 1, 2000. 
           Sec. 6.  Minnesota Statutes 1999 Supplement, 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 297E.01, subdivision 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                            1.8 1.7 percent of the 
                                               amount over $500,000, but 
                                               not over $700,000
           Over $700,000, but not over
           $900,000                            $3,600 $3,400 plus 3.6 
                                               3.4 percent of the amount 
                                               over $700,000, but 
                                               not over $900,000
           Over $900,000                       $10,800 $10,200 plus 5.4 
                                               5.1 percent of the 
                                               amount over $900,000
           EFFECTIVE DATE:  This section is effective July 1, 2000. 
           Sec. 7.  Minnesota Statutes 1998, section 297F.01, 
        subdivision 7, is amended to read: 
           Subd. 7.  [CONSUMER.] "Consumer" means any person an 
        individual who has title to or possession of cigarettes or 
        tobacco products in storage, for use or other personal 
        consumption in this state rather than for sale. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 8.  Minnesota Statutes 1998, section 297F.01, is 
        amended by adding a subdivision to read: 
           Subd. 9a.  [INVOICE.] "Invoice" means a detailed list of 
        cigarettes and tobacco products purchased or sold in this state 
        that contains the following information: 
           (1) name of seller; 
           (2) name of purchaser; 
           (3) date of sale; 
           (4) invoice number; 
           (5) itemized list of goods sold including brands of 
        cigarettes and number of cartons of each brand, unit price, and 
        identification of tobacco products by name, quantity, and unit 
        price; and 
           (6) any rebates, discounts, or other reductions. 
           EFFECTIVE DATE:  This section is effective July 1, 2000. 
           Sec. 9.  Minnesota Statutes 1998, section 297F.01, 
        subdivision 14, is amended to read: 
           Subd. 14.  [RETAILER.] "Retailer" means a person required 
        to be licensed under chapter 461 engaged in this state in the 
        business of selling, or offering to sell, cigarettes or tobacco 
        products to consumers. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 10.  Minnesota Statutes 1998, section 297F.01, 
        subdivision 17, is amended to read: 
           Subd. 17.  [STAMP.] "Stamp" means the adhesive stamp 
        supplied by the commissioner of revenue for use on cigarette 
        packages or any other indicia adopted by the commissioner to 
        indicate that the tax has been paid. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 11.  Minnesota Statutes 1998, section 297F.01, is 
        amended by adding a subdivision to read: 
           Subd. 21a.  [UNLICENSED SELLER.] "Unlicensed seller" means 
        anyone who is not licensed under section 297F.03 or 461.12 to 
        sell the particular product to the purchaser or possessor of the 
        product. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 12.  Minnesota Statutes 1998, section 297F.08, 
        subdivision 2, is amended to read: 
           Subd. 2.  [TAX DUE; CIGARETTES.] Notwithstanding any other 
        provisions of this chapter, the tax due on the return is based 
        upon actual heat-applied stamps purchased during the reporting 
        period. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 13.  Minnesota Statutes 1998, section 297F.08, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DEPOSIT OF PROCEEDS.] The commissioner shall use 
        the amounts appropriated by law to purchase heat-applied stamps 
        for resale.  The commissioner shall charge the purchasers for 
        the costs of the stamps along with the tax value plus shipping 
        costs.  The costs recovered along with shipping costs must be 
        deposited into the general fund. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 14.  Minnesota Statutes 1998, section 297F.08, 
        subdivision 8, is amended to read: 
           Subd. 8.  [SALE OF STAMPS.] The commissioner may sell 
        heat-applied stamps on a credit basis under conditions 
        prescribed by the commissioner.  The commissioner shall sell the 
        stamps at a price which includes the tax after giving effect to 
        the discount provided in subdivision 7.  The commissioner shall 
        recover the actual costs of the stamps from the distributor.  
        The commissioner shall annually establish the maximum amount of 
        heat-applied stamps that may be purchased each month. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 15.  Minnesota Statutes 1999 Supplement, section 
        297F.08, subdivision 8a, is amended to read: 
           Subd. 8a.  [REVOLVING ACCOUNT.] A heat-applied cigarette 
        tax stamp revolving account is created.  The commissioner shall 
        use the amounts in this fund to purchase heat-applied stamps for 
        resale.  The commissioner shall charge distributors for the tax 
        value of the stamps they receive along with the commissioner's 
        cost to purchase the stamps and ship them to the distributor.  
        The stamp purchase and shipping costs recovered must be credited 
        to the revolving account and are appropriated to the 
        commissioner for the further purchases and shipping costs.  The 
        revolving account is initially funded by a $40,000 transfer from 
        the department of revenue. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 16.  Minnesota Statutes 1998, section 297F.08, 
        subdivision 9, is amended to read: 
           Subd. 9.  [TAX STAMPING MACHINES.] The commissioner shall 
        require any person licensed as a distributor to stamp packages 
        with a heat-applied tax stamping machine, approved by the 
        commissioner, which shall be provided by the distributor.  The 
        commissioner shall also supervise and check the operation of the 
        machines and shall provide for the payment of the tax on any 
        package so stamped, subject to the discount provided in 
        subdivision 7.  If the commissioner finds that a stamping 
        machine is not affixing a legible stamp on the package, the 
        commissioner may order the distributor to immediately cease the 
        stamping process until the machine is functioning properly. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 17.  Minnesota Statutes 1998, section 297F.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
        or before the 18th day of each calendar month, a distributor 
        with a place of business in this state shall file a return with 
        the commissioner showing the quantity of cigarettes manufactured 
        or brought in from outside the state or purchased during the 
        preceding calendar month and the quantity of cigarettes sold or 
        otherwise disposed of in this state and outside this state 
        during that month.  A licensed distributor outside this state 
        shall in like manner file a return showing the quantity of 
        cigarettes shipped or transported into this state during the 
        preceding calendar month.  Returns must be made in the form and 
        manner prescribed by the commissioner and must contain any other 
        information required by the commissioner.  The return must be 
        accompanied by a remittance for the full unpaid tax liability 
        shown by it.  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. 
           EFFECTIVE DATE:  This section is effective beginning with 
        the June 2002 liability. 
           Sec. 18.  Minnesota Statutes 1998, section 297F.09, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
        On or before the 18th day of each calendar month, a 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 must be made in the form 
        and manner prescribed by the commissioner and must contain any 
        other information required by the commissioner.  The return must 
        be accompanied by a remittance for the full tax liability shown, 
        less 1.5 percent of the liability as compensation to reimburse 
        the distributor for expenses incurred in the administration of 
        this chapter.  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. 
           EFFECTIVE DATE:  This section is effective beginning with 
        the June 2002 liability. 
           Sec. 19.  Minnesota Statutes 1998, section 297F.13, 
        subdivision 4, is amended to read: 
           Subd. 4.  [RETAILER AND SUBJOBBER TO PRESERVE PURCHASE 
        INVOICES.] Every retailer and subjobber shall procure itemized 
        invoices of all cigarettes or tobacco products purchased.  The 
        invoices shall show the name and address of the seller and the 
        date of purchase. 
           The retailer and subjobber shall preserve a legible copy of 
        each invoice for one year from the date of purchase the invoice. 
        The retailer and subjobber shall preserve copies of the invoices 
        at each retail location or at a central location provided that 
        the invoice must be produced and made available at a retail 
        location within one hour when requested by the commissioner or 
        duly authorized agents and employees.  Copies should be numbered 
        and kept in chronological order. 
           To determine whether the business is in compliance with the 
        provisions of this chapter and sections 325D.30 to 325D.42, at 
        any time during usual business hours, the commissioner, or duly 
        authorized agents and employees, may enter any place of business 
        of a retailer or subjobber without a search warrant and inspect 
        the premises, the records required to be kept under this 
        chapter, and the packages of cigarettes, tobacco products, and 
        vending devices contained on the premises. 
           EFFECTIVE DATE:  This section is effective July 1, 2000. 
           Sec. 20.  Minnesota Statutes 1998, section 297F.21, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONTRABAND DEFINED.] The following are 
        declared to be contraband and therefore subject to civil and 
        criminal penalties under this chapter: 
           (a) Cigarette packages which do not have stamps affixed to 
        them as provided in this chapter, 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 packages 
        as defined in item (i) are found, including all contents 
        contained within the devices. 
           (b) A device for the vending of cigarettes and all packages 
        of cigarettes, 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 this chapter, it shall be 
        presumed that all packages contained in the device are unstamped 
        and contraband. 
           (c) A 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. 
           (d) A 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. 
           (e) A 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 (a).
           (f) Cigarette packages or tobacco products obtained from an 
        unlicensed seller. 
           (g) Cigarette packages offered for sale or held as 
        inventory in violation of section 297F.20, subdivision 7. 
           (h) Tobacco products on which the tax has not been paid by 
        a licensed distributor. 
           (i) Any cigarette packages or tobacco products offered for 
        sale or held as inventory for which there is not an invoice from 
        a licensed seller as required under section 297F.13, subdivision 
        4. 
           EFFECTIVE DATE:  This section is effective July 1, 2000.  
           Sec. 21.  Minnesota Statutes 1998, section 297F.21, 
        subdivision 3, is amended to read: 
           Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
        DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
        seizure of any alleged contraband, the person making the seizure 
        shall make available 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 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 60 days, 
        shall institute an action in the district court of the county 
        where the seizure was made to determine the issue of 
        forfeiture.  The court shall decide whether the alleged 
        contraband is contraband, as defined in subdivision 1. 
           (b) The action must be brought in the name of the state and 
        must 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. 
           (c) When 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. 
           (d) If a demand for judicial determination is made and no 
        action commenced as provided in this subdivision, the property 
        must be released by the commissioner and returned to the person 
        entitled to it.  If no demand is made, the property seized is 
        considered forfeited to the state by operation of law and may be 
        disposed of by the commissioner as provided in the case of a 
        judgment of forfeiture.  When the commissioner is satisfied that 
        a person from whom property is seized was acting in good faith 
        and without intent to evade the tax imposed by this chapter, the 
        commissioner shall release the property seized without further 
        legal proceedings. 
           EFFECTIVE DATE:  This section is effective for alleged 
        contraband seized on or after the day following final enactment. 
           Sec. 22.  [REPEALER.] 
           (a) Minnesota Statutes 1998, section 270.083, is repealed. 
           (b) Minnesota Statutes 1998, sections 297F.09, subdivision 
        6; and 297G.09, subdivision 5, are repealed. 
           EFFECTIVE DATE:  This section, paragraph (a), is effective 
        the day following final enactment.  This section, paragraph (b) 
        is effective beginning with the June 2002 liability. 

                                   ARTICLE 11 
                               LOCAL DEVELOPMENT 
           Section 1.  Minnesota Statutes 1998, 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 tax increment financing 
        district, for which certification was requested after April 30, 
        1990. 
           (2) The captured net tax capacity of a new or the expanded 
        part of an existing tax increment financing district, other than 
        an economic development 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 
           (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 housing district" means: 
           (1) 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; or 
           (2) a housing district for a single-family homeownership 
        project or projects, if 95 percent or more of the homes 
        receiving assistance from tax increments from the district are 
        purchased by qualified purchasers.  A qualified purchaser means 
        the first purchaser of a home after the tax increment assistance 
        is provided whose income is at or below 70 percent of the median 
        gross income for a family of the same size as the purchaser.  
        Median gross income is the greater of (i) area median gross 
        income, or (ii) the statewide median gross income, as determined 
        by the secretary of Housing and Urban Development. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment, and applies to all districts that are 
        subject to the underlying law. 
           Sec. 2.  Minnesota Statutes 1998, section 428A.11, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [AUTHORITY.] "Authority" means an economic 
        development authority or housing and redevelopment authority 
        created pursuant to section 469.003, 469.004, or 469.091 or 
        another entity authorized by law to exercise the powers of an 
        authority created pursuant to one of those sections. 
           Sec. 3.  Minnesota Statutes 1998, section 428A.11, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [IMPLEMENTING ENTITY.] "Implementing entity" 
        means the city or authority designated in the enabling ordinance 
        as responsible for implementing and administering the housing 
        improvement area. 
           Sec. 4.  Minnesota Statutes 1998, section 428A.13, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ORDINANCE.] The governing body of the city 
        may adopt an ordinance establishing a one or more housing 
        improvement area areas.  The ordinance must specifically 
        describe the portion of the city to be included in the area, the 
        basis for the imposition of the fees, and the number of years 
        the fee will be in effect.  In addition, the ordinance must 
        include findings that without the housing improvement area, the 
        proposed improvements could not be made by the condominium 
        associations or housing unit owners, and the designation is 
        needed to maintain and preserve the housing units within the 
        housing improvement area.  The ordinance shall designate the 
        implementing entity.  The ordinance may not be adopted until a 
        public hearing has been held regarding the ordinance.  The 
        ordinance may be amended by the governing body of the city, 
        provided the governing body complies with the public hearing 
        notice provisions of subdivision 2.  Within 30 days after 
        adoption of the ordinance under this subdivision, the governing 
        body shall send a copy of the ordinance to the commissioner of 
        revenue. 
           Sec. 5.  Minnesota Statutes 1998, section 428A.13, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PROPOSED HOUSING IMPROVEMENTS.] At the public 
        hearing held under subdivision 2, the city proposed implementing 
        entity shall provide a preliminary listing of the housing 
        improvements to be made in the area.  The listing shall identify 
        those improvements, if any, that are proposed to be made to all 
        or a portion of the common elements of a condominium.  The 
        listing shall also identify those housing units that have 
        completed the proposed housing improvements and are proposed to 
        be exempted from a portion of the fee.  In preparing the list 
        the city proposed implementing entity shall consult with the 
        residents of the area and the condominium associations. 
           Sec. 6.  Minnesota Statutes 1998, section 428A.14, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORITY.] Fees may be imposed by the 
        city implementing entity on the housing units within the housing 
        improvement area at a rate, term, or amount sufficient to 
        produce revenue required to provide housing improvements in the 
        area to reimburse the implementing entity for advances made to 
        pay for the housing improvements or to pay principal of, 
        interest on, and premiums, if any, on bonds issued by the 
        implementing entity under section 428A.16.  The fee can be 
        imposed on the basis of the tax capacity of the housing unit, or 
        the total amount of square footage of the housing unit, or a 
        method determined by the council and specified in the resolution.
        Before the imposition of the fees, a hearing must be held and 
        notice must be published in the official newspaper at least 
        seven days before the hearing and shall be mailed at least seven 
        days before the hearing to any housing unit owner subject to a 
        fee.  For purposes of this section, the notice must also include:
           (1) a statement that all interested persons will be given 
        an opportunity to be heard at the hearing regarding a proposed 
        housing improvement fee; 
           (2) the estimated cost of improvements including 
        administrative costs to be paid for in whole or in part by the 
        fee imposed under the ordinance; 
           (3) the amount to be charged against the particular 
        property; 
           (4) the right of the property owner to prepay the entire 
        fee; 
           (5) the number of years the fee will be in effect; and 
           (6) a statement that the petition requirements of section 
        428A.12 have either been met or do not apply to the proposed fee.
           Within six months of the public hearing, the city 
        implementing entity may adopt a resolution imposing a fee within 
        the area not exceeding the amount expressed in the notice issued 
        under this section. 
           Prior to adoption of the resolution approving the fee, the 
        condominium associations located in the housing improvement area 
        shall submit to the city implementing entity a financial plan 
        prepared by an independent third party, acceptable to the city 
        implementing entity and associations, that provides for the 
        associations to finance maintenance and operation of the common 
        elements in the condominium and a long-range plan to conduct and 
        finance capital improvements. 
           Sec. 7.  Minnesota Statutes 1998, section 428A.15, is 
        amended to read: 
           428A.15 [COLLECTION OF FEES.] 
           The city implementing entity may provide for the collection 
        of the housing improvement fees according to the terms of 
        section 428A.05. 
           Sec. 8.  Minnesota Statutes 1998, section 428A.16, is 
        amended to read: 
           428A.16 [BONDS.] 
           At any time after a contract for the construction of all or 
        part of an improvement authorized under sections 428A.11 to 
        428A.20 has been entered into or the work has been ordered, the 
        governing body of the city implementing entity may issue 
        obligations in the amount it deems necessary to defray in whole 
        or in part the expense incurred and estimated to be incurred in 
        making the improvement, including every item of cost from 
        inception to completion and all fees and expenses incurred in 
        connection with the improvement or the financing. 
           The obligations are payable primarily out of the proceeds 
        of the fees imposed under section 428A.14, or from any other 
        special assessments or revenues available to be pledged for 
        their payment under charter or statutory authority, or from two 
        or more of those sources.  The governing body of the city, or if 
        the governing bodies are the same or consist of identical 
        membership, the authority may, by resolution adopted prior to 
        the sale of obligations, pledge the full faith, credit, and 
        taxing power of the city to assure bonds issued by it to ensure 
        payment of the principal and interest if the proceeds of the 
        fees in the area are insufficient to pay the principal and 
        interest.  The obligations must be issued in accordance with 
        chapter 475, except that an election is not required, and the 
        amount of the obligations are not included in determination of 
        the net debt of the city under the provisions of any law or 
        charter limiting debt. 
           Sec. 9.  Minnesota Statutes 1998, section 428A.17, is 
        amended to read: 
           428A.17 [ADVISORY BOARD.] 
           The governing body of the city implementing entity may 
        create and appoint an advisory board for the housing improvement 
        area in the city to advise the governing body implementing 
        entity in connection with the planning and construction of 
        housing improvements.  In appointing the board, the council 
        implementing entity shall consider for membership members of 
        condominium associations located in the housing improvement 
        area.  The advisory board shall make recommendations to 
        the governing body implementing entity to provide improvements 
        or impose fees within the housing improvement area.  Before the 
        adoption of a proposal by the governing body implementing entity 
        to provide improvements within the housing improvement area, the 
        advisory board of the housing improvement area shall have an 
        opportunity to review and comment upon the proposal. 
           Sec. 10.  Minnesota Statutes 1998, section 428A.19, is 
        amended to read: 
           428A.19 [ANNUAL REPORTS.] 
           Each condominium association located within the housing 
        improvement area must, by August 15 annually, submit a copy of 
        its audited financial statements to the city implementing entity.
        The city may also, as part of the enabling ordinance, require 
        the submission of other relevant information from the 
        associations. 
           Sec. 11.  Minnesota Statutes 1998, section 428A.21, is 
        amended to read: 
           428A.21 [SUNSET.] 
           No new housing improvement areas may be established under 
        sections 428A.11 to 428A.20 after June 30, 2001 2005.  After 
        June 30, 2001 2005, a city may establish a housing improvement 
        area, provided that it receives enabling legislation authorizing 
        the establishment of the area. 
           Sec. 12.  Minnesota Statutes 1998, section 469.115, is 
        amended to read: 
           469.115 [POWERS OF AGENCIES.] 
           A local agency shall have all the powers necessary or 
        convenient to carry out the purposes of sections 469.109 to 
        469.123; except that the agencies shall not levy and collect 
        taxes or special assessments, nor exercise the power of eminent 
        domain unless the governing body of the municipality or 
        municipalities, in the case of a joint exercise of power, shall 
        by resolution have expressly conferred that power on the 
        agency.  A local agency shall also have the following powers in 
        addition to others granted in sections 469.109 to 469.123: 
           (1) to sue and be sued, to have a seal, which shall be 
        judicially noticed, and to alter the same at pleasure; to have 
        perpetual succession; and to make, amend, and repeal rules and 
        regulations not inconsistent with these sections; 
           (2) to employ an executive director, technical experts, and 
        officers, agents and employees, permanent and temporary, that it 
        requires, and determine their qualifications, duties, and 
        compensation; for legal service it may require, to call upon the 
        chief law officer of the municipality or to employ its own 
        counsel and legal staff; so far as practical, to use the 
        services of local public bodies, in its area of operation.  
        Those local bodies, if requested, shall make the services 
        available; 
           (3) to delegate to one or more of its agents or employees 
        the powers or duties it deems proper; 
           (4) upon proper application by a public body or private 
        applicant, and after determining that the purpose of sections 
        469.109 to 469.123 will be accomplished by the establishment of 
        the project in the redevelopment area to approve a redevelopment 
        project; 
           (5) to sell, transfer, convey, or otherwise dispose of real 
        or personal property or any interest therein, and to execute 
        leases, deeds, conveyances, negotiable instruments, purchase 
        agreements, and other contracts or instruments, and take action 
        that is necessary or convenient to carry out the purposes of 
        these sections; 
           (6) within its area of operation to acquire real or 
        personal property or any interest therein by gift, grant, 
        purchase, exchange, lease, transfer, bequest, devise, or 
        otherwise.  An agency may acquire real property which it deems 
        necessary for its purposes by exercise of the power of eminent 
        domain in the manner provided in chapter 117, after adoption of 
        a resolution declaring that the acquisition of the real property 
        is necessary to eliminate one or more of the conditions found to 
        exist in the resolution adopted pursuant to section 469.111, 
        subdivision 1; 
           (7) to designate redevelopment areas; 
           (8) to cooperate with industrial development corporations, 
        state and federal agencies, and private persons or corporations 
        in efforts to promote the expansion of recreational, commercial, 
        industrial, and manufacturing activity in a redevelopment area; 
           (9) upon proper application by any public body or private 
        applicant, to determine whether the declared public purpose of 
        these sections has been accomplished or will be accomplished by 
        the establishment of a redevelopment project in a redevelopment 
        area; 
           (10) to obtain information necessary to the designation of 
        a redevelopment area and the establishment of a redevelopment 
        project therein; 
           (11) to cooperate with or act as agent for the federal 
        government, the state, or any state public body or any agency or 
        instrumentality thereof in carrying out the provisions of these 
        sections or of any other related federal, state, or local 
        legislation; 
           (12) to borrow money or other property and accept 
        contributions, grants, gifts, services, or other assistance from 
        the federal or state government to accomplish the purposes of 
        sections 469.109 to 469.123; 
           (13) to conduct mined underground space development 
        pursuant to sections 469.135 to 469.141; 
           (14) to include in any contract for financial assistance 
        with the federal government any conditions which the federal 
        government may attach to its financial aid of a redevelopment 
        project; 
           (15) (14) to issue bonds, notes, or other evidences of 
        indebtedness as hereinafter provided, for any of its purposes 
        and to secure them by mortgages upon property held or to be held 
        by it, or by pledge of its revenues, including grants or 
        contributions; and 
           (16) (15) to invest any funds held in reserve or sinking 
        funds, or any funds not required for immediate disbursement, in 
        property or securities in which savings banks may legally invest 
        funds subject to their control.  
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 13.  Minnesota Statutes 1998, section 469.174, 
        subdivision 9, is amended to read: 
           Subd. 9.  [TAX INCREMENT FINANCING DISTRICT.] "Tax 
        increment financing district" or "district" means a contiguous 
        or noncontiguous geographic area within a project delineated in 
        the tax increment financing plan, as provided by section 
        469.175, subdivision 1, for the purpose of financing 
        redevelopment, mined underground space development, housing or 
        economic development in municipalities through the use of tax 
        increment generated from the captured net tax capacity in the 
        tax increment financing district.  
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 14.  Minnesota Statutes 1998, section 469.174, 
        subdivision 10, is amended to read: 
           Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
        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 one or more of the 
        following conditions, reasonably distributed throughout the 
        district, exists: 
           (1) parcels consisting of 70 percent of the area of the 
        district are occupied by buildings, streets, utilities, or other 
        improvements and more than 50 percent of the buildings, not 
        including outbuildings, are structurally substandard to a degree 
        requiring substantial renovation or clearance; or 
           (2) the property consists of vacant, unused, underused, 
        inappropriately used, or infrequently used railyards, rail 
        storage facilities, or excessive or vacated railroad 
        rights-of-way; or 
           (3) tank facilities, or property whose immediately previous 
        use was for tank facilities, as defined in section 115C.02, 
        subdivision 15, if the tank facilities: 
           (i) have or had a capacity of more than 1,000,000 gallons; 
           (ii) are located adjacent to rail facilities; and 
           (iii) have been removed or are unused, underused, 
        inappropriately used, or infrequently used. 
           (b) For purposes of this subdivision, "structurally 
        substandard" shall mean containing defects in structural 
        elements or a combination of deficiencies in essential utilities 
        and facilities, light and ventilation, fire protection including 
        adequate egress, layout and condition of interior partitions, or 
        similar factors, which defects or deficiencies are of sufficient 
        total significance to justify substantial renovation or 
        clearance.  
           (c) A building is not structurally substandard if it is in 
        compliance with the building code applicable to new buildings or 
        could be modified to satisfy the building code at a cost of less 
        than 15 percent of the cost of constructing a new structure of 
        the same square footage and type on the site.  The municipality 
        may find that a building is not disqualified as structurally 
        substandard under the preceding sentence on the basis of 
        reasonably available evidence, such as the size, type, and age 
        of the building, the average cost of plumbing, electrical, or 
        structural repairs, or other similar reliable evidence.  The 
        municipality may not make such a determination without an 
        interior inspection of the property, but need not have an 
        independent, expert appraisal prepared of the cost of repair and 
        rehabilitation of the building.  An interior inspection of the 
        property is not required, if the municipality finds that (1) the 
        municipality or authority is unable to gain access to the 
        property after using its best efforts to obtain permission from 
        the party that owns or controls the property; and (2) the 
        evidence otherwise supports a reasonable conclusion that the 
        building is structurally substandard.  Items of evidence that 
        support such a conclusion include recent fire or police 
        inspections, on-site property tax appraisals or housing 
        inspections, exterior evidence of deterioration, or other 
        similar reliable evidence.  Written documentation of the 
        findings and reasons why an interior inspection was not 
        conducted must be made and retained under section 469.175, 
        subdivision 3, clause (1). 
           (d) A parcel is deemed to be occupied by a structurally 
        substandard building for purposes of the finding under paragraph 
        (a) if all of the following conditions are met: 
           (1) the parcel was occupied by a substandard building 
        within three years of the filing of the request for 
        certification of the parcel as part of the district with the 
        county auditor; 
           (2) the substandard building was demolished or removed by 
        the authority or the demolition or removal was financed by the 
        authority or was done by a developer under a development 
        agreement with the authority; 
           (3) the authority found by resolution before the demolition 
        or removal that the parcel was occupied by a structurally 
        substandard building and that after demolition and clearance the 
        authority intended to include the parcel within a district; and 
           (4) upon filing the request for certification of the tax 
        capacity of the parcel as part of a district, the authority 
        notifies the county auditor that the original tax capacity of 
        the parcel must be adjusted as provided by section 469.177, 
        subdivision 1, paragraph (h). 
           (e) For purposes of this subdivision, a parcel is not 
        occupied by buildings, streets, utilities, or other improvements 
        unless 15 percent of the area of the parcel contains 
        improvements. 
           (f) For districts consisting of two or more noncontiguous 
        areas, each area must qualify as a redevelopment district under 
        paragraph (a) to be included in the district, and the entire 
        area of the district must satisfy paragraph (a). 
           EFFECTIVE DATE:  This section is effective for districts or 
        additions to the geographic area of an existing district for 
        which the request for certification was received by the county 
        auditor after June 30, 2000. 
           Sec. 15.  Minnesota Statutes 1998, section 469.174, 
        subdivision 11, is amended to read: 
           Subd. 11.  [HOUSING DISTRICT.] "Housing district" means a 
        type of tax increment financing district which consists of a 
        project, or a portion of a project, intended for occupancy, in 
        part, by persons or families of low and moderate income, as 
        defined in chapter 462A, Title II of the National Housing Act of 
        1934, the National Housing Act of 1959, the United States 
        Housing Act of 1937, as amended, Title V of the Housing Act of 
        1949, as amended, any other similar present or future federal, 
        state, or municipal legislation, or the regulations promulgated 
        under any of those acts.  A project district does not qualify as 
        a housing district under this subdivision if the fair market 
        value of the improvements which are constructed in the district 
        for commercial uses or for uses other than low and moderate 
        income housing consists of more than 20 percent of the total 
        fair market value of the planned improvements in the development 
        plan or agreement.  The fair market value of the improvements 
        may be determined using the cost of construction, capitalized 
        income, or other appropriate method of estimating market value.  
        Housing project means a project, or a portion of a project, that 
        meets all of qualifications of a housing district under this 
        subdivision, whether or not actually established as a housing 
        district. 
           EFFECTIVE DATE:  This section is effective for districts 
        and amendments adding geographic area to an existing district 
        for which the request for certification was filed with the 
        county after May 1, 1988. 
           Sec. 16.  Minnesota Statutes 1998, section 469.174, 
        subdivision 12, is amended to read: 
           Subd. 12.  [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 
        development district" means a type of tax increment financing 
        district which consists of any project, or portions of a 
        project, not meeting the requirements found in the definition of 
        redevelopment district, renewal and renovation district, soils 
        condition district, mined underground space development 
        district, or housing district, but which the authority finds to 
        be in the public interest because: 
           (1) it will discourage commerce, industry, or manufacturing 
        from moving their operations to another state or municipality; 
        or 
           (2) it will result in increased employment in the state; or 
           (3) it will result in preservation and enhancement of the 
        tax base of the state. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 17.  Minnesota Statutes 1998, section 469.174, 
        subdivision 14, is amended to read: 
           Subd. 14.  [ADMINISTRATIVE EXPENSES.] "Administrative 
        expenses" means all expenditures of an authority other than: 
           (1) amounts paid for the purchase of land or; 
           (2) amounts paid to contractors or others providing 
        materials and services, including architectural and engineering 
        services, directly connected with the physical development of 
        the real property in the district, project; 
           (3) relocation benefits paid to or services provided for 
        persons residing or businesses located in the district, 
        or project; 
           (4) amounts used to pay principal or interest on, fund a 
        reserve for, or sell at a discount bonds issued pursuant to 
        section 469.178; or 
           (5) amounts used to pay other financial obligations to the 
        extent those obligations were used to finance costs described in 
        clauses (1) to (3). 
           For districts for which the requests for certifications 
        were made before August 1, 1979, or after June 30, 1982, 
        "administrative expenses" includes amounts paid for services 
        provided by bond counsel, fiscal consultants, and planning or 
        economic development consultants.  
           EFFECTIVE DATE:  This section is effective for all tax 
        increment financing districts, regardless of when the request 
        for certification was made. 
           Sec. 18.  Minnesota Statutes 1998, section 469.174, 
        subdivision 22, is amended to read: 
           Subd. 22.  [TOURISM FACILITY.] "Tourism facility" means 
        property that: 
           (1) is located in a county where the median income is no 
        more than 85 percent of the state median income; 
           (2) is located in a county in which, excluding the cities 
        of the first class in that county, the earnings on 
        tourism-related activities are 15 percent or more of the total 
        earnings in the county development region 2, 3, 4, or 5, as 
        defined in section 462.385; 
           (3) is located outside the metropolitan area defined in 
        section 473.121, subdivision 2; 
           (4) is not located in a city with a population in excess of 
        20,000; and 
           (5) (4) is acquired, constructed, or rehabilitated for use 
        as a convention and meeting facility that is privately 
        owned, amusement park, recreation facility, cultural facility, 
        marina, park, hotel, motel, lodging facility, or nonhomestead 
        dwelling unit that in each case is intended to serve primarily 
        individuals from outside the county. 
           EFFECTIVE DATE:  This section is effective for districts 
        for which the request for certification was received by the 
        county auditor after June 30, 2000, but the new clause (4) does 
        not apply to (1) expenditures made under a binding contract 
        entered before January 1, 2000; or (2) expenditures made under a 
        binding contract entered pursuant to a letter of intent with the 
        developer or contractor if the letter of intent was entered 
        before January 1, 2000. 
           Sec. 19.  Minnesota Statutes 1998, section 469.175, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [INCLUSION OF COUNTY ROAD COSTS.] (a) The county 
        board may require the authority to pay all or a portion of the 
        cost of county road improvements out of increment revenues, if 
        the following conditions occur: 
           (1) the proposed tax increment financing plan or an 
        amendment to the plan contemplates construction of a development 
        that will, in the judgment of the county, substantially increase 
        the use of county roads requiring construction of road 
        improvements or other road costs; and 
           (2) the road improvements or other road costs are not 
        scheduled for construction within five years under the county 
        capital improvement plan or other within five years under 
        another formally adopted county plan, and in the opinion of the 
        county, would not reasonably be expected to be needed within the 
        reasonably foreseeable future if the tax increment financing 
        plan were not implemented. 
           (b) If the county elects to use increments to finance the 
        road improvements, the county must notify the authority and 
        municipality within 30 45 days after receipt of the information 
        on the proposed tax increment district financing plan under 
        subdivision 2.  The notice must include the estimated cost of 
        the road improvements and schedule for construction and payment 
        of the cost.  The authority must include the improvements in the 
        tax increment financing plan.  The improvements may be financed 
        with the proceeds of tax increment bonds or the authority and 
        the county may agree that the county will finance the 
        improvements with county funds to be repaid in installments, 
        with or without interest, out of increment revenues.  If the 
        cost of the road improvements and other project costs exceed the 
        projected amount of the increment revenues, the county and 
        authority shall negotiate an agreement, modifying the 
        development plan or proposed road improvements that will permit 
        financing of the costs before the tax increment financing plan 
        may be approved. 
           EFFECTIVE DATE:  This section, paragraph (a), is effective 
        for districts or expansions of the geographic area of districts, 
        for which certification is requested after the day following 
        final enactment of this act. 
           This section, paragraph (b), is effective for tax increment 
        financing plans or amendments to plans approved after July 1, 
        2000. 
           Sec. 20.  Minnesota Statutes 1998, section 469.175, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONSULTATIONS; COMMENT AND FILING.] Before 
        formation of a tax increment financing district, the authority 
        shall provide an opportunity to the members of the county boards 
        of commissioners of any county in which any portion of the 
        proposed district is located and the members of the school board 
        of any school district in which any portion of the proposed 
        district is located to meet with the authority.  The authority 
        shall present to the members of the county boards of 
        commissioners and the school boards its the county auditor and 
        clerk of the school board with the proposed tax increment 
        financing plan for the district and the authority's estimate of 
        the fiscal and economic implications of the proposed tax 
        increment financing district.  The authority must provide the 
        proposed tax increment financing plan and the information on the 
        fiscal and economic implications of the plan must be provided to 
        the county auditor and the clerk of the school district boards 
        board at least 30 days before the public hearing required by 
        subdivision 3.  The information on the fiscal and economic 
        implications may be included in or as part of the tax increment 
        financing plan.  The county auditor and clerk of the school 
        board shall provide copies to the members of the boards, as 
        directed by their respective boards.  The 30-day requirement is 
        waived if the boards of the county and school district submit 
        written comments on the proposal and any modification of the 
        proposal to the authority after receipt of the information.  The 
        members of the county boards of commissioners and the school 
        boards may present their comments at the public hearing on the 
        tax increment financing plan required by subdivision 3.  Upon 
        adoption of the tax increment financing plan, the authority 
        shall file a copy of the plan with the commissioner of revenue.  
        The authority must also file with the commissioner a copy of the 
        development plan for the project area. 
           EFFECTIVE DATE:  This section is effective for tax 
        increment financing plans approved after July 1, 2000. 
           Sec. 21.  Minnesota Statutes 1998, section 469.175, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [HOUSING DISTRICTS; REDEVELOPMENT DISTRICTS.] In 
        the case of a proposed housing district or redevelopment 
        district, in addition to the requirements of subdivision 2, at 
        least 30 days before the publication of the notice for public 
        hearing under subdivision 3, the authority shall deliver written 
        notice of the proposed district to each county commissioner who 
        represents part of the area proposed to be included in the 
        district.  The notice must contain a general description of the 
        boundaries of the proposed district and the proposed activities 
        to be financed by the district, an offer by the authority to 
        meet and discuss the proposed district with the county 
        commissioner, and a solicitation of the commissioner's comments 
        with respect to the district.  The commissioner may waive the 
        30-day requirement by submitting written comments on the 
        proposal and any modification of the proposal to the authority 
        after receipt of the information. 
           EFFECTIVE DATE:  This section is effective for tax 
        increment financing districts for which the requests for 
        certification is made after May 31, 1993. 
           Sec. 22.  Minnesota Statutes 1998, 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 documented in writing and 
        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 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. 
           EFFECTIVE DATE:  This section is effective for tax 
        increment financing plans approved after June 30, 2000. 
           Sec. 23.  Minnesota Statutes 1998, section 469.175, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ANNUAL DISCLOSURE.] (a) The authority shall 
        annually submit to the county board, the county auditor, the 
        school board, 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 and any 
        subdistrict, 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.  The authority must 
        submit the annual report for a year on or before August 1 of the 
        next year. 
           (b) 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 and any subdistrict'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, for each district the information required to 
        be reported under subdivision 6, paragraph (c), clauses (1), 
        (2), (3), (11), (12), (20), and (21); the amounts of tax 
        increment received and expended in the reporting period; and any 
        additional information the authority deems necessary shall must 
        be published in a newspaper of general circulation in the 
        municipality that approved the tax increment financing plan.  If 
        the fiscal disparities contribution under chapter 276A or 473F 
        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.  The annual statement 
        must inform readers that additional information regarding each 
        district may be obtained from the authority, and must explain 
        how the additional information may be requested.  The authority 
        must publish the annual statement for a year no later than 
        August 15 of the next year.  The authority must identify the 
        newspaper of general circulation in the municipality to which 
        the annual statement has been or will be submitted for 
        publication and provide a copy of the annual statement to 
        the county board, the county auditor, the school board, the 
        state auditor, and, if the authority is other than the 
        municipality, the governing body of the municipality on or 
        before August 1 of the year in which the statement must be 
        published.  
           (c) The disclosure and reporting requirements imposed by 
        this subdivision apply to districts certified before, on, or 
        after August 1, 1979. 
           EFFECTIVE DATE:  This section is effective for reports due 
        in 2001 and subsequent years. 
           Sec. 24.  Minnesota Statutes 1998, section 469.175, 
        subdivision 6, is amended to read: 
           Subd. 6.  [ANNUAL 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 
        a financial report in compliance with paragraph (a).  Copies of 
        the report must also be provided to the county and school 
        district boards auditor 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).  The authority must submit 
        the annual report for a year on or before August 1 of the next 
        year. 
           (c) The annual financial report must also include the 
        following items: 
           (1) the original net tax capacity of the district and any 
        subdistrict under section 469.177, subdivision 1; 
           (2) the net tax capacity for the reporting period of the 
        district and any subdistrict; 
           (3) the captured net tax capacity of the district, 
        including the amount of any captured net tax capacity shared 
        with other taxing districts; 
           (3) (4) any fiscal disparity deduction from the captured 
        net tax capacity under section 469.177, subdivision 3; 
           (5) the captured net tax capacity retained for tax 
        increment financing under section 469.177, subdivision 2, 
        paragraph (a), clause (1); 
           (6) any captured net tax capacity distributed among 
        affected taxing districts under section 469.177, subdivision 2, 
        paragraph (a), clause (2); 
           (7) the type of district; 
           (8) the date the municipality approved the tax increment 
        financing plan and the date of approval of any modification of 
        the tax increment financing plan, the approval of which requires 
        notice, discussion, a public hearing, and findings under 
        subdivision 4, paragraph (a); 
           (9) the date the authority first requested certification of 
        the original net tax capacity of the district and the date of 
        the request for certification regarding any parcel added to the 
        district; 
           (10) the date the county auditor first certified the 
        original net tax capacity of the district and the date of 
        certification of the original net tax capacity of any parcel 
        added to the district; 
           (11) the month and year in which the authority has received 
        or anticipates it will receive the first increment from the 
        district; 
           (12) the date the district must be decertified; 
           (13) for the reporting period and prior years of the 
        district, the actual amount received from, at least, the 
        following categories: 
           (i) tax increments paid by the captured net tax capacity 
        retained for tax increment financing under section 469.177, 
        subdivision 2, paragraph (a), clause (1), but excluding any 
        excess taxes; 
           (ii) tax increments that are interest or other investment 
        earnings on or from tax increments; 
           (iii) tax increments that are proceeds from the sale or 
        lease of property, tangible or intangible, purchased by the 
        authority with tax increments; 
           (iv) tax increments that are repayments of loans or other 
        advances made by the authority with tax increments; 
           (v) bond or loan proceeds; 
           (vi) special assessments; 
           (vii) grants; and 
           (viii) transfers from funds not exclusively associated with 
        the district; 
           (14) for the reporting period and for the duration prior 
        years 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 
           (vi) transfers to funds not exclusively associated with the 
        district; 
           (4) (15) for properties sold to developers, the total cost 
        of the property to the authority and the price paid by the 
        developer; and 
           (5) the amount of increments rebated or paid to developers 
        or property owners for privately financed improvements or other 
        qualifying costs. 
           (16) the amount of any payments and the value of any 
        in-kind benefits, such as physical improvements and the use of 
        building space, that are paid or financed with tax increments 
        and are provided to another governmental unit other than the 
        municipality during the reporting period; 
           (17) the amount of any payments for activities and 
        improvements located outside of the district that are paid for 
        or financed with tax increments; 
           (18) the amount of payments of principal and interest that 
        are made during the reporting period on any nondefeased: 
           (i) general obligation tax increment financing bonds; 
           (ii) other tax increment financing bonds; and 
           (iii) notes and pay-as-you-go contracts; 
           (19) the principal amount, at the end of the reporting 
        period, of any nondefeased: 
           (i) general obligation tax increment financing bonds; 
           (ii) other tax increment financing bonds; and 
           (iii) notes and pay-as-you-go contracts; 
           (20) the amount of principal and interest payments that are 
        due for the current calendar year on any nondefeased: 
           (i) general obligation tax increment financing bonds; 
           (ii) other tax increment financing bonds; and 
           (iii) notes and pay-as-you-go contracts; 
           (21) if the fiscal disparities contribution under chapter 
        276A or 473F for the district is computed under section 469.177, 
        subdivision 3, paragraph (a), the amount of increased property 
        taxes imposed on other properties in the municipality that 
        approved the tax increment financing plan as a result of the 
        fiscal disparities contribution; 
           (22) 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 outside of the district; 
           (ii) for deposit into a common bond 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 
           (23) any additional information the state auditor may 
        require. 
           (d) The commissioner of revenue shall prescribe the method 
        of calculating the increased property taxes under paragraph (c), 
        clause (21), and the form of the statement disclosing this 
        information on the annual statement under subdivision 5. 
           (e) The reporting requirements imposed by this subdivision 
        apply to districts certified before, on, and after August 1, 
        1979. 
           EFFECTIVE DATE:  This section is effective for reports due 
        in 2001 and subsequent years. 
           Sec. 25.  Minnesota Statutes 1998, section 469.176, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
        shall in any event be paid to the authority 
           (1) after 25 years from date of receipt by the authority of 
        the first tax increment for a mined underground space 
        development district, 
           (2) after 15 years after receipt by the authority of the 
        first increment for a renewal and renovation district, 
           (3) (2) after 20 years after receipt by the authority of 
        the first increment for a soils condition district, 
           (4) (3) after nine eight years from the date of the 
        after receipt, or 11 years from approval of the tax increment 
        financing plan, whichever is less, by the authority of the first 
        increment for an economic development district, 
           (5) (4) for a housing district or a redevelopment district, 
        after 20 years from the date of receipt by the authority of the 
        first tax increment by the authority pursuant to section 
        469.175, subdivision 1, paragraph (b); or, if no provision is 
        made under section 469.175, subdivision 1, paragraph (b), after 
        25 years from the date of receipt by the authority of the first 
        increment. 
           (b) For purposes of determining a duration limit under this 
        subdivision or subdivision 1e that is based on the receipt of an 
        increment, any increments from taxes payable in the year in 
        which the district terminates shall be paid to the authority.  
        This paragraph does not affect a duration limit calculated from 
        the date of approval of the tax increment financing plan or 
        based on the recovery of costs or to a duration limit under 
        subdivision 1c.  This paragraph does not supersede the 
        restrictions on payment of delinquent taxes in subdivision 1f. 
           (c) Except as authorized by section 469.175, subdivision 1, 
        paragraph (b), an action by the authority to waive or decline to 
        accept an increment has no effect for purposes of computing a 
        duration limit based on the receipt of increment under this 
        subdivision or any other provision of law.  The authority is 
        deemed to have received an increment for any year in which it 
        waived or declined to accept an increment, regardless of whether 
        the increment was paid to the authority. 
           EFFECTIVE DATE:  This section is effective for districts 
        for which the request for certification was received by the 
        county auditor after June 30, 2000, and does not apply to 
        amendments adding geographic area to a district for which the 
        request for certification was received before July 1, 2000. 
           Sec. 26.  Minnesota Statutes 1998, section 469.176, is 
        amended by adding a subdivision to read: 
           Subd. 4k.  [ASSISTING HOUSING OUTSIDE PROJECT 
        AREA.] Notwithstanding the definition of a project under section 
        469.174, increments may be spent to assist housing that meets 
        the requirements under section 469.1763, subdivision 2, 
        paragraph (d), regardless of whether the housing is located 
        within the boundaries of the project area. 
           EFFECTIVE DATE:  This section is effective for increments 
        spent after July 1, 2000, from districts for which certification 
        was requested after May 1, 1990. 
           Sec. 27.  Minnesota Statutes 1998, section 469.1761, 
        subdivision 4, is amended to read: 
           Subd. 4.  [NONCOMPLIANCE; ENFORCEMENT.] Failure to comply 
        with the requirements of this section results in application of 
        the duration limits for economic development districts to the 
        district.  If at the time of the noncompliance the district has 
        exceeded the duration limits for an economic development 
        district, the district must be decertified effective for taxes 
        assessed in the next calendar year.  The commissioner of revenue 
        shall enforce the provisions of this section is subject to 
        section 469.1771.  The commissioner may waive insubstantial 
        violations.  Appeal of the commissioner's orders of 
        noncompliance must be made to the tax court in the manner 
        provided in section 271.06. 
           EFFECTIVE DATE:  This section is effective for violations 
        occurring after July 1, 2000. 
           Sec. 28.  Minnesota Statutes 1998, 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. 
           (d) The authority may elect, in the tax increment financing 
        plan for the district, to increase by up to ten percentage 
        points the permitted amount of expenditures for activities 
        located outside the geographic area of the district under 
        paragraph (a).  As permitted by section 469.176, subdivision 4k, 
        the expenditures, including the permitted expenditures under 
        paragraph (a), need not be made within the geographic area of 
        the project.  To qualify for the increase under this paragraph, 
        the expenditures must: 
           (1) be used exclusively to assist housing that meets the 
        requirement for a qualified low-income building, as that term is 
        used in section 42 of the Internal Revenue Code; 
           (2) not exceed the qualified basis of the housing, as 
        defined under section 42(c) of the Internal Revenue Code, less 
        the amount of any credit allowed under section 42 of the 
        Internal Revenue Code; and 
           (3) be used to: 
           (i) acquire and prepare the site of the housing; 
           (ii) acquire, construct, or rehabilitate the housing; or 
           (iii) make public improvements directly related to the 
        housing. 
           EFFECTIVE DATE:  This section is effective for increments 
        spent after July 1, 2000, from districts for which certification 
        was requested after May 1, 1990. 
           Sec. 29.  Minnesota Statutes 1998, 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) (c) 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) (d) 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.  In computing the average percentage increase in 
        market value, the auditor shall exclude the market value, as 
        estimated by the assessor, that is attributable to new 
        construction; extension of sewer, water, roads, or other public 
        utilities; or platting of the land. 
           (g) (e) 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) (f) 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. 
           EFFECTIVE DATE:  This section is effective for districts 
        for which the request for certification was received by the 
        county auditor after June 30, 2000, and does not apply to 
        amendments adding geographic area to a district for which the 
        request for certification was received before July 1, 2000. 
           Sec. 30.  Minnesota Statutes 1999 Supplement, section 
        469.1771, subdivision 1, is amended to read: 
           Subdivision 1.  [ENFORCEMENT.] (a) 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 2, 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 state auditor may examine and audit political 
        subdivisions' use of tax increment financing.  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 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.  If the county attorney 
        determines not to bring an action or if the county attorney has 
        not brought an action within 12 months after receipt of the 
        initial notification by the state auditor of the violation, the 
        county attorney shall notify the state auditor in writing. 
           (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. 
           (d) The state auditor shall notify the attorney general in 
        writing and provide supporting materials for a violation found 
        by the auditor, if the: 
           (1) auditor receives notification from the county attorney 
        under paragraph (b) or receives no notification for a 12-month 
        period after initially notifying the county attorney and the 
        state auditor confirms with the county attorney or the 
        municipality that no action has been brought regarding the 
        matter; and 
           (2) municipality or development authority have not 
        eliminated or resolved the violation to the satisfaction of the 
        state auditor. 
        The auditor shall provide the municipality and development 
        authority a copy of the notification sent to the attorney 
        general. 
           EFFECTIVE DATE:  This section is effective for violations 
        occurring after the date of final enactment.  
           Sec. 31.  Minnesota Statutes 1998, section 469.1771, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [SUSPENSION OF DISTRIBUTION OF TAX INCREMENT.] 
        (a) If an authority fails to make a disclosure or to submit a 
        report containing the information required by section 469.175, 
        subdivisions 5 and 6, regarding a tax increment financing 
        district within the time provided in section 469.175, 
        subdivisions 5 and 6, or if a municipality fails to submit a 
        report containing the information required of section 469.175, 
        subdivision 6a, regarding a tax increment financing district 
        within the time provided in section 469.175, subdivision 6a, the 
        state auditor shall mail to the authority a written notice that 
        it or the municipality has failed to make the required 
        disclosure or to submit a required report with respect to a 
        particular district.  The state auditor shall mail the notice on 
        or before the third Tuesday of August of the year in which the 
        disclosure or report was required to be made or submitted.  The 
        notice must describe the consequences of failing to disclose or 
        submit a report as provided in paragraph (b).  If the state 
        auditor has not received a copy of a disclosure or a report 
        described in this paragraph on or before the third Tuesday of 
        November of the year in which the disclosure or report was 
        required to be made or submitted, the state auditor shall mail a 
        written notice to the county auditor to hold the distribution of 
        tax increment from a particular district.  
           (b) Upon receiving written notice from the state auditor to 
        hold the distribution of tax increment, the county auditor shall 
        hold: 
           (1) 25 percent of the amount of tax increment that 
        otherwise would be distributed, if the distribution is made 
        after the third Friday in November but during the year in which 
        the disclosure or report was required to be made or submitted; 
        or 
           (2) 100 percent of the amount of tax increment that 
        otherwise would be distributed, if the distribution is made 
        after December 31 of the year in which the disclosure or report 
        was required to be made or submitted. 
           (c) Upon receiving the copy of the disclosure and all of 
        the reports described in paragraph (a) with respect to a 
        district regarding which the state auditor has mailed to the 
        county auditor a written notice to hold distribution of tax 
        increment, the state auditor shall mail to the county auditor a 
        written notice lifting the hold and authorizing the county 
        auditor to distribute to the authority or municipality any tax 
        increment that the county auditor had held pursuant to paragraph 
        (b).  The state auditor shall mail the written notice required 
        by this paragraph within five working days after receiving the 
        last outstanding item.  The county auditor shall distribute the 
        tax increment to the authority or municipality within 15 working 
        days after receiving the written notice required by this 
        paragraph. 
           (d) Notwithstanding any law to the contrary, any interest 
        that accrues on tax increment while it is being held by the 
        county auditor pursuant to paragraph (b) is not tax increment 
        and may be retained by the county. 
           (e) For purposes of sections 469.176, subdivisions 1a to 
        1g, and 469.177, subdivision 11, tax increment being held by the 
        county auditor pursuant to paragraph (b) is considered 
        distributed to or received by the authority or municipality as 
        of the time that it would have been distributed or received but 
        for paragraph (b). 
           EFFECTIVE DATE:  This section is effective for reports due 
        in 2001 and later years. 
           Sec. 32.  Minnesota Statutes 1998, section 469.1771, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [INCREMENTS RECEIVED AFTER DURATION LIMIT.] (a) 
        This subdivision applies to payments made by the county auditor 
        as tax increments that: 
           (1) were received by the authority before July 1, 2000, for 
        a tax increment financing district after the maximum duration 
        limit for the district; and 
           (2) were not permitted to be made under section 469.176, 
        subdivision 1f, or any other provision of law as tax increments 
        after the duration limit for the district. 
           (b) The authority or the municipality may enter an 
        agreement with the county to repay these amounts in 
        installments, without interest, over a period not to exceed 
        three years. 
           (c) If a repayment agreement is entered or the authority or 
        municipality otherwise voluntarily repays these amounts, then 
        distributions of these repayments under subdivision 5 must be 
        made to each of the taxing jurisdictions, including the 
        municipality. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment and applies to tax increment financing 
        districts, regardless of whether the request for certification 
        was made before, on, or after August 1, 1979. 
           Sec. 33.  Minnesota Statutes 1999 Supplement, section 
        469.1813, subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORITY.] The governing body of a 
        political subdivision may grant an abatement of the taxes 
        imposed by the political subdivision on a parcel of property, or 
        defer the payments of the taxes and abate the interest and 
        penalty that otherwise would apply, if: 
           (a) it expects the benefits to the political subdivision of 
        the proposed abatement agreement to at least equal the costs to 
        the political subdivision of the proposed agreement or intends 
        the abatement to phase in a property tax increase, as provided 
        in clause (b)(7); and 
           (b) it finds that doing so is in the public interest 
        because it will: 
           (1) increase or preserve tax base; 
           (2) provide employment opportunities in the political 
        subdivision; 
           (3) provide or help acquire or construct public facilities; 
           (4) help redevelop or renew blighted areas; 
           (5) help provide access to services for residents of the 
        political subdivision; or 
           (6) finance or provide public infrastructure; or 
           (7) phase in a property tax increase on the parcel 
        resulting from an increase of 50 percent or more in one year on 
        the estimated market value of the parcel, other than increase 
        attributable to improvement of the parcel. 
           EFFECTIVE DATE:  This section is effective beginning with 
        taxes payable in 2001. 
           Sec. 34.  Minnesota Statutes 1998, section 469.1813, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PROPERTY LOCATED IN TAX INCREMENT FINANCING 
        DISTRICTS.] The governing body of a governmental political 
        subdivision may not enter into a property tax abatement 
        agreement under sections 469.1812 to 469.1815 if the property 
        that provides for abatement of taxes on a parcel, if the 
        abatement will occur while the parcel is located in a tax 
        increment financing district. 
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and later years. 
           Sec. 35.  Minnesota Statutes 1999 Supplement, section 
        469.1813, subdivision 6, is amended to read: 
           Subd. 6.  [DURATION LIMIT.] (a) A political subdivision may 
        grant an abatement for a period no longer than ten years, except 
        as provided under paragraph (b).  The subdivision may specify in 
        the abatement resolution a shorter duration.  If the resolution 
        does not specify a period of time, the abatement is for eight 
        years.  If an abatement has been granted to a parcel of property 
        and the period of the abatement has expired, the political 
        subdivision that granted the abatement may not grant another 
        abatement for eight years after the expiration of the first 
        abatement.  This prohibition does not apply to improvements 
        added after and not subject to the first abatement. 
           (b) A political subdivision proposing to abate taxes for a 
        parcel may request, in writing, that the other political 
        subdivisions in which the parcel is located grant an abatement 
        for the property.  If one of the other political subdivisions 
        declines, in writing, to grant an abatement or if 90 days pass 
        after receipt of the request to grant an abatement without a 
        written response from one of the political subdivisions, the 
        duration limit for an abatement for the parcel is increased to 
        15 years.  If the political subdivision which declined to grant 
        an abatement later grants an abatement for the parcel, the 
        15-year duration limit is reduced by one year for each year that 
        the declining political subdivision grants an abatement for the 
        parcel during the period of the abatement granted by the 
        requesting political subdivision.  The duration limit may not be 
        reduced below the limit under paragraph (a).  
           EFFECTIVE DATE:  This section is effective for taxes 
        payable in 2001 and thereafter. 
           Sec. 36.  Laws 1997, chapter 231, article 1, section 19, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [DEFINITION OF INCREMENT.] For purposes of this 
        section, "tax increments" and "revenues derived from tax 
        increments" have the meaning given in Minnesota Statutes, 
        section 469.174, subdivision 25, except that the definition 
        applies to all tax increment financing districts, regardless of 
        when the request for certification was made and regardless of 
        when the revenues were received, notwithstanding the effective 
        date of Minnesota Statutes, section 469.174, subdivision 25. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 37.  [BROOKLYN PARK EDA; TIF DISTRICT NO. 18.] 
           The 1998 amendments to Minnesota Statutes, section 469.176, 
        subdivision 7, as set forth in Laws 1998, chapter 389, article 
        11, section 6, apply to the Brooklyn Park economic development 
        authority's tax increment financing district No. 18, 
        notwithstanding the effective date of the amendments. 
           EFFECTIVE DATE:  This section is effective the day after 
        the governing body of the city of Brooklyn Park and its chief 
        clerical officer timely complete their compliance with Minnesota 
        Statutes, section 645.021, subdivisions 2 and 3. 
           Sec. 38.  [CITY OF FOUNTAIN; TIF DURATION EXTENSION.] 
           The governing body of the city of Fountain may extend the 
        duration of tax increment financing district 1-1 through 
        December 31, 2008, notwithstanding the provision of Minnesota 
        Statutes, section 469.176, subdivision 1b.  The extension under 
        this section is intended to correct an error in calculation of 
        the increment after a division of a parcel in the tax increment 
        financing district.  As a result, the provisions of Minnesota 
        Statutes, section 469.1782, subdivision 1, do not apply to the 
        district. 
           EFFECTIVE DATE:  This section is effective the day after 
        the governing bodies of the city, county, and school district, 
        and their chief clerical officers, timely complete their 
        compliance with Minnesota Statutes, sections 469.1782, 
        subdivision 2, and 645.021, subdivisions 2 and 3. 
           Sec. 39.  [MENDOTA HEIGHTS TAX INCREMENT FINANCING 
        DISTRICT; CONTINUATION.] 
           Notwithstanding the provisions of Minnesota Statutes, 
        section 469.1764, or any other law, tax increment financing 
        district No. 1 established by the city of Mendota Heights in 
        1981 shall continue in effect for its original authorized 
        duration, subject to the condition that, except for expenditures 
        to pay preexisting obligations described in Minnesota Statutes, 
        section 469.1764, subdivision 5, paragraphs (b) and (c), all 
        future expenditures of tax increment shall not exceed $4,500,000 
        and shall be limited to the city's freeway road project 
        substantially as described in the city's application for a grant 
        from the livable communities demonstration account of the 
        metropolitan livable communities fund. 
           EFFECTIVE DATE:  This section is effective the day after 
        approval by the governing body of the city of Mendota Heights 
        and compliance with Minnesota Statutes, section 645.021, 
        subdivision 3. 
           Sec. 40.  [ST. PAUL HOUSING AND REDEVELOPMENT AUTHORITY; 
        HOUSING DISTRICT.] 
           Subdivision 1.  [AUTHORIZATION.] The governing body of the 
        housing and redevelopment authority of the city of St. Paul may 
        create a tax increment financing housing district as provided in 
        this section for a development containing both owner-occupied 
        and residential rental units for mixed income occupancy. 
           Subd. 2.  [AREA.] The housing district authorized in this 
        section may only be created in the northeast quadrant of 
        downtown St. Paul, which is defined as the approximately 15-acre 
        area bounded by Interstate 94 on the north and east, Jackson 
        Street on the west, and Seventh Street on the south, together 
        with the west side of Jackson Street to midblock between 
        Interstate 94 and Seventh Street. 
           Subd. 3.  [INCOME REQUIREMENTS FOR COMBINED OWNER-OCCUPIED 
        AND RESIDENTIAL RENTAL DEVELOPMENT.] (a) Notwithstanding the 
        income requirements in Minnesota Statutes, section 469.174, 
        subdivision 11, or 469.1761, a housing district in the northeast 
        quadrant means a type of tax increment financing district that 
        consists of a project, or a portion of a project, intended for 
        occupancy, in part, by persons of low and moderate income as 
        defined in chapter 462A, Title II, of the National Housing Act 
        of 1934; the National Housing Act of 1959; the United States 
        Housing Act of 1937, as amended; Title V of the Housing Act of 
        1949, as amended; any other similar present or future federal, 
        state, or municipal legislation, or the regulations promulgated 
        under any of those acts, as further set forth in this section.  
        Twenty percent of the units in the development in the housing 
        district must be occupied by individuals whose family income is 
        equal to or less than 50 percent of area median gross income and 
        an additional 60 percent of the units in the development in the 
        housing district must be occupied by individuals whose family 
        income is equal to or less than 115 percent of area median gross 
        income.  Twenty percent of the units in the development in the 
        housing district shall not be subject to any income limitations. 
           (b) For purposes of this section, family income means the 
        median gross income for the area as determined under section 42 
        of the Internal Revenue Code of 1986, as amended.  The income 
        requirements of this subdivision shall be deemed to be satisfied 
        if the sum of qualified owner-occupied units and qualified 
        residential rental units equals the required total number of 
        qualified units.  Owner-occupied units must be initially 
        purchased and occupied by individuals whose family income 
        satisfies the income requirements of this subdivision.  For 
        residential rental property, the income requirements of this 
        subdivision apply for the duration of the tax increment district.
           (c) The development in the housing district, but not the 
        project, does not qualify under this subdivision if the fair 
        market value of the improvements which are constructed for 
        commercial uses or for uses other than owner-occupied and rental 
        mixed-income housing consists of more than 20 percent of the 
        total fair market value of the planned improvements in the 
        development plan or agreement.  The fair market value of the 
        improvements may be determined using the cost of construction, 
        capitalized income, or other appropriate method of estimating 
        market value. 
           EFFECTIVE DATE:  This section is effective the day after 
        the governing body of the city of St. Paul and its chief 
        clerical officer timely comply with Minnesota Statutes, section 
        645.021, subdivisions 2 and 3. 
           Sec. 41.  [WINONA TAX INCREMENT FINANCING DISTRICT; 
        RATIFICATION OF EXPENDITURE.] 
           For tax increment financing district No. 2, approved by the 
        city of Winona on August 1, 1980, the expenditure of tax 
        increments before January 1, 1998, to finance, in part, the 
        construction of improvements to the existing municipal 
        wastewater treatment plant is ratified and deemed an expenditure 
        within the geographic area of the tax increment financing 
        district, and Minnesota Statutes, section 469.1764, does not 
        apply to the tax increment financing district. 
           EFFECTIVE DATE:  This section is effective upon approval by 
        the Winona city council and compliance with Minnesota Statutes, 
        section 645.021. 
           Sec. 42.  [REDEVELOPMENT GRANTS; RICHFIELD.] 
           (a) For fiscal year 2001, $5,000,000 is appropriated from 
        the general fund to the commissioner of trade and economic 
        development for a redevelopment grant or grants to the city of 
        Richfield under Minnesota Statutes, sections 116J.561 to 
        116J.566. 
           (b) Grants made under this authority may only be used for 
        acquisition and site preparation of residential property in the 
        city of Richfield, located within an area consisting of no more 
        than two blocks immediately to the west of trunk highway 77, 
        bounded on the north by trunk highway 62 and on the south by 
        77th street.  A property qualifies as a residential property 
        only if the land is improved with a building and at least 75 
        percent of the square footage of the building is for single 
        family or multiunit residential uses. 
           (c) For purposes of this grant, the local match requirement 
        under Minnesota Statutes, section 116J.566, and the requirements 
        to repay sales proceeds under section 116J.567, do not apply. 
           (d) The city of Richfield must submit a report to the 
        chairs of the tax committees of the house of representatives and 
        senate by no later than December 15, 2000, on the redevelopment 
        plans.  This report must include details on the plans for and, 
        to the extent available, the actual use of the grant money, 
        including, but not limited to, information on: 
           (1) residential units purchased or to be purchased, by 
        location and type of unit; 
           (2) the cost of acquisition or the estimated cost of 
        acquisition of the units; 
           (3) the cost of demolition or relocation of buildings, 
        including any offsetting savings from buildings to be relocated 
        or other salvage; 
           (4) the cost of relocation of utilities; 
           (5) the cost of any other site preparation for development; 
           (6) plans for sale and use of the cleared land, including 
        estimates of the value of the land after clearance and site 
        preparation; and 
           (7) the plans for the ultimate use of the properties 
        acquired or to be acquired. 
           Sec. 43.  [MINNESOTA MINERALS 21ST CENTURY FUND.] 
           Subdivision 1.  [TRANSFER.] $30,000,000 is appropriated in 
        fiscal year 2001 from the general fund for transfer to the 
        Minnesota Minerals 21st Century Fund. 
           Subd. 2.  [INFRASTRUCTURE MUST BE MADE AVAILABLE.] Any 
        entity controlling the infrastructure created by an investment 
        from the Minnesota Minerals 21st Century Fund from money 
        transferred under this section shall make the infrastructure 
        available to be utilized by other businesses or public 
        authorities at costs reasonably designed to meet operating and 
        maintenance needs of the infrastructure.  The utilization of 
        this infrastructure by others only pertains to the 
        infrastructure capacity not needed by the primary recipient of 
        the investments by the Minnesota Minerals 21st Century Fund. 
           Sec. 44.  [REPEALER.] 
           (a) Minnesota Statutes 1998, sections 469.055, subdivision 
        5; 469.101, subdivision 21; 469.135; 469.136; 469.137; 469.138; 
        469.139; 469.140; 469.174, subdivision 13; and 469.176, 
        subdivision 4a, are repealed.  
           (b) Minnesota Statutes 1998, section 469.175, subdivision 
        6a, is repealed. 
           EFFECTIVE DATE:  Paragraph (a) is effective the day 
        following final enactment.  Paragraph (b) is effective for 
        reports due beginning in 2001. 

                                   ARTICLE 12 
                                 FEDERAL UPDATE 
           Section 1.  Minnesota Statutes 1999 Supplement, section 
        289A.02, subdivision 7, is amended to read: 
           Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
        defined otherwise, "Internal Revenue Code" means the Internal 
        Revenue Code of 1986, as amended through December 31, 1998 1999. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 2.  Minnesota Statutes 1999 Supplement, 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(g) 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; 
           (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; and 
           (3) the deduction for dividends paid must also be applied 
        in the amount of any undistributed capital gains which the 
        regulated investment company elects to have treated as provided 
        in section 852(b)(3)(D) 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, the provisions of sections 
        7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 
        1989, Public Law Number 101-239, the provisions of sections 
        1305, 1704(r), and 1704(e)(1) of the Small Business Job 
        Protection Act, Public Law Number 104-188, and the provisions of 
        sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act 
        of 1997, Public Law Number 105-34, and the provisions of section 
        4004 of the Omnibus Consolidated and Emergency Supplemental 
        Appropriations Act, 1999, Public Law Number 105-277 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, 
        the provisions of sections 11701 and 11703 of the Revenue 
        Reconciliation Act of 1990, Public Law Number 101-508, and the 
        provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 
        Small Business Job Protection Act, Public Law Number 104-188, 
        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, 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, and the provisions of section 1604(a)(1), (2), and (3) 
        of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
        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, the provisions of sections 1703(a), 1703(d), 1703(i), 
        1703(l), and 1703(m) of the Small Business Job Protection Act, 
        Public Law Number 104-188, and the provision of section 1604(c) 
        of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
        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, the provisions of sections 1, 2, and 3, of 
        the Self-Employed Health Insurance Act of 1995, Public Law 
        Number 104-7, the provision of section 501(b)(2) of the Health 
        Insurance Portability and Accountability Act, Public Law Number 
        104-191, the provisions of sections 1604 and 1704(p)(1) and (2) 
        of the Small Business Job Protection Act, Public Law Number 
        104-188, and the provisions of sections 1011, 1211(b)(1), and 
        1602(f) of the Taxpayer Relief Act of 1997, Public Law Number 
        105-34, 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. 
           The provisions of sections 1119(a), 1120, 1121, 1202(a), 
        1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 
        Business Job Protection Act, Public Law Number 104-188, the 
        provision of section 511 of the Health Insurance Portability and 
        Accountability Act, Public Law Number 104-191, and the 
        provisions of sections 1174 and 1601(i)(2) of the Taxpayer 
        Relief Act of 1997, Public Law Number 105-34, shall become 
        effective at the time they become effective for federal purposes.
           The Internal Revenue Code of 1986, as amended through March 
        22, 1996, is in effect for taxable years beginning after 
        December 31, 1995. 
           The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
        1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
        1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
        Protection Act, Public Law Number 104-188, the provisions of 
        Public Law Number 104-117, the provisions of sections 313(a) and 
        (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
        1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
        1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
        and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
        Public Law Number 105-34, the provisions of section 6010 of the 
        Internal Revenue Service Restructuring and Reform Act of 1998, 
        Public Law Number 105-206, and the provisions of section 4003 of 
        the Omnibus Consolidated and Emergency Supplemental 
        Appropriations Act, 1999, Public Law Number 105-277, shall 
        become effective at the time they become effective for federal 
        purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1996, shall be in effect for taxable years 
        beginning after December 31, 1996. 
           The provisions of sections 202(a) and (b), 221(a), 225, 
        312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
        (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
        1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
        1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
        of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
        the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
        7002, and 7003 of the Internal Revenue Service Restructuring and 
        Reform Act of 1998, Public Law Number 105-206, and the 
        provisions of section 3001 of the Omnibus Consolidated and 
        Emergency Supplemental Appropriations Act, 1999, Public Law 
        Number 105-277, and the provisions of section 3001 of the 
        Miscellaneous Trade and Technical Corrections Act of 1999, 
        Public Law Number 106-36, shall become effective at the time 
        they become effective for federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1997, shall be in effect for taxable years 
        beginning after December 31, 1997. 
           The provisions of sections 5002, 6009, 6011, and 7001 of 
        the Internal Revenue Service Restructuring and Reform Act of 
        1998, Public Law Number 105-206, the provisions of section 9010 
        of the Transportation Equity Act for the 21st Century, Public 
        Law Number 105-178, the provisions of sections 1004, 4002, and 
        5301 of the Omnibus Consolidation and Emergency Supplemental 
        Appropriations Act, 1999, Public Law Number 105-277, and the 
        provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
        Act of 1998, Public Law Number 105-369, and the provisions of 
        sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
        Work Incentives Improvement Act of 1999, Public Law Number 
        160-170, shall become effective at the time they become 
        effective for federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1998, shall be in effect for taxable years 
        beginning after December 31, 1998. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1999, shall be in effect for taxable years 
        beginning after December 31, 1999. 
           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. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment except that the striking of text is 
        effective for taxable years beginning after December 31, 1999. 
           Sec. 3.  Minnesota Statutes 1999 Supplement, section 
        290.01, subdivision 31, is amended to read: 
           Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
        defined otherwise, "Internal Revenue Code" means the Internal 
        Revenue Code of 1986, as amended through December 31, 1998 1999. 
           EFFECTIVE DATE:  This section is effective for tax years 
        beginning after December 31, 1999. 
           Sec. 4.  Minnesota Statutes 1999 Supplement, section 
        290A.03, subdivision 15, is amended to read: 
           Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
        means the Internal Revenue Code of 1986, as amended through 
        December 31, 1998 1999. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 5.  Minnesota Statutes 1999 Supplement, section 
        291.005, subdivision 1, is amended to read: 
           Subdivision 1.  Unless the context otherwise clearly 
        requires, the following terms used in this chapter shall have 
        the following meanings: 
           (1) "Federal gross estate" means the gross estate of a 
        decedent as valued and otherwise determined for federal estate 
        tax purposes by federal taxing authorities pursuant to the 
        provisions of the Internal Revenue Code. 
           (2) "Minnesota gross estate" means the federal gross estate 
        of a decedent after (a) excluding therefrom any property 
        included therein which has its situs outside Minnesota and (b) 
        including therein any property omitted from the federal gross 
        estate which is includable therein, has its situs in Minnesota, 
        and was not disclosed to federal taxing authorities.  
           (3) "Personal representative" means the executor, 
        administrator or other person appointed by the court to 
        administer and dispose of the property of the decedent.  If 
        there is no executor, administrator or other person appointed, 
        qualified, and acting within this state, then any person in 
        actual or constructive possession of any property having a situs 
        in this state which is included in the federal gross estate of 
        the decedent shall be deemed to be a personal representative to 
        the extent of the property and the Minnesota estate tax due with 
        respect to the property. 
           (4) "Resident decedent" means an individual whose domicile 
        at the time of death was in Minnesota. 
           (5) "Nonresident decedent" means an individual whose 
        domicile at the time of death was not in Minnesota. 
           (6) "Situs of property" means, with respect to real 
        property, the state or country in which it is located; with 
        respect to tangible personal property, the state or country in 
        which it was normally kept or located at the time of the 
        decedent's death; and with respect to intangible personal 
        property, the state or country in which the decedent was 
        domiciled at death. 
           (7) "Commissioner" means the commissioner of revenue or any 
        person to whom the commissioner has delegated functions under 
        this chapter. 
           (8) "Internal Revenue Code" means the United States 
        Internal Revenue Code of 1986, as amended through December 31, 
        1998 1999. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 

                                   ARTICLE 13 
                                 MISCELLANEOUS 
           Section 1.  Minnesota Statutes 1998, section 8.30, is 
        amended to read: 
           8.30 [COMPROMISE OF TAX AND FEE CLAIMS.] 
           Notwithstanding any other provisions of law to the 
        contrary, the attorney general shall have authority to 
        compromise taxes, fees, surcharges, assessments, penalties, and 
        interest in any case referred to the attorney general by the 
        commissioner of revenue, whether reduced to judgment or not, 
        where, in the attorney general's opinion, it shall be in the 
        best interests of the state to do so.  Such a compromise of a 
        tax debt shall must be in such a form as prescribed by the 
        attorney general shall prescribe and shall be in writing signed 
        by the attorney general, the taxpayer or taxpayer's 
        representative, and the commissioner of revenue.  
           EFFECTIVE DATE:  This section is effective for compromises 
        entered into after the date of final enactment. 
           Sec. 2.  Minnesota Statutes 1998, section 16A.46, is 
        amended to read: 
           16A.46 [LOST OR DESTROYED WARRANT DUPLICATE; INDEMNITY.] 
           The commissioner may issue a duplicate to an owner if the 
        loss or destruction of an unpaid warrant is documented by 
        affidavit.  When the duplicate is issued, the original is void.  
        The commissioner may require an indemnity bond from the 
        applicant to the state for double the amount of the warrant for 
        anyone damaged by the issuance of the duplicate.  The 
        commissioner may refuse to issue a duplicate of an unpaid state 
        warrant.  If the commissioner acts in good faith the 
        commissioner is not liable, whether the application is granted 
        or denied.  For an unpaid refund or rebate issued under a tax 
        law administered by the commissioner of revenue that has been 
        lost or destroyed, an affidavit is not required for the 
        commissioner to issue a duplicate if the duplicate is issued to 
        the same name and social security number as the original warrant 
        and that information is verified on a tax return filed by the 
        recipient. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 3.  Minnesota Statutes 1999 Supplement, section 
        16D.09, subdivision 2, is amended to read: 
           Subd. 2.  [NOTIFICATION OF ACTION BY DEPARTMENT OF 
        REVENUE.] When the department of revenue has determined that a 
        debt is uncollectible and has written off that debt as provided 
        in subdivision 1, the commissioner of revenue must make a 
        reasonable attempt to notify the debtor of that action and of 
        the release of any liens imposed under section 270.69 related to 
        that debt, within 30 days after the determination has been 
        reported to the commissioner of finance.  A lien imposed under 
        section 270.69 need not be released unless after the write-off 
        of uncollectible debt there is no remaining collectible 
        liability recorded on the lien. 
           EFFECTIVE DATE:  This section is effective for debts 
        written off on or after the day following final enactment. 
           Sec. 4.  Minnesota Statutes 1999 Supplement, section 
        168.012, subdivision 1, is amended to read: 
           Subdivision 1.  [VEHICLES EXEMPT FROM TAX AND REGISTRATION 
        FEES.] (a) The following vehicles are exempt from the provisions 
        of this chapter requiring payment of tax and registration fees, 
        except as provided in subdivision 1c:  
           (1) vehicles owned and used solely in the transaction of 
        official business by the federal government, the state, or any 
        political subdivision; 
           (2) vehicles owned and used exclusively by educational 
        institutions and used solely in the transportation of pupils to 
        and from such institutions; 
           (3) vehicles used solely in driver education programs at 
        nonpublic high schools; 
           (4) vehicles owned by nonprofit charities and used 
        exclusively to transport disabled persons for educational 
        purposes; 
           (5) vehicles owned and used by honorary consul; 
           (6) ambulances owned by ambulance services licensed under 
        section 144E.10, the general appearance of which is 
        unmistakable; and 
           (7) vehicles owned by a commercial driving school licensed 
        under section 171.34, or an employee of a commercial driving 
        school licensed under section 171.34, and the vehicle is used 
        exclusively for driver education and training. 
           (b) Vehicles owned by the federal government, municipal 
        fire apparatuses including fire-suppression support vehicles, 
        police patrols and ambulances, the general appearance of which 
        is unmistakable, shall not be required to register or display 
        number plates.  
           (c) Unmarked vehicles used in general police work, liquor 
        investigations, arson investigations, and passenger automobiles, 
        pickup trucks, and buses owned or operated by the department of 
        corrections shall be registered and shall display appropriate 
        license number plates which shall be furnished by the registrar 
        at cost.  Original and renewal applications for these license 
        plates authorized for use in general police work and for use by 
        the department of corrections must be accompanied by a 
        certification signed by the appropriate chief of police if 
        issued to a police vehicle, the appropriate sheriff if issued to 
        a sheriff's vehicle, the commissioner of corrections if issued 
        to a department of corrections vehicle, or the appropriate 
        officer in charge if issued to a vehicle of any other law 
        enforcement agency.  The certification must be on a form 
        prescribed by the commissioner and state that the vehicle will 
        be used exclusively for a purpose authorized by this section.  
           (d) Unmarked vehicles used by the departments of revenue 
        and labor and industry, fraud unit, in conducting seizures or 
        criminal investigations must be registered and must display 
        passenger vehicle classification license number plates which 
        shall be furnished at cost by the registrar.  Original and 
        renewal applications for these passenger vehicle license plates 
        must be accompanied by a certification signed by the 
        commissioner of revenue or the commissioner of labor and 
        industry.  The certification must be on a form prescribed by the 
        commissioner and state that the vehicles will be used 
        exclusively for the purposes authorized by this section. 
           (e) Unmarked vehicles used by the division of disease 
        prevention and control of the department of health must be 
        registered and must display passenger vehicle classification 
        license number plates.  These plates must be furnished at cost 
        by the registrar.  Original and renewal applications for these 
        passenger vehicle license plates must be accompanied by a 
        certification signed by the commissioner of health.  The 
        certification must be on a form prescribed by the commissioner 
        and state that the vehicles will be used exclusively for the 
        official duties of the division of disease prevention and 
        control.  
           (f) All other motor vehicles shall be registered and 
        display tax-exempt number plates which shall be furnished by the 
        registrar at cost, except as provided in subdivision 1c.  All 
        vehicles required to display tax-exempt number plates shall have 
        the name of the state department or political subdivision, 
        nonpublic high school operating a driver education program, or 
        licensed commercial driving school, on the vehicle plainly 
        displayed on both sides thereof in letters not less than 2-1/2 
        inches high and one-half inch wide; except that each state 
        hospital and institution for the mentally ill and mentally 
        retarded may have one vehicle without the required 
        identification on the sides of the vehicle, and county social 
        service agencies may have vehicles used for child and vulnerable 
        adult protective services without the required identification on 
        the sides of the vehicle.  Such identification shall be in a 
        color giving contrast with that of the part of the vehicle on 
        which it is placed and shall endure throughout the term of the 
        registration.  The identification must not be on a removable 
        plate or placard and shall be kept clean and visible at all 
        times; except that a removable plate or placard may be utilized 
        on vehicles leased or loaned to a political subdivision or to a 
        nonpublic high school driver education program. 
           Sec. 5.  Minnesota Statutes 1998, section 270.063, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [FEDERAL TAX REFUND OFFSET FEES.] For fees 
        charged by the department of the treasury of the United States 
        for the offset of federal tax refunds that are deducted from the 
        refund amounts remitted to the commissioner, the unpaid debts of 
        the taxpayers whose refunds are being offset to satisfy the 
        debts are reduced only by the actual amount of the refund 
        payments received by the commissioner. 
           EFFECTIVE DATE:  This section is effective for offsets of 
        refunds made on or after the day following final enactment.  
           Sec. 6.  Minnesota Statutes 1999 Supplement, section 
        270.65, is amended to read: 
           270.65 [DATE OF ASSESSMENT; DEFINITION.] 
           For purposes of taxes administered by the commissioner, the 
        term "date of assessment" means the date a liability reported on 
        a return was filed entered into the records of the commissioner 
        or the date a return should have been filed, whichever is later; 
        or, in the case of taxes determined by the commissioner, "date 
        of assessment" means the date of the order assessing taxes or 
        date of the return made by the commissioner; or, in the case of 
        an amended return filed by the taxpayer, the assessment date is 
        the date additional liability reported on the return, if any, 
        was filed with entered into the records of the commissioner; or, 
        in the case of a check from a taxpayer that is dishonored and 
        results in an erroneous refund being given to the taxpayer, 
        remittance of the check is deemed to be an assessment and the 
        "date of assessment" is the date the check was received by the 
        commissioner. 
           EFFECTIVE DATE:  This section is effective for assessments 
        made on or after the day following final enactment.  
           Sec. 7.  Minnesota Statutes 1999 Supplement, section 
        270A.03, subdivision 2, is amended to read: 
           Subd. 2.  [CLAIMANT AGENCY.] "Claimant agency" means any 
        state agency, as defined by section 14.02, subdivision 2, the 
        regents of the University of Minnesota, any district court of 
        the state, any county, any statutory or home rule charter city 
        presenting a claim for a municipal hospital or a public 
        library or a municipal ambulance service, a hospital district, a 
        private nonprofit hospital that leases its building from the 
        county in which it is located, any public agency responsible for 
        child support enforcement, any public agency responsible for the 
        collection of court-ordered restitution, and any public agency 
        established by general or special law that is responsible for 
        the administration of a low-income housing program. 
           EFFECTIVE DATE:  This section is effective for claims 
        submitted after June 30, 2000.  
           Sec. 8.  Minnesota Statutes 1998, 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.  
           For purposes of this chapter, lottery prizes, as set forth 
        in section 349A.08, subdivision 8, and amounts granted to 
        persons by the legislature on the recommendation of the joint 
        senate-house of representatives subcommittee on claims 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.  In the case of 
        a joint income tax refund under chapter 289A, 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 taxable income determined under section 290.01, 
        subdivision 29.  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.  For court fines, fees, and surcharges and court-ordered 
        restitution under section 611A.04, subdivision 2, the notice 
        provided by the commissioner of revenue under section 270A.07, 
        subdivision 2, paragraph (b), serves as the appropriate legal 
        notice to the spouse who does not owe the debt.  
           EFFECTIVE DATE:  This section is effective for notices 
        provided after June 30, 2000. 
           Sec. 9.  Minnesota Statutes 1998, section 270A.07, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NOTIFICATION REQUIREMENT.] Any claimant 
        agency, seeking collection of a debt through setoff against a 
        refund due, shall submit to the commissioner information 
        indicating the amount of each debt and information identifying 
        the debtor, as required by section 270A.04, subdivision 3.  
           For each setoff of a debt against a refund due, the 
        commissioner shall charge a fee of $10.  The claimant agency may 
        add the fee to the amount of the debt.  
           The claimant agency shall notify the commissioner when a 
        debt has been satisfied or reduced by at least $200 within 30 
        days after satisfaction or reduction. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 10.  Minnesota Statutes 1999 Supplement, 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, or shall be sent to the 
        debtor at the time of setoff if the entire refund is set off.  
        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; (3) issues relating to the validity of 
        the claim that have been previously raised at a hearing 
        conducted under rules promulgated by the United States 
        Department of Housing and Urban Development or any public agency 
        that is responsible for the administration of a low-income 
        housing program, or that were not timely raised by the debtor 
        under those rules; or (4) issues relating to the validity of the 
        claim for which a hearing is discretionary under section 
        270A.09.  The notice shall include an explanation of the right 
        of the spouse who does not owe the debt to request the claimant 
        agency to repay the spouse's portion of a joint refund.  
           EFFECTIVE DATE:  This section is effective for notices 
        provided after June 30, 2000.  
           Sec. 11.  Minnesota Statutes 1998, section 289A.35, is 
        amended to read: 
           289A.35 [ASSESSMENTS; COMMISSIONER FILED RETURNS.] 
           The commissioner shall has the authority to make 
        determinations, corrections, and assessments with respect to 
        state taxes, including interest, additions to taxes, and 
        assessable penalties.  The commissioner may audit and adjust the 
        taxpayer's computation of federal taxable income, items of 
        federal tax preferences, or federal credit amounts to make them 
        conform with the provisions of chapter 290 or section 298.01.  
        If a taxpayer fails to file a required return, the commissioner, 
        from information in the commissioner's possession or obtainable 
        by the commissioner, may make a return for the taxpayer.  The 
        return will be prima facie correct and valid.  If a return has 
        been filed, the commissioner shall examine enter the liability 
        reported on the return and may make any audit or investigation 
        that is considered necessary.  The commissioner may use 
        statistical or other sampling techniques consistent with 
        generally accepted auditing standards in examining returns or 
        records and making assessments. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 12.  Minnesota Statutes 1999 Supplement, section 
        289A.55, subdivision 9, is amended to read: 
           Subd. 9.  [INTEREST ON PENALTIES.] (a) A penalty imposed 
        under section 289A.60, subdivision 1, 2, 3, 4, 5, 6, or 21 bears 
        interest from the date the return or payment was required to be 
        filed or paid, including any extensions, to the date of payment 
        of the penalty. 
           (b) A penalty not included in paragraph (a) bears interest 
        only if it is not paid within ten 60 days from the date of 
        notice.  In that case interest is imposed from the date of 
        notice to the date of payment. 
           EFFECTIVE DATE:  This section is effective for penalties 
        assessed after the date of final enactment.  
           Sec. 13.  Minnesota Statutes 1998, section 296A.03, 
        subdivision 5, is amended to read: 
           Subd. 5.  [FORM OF APPLICATION; BOND.] (a) A written 
        application shall be made in the form and manner prescribed by 
        the commissioner. 
           (b) The commissioner shall also require the applicant or 
        licensee to deposit with the state treasurer securities of the 
        United States government or the state of Minnesota or to execute 
        and file a bond, with a corporate surety approved by the 
        commissioner, to the state of Minnesota in an amount to be 
        determined by the commissioner and in a form to be fixed by the 
        commissioner and approved by the attorney general, and which 
        shall be conditioned for the payment when due of all excise 
        taxes, inspection fees, penalties, and accrued interest arising 
        in the ordinary course of business or by reason of any 
        delinquent money which may be due the state.  The bond shall 
        cover all places of business within the state where petroleum 
        products are received by the licensee.  The applicant or 
        licensee shall designate and maintain an agent in this state 
        upon whom service may be made for all purposes of this section. 
           (c) An initial applicant for a distributor's license shall 
        furnish a bond in a minimum sum of $3,000 for the first year. 
           (d) The commissioner, on reaching the opinion that the bond 
        given by a licensee is inadequate in amount to fully protect the 
        state, shall require an additional bond in such amount as the 
        commissioner deems sufficient. 
           (e) A licensee who desires to be exempt from depositing 
        securities or furnishing such bond shall furnish to the 
        commissioner an itemized financial statement showing the assets 
        and the liabilities of the applicant.  If it appears to the 
        commissioner, from the financial statement or otherwise, that 
        the applicant is financially responsible, then the commissioner 
        may exempt the applicant from depositing such securities or 
        furnishing such bond until the commissioner otherwise orders. 
           (f) When the surety upon any bond issued under the 
        provisions of this chapter have fulfilled the conditions of such 
        bond and compensated the state for any loss occasioned by any 
        act or omission of any licensee under this chapter, such surety 
        shall be subrogated to all the rights of the state in connection 
        with the transaction where such loss occurred. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 14.  Minnesota Statutes 1998, section 296A.21, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COLLECTION.] No action shall be brought for the 
        collection of delinquent taxes and inspection fees under section 
        270.68 unless commenced within five years after the date of 
        assessment of the taxes and fees. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 15.  Minnesota Statutes 1998, section 296A.21, 
        subdivision 3, is amended to read: 
           Subd. 3.  [FALSE OR FRAUDULENT REPORT.] In the case of a 
        false or fraudulent report with intent to evade tax taxes or 
        inspection fee fees or of a failure to file a report, the taxes 
        or fees may be assessed at any time, and a proceeding in court 
        for their collection must be begun within five years after the 
        assessment. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 16.  Minnesota Statutes 1998, section 296A.22, 
        subdivision 6, is amended to read: 
           Subd. 6.  [SALE PROHIBITED UNDER CERTAIN CONDITIONS.] No 
        petroleum product shall be unloaded or sold by any person or 
        distributor whose tax and inspection fees are the basis for 
        collection action under subdivision 2. 
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment.  
           Sec. 17.  Minnesota Statutes 1999 Supplement, section 
        298.24, subdivision 1, is amended to read: 
           Subdivision 1.  (a) For concentrate produced in 1999, 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 $2.141 per gross ton of merchantable iron ore concentrate 
        produced therefrom.  
           (b) For concentrates produced in 2000 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 for 
        the gross domestic product prepared by the bureau of economic 
        analysis of the United States Department of Commerce.  
           (c) On concentrates produced in 1997 and thereafter, an 
        additional tax is imposed equal to three cents per gross ton of 
        merchantable iron ore concentrate for each one percent that the 
        iron content of the product exceeds 72 percent, when dried at 
        212 degrees Fahrenheit. 
           (d) 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.  
           (e) If the tax or any part of the tax imposed by this 
        subdivision is held to be unconstitutional, a tax of $2.141 per 
        gross ton of merchantable iron ore concentrate produced shall be 
        imposed.  
           (f) 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. 
           (g)(1) Notwithstanding any other provision of this 
        subdivision, for the first two years of a plant's production of 
        direct reduced ore, no tax is imposed under this section.  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.  
        For the third year of a plant's production of direct reduced 
        ore, the rate to be applied to direct reduced ore is 25 percent 
        of the rate otherwise determined under this subdivision.  For 
        the fourth such production year, the rate is 50 percent of the 
        rate otherwise determined under this subdivision; for the fifth 
        such production year, the rate is 75 percent of the rate 
        otherwise determined under this subdivision; and for all 
        subsequent production years, the full rate is imposed. 
           (2) Subject to clause (1), 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. 
           EFFECTIVE DATE:  This section is effective for concentrates 
        produced in 2000 and thereafter.  
           Sec. 18.  [ITASCA AND CASS COUNTIES; DISTRIBUTION OF CASINO 
        TAX REVENUES.] 
           Notwithstanding any contrary provision of law, in the case 
        of one tribal government that operates three casinos, two of 
        which are located in Cass county, and one of which is located in 
        Itasca county, the payments to the counties under Minnesota 
        Statutes, section 270.60, subdivision 4, attributable to 
        agreements with that tribe, must be distributed, two-thirds to 
        Cass county, and one-third to Itasca county.  This section 
        applies to distributions in 2001, 2002, and 2003. 
           EFFECTIVE DATE:  This section is effective upon approval by 
        the governing bodies of both Itasca county and Cass county, and 
        compliance by both of them with Minnesota Statutes, section 
        645.021, subdivision 3. 
           Sec. 19.  [MINNESOTA WORKERS' COMPENSATION ASSIGNED RISK 
        PLAN SURPLUS TRANSFER.] 
           On or before July 15, 2000, the commissioner of finance 
        must transfer $110,000,000 of assets of the assigned risk plan 
        to the general fund.  
           EFFECTIVE DATE:  This section is effective the day 
        following final enactment. 
           Sec. 20.  [INSTRUCTION TO REVISOR.] 
           Notwithstanding any law to the contrary, if a section of 
        Minnesota Statutes repealed and recodified by Laws 2000, chapter 
        394, is amended by this act, the amendment supersedes the 
        provisions of chapter 394, and the revisor shall codify the 
        amendment consistent with the recodification of the affected 
        section by Laws 2000, chapter 394. 
           Sec. 21.  [REPEALER.] 
           Minnesota Rules, part 8160.0300, subpart 4, is repealed. 
           EFFECTIVE DATE:  This section is effective for assessments 
        made on or after the day following final enactment. 
           Presented to the governor May 11, 2000 
           Signed by the governor May 15, 2000, 11:25 a.m.